Travere Therapeutics, Inc. — Q3 2022 Form 10-Q
Business context and reporting period. Travere is a biopharmaceutical company focused on rare diseases, with commercial products Chenodal, Cholbam, and Thiola/Thiola EC and development programs including sparsentan, pegtibatinase (TVT-058), and Chenodal for CTX. This filing reports the quarter and nine months ended September 30, 2022; financial amounts below are in millions except per-share data.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Total revenue | $53.5 | $68.2 | $156.2 | $170.2 |
| Net product sales | $50.8 | $54.2 | $148.2 | $156.2 |
| Operating loss | $68.1 | $31.7 | $199.7 | $114.6 |
| Net loss | $69.7 | $35.6 | $212.7 | $128.5 |
| Basic and diluted loss per share | $1.09 | $0.59 | $3.34 | $2.17 |
| Cash used in operating activities | Not separately reported for the quarter | $131.7 | Cash provided: $12.1 |
At September 30, 2022, cash and cash equivalents were $151.3 and marketable debt securities were $355.0, totaling $506.3. Net working capital was $403.8, compared with $458.7 at December 31, 2021. Current assets were $534.8 and current liabilities $131.0. Convertible debt, net of issuance costs and discounts, was $375.1; principal outstanding was approximately $385.2, comprising $316.3 of 2029 Notes and $68.9 of 2025 Notes. Stockholders’ equity was $100.7, down from $302.1 at year-end 2021. The filing does not report a headline operating or gross margin.
Material changes versus prior comparable periods
- Q3 revenue declined $14.7 (about 22%); nine-month revenue declined $14.1 (about 8%). Product sales fell $3.4 in Q3 and $8.0 year to date, principally from generic competition affecting Thiola, partly offset by higher bile-acid product sales.
- License and collaboration revenue fell $11.3 in Q3 and $6.1 year to date, mainly because $12.0 of license revenue was recognized upon signing the CSL Vifor agreement in 2021.
- R&D expense rose $10.8 in Q3 and $27.4 year to date, reflecting higher headcount, medical-affairs activity, and external development costs. SG&A rose $21.5 and $49.5, respectively, driven mainly by staffing and preparation for a potential U.S. sparsentan launch.
- Operating losses widened as revenue decreased and operating expenses increased. The nine-month net loss also included a $7.6 loss on extinguishment of debt.
- Operating cash flow shifted from $12.1 provided in the first nine months of 2021 to $131.7 used in 2022. The company attributed the change primarily to higher R&D and SG&A spending and the $55.0 CSL Vifor upfront payment received in 2021.
Outlook, commentary, risks, and unusual items
- Management said available cash and short-term investments were expected to fund anticipated operations beyond the next 12 months. The filing gives no specific revenue, earnings, or expense guidance.
- Sparsentan: the FDA extended the IgAN NDA target action date to February 17, 2023 after requesting liver monitoring in the proposed REMS; the company submitted an updated plan in October 2022. The EMA accepted the IgAN application for review, with a decision expected in the second half of 2023. For FSGS, the FDA did not consider submitted interim eGFR data sufficient for accelerated approval; the company planned to pursue traditional approval after DUPLEX results, expected in the first half of 2023. The EU FSGS filing was targeted by year-end 2023, subject to supportive data.
- Pegtibatinase is in a Phase 1/2 study; the company reported earlier positive topline results and was discussing pivotal-program design with regulators. It cautioned that enrollment, manufacturing materials, and regulatory alignment could affect timelines.
- Key business risks include clinical-trial failure or delay, regulatory uncertainty, generic competition, pricing and reimbursement changes, dependence on third-party manufacturers and distributors, and the need to fund continuing development and potential commercialization.
- Two generic manufacturers delivered paragraph IV notices concerning proposed generic Thiola EC tablets; the company was evaluating them and may pursue patent litigation. Generic tiopronin competition was already affecting Thiola sales.
- A French authority sought repayment of part of Kolbam sales for 2015–2020. The company could not estimate any potential liability; related French sales over that period were approximately $8.0.
- The company issued $316.3 of 2.25% convertible notes due 2029 and repurchased $207.1 principal amount of 2025 Notes in March 2022. It also recorded $3.7 of unrealized losses on marketable securities at September 30, primarily attributed to higher interest rates, and said it did not believe these losses were credit-related.
- COVID-19 had not materially affected financial position or results through the period, according to the company, but it cited possible clinical, supply-chain, workforce, and cybersecurity disruptions. A 100-basis-point interest-rate change was estimated to affect investment values by approximately $2.0.
Most important facts for investors to verify
- Whether sparsentan receives FDA approval for IgAN by the revised target date, what REMS and labeling requirements apply, and whether confirmatory data support full approval.
- Whether the DUPLEX and PROTECT studies deliver the expected confirmatory eGFR results and remain adequately enrolled.
- Whether generic competition continues to reduce Thiola sales, and the outcome of the Thiola EC paragraph IV notices and any patent litigation.
- Cash burn relative to the $506.3 liquidity balance, commercialization spending, and the company’s ability to fund operations and debt obligations.
- The outcome and potential financial exposure of the French Kolbam reimbursement matter, which the filing says cannot currently be estimated.