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Edited Transcript of RTRX earnings conference call or presentation 26-Feb-19 9:30pm GMT

Q4 2018 Retrophin Inc Earnings Call

Mar 24, 2019 (Thomson StreetEvents) -- Edited Transcript of Retrophin Inc earnings conference call or presentation Tuesday, February 26, 2019 at 9:30:00pm 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

* Neil F. McFarlane

Retrophin, Inc. - COO

* Noah L. Rosenberg

Retrophin, Inc. - Chief Medical Officer

* William E. Rote

Retrophin, Inc. - SVP of Research & Development

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Conference Call Participants

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* Dae Gon Ha

SVB Leerink LLC, Research Division - Associate

* Jun-ho Cha

Instinet, LLC, Research Division - Research Analyst

* Keith Richard Tapper

BMO Capital Markets Equity Research - Associate

* 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 afternoon, ladies and gentlemen, and welcome to the Retrophin Inc. Fourth Quarter and Full Year 2018 Financial Results and Corporate Update Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Chris Cline. Sir, you may begin.

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

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Great. Thank you, Tom. Good afternoon, everyone, and welcome to Retrophin's Fourth Quarter and Full Year 2018 Financial Results and Corporate Update Call. Today's call will be led by Eric Dube, our Chief Executive Officer. Eric will be joined by our Chief Medical Officer, Dr. Noah Rosenberg; and our Chief Financial Officer, Laura Clague for their prepared remarks. Neil McFarlane, our Chief Operating Officer; and Dr. Bill Rote, our Senior Vice President of Research and Development will be joining us for the Q&A session.

Before we begin, I would 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 expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our Form 10-K filed with the SEC today. In addition, any forward-looking statements represent our views only as of the date such statements are made, February 26, 2019, and Retrophin specifically disclaims any obligation to update such statements to reflect future information, events or circumstances.

With that, let me 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 thank you all for joining us today.

As this is my first corporate update call since joining Retrophin last month, let me start by saying how honored I am to be on board and leading an organization with such an important mission. Retrophin has a number of important opportunities to deliver innovative treatments to patients living with rare disease. And the coming years will be pivotal in shaping the future of our company and how we can help patients. Aligned with this mission and opportunities is our work to bring potential first-in-class treatments for diseases like pantothenate kinase-associated neurodegeneration or PKAN, focal segmental glomerulosclerosis or FSGS, and IgA nephropathy or IgAN to communities with severe unmet needs.

Last quarter further demonstrated our ability to execute on the key clinical objectives to advance our fosmetpantotenate and sparsentan development programs for these rare disorders. I want to commend our employees for an impressive fourth quarter and start to 2019 and to thank them for their unwavering focus and performance.

For fosmetpantotenate, we were very pleased to complete enrollment in the Phase III FORT Study in December. We know how difficult life is for these patients who are living without an approved treatment, so we are very encouraged to see their dedication to the FORT Study. Completing enrollment in December put us on track for a top line readout in the third quarter of this year, which will be a major milestone for the program and potentially for PCAN patients. As you know, the study is designed in alignment with a special protocol assessment agreement with FDA. And if we generate positive data, it should support both NDA and MAA filings. Our development teams are already working together on submission preparations so that we will be in position to put a high quality package together for review in 2020. We are also making good progress on our sparsentan programs. Given the need for effective therapies to treat these rare nephropathies, we are advancing the 2 pivotal programs as quickly as possible and working to establish our leadership in the rare nephrology community. We continue to advance our efforts to enroll the Phase III DUPLEX Study of sparsentan and FSGS. Our focus remains on randomizing the first 190 FSGS patients in order to enable the top line readout from our interim proteinuria assessment in the second half of 2020. We believe a positive result from that readout would allow us to potentially gain conditional marketing approval in the U.S. and Europe. In parallel, we continue to make significant progress with our additional indication for sparsentan. During the fourth quarter, we achieved a key developmental milestone with the first patient dosed in the Phase III PROTECT Study for IgA nephropathy. IgAN represents a significant opportunity for sparsentan to potentially help hundreds of thousands of people globally who are currently facing progression to end-stage renal disease with no indicated treatment option. The teams here did an amazing job of operationalizing this pivotal study in a short period, and we are looking forward to initiating additional sites around the world.

Through these 2 pivotal programs, our goal is to contribute to the better understanding of these rare diseases and improve patients' lives with the introduction of a potential first-in-class treatment. Another key value driver for us is the ongoing collaboration with Censa to advance CNSA-001 for the treatment of phenylketonuria or PKU. Our partners at Censa made considerable progress in the fourth quarter and to start this year. Just recently, the Censa team had their Phase I dosing study published online in the Journal of Molecular Genetics and Metabolism. This is an important milestone for their program and the findings support the hypothesis that the amount of BH4 in plasma derived from CNSA-001 was significantly greater than what was seen with standard of care.

As many of you know, Censa is currently running a Phase II proof-of-concept study to further evaluate CNSA-001 versus current standard of care, and we will continue to be pleased with their development. We understand from our partners that they remain on-track to deliver top line data to Retrophin in the second quarter of this year with a full data package to follow thereafter. We continue to believe this program has the potential to address a significant unmet need for patients and possibly be a fourth pivotal program in our pipeline. We anticipate making the decision on our option to acquire Censa after we have had a chance to fully evaluate the complete data as well as the regulatory pathway and other requirement for successful product development.

The fourth quarter also marked another consecutive quarter of period-over-period growth from the commercial portfolio. Our approved products continue to play an important role in patients' lives. Thiola performed in line with expectations and we saw a nice rebound in the bile acid products during the fourth quarter. Our commercial teams have helped to deliver organic growth based on new patient starts, and we look forward to continuing that growth at a similar rate in 2019. Also during the quarter, the NDA for the new formulation of Thiola was accepted for review by the FDA and assigned a June 30 PDUFA date. If approved, we may have the ability to improve the treatment experience for cystinuria patients, and we are working to make sure that we have a solid launch in the second half of the year.

I'd now like to turn the call over to Noah for an update on our late-stage development programs.

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

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Thanks, Eric, and good afternoon to everyone. As Eric mentioned, we met key clinical milestones in the fourth quarter that have set the stage for 2019 to be a very exciting year for all of our programs in development. I'll start with fosmetpantotenate for PKAN. This will be the first of our 3 pivotal programs underway to readout. In December, we announced the completion of enrollment in our Phase III FORT Study. FORT is our placebo-controlled pivotal trial being conducted under a SPA agreement with the FDA and is expected to support approval in both the U.S. and Europe if we generate positive results. I want to commend our clinical team and investigators for enabling us to reach our target of completing enrollment in the study by year-end. Most recently, we had our fourth review of safety for our independent data monitoring committee. This review was based upon 100% enrollment in the trial, and the committee recommended we continue as planned. Based upon the randomization schedule and prespecified 24-week observation period, we were expecting to have database lock and top line data from the study available in the third quarter of this year. Our internal biometrics team continues to work closely with our CRO partner to ensure we have the highest quality data, and we look forward to sharing those results with all of you and the PKAN community later this year. If successful, we want to make fosmetpantotenate available to patients as quickly as possible. In that spirit, our development teams are working with physicians to submit NDA and MAA applications after we receive our data package. Sparsentan also continues to make steady progress towards becoming a potential first-in-class therapy for both FSGS and IgA nephropathy, rare and debilitating kidney disorders which often progress to end-stage renal disease.

With our 2 pivotal studies progressing, I am pleased with how we are continuing to make progress towards becoming the leaders in the rare nephrology community. The Phase III DUPLEX Study of sparsentan in our lead indication FSGS continues to advance toward the goal of enrolling the first 190 out of 300 subjects necessary to enable our interim assessment. Our team has done a great job engaging with investigators, and I'm pleased that we now have more than 100 open study sites actively screening patients. The overall reception has been positive, and we continue to believe that the community is excited about driving this landmark study to meet its enrollment goals. We expect our work over the next 10 months will enable a top line readout of the FSGS partial remission of proteinuria endpoint during the second half of next year. If positive, we would expect to subsequently pursue an NDA filing under Subpart H in the U.S. and conditional marketing authorization in Europe.

We also continue to make progress in our next indication for sparsentan, IgA nephropathy. As Eric mentioned, at the end of December, we reached our targeted milestone of dosing the first patient in the pivotal PROTECT Study. The PROTECT Study is our active controlled Phase III clinical trial designed to support registration of sparsentan for the treatment of IgA nephropathy in the U.S. and Europe. Similar to our ongoing Phase III study in FSGS, the PROTECT Study utilizes a proteinuria-based endpoint after 36 weeks of treatment with sparsentan to support a Subpart H submission in the U.S and consideration for conditional marketing authorization in Europe. While still early in the study rollout, we have completed 3 global investigator meetings and are encouraged to have study initiations progressing in line with our plan. For the balance of this year, we'll be focused on building further awareness of our study and getting additional sites opened around the world to move towards our ultimate goal of enrolling 280 patients in the study. Based on our current projections, we expect to generate top line data from the 36-week proteinuria assessment of 280 patients in the first half of 2022.

Looking ahead, our teams will remain focused on meeting our near-term development goals to move us closer to potentially delivering important new treatment options to the patients we serve. We are especially excited by the opportunity to advance our pipeline and generate multiple NDA and MAA filings in the coming years starting with fosmetpantotenate in the near future.

So 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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Thank you, Noah, and happy birthday to you. Net product sales from our commercial portfolio increased to $43.8 million for the fourth quarter and $164.2 million for the full year 2018. This represents a 6% increase over the full year 2017. We reported a GAAP net loss of $7.5 million for the fourth quarter and a net loss of $102.7 million for the full year 2018. After adjusting for noncash expenses, we reported a non-GAAP net loss of $8.5 million for the fourth quarter and $51.8 million for the full year of 2018. On a GAAP basis, R&D expenses were $32 million for the fourth quarter and $123.8 million for the full year 2018. The increase over 2017 is largely attributable to higher expenses to support our clinical and product development effort for fosmetpantotenate and sparsentan as well as funding for the CNSA-001 collaboration. On an adjusted basis, R&D expenses were $30.1 million for the fourth quarter and $116.6 million for the full year 2018. Relevant noncash expenses for the fourth quarter included $1.9 million of stock-based compensation and amortization. Selling, general and administrative expenses were $26 million for the fourth quarter and $103.7 million for the full year 2018. This is largely unchanged from our 2017 SG&A spending levels.

On an adjusted basis, non-GAAP SG&A expenses for the fourth quarter were $18.1 million and $72.4 million for the full year 2018. Significant noncash adjustments for the quarter consisted of $7.8 million in stock-based compensation and depreciation and amortization. As of December 31, 2018, we had $471.5 million in cash and cash equivalents and marketable securities, a very strong financial position for our company.

Looking ahead, we expect our operating expense levels in 2019 to increase over 2018 levels. We are investing in our ongoing clinical and product development activities as we advance our pivotal programs and, as such, we expect our year-on-year R&D expense to increase materially over the course of 2019. While there may be some uneven quarters with the timing of manufacturing runs or CRO activities, we expect the general trend to be upward throughout the year. We anticipate that SG&A will incur smaller and more stable increases throughout the year as we invest in our product launch capabilities. Lastly, as a result of our 2025 convertible notes issued in the third quarter of last year, you should expect that our interest expense will be higher in the future when compared to previous years.

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. In closing, I would like to share some initial impressions from my first 2 months at Retrophin. I spent much of my time with the teams to get an initial sense of the strength of our business and areas where we can continue to build our organization for future growth. I have also spent time meeting with community leaders and stakeholders to gain additional perspective on the company. It has become clear to me that I have inherited a tremendously talented group of employees dedicated to helping patients living with rare disease and a strong foundation built upon commercial capabilities and a pipeline with the potential to create significant value for patients. Looking ahead, we know the value creation will come from our pipeline and, as such, our #1 priority will be to continue the near-term execution of these programs. I'm going to leverage my background in delivering innovative treatments to ensure that we are doing everything we can to get our therapies to patients as quickly as possible.

As part of my evaluation of the organization over the first 100 days of my tenure, I am assessing all of our programs, their timelines and our readiness to deliver them to patients. What I have seen in the first 60 days gives me confidence in our product candidates and the expertise of our people. I am encouraged by our ability to execute, as you most recently saw with the completion of enrollment in the FORT Study, and our capabilities to ultimately get our first-in-class therapies across the finish line. With our first pivotal readout reaching key enrollment milestones with sparsentan and the decision on the CNSA-001 program planned for this year, it is going to be an important and exciting year for our company's advancement on this front.

Simultaneously, I will be working with our leadership team to further our plans to accelerate the company's growth for the future. We are uniquely positioned with a commercial portfolio that will continue to provide an important source of funding to pursue and execute our R&D efforts, but more importantly, it gives a strategic advantage when bringing new therapies to market. We expect to be launching at least 3 new therapies in 4 indications in the coming years. And the strong capabilities of our commercial and medical teams will be instrumental in our successful launches. We'll also be laying additional groundwork for Retrophin's long-term sustainability and success, which will require a disciplined approach to our execution and a continued focus on business development to further diversify our business. I look forward to continuing to deliver therapies for people living with rare disease and to sharing more with all of you as we execute on our goals of bringing the first approved treatments to address the significant unmet needs of patients with PKAN, FSGS and IgAN as well as a potential improved treatment for PKU.

Okay, Chris, I think we can open up the call for questions.

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

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Great. Thanks, Eric. Tom, 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) And our first question comes from the line of Tim Lugo from William Blair.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [2]

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So for the CNSA-001 program, it sounds like the acquisition may not just be dependent on the upcoming data readout but also, I think you noted, Eric, in your commentary some -- a comment about the regulatory path forward. Does that mean you may want to have an end of Phase II meeting with the agency before deciding to bring that program in-house? And I guess, are there any mechanisms for where you would go forward with that program, maybe in some sort of co-developments, I guess, path forward?

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

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Yes. Thank you, Tim for the question. Certainly, we are working closely with Censa through the joint steering committee in looking at the path for Phase III, what that would look like. And my comment is really about the path forward and the decision to acquire the company are really based on making sure I can make the most informed decision, given that we would be using a sizable portion of the equity for that acquisition. I want to make sure that we look not just at the totality of the data, but how quickly we're able to bring this product to the FDA, and ensure that we are keeping a continued keen eye on the evolving competitive landscape. So I'm not sure if that significantly changes how that decision would have been made in the past, but I certainly want to make sure that I am using the company's resources in the best way possible to deliver patient value as well as value for equity holders.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [4]

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Okay, that's understood. And will you be thinking at all about maybe its impact in BH4 deficiency? Or I know that there's also this gastroparesis investigator-led study ongoing, or maybe that's already over with. But will you be looking at any other indications, I guess, outside of PKU and your thoughts around whether you acquire 001 or not?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [5]

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Yes. So we are going to be looking at any data that is made available from Censa at the time that we get the complete data package for the PKU program. As you know, there are a number of studies like primary BH4 deficiency. We would be very excited if we see positive data where we'd be able to bring that to patients. But I certainly wouldn't want to wait until those data are completed or those programs are completed before we make a decision on the PKU data.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [6]

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Okay, fair enough. So maybe one last question. You mentioned your assessing timelines for DUPLEX. Would you say that you're still on track for the 190th patient to be enrolled in the second half of this year? And I guess, Noah, you can't answer because it is your birthday, and I did mention I won't be asking you any questions.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [7]

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So I'll speak on his behalf, Tim. From everything that I have seen, we continue to be on track and see -- as we move forward, as you often see with trials, a continued acceleration of screening and enrollment. Noah, anything else that you want to add as a birthday gift?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [8]

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I think you captured it well, Eric.

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Operator [9]

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Our next question comes from the line of Maury Raycroft from Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [10]

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My first question is on CNSA-001, specifically on the blood-brain barrier penetration benefit. And I'm wondering with the Phase II readout, if we'll be able to -- if you're looking for any neuro benefit based on a standard measure. And if you're not looking for a benefit on efficacy, could we potentially anticipate differences in neuro AEs from that readout?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [11]

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Thank you, Maury. I'm going to pass that over to Bill.

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William E. Rote, Retrophin, Inc. - SVP of Research & Development [12]

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Sure. Thanks for the question, Maury. The -- I think the short answer to your question is that the Phase II proof of concept study does not have any neurocognitive assessment in the protocol. So it's really primarily looking at safety and efficacy, efficacy driven by plasma phenylalanine. So with the second piece of your question around adverse events, would we be able to see, if I understand it, a differential in adverse events between CNSA-001 and the standard of care vis-a-vis the differential in blood-brain penetration. I think the answer is probably likely no, just based on the number of patients in the study, 24 patients. We're certainly going to look at that. But I would expect in a study -- traditionally in studies that small, you don't have a large enough signal-to-noise ratio to pick out something that would be, in my eyes, probably subtle and that would be coming in larger in later studies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [13]

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Got it. So with this readout, we're probably not going to get a good sense of benefit on -- based on the drug's ability to penetrate the blood-brain barrier?

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William E. Rote, Retrophin, Inc. - SVP of Research & Development [14]

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It's really going to be an evaluation of fee reduction is really what we're going to be looking at.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [15]

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Got it, okay. And as far as that assessment on the primary endpoint, can you -- should we anticipate stat sig differences and potentially with some of the secondary endpoints where you're looking at the 10%, 20% and 30% reduction rates. Should we look for stat -- any stats on that as well?

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William E. Rote, Retrophin, Inc. - SVP of Research & Development [16]

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I think on overall fee reduction, percent reduction in phenylalanine, I think, we should be seeing statistical significance. I expect that these won't be difficult to see changes between the agent. Whether it breaks down when you start to get into the different buckets of less than 10%, less than 15%, less than 30%, it's going to come down to a numbers game. Certainly, the trend should be consistent across those groups. But I do think, you'll see statistical differences in the overall endpoint.

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

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Got it. That's very helpful. And then just a question on FSGS. So you mentioned you've got 100 sites up and running. I guess can you provide any general perspectives on the types of patients that you're enrolling and whether you're seeing any enrollment trends based on the regions or where the sites are located in and how that could shape your strategy in the U.S. or ex U.S. that you're willing to comment on?

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

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Yes. Noah, do you want to take that?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [19]

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Yes. So -- and just to also back into Eric's question before this. The team has done a great job of engaging with investigators in generating screening activity. We now have, as we said, over 100 sites up and running. And so while we haven't done a formal analysis, to your question on patient demographics, our real-time monitoring suggests the patients coming in are aligning with our prespecified protocol. It's probably still too early to look for regional differences, but it's something we will definitely monitor and pay attention to.

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Operator [20]

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Our next question comes from the line of Joseph Schwartz from SVB Leerink.

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Dae Gon Ha, SVB Leerink LLC, Research Division - Associate [21]

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This is Dae Gon dialling in for Joe. And I'd like to extend our welcome to Eric for joining Retrophin. Look forward to meeting you soon. So just a couple of questions. Let's start with the commercial. Eric, you were talking about the projection on Thiola sales to be roughly in line with the 2018 year-over-year growth, if I heard you correct. So just wondering, given you have the Thiola 2.0 PDUFA date at mid-year, and you said that the launch should commence, if approved, in the second half of '19. Given the 4 attributes, if I remember correctly, of benefit that the Thiola 2.0 delivers, are you just being conservative? Can you walk us through, sort of, the logic behind giving roughly a 6% year-over-year growth there? And then in terms of, I guess, sparsentan in DUPLEX Study, just looking through the baseline urine protein creatinine ratio of greater than or equal to 1.5 grams per gram, that's slightly over or higher than what DUET was in terms of inclusion. So just wondering, can you remind us in your subgroup analysis that you conducted in DUET, to what extent does baseline UPCR impact outcome, whether it'd be modified, partial remission, complete remission or proteinuria reduction? And I guess, from a commercial standpoint, what proportion does that 1.5 gram cutoff represent in the roughly 40,000 prevalent population?

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

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Thank you, Joe. And thank you for the welcome. Actually, why don't we start with the second question. Noah, do you want to talk about the UPC baseline?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [23]

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Yes, we -- so I don't believe specifically that we've analyzed and done that cut that you're referring to. But I think overall, what we've seen was a directional improvement regardless of patients' baseline UPCR, and I think the -- that subtle difference, the 1 to 1.5, is probably not that clinically meaningful that we would expect any significant difference.

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

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Thank you, Noah. And with regard to the commercial projections, we are expecting that our overall growth rate across the 3 commercialized products will be consistent with that 6% growth that we saw last year. With regard to the expected growth for Thiola specifically and more about the fourth potential benefit, I'm going to turn that over to Neil.

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Neil F. McFarlane, Retrophin, Inc. - COO [25]

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Yes, Dae Gon. So I want to talk about 2 things. One, you talked about the 4 attributes of the product. We've consistently said that our new patient friendly formulation, it's 3 of the 4 attributes of which we're -- we'll continue to be consistent in that and through until our PDUFA date when we actually describe those the whole business, as Eric said, in line with our previous 2018 growth rate. So on Thiola, we still see new patient adds. As a matter of fact, our early Q1 is absolutely in line with our guidance for 2018. And maybe I'll stop there and see if there's anything else that I might have missed.

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Dae Gon Ha, SVB Leerink LLC, Research Division - Associate [26]

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No, I guess that's fairly consistent. Just wondering given the benefit of low pill burden and the pill is not cracking, I would assume that it would be better on the compliance side, and given the new patient adds and higher retention probably, the growth might be higher. So I guess your answer is sufficient enough, and we can just see what the June PDUFA date unfolds. If I can ask just one more question though. To your point, Eric, about BD going forward. Can you maybe elaborate on how you're thinking or approaching the BD strategies going forward? I guess we've got kind of 2 scenarios or the way I see it 2 scenarios, one which is CNSA-001 kind of becomes an in-house product and then you develop it. And scenario 2 is where you forego the option and look for alternatives. Just thinking, will neuro or neurodegeneration continue to be a focus at the company given that PKAN is kind of in that wheelhouse, or will you open a new organ system beyond nephrology that you have with sparsentan. I guess in terms of valuation, what is the sweet spot that you're considering?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [27]

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Okay. Thank you, Joe. And with regard to the overall business development approach, we want to continue to look at areas in rare disease that have a high unmet need. While we believe that we have strong expertise in certain therapeutic areas, we want to make sure that we're opportunistic in looking broadly at areas of rare disease where there is unmet need and a potential for us to be able to accelerate potentially being first-in-class or better -- potentially better in the case of Censa. With every one of those decisions, including Censa, we want to be very disciplined about how we make those decisions. And we are continuing to be very active in business development regardless of what the ultimate data readout and decision will be on Censa. Neil, anything else that you'd like to add on business development?

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Neil F. McFarlane, Retrophin, Inc. - COO [28]

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Yes. Maybe I'll just go specific to your point that you talked about in terms of neurodegeneration. As we've continued in our PKAN program. We're going to be leveraging our footprint that we have commercially today to be able to execute in that area. We're continuing to look externally, disciplined to diversify the portfolio but anywhere that we can actually see that we can add value today from our current footprint or areas, both commercially and in our late stage development capabilities that we want to be able to leverage.

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Operator [29]

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(Operator Instructions) Our next question comes from the line of Do Kim from BMO Capital Markets.

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Keith Richard Tapper, BMO Capital Markets Equity Research - Associate [30]

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This is Keith Tapper on for Do. I just had a quick question. You announced the enrollment completion for the FORT Study. Just wanted to know if there's anything that you'd be willing to comment on in terms of what you're seeing so far either from the enrolled patients or from the compassionate use patients in terms of signs of benefit or measurable impact or anecdotal evidence from physicians or anything like that. Should we be expecting subgroup analysis and what might that look like in terms of disease progression in context of patient age for example due to the form of PKAN? And then finally or thirdly, the FORT protocol you mentioned was approved under the special protocol assessment agreement. Is it safe to assume a similar arrangement with the EMA? And then I have one more to follow up.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [31]

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Okay, thank you, Keith. I am going to turn that over to Noah to answer your question.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [32]

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So just to address your first part -- your first question. In terms of the overall what we're seeing, obviously, we're blinded to the data set. There's not much we can really say between the groups but what we can say overall is we're seeing a representative population that's tracking well with our protocol and all the demographics baseline information that we've seen to date is in line with our expectations. Looks like we'll end up with about 2/3 of the study in the adult cohort with the pediatric being large enough to show an effect, if our hypothesis is correct. Just want to add, we've had a lot of dedication from patients in founding the study. We had our fourth DMC meeting at the beginning of the month that may be relevant to your question. And we got the all clear and they were unblinded to the data. So they gave us a proceed as planned, so that was a very encouraging sign. In terms of the subgroup analyses, you have to remember, this is not a huge study. So we probably will conduct subgroup analyses, pediatric adult. I think when you have studies in this size, you're not necessarily looking for statistical significance. You're looking for trends and some benefit in those populations. And until we have really top line results, we don't anticipate any significant program updates there. I -- just in terms of the SPA, Bill, do you want answer that?

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William E. Rote, Retrophin, Inc. - SVP of Research & Development [33]

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We have the SPA in the U.S. We don't have a similar agreement in the EU, but have alignment that on the study design and a single study to support approval, if positive. So effectively the same setup.

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Keith Richard Tapper, BMO Capital Markets Equity Research - Associate [34]

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Terrific. Okay, great. And just wanted to follow up on Thiola. Is there any update that you're seeing in terms of the generic entrants or competition at present? Is there anything intensifying or ramping up in terms of competition? And then, could you remind us of the commercialization strategy that you're looking at in terms of transitioning patients to the new formulation? Or can you comment on recapturing the patients that would be more likely to take the more patient-friendly formulation that you perhaps lost because of pill burden?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [35]

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So Keith, with regard to generic, we've not seen anything. We obviously continue to monitor that landscape, and we don't have access to all information or privy to everything that may be going on out there. But nothing that we see would suggest that there is a generic on the near-term horizon. What I like to do is turn it over to Neil to give maybe a bit more detail on that and the commercialization question.

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Neil F. McFarlane, Retrophin, Inc. - COO [36]

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Yes. So I could probably give you a little bit more flavor on that one specific to your question in regards to we will not be creating any barriers to conversion of patients to a new friendly formulation -- to our new patient friendly formulation. I think what we've done is continue to listen to patients to understand what are the needs that they're looking for to be able to better their compliance and persistency. And what we plan to do in a partnership with our hub service providers and the others is to actually be able to go out and ensure that patients who may have discontinued product for whatever reason have -- and their physicians we have the ability to contact those physicians and let them know that we've got a new formulation and the attributes that we've heard. So that's what we'll do. In addition to that, the barriers to entry for this product, we don't plan to raise any to being able to have patients convert to the new formulation.

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Operator [37]

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Our next question comes from the line of Michelle Gilson from Canaccord Genuity.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [38]

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I also want to offer happy birthday to Noah. But I'm not as nice, so I do have questions for you.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [39]

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Oh, shucks. Go ahead, Michelle. Thank you, anyway.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [40]

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I was just hoping you could talk a little bit about the dosing of fosmetpantotenate in FORT? And how you selected the 300 t.i.d. dose? And then also a little bit on how you're managing if you're seeing any LFT elevations in your protocol? And are you expecting patients to need to reduce their dose?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [41]

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Yes. So in terms of selection of the dose, we pick the maximally tolerated dose. We do want to get the maximum benefit. I'll just correlate that back to the patients who are in compassionate use, who actually saw an effect even at lower doses. In terms of the LFT question, we are following -- we follow safety as you're aware, very closely. Specifically, we're looking at any potential for increases in any lab abnormalities, specifically LFTs. And we have not seen a signal or any concern with regarding to LFTs.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [42]

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Okay. And I think one of the patients in compassionate use might have gotten sick during the study...

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [43]

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Yes, there was one -- I'm referring to -- correct, to the FORT. There was 1 patient in compassionate use that saw a transient elevation to 2 to 3 fold in transaminitis that was improved when the dose was cut, and the patient is doing fine on the drug. So again that's -- we have that to your point, Michelle, and as usual very diligent in picking that point up. We are following as an AEOI, or adverse event of interest, LFTs. And again specifically, we're not seeing anything concerning and again, we had our recent DMC meeting and everything's all clear. So thanks. Great question, Michelle, as usual.

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Michelle Lim Gilson, Canaccord Genuity Limited, Research Division - Analyst [44]

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Maybe one more on PKAN diagnostics, and if you're hearing, I guess, anecdotally from KOLs and investigators in your study. If they're seeing any uptick just I guess based on your conversations with the study now enrolling or…

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [45]

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Can you clarify what -- Neil?

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Neil F. McFarlane, Retrophin, Inc. - COO [46]

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Yes. Maybe I can answer some of that. And you're absolutely right. The awareness of the study and some of the work that we've done with our medical affairs assets on the ground across both the U.S. and Europe have identified more patients across than we had originally identified. And we have seen additional activity around newly diagnosed patients as we may have mentioned on the last call. We had a flurry of patients that came in to our clinical sites once they were aware. So yes, is the answer to that question.

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Operator [47]

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Our next question comes from the line of Christopher Marai from Nomura Instinet.

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Jun-ho Cha, Instinet, LLC, Research Division - Research Analyst [48]

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This is Allen on for Christopher. Just one question on the PKAN. For the format of the readout presentation later this year, will you be segmenting by age of onset. And can you elaborate a little more on the correlation between age of onset and disease progression and its relevance to the readout expectations? And I've got a follow-up.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [49]

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Yes, so in terms of your first question, it's Noah here. In terms of the actual readout, at a minimum, we expect to communicate the study met its primary endpoint in any key safety aspects. To note outside of that, it will really depend on the timing and what information we provide, while retaining ability to get that data presented at an appropriate medical meeting. So I think that was the question around the top line data. And in terms of predictions. There is an understanding that there are 2 populations. One is pediatric, and then in older age of onset. Pediatrics potentially may move a little more quickly, but I don't think that's so well understood in terms of what the actual drug effect would be. So I don't know that, that's clear. And I think we have a population with again 2/3 adults, 1/3 pediatrics, so a fairly nice sampling, patients well represented. So that's as much as I can say.

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Jun-ho Cha, Instinet, LLC, Research Division - Research Analyst [50]

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Got it. And how is the patient or physician interest on compassionate use for the asset?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [51]

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It's very high. We are obviously just in the stage now where we're moving patients over from the FORT into the long-term open label. And we are working very hard internally to do our best to get a compassionate use program up and running. But there's definitely a high level of interest.

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Operator [52]

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(Operator Instructions) Our next question comes from the line of Liisa Bayko from JMP Securities.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [53]

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The vast majority of my questions have been answered. But just one quick new one. For the Censa program, how can we expect that data to be communicated? Will you share the full data set with us or just tell us it's a go or no go? Or what level of disclosure should we expect around that?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [54]

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Thank you, Liisa. I'll ask Bill to cover that.

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William E. Rote, Retrophin, Inc. - SVP of Research & Development [55]

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Certainly. As you know this is a partner program. And we will be working with our partners Censa Pharmaceuticals to determine where we'll be presenting -- where the data will be presented. So we need to get to the point where we have top line data, evaluate that and then make an aligned decision around that. We don't have -- we haven't had that discussion yet or we haven't had it to completion. And when we do have that nailed down, we'll let you know.

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Operator [56]

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(Operator Instructions) There are no further questions at this time. I would like to turn the conference over to Mr. Chris Cline.

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [57]

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Great. Thank you, Tom. And thank you everybody for joining us today for our call. We look forward to updating you in the near future on our progress.

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Operator [58]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day. You may now disconnect.