Travere Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. The company is a rare-disease biopharmaceutical business with marketed products and clinical programs including sparsentan, pegtibatinase and Chenodal for CTX.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $54.2 million | $54.6 million | $102.7 million | $102.0 million |
| Net product sales | $51.0 million | $54.6 million | $97.4 million | $102.0 million |
| Operating loss | $(65.5) million | $(35.3) million | $(131.6) million | $(82.9) million |
| Net loss | $(67.0) million | $(39.0) million | $(143.0) million | $(92.9) million |
| Net loss per share | $(1.05) | $(0.64) | $(2.26) | $(1.59) |
| Operating cash flow | Not separately reported by quarter | $(92.1) million | $(20.0) million |
Q2 cost of goods sold was $2.1 million; product gross margin was approximately 96% (calculated from net product sales less cost of goods sold). Cash and cash equivalents were $179.8 million and marketable debt securities were $373.4 million at June 30, 2022, totaling $553.2 million. Working capital was $462.3 million.
Convertible debt had $385.2 million aggregate principal outstanding: $316.3 million of 2.25% notes due 2029 and $68.9 million of 2.50% notes due 2025. Its net carrying value was $374.7 million. The company stated that available cash and short-term investments should fund anticipated operations for at least the next 12 months.
Material changes versus the prior comparable period
- Q2 revenue was nearly flat: lower product sales were offset by $3.2 million of Vifor collaboration revenue. For the first half, product sales fell 4.5%, while total revenue increased slightly due to $5.3 million of collaboration revenue.
- Tiopronin product sales declined $4.2 million in Q2 and $8.3 million for the first half; bile acid product sales rose $0.6 million and $3.7 million, respectively. Management attributed the overall product-sales decline primarily to lower Thiola sales, including generic competition.
- Q2 operating expenses rose $29.7 million to $119.6 million. R&D increased $7.9 million and SG&A increased $18.0 million, mainly reflecting expanded staffing, program support and commercial launch preparation. Contingent-consideration revaluation expense also increased.
- First-half operating cash use rose to $92.1 million, primarily due to higher R&D and SG&A spending.
- In March 2022, the company issued $316.3 million principal of 2029 notes and repurchased $207.1 million principal of 2025 notes for $213.8 million including accrued interest. The transaction resulted in a $7.6 million early debt-extinguishment loss.
Outlook, commentary, risks and unusual items
- Sparsentan—IgAN: The FDA accepted the accelerated-approval NDA for Priority Review; the stated PDUFA target date was November 17, 2022. The company and Vifor planned to submit for European conditional marketing authorization, with a decision expected in the second half of 2023, subject to acceptance and review.
- Sparsentan—FSGS: The FDA said the available additional eGFR data did not support an accelerated-approval submission, while the ongoing DUPLEX trial remained capable of supporting traditional approval. The company expected confirmatory results in the first half of 2023 and planned to seek traditional approval thereafter. A European filing was targeted by the end of 2023, contingent on supportive results.
- Pegtibatinase: The Phase 1/2 study had reported positive topline findings, but further development and pivotal-study design remained subject to regulatory discussions. The company was enrolling an additional cohort. Manufacturing-material shortages and trial enrollment or data-collection delays were identified risks.
- Other programs: The Chenodal Phase 3 RESTORE study for CTX remained open to enrollment. The company also entered a cystinuria collaboration with PharmaKrysto, including estimated research funding of approximately $5.0 million and potential milestone and royalty obligations.
- Contingency: French authorities sought repayment relating to historical Kolbam sales. The company reported approximately $8.0 million of French sales during 2015–2020 but could not estimate any potential liability.
- Commercial and operating risks: Generic competition, payer coverage and pricing, reliance on sole-source manufacturers and a third-party distributor, clinical and regulatory uncertainty, COVID-19 effects, supply-chain constraints, inflation and cybersecurity risks could affect results. The FTC investigation concerning product marketing, sales, distribution and pricing remained open; the company said it had completed its response and the FTC had not indicated further questions or initiated a claim.
- Unrealized losses on available-for-sale securities increased with rising interest rates; management did not attribute them to credit concerns. A 100-basis-point rate change was estimated to affect the investment portfolio by approximately $1.7 million. The company reported effective disclosure controls and no significant change in internal control over financial reporting during the quarter.
- The filing provided no specific financial revenue, earnings or cash-flow guidance. Management cautioned that operating results may fluctuate and profitability remains uncertain.
Important facts for investors to verify
- FDA action and any subsequent regulatory decisions on sparsentan for IgAN, and the confirmatory PROTECT and DUPLEX trial results and timelines.
- Thiola sales trends, generic competition, and the outlook for the company’s marketed products.
- Cash burn, funding runway, debt terms and potential cash or share settlement obligations on the convertible notes.
- Any resolution or estimated exposure related to the French Kolbam reimbursement matter and the status of the FTC inquiry.
- Whether manufacturing supply, clinical enrollment and other stated operational risks affect development timelines or commercialization.