Thanks, thanks for joining us to have a conversation with Shalabh Gupta, Founder and CEO of Unicycive Therapeutics. Unicycive Therapeutics is a clinical-stage biotechnology company developing novel therapies for treating kidney diseases. The company's leading clinical candidate, oxylanthanum carbonate or OLC, is being evaluated as a treatment for lowering high phosphate levels or hyperphosphatemia in chronic kidney disease patients undergoing dialysis. OLC recently received a CRL from the FDA. In this conversation, we're going to explore the regulatory and commercial strategy, and also funding arrangements that are in place for a successful launch. Without much ado, I would like to welcome Shalabh to this fireside chat. Good day, Shalabh. Thank you. It's nice to see you, and I appreciate you accepting our invitation to talk to our audience today. Thank you, R.K., and thank you, H.C. Wainwright. Shalabh, for those who are not quite aware of what Unicycive is, could you please give us a brief update on the business plan, and also what are we treating here? hyperphosphatemia, what is that? Absolutely, R.K. First of all, thank you to audience and those who are joining us or listening recorded version of this webcast. Unicycive is clinical-stage biotechnology company with OLC, as R.K., you pointed out, is our lead asset. We have a second drug, which is UNI-494, which has completed phase I clinical trial, and it's being evaluated for acute kidney disease or acute kidney injury, as well as chronic kidney disease. Coming back to OLC and the treatment condition or the treatment, what is indicated for hyperphosphatemia. High phosphate is a condition that happens with patients who have impaired kidney function. Chronic kidney disease are divided from a stage 1 through stage 5, end-stages, called end-stage kidney disease or end-stage renal disease, ESKD or ESRD. Many of these patients who are in end-stage, they are living on dialysis. Dialysis machines take care of many bad stuff or toxic products in the body. Phosphate is something that does not come out from the dialysis machine because the filter is not able to prevent phosphate from getting freely from the body. In summary, hyperphosphatemia happens in patients who are at late stage of kidney disease. Our drug, like most of the drugs that are on the market, is indicated in patients who are on dialysis. I can talk a little bit more about what happens if patients have high phosphate, if you would allow me to. Yep. Please go ahead. Patients who have high phosphate, high phosphate combines with calcium and causes thickening of blood vessels. Blood vessels which are otherwise pliable and pump blood from heart to the body, they become rigid like lead pipe. That rigidity or the lack of pliability is also known as atherosclerosis. What patients will face is a mortality and morbidity because of the cardiovascular condition. That's number one problem. The second problem happens is the calcium and phosphate, they get deposited into soft tissue, and they cause bony deposits, and they can cause fractures and soft tissue deposition, which can be abnormal growth coming out from soft tissue in hand or arm, and that can be very painful. Besides cosmetic deformity, it causes pain, and patients are prone to fractures. Each milligram per deciliter increase in serum phosphate increases risk of cardiovascular morbidity and mortality by 10%-15%, and also causes increased risk in hospitalization by another 10%-15%. It is a fairly challenging problem. The only thing that happens to patients clinically is that they do not see the symptoms immediately. Very good. Hyperphosphatemia obviously is being, as you said, since it is associated with dialysis patients, it has been treated for many, many years, and obviously there are multiple therapies already being marketed for it. Still, there is the issue of non-adherence to the current phosphate binders. What do you think are the factors that lead to this non-adherence, and how do you think OLC can help to overcome the non-adherence? R.K., these patients who are on dialysis, on an average, they are taking 20 to 30 pills per day, and they're taking these pills for the rest of their life. Challenge for these patients is that they are taking pills for treatment of hyperphosphatemia that make it really hard for them to take the pills. Let me be more specific. There are few types of problem that exists with the existing treatment. Number one, patients are taking large number of pills. The most commonly prescribed or the most prescribed drug, it's a generic version or brand is version Renvela. On an average, patients are taking nine pills. Many of them are taking 12 or 15 pills per day. That's a common form of treatment that patients are taking. 15 pills per day seems like a lot, but you have to then put in the context of the patients who are taking them. They are taking 15 other pills for other conditions. Overall, 30 pills per day. These are patients who are undergoing dialysis three times a week. Their lifestyle and the way their disease impacts them, it's really challenging. For them to be able to take these number of pills does not become an easy task. Frankly, it will be a challenge for most of us if we were to take those number of pills. That's number one problem. Number two problem is that there are solutions where patients can take a smaller number of pills. Those pills are large in size, and the size itself may not make that much of an impression, but the third problem happens, these large size pills then have to be chewed. We're combining palatability, which is a main issue, because when patients have to chew these pills, again, we are asking them to take every single meal, they are supposed to take large size pills, which are filled with metal because their component active ingredient is metal, and ask them to chew the pills. Patients are not able to do that. They don't do it. Many of them are embarrassed when their physicians ask them, "Have you taken these pills?" They want to say that they're taking the pills, but when you do the serum phosphate level check, that they haven't taken their pills. Yeah. OLC obviously is in front of the FDA. They're reviewing your package. However, there was a CRL which was given out on June 28th. What do you think is the main reason for the CRL? What can you tell us in terms of what they're asking for to resubmit your application? Prior to June 28th, the agency notified us on June 10th, I believe, which was a Monday, and we immediately released the following day that they had a problem with a third-party vendor. It's a manufacturing vendor which is not a main vendor, but it's a vendor that helps us finish making a tablet. The main vendor has no problem. It's a vendor that makes the powder into tablet, and packaging and shipping. That vendor had a problem. On 28th, informed us that, as we notified you earlier, that vendor has a problem. Essentially, Complete Response Letter is a confirmation of what they had told us earlier, that there was a problem with their vendor. You need to fix the vendor in order to get the drug approved. The good part, which can be a challenge to find in a med software disappointment, was that they actually had no other questions or no other issues. They had no questions with preclinical data. They had no question with safety. They had no question about efficacy, and they had no question about tolerability. This CRL on one hand is a disappointment because we wanted to get the drug on the market, get to the patients as quickly as possible. On the other hand, this is one very clear path to approval because the only thing we need to resolve or solve for is the third-party vendor. We also said, and it provides me an opportunity to give you a little bit of color, we had created redundancies from a manufacturing point of view. The powder that is manufactured, that goes into two different vendors, so both the vendors were getting ready. One obviously generated enough data that we submitted to FDA. The second one, we had been working with them for quite some time, prior to any manufacturing problem. We have the data from both these vendors, and the plan was to, as we get the approval, to diversify our supply chain so that way we are not limited by one vendor. We also anticipated the commercial need for the drug to be so large that we felt that one vendor may not be sufficient. We had done a lot of this work ahead of time. Now, what lies ahead of us is to talk to the FDA and find what will be the best way to be able to resolve the two possible paths to approval. Number one, the first vendor that is on penalty box, they get out of the penalty box and the first vendor is working, and they're working diligently with FDA to resolve the problem. I would call out the vendor that actually did not have any issue with our drug, with our manufacturing of drug. It was a site-specific issue, not related to our drug. We believe they can solve this, resolve it very quickly. I don't have a specific timeline yet, but we are working with FDA, we are working with a vendor to see how quickly they can resolve. Concurrently, what we had done was to work on the second vendor, and our goal is to meet with FDA, understand which of these two options will be the best way to get the drug approved and the fastest possible pathway. As soon as we have that visibility, we come back and tell the street what our plan of action is. We feel this is a resolvable issue. This is something that FDA has given them a penalty box, the first vendor, but they can get out of the penalty box. The question is how quickly and through which pathway we can resolve it. I don't know if you can answer this question at this time or not. For this third-party vendor to resolve, is it more of a paperwork or is it both paperwork and inspection by the FDA? The resolution, it's dependent on the facility to make progress which you can attribute to paperwork. The FDA has flexibility. FDA does not necessarily have to audit every time, and they have done in the past because of their bandwidth to do virtual audits or sometimes not to do audit at all. It is entirely up to the agency. I am not able to give you any specific way how they will go, but we are trying to understand that part. The part is that while it seems disappointing to us and we understand that the FDA has a concern, FDA does want to get new drugs on the market, and we feel there may be an opportunity to work with them to get the drug as quickly as possible to approval. Again, another question. I'm sure how much you can answer. On the general timeline, what should investors expect? In these type of situations, R.K., we believe the best way to answer the question is to have clarity from the FDA. Management and the companies have gone in the past and made assumptions, and then they find that the agency has slightly different expectations. Our goal is to take a little bit of time and provide. As a general matter, we plan to provide update in the coming weeks. We have Q1 earnings coming up. We'll provide update then. As soon as we resolve with FDA, we'll provide the full guidance. As a reminder, in the past, a challenge happened to us that FDA asked us to run a clinical trial. We immediately disclosed it. We provided that FDA asked us to run clinical trial, and then we provided FDA with a clinical trial design with the sample size and how we would run the trial. Once we got written confirmation, all these questions, we came out and disclosed it that this is the plan to run the trial. We feel there is a way path forward. The best time to be able to talk more openly about it is when we believe the agency has agreed with that because they do have their flexibility and discretion. More often than not, FDA does work with its data. We also want to generate enough data to be able to show them that there is a similarity in both these processes, if you will. Okay. From this conversation, what I understand is it's just a question of when, not if. Yes. Absolutely. Upon approval, how much time would you need to get the OLC into the market? Okay. I want to go back to the prior question, just one more clarification. You pointed out, many drugs and many companies face challenges. This is as best clean shot you can get in terms of approval. Both these vendors supply global markets. They are supplying U.S. market, they supply billions of tablets. We feel there is a very good shot to be able to resolve it. I will not say that a delay is a minor setback. It's a pretty big setback for us as a management team, as a company, and for investors. I can assure who is watching this webcast or listening to this. We are working every single day to find the shortest possible pathway for approval and work with the agency because that is the best way to be able to resolve it. Answering your second question about how quickly we can commercialize. One way to think about this is a pause before a final approval and launch. This pause gives us an opportunity to be ready and launch within a couple of weeks after approval. Now we have more visibility in terms of what the timeline could look like. It gives us time to use the time to get commercially ready. We had been doing some of the work prior to approval, deadline which was June 28th, and we feel with the additional time we can be ready for launch more quickly than before. Very good. Overall, what's the commercial strategy for OLC? The plan is to have our own sales force, and the plan was, prior to approval, to start to build infrastructure. We were deliberate in not hiring a lot of people in-house. A lot of hiring were contingent upon approval. Because approval got pushed, and we managed our resources well, so we decided to push out those hiring. There is a time that we can use now to create market awareness. For example, getting word out in terms of medical literature and publications, trade journals, as well as the medical conferences, doing ad posts. Some of them are in-person, some of them are virtual ad posts. We're continuing to do that. The launch of the drug is dependent on both what physicians understand, also what the data exists in the peer-reviewed literature. We feel there's an opportunity to generate all of that. That doesn't require FDA approval, which is to create awareness and get in front of physicians to help them understand what type of data we have and how it can solve their patients' problem. The other mechanism that you have been talking about is TDAPA. What is TDAPA and how beneficial is it for drug developers such as you to enter into TDAPA? I said this before, and I'll just remind everyone that we do not take any of this work lightly. Launching a drug is generally challenging, especially for a small company that has no commercial product yet in the market. We feel TDAPA provides a tailwind, and I say this tailwind because it takes away the general inherent friction between a payer and a patient or payer and provider. Think about this way, that upon approval, we have to apply for TDAPA. The TDAPA mechanism allows the drug to be reimbursed by CMS at 100% of the price. For those who are not very familiar with the system, think about 1/3 of the market opportunity, 1/3 of the patients who currently have challenges in getting the drug until January 1, 2025. Prior to January 1, 2025, patients used to get Medicare Part D reimbursement for these drugs. Now it's all part of Medicare Part D, R.K. CMS categorically says, and even in this latest guidelines that they put out. It came out just a couple of days ago. I believe it was the last week of June or first week of July. CMS has provided TDAPA as a mechanism for a new sponsor, new products to come to the market and not get disadvantaged. It is a substantial benefit for a company like us. We feel it provides us an opportunity to be able to ramp up pretty quickly. On top of that, it also helps providers to be able to write the prescription and not worry about reimbursement. Essentially, your provider writes a prescription, this gets directly reimbursed from CMS Medicare Part B as employed. Very good. We know that the launch is going to get delayed a bit, even though we don't know what the timing of the delay is. How often does TDAPA application get reviewed? What should we consider in terms of how quickly you can get onto the TDAPA once the drug gets approved? It depends on the two parts. One is your drug approved in a specific cycle. As such, to answer your question more specific about how often TDAPA application gets reviewed, it's four times a year. It's January 1, then April 1, September 1, and December 1. It will be four times a year, and specific timelines come for many months ahead. Every quarter you have an opportunity to apply for TDAPA. It just depends on whenever your drug gets approved. The paperwork is relatively simple. It's not a very complicated process to apply, and we believe that the timing from approval to timing to get TDAPA is a couple of months, between 3- 6 months at the most. That opportunity is relatively straightforward, and we have done a lot of work to understand the application process. You can only apply for TDAPA after approval. Yeah. Okay. Is that the only eligibility requirement for TDAPA, or is there additional things? Also, if and when a drug does not get included into TDAPA, what are the general pushbacks? CMS wanted to use this as a vehicle to provide opportunity for innovative products, but they also didn't want somebody to create just a minor reformulation, if you will, and apply for TDAPA. TDAPA has very specific guidelines that you have to be certain type of NDA, and you have to be within a certain time period. Based on our understanding, we qualify for all the eligibility criteria, and we believe we would not have a difficulty in being able to apply for TDAPA and get one. The eligibility criteria has been outlined for quite some time. Recent guidelines that came out even a week ago or week or 10 days ago, they have no changes in that eligibility criteria. In fact, they provide more specific opportunity for someone to understand that a drug like ours, upon applying for TDAPA and getting one, we have a two-year full TDAPA period and three-year TDAPA period, which is an extension period, which is the CMS allows for 65% reimbursement of the average selling price. The first two years is 100% of the average selling price. Very good. The other questions I believe investors still have about Unicycive is on the funding side of things, right? In general, what's the cost of launching a commercial drug in this space? An opportunity to launch a drug for a company like us in this space is really, really unique, and it's quite exciting because the provider population is very concentrated. We've talked about this in other opportunities or scenarios. Roughly 50% of prescribers constitute with 2,100 physicians. You can have a very small, dedicated, focused sales force and be able to launch the drug. We feel there is an absolute opportunity for us to be able to launch, and we've been preparing for that. People have talked about how many sales rep you need and where you go. We, in fact, in our public corporate deck, we have a U.S. map that talks about where the physicians are located and how one can go about hiring these sales team. We are building up internal capabilities. We've added some more people in our internal team in the last few months. Majority of the hiring of the sales force, we plan to do it upon approval. Okay. In terms of the funding arrangement itself, what do you have in place for commercializing OLC once upon approval? We have three tranches of warrants. The first tranche is upon approval, which gives us roughly $25 million. The second tranche is getting TDAPA designation, gets us another $25 million, and the third tranche is $50 million, which is four quarters of sales with no minimum threshold. In total, we have over $100 million in tranches and milestones, and we feel we'll be more than able to launch the drug properly with these milestones. Separately, we also reported our cash position. As of June thirtieth, we had $20.7 million in cash. We use our resources properly, and I can talk more specifically about how we plan to use this cash until approval. Okay. Before we get there, I just want to understand in your own internal conversations and planning, how do you think about OLC sales growth once you pass the TDAPA phase? The first five years, you're under the umbrella of TDAPA, so you're a little bit protected. Beyond that, what's the stickiness of the drug? See, R.K., drugs don't just sell because of the price or the government reimbursement mechanism. At the end of the day, drugs sell because they have something unique to offer. To that point, I'll say OLC offers a best-in-class potential advantage in this treatment paradigm. With a best-in-class drug, we feel during the TDAPA period, the drug benefits from the reimbursement support from CMS, which is a unique mechanism. Once the TDAPA period is over, the drug goes into bundle. By that time, by five years after launch, drug can take a very sizable market share. That market share then allows the drug to continue to create value for the investors. It is at a compressed price, but then you have a larger volume of the market. The market size itself is sizable, as we talked about it before. Usage for these phosphate lowering therapies in prior years have been over $1 billion. At least over $1 billion in sales the last several years. Okay. Just one more quick question on the finance side. When you ended first quarter, you reported $20.7 million, as you just said. Is there a good funding in place for you until you get the first tranche of money upon approval? Absolutely, yes. It is. R.K., we said $20.7 was up on June 30th. We had some of the folks who had exercised their warrants early on. We had early exercise of warrants, and there were also ATM proceeds. R.K., a lot of companies build up a pretty big commercial infrastructure before the launch, and we did not do that. We have been very careful with our cash. We had decided to hire, I've mentioned a few times, the majority of workforce upon approval or the commercial team upon approval. That wasn't a problem. This $20.7 million gets us at least into second half of next year. By way of background, if you just look at last two, three quarters, there is a aberration in burn, and you will not be able to say what is the steady state burn for this kind of a company. Part of the reason was that commercialization is expensive. We had done some of the activities, were one-time activities. Prior to that, in 2024, we did spend several million dollars to create commercial supply or the manufacturing supply ready for the product. Going forward, the only thing pending is to get the drug approved. It also allows us to put things that we can put on hold and be more conservative in terms of our spend and which we plan to do that. We should have no difficulty in being able to get through the approval and ready for utilizing our warrant mechanism. Okay. The last question from me is, what's then the next set of updates that we should see from management, either on the CRL or on the development strategy, either on OLC or on 494? Most important thing we will do is that we plan to align with FDA as soon as possible. We'll be providing earnings update. You will definitely hear that by August 15th or prior to that. That's the one update. The next thing is that all eyes are at the moment just on FDA and getting the drug approved. We are working diligently on that. We are using the resources we currently have, the team we have, the adverts we can do, publications we can do to get the word out. We have talked to physicians, and they understand that there may be slight delay, but they remain extremely enthusiastic about the drug. Any conversation we have had, we have found the physician community, investment community to be supportive toward our product. The delay is not anyone expected, but the only thing which I can remind again, the delay clearly outlines that he has no question about anything else, whether it's the safety, tolerability, efficacy. It's a third-party manufacturing vendor which we can rectify and solve it by more than one way, which I pointed out. Either use the existing vendors, resolve that issue for them, or a new vendor use that to be able to apply for approval. Thank you. Thank you very much and good luck. Thank you for your time, R.K., and thank you to H.C. Wainwright for hosting us.