Tricida Could Topple With Lock-Up Expiration

The 180-day lock-up period for Tricida Inc. (TCDA) ends on December 25, 2018. When this period ends, the company's pre-IPO shareholders and insiders may opt to sell their shares in the secondary market. More than 28 million shares of TCDA are subject to lock-up agreements - versus the initial offering of 11.7 million shares. Any significant sales of restricted shares once the lock-up expires could flood the secondary market for TCDA and cause a sharp, short-term downturn in share price.

(Source: S-1/A)

We believe that these pre-IPO shareholders and company insiders will be eager to cash in on gains. TCDA had a first-day return of 36.8% and the stock currently has a return from IPO of 47.4%.

Business Overview: Pharmaceutical Company Developing Treatment for Metabolic Acidosis

Tricida is a late-stage pharmaceutical company that is developing its drug candidate, TRC101, which is a non-absorbed polymer. It works to treat metabolic acidosis by binding and eliminating acid from the gastrointestinal tract. Metabolic acidosis affects primarily patients with chronic kidney disease (CKD).

(Source: Tricida website)

The company has completed a double-blind, placebo-controlled Phase 3 clinical trial with 217 patients with metabolic acidosis. In its SEC filings, Tricida notes that the drug candidate met its primary and secondary endpoints and was well tolerated. Both the active and placebo patients had low rates of adverse effects and low discontinuation rates. The company is continuing with a 40-week blinded safety trial, which is expected to be completed within the first half of 2019.

Tricida expects to submit a New Drug Application with the FDA in late 2019. The company will submit the application through the Accelerated Approval Program.

Tricida estimates that nearly 3 million CKD patients will experience metabolic acidosis in the United States. It expects to market its treatment initially in the United States with a sales force that will focus on the nephrology sector of the medical industry. For international sales, Tricida will seek partnerships with companies that have experience selling in target markets. Tricida believes its intellectual property estate will give patent protection through at least 2034 in the United States, China, India, Japan, the European Union, and other markets.

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I am short TCDA.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock ...

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