Retrophin, Inc.
Aug 4, 2016

Retrophin Reports Second Quarter 2016 Financial Results

Second quarter revenues increased 38 percent year-over-year

Sparsentan top-line data expected in third quarter of 2016

RE-024 efficacy trial expected to initiate in second half of 2016

SAN DIEGO, Aug. 04, 2016 (GLOBE NEWSWIRE) -- Retrophin, Inc. (NASDAQ:RTRX) today reported its second quarter 2016 financial results.

"We are very pleased with our strong second quarter performance, which was led by growth across all of our commercial products, and included the expansion of our pipeline," said Stephen Aselage, chief executive officer of Retrophin. "We look forward to building upon the momentum from the first half of the year with upcoming clinical milestones for sparsentan and RE-024, which we believe will make 2016 a transformational year for Retrophin."

Quarter Ended June 30, 2016

Net product sales for the second quarter of 2016 were $33.3 million, compared to $24.1 million for the same period in 2015. For the six months ended June 30, 2016, net product sales were $62.3 million, compared to $41.4 million for the same period in 2015. The increase was due to new patients initiating treatment with all of the Company's commercial products: Thiola®, Cholbam®, and Chenodal®. The Company expects further sales growth throughout the balance of 2016 and reiterates its full-year guidance of $130.0 to $140.0 million.

Selling, general and administrative (SG&A) expenses for the second quarter of 2016 were $23.2 million, compared to $19.7 million for the same period in 2015. For the six months ended June 30, 2016, SG&A expenses were $42.3 million, compared to $34.5 million for the same period in 2015. The increase is attributable to additional headcount and expanded efforts in support of the Company's commercial products. On a non-GAAP adjusted basis, SG&A expenses were $14.5 million for the second quarter of 2016, compared to $12.8 million for the same period in 2015.

Research and development (R&D) expenses for the second quarter of 2016 were $17.7 million, compared to $10.6 million for the same period in 2015. For the six months ended June 30, 2016, R&D expenses were $32.3 million, compared to $20.9 million for the same period in 2015. The increase is largely attributable to an increase in clinical efforts related to sparsentan and RE-024. On a non-GAAP adjusted basis, R&D expenses were $15.0 million for the second quarter of 2016, compared to $8.6 million for the same period in 2015.

Total other expense for the second quarter of 2016 was $9.4 million, compared to $18.6 million for the same period in 2015. For the six months ended June 30, 2016, total other income was $5.0 million, compared to total other expense of $10.8 million for the same period in 2015. The difference is largely attributable to a decrease in the Company's derivative liability due to less share price fluctuation in the period, and the prepayment of the Company's credit facility in July 2015, which resulted in a reduction in interest expense and loss on extinguishment of debt.

Tax benefit of $7.4 million for the second quarter of 2016 was primarily due to a favorable effective tax rate as a result of orphan drug and R&D tax credits.

Net loss for the second quarter of 2016 was $13.4 million, or $0.37 per basic share, compared to $25.5 million, or $0.73 per basic share for the same period in 2015. For the six months ended June 30, 2016, net loss was $2.2 million, compared to a net income of $14.1 million for the same period in 2015. Non-GAAP adjusted net income for the second quarter of 2016 was $2.5 million, or $0.07 per basic share, compared to $12.9 million, or $0.37 per basic share for the same period in 2015. 

As of June 30, 2016, the Company had cash, cash equivalents, marketable securities and notes receivable of $315.2 million.

Commercial Product Updates

Thiola® (tiopronin)

Cholbam® (cholic acid)

Chenodal® (chenodeoxycholic acid)

Pipeline Updates

Sparsentan

RE-024

Liquid ursodeoxycholic acid (L-UDCA)

Conference Call Information

Retrophin will host a conference call and webcast today, Thursday, August 4, 2016 at 4:30 p.m. ET to discuss second quarter 2016 financial results. To participate in the conference call, dial +1-855-219-9219 (U.S.) or +1-315-625-6891 (International), confirmation code 50760103 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 starting at 7:30 p.m. ET, August 4, 2016 until 11:59 p.m. ET, August 11, 2016. The replay number is +1-855-859-2056 (U.S.) or +1-404-537-3406 (International), confirmation code 50760103.

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, revaluation of acquisition related contingent consideration, stock-based compensation expense, depreciation and amortization expense, change in fair value of derivative instruments; income tax provision; bargain purchase gain (ii) the historical non-GAAP SG&A expense measures exclude from GAAP SG&A expenses, as applicable, stock-based compensation expense, and depreciation and amortization expense; (iii) the historical non-GAAP R&D expense measures exclude from GAAP R&D expenses, as applicable, stock-based compensation expense, and depreciation and amortization 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 significant unmet medical needs, 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 in several rare diseases is also underway. Retrophin's R&D efforts are supported by revenues from the Company's commercial products Thiola®, Cholbam®, and Chenodal®.

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 a New Drug Application for liquid ursodeoxycholic acid in 2017 or ever, risk that a New Drug Application for liquid ursodeoxycholic acid will not be approved for efficacy, safety, regulatory or other reasons, the 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
June 30, 2016
(in thousands)
     
  June 30, 2016 December 31, 2015
Assets (unaudited)  
Current assets:    
Cash and cash equivalents $21,155  $37,805 
Marketable securities 200,359  191,799 
Accounts receivable, net 16,566  12,458 
Inventory, net 2,713  2,536 
Prepaid expenses and other current assets 3,365  2,378 
Prepaid taxes 8,499  8,107 
Note receivable, current 47,500  46,849 
Total current assets 300,157  301,932 
     
Property and equipment, net 381  428 
Other asset 1,859  1,859 
Intangible assets, net 184,432  161,536 
Goodwill 936  936 
Note receivable, long term 46,206  45,573 
Total assets $533,971  $512,264 
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $6,285  $7,639 
Accrued expenses 23,159  23,820 
Other current liabilities 1,187  958 
Guaranteed minimum royalty 2,000  2,000 
Business combination-related contingent consideration 14,077  13,754 
Derivative financial instruments, warrants 33,360  38,810 
Total current liabilities 80,068  86,981 
     
Convertible debt 44,092  43,766 
Other non-current liabilities 2,548  3,066 
Guaranteed minimum royalty, less current portion 8,488  8,885 
Business combination-related contingent consideration, less current portion 72,300  45,267 
Deferred income tax liability, net 12,103  24,328 
Total liabilities 219,599  212,293 
Stockholders' Equity:    
Preferred stock $0.001 par value; 20,000,000 shares authorized; 0 issued and outstanding as of June 30, 2016 and December 31, 2015    
Common stock $0.0001 par value; 100,000,000 shares authorized; 36,725,130 and 36,465,853 issued and outstanding as of June 30, 2016 and December 31, 2015, respectively 4  4 
Additional paid-in capital 381,687  365,802 
Accumulated deficit (67,340) (65,153)
Accumulated other comprehensive income (loss) 21  (682)
Total stockholders' equity 314,372  299,971 
Total liabilities and stockholders' equity $533,971  $512,264 
         


RETROPHIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
        
 Three Months Ended June 30, Six Months Ended June 30,
 2016 2015 2016 2015
Net product sales$33,311  $24,068  $62,319  $41,440 
        
Operating expenses:       
Cost of goods sold1,021  637  1,778  912 
Research and development17,675  10,563  32,347  20,910 
Selling, general and administrative23,205  19,692  42,330  34,547 
Change in valuation of contingent consideration2,789  120  5,485  120 
Total operating expenses44,690  31,012  81,940  56,489 
        
Operating loss(11,379)  (6,944) (19,621) (15,049)
        
Other income (expenses), net:        
Other income (expenses), net(206) 522  4  349 
Interest expense, net(147) (2,922) (309) (6,720)
Finance expense      (600)
Change in fair value of derivative instruments(9,063) (29,418) 5,277  (66,171)
Loss on extinguishment of debt  (2,250)   (2,250)
Litigation settlement gain  15,500    15,500 
Bargain purchase gain       49,063 
Total other income (loss), net(9,416) (18,568) 4,972  (10,829)
        
Loss before provision for income taxes(20,795) (25,512) (14,649) (25,878)
        
Income tax benefit (expense)7,392  (15) 12,462  40,006 
        
Net income (loss)$(13,403) $(25,527 ) $(2,187) $14,128 
         
Net earnings (loss) per common share, basic$(0.37)  $(0.73) $(0.06) $0.45 
Net earnings (loss) per common share, diluted$(0.37) $(0.73) $(0.20) $0.44 
Weighted average common shares outstanding, basic36,683,429   34,957,134  36,601,807  31,079,053 
Weighted average common shares outstanding, diluted36,683,429  34,957,134  38,063,285  34,827,405 
            


RETROPHIN, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(in thousands, except share and per share data)
(unaudited)
         
         
  Three Months Ended June 30, Six Months Ended June 30,
  2016 2015 2016 2015
GAAP Operating Loss $(11,379) $(6,944) $(19,621) $(15,049)
         
R&D Operating Expense (17,675) (10,563) (32,347) (20,910)
         
Stock Compensation 2,641  1,749  5,127  3,968 
Amortization & Depreciation 81  193  163  414 
Subtotal non-GAAP items 2,722  1,942  5,290  4,382 
Non-GAAP R&D Expense (14,953) (8,621) (27,057) (16,528)
         
SG&A Operating Expense (23,205) (19,692) (42,330) (34,547)
         
Stock Compensation 4,852  3,245  9,159  6,599 
Amortization & Depreciation 3,885  3,648  7,695  5,206 
Subtotal non-GAAP items 8,737  6,893  16,854  11,805 
Non-GAAP SG&A Expense (14,468) (12,799) (25,476) (22,742)
         
Change in valuation of contingent consideration 2,789  120  5,485  120 
Subtotal non-GAAP items 14,248  8,955  27,629  16,307 
Non-GAAP Operating Income $2,869  $2,011  $8,008  $1,258 
         
GAAP Net Income (Loss) $(13,403) $(25,527) $(2,187) $14,128 
Non-GAAP Operating Loss Adjustments 14,248  8,955  27,629  16,307 
Change in fair value of derivative instruments 9,063  29,418  (5,277)  66,171 
Bargain purchase gain       (49,063)
Income tax benefit (expense) (7,392) 15   (12,462) (40,006)
Non-GAAP Net Income $2,516  $12,861  $7,703  $7,537 
         
Per share data:        
Net gain (loss) per common share, basic $0.07  $0.37  $0.21  $0.24 
Weighted average common shares outstanding, basic 36,683,429  34,957,134  36,601,807  31,079,053 
             
Contact:



Chris Cline, CFA

Senior Director, Investor Relations

646-564-3680

IR@retrophin.com 

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Source: Retrophin, Inc.

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