On August 4, 2016 Raptor Pharmaceutical Corp. (NASDAQ:RPTP), a biopharmaceutical company developing and commercializing transformative treatments for rare diseases, reported its financial results for the second quarter of 2016 and provided an update on recent corporate developments (Press release, Raptor Pharmaceutical, AUG 4, 2016, View Source [SID:1234514301]).
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Summary
Global net product revenue was $32.0 million for the second quarter ended June 30, 2016, a 37.3% increase compared to $23.3 million for the same period in 2015.
Net loss on a GAAP basis was $14.0 million, or $0.16 per share, for the second quarter of 2016 compared to a GAAP net loss of $13.9 million, or $0.17 per share, for the same period in 2015.
Non-GAAP net loss, which excludes non-cash expenditures such as stock compensation, amortization and impairment of IPR&D, and change in the fair value of the contingent consideration liability related to acquisitions, was $11.3 million, or $0.13 per share, for the second quarter of 2016 compared to a non-GAAP net loss of $9.6 million, or $0.12 per share, for the same period in 2015.
Cash and cash equivalents were $124.2 million as of June 30, 2016.
Raptor is raising its 2016 global net revenue guidance to $125 to 135 million from $115 to $125 million and affirming its guidance for non-GAAP operating expenses, excluding non-cash expenditures such as stock compensation, amortization and impairment of IPR&D, and change in the fair value of the contingent consideration liability related to acquisitions, of between $125 and $135 million.
"I’m delighted that we delivered another record quarter for sales, driven primarily by growing patient demand for PROCYSBI ," said Julie Anne Smith, President and CEO of Raptor. "For the first time, PROCYSBI revenue was augmented by sales of QUINSAIR, which is off to a terrific launch in Europe. Based on our outstanding commercial performance, we are pleased to raise our 2016 revenue guidance. We look forward to continued growth from both products and supporting patients living with rare diseases and with limited options."
Second Quarter 2016 Business Highlights
In April, Raptor commenced the first commercial sales of QUINSAIR (levofloxacin inhalation solution) in Germany and Denmark for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adult patients with cystic fibrosis. To date, approval for reimbursement for QUINSAIR has been achieved in numerous European countries.
In June, Raptor participated in the 39th European Cystic Fibrosis Conference and presented new analyses of data from its Phase 3 clinical study (MPEX-209) comparing QUINSAIR to inhaled tobramycin solution in patients with cystic fibrosis and chronic Pseudomonas aeruginosa infections. The data suggest that subjects with three or more pulmonary exacerbations in the prior year who were randomized to receive QUINSAIR had a significantly lower incidence of pulmonary exacerbations when compared with their peers who were randomized to receive the active comparator, tobramycin inhalation solution (p=0.026).
Second Quarter 2016 Financial Results
Raptor provides non-GAAP financial measures, which it believes can enhance an overall understanding of its financial performance when considered together with GAAP figures. Refer to the section of this press release below entitled "Non-GAAP Financial Information and Other Disclosures" for further discussion on this subject.
Net Product Revenue
Global net revenue for the second quarter of 2016 was $32.0 million, compared to $23.3 million for the second quarter of 2015. The 37.3% revenue growth was driven by further market penetration in the U.S. and in Europe and an increase in named patient sales in other international territories for PROCYSBI, and by the introduction of QUINSAIR during the quarter.
Cost of Sales
Cost of sales was $4.9 million for the second quarter of 2016, compared to $2.6 million for the second quarter of 2015. The increase was due to higher quarterly sales year-over-year, leading to higher direct costs and royalty expenses in 2016.
Research & Development (R&D)
R&D expenses for the second quarter of 2016 were $15.7 million, compared to $11.9 million for the second quarter of 2015. The increased expense for the three month period ended June 30, 2016 was primarily due to increased activities associated with our product portfolio, support for the European QUINSAIR launch and related to preparation for a potential NDA filing for QUINSAIR in a cystic fibrosis indication in the US.
Selling, General and Administrative (SG&A)
SG&A expenses were $20.9 million for the second quarter of 2016 compared to $17.8 million for the second quarter of 2015. The increase in SG&A expenses was primarily a result of increased personnel costs and promotional support for the worldwide commercial operations of PROCYSBI and QUINSAIR in Europe.
Interest Expense
Interest expense for the second quarter of 2016 was $4.3 million, compared to $4.8 million for the second quarter of 2015. The decrease in interest expense was primarily due to a decrease in principal from which Raptor’s interest expense is calculated.
Net Loss
GAAP net loss in the second quarter of 2016 was $14.0 million, or $0.16 per share, compared to a net loss of $13.9 million, or $0.17 per share for the second quarter of 2015.
Non-GAAP net loss, which excludes non-cash expenditures such as stock compensation, amortization and impairment of IPR&D, and change in the fair value of the contingent consideration liability related to acquisitions, for the second quarter of 2016 was $11.3 million, or $0.13 per share, compared to a non-GAAP net loss of $9.6 million, or $0.12 per share, in the second quarter of 2015.
Cash and Cash Equivalents
As of June 30, 2016, Raptor had $124.2 million in cash and cash equivalents compared to $132.0 million in cash and cash equivalents at March 31, 2016.
2016 Full-Year Financial Guidance
Raising 2016 global net revenue guidance to $125 to $135 million from $115 to $125 million.
Refining PROCYSBI revenue growth to at least 30% over 2015 revenues.
Reiterating non-GAAP operating expense guidance, which excludes non-cash expenditures such as stock compensation, amortization and impairment of IPR&D, and change in the fair value of the contingent consideration liability related to acquisitions, of $125 to $135 million. Raptor is unable to reconcile non-GAAP operating expense guidance to GAAP operating expense guidance without unreasonable efforts and believes any such reconciliation would imply a degree of precision that could be confusing to investors. Raptor is unable to predict the probable significance of any of the above-listed adjustments.
Product and Pipeline Updates
PROCYSBI for Nephropathic Cystinosis
In the second quarter, Raptor recorded the first PROCYSBI sales in several additional European countries.
A New Drug Submission (NDS) for PROCYSBI for the treatment of nephropathic cystinosis is currently under review by Health Canada. Recently, Raptor received notice from Health Canada that it is seeking additional information to complete its review. Raptor intends to submit a response to Health Canada in a timely fashion to preserve Priority Review status and expects that Health Canada’s timeline for review of the NDS will re-commence when it accepts Raptor’s response. As a result, Raptor anticipates a delay in Health Canada’s decision on the potential marketing approval of PROCYSBI.
QUINSAIR for Cystic Fibrosis
In April, Raptor launched QUINSAIR in Germany and Denmark for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adults with cystic fibrosis, and to date, QUINSAIR has become available for reimbursement in several territories in the EU and Raptor is actively expanding into new countries.
Raptor anticipates launching QUINSAIR in Canada for the same indication, for which it has received marketing approval, in the second half of 2016.
In August, the European Patent Office issued EP Pat. No. 1 901 749 with claims covering Raptor’s QUINSAIR formulation. This patent will expire in May 2026, supplementing Raptor’s 10 years of data exclusivity.
MP-376 (Investigational Form of QUINSAIR)
Raptor had a meeting with the FDA in the second quarter concerning MP-376 for the management of chronic pulmonary infections due to Pseudomonas aeruginosa in adult patients with cystic fibrosis in the U.S. The FDA requested additional information pertinent to Raptor’s existing trials prior to the company’s potential submission of an NDA. Raptor submitted a response to the FDA’s request and expects to have additional discussions with the FDA.
The company intends to initiate a clinical study for MP-376 in bronchiectasis (BE) in 2016. Raptor plans to provide additional clarity on the timing of key activities once the study design has been finalized.
RP103 for Huntington’s Disease
With current efforts focused on prioritizing clinical programs that represent Raptor’s best use of current capital, the company continues to explore non-dilutive funding and partnering options for RP103 in Huntington’s disease.
RP103 for Mitochondrial Diseases
The second interim analysis, which occurred after 12 patients completed 24 weeks of treatment, indicated the ongoing trial should continue as planned, which is currently ongoing.
Anticipated Upcoming Milestones
2H 2016 — Potential QUINSAIR launch in Canada
2016 — Advancement towards an NDA submission for MP-376 in cystic fibrosis in the U.S.
2016 — Initiation of a clinical study for MP-376 in BE
1H 2017 — Phase 2 RP103 data in mitochondrial diseases