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Edited Transcript of RTRX earnings conference call or presentation 7-May-19 8:30pm GMT

Q1 2019 Retrophin Inc Earnings Call

May 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Retrophin Inc earnings conference call or presentation Tuesday, May 7, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Chris Cline

Retrophin, Inc. - VP of IR & Corporate Communications

* Eric M. Dube

Retrophin, Inc. - President, CEO & Director

* Laura M. Clague

Retrophin, Inc. - CFO & Senior VP

* Noah L. Rosenberg

Retrophin, Inc. - Chief Medical Officer

* William E. Rote

Retrophin, Inc. - Senior VP and Head of Research & Development

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Conference Call Participants

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* Christopher N. Marai

Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology

* Gregory Allen Harrison

Barclays Bank PLC, Research Division - Research Analyst

* Joseph Patrick Schwartz

SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst

* Liisa Ann Bayko

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Maurice Thomas Raycroft

Jefferies LLC, Research Division - Equity Analyst

* Michelle Lim Gilson

Canaccord Genuity Limited, Research Division - Analyst

* Timothy Francis Lugo

William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Retrophin First Quarter 2019 Financial Results and Corporate Update Call. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to turn the call over to Chris Cline. You may begin.

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [2]

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Great. Thank you, Michelle. Good afternoon, everyone, and welcome to Retrophin's First Quarter 2019 Financial Results and Corporate Update Call. Today's call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined by our Chief Medical Officer, Dr. Noah Rosenberg; and our Chief Financial Officer, Laura Clague for the prepared remarks. Dr. Bill Rote, our Senior Vice President of Research and Development, will also be joining us for the Q&A session.

Before we begin, I'd like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those that are expressed or implied by the statement.

Please see the forward-looking statement disclaimer on the company's press release that was issued earlier today as well as the Risk Factors section in our Forms 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, May 7, 2019, and Retrophin specifically disclaims any obligation to update such statements to reflect future information, events or circumstances.

With that, let me now turn the call over to Eric. Eric?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [3]

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Thank you, Chris, and good afternoon, everyone. We continued to advance our pipeline to address significant unmet needs for people living with rare diseases. Our execution in the first quarter has positioned us to reach the next key milestones this year for each of our late-stage programs.

Our lead program evaluating fosmetpantotenate for the treatment of PKAN remains on track for a top line readout from the pivotal FORT Study in the third quarter of this year. We are eagerly awaiting the results, which if positive, have the potential to bring the first approved treatment to patients living with this rare neurodegenerative disease. We've seen a great dedication from patients and families in the FORT Study, and we are thankful for their continued participation and commitment.

We further strengthened our fosmetpantotenate team with the addition of global medical and commercial product leaders, and they are guiding our efforts during this exciting time as we progress our preparation work for both U.S. and European filings as well as commercial launch.

We also continue to make progress with our 2 Phase III programs with the potential to make sparsentan the new treatment standard for rare kidney disorders, FSGS and IgA nephropathy. Together, these two diseases represent an opportunity for us to potentially have a positive impact on the treatment paradigm for as many as 150,000 patients in the U.S. and similar numbers in Europe. Noah will talk a bit more about this in a minute, but we are pleased with the building enthusiasm for the sparsentan program within the nephrology community.

In FSGS, our Phase III DUPLEX Study remains on track to deliver our second pivotal readout, which we expect to come during the second half of 2020. The PROTECT Study to evaluate sparsentan for IgA nephropathy continues to build momentum after starting at the end of last year. Investigator engagement is high and site activation is going to plan. Overall, we remain optimistic about sparsentan's potential to be a first-in-class therapy for FSGS and IgA nephropathy. And we will further our efforts to build our strong foundation throughout the year.

We are also nearing a potential inflection point with the CNSA-001 collaboration. We have been pleased with the progress the team at Censa is making. Since our last call, they completed randomization in the Phase II proof-of-concept study evaluating CNSA-001 in patients with PKU, and we are looking forward to evaluating the outcome.

We understand from Censa that the program remains on track to deliver top line data in the next couple of months, and thus, the decision on our option is expected to come in the third quarter of this year. In order to make our decision on the option, we will be conducting an assessment of the full data set. We will be also be assessing regulatory input, including participating in the planned FDA interactions as well as hosting an advisory board to leverage the input from leading experts in the field to refine our outlook of the competitive landscape.

I know many of you have been asking about when to expect the results of the Phase II study to be made public. We recently worked with Censa to align on the disclosure plan in the event we exercise our option to acquire. That would allow us to make the Phase II data available to all of you at the time of our decision during the third quarter. This takes into account the needs of our collaboration and will allow us to give the full context of our decision in the event we exercise.

Lastly on this program, we are planning for success. Our teams are working to ensure we have the appropriate resources to quickly move CNSA-001 forward if we trigger our option.

Outside of the pipeline and partner programs, the base business continued to benefit from new patient starts, and the first quarter marked another consecutive period of year-over-year organic growth. Thiola performance continued to be steady, and our team in the field continues to make a positive impact with patients diagnosed with cystinuria. The bile acid portfolio came in slightly below the same period last year, which is attributable to the uneven nature in which the patients with these ultra-rare indications initiate and receive treatment.

As is normally expected in our business, we experience higher gross to net discounts in the first quarter driven by the insurance resets in the new year. This shift was in line with our expectations, and we anticipate moving back into normal levels over the coming quarter as we have seen in years past.

Notably, we started the second quarter with a strong month of April, and we remain on track to meet our full year growth projection for 2019. We are also preparing for the upcoming PDUFA date for the new formulation of Thiola on June 30. We are fortunate to have a very experienced team that has been working with the cystinuria community for the last 4 years. They are well positioned to educate and raise the awareness of the opportunity to potentially improve the Thiola experience and ensure seamless access when we look to the launch in the third quarter.

Let me now turn the call over to Noah for a clinical update. Noah?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [4]

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Thank you, Eric, and good afternoon. I'm proud of our team's efforts which have led to the advancement of all 3 of our pivotal programs and a strong start to the year.

Our lead program, fosmetpantotenate, for the treatment of PKAN continues to make solid progress as our Phase III FORT Study advances. As many of you will recall, we completed the enrollment of FORT in December. So at this point, the majority of the patients have completed the prespecified 24-week double-blind period of the trial. We remain pleased with the study conduct and with patients progressing into and remaining in the open-label portion of the study. Most importantly, as Eric mentioned, we are on track to deliver a top line readout in the 24-week safety and efficacy data in the third quarter.

Our biometrics team and CRO continue to do the necessary validation work to ensure we'll have a high-quality readout, and we look forward to sharing the results with all of you and the PKAN community at that time. In parallel, our development team continues to prepare our regulatory package to ensure that we will be in a position to submit our NDA and MAA applications in 2020.

Given the current lack of treatment options and the significant unmet need for patients living with PKAN, we want to be in a position to make fosmetpantotenate broadly available as quickly as possible.

I'll now shift over to sparsentan where I'm pleased with how the enthusiasm and the awareness of our programs continues to rise in the nephrology community. We recently had the opportunity to engage with key opinion leaders at the World Congress of Nephrology meeting in Melbourne, Australia. We were able to continue raising awareness of our ongoing Phase III trials as well as positive results from the DUET Study and open-label extension.

As many of you may recall, the data from the DUET open-label extension showed that ongoing sparsentan treatment in patients with FSGS over 84 weeks resulted in sustained and progressive antiproteinuric effects and an increasing proportion of patients who achieve FSGS partial remission of proteinuria. It also showed that newly initiated immunosuppressive therapy had no meaningful impact on the efficacy and safety measures of sparsentan treatment during the period.

Along with other data sets presented at the meeting that support the potential nephroprotective benefit of dual inhibition with endothelin antagonism and RAS blockade, it was a positive sentiment in our team's one-on-one discussions with thought leaders at the meeting where there appear to be growing enthusiasm for sparsentan utility in FSGS and IgA nephropathy. The pivotal Phase III DUPLEX Study evaluating sparsentan in FSGS continues to advance and remains on track to have a top line readout for the interim proteinuria assessment in the second half of 2020.

We still have a number of sites coming online through the balance of the year, and we're looking forward to getting them up and running. We have been able to leverage the DUPLEX footprint to move quickly with a pivotal PROTECT Study for IgA nephropathy, and the initial trends are encouraging.

Through the balance of the year, we will remain focused on execution of the near-term milestones to advance each of our 3 pivotal programs. I look forward to sharing more with you as we approach key inflection points like the top line readout from the FORT Study in the third quarter.

Let me now turn the call over to Laura for a financial update. Laura?

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Laura M. Clague, Retrophin, Inc. - CFO & Senior VP [5]

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Thanks, Noah. During the first quarter, net product sales from our commercial portfolio grew to $39.6 million, a 3% increase over the same period in 2018. We reported a GAAP net loss of $41 million for the first quarter of 2019. After adjusting for noncash expenses and income tax, we reported a non-GAAP net loss of $26 million.

On a GAAP basis, R&D expenses for the quarter were $33.4 million for the first quarter of '19. The increase over the same period in 2018 is largely attributable to the higher expenses to support our clinical and product development efforts for our fosmetpantotenate and sparsentan, including our 3 Phase III trials. On an adjusted basis, R&D expenses were $31.5 million for the first quarter.

Relevant noncash expenses for the first quarter included $2 million of stock-based compensation and amortization. Selling, general and administrative expenses for the quarter were $32.7 million. The increase over the same period in 2018 is largely attributable to headcount in support of our operational growth and increased legal fees. On an adjusted basis, non-GAAP SG&A expenses for the first quarter were $23.2 million. Significant noncash adjustments for the quarter consisted of $9.5 million in stock-based compensation and depreciation and amortization.

In the first quarter, we made a portfolio decision to discontinue further development of the L-UDCA program, which resulted in a net noncash P&L charge of $7.5 million during the period. The company acquired the rights to L-UDCA in 2016 for $0.5 million.

As we advance our 3 pivotal programs, we continue to leverage our strong financial foundation with $447.6 million in cash and cash equivalents as of March 31, 2019.

For the balance of the year, we continue to expect R&D expenses to increase modestly from current levels. As we said previously, there may be an uneven nature in R&D expenses as we manufacture clinical material and scale it for commercial readiness, but we do anticipate continuing modestly higher as our studies advance in the clinic. SG&A for the remainder of the year should be relatively stable with the potential for minor increases at times.

Let me now turn the call back to Eric for his closing remarks. Eric?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [6]

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Thank you, Laura. On our year-end call a couple of months ago, I talked about my evaluation of the organization as a new leader. I'm pleased to report that Retrophin is in a strong position to deliver fosmetpantotenate and sparsentan in the coming years, and I'm confident in the capabilities of our team across the organization.

It became clear that in order to maintain the patient focus on our key pipeline assets and further the pursuit of our mission in the years ahead, there were a few adjustments to be made. As Laura mentioned, we discontinued our L-UDCA program during the quarter with the belief that it will sharpen the focus on advancing our late-stage pipeline. We also made the decision to transition to a more focused commercial role on the executive team. This shift will allow our team to maximize the success of our upcoming product launches and to reach as many patients as possible with our new and currently approved therapies in the years ahead.

As a result, our Chief Operating Officer, Neil McFarlane, will be departing at the end of this month. Neil's leadership, commitment to patients and continued support of our mission have helped the company evolve and reposition us as a leader in the rare disease community. And we are all grateful for his work and dedication over the last several years.

We are entering a period of significant growth, and we will remain focused on delivering on our near-term milestones to create value this year. It is clear that fosmetpantotenate and sparsentan are the center of our growth for our organization, and we are looking forward to the pivotal readout next quarter. Each of these 3 programs offers an opportunity for us to reach significantly greater number of patients and transform our ability to serve the rare disease community.

With the upcoming option decision on the Censa collaboration and anticipated launch of the new formulation of Thiola in the third quarter, we also have opportunities this year to make strides towards improving the current treatment options for patients with PKU and cystinuria. We are well prepared to recognize value from all of our programs as we reach these key milestones later this year, and we look forward to updating you on our current, continued progress.

Let me turn the call back over to Chris to open it up for questions. Chris?

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [7]

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Thanks, Eric. Michelle, can we go ahead and open up the lines for Q&A, please?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Geoff Meacham of Barclays.

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Gregory Allen Harrison, Barclays Bank PLC, Research Division - Research Analyst [2]

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This is Greg Harrison on for Geoff. With regards to the CNSA-001 asset, could you give us any additional color on how you're going to assess the decision whether you will acquire the asset when you see the data? And is there a fee reduction level we should be thinking of as a minimum bar? Or is there some other criteria that you see as important in making this decision?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [3]

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Yes. Thank you, Greg. So I'll all share with you my thoughts, and then I'll ask Bill Rote to add anything else. So essentially, we're primarily going to be looking at the clinical profile of the CNSA-001 asset. We do believe that there is still unmet need in this established market, and we want to make sure that we would be able to deliver a product that meets the unmet need in a way that the current assets on the market do not.

So we're going to be looking certainly at the clinical profile. But we also want to look at what the regulatory requirements are, what's the pathway and the speed by which we'll be able to bring this asset to market particularly because it is a competitive market. But we also are going to be looking at how we think that this PKU market will evolve over time. Given that it is dynamic, there would likely be new entrants that are currently in the nonclinical or preclinical phase.

So we want to make sure that we understand what the addressable market will be. Those are the 3 key areas that we will be looking at over the next couple of months before we make a decision. And now I'll invite Bill to talk a little bit about what we'll be looking at for fee reduction and the efficacy data.

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [4]

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Certainly. I mean as you said, it's a holistic view with the whole program. Specifically with fee reduction, I don't know that we've established a specific numerical cutoff for which we need to hit. But I think it's more a qualitative view of clear superiority over the existing standard of care. So for those patients who are responders, you see a significantly improved response. And for those who are weak or nonresponders, can you push them into a point where they become responders. Those would be the 2 categories where we really want to see a difference.

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Gregory Allen Harrison, Barclays Bank PLC, Research Division - Research Analyst [5]

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Great. And if I could just follow up. Have you thought about -- I don't know if it's maybe early, but about pricing if you decide to acquire the asset and kind of how you would fit in the market with Kuvan and Palynziq in there and just how you see the overall competitive dynamic evolving.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [6]

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Yes. I mean certainly, we're continuing to look at those trends look like as well as potential new entrants, including the potential for generic Kuvan. And certainly, all of those would play into our thoughts on pricing. And again, we want to make sure that most importantly that this asset would be delivering on an unmet need. And we think that is the primary input into our pricing decision. But we've not disclosed what our thoughts are specifically on pricing. Thanks, Greg.

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Operator [7]

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Our next question comes from Tim Lugo of William Blair.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [8]

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For the upcoming FORT Study, do you have a sense of how many patients have rolled into the open-label follow-up portion of that study? And can you maybe speak of the baseline population enrolled, how heterogeneous it was or the age ranges and concomitant medication?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [9]

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Yes. Tim, certainly, we've been pleased with the progress so far. And I'll invite Noah to share a bit more detail on both of your questions.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [10]

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Tim, so as far as the open-label portion of the study, the first part of your question, we're not giving specific numbers, but we can say the majority of patients have now completed the double-blind portion and have entered the open label. We, just to emphasize, remain encouraged by the retention we've seen in the open label as well.

And in terms of the demographic, reminder, we remain blind into the study. We only really see a limited amount of information. But I would say overall, we're pleased with the study conduct. It's led to a representative population. We've mentioned previously that about 2/3 are adults and 1/3 pediatric. I think it's fair to say that's consistent now as well. And we just want to thank the patients and families, of course, for participating and making this possible.

And then finally, in terms of some of the other demographics, the median PKAN readings, for instance, the data isn't considered final until the database is locked. And we can't share specifics. But I can tell you that the baseline PKAN-ADL results are similar to what we saw in the published PKAN-ADL validation study, which was in the upper 20s. So that's reflective of our initial assumptions of the design. We feel like we've enrolled in the right patients to be able to show an effective fosmet does what we expect it to do. And hopefully, I answered your questions there, Tim.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [11]

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Yes, definitely. And maybe can you remind us what the differences are between the PKAN-specific tool and the UPDRS Part II and III?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [12]

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Yes, yes. So essentially, the UPDRS Part II, which is the activities of daily living part of the Unified Parkinson's Disease Rating Scale, the validation study that Noah mentioned really was done with 41 patients or their caregivers. And a lot of the work that we did with that community was to understand what are the specific symptoms that are hallmarked to PKAN versus those that are in Parkinson's disease. So that is the approach that was taken and the intent. And Noah can speak to those couple of items that were changed from one to the other.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [13]

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Yes. So Tim, in terms of PKAN-ADL which was adapted from the UPDRS Part II, there were 2 items that were removed, which are tremor and freezing. They weren't felt relevant to the population. There was one item that was added, which is problem sitting independently or getting out of a chair.

And I think I just want to also mention that overall, when we look at these scales, this UKPDS, the way the scale is designed, if you remember, there are 12 separate domains. There were -- essentially, there are 4 -- 4 point scale each, and a 1 point change on any one of these domains was designed such that, that will be a clinically relevant effect. So I think it's important to keep that in mind. Again, we saw, as you recall, using the UKPDS II in the compassionate use patients, double-digit changes. But even modest changes with the PKAN-ADL would signal a clinically significant, meaningful effect.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [14]

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Great. Thank you for all the details. And maybe if I could just sneak one more in, I apologize. But you did mention that you are hearing more KOL support, especially at WCN. Can you just maybe talk holistically what's leading to that interest and that support? Is it kind of comfort around the mechanism of action? Is it comfort around fluid retention, which may be felt was an issue of the class prior? Or what's around that KOL interest and support?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [15]

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I think there are a few things that are feeding into that. I think #1 is the fact that we've got the DUET long-term data and we continue to demonstrate that the product is safe and well tolerated as opposed to some of the other folks that are coming in that are a little earlier on, less proven. So I think that there is a lot of more emphasis there on that durability and that long-term safety.

I also think specifically at that meeting, if you recall, there were 2 large outcome studies that were presented: SONAR and CREDENCE. I think both studies taken together in the diabetic nephropathy population is slightly different than what we're looking at but in this nephrotic syndrome or nephropathy population demonstrated that there is residual risk and there is potential for these drugs to actually improve or reduce that residual risk or improve outcomes. And these were hard outcome studies, things like double serum creatinine, end-stage renal disease.

And then finally, I'll just add that the SONAR data, while it was a different compound, was also utilizing ERA on the background of ACEis and ARBs or RAS inhibition, which I think adds even more credibility and credence to the concept of combining both of those mechanisms. It provides support for that rationale in terms of the potential for nephroprotection as well as even potentially down the road, improving overall long-term outcomes.

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Operator [16]

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Our next question comes from Maury Raycroft of Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [17]

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Congratulations on the progress. First question is on sparsentan for the Phase III DUPLEX Study. Assuming that you succeed on FPRE and file for accelerated approval there, what's the best way to try to understand how eGFR slope differences can play out at 108 weeks? And can you comment on your expectations for eGFR?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [18]

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Maury, yes. So Noah, why don't you take this one?

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [19]

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Well, this is Bill. I think that expectations in the FSGS population is that absent treatment or even best standard of care, those patients are going to lose 3 to 5 ml of GFR each year. We're expecting to see a delta at the end of that that's statically significant, and we've powered off that. We haven't revealed what that powering is or what the specific effect size is, but that can give you some of the generalities around it. Is that helpful?

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [20]

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That's helpful. And I guess also about the relationship between proteinuria and eGFR. At 36 weeks, will we get some insight or greater confidence into how eGFR would play out at that point, I guess?

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [21]

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So at that point, it's not clear if there's enough time at 36 weeks to show a difference. It's one of the reasons why we're running the longer study out to 2 years. And that's why it's built in such a way that you have the primary review at 36 weeks looking at proteinuria and then the confirmatory endpoint at 2 years for eGFR. The combination of effect size and variability leads you to the point that you need a longer study for those 2 lines to diverge.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [22]

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Thanks, Bill. I think the other thing that I would add is the endpoint that's used for proteinuria, which is the FSGS partial remission end point, which is really a composite of 40% or greater reduction in baseline proteinuria as well as a proteinuria level at 36 weeks of 1.5 or below, is really based on a modeling that was done to look at survival curves of renal health whereby those that show complete or partial remission on that end point actually have greater long-term renal outcomes. And so I think that was a large basis for looking at that end point, which we believe based on DUET, you can show at 36 weeks but then would be or could be predictive of longer-term renal function.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [23]

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Got it. Very helpful. And then just quickly on Thiola, I'm wondering if you can provide any more color as to what went into the filing package for the NDA. And then maybe as a second question to that, as the company's strategic shift to focus more on your current pipeline and commercial opportunities, any thoughts on label expansions with Thiola?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [24]

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Yes. Thank you. So we've not disclosed much about the new formation of Thiola. We want to make sure that we certainly will share that at the time of the approval, which is next month. And so we'll certainly share more. But I can tell you that the package and the formation was very much tied to what we heard from the patients that we serve and some of the challenges with the current formulation. So again, we're on the eve of the PDUFA date at the end of next month and we'll certainly share more then.

In terms of further label expansion for that and for any of our products, that's something that we continue to look at in life cycle management, how do we continue to develop more evidence, et cetera. But it's not something that we have decided to disclose at this point.

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Operator [25]

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Our next question comes from Michelle Gilson of Canaccord Genuity.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [26]

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I was just hoping you could elaborate a bit on, I guess, the World Congress of Nephrology comments. There were data presented from atrasentan, which is a more selective endothelin A receptor antagonist. Could you just talk about any read-through you see to sparsentan and maybe touch on why FSGS and IgA nephropathy are more ideal indications versus diabetic nephropathy for this mechanism?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [27]

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Yes. Michelle, it's Noah here. So I think with atrasentan, in this population of diabetic nephropathy, it's a little sicker population than what we're seeing and there tend to be higher rates of heart failure and other complication. So in addition, the 8 properties may [confer] some of those worse outcomes. But it was actually heartening to see that even in that context, the heart failure was managed actually with diuretics. Even with that compound in that population -- with our compound in FSGS, which is significantly lower and more favorable properties, that gives us a lot of confidence in terms of the treatment in these patients. We actually look at the DUET data carefully for any signals. And we've seen some fluid retention, as you know, which is managed with diuretics, but no cases of heart failure.

So I think from a safety standpoint, overall, that data gives us a very good, solid basis for us to proceed and in addition to the -- all of the solid foundation from DUET that we have in terms of the overall efficacy that was alluded to before.

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Operator [28]

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Our next question comes from Christopher Marai of Nomura.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [29]

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Just one on -- or a couple of on fosmet. I was wondering if you could just remind us really regarding the dose that you'll be exploring in the Phase III versus that used on -- in the open-label or the individual case reports on this drug, number one. And then maybe number two, if you could further elaborate on components of the UPDRS that changed in those single-patient studies and if they are included primarily in the PKAN-ALD (sic) [PKAN-ADL]. Or how should we think about that mapping one to the other? And have you actually mapped those results onto the PKAN-ALD? And then one follow-up.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [30]

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All right. So Bill, would you like to take those questions?

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [31]

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Sure. The Phase III study currently is 300 milligrams 3 times a day. I think your question was how does that compare with those individuals in the compassionate use setting. They range from 120 milligrams 3 times a day up to 300 milligrams per day. So we're in that ballpark. In Phase I studies, we went as high as 3,600 milligrams in single administration and had pretty reasonable tolerability even at those higher doses.

The other aspect of your question was comparing and trying to draw bridge from the compassionate use individuals and the effect we saw measured in the UPDRS scale and mapping that over to PKAN-ADL. The only components that were removed were freezing and tremors, which really don't occur in patients with PKAN. So it should be a net a neutral change.

When you go to PKAN-ADL, you add one more component that's not assessed in those patients, which is the ability to sit independently and can you get out of a chair unassisted. So that domain was new and would be the only difference. So they match up much more than they diverge. The difference in some of the UPDRS scales is there's one that's patient-reported and one that's physician-reported where PKAN-ADL is either patient or caregiver-reported. It depends on the settings. So I hope that helps you with your question.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [32]

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Absolutely. And then just with regards to, I suppose, the treatment effect you expect to see that's clinically meaningful on the PKAN-ALD, what should we be thinking about? And then thinking about pediatrics versus adults, any expectation that you might move to scale a little bit more on one group versus the other? And if one were to be, I suppose, more clinically relevant and the other not, would you file an NDA in just one population?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [33]

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Yes. I'll just address. So the first question is around the powering. And just to emphasize again how the PKAN-ADL scale works, it's 0 to 48 points, again 12 domains, 0 to 4 rating. And so while we would anticipate that a low single-digit improvement on the PKAN scale relative to placebo would be meaningful, again we did see these double-digit changes, as Bill alluded to. So I think the answer to the question is if we do see modest changes, we would expect those to be clinically significant.

With regard to subpopulations, as you know, it's a fairly small group here of patients. But it is rare disease and these studies aren't really powered to show P-values in subpopulation. So I think it's important to look at every data point and really understand the totality of data and how we're improving disease in these patients. And even small, again, modest changes in the pediatric population in a disease where there is no approved treatment would be meaningful and would be something that would be looked upon, we believe, quite favorably.

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Operator [34]

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Our next question comes from Liisa Bayko of JMP Securities.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [35]

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I just wanted to ask a little bit more about the FORT Study and how much you thought about or know about the natural history. When looking at the end point sort of over that 24-week period, what would you expect kind of as a background change?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [36]

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Yes. I'll just say that it's hard to gauge that or answer that question. It's a rare disease that hasn't been well studied. We don't know a ton about this population. What we have heard is that there is typically steady worsening of patients with -- occasionally, you can see what's referred to as episodic, I'm not sure that's the best term, but maybe stepwise worsening. So a background of modest reduction with stepwise flares of worsening of the disease. We talked to our experts and the folks that help us power the study. And while we don't think that at 24 months we're going to see maximum effect -- sorry, 24 weeks we're going to see maximum effect, we do think that we are in a position to be able to see a clinically meaningful effect at 24 weeks based on their knowledge of the disease state.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [37]

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Okay. Great. And then can you remind us how frequently you're going to be kind of going through the questionnaire because I know it's over time, correct, the way you're measuring it, it's over time, it's not based on versus week 24?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [38]

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Yes. We have measurements frequently throughout the study at various time points. And I think that that's important to note in the way the measurement -- the robustness of the data. So it's not just change for baseline. And we consider all the data points, including week 3, week 6, week 12, week 18 and week 24, which are the measurements -- the time points in the study.

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Operator [39]

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Our next question comes from Joseph Schwartz of SVB Leerink.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [40]

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So continuing on that fosmet theme, I was wondering if you can provide any information on the powering assumptions that when into the trial. What degree of separation needs to be seen based on the variability that you expect in order for the trial to be "successful"?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [41]

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Yes. Thanks, Joe. Bill, do you want to take this?

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [42]

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Sure. We haven't revealed what the specific powering is. And I think Noah mentioned it previously. It was -- long single digits is what we need to see as far as the separation between the 2 groups.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [43]

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Okay. Can you tell us what percentage of the patients who were eligible have opted to participate in the open-label extension study for the FORT Study? Given it sounds like you could be tracking these patients longer term, maybe there will be greater separation over time.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [44]

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I think that's a really good point, Joe. Yes. All patients have opted to cross over from the double blind into the open-label extension. And we will continue to collect that data long term and have a good amount of information to set that long-term function.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [45]

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Great. Okay. And then on Thiola, next-gen Thiola, I understand you don't want to reveal the attributes of the product quite yet. But can you talk about the robustness of the data that you've generated to support the NDA? And how well do you think that will satisfy the FDA's demands for the review?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [46]

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Yes. So we're currently in the process with that filing. And we've not disclosed this specific engagement that we've had. But we believe that we're on track for that. And obviously, because we're still on that discussion with FDA, we don't yet have final labeling. We just want to be cautious. But we believe that what we've submitted will support the approval next month.

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Joseph Patrick Schwartz, SVB Leerink LLC, Research Division - MD of Rare Diseases & Senior Research Analyst [47]

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Okay. Great. And then one last one from me, if I could. You currently don't have much of a rest of world presence. So I was wondering how you might envision this could change any or all of your pipeline payers group.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [48]

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Yes. Thanks, Joe. So certainly, that is something that we are actively looking at. We are in the process of building the European organization. We've got a head of Europe, and part of our expansion has been building out that team over the last couple of quarters, particularly in preparation for the fosmetpantotenate launch. We have actively engaged in looking outside of Europe and U.S., particularly with sparsentan where we know that the rates of FSGS and IgA nephropathy are high and there is unmet need. And we're looking at different models for what would be best for us in delivering that value. But we've not disclosed specifically what that model is outside of the U.S. and Europe.

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Operator [49]

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There are no further questions. I'd like to turn the call back over to Chris Cline for any closing remarks.

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [50]

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Great. Thank you, Michelle. Thank you, everybody, for joining. This concludes our call for the first quarter, and we look forward to updating you in the near future on our progress.

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Operator [51]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.