Travere Therapeutics Inc (TVTX) 2016 Q4 法說會逐字稿

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  • Operator

  • Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Retrophin Incorporated fourth-quarter and full-year 2016 financial results and corporate update.

  • (Operator Instructions).

  • As a reminder this conference is being recorded. Now I would like to welcome and turn the call to Senior Director, Investor Relations, Mr. Chris Cline.

  • Chris Cline - Senior Director of IR

  • Thank you, Carmen. Good afternoon, everyone, and thank you for joining Retrophin's corporate update and fourth-quarter and full-year 2016 financial results call. Joining me on the call today are Steve Aselage, Chief Executive Officer; Neil McFarlane, Chief Operating Officer; and Laura Clague, Chief Financial Officer.

  • Also in the room with us is our newly appointed Head of Research and Development, Dr. Bill Rote. Before we begin, I'll provide a brief outline of how we will move throughout the call today. Steve will open the discussion by walking through our Sparsentan update and highlights from our other programs. Neil will then give an overview of our operational performance, followed by an update on the financials from Laura. We'll then pass the call back to Steve for his closing remarks before moving to Q&A.

  • Prior to starting, I'd like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance, they involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance, or achievements to differ materially from those expressed or implied by the statement.

  • Please see the forward-looking statements disclaimer statement on the Company's press release issued today, as well as the risk factors section in our form 10-K filed with the SEC. In addition any forward-looking statements represent our views only as of this date such statements are made, March 1, 2017 and Retrophin specifically disclaims any obligation to update such statements to reflect future information, events, or circumstances. With that, I'll now turn the call over to Steve. Steve?

  • Steve Aselage - CEO

  • Thanks, Chris. Good afternoon, everyone, and thank you for joining us. We made substantial progress on both the development and commercial fronts in 2016. I'm very proud of our many accomplishments during the year.

  • Most recently in the fourth quarter we presented additional positive data from the Phase 2 duet study of sparsentan. We reached agreement under a special protocol assessment on a Phase 3 trial for RE-024, and we grew revenues by more than 20% over the same period last year.

  • Importantly, all of our progress in the fourth quarter and throughout the balance of 2016, puts us in great position to deliver significant sustainable value in 2017 and the years ahead. A meaningful component of that future value is tied to sparsentan, and I know much of the focus recently has been on its regulatory pathway, so I'll walk through our update from earlier today. To do that, let me first take a step back and set the stage for our interaction with the Food and Drug Administration.

  • As most of you know, in September we announced positive top line results from our Phase 2 DUET study of sparsentan and focal segmental glomerulosclerosis or FSGS. Those results showed that the overall sparsentan treatment group achieved statistical significance in the primary efficacy endpoint, demonstrating a greater than twofold reduction of proteinuria compared to irbesartan after the 8-week double-blind treatment period.

  • In November we followed up with additional positive data from the DUET trial which was presented in the late breaking oral session at the American Society of Nephrology, Kidney Week. Those results included an analysis of the trial's secondary endpoint to modify partial remission of proteinuria. This end point is defined as proteinuria levels of less than or equal to 1.5 g/g urinary protein and a greater than 40% reduction of proteinuria from baseline.

  • Importantly, modified partial remission has been associated with long-term preservation of renal function in FSGS. Our data showed that after an eight week period, double-blind treatment period, 28.1% of patients receiving sparsentan achieve modified partial remission of proteinuria, compared to 9.4% of irbesartan-treated patients. Also notable was the change in the proportion of patients achieving modified partial remission during the open label period of the study.

  • After 48 weeks of treatment with sparsentan, 57.7% of patients achieve modified partial remission. In addition for the group transferring from irbesartan to sparsentan at the beginning of the open label period, the proportion of patients achieving modified partial remission increased from 9.4% to 50% after receiving sparsentan for 40 weeks.

  • Further analysis of the safety database from the initial eight-week double-blind treatment period presented at the conference showed that sparsentan was generally safe and well tolerated. So heading into our end of Phase 2 meeting with the agency in late January, we built a strong body of evidence supporting the potential benefits of sparsentan.

  • I'm pleased to share that we had a very constructive and insightful interaction with the agency. We came away from the meeting with the much-needed clarity on how to move sparsentan forward as expeditiously as possible.

  • Specifically we're pleased to have alignment on an outline of a pivotal Phase 3 trial design that the FDA agrees may demonstrate sparsentan's benefit for patients with FSGS and enable an NDA filing. Perhaps most importantly, our path to potential filing will encompass a single trial with pre-and post marketing elements.

  • The pre-marketing portion of the trial will focus on an interim analysis of proteinuria, which shows substantial treatment effect which would in turn enable an NDA filing for accelerated approval under Subpart H. A key part of our dialog with the agency was around the ability to show a treatment effect on proteinuria in the interim analysis, to provide confidence that the post marketing element of the trial would be able to verify the anticipated benefit.

  • They provided valuable feedback on an approach to determine this threshold and in fact, provided the statistical guidance along with the minutes we just received. We believe our definition of modified partial remission of proteinuria will be the right bar to set for the interim analysis.

  • As many of you know, this definition was derived in conjunction with the Neptune Consortium and based on statistical analysis of more than 200 FSGS patients in multiple databases. This work showed that better long-term outcomes were associated with FSGS patients who reach a modified partial remission of proteinuria. Given the strong data related to this threshold from our Phase 2 DUET trial, we believe it gives us a great potential to expedite sparsentan's path to approval.

  • As I mentioned, we are recently in receipt of the minutes and modeling guidance, so we need to spend some additional time with our statistical team to complete the analysis and gain agreement with FDA on this particular piece. We're confident we will get there in the very near future. The post marketing portion of the trial will subsequently monitor changes in an estimated glomerular filtration rate or EFGR over a longer period of time.

  • EGFR is widely regarded as the best overall measure of kidney function. So we are pleased to have this clarity on the outline of the trial as we make further progress on the statistical plans we will be in a position to give more detail on the specific trial design elements including patient numbers and observation periods. We look forward to continue our discussion with the agency to finalize a protocol and initiating the trial later this year.

  • It is worth noting that since the DUET results were originally announced and presented last fall, external awareness and excitement around the sparsentan program has grown significantly in the investigator, patient, and advocacy communities. Channeling this excitement will be a great asset for us as we look to begin enrollment of this pivotal trial.

  • Will also utilize our experience with the DUET study and leverage our strong and growing network of FSGS stakeholders to efficiently enroll this trial far more quickly. We [applied] more than 100 sites globally with interest in participating in the trial. We estimate these sites represent more than 1,600 patients who would be potentially eligible for entry into the trial.

  • Beyond that, we will continue to work closely with the Neptune Consortium and Nefzger International organizations to ensure we fully involve and leverage the resources of the broader nephrology community. Before moving on to other product updates, I want to briefly highlight that this path forward gives us a great opportunity to finalize our evaluation of additional indications for sparsentan. This could significantly increase its overall value proposition. We will have more on that later this year as we move towards key decision points.

  • Moving on to our other late stage program, RE-024 for PKAN, the strategy we made in 2016 with this program were instrumental in building excitement for the program and advancing RE-024 closer to patients.

  • In March, ACMG was a milestone for us as we shared RE-024 data for the first time at a medical congress. We followed that up with further case reports and presentations at the NDS meeting in June.

  • This helped create a new level of excitement amongst investigators and the PKAN community as a whole. More recently in the fourth quarter we were very gratified to reach an agreement under the spot process with FDA on a Phase 3 trial to support an NDA filing for RE-024. To date, we have gained central IRB approval for this trial and have further site preparation underway.

  • As you know, our CMO had an unforeseen manufacturing delay, which resulted in us having to move first patient dosed in the trial. We believe we have resolved the issue and now have multiple processes running in parallel that give us increasing confidence will be in a position to dose the first patient around midyear.

  • Finally, I'm pleased to report that all four patients receiving RE-024 treatment as part of physician initiated protocols outside the US remain stable on therapy today. Regarding liquid ursodeoxycholic acid, we have a bit more formulation work to go and are more than likely looking at a filing in 2018.

  • To round out the development discussion, I want to highlight the most recent addition to our leadership team, Dr. Bill Rote, who's here in the room with us today. Bill brings a well-proven ability to lead successful research and development organizations and the scientific expertise that aligns directly with our mission of delivering life-changing therapies to people living with rare diseases.

  • He joins us at an exciting time and we look forward to his leadership in our efforts to advance our therapies for patients. Lastly, I want to note that we've made consistent progress with growing all of our commercial products, closing the year with great momentum in this regard which will help carry us into further growth in 2017. Let me now turn the call over to Neil to walk through our performance update. Neil?

  • Neil McFarlane - COO

  • Thanks, Steve. From an operational perspective, I'm pleased with the value we continue to create for people living with rare diseases. And of the progress we're making to support our development efforts which will help shape the future of our organization.

  • Starting with our commercial performance, we closed the year with a strong fourth quarter. We grew revenues by 23% year over year and met our top line guidance by reaching $134 million for the full-year 2016. Our success in 2016 and continued organic growth is a testament to the value our products provide to patients and the consistent focus of our commercial organization.

  • Regarding Thiola, demand remained consistent during the quarter. Our total care hub continues to offer excellent patient support and as a result of this dedicated service, compliance has remained steady. Our bile acid therapies, Cholbam and Chenodal, also had meaningful growth year over year and saw their respective patient bases expand during the quarter. For Cholbam we continue to be excited about the potential impact of the Retrophin sponsored neonatal and adult cholestasis sequencing panel.

  • During the quarter we saw consistent uptick of this important diagnostic tool amongst physicians, and it continues to evolve as a vital piece of the diagnostic paradigm for patients with bile acid synthesis disorders. Regarding Chenodal, the CTX problem study continues to enroll subjects and be a valued approach to better understand the population and help raise awareness for the disorder.

  • We have gleaned meaningful information from the enrolled population in the study and in 2016 it showed that patients can be identified as a result of these efforts. Looking ahead to 2017, we have a number of exciting initiatives that we expect to further our topline growth over 2016. Most notably we're implementing a small expansion of our sales force which will allow us to have two dedicated teams, one for Thiola and one for Cholbam.

  • Moving forward this will enable us to efficiently maximize the value and growth potential of both products in 2017 and beyond. In 2017, the Thiola team will be looking to leverage our experience with ICD 10 code data and identify more physicians that have diagnosed patients in their practice.

  • One thing we've learned of the past year is that there are still a significant number of patients diagnosed with cystinuria susceptible to stone formation, and we want to ensure we do our part to educate the treating physicians. For Cholbam, the focus for bile acid synthesis disorders will be on supporting the evolving change in the diagnostic paradigm. The team will do this by raising more awareness of our genetic cholestasis panel and increasing its use.

  • Based on our planned efforts we expect the use of the panel to double in 2017. For Zellweger's spectrum disorders we will be pushing forward our patient identification efforts and embarking on further education about treating liver dysfunction in this fragile population. Specifically, we want to ensure physicians and caregivers alike understand the importance of monitoring the impact of liver function over time and the potential for Cholbam to positively impact ZSD patients.

  • In terms of development support we are increasingly excited about the added potential to create long-term value with sparsentan. As Steve mentioned, work on assessing additional indications is ongoing we look forward to give more detail in the near future.

  • Finally, I'll touch on our business development efforts before turning it over to Laura to run through the financials. BD remains a key piece of our strategy and with further clarity on the sparsentan pathway, we are prioritizing potential transactions to build a sustainable portfolio to serve rare disease patients. I'll now turn the call over to Laura to give you the financial update. Laura?

  • Laura Clague - CFO

  • Thank you, Neil. Net product sales from our commercial portfolio were $37.3 million in the fourth quarter and $133.6 million for the full-year 2016. As Neil mentioned earlier, we had growth across all of our commercial products during the quarter which led to the 23% growth over the fourth quarter last year.

  • We reported a GAAP net loss of $8.6 million for the fourth quarter and a net loss of $47.9 million for the full-year 2016. Adjusting for extraordinary and one-time expenses resulted in a net income of $0.1 million for the quarter and a net income of $4.4 million for the full year.

  • Significant non-cash adjustments for the quarter included $18.9 million of non-GAAP operating loss adjustments, $6.5 million related to the Company's derivative liability resulting from share price fluctuation and income tax benefit of $3.7 million. R&D expenses on a GAAP basis were $20.1 million for the fourth quarter and $70.9 million for the full-year 2016.

  • The increase over the fourth quarter last year is due to higher clinical expense related to sparsentan and RE-024. On an adjusted basis R&D expense for the fourth quarter was $17.6 million and $60 million for the full-year 2016. Relevant non-cash expenses for the fourth quarter included $2.5 million of stock-based compensation and amortization.

  • Selling, general, and administrative expenses were $26.6 million on a GAAP basis in the fourth quarter and $92.8 million for the full-year 2016. The increase over the fourth quarter of 2015 is largely attributable to further investment in sales and marketing programs in support of our commercial products. On an adjusted basis, SG&A expense for the fourth quarter was $17.9 million and $58.4 million for the full-year 2016.

  • Significant one time and non-cash adjustments for the quarter consisted of $8.7 million related to stock-based compensation and depreciation and amortization. As of December 31, 2016, we had approximately $302.7 million in cash and cash equivalents, marketable securities and a note receivable from the sale of our PRE. This value includes the present value of the $147.5 million payment remaining from Sanofi.

  • Notably in the fourth quarter we had nonrecurring uses of cash totaling $19.4 million. Of this $19.4 million, $9.2 million was primarily related to income tax payments as a result of the receipt of the second installment of our PRB payments, $8 million related to a Cholbam net sales milestone, and $2.2 million related to our previously disclosed advancements of legal fees.

  • In 2017, we will continue to devote the necessary resources to advance our pipeline, notably two Phase 3 programs that we expect to deliver significant future value. As such we do expect operating expenses primarily in R&D will increase over the levels reported for 2016. I will now turn the call back over to Steve for his closing remarks. Steve?

  • Steve Aselage - CEO

  • Thanks, Laura. In 2016 we made progress by creating value for our stakeholders in many ways. We generated value by reaching key milestones that demonstrated sparsentan could represent a significant advancement in the treatment of FSGS and clarified the regulatory path to potential approval of PKAN and RE-024.

  • We also created value by delivering our commercial therapies to more patients than ever before. Through focus in execution, and now further clarity on the regulatory path for sparsentan, we will build on those achievements in 2017. We're in the incredibly strong position of advancing two first in class, Phase 3 clinical programs supported by a commercial portfolio with double-digit year-over-year growth expectations.

  • Combining that with the ability to leverage our strong financial position to allocate our capital appropriately, both internally and externally, will allow us to build sustainable, long-term value that will help shape the promising future of our Organization. Let me now turn the call back over to Chris for questions. Chris?

  • Chris Cline - Senior Director of IR

  • Thanks, Steve. Carmen, can we go ahead and open up the lines for Q&A please?

  • Operator

  • (Operator Instructions)

  • Joseph Schwartz, Leerink Partners.

  • Joseph Schwartz - Analyst

  • Great, thanks very much, and congrats on all the progress and the clarity from the FDA. I was wondering if the agency explained why you couldn't file on the existing data and how you think the next study is likely to compare to DUET in terms of size and duration of the study, as well as the doses that you're thinking of studying?

  • Steve Aselage - CEO

  • Hey, Joe. How are you doing? Good to here from you. Couple of questions in there. Let me start out with probably the easiest ones. We got a couple of takeaways from the agency and their feedback. I think they appreciated the impact that Sparsentan had for patients in the DUET study, but they also felt that they would like to see a longer observation period than the eight weeks, which was the controlled observation period in DUET, that was clear.

  • One of the things we are working with them on right now is what is the exact observation period that we want to put into the confirmatory trial? We know it will be longer than eight weeks but that exact time frame has not been set yet, we're working on details for that.

  • The other thing they have asked us to do, and which DUET did not do for us, was tie the reduction in proteinuria for the achievement of modified partial response to long-term changes in eGFR. We're working through databases that we have access to now to be able to make that connection.

  • That connection is going to give us we believe the insight to be able to know how many patients (inaudible -- technical difficulties) and then how long before the EGF observation. I think I covered all your questions there, but come back at me if I missed anything.

  • Joseph Schwartz - Analyst

  • Yes, thank you. I just was also wondering if there was any discussion or you would have clarity. Can you hear me? Hello?

  • Chris Cline - Senior Director of IR

  • Carmen, can we move to the next question?

  • Operator

  • Liisa Bayko, JMP Securities.

  • Liisa Bayko - Analyst

  • Hi, thanks for taking the question and congratulations on all the progress as well. In terms of the relationship with proteinuria and eGFR, is proteinuria thought to be a leading indicator, or how can we better distill that connection?

  • Steve Aselage - CEO

  • Yes, I think the -- certainly the NEPTUNE data that was presented at ASN really clearly showed that if you could achieve a complete or a modified partial response as defined by the 40% reduction in proteinuria and getting urinary protein down to 1.5 grams per day or lower, that you had improved kidney survival.

  • eGFR, we believe is a little bit quicker way to show the benefit that if you carried a study out long enough, would result in seeing a difference in kidney survival. So FDA has previously stated that eGFR is an acceptable endpoint for an approval. We can get there faster than time to dialysis or end-stage renal disease.

  • What we do need to do for them is go through the databases though and link up the modified partial remissions to patient's change in eGFR slope and then the time frames. And that is what we're going to be work -- that is what we're already working on right now, and we hope to be able to do that relatively quickly and then have a final protocol back to the agency in the very near-term.

  • Liisa Bayko - Analyst

  • I was looking at your DUET study results and there was no change in eGFR, but from what I understand it would take significantly longer than the time frame of your study to see a change. Is that something you will be looking at in your open-label extension? And then also I noticed the patients in your study were within the normal range. Maybe as you think about going forward might you enroll sicker population to see a better change on eGFR, or what is the right way to think about that?

  • Steve Aselage - CEO

  • Yes, with regard to the eGFR results in DUET, the observation period was only eight weeks, and you would not expect to see any change in that short a time period. We will definitely take a look at changes in eGFR in the extension, although it sometimes -- we believe will probably be closer to two years to see the type of change in slope of eGFR that we would be comfortable with including into a protocol.

  • We aren't going to have enough patients at a two year mark in the open label to be able to pull as much out of our own database, as we will be able to pull out of the FSGS CT database and the NEPTUNE database. So we'll get what we can from DUET, but we need other databases and fortunately have access to those databases.

  • Liisa Bayko - Analyst

  • And just looking at the patient population in DUET, it looked like as I mentioned they were kind of, I think it was about 73 on average filtration rate at baseline, and then it -- that seems to be within the normal range more or less. Are you thinking about -- do you think you would see a change with a level like that, or do you think you might have to be looking at a different, a slightly maybe more severe patient population in Phase 3 to see a change on that metric?

  • Steve Aselage - CEO

  • Well, generally patients with a urinary protein up around 3 are considered nephrotic, and our median patient in DUET was around that nephrotic range, so it was a relatively sick population. There was a distribution, obviously. But I don't think we need to go to a sicker population to be able to see a meaningful difference in eGFR.

  • Liisa Bayko - Analyst

  • Okay. And then, just one last question, if I may. So is the way you're thinking about Phase 3, I mean, you did see a change in proteinuria in a relatively short period of time that would be -- so you maybe wouldn't need to study that for such a long period of time, you could file on that, and then look for more, like at least 24 months or longer to see if the eGFR change is confirmatory?

  • Steve Aselage - CEO

  • Exactly. I mean, that is the great news we walked away from the meeting with. I realize that everybody, well, maybe not everybody, but most people were hoping that we would get an immediate accelerated approval. But we came out of that meeting with an agreement from FDA, that proteinuria could be used as an appropriate endpoint for an accelerated approval.

  • We came out of the meeting with the agency supportive of helping us put together a protocol that they would find acceptable, and we believe we have a path forward that gives us clarity on time, on costs, and a clear opportunity to get to product, through the clinical process and registration process in a reasonable period of time.

  • Operator

  • Do Kim, BMO Capital Markets.

  • Alex Arfaei - Analyst

  • Hi, this is Alex on for Do. Thanks for taking my questions. Congrats on the progress. We wanted to know, did the FDA make any comments with regards to safety? And in the Phase 3, did they say that they wanted to more safety data with specific reference to hypertension or edema focus?

  • Steve Aselage - CEO

  • There were no issues related to safety that came up in the meeting.

  • Alex Arfaei - Analyst

  • Okay, and with the interim analysis for proteinuria, what will trigger the interim analysis exactly?

  • Steve Aselage - CEO

  • Well, we will -- we're doing some statistical modeling right now. What we want to do is make sure that we have a long enough observation period that the agency is going to be comfortable, that the number of patients represented patients reaching a remission [module] are complete, is sufficient to give them comfort that it is predictive of the type of eGFR changes that we want to see.

  • And then we're obviously the second part of that is statistical modeling to see how many patients we need to have reached that time point, in order to have the study power to be comfortable that we will have statistical significance when we take a look. Those numbers, it is not going to take us long to be able to pull that together and to be able to give you details.

  • I can't do that today though, as we just very recently got the minutes, and need a little bit of time to work through some of the statistical issues.

  • Alex Arfaei - Analyst

  • Okay. And then, maybe one more question, I know that some of the details are being hammered out, but what doses will be evaluated, what do you think will be evaluated in the trial?

  • Steve Aselage - CEO

  • Yes, that is a really good question, and our plan is to start patients at 400 milligram, all patients start at 400 milligrams in the Sparsentan arm, and then the physician can titrate up to 800 milligrams. So 400 starting dose, up to 800.

  • Operator

  • Joseph Schwartz, Leerink Partners.

  • Joseph Schwartz - Analyst

  • Hi, thanks for getting me back on. Actually my follow-up, was on the doses, which you just answered, but while I've got you, how about the DUET study and when are we likely to get another update on the patients then? And at what point would GFR data be reported out of DUET? Thanks.

  • Steve Aselage - CEO

  • Yes, I mean, it's, I can't give you a firm answer on that. We have a publication planned which will go into more detail than we were able to present in the relatively short oral session at ASN. I believe that has been submitted, but not accepted yet, so I can't give you a firm date on that. As soon as we've got a firm date of publication, we will get that to you though.

  • Joseph Schwartz - Analyst

  • Okay. And then do you anticipate using the same active comparator in the Phase 3 study?

  • Steve Aselage - CEO

  • We do, yes. Good question again. Irbesartan is what we anticipate being the active comparator.

  • Operator

  • (Operator Instructions).

  • I'm not showing any further questions. I would like to turn the call back to management for final remarks.

  • Chris Cline - Senior Director of IR

  • Thanks, Carmen, and thank you everybody for joining us today. We look forward to updating you on our progress in the coming months.

  • Operator

  • Ladies and gentlemen, thank you for participating in today's conference. This concludes the program, and you may all disconnect. Have a wonderful day.