2017 Q1 Form 10-Q Financial Statement

#000143853317000017 Filed on May 05, 2017

View on sec.gov

Income Statement

Concept 2017 Q1 2016 Q1
Revenue $33.62M $29.01M
YoY Change 15.9% 66.98%
Cost Of Revenue $709.0K $757.0K
YoY Change -6.34% 176.28%
Gross Profit $32.91M $28.25M
YoY Change 16.49% 65.23%
Gross Profit Margin 97.89% 97.39%
Selling, General & Admin $23.12M $19.13M
YoY Change 20.86% 28.74%
% of Gross Profit 70.23% 67.7%
Research & Development $20.86M $14.67M
YoY Change 42.18% 41.8%
% of Gross Profit 63.38% 51.93%
Depreciation & Amortization $4.284M $3.891M
YoY Change 10.1% 118.72%
% of Gross Profit 13.02% 13.77%
Operating Expenses $48.03M $37.25M
YoY Change 28.94% 46.21%
Operating Profit -$14.41M -$8.241M
YoY Change 74.83% 1.69%
Interest Expense -$132.0K -$163.0K
YoY Change -19.02% -95.71%
% of Operating Profit
Other Income/Expense, Net $1.254M -$14.39M
YoY Change -108.72% -285.93%
Pretax Income -$13.15M $6.146M
YoY Change -314.03% -1779.23%
Income Tax -$2.064M -$5.070M
% Of Pretax Income -82.49%
Net Earnings -$11.09M $11.22M
YoY Change -198.88% -71.72%
Net Earnings / Revenue -32.99% 38.67%
Basic Earnings Per Share -$0.29 $0.31
Diluted Earnings Per Share -$0.32 -$0.08
COMMON SHARES
Basic Shares Outstanding 38.05M shares 36.52M shares
Diluted Shares Outstanding 39.16M shares 37.95M shares

Balance Sheet

Concept 2017 Q1 2016 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $248.2M $222.3M
YoY Change 11.61% 76.05%
Cash & Equivalents $41.87M $23.26M
Short-Term Investments $206.3M $199.1M
Other Short-Term Assets $6.900M $11.60M
YoY Change -40.52% -88.09%
Inventory $4.751M $3.230M
Prepaid Expenses
Receivables $15.43M $13.40M
Other Receivables $47.20M $47.20M
Total Short-Term Assets $322.4M $297.7M
YoY Change 8.28% 27.51%
LONG-TERM ASSETS
Property, Plant & Equipment $2.428M $417.0K
YoY Change 482.25% -30.5%
Goodwill $936.0K $936.0K
YoY Change 0.0%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $3.661M $1.859M
YoY Change 96.93% -83.25%
Total Long-Term Assets $188.0M $209.4M
YoY Change -10.21% 14.72%
TOTAL ASSETS
Total Short-Term Assets $322.4M $297.7M
Total Long-Term Assets $188.0M $209.4M
Total Assets $510.4M $507.1M
YoY Change 0.65% 21.9%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $4.671M $4.647M
YoY Change 0.52% -21.24%
Accrued Expenses $30.19M $20.39M
YoY Change 48.06% 5.66%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $76.56M $66.62M
YoY Change 14.92% -34.82%
LONG-TERM LIABILITIES
Long-Term Debt $44.60M $43.90M
YoY Change 1.59% 1.15%
Other Long-Term Liabilities $3.857M $2.889M
YoY Change 33.51% -97.16%
Total Long-Term Liabilities $3.857M $2.889M
YoY Change 33.51% -98.01%
TOTAL LIABILITIES
Total Short-Term Liabilities $76.56M $66.62M
Total Long-Term Liabilities $3.857M $2.889M
Total Liabilities $209.4M $187.9M
YoY Change 11.49% -24.06%
SHAREHOLDERS EQUITY
Retained Earnings -$129.0M -$53.94M
YoY Change 139.19%
Common Stock $430.4M $373.3M
YoY Change 15.28%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $300.9M $319.2M
YoY Change
Total Liabilities & Shareholders Equity $510.4M $507.1M
YoY Change 0.65% 21.9%

Cashflow Statement

Concept 2017 Q1 2016 Q1
OPERATING ACTIVITIES
Net Income -$11.09M $11.22M
YoY Change -198.88% -71.72%
Depreciation, Depletion And Amortization $4.284M $3.891M
YoY Change 10.1% 118.72%
Cash From Operating Activities -$3.410M -$3.570M
YoY Change -4.48% -51.3%
INVESTING ACTIVITIES
Capital Expenditures $838.0K $24.00K
YoY Change 3391.67% -4.0%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities $8.440M -$7.160M
YoY Change -217.88% -76.01%
Cash From Investing Activities $4.130M -$9.760M
YoY Change -142.32% -67.31%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00
YoY Change -100.0%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 150.0K -930.0K
YoY Change -116.13% -100.67%
NET CHANGE
Cash From Operating Activities -3.410M -3.570M
Cash From Investing Activities 4.130M -9.760M
Cash From Financing Activities 150.0K -930.0K
Net Change In Cash 870.0K -14.26M
YoY Change -106.1% -113.98%
FREE CASH FLOW
Cash From Operating Activities -$3.410M -$3.570M
Capital Expenditures $838.0K $24.00K
Free Cash Flow -$4.248M -$3.594M
YoY Change 18.2% -51.14%

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:13px;padding-top:12px;font-size:13pt;"><font style="font-family:Arial;font-size:13pt;color:#000000;font-style:normal;font-weight:bold;text-decoration:none;">BASIS OF PRESENTATION</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;text-align:justify;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company&#8217;s Annual Report on Form 10-K for the year ended </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">December&#160;31, 2016</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> (the &#8220;2016 10-K&#8221;) filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) on March 1, 2017. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;) for interim financial information, the instructions for Form&#160;10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods.&#160;The </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">December&#160;31, 2016</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> balance sheet information was derived from the audited financial statements as of that date.</font></div></div>
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:13px;padding-top:12px;font-size:13pt;"><font style="font-family:Arial;font-size:13pt;color:#000000;font-style:normal;font-weight:bold;text-decoration:none;">DESCRIPTION OF BUSINESS</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:16px;font-size:12pt;"><font style="font-family:Arial;font-size:12pt;color:#006ebf;font-style:normal;font-weight:bold;text-decoration:none;">Organization and Description of Business</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;text-align:left;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">In this Quarterly Report on Form 10-Q, unless the context requires otherwise, the terms &#8220;we&#8221;, &#8220;our&#8221;, &#8220;us&#8221;, &#8220;Retrophin&#8221; and the &#8220;Company&#8221; refer to Retrophin, Inc., a Delaware corporation, as well as our direct and indirect subsidiaries. Retrophin is a fully integrated biopharmaceutical company headquartered in San Diego, California focused on the development, acquisition and commercialization of therapies for the treatment of serious or rare diseases. We regularly evaluate and, where appropriate, act on opportunities to expand our product pipeline through licenses and acquisitions of products in areas that will serve patients with serious or rare diseases and that we believe offer attractive growth characteristics. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:12px;font-size:10.5pt;"><font style="font-family:Arial;font-size:10.5pt;color:#666666;font-style:italic;font-weight:bold;text-decoration:none;">Research and Development Programs:</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;text-align:left;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Sparsentan, also known as RE-021, is an investigational therapeutic agent which acts as both a potent angiotensin receptor blocker (&#8220;ARB&#8221;), as well as a selective endothelin receptor antagonist (&#8220;ERA&#8221;), with in vitro selectivity toward endothelin receptor type A. The Company has secured a license to sparsentan from Ligand Pharmaceuticals, Inc. and Bristol-Myers Squibb Company (who referred to it as DARA). The Company is developing sparsentan as a treatment for focal segmental glomerulosclerosis ("FSGS"), which is a leading cause of end-stage renal disease and nephrotic syndrome (&#8220;NS&#8221;). Sparsentan was granted orphan drug designation in the United States and the European Union in January 2015 and November 2015, respectively. In the third quarter of 2016, the Company announced positive top-line data from the Phase 2 DUET study of sparsentan for the treatment of FSGS. In early 2017, we had</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;font-weight:bold;"> </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">an End of Phase 2 meeting with the U.S. Food and Drug Administration (the "FDA") regarding the regulatory pathway for sparsentan as a treatment for FSGS.&#160; Following the meeting and our receipt of confirmatory meeting minutes, we announced our plans to initiate a single Phase 3 clinical trial to serve as the basis of a New Drug Application ("NDA") filing for sparsentan for the treatment of FSGS. </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">We are currently working to finalize the study protocol with the expectation of completing it and gaining alignment with the FDA in the second half of 2017 and initiating the trial thereafter.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;text-align:left;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Fosmetpantotenate, also known as RE-024, a novel small molecule, is being developed as a potential treatment for pantothenate kinase-associated neurodegeneration (&#8220;PKAN&#8221;). PKAN is a genetic neurodegenerative disorder that is typically diagnosed in the first decade of life. Consequences of PKAN include parkinsonism, dystonia, and other severe systemic manifestations. Fosmetpantotenate (RE-024) is a phosphopantothenate replacement therapy that aims to restore levels of this key substrate in PKAN patients. Certain international health regulators have approved the initiation of dosing fosmetpantotenate (RE-024) in PKAN patients under physician-initiated studies in accordance with local regulations in their respective countries. The Company filed a U.S. IND for fosmetpantotenate (RE-024) with the FDA in the first quarter of 2015 to support the commencement of a Company-sponsored Phase 1 study, which was successfully completed during 2015. The FDA granted fosmetpantotenate (RE-024) orphan drug designation in May 2015 and fast track designation in June 2015. In February 2016, the Company announced fosmetpantotenate (RE-024) was granted orphan drug designation by the European Commission. In November 2016, the Company announced that it had reached an agreement with the&#160;FDA under the Special Protocol Assessment (SPA) process for a Phase 3 clinical trial evaluating fosmetpantotenate (RE-024) for PKAN. The Company </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">has reviewed the study design with the </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> European Medicines Agency ("EMA") </font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">and we expect it to support registration in Europe.</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> The Company expects to begin dosing patients in this Phase 3 clinical trial in mid 2017. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Tetracosactide zinc, also known as RE-034, is a synthetic hormone analog of the first 24 amino acids of the 39 amino acids contained in adrenocorticotropic hormone ("ACTH") incorporated into a novel formulation developed by us. Tetracosactide zinc (RE-034) exhibits similar physiological actions as endogenous ACTH by binding to all five melanocortin receptors (pan-MCR), resulting in its anti-inflammatory and immunomodulatory effects. The Company successfully manufactured tetracosactide zinc (RE-034) at proof-of-concept scale using a novel formulation process that allows modulation of the release of the active ingredient from the site of administration. The Company intends to pursue partnership and out-licensing opportunities for RE-034. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Liquid ursodeoxycholic acid ("L-UDCA") is a liquid formulation of ursodeoxycholic acid being developed for the treatment of a rare liver disease called primary biliary cholangitis ("PBC"). We obtained L-UDCA during 2016 with the intention of making L-UDCA commercially available to the subset of PBC patients who have difficulty swallowing. </font></div><div style="line-height:120%;padding-bottom:8px;padding-top:8px;font-size:10pt;"><font style="font-family:Arial Narrow;font-size:10pt;color:#006ebf;font-style:normal;font-weight:bold;text-decoration:none;">NGLY1 Deficiency Discovery Efforts</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:4px;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">We have entered into a research collaboration aimed at the discovery of a novel therapeutic for patients with NGLY1 deficiency, a rare genetic disorder. NGLY1 deficiency is believed to be caused by a deficiency in an enzyme called N-glycanase-1, which is encoded by the gene NGLY1. The condition is characterized by a variety of symptoms, including global developmental delay, movement disorder, seizures, and ocular abnormalities.</font></div><div style="line-height:120%;padding-bottom:8px;padding-top:12px;text-align:justify;font-size:10.5pt;"><font style="font-family:Arial;font-size:10.5pt;color:#666666;font-style:italic;font-weight:bold;text-decoration:none;">Products on the Market:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:4px;padding-bottom:8px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:9.5pt;padding-left:24px;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Chenodal</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"><sup style="vertical-align:top;line-height:120%;font-size:pt">&#174;</sup></font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> (chenodiol) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal has been the standard of care for cerebrotendinous xanthomatosis ("CTX") patients for more than three decades and the Company is currently pursuing adding this indication to the label.</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;padding-bottom:8px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:9.5pt;padding-left:24px;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Cholbam</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"><sup style="vertical-align:top;line-height:120%;font-size:pt">&#174;</sup></font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> (cholic acid) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders.</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:4px;padding-bottom:8px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:9.5pt;padding-left:24px;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:9.5pt;"><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;">Thiola</font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"><sup style="vertical-align:top;line-height:120%;font-size:pt">&#174;</sup></font><font style="font-family:Arial Narrow;font-size:9.5pt;color:#000000;"> (tiopronin) is approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria.</font></div></td></tr></table></div>

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