Travere Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; comparative periods ended June 30, 2020. Travere is a commercial-stage biopharmaceutical company focused on rare kidney, liver and metabolic diseases. Its marketed products are Chenodal, Cholbam, Thiola and Thiola EC.
Key financial results
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net product sales | $54.6 million | $48.4 million | $102.0 million | $96.2 million |
| Operating loss | $35.3 million | $23.1 million | $82.9 million | $38.2 million |
| Net loss | $39.0 million | $26.1 million | $92.9 million | $25.3 million |
| Basic and diluted loss per share | $0.64 | $0.58 | $1.59 | $0.57 |
| Net cash used in operating activities | Not separately reported by quarter | $20.0 million | $35.6 million |
- Q2 product sales rose 12.8%; first-half sales rose 6.1%, which management attributed primarily to increased patient counts. Q2 bile acid product sales were $25.0 million and tiopronin product sales were $29.6 million.
- First-half research and development expense increased $38.7 million to $99.8 million, primarily reflecting clinical-trial activity, including TVT-058, the Orphan Technologies acquisition and higher personnel costs. First-half SG&A increased $3.6 million to $71.7 million.
- First-half gross margin was approximately 96.8%, calculated from reported net product sales less cost of goods sold. This is a derived figure, not a separately reported measure.
- At June 30, cash and cash equivalents were $83.3 million and available-for-sale debt securities were $439.5 million, or $522.8 million combined. Working capital was $452.8 million; the current ratio was 5.67.
- Six-month investing cash outflow was $177.5 million, mainly reflecting net purchases of debt securities. Financing cash inflow was $196.1 million, principally from the February public offering. The company used $20.0 million in operating cash.
- Convertible notes due 2025 had $276.0 million face value and $220.9 million net carrying value; they bear 2.50% interest. Interest expense was $10.2 million for the first half. The company reported no financial or operating covenants in the notes.
Material changes and unusual items
- Losses widened as operating expenses grew faster than product sales. First-half net loss also compares with a $25.3 million loss in 2020, when a $18.9 million tax benefit, primarily related to CARES Act NOL carrybacks, reduced the reported loss.
- Contingent-consideration fair-value expense was $10.1 million for the first half of 2021, versus $2.4 million in 2020. The liability was $70.2 million at June 30. The change reflected forecast refinements, timing of future payments and discount-rate movements.
- In February 2021, the company raised $189.3 million net through a public offering of 7.5 million shares. Shares outstanding increased to 60.7 million from 52.2 million at year-end 2020; an ATM facility had $71.4 million remaining available at June 30.
- A generic version of the 100 mg original Thiola formulation became available in May 2021. The company said it could not yet estimate the business impact; additional generic competition could pressure sales.
- Orphan Technologies acquisition terms include up to $427.0 million of contingent development, regulatory and commercial payments, royalties and a possible voucher-related payment. No contingent cash payments under this agreement had been accrued as of June 30.
Outlook, pipeline and risks
- Management said cash and short-term investments were expected to fund anticipated operations beyond the next 12 months. This is subject to clinical development costs, product revenue, debt service, manufacturing needs and other factors; no revenue or earnings guidance was provided.
- Sparsentan’s Phase 3 DUPLEX study in FSGS met its 36-week interim proteinuria endpoint: 42.0% achieved the defined response versus 26.0% on irbesartan (p=0.0094). The FDA said the available interim data were not sufficient for U.S. accelerated approval at that time; Travere was seeking additional eGFR data to support a potential 2022 submission. Confirmatory eGFR results were expected in the first half of 2023. The company described a potential European conditional marketing authorization path using the interim dataset supplemented by additional data.
- Top-line results from the sparsentan PROTECT IgAN interim assessment were expected in August 2021; preliminary TVT-058 Phase 1/2 data were expected in 2021. Timing could be affected by COVID-19, trial enrollment, data collection or supply constraints. Chenodal’s Phase 3 RESTORE study for CTX remained open.
- Management reported no material adverse COVID-19 effect on first-half financial results to date, but warned of potential clinical-trial delays, workforce disruption, supply-chain constraints and changes in patient access or demand.
- Key risks include clinical failure or delays, uncertainty over FDA accelerated-approval pathways, generic competition, reliance on third-party manufacturers and distributor, reimbursement and pricing pressure, and the cash or dilution consequences of the 2025 convertible notes. The filing reports no off-balance-sheet arrangements and no legal matter expected to have a material adverse effect.
Important facts for investors to verify
- Subsequent clinical-trial results and FDA/EMA feedback, especially the PROTECT IgAN assessment and the additional FSGS eGFR data needed for any accelerated-approval filing.
- Whether generic Thiola affects patient counts, net pricing or sales of either Thiola formulation, and whether further generic competitors enter.
- Cash burn and the adequacy of the stated greater-than-12-month funding runway as pipeline spending and contingent acquisition obligations evolve.
- The basis and sensitivity of the $70.2 million contingent-consideration valuation and the unaccrued potential TVT-058 milestone obligations.
- Potential dilution from equity issuance and convertible-note settlement; the notes’ $276.0 million principal exceeds their balance-sheet carrying value.