Retrophin, Inc.
Feb 25, 2016

Retrophin Reports Fourth Quarter and Full Year 2015 Financial Results

Full year 2016 revenues projected to be $130.0 to $140.0 million

Top-line data from sparsentan Phase 2 DUET study expected 3Q16

Clinical trial evaluating efficacy of RE-024 in PKAN to initiate in 2016

SAN DIEGO, Feb. 25, 2016 (GLOBE NEWSWIRE) -- Retrophin, Inc. (NASDAQ:RTRX) today reported its fourth quarter and full year 2015 financial results.

"The fourth quarter capped a year of meaningful achievements for Retrophin," said Stephen Aselage, chief executive officer of Retrophin. "In 2015, we were able to strengthen our balance sheet, advance our pipeline, and significantly improve our commercial outlook with continued uptake of Thiola and the addition of Cholbam."

Mr. Aselage continued, "Our execution in 2015 sets Retrophin up for what could be a transformational year in 2016, as we reach key clinical milestones with the readout of top-line data from the DUET trial, and the initiation of a trial evaluating RE-024's efficacy in PKAN. Coupled with continued commercial growth, we expect these developments to create substantial value for our shareholders."

Quarter Ended December 31, 2015

Net product sales for the fourth quarter of 2015 were $30.4 million, compared to $14.1 million for the same period in 2014. The increase is primarily due to new patient additions to Thiola® and Chenodal®, and the acquisition and subsequent commercial launch of Cholbam®.

Selling, general and administrative expenses for the fourth quarter of 2015 were $22.7 million, compared to $17.5 million for the same period in 2014. The change is attributable to increased headcount in support of expanded commercial efforts and amortization related to the addition of Cholbam. On a non-GAAP adjusted basis, selling, general and administrative expenses were $13.8 million for the fourth quarter of 2015, compared to $7.6 million for the same period in 2014.

Research and development expenses for the fourth quarter of 2015 were $15.5 million, compared to $14.9 million for the same period in 2014. The increase is largely due to additional headcount and clinical trial expense in support of the Company's lead development candidate, sparsentan. On a non-GAAP adjusted basis, research and development expenses were $12.6 million for the fourth quarter of 2015, compared to $11.1 million for the same period in 2014.

Total other income for the fourth quarter of 2015 was $2.2 million, compared to an expense of $10.3 million for the same period in 2014. The difference is primarily due to a $12.4 million net change in the value of the Company's derivative instruments. 

Tax benefit of $10.5 million for the fourth quarter of 2015 was primarily related to additional tax benefits recorded on the utilization of net operating losses, which were applied against the gain from the sale of the Company's Pediatric Priority Review Voucher (PRV).

Net loss for the fourth quarter of 2015 was $2.5 million, or $0.07 per basic share, compared to a net loss of $29.0 million, or $1.10 per basic share for the same period in 2014. Non-GAAP adjusted net income for the fourth quarter of 2015 was $2.6 million, or $0.07 per basic share, compared to a net loss of $5.7 million, or $0.22 per basic share for the same period in 2014. 

Year Ended December 31, 2015

Net product sales for the full year 2015 were $99.9 million, compared to $28.2 million for the same period in 2014. The increase is due to a full year of sales from both Thiola and Chenodal in 2015, as well as approximately three quarters of Cholbam sales in 2015.

Selling, general and administrative expenses for the full year 2015 were $79.5 million, compared to $59.6 million for the same period in 2014. The increase is largely attributable to additional headcount and marketing efforts to support growth of the Company's commercial products, as well as amortization related to the addition of Cholbam. On a non-GAAP adjusted basis, selling, general and administrative expenses were $46.0 million for the full year 2015, compared to $30.5 million for the same period in 2014.

Research and development expenses for the full year 2015 were $50.4 million, compared to $47.8 million for the same period in 2014. The increase is largely due to increased compensation and clinical trial expense in support of the Company's lead development candidate, sparsentan. On a non-GAAP adjusted basis, research and development expenses were $40.3 million for the full year 2015, compared to $38.7 million for the same period in 2014.

Total other income for the full year 2015 was $156.2 million, compared to other expense of $33.6 million for the same period in 2014. The increase is primarily due to the Company's acquisition of Cholbam and subsequent sale of the accompanying PRV, and the settlement of litigation with Questcor Pharmaceuticals, Inc., offset by the net change in the value of the Company's derivative instruments and fees related to the prepayment of the $45.0 million credit facility due 2018. 

Tax benefit of $11.8 million for the full year 2015 was the result of the Company recording a tax expense primarily related to current and deferred tax accrued on the sale of the PRV, which was partially offset by a release of valuation allowance. The valuation allowance release results in tax savings due to the utilization of net operating loss carryforwards.

Net income for the full year 2015 was $117.2 million, or $3.49 per basic share, compared to a net loss of $110.9 million, or $4.43 per basic share for the same period in 2014. Non-GAAP adjusted net income for the full year 2015 was $11.8 million, or $0.35 per basic share, compared to a net loss of $51.3 million, or $2.05 per basic share for the same period in 2014.

As of December 31, 2015, the Company had cash, cash equivalents, marketable securities and notes receivable of $322.0 million, compared to $27.8 million on December 31, 2014. The increase is largely attributable to the Company's follow-on equity financing, and the initial payment and remaining notes receivable from the sale of its PRV.

Commercial Product Updates

Thiola® (tiopronin)

Cholbam® (cholic acid)

            

Chenodal® (chenodeoxycholic acid)

Pipeline Updates

Sparsentan

            
RE-024

RE-034

2016 Outlook

The Company expects full year 2016 net product sales to be in the range of $130.0 to $140.0 million. The approximate 30 to 40 percent increase over 2015 is expected to be primarily driven by increased patients initiating Thiola therapy, and a full year of Cholbam commercialization efforts.

Conference Call Information

Retrophin will host a conference call and webcast today, Thursday, February 25, 2016 at 4:30 p.m. ET to discuss fourth quarter and full year 2015 financial results. To participate in the conference call, dial +1-855-219-9219 (U.S.) or +1-315-625-6891 (International), confirmation code 49757304 shortly before 4:30 p.m. ET. The webcast can be accessed at www.retrophin.com, in the Events and Presentations section. A replay of the call will be available 7:30 p.m. ET, February 25, 2016 to 11:59 p.m. ET, March 3, 2016. The replay number is +1-855-859-2056 (U.S.) or +1-404-537-3406 (International), confirmation code 49757304.

Use of Non-GAAP Financial Measures

To supplement Retrophin's financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP adjusted financial measures in this press release and the accompanying tables. The Company believes that these non-GAAP financial measures are helpful in understanding its past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with the consolidated financial statements prepared in accordance with GAAP. Retrophin's management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. In addition, Retrophin believes that the use of these non-GAAP measures enhances the ability of investors to compare its results from period to period and allows for greater transparency with respect to key financial metrics the Company uses in making operating decisions.

Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. In addition, from time to time in the future the Company may exclude other items, or cease to exclude items that it has historically excluded, for purposes of its non-GAAP financial measures; Because of the non-standardized definitions, the non-GAAP financial measures as used by the Company in this press release and the accompanying tables may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the Company's competitors and other companies.

As used in this press release, (i) the historical non-GAAP net income (loss) measures exclude from GAAP net income (loss), as applicable, legal fees and settlements, transaction and license fees, intangible asset amortization and impairment, revaluation of acquisition related contingent consideration, gain on disposal of asset, stock-based compensation expense, executive severance charges, change in fair value of derivative instruments, depreciation expense, non-cash interest and finance expenses; income tax provision; (ii) the historical non-GAAP SG&A expense measures exclude from GAAP SG&A expenses, as applicable, intangible asset amortization, stock-based compensation expense, executive severance charges, legal fee and settlements, and depreciation expense; (iii) the historical non-GAAP R&D expense measures exclude from GAAP R&D expenses, as applicable, transaction and license fees, intangible asset amortization, stock-based compensation expense, and depreciation expense.

About Retrophin

Retrophin is a fully-integrated biopharmaceutical company dedicated to delivering life-changing therapies to people living with rare diseases who have few, if any, treatment options. The Company's approach centers on its pipeline featuring clinical-stage assets targeting rare diseases with no approved treatment options, including sparsentan for focal segmental glomerulosclerosis (FSGS), a disorder characterized by progressive scarring of the kidney often leading to end-stage renal disease, and RE-024 for pantothenate kinase-associated neurodegeneration (PKAN), a life-threatening neurological disorder that typically begins in early childhood. Research exploring the potential of early-stage assets, including RE-034, in several rare diseases is also underway. Retrophin's R&D efforts are supported by revenues from the Company's marketed products Chenodal®, Cholbam® and Thiola®.

Retrophin.com

Forward-Looking Statements

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, regarding the research, development and commercialization of pharmaceutical products. Without limiting the foregoing, these statements are often identified by the words "may", "might", "believes", "thinks", "anticipates", "plans", "expects", "intends" or similar expressions. In addition, expressions of our strategies, intentions or plans are also forward-looking statements. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. No forward-looking statement can be guaranteed. Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties associated with the Company's business and finances in general, success of its commercial products as well as risks and uncertainties associated with the Company's preclinical and clinical stage pipeline. Specifically, the Company faces risks associated with market acceptance of its marketed products including efficacy, safety, price, reimbursement and benefit over competing therapies. The risks and uncertainties the Company faces with respect to its preclinical and clinical stage pipeline include risk that the Company's research programs will not identify preclinical candidates for further development and risk that the Company's clinical candidates will not be found to be safe or effective. Specifically, the Company faces risk that the sparsentan Phase 2 clinical trials will fail to demonstrate that sparsentan is safe or effective; risk that the sparsentan Phase 2 program will be delayed for regulatory or other reasons, risk that RE-024 will not progress to Phase 2 or later clinical trials for safety, regulatory or other reasons; risk that the Company will be unable to file an IND for RE-034 or initiate Phase 1 clinical trials for regulatory or other reasons, and for each of the programs risk associated with enrollment of clinical trials for rare diseases. The Company faces risk that it will be unable to raise additional funding required to complete development of any or all of its product candidates; risk relating to the Company's dependence on contractors for clinical drug supply and commercial manufacturing; uncertainties relating to patent protection and intellectual property rights of third parties; risks and uncertainties relating to competitive products and technological changes that may limit demand for the Company's products. You are cautioned not to place undue reliance on these forward-looking statements as there are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. The Company undertakes no obligation to publicly update forward-looking statement, whether as a result of new information, future events, or otherwise. Investors are referred to the full discussion of risks and uncertainties as included in the Company's filings with the Securities and Exchange Commission.

RETROPHIN, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
(in thousands) 
(unaudited) 
      
       
  December 31, 2015 December 31, 2014 
Assets     
      
Current assets:     
Cash $  37,805  $  18,204  
Marketable securities  191,799   9,556  
Accounts receivable, net  12,458   7,960  
Inventory, net  2,536   801  
Prepaid expenses and other current assets  2,378   813  
Prepaid taxes  8,107   -  
Note receivable  46,849   -  
Total current assets  301,932   37,334  
      
Property and equipment, net  428   671  
Other asset  1,995   2,265  
Intangible assets, net  161,536   94,265  
Goodwill  936   936  
Note receivable  45,573   -  
Total assets $  512,400  $  135,471  
      
Liabilities and Stockholders' Equity (Deficit)     
      
Current liabilities:     
Deferred technology purchase liability  $  -   $  1,000  
Accounts payable  7,639   7,124  
Accrued expenses  23,820   27,883  
Other current liabilities  958   206  
Guaranteed minimum royalty, short term  817   732  
Business combination-related contingent consideration   13,754   2,118  
Derivative financial instruments, warrants  38,810   27,990  
Note payable    -    40,486  
Total current liabilities  85,798   107,539  
      
Convertible debt  43,902   43,288  
Other non-current liabilities  3,066   1,617  
Guaranteed minimum royalty, long term  10,068   10,617  
Business combination-related contingent consideration, less current portion   45,267   9,520  
Deferred income tax liability, net    24,328   141  
      
Total liabilities  212,429   172,722  
      
      
Stockholders' Deficit:     
Preferred stock Series A $0.001 par value; 20,000,000 shares authorized; 0 issued and outstanding  -   -  
Common stock $0.0001 par value; 100,000,000 shares authorized; 36,465,853 and 26,428,071 issued and 36,465,853 and 26,048,480 outstanding, respectively    4     3  
Additional paid-in capital    365,802     140,851  
Treasury stock, at cost, none and 379,591, respectively     -      (3,215) 
Accumulated deficit    (65,153)     (179,175) 
Accumulated other comprehensive income/(loss)    (682)     4,285  
Total stockholders' equity (deficit)    299,971     (37,251) 
Total liabilities and stockholders' equity (deficit) $  512,400  $  135,471  
      


 

 RETROPHIN, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS 
 (in thousands, except per share data) 
 (unaudited) 
          
   Three months ended December 31,   Twelve months ended December 31,  
   2015   2014   2015   2014  
          
 Net product sales$  30,447  $  14,085  $  99,892  $  28,203  
          
 Operating expenses:        
 Cost of goods sold   761     338     2,185     571  
 Research and development   15,452     14,896     50,426     47,795  
 Selling, general and administrative   22,686     17,548     79,541     59,645  
 Change in valuation of contingent consideration   6,752     -      13,778     -   
 Impairment of intangible assets   -      -      4,710     -   
 Total operating expenses   45,651     32,782     150,640     108,011  
          
 OPERATING LOSS   (15,204)    (18,697)    (50,748)    (79,808) 
          
 OTHER INCOME (EXPENSE):        
 Litigation settlement gain   -      -      15,500     -   
 Other income (expense), net   (330)    1,807     (296)    2,352   
 Interest income (expense), net   (333)    (2,627)    (7,748)    (7,435) 
 Debt early prepayment penalty   -      -      (2,250)    -   
 Loss on extinguishment of debt   -      -      (4,151)    -   
 Finance expense   -      -       (600)    (4,721) 
 Change in fair value of derivative instruments-loss   2,873     (9,510)    (33,307)    (23,786) 
 Gain on sale of assets   -      -      140,004     -   
 Bargain purchase gain   -      -      49,063     -   
 Total other income (expense), net   2,210     (10,330)    156,215     (33,590) 
          
  INCOME (LOSS) BEFORE INCOME TAXES   (12,994)    (29,027)    105,467     (113,398) 
          
 Income tax benefit   10,525     -      11,770     2,460  
          
 NET INCOME (LOSS)$  (2,469) $  (29,027) $  117,237  $  (110,938) 
          
 PER SHARE DATA:        
 Net income (loss) per common share, basic$  (0.07) $  (1.10) $  3.49  $  (4.43) 
 Net income (loss) per common share, diluted$  (0.14) $  (1.10) $  3.17  $  (4.43) 
 Weighted average common shares outstanding, basic   36,260,106     26,318,863     33,560,249     25,057,509  
 Weighted average common shares outstanding, diluted   37,985,347     26,318,863     37,581,439      25,057,509  
          


 

 RETROPHIN, INC. AND SUBSIDIARIES     
 RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION     
 (in thousands, except per share data)     
 (unaudited)     
                 
                 
    Three  Months Ended December 31,    Twelve Months Ended December 31,      
    2015   2014    2015   2014      
                 
                
 GAAP OPERATING LOSS $   (15,204) $   (18,697)  $   (50,748) $   (79,808)     
                
 R&D Operating Expense    (15,452)    (14,896)     (50,426)    (47,795)     
                
 Stock Compensation    2,756     2,963      9,417     4,960       
 Transaction & License fees    -      604      -      3,338      
 Amortization & Depreciation    83     260      697     826      
 Subtotal non-GAAP items    2,839     3,827      10,114     9,124      
 NON-GAAP R&D EXPENSE    (12,614)    (11,069)     (40,313)    (38,671)     
                
 SG&A Operating Expense    (22,686)    (17,548)     (79,541)    (59,645)     
                
 Legal Expense  (A)    335     1,400       4,359     5,400      
 Executive Severance    -      977       -      5,616      
 Settlements    -      2,158       -      2,485      
 Stock Compensation    4,396     3,700      16,483     10,940       
 Amortization & Depreciation    4,148     1,738      12,693     4,715      
 Subtotal non-GAAP items    8,879     9,973      33,535     29,156      
 NON-GAAP SG&A EXPENSE    (13,807)    (7,575)     (46,006)    (30,489)     
                 
 Change in valuation of contingent consideration    6,752     -       13,778     -       
 Asset Impairment (Carbetocin) (A)    -      -       4,710     -       
 Subtotal non-GAAP items    18,470     13,800      62,136     38,280      
  NON-GAAP OPERATING INCOME (LOSS)    3,266      (4,897)     11,387      (41,528)     
                
                
 GAAP NET INCOME (LOSS)    (2,469 )    (29,027)     117,237      (110,938)     
                
 Non-GAAP Operating Loss Adjustments    18,470     13,800      62,136     38,280      
 Change in fair value of derivative instruments     (2,873)    9,510      33,307     23,786      
 Bargain purchase gain, net (A)    -      -       (49,063)    -       
 Gain on disposal of asset (A)    -      -       (140,004)    -       
 Income Tax (benefit)/provision    (10,525)    -       (11,770)    (2,460)     
  NON-GAAP NET INCOME (LOSS) $   2,604   $   (5,717)  $   11,843   $   (51,332)     
                
 PER SHARE DATA:              
 Net gain (loss) per common share, basic $  0.07  $  (0.22)  $  0.35  $  (2.05)     
 Weighted average common shares outstanding, basic    36,260,106     26,318,863      33,560,249     25,057,509      
                
 (A) Non-recurring items              
                
 Note:  Certain adjustments / reclassifications have been made to prior periods to conform to current year presentation.         

 

Contact:



Chris Cline, CFA

Director, Investor Relations

646-564-3680

IR@retrophin.com

Primary Logo

Source: Retrophin, Inc.

News Provided by Acquire Media