Travere Therapeutics Inc (TVTX) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Retrophin, Inc.

Second Quarter 2018 Financial Results and Corporate Update.

(Operator Instructions)

As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Chris Cline, Vice President Investor Relations.

You may begin.

Great.

Thank you, Nicole.

Good afternoon, everyone, and welcome to Retrophin Second Quarter Financial Results and Corporate Update Call.

Joining me on the call today are Steve Aselage, Chief Executive Officer; Neil McFarlane, Chief Operating Officer; Laura Clague, Chief Financial Officer; and Dr. Bill Rote, Senior Vice President and Head of Research and Development.

Before we begin, 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 and achievements to differ materially from those expressed or implied by the statement.

Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our forms 10-Q and 10-K filed with the SEC.

In addition, any forward-looking statements represent our views only as of the date such statements are made, July 26, 2018, 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?

Thanks, Chris.

Good afternoon, everyone, and thank you for joining us on today's call.

Our team had another solid quarter of execution on our strategies to advance our pipeline and grow the base business.

Most notably, execution on our clinical programs during the quarter keeps us on track to achieve 3 pivotal trials enrolling by the end of 2018 and potentially a fourth in 2019.

We reached significant milestones with all of our product candidates.

Specifically, we opened pediatric enrollment in the pivotal FORT Study with fosmetpantotenate in PKAN.

This was an important event that was enabled by successful evaluation of safety from the independent Data Monitoring Committee for the study.

As expected, we saw a meaningful inflection in enrollment during the quarter, and we remain on track to have that available in the second half of 2019.

We also made landmark progress with sparsentan in both FSGS and IgAN nephropathy during the quarter.

The initiation of the DUPLEX Study of sparsentan in April kicked off efforts to enroll 190 patients to enable the interim proteinuria assessment, that we expect will serve as the basis for a Subpart H submission.

FSGS patients are in desperate need of a better treatment option.

I am pleased that we are on the path to potentially providing that.

We also made significant progress with sparsentan in IgA nephropathy, and we continue to be optimistic in the opportunity to improve the standard of care for these patients.

We're very pleased to have received regulatory guidance during the quarter that enables us to move directly into a single, pivotal trial for IgA nephropathy.

Protocol finalization and study activation efforts are underway, and we're moving quickly to enable the initiation of that study in the fourth quarter of this year.

Lastly, regarding sparsentan, we had a new patent granted during the quarter covering the use of sparsentan and IgA nephropathy and expanding the dosing coverage in FSGS.

The broadening of our intellectual property as a result of this newly issued patent will help us position sparsentan, if approved, as a first-in-class therapy for both FSGS and IgA nephropathy for many years to come.

We're also gaining further optimism for the research collaborations surrounding CNSA-001.

During the second quarter both the single and multiple ascending dose portions of the Phase I study of CNSA-001 were completed and showed encouraging preliminary results.

These results gave us and our partners at Censa the confidence to move ahead with the Phase II proof-of-concept study as planned.

We expect a proof-of-concept study to start in the next few weeks, which keeps us on track to see top line data in early 2019.

That readout will inform our decision to exercise our option to acquire Censa.

Neil and his team also turned in another quarter of growth from the base business, and I'm pleased that we continue to positively impact more patients' lives with our approved products.

We expect our commercial initiatives to gain further traction through the balance of 2018 and to reach our guided range of $170 million to $180 million in net product sales for the year.

Before I turn the call over to Bill to walk through the pipeline update, I would like to take a brief moment to touch on the announcement of my upcoming retirement that was included in our press release a short while ago.

It has truly been an honor to lead Retrophin through a remarkable transition.

And as you can clearly tell from my earlier comments, the fundamentals of the business have never been stronger.

Given the collective progress our organization has made over the past several years, I'm confident that now is the appropriate time to begin transitioning the company to a new leader that can build upon our success and guide Retrophin for the years ahead.

The board has initiated a search for my successor that will include both internal and external candidates, and I will continue to lead our great team members until that person is identified and we ensure a smooth transition.

Until that time, it is business as usual at Retrophin, and we will continue to move the company forward.

Let me now turn the call over to Bill for his research and development update.

Bill?

Thanks, Steve.

From a research and development perspective, we continue to be focused on execution in the clinic, and I'm proud of the progress we've made during the quarter.

I'll start with our lead program, fosmetpantotenate, which is currently enrolling the pivotal Phase III FORT Study for pantothenate kinase-associated neurodegeneration, or PKAN.

During the second quarter, we reached a key milestone for the study after the independent Data Monitoring Committee completed its scheduled clinical safety review required to open enrollment for pediatric patients.

After reviewing the available safety and tolerability data of adult patients in this study in May, the DMC recommended that the pivotal trial continue as planned and supported opening of enrollment of pediatric patients aged 6 to 17.

The DMC's review of the available safety and tolerability data and corresponding support to continue as planned is encouraging for the profile of fosmetpantotenate and strengthens our optimism that the FORT Study will ultimately enable us to deliver the first approved treatment for PKAN.

With pediatric patients now enrolling in this study, the continued great work of our clinical and medical teams are doing with the sites, we're seeing a steady pace of enrollment.

Notably, we expect to complete enrollment in the study around year-end or early 2019 and have a top line readout in the second half of 2019.

We also continue to make great strides with sparsentan, which is our product candidate with first-in-class potential for both focal segmental glomerulosclerosis, or FSGS, and IgA nephropathy.

At the beginning of the second quarter, we initiated the Phase III DUPLEX Study of sparsentan in FSGS.

This is our pivotal study that builds upon the successful Phase II DUET Study to support registration in both the U.S. and Europe.

Since the study started a few months ago, we've been working through additional site initiation and activation activities, and I'm pleased with the progress made thus far.

Our clinical team's focus will remain on enabling sites to reach the initial enrollment target of approximately 190 patients with FSGS to evaluate the interim efficacy endpoint, modified partial remission of proteinuria after 36 weeks of observation.

We expect that successful achievement of this proteinuria endpoint in the interim analysis of DUPLEX will serve as the basis for Subpart H accelerated approval of sparsentan in the United States and conditional marketing authorization consideration in Europe.

Importantly, the program remains on track for top line readout of this endpoint in the second half of 2020.

We also made progress in the efforts to initiate our pivotal trial in IgA nephropathy.

At the end of April, we received regulatory feedback that confirmed our approach of running a single Phase III trial to support registration in the U.S. and in Europe.

Since then, we've been working to finalize our protocol to align with the regulatory feedback received and, in parallel, begin site initiation activities.

Alongside our CRO, our clinical teams are making great progress in setting us up for a strong study start, and we remain on track to initiate the trial in the fourth quarter of this year.

As we've stated previously, we envision the trial to be similar in many respects to our ongoing DUPLEX study in FSGS.

Specifically, we expect an interim analysis based on proteinuria that will support our submission for conditional approval in the U.S. and Europe.

As we stated in our last update, we anticipate giving the full details of the study and time lines for data closer to study initiation.

With these 2 pivotal trials running by the end of the year, we will have positioned sparsentan, if successful, in the clinic and subsequently approved to ultimately become a first-in-class treatment option for both FSGS and IgA nephropathy.

Lastly, I'll provide an update on our collaboration for the development of CNSA-001 for phenylketonuria, or PKU.

In the second quarter, the program completed its Phase I dosing study.

And a review of the preliminary data has shown predictable PK in normal volunteers and confirms our hypothesis that the bioavailability of CNSA-001 in humans is consistent with the data observed in preclinical studies.

Next up for the program is the commencement of the Phase II proof-of-concept study.

Sites have already been initiated, and we anticipate our partner will be dosing the first patient in the coming weeks.

The proof-of-concept study will be a randomized, double crossover, open-label, active-controlled study of CNSA-001 in patients with PKU.

We will be looking at 2 doses of CNSA-001 versus the maximum recommended dose of the current standard of care with the expectation that CNSA-001 treatment will produce a clinically meaningful benefit over the current standard of care.

We remain optimistic and look forward to the top line readout of this study in early 2019.

Overall, we had a great quarter of execution, which has kept all of our programs on track and advancing towards key upcoming milestones.

Let me now turn the call over to Neil for the operational update.

Neil?

Thanks, Bill.

Our commercial team continued the trend of organic growth across our approved product portfolio, which resulted in $41.3 million in net product sales for the quarter.

Thiola continues to grow as expected, and we anticipate steady progress for the product throughout the balance of 2018.

Notably, our dedicated team's efforts to help physicians identify newly diagnosed and under-treated cystinuria patients remains effective in growing our business.

These initiatives combined with the continued advancement of the new formulation of Thiola gives us confidence in the brand and its growth.

I'm pleased to report that alongside with our partner, we remain on track for an NDA filing of the new, more patient-friendly formulation of Thiola in the second half of this year.

I'm also pleased to report that we made additional progress by filing a patent application covering the new formulation during the quarter.

We continue to believe the new formulation will give us a great opportunity to improve the patient experience with the product, and the patent will help improve the longevity of the brand, if granted.

Given the expected improvement in the patient experience, we believe there should be a seamless transition to the new product, and planning for a 2019 launch is already underway.

Our bile acid products also grew relative to the same period last year.

While the growth seen with this portion of the portfolio was uneven compared to previous quarters, we've experienced this previously and it's not uncommon in rare diseases with small patient populations.

We continue to expect growth will accelerate throughout the balance of 2018, as we saw last year.

Importantly, we continue to see new patients initiate both Cholbam and Chenodal therapies, and our -- and our initiatives to support Cholbam continue to gain traction.

We've seen increased interest from physicians in utilizing our trial program for the liver manifestation of the disease in patients with Zellweger Spectrum Disorders.

The trial program allows physicians to initiate Cholbam therapy for patients who've had a hepatic involvement and ZSD and evaluate the potential beneficial effects.

Combining this with our sponsored, symptom-based genetic screening panel and atypical bile acid testing programs, gives us confidence we will continue to grow Cholbam for the foreseeable future.

Overall, I'm pleased with the continued revenue growth we've had to start the year.

We expect our dedicated team's efforts for Thiola and Cholbam, and the initiatives they are driving will accelerate growth in the second half of 2018.

And as Steve mentioned earlier, we continue to expect we will reach our guided range of $170 million to $180 million for the full year.

I'll now turn the call over to Laura to walk through the financials.

Laura?

Thanks, Niel.

During the second quarter, net product sales from our commercial portfolio grew to $41.3 million.

We reported a GAAP net loss of $22.3 million for the second quarter of 2018.

After adjusting for non-GAAP expenses of $12.4 million, we reported a non-GAAP net loss of $9.9 million.

On a GAAP basis, R&D expenses were $34.5 million for the second quarter of 2018.

The increase over the same period in 2017 is largely due to higher expenses to support our pivotal fosmetpantotenate and sparsentan programs as well as development funding for CNSA-001.

On an adjusted basis, R&D expenses were $32.6 million for the second quarter.

Relevant noncash expenses for the second quarter included $1.9 million of stock-based compensation and amortization.

Selling, general and administrative expenses were $25.1 million in the second quarter of 2018.

The decrease compared to the same period last year is primarily due to lower legal fees.

On an adjusted basis, non-GAAP SG&A expenses were $16.9 million for the second quarter.

Significant noncash adjustments for the quarter consisted of $8.2 million related to stock-based compensation and depreciation and amortization.

As of June 30, 2018, we had $255.7 million in cash and cash equivalents and marketable securities.

Looking to the balance of 2018, we expect operating expenses and cash used to remain relatively steady compared to our second quarter level with the potential for some slight increases in R&D as we continue to advance our key programs in the clinic.

Let me now turn the call back over to Steve for his closing comments.

Steve?

Thanks, Laura.

As I mentioned earlier, the fundamentals of our company have never been stronger.

And due to the dedicated efforts of all of our employees, we've had tremendous success in building an organization that offers diverse opportunities for sustainable value creation.

In a remarkably short period of time, we've built a growing commercial business and advanced our pipeline to a position of 3 pivotal programs running by the end of 2018, all of which have the significant opportunity to offer first-in-class treatment for thousands of patients with rare diseases around the world.

We will remain focused on execution and reaching our next phase of growth.

This will be led by the upcoming key inflection points that will demonstrate the transformative value of our pipeline, and advance us towards our vision of becoming a preeminent member of the rare disease community.

Let me now turn the call back over to Chris for questions.

Thanks, Steve.

Nicole, can we go ahead and open up the line for Q&A, please?

(Operator Instructions) Our first question comes from the line of Guyn Kim of BMO Capital Markets.

First question on the CNSA-001.

Could you talk a little bit more about the safety findings of the Phase I study in healthy volunteers and how it compares to Kuvan?

This is Bill.

We've looked at the top line data, and we have -- we don't have a clinical study report.

My recollection was that both groups were pretty benign in the adverse event profile.

Nothing that stood out on -- in either agent.

Okay.

And for the Phase II, who will be running it?

Will it be you or Censa?

Censa runs that program.

They are responsible for the development.

Okay.

And for Thiola, could you remind us what the population size is?

And how far you've penetrated into that market?

And where the challenges are in getting the incremental patient?

This is Steve.

If I can go back to the Censa question, again, before Neil talks about Thiola.

We just want to mention that we have a joint steering committee with senior clinical people from both Retrophin and Censa.

And while Censa is running the study, it's been a very collaborative effort between the 2 companies to make sure that we're moving at a direction that everyone feels comfortable with.

It's been a -- really a great working relationship to date.

So didn't want to interrupt, but I thought that was worth mentioning.

I'm going to give it to Neil now to answer your question about the Thiola.

Guyn, so we, at this point, believe that there is approximately 5,000-plus patients with cystinuria out there.

And where we're today in terms of our penetration of the market, we feel that there's still a large portion of those patients that we'll be able to address with our new formulation of Thiola.

And Steve, congratulations on the retirement.

Well, thanks.

Our next question comes from the line of Joseph Schwartz of Leerink Partners.

This is Dae Gon dialing in for Joe.

So 3, specifically, from me.

First one on the PKAN program.

Bill, can you remind us what the enrollment breakdown is between the adult and pediatric in the estimated 82-patient FORT Study?

And broadly speaking, how has enrollment of pediatric patients been?

I know it's only been about a month or so, and you sounded pretty upbeat.

Just wanted to get some commentary on the enrollment progress there.

In terms of disease progression, is there a much in terms of difference in progression between the adult and the pediatric patients?

And then I've got a couple follow-up.

Sure thing.

Thanks, Dae Gon.

In the protocol -- the FORT Study protocol does not specify breakdown between adults and pediatrics.

It's silent on that division.

So right now, as you can imagine, we have, predominantly, adults because that's who we've been enrolling.

With the opening to pediatric patients, we've had good enthusiasm and beginning to enroll pediatric subjects in the study.

But as you stated, it's just been a month, and we're just getting started.

And some of it's -- a lot of it has been patients scheduling when they want to start and working it around school calendars and stuff like that.

From a -- your second question was around disease progression, and is there a difference between the adults and the kids?

And I think that there is too much heterogeneity in the way PKAN presents and progresses to really make a clear distinction on that.

I think that there is a great deal of difference between the rates of progression, patient to patient.

So I don't know that it's really known that there is a specific difference there.

I think it's really case by case.

Great and, I guess, while we're on the clinical program, moving on to DUPLEX, just wanted to see if you can comment on the number of trial sites open for DUPLEX.

And how much of an overlap is there between DUPLEX and DUET?

And, I guess, along those lines, how much an overlap do you anticipate once you begin your IgA nephropathy study?

Sure.

The -- we're not, at this point, giving specifics around site numbers or patient numbers, but certainly continuing to make progress and happy with the pace at which that's moving forward.

We have a significant number of sites in DUPLEX that were enrollers in DUET.

And it was very interesting as the investigator meeting to sit and talk with those folks, either the PIs or the study coordinators because they're the ones that are dealing with the patients that are in the open-label study.

We're very happy with the compound, and really it bolstered their enthusiasm for DUPLEX.

The -- I don't know the specific breakdown on what the overlap is between DUET and DUPLEX, but it's -- we had pretty significant rollover of sites that were in one and went into the other.

The last part, I think, was the -- how does that impact with the IgA nephropathy study?

We do anticipate a significant number of sites that are in both.

It's a competitive world out there for trial sites.

And a lot of times, it comes down to the capacity at the individual sites as much as it does for their enthusiasm for trials.

If they got the ability to do 1 or 2 studies, once they reach that limit, no matter how much they like the next one, they can't sign up for that.

So I hope I've answered your question.

Yes, absolutely.

And my last question is for Neil on the commercial side.

So, I guess, in terms of Thiola 2.0, if I can call it that, what steps are remaining for the second half of '18 NDA filing?

And, I guess, looking forward, just wanted to get your take on who exactly would be deemed a low-hanging fruit?

I guess, if we go back to your Thiola commercial experience so far, can you comment on the general continuation rates amongst commercial patients?

And how much of them do you expect to recapture with the launch of 2.0?

Yes.

Thanks for the question.

So the first part of the question is that what was remaining to be able to file.

We're working with our partner right now and finalizing the relevant literature and cleaning up the parts of the file that need to be done to be able to pull the trigger, so -- but that's all that's waiting for in that regard.

And in regards to the new formulation and the patients that are out there, you pointed out correctly that there are a number of patients as -- whether it be through pill burden, whether it be through having to take the products on an empty stomach and other areas that will discontinue product.

We're hopeful that with that and other areas that we've been working on in our new patient-friendly formulation, that we'll be able to go back out to those patients who could still benefit from therapy and then allow them to have exposure to a new patient-friendly formulation.

It would be a premature for me to tell you what those patients -- what those numbers look like and what we may readdress in those patients, but we clearly feel that bringing a better experience for patients will allow us to be able to keep the patients that we have on therapy today on therapy longer and readdress those patients who came off for one reason or another.

Great.

And lastly, Steve, thanks for all your commitment and dedication to the company.

I look forward to keeping in touch and wherever Retrophin goes from here.

Thank you.

Our next question comes from the line of Liisa Bayko with JMP Securities.

I also want to reiterate my congratulations on your retirement.

We'll certainly miss you.

Thank you.

Just a follow-up on the PKU.

Can you just talk a little bit more about what your objective in the study?

What we should be thinking about to say, "Aha, this is really a drug?" And what would, kind of, cause you to cement a deal?

Certainly, the reason to believe really on CNSA-001 is around bioavailability of sepiapterin as opposed to BH4.

The bioavailability -- frank bioavailability is much higher with CNSA-001, but in addition to that, you have a much higher tissue availability, which is relevant for PKU.

There's also about 45-fold greater ability to cross the blood-brain barrier.

That compound relative to BH4.

So that's -- that really forms the basis of the hypothesis that the standard of care means a lot of efficacy on the table with its current dosing paradigm and bioavailability.

And if we can extend the amount of BH4, ultimately, that's in tissue, we should -- that should translate to a much more robust clinical effect.

So the percentage of people that are actually fully improved or full responders with PKU should be a much larger number.

And those that are in the partial-responder category, which is the vast majority of patients that are currently treated that, that pool -- those patients should have a more robust response.

Now to the heart of your question: What are we looking for?

We should see a very significant improvement in Phe reduction with the sensor compound over the standard of care.

We're not looking for an incremental increase, looking for a very significant, easily observed and quantified improvement in Phe reduction in those patients with PKU.

Okay, great.

That's helpful.

And then to your commercial portfolio, can you maybe talk about any trends you're seeing there for some of these compounds?

And I know there has been some discussion amongst FDA about trying to look for opportunities for generics and loosening those restrictions, et cetera.

Can you maybe talk about any impact of that on your business, if anything?

Yes, we haven't seen anything that directly impacts our business.

There is, obviously, a great deal of discussion about particular options or opportunities to lower drug costs.

I think it's worth mentioning that we have not taken a price increase on any of our products in over 3 years.

We can't guess what the government might be looking at, either currently or historically.

But what we can say is that we feel our products are priced appropriately for the sized populations they treat and for the degree of benefit which they convey.

And we have not had anything happen that we see us having a direct impact on our ability to continue to grow those products.

Okay, great.

And then just final question.

Is everything still on track, I guess, with the FORT Study?

It looks like you're saying completion of enrollment around year-end, I know you were saying second half before.

So this is still in line with that, but more towards the end.

Is everything still on track there?

Yes, I think, we've been saying for a while that it'd take place somewhere around the year-end, either late this year or early next year.

We have seen a nice uptick in enrollments since that DSMB review.

So we continue to believe that it will ramp up enrollment late this year, early next year, and we'll have data by second half of 2019.

Our next question comes from the line of Tim Lugo of William Blair.

This is Ashiq Mubarack on for Tim.

And I also want to pass on my congrats to Steve.

Sorry to hear you're leaving the company.

Hope you enjoy your retirement.

I wanted to start with PKAN.

I guess, can you give me a little context in terms of whether or not the The Street is underestimating the size of the PKAN population, especially as you guys are identifying new patients at your sites in places such as France.

Any idea on -- if The Street is underestimating them?

And by how much?

Okay.

It's tough for me to know how much the -- how accurate The Street's estimates are because I'm not really conversant in that.

And I think that the true answer here is we don't know the true epidemiology or the incidence or prevalence.

What we do know is when we did some high-level patient mapping in the past, we found a certain number of patients in different regions.

As we've opened up the FORT Study, and some of those study sites are in those regions, we're seeing patients and pockets of patients that we didn't see in the original mapping.

And with rare disease, it is very common that when you open a trial, when there is therapies available, more patients are identified.

And that's not unexpected.

What that actual number translates to, it's early to call, but we're -- we are encouraged by the patient numbers that we're seeing.

But I don't think we're in a position to make estimates at this stage.

Okay, that makes sense.

I think what is encouraging, this is Steve jumping in, is we've gotten better visibility.

We've just put a small group of medical science liaisons in Europe.

We did some patient mapping in France previously.

And when we get feet on the ground and people in the centers, invariably we were getting feedback that there are more patients than we knew about prior to getting that eyes-on opportunity.

So we can't really estimate how high it's going to go, but we do think we'll continue to find new patients.

And I also want to say thank you for your well wishes.

And probably, worth mentioning that I'm not going to disappear on retirement.

I have every intention to continue to work with the company and support my successor in any way I can in the future.

So I'm going to be hanging around for a while, just in a different capacity.

Are you planning on holding onto your board seat in the long term?

We currently have a plan for that to happen.

We'll see how that works out, but that is the plan.

Okay.

And then, I guess, quickly on PKU.

Can you give us some sense of how impressed you were with the Phase I data?

And will you be sharing that at a medical conference or something similar later this year?

I guess, based on your comments, can we infer that, at least in humans, the drug is showing 4, 5 times higher bioavailability compared to Kuvan?

Any context you can share?

I don't know what the publication plan will be for CNSA-001 data in the near future.

As you know, it's a partnered program, and that has to be negotiated to the best needs of both organizations.

And as far as how enthusiastic I am, I think we saw pretty much exactly what we wanted to see, which was increasing bioavailability, which translated to a PK profile that was predictable and measurable effects, and the amount of BH4 in plasma was significantly greater than what we've seen in standard of care mirrored what we saw in preclinical studies certainly from a qualitative standpoint.

Okay.

Can share any details on the dosing frequency?

One study was a single-dose study.

The other was a "once daily, multiple dose" study.

They were dosed for 7 days.

And I'm showing no further questions at this time.

Great.

Thank you, Nicole.

This concludes our call.

Thank you all for joining us today, and we look forward to updating you on our progress in the near future.

Well, ladies and gentlemen, thank you for participating in today's conference.

That does conclude today's program.

You may all disconnect.

Everyone, have a great day.