Retrophin, Inc.
May 11, 2015

Retrophin Reports First Quarter 2015 Financial Results

First quarter revenues increased 23% sequentially to $17.4 million

Cholbam received FDA approval; launch underway

SAN DIEGO--(BUSINESS WIRE)-- Retrophin, Inc. (NASDAQ:RTRX) today reported its first quarter 2015 financial results.

"The first quarter proved to be a very productive start to 2015, as we continued to execute against our strategy," said Stephen Aselage, Chief Executive Officer of Retrophin. "We established ourselves as a leader in the treatment of bile acid disorders with the addition of Cholbam to our commercial portfolio, and acquired a Pediatric PRV in the process. Thiola continued to achieve meaningful commercial growth, and we significantly strengthened our balance sheet with a successful follow-on offering. Combining these accomplishments with better cost controls implemented at the end of last year, Retrophin is in a great position to remain aggressive in business development activities and continue driving our pipeline forward."

Quarter Ended March 31, 2015

Net product sales for the first quarter of 2015 were $17.4 million, compared to $27,900 for the first quarter of 2014.

Selling, general and administrative expenses for the first quarter of 2015 were $14.9 million on a GAAP basis, compared to $15.1 million for the same period in 2014. On a non-GAAP adjusted basis, selling, general and administrative expenses were $8.0 million for the first quarter of 2015, compared to $12.3 million for the same period in 2014. The decrease is largely attributable to the reduction of extraordinary consulting fees.

Research and development expenses for the first quarter of 2015 were $10.3 million on a GAAP basis, compared to $6.9 million for the same period in 2014. On a non-GAAP adjusted basis, research and development expenses were $7.8 million for the first quarter of 2015, compared to $5.3 million for the same period in 2014. The increase reflects expenses related to the addition of headcount to support the ongoing enrollment efforts for the Phase 2 DUET trial for sparsentan and development of RE-024 and RE-034.

Total other income for the first quarter of 2015 was $7.7 million, compared to an expense of $53.6 million for the same period in 2014. The change is primarily due to a bargain purchase gain of $48.6 million net of tax as a result of the acquisition of Cholbam™ and the associated Rare Pediatric Disease Priority Review Voucher ("Pediatric PRV"), and a $16.8 million decrease in expense related to the Company's derivative instruments. The gain was offset by a $3.8 million increase in interest expense related to the Company's senior convertible notes and term loan facility. Included in the $3.8 million interest expense increase was a $1.1 million charge related to new warrants issued to secure a line of credit for the Cholbam™ transaction. The Company ultimately chose not to draw down the line of credit and alternatively used proceeds from its follow-on equity offering in March to finance the transaction. The gain in other income was also offset by a $0.6 million increase in finance expense.

Income tax benefit of approximately $40 million for the first quarter of 2015 resulted from the Company's Cholbam™ acquisition, which generated a bargain purchase gain of $48.6 million net of tax, and together with the potential sale of the Pediatric PRV is projected to create taxable income. The Company recorded a deferred tax liability, which resulted in the release of a valuation allowance and the recording of a corresponding income tax benefit.

Net income for the first quarter of 2015 was $39.7 million, or $1.46 per basic share on a GAAP basis, compared to a net loss of $75.7 million, or $3.25 per share for the same period in 2014. Non-GAAP adjusted net loss for the first quarter of 2015 was $1.1 million, or $0.04 per share, compared to $17.5 million, or $0.75 per share for the same period in 2014.

Commercial Product Updates

Thiola® (tiopronin)

Cholbam (cholic acid)

Chenodal® (chenodeoxycholic acid)

Pipeline Updates

Sparsentan

RE-024

RE-034

Conference Call Information

Retrophin will host a conference call and webcast today, Monday, May 11, at 4:30 p.m. ET to discuss first quarter 2015 financial results. To participate in the conference call, dial +1 855-219-9219 (U.S.) or +1-315-625-6891 (International), confirmation code 36758378 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, May 11, 2015 to 11:59 p.m., May 18, 2015. The replay number is 855-859-2056 (U.S.) or 404-537-3406 (International), confirmation code 36758378.

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, intangible asset amortization, stock-based compensation expense, executive severance charges, transaction and license fees, change in fair value of derivative liabilities, depreciation expense, non-cash interest and finance expenses; adjust the income tax provision to the estimated amount of taxes that are payable in cash; (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, transaction and license fees, legal fee and settlements, and depreciation expense; (iii) the historical non-GAAP R&D expense measures exclude from GAAP R&D expenses, as applicable, intangible asset amortization, stock-based compensation expense, transaction and license fees and depreciation expense.

About Retrophin

Retrophin is a pharmaceutical company focused on the development, acquisition and commercialization of drugs for the treatment of serious, catastrophic or rare diseases for which there are currently no viable options for patients. The Company's approved products include Chenodal®, Cholbam™, and Thiola®, and its pipeline includes compounds for several catastrophic diseases, including focal segmental glomerulosclerosis (FSGS), pantothenate kinase-associated neurodegeneration (PKAN), infantile spasms, nephrotic syndrome and others. For additional information, please visit www.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, as well as risks and uncertainties associated with the Company's pre-clinical and clinical stage pipeline as well as its sales and marketing strategies. Specifically, the risks and uncertainties the Company faces with respect to its pre-clinical and clinical stage pipeline include risk that the Company's research programs will not identify pre-clinical 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 the Company will be unable to initiate and/or complete Phase 1 clinical trials of RE-024, 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 risks associated with market acceptance and competition for its marketed products. 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
March 31, 2015
               

March 31, 2015
(unaudited)

December 31,
2014

Assets
 
Current assets:
Cash $   120,174,877 $   18,204,282
Marketable securities 6,159,962 9,556,098
Accounts receivable, net 8,162,535 7,959,411
Inventory, net 1,718,365 800,507
Pediatric priority review voucher, held for sale 96,250,000 -
Prepaid expenses and other current assets     1,077,355       813,364  
Total current assets 233,543,094 37,333,662
 
Property and equipment, net 618,620 670,796
Security deposits 337,014 337,014
Restricted cash 40,000 40,000
Other asset 1,987,364 1,888,035
Intangible assets, net 169,835,098 94,265,530
Goodwill 935,935 935,935
Deferred tax asset     8,691,307       -  
Total assets $   415,988,432   $   135,470,972  
 
Liabilities and Stockholders' Equity (Deficit)
 
Current liabilities:
Deferred technology purchase liability $ 1,000,000 $ 1,000,000
Accounts payable 5,913,027 7,124,330
Accrued expenses 19,346,699 27,882,995
Other liability 943,615 938,209
Acquisition-related contingent consideration 2,880,577 2,117,565
Derivative financial instruments, warrants 63,390,000 27,990,000
Deferred income tax liability 8,691,307 -
Note payable     -       40,485,452  
Total current liabilities 102,165,225 107,538,551
 
Convertible debt 43,439,333 43,287,814
Note payable 40,803,627 -
Other liability 12,294,520 12,234,513
Acquisition-related contingent consideration, less current portion 48,718,710 9,519,662
Deferred income tax liability, net     -       141,151  
 
Total liabilities     247,421,415       172,721,691  
 
Commitments and contingencies
 
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;

34,845,450 and 26,428,071 issued and 34,845,450 and

26,048,480 outstanding, respectively

3,485 2,643
Additional paid-in capital 310,210,811 140,850,551
Treasury stock, at cost, none and 379,591, respectively - (3,214,608 )
Accumulated deficit (142,734,440 ) (179,174,858 )
Accumulated other comprehensive income     1,087,161       4,285,553  
Total stockholders' equity (deficit)     168,567,017       (37,250,719 )
Total liabilities and stockholders' equity (deficit) $   415,988,432   $   135,470,972  
 
 
RETROPHIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
March 31, 2015
             
 
Three months ended March 31,
2015 2014
(unaudited) (restated)
 
Net product sales $   17,371,800 $   27,900
 
Operating expenses:
Cost of goods sold 274,447 900
Research and development 10,346,456 6,942,323
Selling, general and administrative     14,855,340       15,146,346  
Total operating expenses     25,476,243       22,089,569  
   
OPERATING LOSS     (8,104,443 )     (22,061,669 )
 
OTHER INCOME (EXPENSE):
Gain on sale of asset 204,198 -
Interest income (expense), net (3,798,533 ) 536
Finance expense (600,000 ) -
Realized gain on sale of marketable securities, net 107,368 4,664
Change in fair value of derivative instruments-loss (36,752,960 ) (53,613,802 )
Bargain purchase gain     48,578,208       -  
Total other income (expense), net     7,738,281       (53,608,602 )
 
LOSS BEFORE INCOME TAXES (366,162 ) (75,670,271 )
 
Income tax benefit (provision)     40,021,151       (65,376 )
 
NET INCOME (LOSS) $ 39,654,989   $ (75,735,647 )
 
PER SHARE DATA:
Net income (loss) per common share, basic $   1.46   $   (3.25 )
Net income (loss) per common share, diluted $   1.32   $   (3.25 )
Weighted average common shares outstanding, basic     27,157,883       23,334,967  
Weighted average common shares outstanding, diluted     30,380,694       23,334,967  
 
Comprehensive Income (Loss):
Net income (loss) $ 39,654,989 $ (75,735,647 )
Unrealized gain (loss)     (3,198,391 )     622,076  
Comprehensive Income (loss) $   36,456,598   $   (75,113,571 )
 
 
RETROPHIN, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
March 31, 2015
(unaudited)
             
Three Months Ended March 31,
2015 2014
 
 
GAAP OPERATING LOSS $   (8,104,443 ) $   (22,061,669 )
 
R&D Operating Expense (10,346,456 ) (6,942,323 )
Stock Compensation 2,219,698 547,733
Transaction & license fees 150,000 868,198
Amortization & Depreciation     220,916       242,720  
Subtotal non-GAAP items     2,590,614       1,658,651  
NON-GAAP R&D EXPENSE     (7,755,842 )     (5,283,672 )
 
SG&A Operating Expense (14,855,340 ) (15,146,346 )
Legal Expense (A) 1,963,228 -
Stock Compensation 3,353,580 2,857,143
Amortization & Depreciation     1,557,788       13,218  
Subtotal non-GAAP items     6,874,596       2,870,361  
NON-GAAP SG&A EXPENSE     (7,980,744 )     (12,275,985 )
   
Subtotal non-GAAP items     9,465,210       4,529,012  
NON-GAAP OPERATING INCOME (LOSS)     1,360,767       (17,532,657 )
 
 
GAAP NET INCOME /(LOSS) 39,654,989 (75,735,647 )
 
Non-GAAP Operating Loss Adjustments 9,465,210 4,529,012
Finance Expense 1,650,000 -
Change in fair value of derivative instruments-loss 36,752,960 53,613,802
Bargain purchase (gain), net (A) (48,578,208 ) -
Income Tax (benefit)/provision (A)     (40,021,151 )     65,376  
NON-GAAP NET LOSS $   (1,076,200 ) $   (17,527,457 )
 
PER SHARE DATA:
Net income (loss) per common share, basic $   (0.04 ) $   (0.75 )
Net income (loss) per common share, diluted $   (0.04 ) $   (0.75 )
Weighted average common shares outstanding, basic     27,157,883       23,334,967  
Weighted average common shares outstanding, diluted     30,380,694       23,334,967  
 
(A) Non-recurring items
 
 

Retrophin, Inc.
Chris Cline, CFA, 646-564-3680
Manager, Investor Relations
IR@retrophin.com

Source: Retrophin, Inc.

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