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Retrophin Reports Second Quarter 2015 Financial Results

Aug 04, 2015

 

Second quarter revenue of $24.1 million

Full year 2015 revenue projected to be $95 to $100 million

SAN DIEGO--(BUSINESS WIRE)-- Retrophin, Inc. (NASDAQ: RTRX) today reported its second quarter 2015 financial results.

  • Net product sales for the second quarter 2015 were $24.1 million, compared to net product sales of $5.7 million in the second quarter of 2014
  • Non-GAAP operating income for the second quarter 2015 was $3.2 million, compared to a non-GAAP operating loss of $11.5 million for the same period in 2014
  • Cash, cash equivalents and marketable securities as of June 30, 2015 totaled $133.6 million

"We are very pleased with the ongoing progress made in the second quarter," said Stephen Aselage, Chief Executive Officer of Retrophin. "The 39 percent top-line increase over the first quarter illustrates continued robust growth of Thiola® and a strong start to the Cholbam® launch. With the advancement of RE-024 into the clinic and the recent sale of our Priority Review Voucher for $245 million, we continued to take meaningful steps to deliver long-term shareholder value."

Quarter Ended June 30, 2015

Net product sales for the second quarter of 2015 were $24.1 million, compared to $5.7 million for the second quarter of 2014. The increase is due to the acquisition and subsequent commercial launch of two additional orphan disease products, Thiola and Cholbam.

Selling, general and administrative expenses for the second quarter of 2015 were $19.7 million on a GAAP basis, compared to $9.6 million for the same period in 2014. On a non-GAAP adjusted basis, selling, general and administrative expenses were $11.6 million for the second quarter of 2015, compared to $5.1 million for the same period in 2014. The increase is primarily driven by operational and commercialization efforts to support Thiola and Cholbam.

Research and development expenses for the second quarter of 2015 were $10.6 million on a GAAP basis, compared to $13.3 million for the same period in 2014. On a non-GAAP adjusted basis, research and development expenses were $8.6 million for the second quarter of 2015, compared to $12.1 million for the same period in 2014. The decrease is largely due to the elimination of spend on non-core research and development efforts and timing of preclinical studies.

Total other expense for the second quarter of 2015 was $18.7 million, compared to other income of $26.5 million for the same period in 2014. The change is primarily due to a $62.4 million increase in expense related to the Company's derivative instruments and a $2.3 million expense related to the prepayment of the Company's $45 million credit facility due 2018. The increase in expense was offset by a $15.5 million gain resulting from the legal settlement with Questcor Pharmaceuticals, Inc. and a decrease in finance expense of $4.7 million related to the issuance of the Company's senior convertible notes in the second quarter of 2014.

Income tax expense for the second quarter of 2015 was $0.02 million compared to a benefit of $2.5 million for the same period in 2014.

Net loss for the second quarter of 2015 was $25.5 million, or $0.73 per basic share on a GAAP basis, compared to net income of $11.8 million, or $0.46 per basic share for the same period in 2014. Non-GAAP adjusted net income for the second quarter of 2015 was $13.9 million, or $0.40 per basic share, compared to a net loss of $13.3 million, or $0.52 per basic share for the same period in 2014.

Commercial Product Updates

Thiola® (tiopronin)

  • Retrophin continued to add Thiola patients on a weekly basis and expanded the number of prescribing physicians in the second quarter.
  • The Company's recently expanded 24-member salesforce began marketing on July 1, 2015 and is expected to significantly expand Thiola coverage.

Cholbam® (cholic acid)

  • Retrophin successfully completed the transfer of approximately 30 patients from the clinical trial extension to Cholbam commercial therapy. Additionally, new patients have been identified and have started therapy.
  • The Company is currently restructuring relationships with its distribution partners in both Europe and Asia to optimize commercial market opportunities outside of the United States.

Chenodal® (chenodeoxycholic acid)

  • Chenodal experienced moderate growth of new cerebrotendinous xanthomatosis (CTX) patients initiating therapy in the second quarter.
  • Retrophin continues progress towards creating an acceptable submission to the U.S. Food and Drug Administration (FDA) for the addition of CTX to the Chenodal label.

Pipeline Updates

Sparsentan

  • The Phase 2 DUET study of sparsentan for the treatment of focal segmental glomerulosclerosis (FSGS) continues to enroll toward the target of 100 patients by year-end 2015.

RE-024

  • The Company's Investigational New Drug (IND) application for RE-024 was cleared by the FDA during the second quarter, and a Phase 1 study to evaluate safety and tolerability in healthy volunteers is currently being conducted. Pending a positive outcome in the Phase 1 study, the Company will request a meeting with the FDA to discuss the next clinical study for RE-024.
  • RE-024 received orphan drug designation from the FDA for the treatment of pantothenate kinase-associated neurodegeneration (PKAN), which will provide seven years of U.S. marketing exclusivity if approved.
  • The FDA also granted RE-024 Fast Track designation which allows for more frequent interaction with the agency during the development process and may lead to an expedited drug approval and earlier patient access.

RE-034

  • Retrophin continues preclinical development of RE-034, which could include initiation of IND-enabling studies within the next 12 months.

Second-Half 2015 Outlook

The Company expects full year 2015 net product sales to be in the range of $95 to $100 million. Going forward, management will provide annual top-line financial guidance when year-end financial results are announced.

Conference Call Information

Retrophin will host a conference call and webcast today, Tuesday, August 4, at 4:30 p.m. ET to discuss second quarter 2015 financial results. To participate in the conference call, dial +1 855-219-9219 (U.S.) or +1-315-625-6891 (International), confirmation code 91222829 shortly before 4:30 p.m. ET. The webcast can be accessed at www.retrophin.com, in the Events and Presentations section. A replay of the call will be available 7:30 p.m. ET, August 4, 2015 to 11:59 p.m., August 11, 2015. The replay number is 855-859-2056 (U.S.) or 404-537-3406 (International), confirmation code 91222829.

Use of Non-GAAP Financial Measures

To supplement Retrophin's financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP adjusted financial measures in this press release and the accompanying tables. The Company believes that these non-GAAP financial measures are helpful in understanding its past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. Retrophin's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Retrophin believes that the use of these non-GAAP measures enhances the ability of investors to compare its results from period to period and allows for greater transparency with respect to key financial metrics the Company uses in making operating decisions.

Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. In addition, from time to time in the future the Company may exclude other items, or cease to exclude items that it has historically excluded, for purposes of its non-GAAP financial measures; Because of the non-standardized definitions, the non-GAAP financial measures as used by the Company in this press release and the accompanying tables may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the Company's competitors and other companies.

As used in this press release, (i) the historical non-GAAP net income (loss) measures exclude from GAAP net income (loss), as applicable, intangible asset amortization, stock-based compensation expense, executive severance charges, transaction and license fees, change in fair value of derivative liabilities, depreciation expense, non-cash interest and finance expenses; adjust the income tax provision to the estimated amount of taxes that are payable in cash; (ii) the historical non-GAAP SG&A expense measures exclude from GAAP SG&A expenses, as applicable, intangible asset amortization, stock-based compensation expense, executive severance charges, transaction and license fees, legal fee and settlements, and depreciation expense; (iii) the historical non-GAAP R&D expense measures exclude from GAAP R&D expenses, as applicable, intangible asset amortization, stock-based compensation expense, transaction and license fees and depreciation expense.

About Retrophin

Retrophin is a pharmaceutical company focused on the development, acquisition and commercialization of drugs for the treatment of serious, catastrophic or rare diseases for which there are currently no viable options for patients. The Company's approved products include Chenodal®, Cholbam®, and Thiola®, and its pipeline includes compounds for several catastrophic diseases, including focal segmental glomerulosclerosis (FSGS), pantothenate kinase-associated neurodegeneration (PKAN), infantile spasms, nephrotic syndrome and others. For additional information, please visit www.retrophin.com.

Forward-Looking Statements

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, regarding the research, development and commercialization of pharmaceutical products. Without limiting the foregoing, these statements are often identified by the words "may", "might", "believes", "thinks", "anticipates", "plans", "expects", "intends" or similar expressions. In addition, expressions of our strategies, intentions or plans are also forward-looking statements. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. No forward-looking statement can be guaranteed. Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties associated with the Company's business and finances in general, as well as risks and uncertainties associated with the Company's pre-clinical and clinical stage pipeline as well as its sales and marketing strategies. Specifically, the risks and uncertainties the Company faces with respect to its pre-clinical and clinical stage pipeline include risk that the Company's research programs will not identify pre-clinical candidates for further development and risk that the Company's clinical candidates will not be found to be safe or effective. Specifically, the Company faces risk that the sparsentan Phase 2 clinical trials will fail to demonstrate that sparsentan is safe or effective; risk that the sparsentan Phase 2 program will be delayed for regulatory or other reasons; risk that the Company will be unable to complete Phase 1 clinical trials of RE-024, risk that RE-024 will not progress to Phase 2 or later clinical trials for safety, regulatory or other reasons; risk that the Company will be unable to file an IND for RE-034 or initiate Phase 1 clinical trials for regulatory or other reasons, and for each of the programs risk associated with enrollment of clinical trials for rare diseases. The Company faces risks associated with market acceptance and competition for its marketed products. The Company faces risk that it will be unable to raise additional funding required to complete development of any or all of its product candidates; risk relating to the Company's dependence on contractors for clinical drug supply and commercial manufacturing; uncertainties relating to patent protection and intellectual property rights of third parties; risks and uncertainties relating to competitive products and technological changes that may limit demand for the Company's products. You are cautioned not to place undue reliance on these forward-looking statements as there are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. The Company undertakes no obligation to publicly update forward-looking statement, whether as a result of new information, future events, or otherwise. Investors are referred to the full discussion of risks and uncertainties as included in the Company's filings with the Securities and Exchange Commission.

             
RETROPHIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2015
(in thousands)
             
    June 30, 2015      

December 31,

    (unaudited)      

2014

Assets            
             
Current assets:            
Cash   $ 127,746         $ 18,204  
Marketable securities     5,862           9,556  
Accounts receivable, net     11,467           7,960  
Inventory, net     2,005           801  
Pediatric priority review voucher, held for sale     96,250           -  
Prepaid expenses and other current assets     1,407           813  
Total current assets     244,737           37,334  
             
Property and equipment, net     509           671  
Other asset     2,016           2,265  
Intangible assets, net     168,251           94,265  
Goodwill     936           936  
Deferred tax asset     8,691           -  
Total assets   $ 425,140         $ 135,471  
             
Liabilities and Stockholders' Equity (Deficit)            
             
Current liabilities:            
Deferred technology purchase liability   $ 1,000         $ 1,000  
Accounts payable     4,778           7,124  
Accrued expenses     20,328           27,883  
Other liability     897           938  
Acquisition-related contingent consideration     4,363           2,118  
Derivative financial instruments, warrants     91,200           27,990  
Deferred income tax liability     8,691           -  
Note payable     41,125           40,486  
Total current liabilities     172,382           107,539  
             
Convertible debt     43,593           43,288  
Other liability     12,149           12,234  
Acquisition-related contingent consideration, less current portion     46,235           9,520  
Deferred income tax liability, net     -           141  
             
Total liabilities     274,359           172,722  
             
Commitments and contingencies            
             
Stockholders' Deficit:            

Preferred stock Series A $0.001 par value; 20,000,000
shares authorized; 0 issued and outstanding

    -           -  

Common stock $0.0001 par value; 100,000,000 shares
authorized; 35,072,757 and 26,428,071 issued and
35,072,757 and 26,048,480 outstanding, respectively

    3           3  
Additional paid-in capital     318,280           140,851  
Treasury stock, at cost, none and 379,591, respectively     -           (3,215 )
Accumulated deficit     (168,262 )         (179,175 )
Accumulated other comprehensive income     760           4,285  
Total stockholders' equity (deficit)     150,781           (37,251 )
Total liabilities and stockholders' equity (deficit)   $ 425,140         $ 135,471  
             
                 
RETROPHIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

June 30, 2015

(in thousands)
                 
    Three months ended June 30,   Six months ended June 30,
    2015   2014   2015   2014
    (unaudited)   (restated)   (unaudited)   (restated)
                 
Net product sales   $ 24,068     $ 5,742     $ 41,440     $ 5,770  
                 
Operating expenses:                
Cost of goods sold     637       35       912       36  
Research and development     10,563       13,310       20,910       20,253  
Selling, general and administrative     19,692       9,579       34,547       24,725  
Total operating expenses     30,892       22,924       56,369       45,014  
                 
OPERATING LOSS     (6,824 )     (17,182 )     (14,929 )     (39,244 )
                 
OTHER INCOME (EXPENSE):                
Litigation settlement gain     15,500       -       15,500       -  
Early prepayment penalty     (2,250 )     -       (2,250 )     -  
Other income (expense), net     402       370       229       375  
Interest income (expense), net     (2,922 )     (2,179 )     (6,720 )     (2,179 )
Finance expense     -       (4,708 )     (600 )     (4,708 )
Change in fair value of derivative instruments-loss     (29,418 )     32,979       (66,171 )     (20,635 )
Bargain purchase gain     -       -       49,063       -  
Total other income (expense), net     (18,688 )     26,462       (10,949 )     (27,147 )
                 
LOSS BEFORE INCOME TAXES     (25,512 )     9,280       (25,878 )     (66,391 )
                 
Income tax benefit (provision)     (15 )     2,525       40,006       2,460  
                 
NET INCOME (LOSS)   $ (25,527 )   $ 11,805     $ 14,128     $ (63,931 )
                 
PER SHARE DATA:                
Net income (loss) per common share, basic   $ (0.73 )   $ 0.46     $ 0.45     $ (2.61 )
Net income (loss) per common share, diluted   $ (0.73 )   $ (0.77 )   $ 0.44     $ (2.61 )
Weighted average common shares outstanding, basic     34,957,134       25,635,277       31,079,053       24,491,477  
Weighted average common shares outstanding, diluted     34,957,134       27,326,442       34,825,722       24,491,477  
                 
Comprehensive Income (Loss):                
Net income (loss)   $ (25,527 )   $ 11,805     $ 14,128     $ (63,931 )
Unrealized gain (loss)     (30 )     (103 )     (7 )     519  
Foreign currency translation     (298 )     -       (3,519 )     -  
Comprehensive Income (loss)   $ (25,855 )   $ 11,702     $ 10,602     $ (63,412 )
                                 
                 
RETROPHIN, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
June 30, 2015
(unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2015   2014   2015   2014
                 
GAAP OPERATING LOSS   $ (6,824 )   $ (17,182 )   $ (14,929 )   $ (39,244 )
                 
R&D Operating Expense     (10,563 )     (13,310 )     (20,910 )     (20,253 )
Stock Compensation     1,748       410       3,968       958  
Transaction & license fees     -       696       150       1,565  
Amortization & Depreciation     193       63       414       305  
Subtotal non-GAAP items     1,941       1,169       4,532       2,828  
NON-GAAP R&D EXPENSE     (8,622 )     (12,141 )     (16,378 )     (17,425 )
                 
SG&A Operating Expense     (19,692 )     (9,579 )     (34,547 )     (24,725 )
Legal Expense (A)     1,388       2,095       3,351       2,095  
Stock Compensation     3,244       2,218       6,598       5,075  
Amortization & Depreciation     3,463       166       5,021       179  
Subtotal non-GAAP items     8,095       4,479       14,970       7,349  
NON-GAAP SG&A EXPENSE     (11,597 )     (5,100 )     (19,577 )     (17,376 )
                 
Subtotal non-GAAP items     10,037       5,648       19,502       10,177  
NON-GAAP OPERATING INCOME (LOSS)     3,213       (11,534 )     4,573       (29,067 )
                 
                 
GAAP NET INCOME /(LOSS)     (25,527 )     11,805       14,128       (63,931 )
                 
Non-GAAP Operating Loss Adjustments     10,037       5,648       19,502       10,177  
Finance Expense     -       4,708       1,650       4,708  
Change in fair value of derivative instruments-loss     29,418       (32,979 )     66,171       20,635  
Bargain purchase (gain), net (A)     -       -       (49,063 )     -  
Income Tax (benefit)/provision (A)     15       (2,525 )     (40,006 )     (2,460 )
NON-GAAP NET INCOME (LOSS)   $ 13,943     $ (13,343 )   $ 12,382     $ (30,871 )
                 
                 
PER SHARE DATA:                
Net gain (loss) per common share, basic   $ 0.40     $ (0.52 )   $ 0.40     $ (1.26 )
Weighted average common shares outstanding, basic     34,957,134       25,635,277       31,079,053       24,491,477  
                 
(A) Non-recurring items                
                 

 

Retrophin, Inc.
Chris Cline, CFA
Director, Investor Relations
646-564-3680
IR@retrophin.com

Source: Retrophin, Inc.

 

 

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