Travere Therapeutics, Inc. — 10-Q summary
Issuer and period: The supplied filing is for Retrophin, Inc. (now Travere Therapeutics, Inc.), for the quarter ended March 31, 2013. It was filed July 24, 2013. The company described itself as a development-stage biotechnology company.
Business context and financial results
The company was developing treatments for rare diseases, including RE-021 for focal segmental glomerulosclerosis (FSGS), RE-024 for pantothenate kinase-associated neurodegeneration, and RE-001 for Duchenne muscular dystrophy. It reported no revenue in either the first quarter of 2013 or 2012.
| Metric | Q1 2013 | Q1 2012 |
|---|---|---|
| Revenue | None | None |
| Operating expenses | $2.25 million | $3.56 million |
| Operating loss | $2.25 million | $3.56 million |
| Net loss | $4.74 million | $3.57 million |
| Basic and diluted loss per share | $0.44 | $1.43 |
| Net cash used in operating activities | $4.58 million | $1.22 million |
Q1 2013 net loss included a $2.45 million noncash loss from remeasuring warrant liabilities and $41,563 of interest expense. The filing reports no gross profit or meaningful revenue-based margin because the company had no revenue.
Financial position and cash flow
- At March 31, 2013, cash was $2.50 million, total current assets were $2.64 million, and working capital was approximately $1.3 million.
- Total liabilities were $8.17 million, including $6.96 million of warrant derivative liabilities. Stockholders’ deficit was $3.22 million.
- Operating cash use was $4.58 million; investing cash use was $1.31 million, mainly including repayment of a $1.30 million technology-license liability. Financing provided $8.38 million, primarily from equity issuances.
- The company repaid the remaining $884,764 principal and accrued interest on a related-party note during the quarter. No note payable remained at quarter-end.
- It raised approximately $9.95 million in January and February 2013 private placements. Q1 financing proceeds are reported as $9.28 million net of fees.
Material changes and outlook
- Operating expenses fell about 37% year over year, while net loss increased about 33%, primarily because of the warrant fair-value charge. Cash used in operations increased by $3.36 million year over year.
- Management estimated spending over the next 12 months of $7–8 million on clinical and R&D activities and $5–6 million on general and administrative expenses. It estimated RE-021 development costs of another $4–5 million over 12 months and $25–35 million in aggregate before potential FDA approval; these are estimates, not commitments.
- The company planned to start a Phase 2 RE-021 study in 2013. RE-024 was preclinical, with an IND filing targeted by 2014; RE-001 remained preclinical.
- Management said existing resources were expected to be insufficient to continue operations beyond September 2013 without additional funding. The filing states that substantial doubt existed about the company’s ability to continue as a going concern. Future financing was not committed and could be unavailable or dilutive.
- The registration statement for securities sold in the February placement had not become effective by the filing date. The company said liquidated damages would be payable beginning in Q2 2013 under the registration-rights agreement, at 2% of purchasers’ aggregate purchase price per applicable monthly period, subject to a 10% cap.
- Management concluded disclosure controls and procedures were not effective as of quarter-end. The filing reported no material change in internal control over financial reporting during the quarter and no material pending legal proceedings.
Important facts for investors to verify
- Whether the company raised sufficient capital after the filing to fund operations and planned clinical programs, given the stated September 2013 funding horizon.
- The status, timing, and cost of the planned RE-021 Phase 2 study and the development programs for RE-024 and RE-001.
- The registration statement’s effectiveness and any liquidated damages incurred or paid under the February 2013 agreement.
- The valuation and terms of the warrant liability, including its ratchet provision and potential effects of future equity financing.
- Progress in remediating ineffective disclosure controls and procedures.