Travere Therapeutics, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; the filing also presents unaudited quarterly results. This is an annual report, not a standalone Q4 filing. Travere is a rare-disease biopharmaceutical company with marketed products and clinical-stage programs.
Financial performance and liquidity
| Metric | FY 2020 | FY 2019 |
|---|---|---|
| Net product sales | $198.3 million | $175.3 million |
| Operating loss | $176.2 million | $137.4 million |
| Net loss | $169.4 million | $146.4 million |
| Operating cash used | $42.7 million | $58.2 million |
| Cash and short-term investments, year-end | $361.6 million | $398.5 million |
| Working capital, year-end | $317.7 million | $333.6 million |
| Convertible notes, face principal | $276.0 million | $276.0 million |
- Revenue grew 13.1%, reflecting increased patient counts across products. Tiopronin product sales were $108.9 million, up $13.2 million; bile acid product sales were $89.4 million, up $9.7 million.
- Operating expenses rose to $374.5 million, including $97.1 million of acquired in-process R&D expense for Orphan Technologies. Excluding the acquisition charge, expenses were still higher than the prior year; R&D was $131.8 million and SG&A was $135.8 million.
- Calculated from reported figures, gross margin was approximately 96.9%, operating margin approximately negative 88.8%, and net margin approximately negative 85.4%. These are derived ratios, not company guidance.
- Net loss per share was $3.56, compared with $3.46 in 2019. Interest expense was $19.1 million. The notes carry a 2.50% coupon, mature September 2025, and had a $215.3 million net carrying value at year-end.
- Operating cash use improved year over year. Financing provided $127.7 million, principally from a June public offering ($108.7 million net) and at-the-market sales ($22.8 million net). Investing used $61.3 million, including the Orphan acquisition.
- In February 2021, the company raised a further $189.0 million net through a public offering. Management said available funds, including this raise, were expected to fund operations for at least 12 months.
Material changes and unusual items
- Sales increased from $175.3 million to $198.3 million, but operating loss widened by $38.8 million and net loss by $23.0 million. The $97.1 million Orphan acquired-R&D charge was a major unusual expense.
- Fourth-quarter 2020 sales were $51.0 million. The quarter recorded a $121.6 million net loss, including the Orphan acquisition charge; first-quarter results included an $18.1 million CARES Act tax benefit and $0.8 million net income.
- Travere acquired Orphan Technologies in November 2020 for an upfront cash payment of $90.0 million, plus adjustments and expenses. The agreement provides for up to $427.0 million in contingent milestone payments, potential royalties, and a possible rare pediatric disease voucher payment. No contingent milestone payments were accrued at year-end.
- The company changed its name from Retrophin to Travere Therapeutics in November 2020. It withdrew its European marketing authorization application for Kolbam in July 2020.
Outlook, management commentary and key risks
- Sparsentan for FSGS: In February 2021, Travere reported that the Phase 3 DUPLEX interim endpoint was met: 42.0% of sparsentan patients versus 26.0% of irbesartan patients achieved partial remission of proteinuria at week 36 (p=0.0094). Long-term eGFR data were limited at interim analysis; confirmatory results were expected in the first half of 2023. The company planned FDA and EMA discussions on potential accelerated approval and conditional marketing authorization; regulators could reject that filing approach or the data may not support approval.
- Sparsentan for IgAN: The Phase 3 PROTECT trial remained enrolling, with 36-week proteinuria results expected in Q3 2021. Travere cautioned that COVID-19 could delay enrollment and timelines.
- Other pipeline: TVT-058, acquired with Orphan, was in Phase 1/2 for homocystinuria, with preliminary data expected in 2021. Chenodal’s Phase 3 RESTORE trial for CTX continued enrollment. No financial or earnings guidance was provided.
- Management said COVID-19 had not materially affected FY 2020 financial results, but reported slower trial enrollment and identified potential risks to trial timelines, supply, patient identification, access, and operations.
- Key business risks include clinical-trial failure or delay, dependence on single-source manufacturers and third-party distribution, generic competition for products including Thiola and Chenodal, reimbursement and pricing pressure, and ongoing losses and financing needs.
- Other notable exposures include $276.0 million of 2025 notes, potential cash obligations upon conversion or a fundamental change, and $46.1 million of operating lease commitments. The filing reported no off-balance-sheet arrangements and stated that pending legal matters were not expected to have a material adverse effect.
Important facts for investors to verify
- Review final DUPLEX and PROTECT data, the FDA/EMA feedback and filing decisions, and whether confirmatory eGFR outcomes support full approval.
- Track enrollment, timing, safety, and data quality for TVT-058 and the Chenodal CTX study, including any COVID-19 or supply-related delays.
- Assess product-level sales, patient counts, pricing and reimbursement, generic entry, and the sustainability of commercial growth.
- Reconcile cash, investment balances, operating cash burn, and funding runway after the February 2021 offering; consider dilution from equity issuance.
- Review the terms and likelihood of Orphan’s contingent payments and royalties, the 2025 notes’ conversion and repayment exposure, and contingent-consideration valuation assumptions.