Travere Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless stated otherwise. Travere is a biopharmaceutical company focused on rare kidney, liver and metabolic diseases. FILSPARI received U.S. accelerated approval for IgAN in February 2023 and became commercially available during the quarter.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior balance |
|---|---|---|
| Total revenue | $57.0 million | $48.5 million; up $8.5 million (17.5%) |
| Net product sales | $50.3 million | $46.4 million; up $3.8 million |
| Operating loss | $87.0 million | $66.1 million |
| Net loss | $86.3 million; $1.27 per share | $76.0 million; $1.20 per share |
| Cash used in operations | $81.1 million | $55.3 million |
| Cash and cash equivalents | $161.4 million | $61.7 million at Dec. 31, 2022 |
| Marketable debt securities | $400.1 million | $388.6 million at Dec. 31, 2022 |
| Current assets / liabilities | $604.9 million / $130.6 million | Net working capital $474.3 million; current ratio 4.63 |
| Convertible debt | $376.0 million carrying value | $375.5 million at Dec. 31, 2022 |
Combined cash and marketable securities were $561.5 million at quarter-end. The company reported total liabilities of $619.1 million and stockholders’ equity of $189.1 million. Cash and cash equivalents increased by $99.7 million during the quarter, principally reflecting equity financing.
Net product sales comprised $26.1 million from bile acid products, $21.2 million from tiopronin products and $3.0 million from FILSPARI. License and collaboration revenue was $6.7 million, including $3.3 million from active pharmaceutical ingredient sales to CSL Vifor and $3.4 million for development activities. Gross margin was favorably affected by sales of previously expensed FILSPARI inventory; the company expects this benefit to continue through at least 2024.
Changes versus the prior period
- Revenue increased primarily from the FILSPARI launch, higher bile acid product sales and increased collaboration revenue; tiopronin sales declined slightly amid generic competition.
- Operating expenses increased $29.4 million to $144.0 million. SG&A rose $25.5 million, reflecting commercial launch activity, increased staffing and costs, professional services, and a $2.6 million stock-option modification charge.
- R&D increased $3.3 million to $59.9 million, including higher personnel costs and higher sparsentan and pegtibatinase external costs.
- Net loss widened by $10.4 million. Higher interest income and the absence of the prior-year $7.6 million debt-extinguishment loss partly offset higher operating costs.
- Financing activities provided $217.0 million, including $215.8 million net proceeds from a February public offering of common shares and pre-funded warrants. Outstanding common shares increased to 74.6 million from 64.3 million at year-end.
Outlook, risks and unusual items
- Management said cash and short-term investments, together with anticipated operating cash generation, should fund expected operations beyond the next 12 months. It also expects continued operating losses and rising expenses for commercialization and development; future financing or refinancing may be needed.
- FILSPARI’s accelerated approval is based on proteinuria reduction and is contingent on confirmation of clinical benefit. PROTECT confirmatory results were expected in Q4 2023; an EMA decision on the IgAN application was expected in the second half of 2023.
- Post-quarter development: On May 1, 2023, the company announced that the Phase 3 DUPLEX study in FSGS did not meet its two-year primary endpoint with statistical significance versus irbesartan. Management planned further analysis and regulatory discussions; a future FSGS submission or approval was uncertain.
- The company expected additional pegtibatinase COMPOSE data in mid-2023 and was preparing for a possible Phase 3 start in the second half of 2023, subject to regulatory feedback. It expected to complete the Chenodal RESTORE study in CTX during 2023.
- FILSPARI is subject to a REMS and boxed warnings addressing liver injury and embryo-fetal toxicity. The company also faces launch, reimbursement, competition, clinical-development, manufacturing and regulatory risks. Generic Thiola EC was approved in February 2023.
- The company capitalized a $23.0 million Ligand/BMS milestone triggered by FILSPARI approval and began incurring sparsentan royalties of 15%–17% of net sales. It had a $36.3 million commitment for active pharmaceutical ingredient deliveries in 2023.
- A French reimbursement matter involving historical Kolbam sales remained unresolved; the company could not estimate any potential liability. It reported no other legal proceeding expected to have a material adverse effect.
- Disclosure controls and procedures were concluded to be ineffective because of an unremediated material weakness concerning accounting for a pre-launch inventory contract and timing of R&D expense. Remediation work had begun, but effectiveness had not yet been established.
Most important facts for investors to verify
- FILSPARI launch uptake, payer access, safety monitoring requirements and the confirmatory PROTECT results and regulatory status.
- Implications of the failed DUPLEX primary endpoint for any potential FSGS filing, approval and development spending.
- Cash burn relative to the $561.5 million cash-and-securities balance, and management’s assumptions supporting liquidity beyond 12 months.
- Revenue trends and generic competition across legacy products, including the impact of generic Thiola EC.
- Share dilution from the February offering, potential dilution from convertible notes, and the $36.3 million supply commitment.
- Progress in remediating the material weakness and any estimate or resolution of the French reimbursement matter.