Travere Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; comparative figures are for FY2020 unless noted. Travere is a rare-disease biopharmaceutical company with marketed products and a clinical-stage pipeline focused on kidney, liver, and metabolic diseases.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $227.5 million | $198.3 million |
| Net product sales | $210.8 million | $198.3 million |
| Operating loss | $161.8 million | $176.2 million |
| Net loss | $180.1 million | $169.4 million |
| Basic and diluted loss per share | $3.01 | $3.56 |
| Cash used in operating activities | $14.8 million | $42.7 million |
| Cash and cash equivalents | $165.8 million | $84.8 million |
| Marketable debt securities | $387.1 million | $276.8 million |
| Working capital | $458.7 million | $317.7 million |
| Working capital ratio | 4.70 | 4.43 |
- Total revenue increased 14.7%; product sales rose 6.3%, reflecting higher patient counts across products. The remaining FY2021 revenue included $16.7 million from the Vifor collaboration.
- Cost of goods sold was $6.8 million. Operating and net margins, calculated from reported figures, were approximately negative 71% and negative 79%, respectively.
- Research and development expense rose to $210.3 million from $131.8 million, primarily as sparsentan and pegtibatinase development advanced. SG&A increased to $149.9 million from $135.8 million.
- Operating loss narrowed despite higher R&D and SG&A, partly because FY2020 included $97.1 million of acquired in-process R&D expense. Net loss increased, in part because FY2020 included a $19.4 million income tax benefit related to a CARES Act NOL carryback; FY2021 recorded a $0.4 million tax provision.
- Operating cash use declined year over year, supported by the $55.0 million Vifor upfront payment and higher product sales, partly offset by increased R&D. Investing activities used $137.6 million, mainly reflecting net purchases of marketable securities; financing provided $231.7 million, including public-offering proceeds.
- At year-end, cash and marketable securities totaled $552.9 million. Management said available cash and short-term investments were expected to fund operations beyond the next 12 months; this depends on development spending, product revenue, and other factors.
- Outstanding 2.50% convertible senior notes had $276.0 million principal, mature September 2025, and were carried at $226.6 million net of unamortized discount and costs. Interest expense was $20.1 million; the notes’ disclosed year-end market value was $300.6 million.
Material developments and outlook
- Sparsentan: In FSGS, the Phase 3 DUPLEX interim endpoint was met: 42.0% on sparsentan versus 26.0% on irbesartan achieved partial remission of proteinuria at week 36 (p=0.0094). The FDA said additional supportive eGFR data were needed for potential accelerated approval. The company planned to provide further data in the first half of 2022 and, if supportive, submit in mid-2022; confirmatory endpoint results were expected in the first half of 2023.
- In IgAN, the Phase 3 PROTECT interim endpoint was met: mean proteinuria reduction at week 36 was 49.8% with sparsentan versus 15.1% with irbesartan (p<0.0001). The company planned an accelerated-approval NDA submission in the first quarter of 2022; confirmatory results were expected in the second half of 2023. These are management expectations, not guaranteed outcomes.
- Vifor agreement: Travere licensed sparsentan commercialization rights in Europe, Australia, and New Zealand. The $55.0 million upfront payment was partly recognized in 2021; $36.6 million remained deferred at year-end. Potential consideration includes up to $135.0 million in regulatory and access milestones, up to $655.0 million in sales milestones, and tiered royalties of up to 40% in licensed territories. Travere retains U.S. rights and responsibility for worldwide clinical development. A planned European conditional-marketing application was targeted for mid-2022.
- Pegtibatinase: Phase 1/2 topline results reported a 55.1% mean reduction in total homocysteine at the highest dose after 12 weeks. The company reported general tolerability to date and was discussing a pivotal program with regulators while evaluating an additional study cohort. Results remain preliminary and require confirmation.
- Other programs and products: Enrollment continued in the Phase 3 RESTORE study of Chenodal for CTX. A generic version of original-formulation Thiola launched in May 2021. Cholbam’s U.S. orphan exclusivity was due to expire in March 2022, increasing generic-competition risk.
- The company reported no material adverse financial impact from COVID-19 in 2021, but cited possible effects on trial enrollment, supply chains, patient access, and operations. It also noted manufacturing dependence on third parties and pandemic-related difficulty obtaining a membrane used in pegtibatinase production.
Risks, contingencies, and unusual items
- Development and regulatory outcomes are uncertain: interim clinical data may change, accelerated approval may not be supported, and confirmatory eGFR results may fail to establish full approval. Trial enrollment, retention, safety, and execution also pose risks.
- Commercial sales face generic competition, reimbursement and pricing pressure, and reliance on sole-source manufacturers and a third-party distributor. The company has no patent protection for its existing commercial products, while sparsentan’s European patent coverage faced an opposition.
- The company recorded a $22.3 million increase in the fair value of acquisition-related contingent consideration in 2021, driven by changes in discount factors, revenue forecasts, and payment timing.
- French authorities sought repayment of a portion of historical Kolbam reimbursements. The filing states that the potential liability, if any, could not be estimated; French Kolbam revenues from 2015–2020 totaled approximately $8 million.
- The FTC investigation concerning marketing, sales, distribution, and pricing of products remained open; Travere said it had completed its response to a civil investigative demand and had received no indication of further questions or proceedings at that time.
- Other key risks include continued losses and future funding needs, the $276.0 million notes’ repayment or conversion obligations, potential dilution from equity issuance or note conversion, and regulatory, litigation, data-security, and supply-chain risks.
Important facts for investors to verify
- Whether sparsentan’s subsequent eGFR data and regulatory submissions supported accelerated or conditional approval, and whether confirmatory trials met their endpoints.
- Whether commercial product sales, especially Thiola and Cholbam, withstand generic entry and maintain patient access and reimbursement.
- Whether the company’s cash runway remains consistent with management’s stated expectation after development spending, and how future financing or share issuance affects dilution.
- The eventual amount, if any, payable in the French Kolbam reimbursement matter, and any material change in the FTC inquiry.
- Whether manufacturing and supply constraints affect pegtibatinase, sparsentan, or marketed products, and the impact of Vifor’s commercialization execution in its licensed territories.
The company reported audited U.S. GAAP financial statements with an unqualified audit opinion and effective internal control over financial reporting as of December 31, 2021.