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Edited Transcript of RTRX earnings conference call or presentation 11-May-20 8:30pm GMT

Q1 2020 Retrophin Inc Earnings Call

May 12, 2020 (Thomson StreetEvents) -- Edited Transcript of Retrophin Inc earnings conference call or presentation Monday, May 11, 2020 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

* Peter Heerma

Retrophin, Inc. - Chief Commercial 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

* Jonathan Patrick Wolleben

JMP Securities LLC, Research Division - Associate

* Lina Kaminski

Canaccord Genuity Corp., Research Division - Associate

* 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. First Quarter Financial Results and Corporate Update Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Mr. Chris Cline, Senior Vice President of Investor Relations and Corporate Communications.

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

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Great. Thank you, Bella. Good afternoon, and welcome to Retrophin's First Quarter 2020 Financial Results and Corporate Update Call. Thank you all for taking the time to join us this afternoon. I hope you and your families remain well during this time. Today's call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined for the prepared remarks by our Chief Medical Officer, Dr. Noah Rosenberg; Peter Heerma, our Chief Commercial Officer; and our Chief Financial Officer, Laura Clague.

Dr. Bill Rote, Senior Vice President of Research and Development, will join 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 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 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 11, 2020, 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. Our organization demonstrated great execution to start 2020. Prior to the advent of COVID-19, this translated to our strongest momentum and enrollment trends yet for our pivotal DUPLEX and PROTECT studies of sparsentan in FSGS and IgA nephropathy; and notably to achieving the critical milestone of enrolling the first 190 patients in DUPLEX during the first quarter. It also translated to a strong performance by our commercial organization.

In the first quarter of the year, we continued our consistent track record of reaching new patients with our approved products and further demonstrated our ability to deliver therapies to patients in the rare nephrology and hepatology communities.

Later in the first quarter, the COVID-19 pandemic spread and disrupted the lives of people around the world. We recognize that these are difficult times for everyone and especially for those families living with rare disease. While this pandemic has required us to adjust our ways of working, it has not altered our strong operational and financial foundation, and it has not changed our goals. We are continuing to make progress and are focusing on completing enrollment and maintaining high-quality conduct in our 2 pivotal studies of sparsentan, while simultaneously preparing for regulatory submissions. And in parallel, we are building upon our existing commercial capabilities in order to support continued organic growth of our approved products and to position us to ultimately be able to maximize sparsentan's potential for patients, if approved in the future. Importantly, we have aligned as an organization on the priorities that we believe will allow us to best mitigate the impact of the COVID-19 pandemic as it has evolved to date and continue advancing towards these goals. We will continue to focus on the safety, support and well-being of our employees. By safeguarding the health and well-being of our employees as well as providing them support and flexibility during this time, we can continue our work on behalf of patients.

Like most companies, we have shifted to a virtual working environment where possible. And for us, this has translated to having nearly all of our employees work remotely from home. I have been very proud of our organization's resilience, ability to adapt and dedication thus far, which gives me great confidence that we will continue to evolve together and deliver on our mission during this pandemic and beyond. For patients receiving our approved products or participating in our studies, we have implemented heightened procedures to ensure safety, access and continuity of care during this time. Over the last several years, we have focused on building a supply chain with flexibility and contingency plans for events like this. I am pleased to report that as a result of these ongoing efforts, the supply of our approved and investigational therapies has been uninterrupted to date. As of today, we have ready access to 12 months or more worth of finished goods for all products, and we are confident in our ability to provide continuous treatment in the pandemic's current state.

Our clinical studies of sparsentan have continued despite the challenging conditions. We are working within the recent FDA and EMA guidance regarding COVID-19 in an effort to ensure patient safety, continuous delivery of medication and maintain quality of data, especially key endpoint data for DUPLEX and PROTECT. Achieving 190 patients enrolled in DUPLEX during the first quarter was a critical milestone that brought us one step closer to realizing our goal for sparsentan to potentially shape the treatment paradigm for FSGS, if approved. I have been pleased with the results from our teams and partners' efforts to expeditiously implement the measures necessary to preserve monitoring and data integrity for our studies in the face of the disruption of the pandemic.

As you are well aware, in many cases, access to study centers across clinical trials has been restricted in order to protect both site staff and patients from possible coronavirus exposure and to augment the capacity of the COVID-19 response. This has unsurprisingly resulted in a recent slowdown in screening and enrollment for our ongoing clinical studies. Based upon what we know today, we believe the time lines provided at the beginning of the year are still achievable. However, we do not yet know the full impact of COVID-19 and if an extended slowdown in enrollment were to occur, it could impact our time line. We are working closely with clinical sites, physicians, our CROs and the patient community to learn more each day and support site activity where and when appropriate. We have also been taking steps to be in position to accelerate clinical trial execution when pressures on the health care system ease. This will be instrumental as we leverage our existing clinical trial footprint to rebuild our momentum towards completing enrollment in DUPLEX, PROTECT and RESTORE at the appropriate time. For our commercial business, we are ensuring that our existing patients are receiving the support and access they need during this time. I am proud to report that to date, our total care hub has remained fully operational and has been able to meet the increased needs of our patients during this time. We have also seen new patients initiate treatment. While it is encouraging that patients continue to be diagnosed and receive the treatment they need during this time, we do anticipate that fewer patient visits during the pendent could reduce the number of patients initiating treatment in subsequent months.

Importantly, through our field-based teams' virtual interactions, we are continuing to engage with health care providers so that they have the necessary support and information. We are continuing to monitor this dynamic and the impact it could have on the previously expected growth for our approved product portfolio this year. We certainly recognize the extraordinary challenges that our society, our industry and especially the rare disease communities are currently facing. We also understand that the unmet needs within these communities will remain beyond this pandemic. This is why our organization will remain resilient as we continue to work through the COVID-19 pandemic and beyond.

Let me now turn the call over to Noah so that he can provide additional detail on the steps we are taking to advance our clinical studies. Noah?

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

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Thank you, Eric, and good afternoon, everyone. As mentioned earlier, we started the year with great momentum in our pivotal DUPLEX and PROTECT studies on sparsentan. Later in the first quarter, the COVID-19 pandemic began to impact global clinical trials, and our clinical teams' near-term priorities shifted to implementing measures to support our sites and patients during this period and to mitigate the impact to these important studies. The broad clinical network we have implemented for these studies in rare disease setting has enabled a level of connectivity with our sites that provides for a deep understanding of the individual site needs as well as visibility into each patient visits to provide the right level of support. We are in contact with all of our study sites, principal investigators and CRO partners, and their continuing dedication has served as an important reminder of the significant need for new treatments in FSGS and IgA nephropathy. Their collective insights have helped us develop and institute the following 5 priorities that we believe will help us best navigate this pandemic.

First, patient safety remains paramount. Every decision we make with as a clinical team is designed to ensure patient safety. We recognize the increased need for flexibility during this time. And while we've been pleased with the adherence to study plans thus far, we have made sure sites and patients have the support as needed to leverage technologies such as telemedicine and remote monitoring to ensure patient safety.

Second is providing continuous drug supply. We are making extra shipments of blinded clinical supply to sites and have the ability to arrange for shipments directly to patients under control protocols, if necessary.

Third is protecting the key endpoint and safety data for our studies. The DUPLEX and PROTECT studies are critical to developing potential approved -- first approved therapy for FSGS and IgA nephropathy. We are prioritizing monitoring and maintaining the data and lab results that will support a high-quality study readout. To date, we have seen across both sites and patients a motivation to continue with visits and thus far, we have seen strong efforts to adhere to study plans. Fourth is clear documentation of actions taken as a result of COVID-19. As many of you are aware, the FDA and EMA have provided guidance to ensure patient safety and data integrity in clinical studies during this time, and we are clearly documenting the steps we are taking to adhere to these.

Fifth, we are taking steps today that should enable us to regain strong enrollment momentum in our studies once the pandemic-related conditions ease. As many of you will recall, we have a broad clinical footprint with more than 200 sites supporting DUPLEX and PROTECT studies. This has allowed for some regions to continue uninterrupted and continue to randomize patients. But understandably, the global restrictions have resulted in a meaningful slowdown in these activities recently.

While we cannot control the length in which there will be restrictions at sites or imagine the pandemic, we have been able to continue prescreening activities to keep identifying trial candidates, and we are implementing practices to leverage our broad clinical footprint to be in position to reaccelerate activity at the appropriate time.

I'll now provide a brief update on each of our pivotal sparsentan studies, starting with DUPLEX for FSGS. In early March, we achieved a critical milestone of enrolling the first 190 patients in DUPLEX. As many of you will recall, the DUPLEX Study protocol provides for a prespecified interim analysis to evaluate the proteinuria efficacy endpoint in the first 190 patients after 36 weeks of treatment. Successful achievement of this 36-week proteinuria endpoint is expected to serve as the basis for submission of filings for accelerated approval in the U.S. and Europe. Thus far, we have been pleased with patients following plan site visits and follow-ups despite the pandemic, and we are working within the regulatory framework to preserve the ongoing study conduct. We continue to believe that a top line readout in the first quarter of next year is achievable. However, if the recent slowdown in enrollment were to extend as a result of COVID-19, it could delay the top line readout. We will update you at the appropriate time if that materializes.

Turning to the PROTECT Study, our Phase III clinical trial in IgA nephropathy. As we mentioned during our last update, there has been a growing body of evidence to support the link between proteinuria reduction, improvements in eGFR, specifically in IgA nephropathy. After applying the latest learnings to our current study design and in consultation with FDA, we're adopting the measurement of eGFR over 110 weeks of treatment as a confirmatory endpoint and increasing the total sample size to 380 patients. We believe this adjustment increases our probability for full approval. Importantly, the primary endpoint analysis of change in proteinuria after 36 weeks of treatment of the first 280 patients remains unchanged, and our plan to pursue accelerated filings with these data remains unchanged.

As Eric mentioned earlier, prior to the initial COVID-19 response, we have seen strong enrollment trends in PROTECT, and we are making good progress, total enrollment of 280 patients to support the 36-week proteinuria analysis. PROTECT continues to enroll patients, and we continue to believe that a top line readout from the 36-week proteinuria endpoint analysis in the first half of 2022 is achievable. However, if the recent slowdown in enrollment were to be prolonged as a result of COVID-19, it could have an impact on our time lines. We will update you at the appropriate time if that materializes. Notable for both of these studies, at the end of April, we completed our third scheduled independent data monitoring committee meeting. I am pleased to report that the DMC recommended that both DUPLEX and PROTECT proceed as planned.

So to summarize, despite the challenges presented by COVID-19, we continue to enhance both of our pivotal studies with a clear focus on patient safety, enabling continuous supply, preserving data integrity and documentation. While we have understandably seen a slowdown in recent enrollment trends, we continue to see new patients come into our studies and we are confident in the steps being taken to leverage our clinical footprint and position us to regain momentum at the appropriate time. And we have an organization diligently working to deliver high-quality data from our studies. We look forward to providing initial updates as we learn more in the coming months.

Let me now turn the call over to Peter. Peter?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [5]

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Thank you, Noah. Our commercial organization continues to demonstrate an ability to understand the needs of patients with rare disease, formulate and execute a launch plan and identify new patients. In the first quarter, we saw new patient diagnosis and treatment initiation across all 3 approved products. This resulted in net product sales of $47.8 million, which is driven by organic growth, as we have not increased prices in nearly 5 years. Notably, in the first quarter, we saw strong demand for THIOLA EC. This is consistent with our earlier research at (inaudible) community that indicated that system urea patients have an underserved need for additional flexibility in the treatment regimen. As expected in our business, we experienced higher gross to net discounts in the first quarter driven by the insurance resets in the beginning of the new year. The shift was in line with our expectations, and we anticipate it will return to normal levels beginning in the second quarter.

In the second half of March, we began to see an increase in early request for sales as well as some increase in patient compliance, likely in response to the evolving coronavirus dynamic. We estimate that this has contributed to approximately $1.5 million to $2 million of pull forward revenue that we likely would not have seen during the first quarter in normal circumstances. This could slightly reduce expected revenues in subsequent quarters.

During the response to the coronavirus, our teams and partners are working diligently to ensure continued access and support to patients receiving our core therapies. We have taken steps including appropriate levels of inventory and flexible shipping options to maintain continued delivery through this initial onset of the pandemic. I have been incredibly proud of our team's ability to deliver continuing support for our patients' needs during this unprecedented time. Our sales teams for [Fiola] and [Goldbaum] have transitioned exclusively to virtual interactions with HCPs. Given that we have relatively small teams and cover broad geographies in the United States, virtual engagements have been a core part of how we have worked with health care providers for many years. This made a transition to relying solely on this method seamless for many of our team members, and we have seen solid engagement with these efforts.

As we look ahead, we are closely monitoring our current patient base, how the increase in unemployment rate could change patient insurance coverage and how fewer visits with physicians may impact new patient starts. As it relates to our current patient base, we do not anticipate that the COVID-19 pandemic as it has evolved to date, will have a meaningful impact for those that are already prescribed our approved products. As mentioned earlier, to date, we have been successfully prioritizing excess and delivery of treatments. Our total care hub is currently operating uninterrupted, and providing the support that our patients have come to depend on.

Regarding patient insurance coverage, we have not seen a change in the payer mix thus far, but we will continue to monitor this dynamic. In terms of identifying new patients, we continued to see strong patient additions across all 3 products for the month of April. The impact in future months, however, is currently unpredictable as we anticipate fewer patients will visit their physicians as a result of COVID-19. We do not yet know the full impact this may have, if any, to our growth potential in 2020. While we are currently navigating uncertain times, our commercial organization continues to demonstrate an ability to work closely together with ATPs and other stakeholders in identifying, treating and supporting patients living with rare diseases. This continues to give us a high degree of confidence that we will be able to continue reaching patients during the current state of the pandemic, and we have a robust foundation in nephrology to launch sparsentan if approved.

Let me now turn the call over to Laura for the financials. Laura?

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Laura M. Clague, Retrophin, Inc. - CFO & Senior VP [6]

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Thank you, Peter. During the first quarter, net product sales from our commercial portfolio grew to $47.8 million, a 21% increase over the same period in 2019. We reported a GAAP net income of $0.8 million for the first quarter of 2019. After adjusting for noncash expenses and income tax, we reported a non-GAAP net loss of $8.5 million. On a GAAP basis, R&D expenses were $30.2 million for the first quarter of 2020. The decrease compared to the same period in 2019 is largely attributable to the discontinuation of the fosmetpantotenate development program.

On an adjusted basis, R&D expenses were $27.8 million for the first quarter. Relevant noncash expenses for the first quarter included $2.4 million of stock-based compensation and amortization. On a GAAP basis, selling, general and administrative expenses for the first quarter were $33.1 million. The minimal increase over the same period in 2019 is largely attributable to increased compensation expense and higher professional fees. On an adjusted basis, SG&A expenses for the first quarter were $24 million. Significant noncash adjustments for the quarter consisted of $9.2 million in stock-based compensation and depreciation and amortization. We incurred approximately $21 million of nonoperating cash used during the quarter as a result of a onetime co bond sales milestone of $10 million and contingent consideration and debt interest payments. During the quarter, we recorded an income tax benefit of $19 million. This benefit resulted from the Cares Act legislation, which provides for net operating losses to be carried back to preceding taxable years to generate a refund of previously paid income taxes. We anticipate this refund will be distributed to the company in installments during 2020 and 2021. Importantly, we ended the quarter with a solid financial foundation and $356.5 million of cash and cash equivalents as of March 31, 2020. While our near-term operating expenses may be difficult to predict as we mitigate the impact of COVID-19 and adjust our ways of working, we will remain disciplined in our use of capital. And we continue to believe that our cash on hand is sufficient to fund our operations beyond the readouts from our Phase III studies of sparsentan.

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

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

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Thank you, Laura. As we continue to navigate the challenging pandemic presented by COVID-19, we have shifted the how we work, not the why. The continued pursuit of our mission has never been more critical. Rare diseases do not wait for pandemics and our organization remains steadfast in its dedication to serving our patients and caregivers. We have a strong financial foundation to support our operations and our goals remain unchanged. We are focused on the continued development of sparsentan to support our goal of delivering the potential first treatment approved for FSGS and IgA nephropathy. And we will also work to reach new patients with our approved products while strengthening our commercial capabilities to ultimately maximize sparsentan's potential, if approved. I am confident that the actions we are taking to mitigate disruptions caused by the pandemic will protect our employees and patients, that position us to accelerate enrollment quickly when conditions ease and ultimately deliver high-quality data from the DUPLEX and PROTECT studies.

Finally, I would like to thank each of our dedicated Retrophin team members. With their continued focus on the priorities outlined today, I am confident that we will continue to deliver the highest level of support for our patients and ultimately emerge from the COVID-19 pandemic as a stronger company. Let me now turn the call back over to Chris for Q&A. Chris?

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [8]

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Thanks, Eric. Can we please open up the lines for Q&A?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Maury Raycroft with Jefferies.

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Unidentified Analyst, [2]

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This is [Fabian] on for Maury. So I had a couple of questions. The commercial sales seem to do better than expected. Can you provide any specifics on what proportion was driven by pricing versus volume? And what proportion was driven by THIOLA EC versus the prior gen THIOLA?

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

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Thank you very much, [Fabian], for the question. Peter, why don't I have you take that one?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [4]

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Very good. Thank you, Eric. And thank you, [Fabian] for the question. So the last -- over the last 5 years, we have not increased prices. So the growth that you saw in the first quarter was solely by organic growth like new patients coming into the mix. It's building on top of the strong quarter that we saw in the first -- on the fourth quarter in 2019, where we saw great new additions of patients, and we continue to see that in the first quarter of 2020 as well. It includes both THIOLA, THIOLA EC as well as (inaudible).

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Unidentified Analyst, [5]

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I see. And for the 190 patients that you have enrolled in the FSGS studies. So can you go into specifics of what happens if the patient becomes EL or does not -- cannot come for the basically treatment or has to drop out?

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

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Yes, certainly. Noah, would you like to take that?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [7]

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Sure. Let me first state that we've been following very carefully and closely with the sites, the study conduct, and we're very pleased with the site's ability to conduct the study and maintain trial integrity. With regard to not being able to come to sites, there are accommodations based on the regulatory guidance. Some of the sites are able to utilize satellite locations. In some cases, patients are using local labs for safety with [drawing]. And as I said, we're very pleased with the conduct of the sites. They've done a nice job of continuing to maintain a focus on the core priorities I said earlier. In terms of COVID-19, if they develop COVID-19, which obviously, we have special protocols within the partical to address that. Patients can actually develop COVID, potentially go off drug and then come back on drug as soon as they are feeling better and improve their condition. So hopefully, that addresses your questions.

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Operator [8]

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Your next question comes from the line of Joe Schwartz with SVP Leerink.

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Unidentified Analyst, [9]

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This is Chris Clark on for Joe. How do you think the degree of protein area reduction from sparsentan and IgA neuropathy may compare to FSGS? Can you talk about any insights you have from preclinical or clinical data?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [10]

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Yes, thank you. So we certainly do have data on FSGs with sparsentan from our Phase IIs and not in IgA nephropathy, we've looked at existing databases in other areas. Noah, perhaps you can share a little bit about the potential differences there.

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [11]

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Yes. I mean, I think that we've clearly got for the DUPLEX study the [Duet] data to rely upon. And you can still see this precedent, it's a very similar population in terms of the reduction of proteinuria. We expect something similar along the same lines as what we saw there. With regard to IgAN, there is preclinical data as well as some clinical data showing that the addition of endothelin inhibition on top of angiotensin blockade does provide incremental benefit an additional reduction. So it's hard to say exactly what the differences are. I think you would see reductions but probably in a similar range in both. But I would say, overall, one thing we saw in DUPLEX -- in Duet, if you recall, was patients who are above and below on 2 in terms of their overall UPCR, saw a similar reduction. So I think that's the data we have, and I think that's -- we're fairly confident in that.

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

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Thank you, Noah. Chris, one thing that I would add on that is just in the disease state itself, FSGS patients are oftentimes exhibiting higher levels of proteinuria, and so that may or may not play into what ultimately we see. But as Noah mentioned, we expect to see a consistent effect because the mechanism of both the disease and the mechanism in which sparsentan works is consistent in both of those, we believe.

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Operator [13]

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

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Lina Kaminski, Canaccord Genuity Corp., Research Division - Associate [14]

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This is Lina for Michelle. So maybe just on sparsentan, one, and then a little bit broader on FSGS. So first question is, can you maybe remind us about the tolerability that you saw with sparsentan with regards to the 400 versus the 800? And I guess, how many patients if the protocol that you are using now for Phase III, if you were to use that, the down translation protocol or in Phase II, how many patients would you expect to see downturn type rated under that vertical in the DUET Study? And then...

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [15]

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Thank you, Lina. Yes. Yes. Sorry, your second question?

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Lina Kaminski, Canaccord Genuity Corp., Research Division - Associate [16]

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No, it's okay. I can follow up with that after your answer.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [17]

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Yes. Noah, why don't you address the question on tolerability?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [18]

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Sure. I think Lina, what you're referring to, that's a great question, is referring to the DUET Study design. The way this study was designed, patients were started on 200, 400 or 800. And what we saw is patients who were on 800 had some symptoms consistent with the blood pressure driving some light headiness intolerability and had to drop back to the 400-milligram dose. And as a result, we weren't really adequately able to test the 400 versus the 800. When we designed the DUPLEX Study, we actually designed it with that in mind, and that's why there's a 2 week titration step. So the patients will start on the lower dose, and then after 2 weeks, if they tolerate, they'll titrate up to the higher dose. We expect that a pretty considerable number of patients are going to be able to achieve the 800-milligram dose and hopefully stay there. I think that is just as much as I can say. But I would say, in addition that the 400-milligram dose, if you recall from DUET, is an effective dose. And the drug works quite well, whether it's 400 or 800. So we would be very pleased with the 400, what we feel comfortable with the current strata, titrating up to 800, and we think we have a pretty good chance of showing an effect at the 800 as well.

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Lina Kaminski, Canaccord Genuity Corp., Research Division - Associate [19]

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Got it. And then with the different treatments and kind of different therapies in clinical trials, can you maybe talk a little bit more broadly on FSGS market? And kind of where you see sparsentan fit in, in that landscape?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [20]

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Yes. So I'll start and then Noah, certainly feel free to add anything further. We do see that the FSGS patients are quite broad. And in the U.S., there are over 40,000 patients with FSGS and very consistent numbers within Europe. What we see is that these patients and the prevalence is actually growing likely because of perhaps the conditions that drive the scarring and the injury at the glomerulus. What -- how these patients are currently treated today is with an ACE or an ARB. And if we look at the DUET study, over 80%, 85% of the patients that went into the DUET study were on an ACE or an ARB. And what we also know from that study, but also from many other studies is that unfortunately, the currently available treatments all off-label do not effectively control the proteinuria to a degree that is going to slow the progression of this disease. And so we believe that if sparsentan is effective, is safe and is approved that it would become the standard of care in the treatment of FSGS, whether it replaces an ACE or an ARB or patients are first started there and then step up quickly to sparsentan to get greater reduction in proteinuria remains to be seen. That's some of the work that Peter and his team are doing to understand how physicians may think about this role. But that's largely how we see the role that sparsentan would play. There certainly would be used -- other treatments used. We know that some of these patients are treated with other classes of therapies such as steroids but we also hear very consistently from patients and their clinicians that there really is a hope for something that treats the common pathway of this disease and is not going to be immunocompromising. Noah, anything else you'd like to add on the future role?

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Noah L. Rosenberg, Retrophin, Inc. - Chief Medical Officer [21]

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I think you covered the landscape well, Eric. If I could just add 2 points. Just to reiterate, number one, there are no approved therapies, as Eric said, for FSGS. I think that's critical. Number two, we are the only compound in Phase III at this stage in the game, and we're very proud of that. Sparsentan has over 500 patients who've been treated. We've got a large, for this space, safety database to draw off of. And the DUET data is really a great example of that. I think in terms of other therapies that are emerging, really, there aren't really many therapies at all, that have established the safety yet in this area. Eric alluded many of them are immunosuppressive. There are concerns with those classes around safety. So let me first say we are for the patients. We want to make sure there's many therapies out there as possible, and there's no reason that sparsentan wouldn't be complementary with these therapies that we can see. But again, in the position that we're at, we believe that we're in a good position.

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Lina Kaminski, Canaccord Genuity Corp., Research Division - Associate [22]

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Congrats on the quarter.

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Operator [23]

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

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [24]

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Congratulations on the strong performance in the quarter. I know it hasn't been easy. I wanted to ask with respect to the benefit, the pull-through you're seeing with respect to COVID. How much of that is the bile acid products versus THIOLA sales? And then if you could comment, you're seeing -- or you had highlighted earlier in your comments on enhanced compliance. And I was wondering if you can comment on that. Is that enhanced compliance due to the new THIOLA formulation, or those who have switched to that formulation, or is it compliance that is more COVID related?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [25]

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All right. Thank you, Chris. Peter, why don't you take this one?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [26]

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Yes. Thank you. And thanks for the question. Well, the growth, first of all, we saw consistent across all 3 products. So continued ability to identify new patients for all 3 product lines. I think that was a driver for the growth. With regards to your second question on compliance, it's an interesting question. I think the concept of compliance and adherence is a broader question. And we start to see, and although it's still early days, we start to see that there is an impact -- improved impact on compliance with the [EC.] It's too early to comment on like specific numbers. But in addition to that in the second half of March, we also started to see across all products, an increase of compliance likely due to COVID. And I think that speaks to the behavioral components of treatment as well. In particular for cystinuria, you can imagine that patients want to stay away from the hospital in these days. So that could have an impact on the compliance. An additional element here could be THIOLA EC is like a [TID] treatment, 3 times a day, and especially that middle treatment, with patients being at home or being more at home, have more ability to date that treatment as well. So that could also have an increasing effect on compliance. So to your question, like the broader compliance sector, we saw an increase lately due to [EC] but in addition in the second half of March also increased likely through the COVID situation.

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

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Thank you, Peter. Before you ask your next question, let me just add one more thing that both THIOLA and Cobalt had a pull forward of shipments as might be expected for these drugs in these conditions. We did see more of that with THIOLA that drove some of that, but also that's probably where we saw more of the compliance impact as well. Sorry to interrupt you. Go ahead.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [28]

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Yes. No, I was just -- that was very helpful. And I guess I was curious about the second half of March increase in compliance generally that you saw. Is it your expectation that this will continue through second quarter? And then perhaps given the dynamic you've seen in Q1 and the emerging impact of COVID, how do you look at a benefit or potential impact in 2Q? And then I have a follow-up.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [29]

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Peter?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [30]

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Yes. I think it's too early to say. As I mentioned, like the second half of March is really when the pandemic effect started to see. We saw a slight increase in compliance there. How they translate into the second quarter, I think it's too early to say. I think with the EC, I think the EC allows for a greater flexibility of patients. So it could have been expected that there could be a slight increase in compliance there. I think that's what we start to see. The particular aspect of COVID, I think it's too early to call how that translate into the second quarter.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [31]

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Okay. Great. And then just with respect to, I guess, you guys were going to initiate a pivotal trial in CTX with CHENODAL. And I was wondering how that's being impacted or if you did initiate that pivotal trial? I'm sorry. And how that may have been impacted? And then finally, just with respect to BD, I know you had been looking at many different potential opportunities, and has that slowed down or sped up with respect to COVID?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [32]

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Sure. Thank you, Chris. So with regard to the CHENODAL CTX study, this is the RESTORE study. We did initiate that trial. And similar to the impact of screening and enrollment that we saw with Duplex and PROTECT, we also are seeing that with RESTORE. So I'd say at this point, it's too early for us to be able to project time lines for that one, but it is an ongoing study. And then with regard to business development, I would say this has not sped up or slowed down. We continue to remain focused on that as a priority for us. And we believe that there still are a number of assets within the rare disease space that would leverage the strengths and the footprint we have, both for clinical development and for commercial. So stay tuned on that. Our team is continuing to evaluate different assets.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD & Senior Analyst of Biotechnology [33]

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Congrats on the quarter.

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Operator [34]

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Your next question comes from the line of Tim Lugo with William Blair.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [35]

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Congratulations on managing through a difficult situation. I guess, maybe a question for Noah. I think we all understand the slowing down of patients being screened and enrolled in DUPLEX and PROTECT. And then also, I think in your comments, you mentioned you had some protocols around if a patient were diagnosed with COVID-19. I'm just wondering more about the general difficulty collecting urine and blood samples during the pandemic and if patients can't come in within the protocol-defined windows, how those patients are managed? And if you're able to maybe employ home nursing visits or how you're just managing the situation?

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

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Yes. Great question. Great question. So with regard to the collection of the urine specimens, and I think you're referencing the key endpoint visits. And we have a great deal of focus on, say, the week 36 urine collection because that's pivotal, right? That's a key endpoint for us. And we've got trackers that track each patient down to each visit. So we know exactly where those patients samples are being collected, working close with the sites. I will tell you that in many sites, it's still being collected centrally, and that's still occurring. There are some sites where those collections will either be dropped off at a clinical site. Sometimes, they'll even meet in a parking lot. I mean, there are things like that where the sites are ensuring that they continue to collect that data and get that off. And frankly, looking across, again, an aggregated data set that we have, I can say that we are pleased again with the overall conduct in the study. There is room at some point potentially for visiting nursing. I think you had mentioned that. We haven't seen a huge need for it at this point, but we are looking at that option and are in the process of contracting a group to do that work for us, in case this is prolonged and the sites do require that additional support. So I think it's a great question. Hopefully, that answers your question.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [37]

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Yes. No, definitely. It sounds like you've been innovative in the approaches. As I guess more people talk about easing and kind of these days -- or at least domestically focused on easing. If we fast forward to June, how many sites do you expect to be still impacted, just maybe a rough percentage?

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

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Yes. That's a tough question to answer because it is a dynamic process. But I will say this, that the team is -- we're engaged with every site. We've had no sites dropped from the study. The sites are very interested in maintaining, continuing and driving the study. They understand the value. Site engagement, if you recall, prior to this is what got us to the 190. That's what drove the momentum. And they're engaged and excited. And the conversations that I have, typically, Tim, with PIs, and I talk with a great number, then what you can imagine, is when, right? Can we start to see pre screening activities, some are doing it now. Some -- they're not ready. And when can we start seeing ramping up of screening and randomization. They'll tie it to the opening up of the clinics. As the clinic starts to open up, you'll start to see more and more screening and recruitment because of capacity. But there -- without overpromising, I think talking to a number of these sites, they're quite excited and engaged, and they're paying as close attention as we are to all this and making sure that we can take advantage once things ramp up.

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Timothy Francis Lugo, William Blair & Company L.L.C., Research Division - Co-Group Head of Biopharma Equity Research [39]

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Okay. And as you mentioned, you are the only FSGS Phase III up and running. Is that -- I guess, can you give me some of the anecdotes you've heard from investigators and maybe their views on immunosuppressive therapies in this indication given that it seems given a pandemic, I don't know if I want to be on immunosuppressants right now.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [40]

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Yes. Tim, maybe I'll take that one, and I'll take it from the conversations that I've had with some of the patient advocacy leaders within the rare renal space, but actually beyond, there is a very consistent heightened awareness around immunosuppression and the risk of infection. And so I think this is something that the rare disease communities are -- have a heightened awareness anyway, and it's even more so during this pandemic. And so I think that there is really this question of is a potential treatment or clinical trial going to put me at greater risk, given that many of these patients face regardless of their treatment an immunocompromised state. I think that's driving a lot of this. And I suspect that the clinicians are going to be thinking the same way. Noah, anything quickly you want to add?

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

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Yes. I think just to support what you said, Eric, we've heard that from the PIs on an institutional level as well. So what they're saying anecdotally is the studies that are not putting patients at risk are likely to be the first of the volume of studies to get back up and running on the site level as well.

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Operator [42]

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Your next question comes from the line of Liisa Bayko with JMP Securities.

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Jonathan Patrick Wolleben, JMP Securities LLC, Research Division - Associate [43]

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This is Jon Wolleben on for Liisa. Congrats on the progress. Just one on the PROTECT study. Could you just discuss kind of this new confirmatory endpoint, how this might have evolved or changed over time? And what is the meaningful difference between this update and what we're previously expecting?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [44]

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Yes. Thank you, John. I'm going to have Bill take that question.

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William E. Rote, Retrophin, Inc. - Senior VP and Head of Research & Development [45]

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Certainly, thanks for the question, John. The change is really relatively straightforward. We're essentially removing the post cessation of therapy measurement. So it's -- the observation window is 4 weeks shorter than what was listed before because that really wasn't the right measurement for smart sensing. And we believe this change derisks our potential for full approval. We originally designed the study based on robust data from DUET and our knowledge of FSGS as well as registry data from patients with IgA nephropathy. And at that time, the FDA had asked us to look at pre and post because there was precedent with that measurement with other therapies. And since we started the PROTECT study, we've gained access to a robust trial level analysis, specific for IgA nephropathy trials that's allowed us to demonstrate using modeling that measuring eGFR from 0 to 110 weeks, while on therapy is really the optimal way to understand sparsentan's effect and outcomes. We shared this with the agency and subsequently made the change to the protocol. It's important for me to point out that this was done based on the modeling from the trial level analysis. It wasn't done with study data. We're still blinded to the study, and we don't have patients out at the point in PROTECT yet.

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Jonathan Patrick Wolleben, JMP Securities LLC, Research Division - Associate [46]

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Okay. Great. And then just on kind of the commercial portfolio, you mentioned that you expect perhaps new patient starts will be a little more difficult, obviously, with the pandemic ongoing. But how are you feeling about your previous guidance of mid- single-digit growth for net product sales for the year?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [47]

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Yes. So John, I would say that we started off very strongly for the year in new patient growth. And we would have seen a very strong quarter even without some of the pull forward of some of the prescriptions. And as Peter mentioned, our April new patient starts were also strong. That said, we need to be very careful in thinking about the duration and severity of the pandemic through the rest of the year. And so we're cautious. But at this point, we believe that it is possible to achieve that mid- single-digit growth, and we'll continue to monitor and report as we see any potential change from that.

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Operator [48]

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Our next question comes from the line of Gena Wang with Barclay.

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Unidentified Analyst, [49]

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This is [David Dai] on for Gena and my congratulations on the great quarter. I still have one question on the commercial franchise. For the THIOLA EC, do you see more patients switching to the EC formulation because of COVID-19 partly because of convenience and whatnot? And then can you just help us understand what's sort of like a split patients between the THIOLA EC formation and the original formation?

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [50]

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Thank you very much, David. Peter, do you want to take those questions?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [51]

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Yes. Happy to take that question. Thanks for that, Dave. So I think in the last quarterly earnings, we reported about 2/3 of the patients started using THIOLA EC, which was very much in line with the research we had done previously. And since then, we continue to see an increase of that number. We don't provide the specifics. If that is more rapidly increased due to COVID, I don't think we see that effect.

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Operator [52]

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Your next question comes from the line of Do Kim with BMO Capital.

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Unidentified Analyst, [53]

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This is [EK] on for Do. I just had a quick question regarding THIOLA. In terms of the Q-over-Q decrease in sales, is that primarily due to the DTN offsetting the new patient starts and a little bit of seasonality going on there?

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

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Yes. Peter, would you like to take that one?

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Peter Heerma, Retrophin, Inc. - Chief Commercial Officer [55]

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Yes, absolutely. Yes. I think it's a continuum actually because all 3 lines. We still see patients that are currently using the IR formulation that move towards the EC. We see also new patients that are being diagnosed and get treatment that they get a THIOLA EC. And we continue to see patients that used to have THIOLA and restart therapy with the EC. So across all 3 lines, we see that patients are using EC.

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Eric M. Dube, Retrophin, Inc. - President, CEO & Director [56]

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And I think one of the other things that I would add just in the first quarter, we do see that overall, the gross to net is usually higher in the first quarter versus Q4. But as you would imagine, that with the volume shift of THIOLA to THIOLA EC, that there would be a differential potentially with gross to net there. But I think largely, what we see is a pattern that is consistent in quarter 1 of previous years as patients' insurance reset for the year. So I think largely, in terms of the market dynamics, as Peter mentioned, but then you also have this unique dynamic of gross to net within Q1 versus the prior quarter.

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Operator [57]

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And I'm showing no further questions at this time. I would now like to turn the conference back to Chris Cline.

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Chris Cline, Retrophin, Inc. - VP of IR & Corporate Communications [58]

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Great. Thank you, Bella. Thank you, everybody, for joining us today. This concludes our call. I hope you all remain safe and well.

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Operator [59]

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