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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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27-4842691
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3721 Valley Centre Drive, Suite 200, San Diego CA
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92130
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(Address of Principal Executive Offices)
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(Zip code)
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Title of each class
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Name of exchange on which registered
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Common Stock, par value $0.0001 per share
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The NASDAQ Global Market
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Large Accelerated Filer
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þ
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Accelerated Filer
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¨
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Non-Accelerated Filer
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¨
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Smaller Reporting Company
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¨
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Emerging growth Company
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¨
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Page
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our ability to produce, sustain and expand sales of our products;
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our ability to develop, acquire and/or introduce new products;
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our projected future sales, profitability and other financial metrics;
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our future financing plans;
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our anticipated needs for working capital;
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the anticipated trends in our industry;
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acquisitions of other companies or assets that we might undertake in the future;
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our operations in the United States and abroad, and the domestic and foreign regulatory, economic and political conditions; and
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competition existing today or that will likely arise in the future.
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Focal segmental glomerulosclerosis ("FSGS")
is a rare kidney disease characterized by proteinuria where the glomeruli become progressively scarred. FSGS is a leading cause of end-stage renal disease.
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Immunoglobulin A nephropathy ("IgAN")
is an immune-complex-mediated glomerulonephritis characterized by hematuria, proteinuria, and variable rates of progressive renal failure. IgAN is the most common primary glomerular disease.
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Chenodal
®
(chenodeoxycholic acid)
is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal
®
has also been the standard of care for cerebrotendinous xanthomatosis (“CTX”) patients for more than three decades and the Company is currently pursuing adding this indication to the label.
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Cholbam
®
(cholic acid)
is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders.
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Thiola
®
(tiopronin)
is approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria.
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Focus on developing products to treat rare diseases characterized by severe unmet medical needs.
We focus on potentially transformational orphan drug candidates in order to leverage our development and commercialization capabilities in rare disease. We believe that drug development for orphan drug markets is particularly attractive because relatively small clinical trials can demonstrate the large clinical effects expected with transformational therapies. Furthermore, the regulatory and commercial models for orphan drugs are well established. Finally, we believe that our research, development, and commercialization capabilities are well suited to the orphan drug market and represent distinct competitive advantages.
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Develop a sustainable pipeline by employing disciplined decision criteria in the evaluation of potential in-licensing candidates.
We seek to build a sustainable product pipeline by employing multiple therapeutic approaches and by developing or acquiring orphan drug candidates. We seek to augment our internally developed pipeline projects by selectively and strategically acquiring pipeline assets that will add value to the portfolio. We intend to mitigate risk by employing rigorous decision criteria, favoring drug candidates that have undergone at least some clinical study. Our decision to acquire rights to a drug candidate also depends on the scientific merits of the available clinical data; the identifiable orphan patient population; the economic terms of any proposed acquisition of rights; the projected amount of capital required to develop the drug candidate; and the economic potential of the drug candidate, should it be commercialized. We believe this strategy minimizes our clinical development risk and allows us to accelerate the development and potential commercialization of current and future drug candidates.
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Evaluate the commercialization strategies on a product-by-product basis to maximize the value of each.
As we move our drug candidates through development toward regulatory approval, we will evaluate several options for each drug candidate’s commercialization strategy. These options include utilizing or expanding our own internal sales force; entering into joint marketing partnerships with other pharmaceutical or biotechnology companies, whereby we jointly sell and market the product; and out-licensing our products, whereby other pharmaceutical or biotechnology companies sell and market our product and pay us a royalty on sales. Our decision will be made separately for each product and will be based on a number of factors including capital necessary to execute on each option, size of the market and terms of potential offers from other pharmaceutical and biotechnology companies.
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serve patients living with rare disease that have limited treatment options;
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drive optimum performance of our marketed products;
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educate and train healthcare providers about our products and the diseases for which they are approved to treat;
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support access to and reimbursement coverage for our products in the U.S. without significant restrictions; and
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minimize the number of patients who discontinue treatment or have low compliance with our products by providing patients with support services and disease education, to the extent and in the manner permitted under applicable laws, to help them maximize the benefits of treatment.
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completion of extensive pre-clinical laboratory tests, animal studies, and formulation studies in accordance with the FDA’s GLP regulations;
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submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;
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performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practices ("GCP") requirements to establish the safety and efficacy of the drug for each proposed indication;
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submission to the FDA of an NDA after completion of all pivotal clinical trials;
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satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with current Good Manufacturing Practices ("cGMPs"); and
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FDA review and approval of the NDA prior to any commercial marketing or sale of the drug in the United States.
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more frequent meetings with FDA to discuss the drug's development plan and ensure collection of appropriate data needed to support drug approval;
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more frequent written communication from FDA about such things as the design of the proposed clinical trials and use of biomarkers;
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eligibility for Accelerated Approval and Priority Review, if relevant criteria are met; and
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rolling Review, which means that a drug company can submit completed sections of its Biologic License Application (BLA) or NDA for review by FDA, rather than waiting until every section is completed before the entire application can be reviewed. BLA or NDA review usually does not begin until the drug company has submitted the entire application to the FDA.
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
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fines, warning letters or holds on post-approval clinical trials;
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refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals;
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product seizure or detention, or refusal to permit the import or export of products; or
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injunctions or the imposition of civil or criminal penalties.
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lower demonstrated efficacy, safety and/or tolerability compared to other drugs;
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prevalence and severity of adverse side-effects;
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lack of cost-effectiveness;
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lack of coverage and adequate reimbursement availability from third-party payers;
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a decision to wait for the approval of other therapies in development that have significant perceived advantages over our drug;
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convenience and ease of administration;
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other potential advantages of alternative treatment methods; and
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ineffective marketing and/or distribution support.
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our preclinical or nonclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical testing or clinical trials or we may abandon projects that we expect to be promising;
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regulators may require us to conduct studies of the long-term effects associated with the use of our product candidates;
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regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site;
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the FDA or any non-United States regulatory authority may impose conditions on us regarding the scope or design of our clinical trials or may require us to resubmit our clinical trial protocols to institutional review boards for re-inspection due to changes in the regulatory environment;
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the number of patients required for our clinical trials may be larger than we anticipate or participants may drop out of our clinical trials at a higher rate than we anticipate;
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our third-party contractors or clinical investigators may fail to comply with regulatory requirements or fail to meet their contractual obligations to us in a timely manner;
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we might have to suspend or terminate one or more of our clinical trials if we, regulators or institutional review boards determine that the participants are being exposed to unacceptable health risks;
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regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements;
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the cost of our clinical trials may be greater than we anticipate;
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the supply or quality of our product candidates or other materials necessary to conduct our clinical trials may be insufficient or inadequate or we may not be able to reach agreements on acceptable terms with prospective clinical research organizations; and
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the effects of our product candidates may not be the desired effects or may include undesirable side effects or the product candidates may have other unexpected characteristics.
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be delayed in obtaining, or may not be able to obtain, marketing approval for one or more of our product candidates;
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obtain approval for indications that are not as broad as intended or entirely different than those indications for which we sought approval; and
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have the product removed from the market after obtaining marketing approval.
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obtaining supplies of fosmetpantotenate, sparsentan, CNSA-001 and subsequent product candidates for completion of our clinical trials on a timely basis;
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successful completion of pre-clinical and clinical studies;
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with respect to L-UDCA, our ability to complete the activities necessary to submit an NDA;
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obtaining marketing approvals from the FDA and similar regulatory authorities outside the United States;
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establishing commercial-scale manufacturing arrangements with third-party manufacturers whose manufacturing facilities are operated in compliance with cGMP regulations;
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launching commercial sales of the product, whether alone or in collaboration with others;
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acceptance of the product by patients, the medical community and third-party payers;
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reimbursement from medical, medicaid or private payers;
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competition from other companies;
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successful protection of our intellectual property rights from competing products in the United States and abroad; and
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a continued acceptable safety and efficacy profile of our product candidates following approval.
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regulatory authorities may require the addition of restrictive labeling statements;
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regulatory authorities may withdraw their approval of the product; and
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we may be required to change the way the product is administered or conduct additional clinical trials.
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the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;
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the efficacy and potential advantages over alternative treatments;
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the pricing of our product candidates;
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relative convenience and ease of administration;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support and timing of market introduction of competitive products;
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publicity concerning our products or competing products and treatments; and
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sufficient third-party insurance coverage or reimbursement.
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we or our licensors were the first to make the inventions covered by each of our pending patent applications;
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we or our licensors were the first to file patent applications for these inventions;
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others will not independently develop similar or alternative technologies or duplicate any of our technologies;
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any patents issued to us or our licensors that provide a basis for commercially viable products will provide us with any competitive advantages or will not be challenged by third parties;
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we will develop additional proprietary technologies that are patentable;
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we will file patent applications for new proprietary technologies promptly or at all;
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the claims we make in our patents will be upheld by patent offices in the United States and elsewhere;
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our patents will not expire prior to or shortly after commencing commercialization of a product; and
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the patents of others will not have a negative effect on our ability to do business.
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a covered benefit under its health plan;
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safe, effective and medically necessary;
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appropriate for the specific patient;
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cost-effective; and
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neither experimental nor investigational.
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reliance on the third party for regulatory compliance and quality assurance;
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limitations on supply availability resulting from capacity and scheduling constraints of the third parties;
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impact on our reputation in the marketplace if manufacturers of our products fail to meet the demands of our customers;
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the possible breach of the manufacturing agreement by the third party because of factors beyond our control; and
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the possible termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.
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our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
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the inability of sales personnel to obtain access to or educate adequate numbers of physicians to prescribe our products;
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the lack of complementary products to be offered by our sales personnel, which may put us at a competitive disadvantage against companies with broader product lines;
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unforeseen costs associated with expanding our own sales and marketing team for new products or with entering into a partnering agreement with an independent sales and marketing organization; and
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efforts by our competitors to commercialize competitive products.
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continue our ongoing clinical development of fosmetpantotenate for the treatment of PKAN;
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continue the open label portion of DUET and conduct the planned Phase 3 trials of sparsentan indications;
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continue funding the clinical development of CNSA-001 for PKU;
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complete requirements necessary for an NDA filing of L-UDCA and the next generation of Thiola;
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continue the research and development of additional product candidates;
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expand our sales and marketing infrastructure to commercialize our current products and any new products for which we may obtain regulatory approval; and
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expand operational, financial, and management information systems and personnel, including personnel to support product development efforts and our obligations as a public company.
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the progress and results of our pre-clinical and clinical studies of fosmetpantotenate, sparsentan, CNSA-001 and other drug candidates;
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the costs, timing and outcome of regulatory review of our product candidates;
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the number and development requirements of other product candidates that we pursue;
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the costs of commercialization activities, including product marketing, sales and distribution;
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the emergence of competing technologies and other adverse market developments;
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the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property related claims;
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the extent to which we acquire or invest in businesses, products and technologies, i
ncluding the extent to which we exercise our option to acquire Censa
; and
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our ability to establish collaborations and obtain milestone, royalty or other payments from any such collaborators.
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results of clinical trials of our product candidates or those of our competitors;
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our entry into or the loss of a significant collaboration;
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regulatory or legal developments in the United States and other countries, including changes in the health care payment systems;
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our ability to obtain and maintain marketing approvals from the FDA or similar regulatory authorities outside the United States;
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variations in our financial results or those of companies that are perceived to be similar to us;
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changes in the structure of healthcare payment systems;
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market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;
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general economic, industry and market conditions;
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results of clinical trials conducted by others on drugs that would compete with our product candidates;
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developments or disputes concerning patents or other proprietary rights;
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public concern over our product candidates or any products approved in the future;
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litigation;
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communications from government officials regarding health care costs or pharmaceutical pricing;
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future sales or anticipated sales of our common stock by us or our stockholders; and
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the other factors described in this “Risk Factors” section.
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integrating personnel, operations and systems, while maintaining focus on producing and delivering consistent, high quality products;
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coordinating geographically dispersed organizations;
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distracting employees from operations;
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retaining existing customers and attracting new customers; and
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managing inefficiencies associated with integrating the operations of the Company.
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inability of sales personnel to obtain access to or convince adequate numbers of physicians to prescribe our products;
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inability to recruit, retain and effectively manage adequate numbers of effective sales personnel;
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lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies that have more extensive product lines; and
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unforeseen delays, costs and expenses associated with maintaining our sales organization.
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decreased demand for any product candidates or products that we may develop;
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damage to our reputation;
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regulatory investigations that could require costly recalls or product modifications;
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withdrawal of clinical trial participants;
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costs to defend the related litigation;
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substantial monetary awards to trial participants or patients, including awards that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available, and would damage our ability to obtain liability insurance at reasonable costs, or at all, in the future;
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loss of revenue;
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the diversion of management’s attention from managing our business; and
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the inability to commercialize any products that we may develop.
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our failure to demonstrate to the satisfaction of the FDA or comparable regulatory authorities that a product candidate is safe and effective for a particular indication;
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the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable regulatory authorities for approval;
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our inability to demonstrate that a product candidate’s benefits outweigh its risks;
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our inability to demonstrate that the product candidate presents an advantage over existing therapies;
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the FDA’s or comparable regulatory authorities’ disagreement with the manner in which we interpret the data from preclinical studies or clinical trials;
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failure of the third-party manufacturers with which we contract for clinical or commercial supplies to satisfactorily complete an FDA pre-approval inspection of the facility or facilities at which the product is manufactured to assess compliance with the FDA’s cGMP regulations to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
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a change in the approval policies or regulations of the FDA or comparable regulatory authorities or a change in the laws governing the approval process.
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make it more difficult for us to satisfy our obligations with respect to any other debt we may incur in the future;
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increase our vulnerability to general adverse economic and industry conditions;
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and related interest, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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increase our cost of borrowing;
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place us at a competitive disadvantage compared to our competitors that may have less debt; and
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limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate purposes.
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failure to pay (for more than 30 days) interest when due;
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failure to pay principal when due;
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failure to deliver shares of common stock upon conversion of a Note;
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failure to provide notice of a fundamental change;
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acceleration on our other indebtedness in excess of $10 million (other than indebtedness that is non-recourse to us); or
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certain types of bankruptcy or insolvency involving us.
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Location
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Address
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Lease Expiration
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Square Feet
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San Diego, California (corporate headquarters)
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3721/3661 Valley Centre Drive
Suites 200, 225, 250 & 275
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July 31, 2024
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45,446
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Quarter Ending
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High
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Low
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||||
Fiscal Year 2017
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|
|
|
|
|
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||
First Quarter
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$
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22.36
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$
|
17.00
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Second Quarter
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$
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20.21
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|
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$
|
15.55
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Third Quarter
|
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$
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25.44
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|
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$
|
18.70
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Fourth Quarter
|
|
$
|
26.44
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|
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$
|
20.66
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Fiscal Year 2016
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|
|
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|
|
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First Quarter
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|
$
|
19.24
|
|
|
$
|
11.60
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Second Quarter
|
|
$
|
19.32
|
|
|
$
|
13.31
|
|
Third Quarter
|
|
$
|
24.57
|
|
|
$
|
15.88
|
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Fourth Quarter
|
|
$
|
24.20
|
|
|
$
|
16.07
|
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|
For the year ended December 31,
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||||||||||||||||||
Consolidated Statement of Operations:
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2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Net product sales
|
$
|
154,937
|
|
|
$
|
133,591
|
|
|
$
|
99,892
|
|
|
$
|
28,203
|
|
|
$
|
—
|
|
Total operating expenses
|
208,728
|
|
|
191,805
|
|
|
150,640
|
|
|
108,011
|
|
|
24,773
|
|
|||||
Operating loss
|
(53,791
|
)
|
|
(58,214
|
)
|
|
(50,748
|
)
|
|
(79,808
|
)
|
|
(24,773
|
)
|
|||||
Total other income (expenses), net
|
(4,572
|
)
|
|
632
|
|
|
156,215
|
|
|
(33,590
|
)
|
|
(9,776
|
)
|
|||||
Income (Loss) before benefit for income taxes
|
(58,363
|
)
|
|
(57,582
|
)
|
|
105,467
|
|
|
(113,398
|
)
|
|
(34,549
|
)
|
|||||
Income tax benefit (provision)
|
(1,368
|
)
|
|
9,679
|
|
|
11,770
|
|
|
2,460
|
|
|
(76
|
)
|
|||||
Net income (loss)
|
$
|
(59,731
|
)
|
|
$
|
(47,903
|
)
|
|
$
|
117,237
|
|
|
$
|
(110,938
|
)
|
|
$
|
(34,625
|
)
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Income (loss) per common share, basic
|
$
|
(1.54
|
)
|
|
$
|
(1.29
|
)
|
|
$
|
3.49
|
|
|
$
|
(4.43
|
)
|
|
$
|
(2.44
|
)
|
Net Income (loss) per common share, diluted
|
$
|
(1.54
|
)
|
|
$
|
(1.29
|
)
|
|
$
|
3.17
|
|
|
$
|
(4.43
|
)
|
|
$
|
(2.44
|
)
|
Weighted average common shares outstanding, basic
|
38,769,816
|
|
|
36,997,865
|
|
|
33,560,249
|
|
|
25,057,509
|
|
|
14,205,264
|
|
|||||
Weighted average common shares outstanding, diluted
|
38,769,816
|
|
|
38,288,012
|
|
|
37,581,439
|
|
|
25,057,509
|
|
|
14,205,264
|
|
|
As of December 31,
|
||||||||||||||||||
Balance Sheet data:
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Cash, cash equivalents and marketable securities
|
$
|
300,630
|
|
|
$
|
255,873
|
|
|
$
|
229,604
|
|
|
$
|
27,760
|
|
|
$
|
(6,130
|
)
|
Working capital (deficit)
|
240,139
|
|
|
249,090
|
|
|
214,951
|
|
|
(70,205
|
)
|
|
(29,064
|
)
|
|||||
Total assets
|
520,346
|
|
|
525,282
|
|
|
512,264
|
|
|
134,973
|
|
|
20,499
|
|
|||||
Long-term debt
|
45,077
|
|
|
44,422
|
|
|
43,766
|
|
|
42,790
|
|
|
—
|
|
|||||
Total stockholders’ equity (deficit)
|
$
|
293,134
|
|
|
$
|
307,767
|
|
|
$
|
299,971
|
|
|
$
|
(37,251
|
)
|
|
$
|
(19,667
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
|
|
(in thousands)
|
|
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
External service provider costs:
|
|
||||||||||
Fosmetpantotenate
|
$
|
16,571
|
|
|
$
|
12,625
|
|
|
$
|
7,631
|
|
Sparsentan
|
20,237
|
|
|
21,064
|
|
|
11,179
|
|
|||
Other product candidates
|
331
|
|
|
1,407
|
|
|
1,053
|
|
|||
General
|
15,827
|
|
|
10,958
|
|
|
6,754
|
|
|||
Total external service provider costs:
|
52,966
|
|
|
46,054
|
|
|
26,617
|
|
|||
Internal personnel costs:
|
25,202
|
|
|
24,768
|
|
|
23,809
|
|
|||
Total research and development
|
$
|
78,168
|
|
|
$
|
70,822
|
|
|
$
|
50,426
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Thiola
|
$
|
82,311
|
|
|
$
|
71,199
|
|
|
$
|
11,112
|
|
|
$
|
71,199
|
|
|
$
|
54,923
|
|
|
$
|
16,276
|
|
Bile acid products
|
72,626
|
|
|
62,392
|
|
|
10,234
|
|
|
62,392
|
|
|
44,969
|
|
|
17,423
|
|
||||||
Total net product revenues
|
$
|
154,937
|
|
|
$
|
133,591
|
|
|
$
|
21,346
|
|
|
$
|
133,591
|
|
|
$
|
99,892
|
|
|
$
|
33,699
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Cost of goods sold
|
$
|
3,605
|
|
|
$
|
4,554
|
|
|
$
|
(949
|
)
|
|
$
|
4,554
|
|
|
$
|
2,185
|
|
|
$
|
2,369
|
|
Research and development
|
78,168
|
|
|
70,822
|
|
|
7,346
|
|
|
70,822
|
|
|
50,426
|
|
|
20,396
|
|
||||||
Selling, general and administrative
|
101,333
|
|
|
91,941
|
|
|
9,392
|
|
|
91,941
|
|
|
79,541
|
|
|
12,400
|
|
||||||
Change in fair value of contingent consideration
|
19,389
|
|
|
18,383
|
|
|
1,006
|
|
|
18,383
|
|
|
13,778
|
|
|
4,605
|
|
||||||
Restructuring
|
3,608
|
|
|
893
|
|
|
2,715
|
|
|
893
|
|
|
—
|
|
|
893
|
|
||||||
Legal fee settlement
|
2,625
|
|
|
5,212
|
|
|
(2,587
|
)
|
|
5,212
|
|
|
—
|
|
|
5,212
|
|
||||||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,710
|
|
|
(4,710
|
)
|
||||||
|
$
|
208,728
|
|
|
$
|
191,805
|
|
|
$
|
16,923
|
|
|
$
|
191,805
|
|
|
$
|
150,640
|
|
|
$
|
41,165
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||||
Litigation settlement gain
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,500
|
|
|
$
|
(15,500
|
)
|
Other income (expense), net
|
1,107
|
|
|
(264
|
)
|
|
1,371
|
|
|
(264
|
)
|
|
(296
|
)
|
|
32
|
|
||||||
Interest expense, net
|
(1,188
|
)
|
|
(759
|
)
|
|
(429
|
)
|
|
(759
|
)
|
|
(7,748
|
)
|
|
6,989
|
|
||||||
Debt early payment penalty
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,250
|
)
|
|
2,250
|
|
||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,151
|
)
|
|
4,151
|
|
||||||
Finance expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
|
600
|
|
||||||
Change in fair value of derivative instruments
|
(4,491
|
)
|
|
1,655
|
|
|
(6,146
|
)
|
|
1,655
|
|
|
(33,307
|
)
|
|
34,962
|
|
||||||
Gain on sale of assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140,004
|
|
|
(140,004
|
)
|
||||||
Bargain purchase gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49,063
|
|
|
(49,063
|
)
|
||||||
|
$
|
(4,572
|
)
|
|
$
|
632
|
|
|
$
|
(5,204
|
)
|
|
$
|
632
|
|
|
$
|
156,215
|
|
|
$
|
(155,583
|
)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Revenue
|
$
|
154,937
|
|
|
$
|
133,591
|
|
Net loss
|
(59,731
|
)
|
|
(47,903
|
)
|
||
Cash & cash equivalents
|
99,394
|
|
|
41,002
|
|
||
Short term investments
|
201,236
|
|
|
214,871
|
|
||
Accumulated deficit
|
(177,655
|
)
|
|
(113,056
|
)
|
||
Stockholders' equity
|
293,134
|
|
|
307,767
|
|
||
Net working capital
|
$
|
240,139
|
|
|
$
|
249,090
|
|
Net working capital ratio
|
3.80
|
|
|
3.99
|
|
•
|
revenue growth of our marketed products;
|
•
|
the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
|
•
|
the timing of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products;
|
•
|
our ability to manufacture sufficient quantities of our products to meet expected demand;
|
•
|
the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation;
|
•
|
our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements;
|
•
|
the potential need to expand our business, resulting in additional payroll and other overhead expenses;
|
•
|
the potential acquisition or in-licensing of other products or technologies; and
|
•
|
the emergence of competing products or other adverse market developments.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by (used in) operating activities
|
$
|
7,403
|
|
|
$
|
(3,441
|
)
|
|
$
|
(1,389
|
)
|
Net cash provided by (used in) investing activities
|
45,602
|
|
|
10,370
|
|
|
(80,602
|
)
|
|||
Net cash provided by (used in) financing activities
|
5,445
|
|
|
(3,849
|
)
|
|
101,602
|
|
|||
Net increase in cash
|
58,450
|
|
|
3,080
|
|
|
19,611
|
|
|||
Effect of exchange rate changes on cash
|
(58
|
)
|
|
117
|
|
|
(10
|
)
|
|||
Cash & cash equivalents, beginning of period
|
41,002
|
|
|
37,805
|
|
|
18,204
|
|
|||
Cash & cash equivalents, end of period
|
$
|
99,394
|
|
|
$
|
41,002
|
|
|
$
|
37,805
|
|
Exhibit No.
|
|
Description
|
|
|
|
2.1
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4+
|
|
|
10.5†
|
|
|
10.6†
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9+
|
|
|
10.10
|
|
|
10.11
|
|
10.12
|
|
|
10.13
|
|
|
10.14
|
|
|
10.15+
|
|
|
10.16+
|
|
|
10.17
|
|
|
10.18†
|
|
|
10.19+
|
|
|
10.20+
|
|
|
10.21+
|
|
|
10.22+
|
|
|
10.23
|
|
|
10.24†
|
|
|
10.25†
|
|
|
10.26†
|
|
|
10.27†
|
|
|
10.28
|
|
|
10.29
|
|
|
21.1
|
|
|
23.1
|
|
|
24.1
|
|
Power of Attorney (see signature page hereto).
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
Taxonomy Extension Presentation Linkbase Document.
|
+
|
|
We have received confidential treatment of certain portions of this agreement, which have been omitted and filed separately with the SEC pursuant to Rule 406 under the Securities Act of 1933, as amended, or Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
|
†
|
|
Indicates management contract or compensatory plan.
|
Date: February 27, 2018
|
RETROPHIN, INC.
|
|
|
|
|
|
By:
|
/s/ Stephen Aselage
|
|
|
Name: Stephen Aselage
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
By:
|
/s/ Laura Clague
|
|
|
Name: Laura Clague
|
|
|
Title: Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Stephen Aselage
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 27, 2018
|
Stephen Aselage
|
|
|
|
|
|
|
|
|
|
/s/ Laura Clague
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 27, 2018
|
Laura Clague
|
|
|
|
|
|
|
|
|
|
/s/ Roy D. Baynes
|
|
Director
|
|
|
Roy D. Baynes
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ Timothy Coughlin
|
|
Director
|
|
|
Timothy Coughlin
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ John Kozarich
|
|
Director
|
|
|
John Kozarich
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ Gary Lyons
|
|
Director
|
|
|
Gary Lyons
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ Jeffrey A. Meckler
|
|
Director
|
|
|
Jeffrey A. Meckler
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ John A. Orwin
|
|
Director
|
|
|
John A. Orwin
|
|
|
|
February 27, 2018
|
|
|
|
|
|
/s/ Ron Squarer
|
|
Director
|
|
|
Ron Squarer
|
|
|
|
February 27, 2018
|
|
Page
|
Financial Statements
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
99,394
|
|
|
$
|
41,002
|
|
Marketable securities
|
201,236
|
|
|
214,871
|
|
||
Accounts receivable, net
|
13,872
|
|
|
18,510
|
|
||
Inventory, net
|
5,351
|
|
|
2,826
|
|
||
Prepaid expenses and other current assets
|
3,112
|
|
|
4,831
|
|
||
Prepaid taxes
|
2,842
|
|
|
3,463
|
|
||
Note receivable, current
|
—
|
|
|
46,849
|
|
||
Total current assets
|
325,807
|
|
|
332,352
|
|
||
Property and equipment, net
|
3,230
|
|
|
2,587
|
|
||
Other assets
|
5,556
|
|
|
7,364
|
|
||
Intangible assets, net
|
184,817
|
|
|
182,043
|
|
||
Goodwill
|
936
|
|
|
936
|
|
||
Total assets
|
$
|
520,346
|
|
|
$
|
525,282
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
18,938
|
|
|
$
|
7,522
|
|
Accrued expenses
|
36,018
|
|
|
33,308
|
|
||
Guaranteed minimum royalty, short term
|
2,000
|
|
|
2,000
|
|
||
Other current liabilities
|
3,902
|
|
|
1,842
|
|
||
Business combination-related contingent consideration
|
9,100
|
|
|
16,150
|
|
||
Derivative financial instruments, warrants
|
15,710
|
|
|
22,440
|
|
||
Total current liabilities
|
85,668
|
|
|
83,262
|
|
||
Convertible debt
|
45,077
|
|
|
44,422
|
|
||
Other noncurrent liabilities
|
2,472
|
|
|
4,010
|
|
||
Guaranteed minimum royalty, long term
|
13,095
|
|
|
8,068
|
|
||
Business combination-related contingent consideration, less current portion
|
80,900
|
|
|
71,328
|
|
||
Deferred income tax liability, net
|
—
|
|
|
6,425
|
|
||
Total liabilities
|
227,212
|
|
|
217,515
|
|
||
Stockholders' Equity:
|
|
|
|
|
|
||
Preferred stock $0.001 par value; 20,000,000 shares authorized; 0 issued and outstanding as of December 31, 2017 and 2016, respectively
|
—
|
|
|
—
|
|
||
Common stock $0.0001 par value; 100,000,000 shares authorized; 39,373,745 and 37,906,669 issued and outstanding as of December 31, 2017 and 2016, respectively
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
471,800
|
|
|
421,309
|
|
||
Accumulated deficit
|
(177,655
|
)
|
|
(113,056
|
)
|
||
Accumulated other comprehensive loss
|
(1,015
|
)
|
|
(490
|
)
|
||
Total stockholders' equity
|
293,134
|
|
|
307,767
|
|
||
Total liabilities and stockholders' equity
|
$
|
520,346
|
|
|
$
|
525,282
|
|
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net product sales
|
$
|
154,937
|
|
|
$
|
133,591
|
|
|
$
|
99,892
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Cost of goods sold
|
3,605
|
|
|
4,554
|
|
|
2,185
|
|
|||
Research and development
|
78,168
|
|
|
70,822
|
|
|
50,426
|
|
|||
Selling, general and administrative
|
101,333
|
|
|
91,941
|
|
|
79,541
|
|
|||
Change in fair value of contingent consideration
|
19,389
|
|
|
18,383
|
|
|
13,778
|
|
|||
Restructuring
|
3,608
|
|
|
893
|
|
|
—
|
|
|||
Legal fee settlement
|
2,625
|
|
|
5,212
|
|
|
—
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
4,710
|
|
|||
Total operating expenses
|
208,728
|
|
|
191,805
|
|
|
150,640
|
|
|||
Operating loss
|
(53,791
|
)
|
|
(58,214
|
)
|
|
(50,748
|
)
|
|||
Other Income (expense), net:
|
|
|
|
|
|
|
|
|
|||
Litigation settlement gain
|
—
|
|
|
—
|
|
|
15,500
|
|
|||
Other income (expense), net
|
1,107
|
|
|
(264
|
)
|
|
(296
|
)
|
|||
Interest expense, net
|
(1,188
|
)
|
|
(759
|
)
|
|
(7,748
|
)
|
|||
Debt early payment penalty
|
—
|
|
|
—
|
|
|
(2,250
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(4,151
|
)
|
|||
Finance expense
|
—
|
|
|
—
|
|
|
(600
|
)
|
|||
Change in fair value of derivative instruments
|
(4,491
|
)
|
|
1,655
|
|
|
(33,307
|
)
|
|||
Gain on sale of assets
|
—
|
|
|
—
|
|
|
140,004
|
|
|||
Bargain purchase gain
|
—
|
|
|
—
|
|
|
49,063
|
|
|||
Total other income (expense), net
|
(4,572
|
)
|
|
632
|
|
|
156,215
|
|
|||
Income (loss) before benefit (provision) for income taxes
|
(58,363
|
)
|
|
(57,582
|
)
|
|
105,467
|
|
|||
Income tax benefit (provision)
|
(1,368
|
)
|
|
9,679
|
|
|
11,770
|
|
|||
Net income (loss)
|
$
|
(59,731
|
)
|
|
$
|
(47,903
|
)
|
|
$
|
117,237
|
|
Net income (loss) per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(1.54
|
)
|
|
$
|
(1.29
|
)
|
|
$
|
3.49
|
|
Diluted
|
$
|
(1.54
|
)
|
|
$
|
(1.29
|
)
|
|
$
|
3.17
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
38,769,816
|
|
|
36,997,865
|
|
|
33,560,249
|
|
|||
Diluted
|
38,769,816
|
|
|
38,288,012
|
|
|
37,581,439
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|||
Net income (loss)
|
$
|
(59,731
|
)
|
|
$
|
(47,903
|
)
|
|
$
|
117,237
|
|
Foreign currency translation gain (loss)
|
(339
|
)
|
|
93
|
|
|
(40
|
)
|
|||
Unrealized gain (loss) on sale of marketable securities
|
(186
|
)
|
|
99
|
|
|
(4,927
|
)
|
|||
Comprehensive income (loss)
|
$
|
(60,256
|
)
|
|
$
|
(47,711
|
)
|
|
$
|
112,270
|
|
|
Common Stock
|
|
Common Stock in Treasury
|
|
Additional Paid in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Accumulated
Deficit |
|
Total
Stockholders' Equity (Deficit) |
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
BALANCE - DECEMBER 31, 2014
|
26,428,071
|
|
|
$
|
3
|
|
|
(379,591
|
)
|
|
$
|
(3,215
|
)
|
|
$
|
140,851
|
|
|
$
|
4,285
|
|
|
$
|
(179,175
|
)
|
|
$
|
(37,251
|
)
|
Share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,900
|
|
|
—
|
|
|
—
|
|
|
25,900
|
|
||||||
Vesting of stock for accrued severance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,126
|
|
|
—
|
|
|
—
|
|
|
2,126
|
|
||||||
Issuance of common stock in connection with March 2015 public offering at $19.00 per share, net of fees of $9 million
|
7,866,000
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
139,986
|
|
|
—
|
|
|
—
|
|
|
139,987
|
|
||||||
Exercise of warrants and reclassification of derivative liability
|
870,306
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,012
|
|
|
—
|
|
|
—
|
|
|
28,012
|
|
||||||
Retirement of treasury stock
|
(379,591
|
)
|
|
—
|
|
|
379,591
|
|
|
3,215
|
|
|
—
|
|
|
—
|
|
|
(3,215
|
)
|
|
—
|
|
||||||
Unrealized gain/(loss) on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,927
|
)
|
|
—
|
|
|
(4,927
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||||
Option inducement liability reversal and adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,840
|
|
|
—
|
|
|
—
|
|
|
3,840
|
|
||||||
Issuance of common shares under the equity incentive plan
|
1,019,788
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,818
|
|
|
—
|
|
|
—
|
|
|
6,818
|
|
||||||
Shares issued in connection with Cholbam acquisition
|
661,279
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,844
|
|
|
—
|
|
|
—
|
|
|
15,844
|
|
||||||
Excess tax benefits of stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,425
|
|
|
—
|
|
|
—
|
|
|
2,425
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117,237
|
|
|
117,237
|
|
||||||
BALANCE - DECEMBER 31, 2015
|
36,465,853
|
|
|
$
|
4
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
365,802
|
|
|
$
|
(682
|
)
|
|
$
|
(65,153
|
)
|
|
$
|
299,971
|
|
Share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,102
|
|
|
—
|
|
|
—
|
|
|
29,102
|
|
||||||
Legal fee settlement-short swing profit recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,025
|
|
|
—
|
|
|
—
|
|
|
2,025
|
|
||||||
Exercise of warrants and reclassification of derivative liability
|
898,633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,720
|
|
|
—
|
|
|
—
|
|
|
20,720
|
|
||||||
Unrealized gain/(loss) on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
93
|
|
|
—
|
|
|
96
|
|
||||||
Issuance of common shares under the equity incentive plan
|
542,183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,016
|
|
|
—
|
|
|
—
|
|
|
4,016
|
|
||||||
Tax shortfall from stock option exercises
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(359
|
)
|
|
—
|
|
|
—
|
|
|
(359
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,903
|
)
|
|
(47,903
|
)
|
||||||
BALANCE - DECEMBER 31, 2016
|
37,906,669
|
|
|
$
|
4
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
421,309
|
|
|
$
|
(490
|
)
|
|
$
|
(113,056
|
)
|
|
$
|
307,767
|
|
Adoption of ASU 2016-16 required de-recognition of intra-company deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,868
|
)
|
|
(4,868
|
)
|
||||||
Share based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,645
|
|
|
—
|
|
|
—
|
|
|
26,645
|
|
||||||
Exercise of warrants and reclassification of derivative liability
|
607,481
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,866
|
|
|
—
|
|
|
—
|
|
|
14,866
|
|
||||||
Unrealized gain/(loss) on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(186
|
)
|
|
—
|
|
|
(186
|
)
|
||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(339
|
)
|
|
—
|
|
|
(339
|
)
|
|||||||
Issuance of common shares under the equity incentive plan and proceeds from exercise.
|
819,573
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,087
|
|
|
—
|
|
|
—
|
|
|
8,087
|
|
||||||
ESPP stock purchase and expense
|
40,022
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
893
|
|
|
—
|
|
|
—
|
|
|
893
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,731
|
)
|
|
(59,731
|
)
|
||||||
BALANCE - DECEMBER 31, 2017
|
39,373,745
|
|
|
$
|
4
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
471,800
|
|
|
$
|
(1,015
|
)
|
|
$
|
(177,655
|
)
|
|
$
|
293,134
|
|
Cash paid for interest
|
$
|
2,070
|
|
|
$
|
2,070
|
|
|
$
|
5,838
|
|
Cash paid for income taxes
|
$
|
7,172
|
|
|
$
|
7,933
|
|
|
$
|
9,610
|
|
Non-cash Investing and financing activities:
|
|
|
|
|
|
|
|
|
|||
Short swing profit judgment offset with settlement expense accrual
|
$
|
—
|
|
|
$
|
2,025
|
|
|
$
|
—
|
|
Reclassification of derivative liability to equity due to exercise of warrants
|
$
|
11,221
|
|
|
$
|
14,715
|
|
|
$
|
25,537
|
|
Accrued royalty in excess of minimum payable to the sellers of Thiola
|
$
|
13,247
|
|
|
$
|
11,206
|
|
|
$
|
8,219
|
|
Accrual of fee to extend term of current Thiola agreement
|
$
|
5,885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Present value of contingent consideration payable upon acquisition related to L-UDCA
|
$
|
—
|
|
|
$
|
25,000
|
|
|
$
|
—
|
|
Present value of contingent consideration payable upon acquisition relate to Cholbam
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,010
|
|
Shares issued in connection with Cholbam acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,844
|
|
•
|
Chenodal (chenodiol tablets) is approved in the United States for the treatment of patients suffering from gallstones in whom surgery poses an unacceptable health risk due to disease or advanced age. Chenodal has been the standard of care for
cerebrotendinous xanthomatosis ("
CTX") patients for more than three decades and the Company is currently pursuing adding this indication to the label.
|
•
|
Cholbam (cholic acid capsules) is approved in the United States for the treatment of bile acid synthesis disorders due to single enzyme defects and is further indicated for adjunctive treatment of patients with peroxisomal disorders.
|
•
|
Thiola (tiopronin tablets) is approved in the United States for the
prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria.
|
|
Initial Vesting Term
|
Stock Options
|
3 to 4 years
|
Restricted Stock Units
|
2 to 3 years
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Raw material
|
$
|
3,435
|
|
|
$
|
1,336
|
|
Finished goods
|
1,916
|
|
|
1,490
|
|
||
Total inventory
|
$
|
5,351
|
|
|
$
|
2,826
|
|
Computers and equipment
|
3 years
|
Furniture and fixtures
|
7 years
|
Leasehold improvements
|
Shorter of length of lease or life of the asset
|
Cash paid upon consummation
|
$
|
500
|
|
Present value of contingent consideration
|
25,000
|
|
|
Total purchase price
|
$
|
25,500
|
|
Fair Value of Assets Acquired and Liabilities Assumed
|
|
||
Acquired product rights: L-UDCA (intangible asset)
|
$
|
25,500
|
|
Total purchase price
|
$
|
25,500
|
|
Cash paid upon consummation
|
$
|
33,430
|
|
Present value of contingent consideration and service fees
|
42,010
|
|
|
Fair Value of 661,279 shares issued to Asklepion
|
15,844
|
|
|
Total Purchase Price
|
$
|
91,284
|
|
Fair Value of Assets Acquired and Liabilities Assumed
|
|
||
Acquired product rights-Cholbam (Intangible Asset)
|
$
|
83,200
|
|
Pediatric Priority Review Voucher
|
96,250
|
|
|
Inventory
|
777
|
|
|
Deferred tax liability
|
(39,880
|
)
|
|
Total Allocation of Purchase Price
|
140,347
|
|
|
Bargain Purchase Gain
|
(49,063
|
)
|
|
Total Purchase Price
|
$
|
91,284
|
|
|
As of December 31,
|
||||||
|
2017
|
|
2016
|
||||
Marketable Securities:
|
|
|
|
||||
Commercial paper
|
6,897
|
|
|
30,303
|
|
||
Corporate debt securities
|
164,297
|
|
|
134,570
|
|
||
Securities of government sponsored entities
|
30,042
|
|
|
49,998
|
|
||
Total Marketable Securities:
|
$
|
201,236
|
|
|
$
|
214,871
|
|
|
Contractual Maturity (in years)
|
|
Amortized Cost
|
|
Unrealized Losses
|
|
Aggregate Estimated Fair Value
|
||||||
Marketable Securities:
|
|
|
|
|
|
|
|
||||||
Commercial paper
|
Less than 1
|
|
$
|
6,911
|
|
|
$
|
(14
|
)
|
|
$
|
6,897
|
|
Corporate debt securities
|
Less than 1
|
|
86,531
|
|
|
(198
|
)
|
|
86,333
|
|
|||
Securities of government-sponsored entities
|
Less than 1
|
|
30,132
|
|
|
(90
|
)
|
|
30,042
|
|
|||
Total maturity less than 1 year
|
|
|
123,574
|
|
|
(302
|
)
|
|
123,272
|
|
|||
Corporate debt securities
|
1 to 2
|
|
78,388
|
|
|
(424
|
)
|
|
77,964
|
|
|||
Total maturity 1 to 2 years
|
|
|
78,388
|
|
|
(424
|
)
|
|
77,964
|
|
|||
Total available-for-sale securities
|
|
|
$
|
201,962
|
|
|
$
|
(726
|
)
|
|
$
|
201,236
|
|
|
Contractual Maturity (in years)
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Aggregate Estimated Fair Value
|
||||||||
Marketable Securities:
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
Less than 1
|
|
$
|
30,330
|
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
$
|
30,303
|
|
Corporate debt securities
|
Less than 1
|
|
64,794
|
|
|
7
|
|
|
(91
|
)
|
|
64,710
|
|
||||
Securities of government-sponsored entities
|
|
|
19,500
|
|
|
—
|
|
|
(10
|
)
|
|
19,490
|
|
||||
Total maturity less than 1 year
|
|
|
114,624
|
|
|
7
|
|
|
(128
|
)
|
|
114,503
|
|
||||
Corporate debt securities
|
1 to 2
|
|
70,207
|
|
|
—
|
|
|
(347
|
)
|
|
69,860
|
|
||||
Securities of government-sponsored entities
|
1 to 2
|
|
30,583
|
|
|
—
|
|
|
(75
|
)
|
|
30,508
|
|
||||
Total maturity 1 to 2 years
|
|
|
100,790
|
|
|
—
|
|
|
(422
|
)
|
|
100,368
|
|
||||
Total available-for-sale securities
|
|
|
$
|
215,414
|
|
|
$
|
7
|
|
|
$
|
(550
|
)
|
|
$
|
214,871
|
|
Risk free rate
|
1.39
|
%
|
|
Expected volatility
|
85
|
%
|
|
Expected life (in years), represents the weighted average period until next liquidity event
|
0.3
|
|
|
Expected dividend yield
|
—
|
|
|
Exercise Price
|
$
|
13.25
|
|
Risk free rate
|
1.62
|
%
|
|
Expected volatility
|
85
|
%
|
|
Expected life (in years), represents the weighted average period until next liquidity event
|
0.36
|
|
|
Expected dividend yield
|
—
|
|
|
Exercise Price
|
$
|
12.76
|
|
|
As of
|
||||||
|
December 31, 2017
|
|
December 31, 2016
|
||||
Fair value of common stock
|
$
|
21.07
|
|
|
$
|
18.93
|
|
Remaining Life (in years) of the Warrants
|
.1 – 2.0 years
|
|
|
1.2 – 3.0 years
|
|
||
Risk-free interest rate
|
1.39 - 1.89%
|
|
|
.89 - 1.48%
|
|
||
Expected volatility
|
33 - 43%
|
|
|
55 - 75%
|
|
||
Dividend yield
|
—
|
|
|
—
|
|
Exercise
Price
|
|
Number of Warrants
|
|
Weighted Average Remaining
Contractual Life (years)
|
|
Number
Exercisable
|
||||
$
|
3.60
|
|
|
168,336
|
|
|
0.10
|
|
168,336
|
|
$
|
6.00
|
|
|
611,921
|
|
|
0.60
|
|
611,921
|
|
$
|
12.76
|
|
|
337,500
|
|
|
1.50
|
|
337,500
|
|
$
|
13.25
|
|
|
41,667
|
|
|
2.00
|
|
41,667
|
|
|
As of December, 2017
|
|
Fair Value Hierarchy at December 31, 2017
|
||||||||||||
|
Total carrying and
estimated fair value
|
|
Quoted prices in
active markets
(Level 1)
|
|
Significant other
observable inputs
(Level 2)
|
|
Significant
unobservable
inputs (Level 3)
|
||||||||
Asset:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
99,394
|
|
|
$
|
92,726
|
|
|
$
|
6,668
|
|
|
$
|
—
|
|
Marketable securities, available-for-sale
|
201,236
|
|
|
—
|
|
|
201,236
|
|
|
—
|
|
||||
Total
|
$
|
300,630
|
|
|
$
|
92,726
|
|
|
$
|
207,904
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liability related to warrants
|
$
|
15,710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,710
|
|
Business combination-related contingent consideration
|
90,000
|
|
|
—
|
|
|
—
|
|
|
90,000
|
|
||||
Total
|
$
|
105,710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105,710
|
|
|
As of December, 2016
|
|
Fair Value Hierarchy at December 31, 2016
|
||||||||||||
|
Total carrying and
estimated fair value |
|
Quoted prices in
active markets (Level 1) |
|
Significant other
observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||
Asset:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
41,002
|
|
|
$
|
39,929
|
|
|
$
|
1,073
|
|
|
$
|
—
|
|
Marketable securities, available-for-sale
|
214,871
|
|
|
—
|
|
|
214,871
|
|
|
—
|
|
||||
Total
|
$
|
255,873
|
|
|
$
|
39,929
|
|
|
$
|
215,944
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liability related to warrants
|
$
|
22,440
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,440
|
|
Business combination-related contingent consideration
|
87,478
|
|
|
—
|
|
|
—
|
|
|
87,478
|
|
||||
Total
|
$
|
109,918
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109,918
|
|
|
Fair Value Measurements of Common Stock Warrants Using Significant Unobservable Inputs (Level 3)
|
||||||
|
2017
|
|
2016
|
||||
Balance at January 1,
|
$
|
22,440
|
|
|
$
|
38,810
|
|
Reclassification of derivative liability to equity upon exercise of warrants
|
(11,221
|
)
|
|
(14,715
|
)
|
||
Change in estimated fair value of liability classified warrants
|
4,491
|
|
|
(1,655
|
)
|
||
Balance at December 31,
|
$
|
15,710
|
|
|
$
|
22,440
|
|
|
Fair Value Measurements of Acquisition-Related Contingent Consideration (Level 3)
|
||||||
|
2017
|
|
2016
|
||||
Balance at January 1,
|
$
|
87,478
|
|
|
$
|
59,021
|
|
Present value of contingent consideration upon acquisition related to a business combination
|
—
|
|
|
25,000
|
|
||
Increase from revaluation of contingent consideration
|
19,389
|
|
|
18,383
|
|
||
Contractual Payments
|
(6,006
|
)
|
|
(12,826
|
)
|
||
Contractual Payments accrued at December 31
|
(11,012
|
)
|
|
(1,988
|
)
|
||
Foreign currency impact
|
151
|
|
|
(112
|
)
|
||
Balance at December 31,
|
$
|
90,000
|
|
|
$
|
87,478
|
|
|
Useful Life
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Book Value
|
||||||
Chenodal Product Rights
|
16
|
$
|
67,849
|
|
|
$
|
(15,976
|
)
|
|
$
|
51,873
|
|
Thiola License
|
15
|
54,471
|
|
|
(10,168
|
)
|
|
44,303
|
|
|||
Economic Interest - U.S. revenue Cholbam
|
10
|
75,900
|
|
|
(20,903
|
)
|
|
54,997
|
|
|||
Economic Interest - International revenue Cholbam
|
10
|
8,058
|
|
|
(2,219
|
)
|
|
5,839
|
|
|||
Economic Interest - L-UDCA (acquired IPR&D)
|
Indefinite
|
25,500
|
|
|
—
|
|
|
25,500
|
|
|||
Ligand License
|
11
|
3,300
|
|
|
(1,420
|
)
|
|
1,880
|
|
|||
Manchester Customer Relationships
|
10
|
403
|
|
|
(152
|
)
|
|
251
|
|
|||
Manchester Trade Name
|
1
|
175
|
|
|
(175
|
)
|
|
—
|
|
|||
Internal use software
|
5
|
$
|
207
|
|
|
$
|
(33
|
)
|
|
$
|
174
|
|
Total
|
|
$
|
235,863
|
|
|
$
|
(51,046
|
)
|
|
$
|
184,817
|
|
|
Useful Life
|
Gross Carrying
Amount |
|
Accumulated
Amortization |
|
Net Book Value
|
||||||
Chenodal Product Rights
|
16
|
$
|
67,849
|
|
|
$
|
(11,738
|
)
|
|
$
|
56,111
|
|
Thiola License
|
10
|
35,339
|
|
|
(5,818
|
)
|
|
29,521
|
|
|||
Economic Interest - U.S. revenue Cholbam
|
10
|
75,900
|
|
|
(13,320
|
)
|
|
62,580
|
|
|||
Economic Interest - International revenue Cholbam
|
10
|
7,074
|
|
|
(1,241
|
)
|
|
5,833
|
|
|||
Economic Interest - L-UDCA (acquired IPR&D)
|
Indefinite
|
25,500
|
|
|
—
|
|
|
25,500
|
|
|||
Ligand License
|
11
|
3,300
|
|
|
(1,093
|
)
|
|
2,207
|
|
|||
Manchester Customer Relationships
|
10
|
403
|
|
|
(112
|
)
|
|
291
|
|
|||
Manchester Trade Name
|
1
|
175
|
|
|
(175
|
)
|
|
—
|
|
|||
Total
|
|
$
|
215,540
|
|
|
$
|
(33,497
|
)
|
|
$
|
182,043
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Research and development
|
$
|
327
|
|
|
$
|
328
|
|
|
$
|
697
|
|
Selling, general and administrative
|
17,004
|
|
|
15,665
|
|
|
12,534
|
|
|||
Total amortization expense
|
$
|
17,331
|
|
|
$
|
15,993
|
|
|
$
|
13,231
|
|
2018
|
$
|
16,871
|
|
2019
|
16,871
|
|
|
2020
|
16,871
|
|
|
2021
|
16,871
|
|
|
2022
|
16,871
|
|
|
Thereafter
|
74,962
|
|
|
Total
|
$
|
159,317
|
|
|
2017
|
|
2016
|
||||
Compensation related costs
|
$
|
7,749
|
|
|
$
|
7,441
|
|
Research and development
|
6,989
|
|
|
7,311
|
|
||
Government rebate reserves
|
5,883
|
|
|
6,967
|
|
||
Selling, general and administrative
|
3,896
|
|
|
3,333
|
|
||
Royalty/contingent consideration
|
6,429
|
|
|
5,766
|
|
||
Restructuring expenses
|
3,549
|
|
|
893
|
|
||
Miscellaneous accrued expenses
|
1,523
|
|
|
1,597
|
|
||
Total accrued expenses
|
$
|
36,018
|
|
|
$
|
33,308
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Aggregate principle amount of Notes
|
$
|
46,000
|
|
|
$
|
46,000
|
|
Unamortized debt discount and debt issuance costs
|
(923
|
)
|
|
(1,578
|
)
|
||
|
$
|
45,077
|
|
|
$
|
44,422
|
|
Risk free rate
|
1.62
|
%
|
|
Expected volatility
|
85
|
%
|
|
Expected life (in years), represents the weighted average period until next liquidity event
|
0.36
|
|
|
Expected dividend yield
|
—
|
|
|
Exercise Price
|
$
|
12.76
|
|
Facilities
|
|
Base Rent
|
|
Lease Expiration
|
|
Comments
|
Occupied Location
|
|
|
|
|
|
|
Corporate Headquarters
San Diego CA
|
|
$2.1 million
|
|
July 2024
|
|
|
Vacated Location
|
|
|
|
|
|
|
New York NY
|
|
$0.5 million
|
|
November 2018
|
|
Sublet through expiration
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Operating leases
|
$
|
16,037
|
|
|
$
|
2,012
|
|
|
$
|
4,757
|
|
|
$
|
5,046
|
|
|
$
|
4,222
|
|
Note payable, including contractual interest
|
71,933
|
|
|
4,070
|
|
|
50,863
|
|
|
4,000
|
|
|
13,000
|
|
|||||
Sales support services
|
2,638
|
|
|
417
|
|
|
833
|
|
|
833
|
|
|
555
|
|
|||||
Product supply contracts
|
1,539
|
|
|
1,358
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|||||
Purchase order commitments
|
8,119
|
|
|
5,619
|
|
|
1,000
|
|
|
1,000
|
|
|
500
|
|
|||||
|
$
|
100,266
|
|
|
$
|
13,476
|
|
|
$
|
57,634
|
|
|
$
|
10,879
|
|
|
$
|
18,277
|
|
|
Twelve Months Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Risk free rate
|
2.10
|
%
|
|
1.20
|
%
|
|
1.53
|
%
|
Expected volatility
|
70
|
%
|
|
68
|
%
|
|
83
|
%
|
Expected life (in years)
|
6.1
|
|
|
5.8
|
|
|
5.8
|
|
Expected dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Weighted Average
|
|
|
||||||||
|
Shares Underlying
Options
|
|
Exercise
Price
|
|
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
||||||
Exercisable at December 31, 2016
|
3,793,017
|
|
|
$
|
14.94
|
|
|
6.82
|
|
|
$
|
23,358
|
|
Outstanding at December 31, 2016
|
6,430,570
|
|
|
16.91
|
|
|
7.64
|
|
|
$
|
30,088
|
|
|
Granted
|
2,111,300
|
|
|
18.48
|
|
|
—
|
|
|
—
|
|
||
Forfeited and expired
|
(759,127
|
)
|
|
22.28
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(629,075
|
)
|
|
12.86
|
|
|
—
|
|
|
5,420
|
|
||
Outstanding at December 31, 2017
|
7,153,668
|
|
|
$
|
17.16
|
|
|
6.95
|
|
|
$
|
39,010
|
|
Exercisable at December 31, 2017
|
4,610,233
|
|
|
$
|
15.97
|
|
|
5.85
|
|
|
$
|
31,991
|
|
|
|
|
Weighted Average
|
|
|
||||||||
|
Shares Underlying
Options
|
|
Exercise
Price
|
|
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
||||||
Exercisable at December 31, 2015
|
2,036,906
|
|
|
$
|
12.55
|
|
|
8.34
|
|
|
$
|
15,582
|
|
Outstanding at December 31, 2015
|
5,665,584
|
|
|
$
|
17.05
|
|
|
8.75
|
|
|
$
|
31,542
|
|
Granted
|
1,687,250
|
|
|
16.73
|
|
|
—
|
|
|
—
|
|
||
Forfeited and expired
|
(541,416
|
)
|
|
22.19
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(380,848
|
)
|
|
10.55
|
|
|
—
|
|
|
2,873
|
|
||
Outstanding at December 31, 2016
|
6,430,570
|
|
|
$
|
16.91
|
|
|
7.64
|
|
|
$
|
30,088
|
|
Exercisable at December 31, 2016
|
3,793,017
|
|
|
$
|
14.94
|
|
|
6.82
|
|
|
$
|
23,358
|
|
|
|
|
Weighted Average
|
|
|
||||||||
|
Shares Underlying
Options
|
|
Exercise
Price
|
|
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
||||||
Exercisable at December 31, 2014
|
1,225,833
|
|
|
$
|
9.73
|
|
|
7.96
|
|
|
$
|
3,395
|
|
Outstanding at December 31, 2014
|
4,892,208
|
|
|
$
|
10.93
|
|
|
8.57
|
|
|
$
|
8,353
|
|
Granted
|
2,285,000
|
|
|
27.15
|
|
|
—
|
|
|
—
|
|
||
Forfeited and expired
|
(970,170
|
)
|
|
14.91
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(541,454
|
)
|
|
13.10
|
|
|
—
|
|
|
7,230
|
|
||
Outstanding at December 31, 2015
|
5,665,584
|
|
|
$
|
17.05
|
|
|
8.75
|
|
|
$
|
31,542
|
|
Exercisable at December 31, 2015
|
2,036,906
|
|
|
$
|
12.55
|
|
|
8.34
|
|
|
$
|
15,582
|
|
|
Number of
RSUs
|
|
Weighted Average
Grant Date Fair Value
|
|||
Unvested December 31, 2015
|
429,666
|
|
|
$
|
20.38
|
|
Granted
|
245,000
|
|
|
17.52
|
|
|
Vested
|
(161,335
|
)
|
|
16.76
|
|
|
Forfeited/cancelled
|
(105,585
|
)
|
|
21.19
|
|
|
Unvested December 31, 2016
|
407,746
|
|
|
19.88
|
|
|
Granted
|
157,750
|
|
|
18.32
|
|
|
Vested
|
(190,498
|
)
|
|
17.12
|
|
|
Forfeited/cancelled
|
(29,666
|
)
|
|
22.00
|
|
|
Unvested December 31, 2017
|
345,332
|
|
|
$
|
20.51
|
|
|
Twelve Months Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Selling, general and administrative expenses
|
$
|
17,924
|
|
|
$
|
18,614
|
|
|
$
|
16,483
|
|
Research and development expenses
|
8,950
|
|
|
10,488
|
|
|
9,417
|
|
|||
Total
|
$
|
26,874
|
|
|
$
|
29,102
|
|
|
$
|
25,900
|
|
|
For the year ended December 31,
|
|||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||||||||||||||
|
Shares
|
|
Net loss
|
|
EPS
|
|
Shares
|
|
Net loss
|
|
EPS
|
|
Shares
|
|
Net Income
|
|
EPS
|
|||||||||||||||
Basic Earnings per Share
|
38,769,816
|
|
|
$
|
(59,731
|
)
|
|
$
|
(1.54
|
)
|
|
36,997,865
|
|
|
$
|
(47,903
|
)
|
|
$
|
(1.29
|
)
|
|
33,560,249
|
|
|
$
|
117,237
|
|
|
$
|
3.49
|
|
Dilutive shares related to warrants
|
—
|
|
|
—
|
|
|
|
|
1,290,147
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|||||||||
Change in fair value of derivative instruments
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(1,655
|
)
|
|
|
|
—
|
|
|
—
|
|
|
|
|||||||||
Convertible Debt
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
2,642,160
|
|
|
1,881
|
|
|
|
|||||||||
Restricted Stock
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
290,966
|
|
|
—
|
|
|
|
|||||||||
Stock Options
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
1,088,064
|
|
|
—
|
|
|
|
|||||||||
Dilutive Earnings per Share
|
38,769,816
|
|
|
$
|
(59,731
|
)
|
|
$
|
(1.54
|
)
|
|
38,288,012
|
|
|
$
|
(49,558
|
)
|
|
$
|
(1.29
|
)
|
|
37,581,439
|
|
|
$
|
119,118
|
|
|
$
|
3.17
|
|
|
For the year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Convertible Debt
|
2,642,160
|
|
|
2,642,160
|
|
|
—
|
|
Restricted Stock
|
157,319
|
|
|
444,942
|
|
|
22,069
|
|
Options
|
7,080,998
|
|
|
6,286,584
|
|
|
1,049,375
|
|
Warrants
|
1,159,424
|
|
|
—
|
|
|
2,665,548
|
|
Total Anti-Dilutive Shares
|
11,039,901
|
|
|
9,373,686
|
|
|
3,736,992
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
(55,611
|
)
|
|
$
|
(52,750
|
)
|
|
$
|
107,038
|
|
Foreign
|
(2,752
|
)
|
|
(4,832
|
)
|
|
(1,571
|
)
|
|||
Total
|
$
|
(58,363
|
)
|
|
$
|
(57,582
|
)
|
|
$
|
105,467
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
6,991
|
|
|
$
|
13,137
|
|
|
$
|
2,094
|
|
State
|
802
|
|
|
(155
|
)
|
|
1,709
|
|
|||
|
7,793
|
|
|
12,982
|
|
|
3,803
|
|
|||
Deferred
|
|
|
|
|
|
|
|
|
|||
Federal
|
(7,965
|
)
|
|
(18,814
|
)
|
|
(8,296
|
)
|
|||
State
|
1,540
|
|
|
(3,847
|
)
|
|
(7,277
|
)
|
|||
|
(6,425
|
)
|
|
(22,661
|
)
|
|
(15,573
|
)
|
|||
Total tax provision (benefit)
|
$
|
1,368
|
|
|
$
|
(9,679
|
)
|
|
$
|
(11,770
|
)
|
|
2017
|
|
2016
|
|
2015
|
|||
Statutory rate - federal
|
(35.00
|
)%
|
|
(35.00
|
)%
|
|
35.00
|
%
|
State taxes, net of federal benefit
|
(3.30
|
)%
|
|
(3.16
|
)%
|
|
1.53
|
%
|
Change in FV of derivative liability (warrants)
|
2.82
|
%
|
|
1.10
|
%
|
|
10.89
|
%
|
Change in federal tax rate
|
23.29
|
%
|
|
—
|
%
|
|
—
|
%
|
Bargain purchase gain
|
—
|
%
|
|
—
|
%
|
|
(16.04
|
)%
|
Other permanent differences
|
1.04
|
%
|
|
2.05
|
%
|
|
3.68
|
%
|
Tax credits
|
(5.79
|
)%
|
|
(1.58
|
)%
|
|
(7.85
|
)%
|
Return to provision adjustments and other true-ups
|
(3.48
|
)%
|
|
(1.15
|
)%
|
|
(10.40
|
)%
|
Other
|
1.25
|
%
|
|
3.09
|
%
|
|
(0.79
|
)%
|
Change in valuation allowance
|
21.62
|
%
|
|
16.30
|
%
|
|
(27.02
|
)%
|
Income tax provision (benefit)
|
2.45
|
%
|
|
(18.35
|
)%
|
|
(11.00
|
)%
|
|
2017
|
|
2016
|
||||
Deferred Tax Assets:
|
|
|
|
||||
Net operating loss
|
$
|
1,099
|
|
|
$
|
1,832
|
|
Research and development and other tax credits
|
1,599
|
|
|
60
|
|
||
Contingent consideration
|
23,080
|
|
|
32,792
|
|
||
Other accrued expenses
|
2,603
|
|
|
4,621
|
|
||
Stock based compensation
|
15,695
|
|
|
18,520
|
|
||
Other
|
358
|
|
|
30
|
|
||
|
44,434
|
|
|
57,855
|
|
||
Deferred Tax Liabilities:
|
|
|
|
||||
Intangible assets
|
(16,810
|
)
|
|
(34,153
|
)
|
||
Deferred gain on installment sale
|
—
|
|
|
(14,547
|
)
|
||
Tax basis depreciation less than book depreciation
|
—
|
|
|
—
|
|
||
|
(16,810
|
)
|
|
(48,700
|
)
|
||
|
|
|
|
||||
Net deferred tax assets (liabilities) before valuation allowance
|
27,624
|
|
|
9,155
|
|
||
Valuation allowance
|
(27,624
|
)
|
|
(15,580
|
)
|
||
Total deferred tax liability
|
$
|
—
|
|
|
$
|
(6,425
|
)
|
|
2017
|
|
2016
|
||||
Balance as of January 1:
|
$
|
1,500
|
|
|
$
|
3,324
|
|
Increase in current period positions
|
—
|
|
|
—
|
|
||
Decrease in prior period positions
|
(1,500
|
)
|
|
(1,824
|
)
|
||
Increase in prior period positions
|
—
|
|
|
—
|
|
||
Balance as of December 31:
|
$
|
—
|
|
|
$
|
1,500
|
|
|
Twelve months ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net product revenues by product:
|
|
|
|
|
|
||||||
Thiola
|
$
|
82,311
|
|
|
$
|
71,199
|
|
|
$
|
54,923
|
|
Bile acid products
(1)
|
72,626
|
|
|
62,392
|
|
|
44,969
|
|
|||
Total net product revenues
|
$
|
154,937
|
|
|
$
|
133,591
|
|
|
$
|
99,892
|
|
|
Twelve Months Ended December 31, 2017
|
||
Liability, beginning of period
|
$
|
893
|
|
Restructuring expenses
|
3,608
|
|
|
Cash settlements
|
(897
|
)
|
|
Adjustments to previous estimates
|
(55
|
)
|
|
Liability, end of period
|
$
|
3,549
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Computers and equipment
|
$
|
436
|
|
|
$
|
311
|
|
Furniture and fixtures
|
945
|
|
|
1,573
|
|
||
Leasehold improvements
|
2,071
|
|
|
903
|
|
||
Construction-in-progress
|
363
|
|
|
—
|
|
||
|
3,815
|
|
|
2,787
|
|
||
Less: Accumulated depreciation
|
(585
|
)
|
|
(200
|
)
|
||
Total property and equipment, net
|
$
|
3,230
|
|
|
$
|
2,587
|
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second Quarter
|
|
First
Quarter
|
||||||||
|
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Net product sales
|
$
|
42,177
|
|
|
$
|
40,340
|
|
|
$
|
38,800
|
|
|
$
|
33,620
|
|
Total operating expenses
|
57,354
|
|
|
50,948
|
|
|
52,398
|
|
|
48,028
|
|
||||
Operating loss
|
(15,177
|
)
|
|
(10,608
|
)
|
|
(13,598
|
)
|
|
(14,408
|
)
|
||||
Total other income (expense), net
1
|
4,139
|
|
|
(8,409
|
)
|
|
(1,556
|
)
|
|
1,254
|
|
||||
Loss before provision for income taxes
|
(11,038
|
)
|
|
(19,017
|
)
|
|
(15,154
|
)
|
|
(13,154
|
)
|
||||
Income tax benefit (provision)
|
(6,580
|
)
|
|
1,223
|
|
|
1,925
|
|
|
2,064
|
|
||||
Net income (loss)
|
$
|
(17,618
|
)
|
|
$
|
(17,794
|
)
|
|
$
|
(13,229
|
)
|
|
$
|
(11,090
|
)
|
Net Loss per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.45
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.29
|
)
|
Diluted
|
$
|
(0.55
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
(0.34
|
)
|
|
$
|
(0.32
|
)
|
For the year ended December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Net product sales
|
$
|
37,327
|
|
|
$
|
33,945
|
|
|
$
|
33,311
|
|
|
$
|
29,008
|
|
Total operating expenses
|
55,549
|
|
|
54,317
|
|
|
44,690
|
|
|
37,249
|
|
||||
Operating loss
|
(18,222
|
)
|
|
(20,372
|
)
|
|
(11,379
|
)
|
|
(8,241
|
)
|
||||
Total other income (expense), net
1
|
(5,935
|
)
|
|
10,274
|
|
|
9,416
|
|
|
(14,387
|
)
|
||||
Income (loss) before provision for income taxes
|
(12,287
|
)
|
|
(30,646
|
)
|
|
(20,795
|
)
|
|
6,146
|
|
||||
Income tax benefit (provision)
|
3,684
|
|
|
(6,467
|
)
|
|
7,392
|
|
|
5,070
|
|
||||
Net income (loss)
|
$
|
(8,603
|
)
|
|
$
|
(37,113
|
)
|
|
$
|
(13,403
|
)
|
|
$
|
11,216
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.23
|
)
|
|
$
|
(1.00
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
0.31
|
|
Diluted
|
$
|
(0.39
|
)
|
|
$
|
(1.00
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.08
|
)
|
1.0
|
Amendments
|
(a)
|
Exhibit B attached hereto will replace Exhibit B to the Third Amendment.
|
(b)
|
Amend and replace Section 2.0(b) of the Third Amendment, which amended Section 10.0 of the Agreement with the following:
|
(c)
|
Insert new Section 2.0(e) of the Third Amendment, as follows:
|
(d)
|
Amend and replace Section 2.0(d) of the Third Amendment, which amended Exhibit B of the Agreement, with the following:
|
(e)
|
Amend Article 1.0 of the Third Amendment to add a Section 1.7 as follows:
|
i.
|
Retrophin shall bear the costs of such preparation and filing for such preparation and filing.
|
ii.
|
Retrophin shall bear the costs of further prosecution of the Application, pursuant to written budgets mutually agreed upon in writing by the Parties on an annual basis after the initial filing of the Application.
|
iii.
|
Retrophin shall have the right to review, comment upon, and approve the Application prior to its being filed. The Parties shall reasonably cooperate with each other with respect to the preparation and filing of the Application.
|
iv.
|
Retrophin shall have the right to review, comment upon, and approve of all filings and submissions related to the prosecution of the Application. Mission shall instruct Counsel to copy Retrophin on all correspondence related to the Application, including without limitation office actions and proposed responses thereto. The Parties shall reasonably cooperate with respect to prosecution of the Application.
|
v.
|
Notwithstanding Section 1.1 of this Third Amendment, Project Know-How as used in this Section is defined as follows: “Project Know-How” shall mean all inventions, data, information, formulations, and trade secrets arising from, or invented or created pursuant to, the Development Project.
|
vi.
|
Intellectual property in the Project Know-How, including patent applications and patents directed to the same, shall be defined as “Project IP,” and shall be owned by Mission, subject to the licenses to Retrophin provided for in the Second Amendment to the Third Amendment (i.e., this amendment).
|
vii.
|
“Licensed Patents” shall mean (a) the Application; (b) all patent applications having at least one claim covering a Product or claiming priority to or common priority with the Application (including all such PCT and foreign applications), and all divisionals, continuations, continuations-in-part, and substitutions of any of the foregoing; (c) all patents issuing on any of the foregoing, together with all re-examinations, re-issues, and extensions thereof; and (d) all counterparts to any of the foregoing outside the U.S.
|
viii.
|
Mission hereby grants to Retrophin an exclusive (even as to Mission) fully paid, irrevocable, perpetual patent license to market, sell and commercialize Products manufactured by Mission as long as Retrophin continues to be a party to the current Trademark License and Supply Agreement between the Parties, such license to be sublicensable to any wholly-owned subsidiary or parent entity of Retrophin.
|
ix.
|
Retrophin shall have the right to enforce the Licensed Patents against infringement and alleged infringement involving any Product(s), retaining all recoveries. The Parties agree to cooperate in any such enforcement, at Retrophin’s expense (on a pass-through basis with no markup), including being named as party-plaintiff if needed for standing or other legal purpose.
|
x.
|
On or after the filing date of the Application, Mission may elect to file a derivative patent application (the “Derivative Application”) that includes Project Know-How, provided that such Derivative Application shall not, at any time, contain a claim covering a Product. Any Derivative Application, and any patent issuing therefrom, that includes at any time a claim covering a Product shall immediately become and thereafter remain a Licensed Patent to which Retrophin receives an exclusive license in accordance with Section 1.7(viii) above.”
|
(f)
|
Add a new Section 2.0(f) of the Third Amendment as follows:
|
(g)
|
Add a new Section 2.0(g) of the Third Amendment as follows:
|
(h)
|
Amend Retrophin’s address in Section 25.3 of the Agreement as follows:
|
Exhibit B
|
Revised Remainder 2017 as of [...***...]
|
Revised Calender 2018 as of [...***...]
|
Revised 2019 as of [...***...]
|
Revised Budget Total
|
Manufacturing
|
|
|
|
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Subtotal
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Regulatory & Development Strategy
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
CMC Support
|
|
|
|
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Clinical Program
|
|
|
|
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
NDA Preparation Modules 1, 2, & 3 and Remaining NDA sections
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
...***...
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
...***...
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
...***...
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Third Party Pass-Through Costs ([...***...])
|
|
|
|
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[
***Confidential Treatment Requested
...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Study Set up and Monitoring, Analysis and report
|
|
|
|
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Other Pass-Through costs
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Subtotal
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...][...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
Subtotal
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
PROJECT Total
|
[...***...]
|
[...***...]
|
[...***...]
|
[...***...]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No.
|
|
Name
|
1
|
|
Retrophin Pharmaceutical, Inc.
|
2
|
|
Retrophin Therapeutics I, Inc.
|
3
|
|
Retrophin Therapeutics II, Inc.
|
4
|
|
Retrophin Europe Ltd
|
5
|
|
Retrophin International Holdings Ltd
|
6
|
|
RTRX International CV
|
7
|
|
Retrophin Therapeutics International LLC
|
8
|
|
US LLC 2
|
9
|
|
Retrophin Research Ltd
|
10
|
|
Retrophin US Holdings LLC
|
11
|
|
Manchester Pharmaceuticals LLC
|
1.
|
I have reviewed this Annual Report on Form 10-K of Retrophin, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 27, 2018
|
/s/ Stephen Aselage
|
|
Stephen Aselage
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Retrophin, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 27, 2018
|
/s/ Laura Clague
|
|
Laura Clague
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 27, 2018
|
/s/ Stephen Aselage
|
|
Stephen Aselage
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report, fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: February 27, 2018
|
/s/ Laura Clague
|
|
Laura Clague
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|