Travere Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; financial statements are unaudited. Travere is a biopharmaceutical company focused on rare kidney, liver and metabolic diseases, with commercial products and a clinical-stage pipeline.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Total revenue | $48.5 million | $47.4 million; up $1.1 million |
| Net product sales | $46.4 million | $47.4 million; down $1.0 million |
| Net loss | $76.0 million | $53.9 million |
| Net loss per share, basic and diluted | $1.20 | $0.96 |
| Operating expenses | $114.6 million | $95.0 million |
| Cash used in operations | $55.3 million | $26.5 million |
- Product sales comprised $25.1 million from bile acid products, up $3.1 million, and $21.4 million from tiopronin products, down $4.1 million. Management attributed the overall product-sales decline mainly to increased commercial rebates on tiopronin products.
- Research and development expense increased $8.7 million to $56.6 million, primarily from program-related external costs and personnel. Selling, general and administrative expense rose $10.0 million to $46.8 million, including increased personnel and commercial preparation costs.
- Cash and cash equivalents were $256.6 million and marketable debt securities were $346.8 million at March 31, for $603.4 million combined. Working capital was $511.6 million; the company reported a 5.28 current ratio.
- Investing activities provided $33.2 million, mainly reflecting net maturities of marketable securities. Financing activities provided $113.9 million, including the 2029 notes issuance and ATM stock sales, partly offset by repurchase of 2025 notes.
- Convertible debt had a $374.3 million net carrying amount at quarter-end. Principal outstanding was approximately $316.3 million of 2029 notes and $68.9 million of 2025 notes. The company reported approximately $385 million of total debt in its risk discussion.
Material changes and unusual items
- On March 11, Travere issued $316.3 million principal amount of 2.25% convertible senior notes due 2029, receiving $306.4 million net proceeds. It used cash to repurchase $207.1 million principal amount of 2025 notes for $213.8 million, including accrued interest, leaving $68.9 million principal outstanding. The transaction resulted in a $7.6 million early-extinguishment loss.
- Adoption of convertible-debt accounting guidance on January 1, 2022 increased the carrying amount of the 2025 notes by $44.7 million and reduced additional paid-in capital by $74.9 million, with a $30.2 million reduction to accumulated deficit.
- Fair-value expense for acquisition-related contingent consideration was $9.1 million, versus $8.6 million in Q1 2021. The liability was $73.5 million at quarter-end.
- Unrealized losses on available-for-sale securities increased as interest rates rose; the company said it did not consider the losses credit-related and did not expect to need to sell the securities before recovery.
Outlook, management commentary and risks
- Management said available cash and short-term investments were expected to fund anticipated operations for at least the next 12 months. Cash use is expected to remain significant as clinical development and commercialization preparation continue; results may fluctuate materially between periods.
- In March 2022, Travere submitted an FDA NDA under Subpart H for accelerated approval of sparsentan for IgA nephropathy (IgAN). The company planned a European conditional marketing authorization submission in mid-2022. Confirmatory Phase 3 PROTECT results were expected in the second half of 2023.
- For sparsentan in focal segmental glomerulosclerosis (FSGS), Travere planned to provide additional DUPLEX eGFR data in the first half of 2022 and pursue a potential U.S. accelerated-approval filing in mid-2022 if regulators considered the data supportive. Otherwise, it expected to complete the study in the first half of 2023 and seek full approval thereafter. These were plans, not assured outcomes.
- Pegtibatinase (TVT-058) was in Phase 1/2 development for homocystinuria. The company reported positive topline results from 2021, but noted that additional cohort work and discussions with regulators would inform pivotal development. Chenodal’s Phase 3 RESTORE study for CTX remained open to enrollment.
- Key risks include clinical-trial efficacy, safety, enrollment and data-collection uncertainty; the possibility that DUPLEX eGFR data will not support accelerated approval; generic competition and payer rebates; dependence on third-party manufacturers and distributors; and financing needs, debt obligations, and potential dilution or cash settlement of convertible notes. COVID-19 and supply-chain disruptions may affect trials and product supply.
- A French pricing authority sought reimbursement relating to Kolbam sales from 2015–2020, when aggregate French sales were approximately $8.0 million. Travere said it could not estimate any potential liability. The company also consolidated PharmaKrysto, a preclinical cystinuria collaborator, and expects to fund approximately $5.0 million of research and development activities under the arrangement.
- Travere reported that COVID-19 had not materially adversely affected Q1 financial results, while noting possible future effects on trials, supply, demand and financing. It also identified interest-rate exposure; a 100-basis-point rate change was estimated to affect investment values by approximately $1.1 million.
Most important facts for investors to verify
- Regulatory feedback and the evidentiary sufficiency of the planned 2022 DUPLEX eGFR data cut for potential FSGS accelerated approval, plus the progress of the IgAN NDA review.
- Enrollment, retention, safety and confirmatory eGFR outcomes in the DUPLEX and PROTECT trials, and whether expected timelines remain achievable.
- Quarterly product sales and commercial rebates, especially the direction of tiopronin sales amid generic competition.
- Operating cash burn and liquidity relative to development and launch spending, debt service, and possible cash requirements under the convertible notes.
- The resolution and potential financial exposure of the French Kolbam reimbursement matter, and the execution, funding and obligations associated with the PharmaKrysto collaboration.