Travere Therapeutics, Inc. (NASDAQ:TVTX) Q3 2021 Earnings Conference Call October 28, 2021 4:30 PM ET Company Participants Chris Cline - SVP, IR & Corporate Communications Eric Dube - CEO Noah Rosenberg - CMO Peter Heerma - CCO Laura Clague - CFO Bill Rote - SVP, Research & Development Conference Call Participants Maury Raycroft - Jefferies Greg Harrison - Bank of America Joseph Schwartz - SVB Leerink Michelle Gilson - Canaccord Genuity Liisa Bayko - Evercore ISI Laura Chico - Wedbush Securities Operator Go ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-Q _________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-36257 TRAVERE THERAPEUTICS, INC. (Exact na ...

Travere Therapeutics, Inc. (NASDAQ:TVTX) Q2 2021 Results Conference Call July 29, 2021 4:30 PM ET Company Participants Chris Cline - SVP, IR & Corporate Communications Dr. Eric Dube - CEO Dr. Noah Rosenberg - Chief Medical Officer Peter Heerma - Chief Commercial Officer Laura Clague - CFO Dr. Bill Rote - SVP, Research and Development Conference Call Participants Joseph Schwartz - SVB Leerink Liisa Bayko - Evercore ISI Tim Lugo - William Blair Greg Harrison - Bank of America Michelle Gilson - Canaccord Maury ...

| UNITED STATES | | --- | | SECURITIES AND EXCHANGE COMMISSION | | WASHINGTON, D.C. 20549 | _________________________________ FORM 10-Q _________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-36257 TRAVERE THERAPEUTICS, ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-Q _________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-36257 TRAVERE THERAPEUTICS, INC. (Exact name o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 Commission File Number: 001-36257 TRAVERE THERAPEUTICS, INC. (Exact Name of Registrant as specified in its Charter) Delaware 27-4842691 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 3611 Valley Centre Drive, Suite 300 San Diego, CA 92130 (Addres ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the nine months ended September 30, 2020, the company reported a **net loss of $47.8 million** on **$147.3 million in net product sales**, with cash and equivalents increasing to **$200.5 million** due to a **$108.7 million equity offering** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2020 (Unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $200,481 | $62,436 | | Total current assets | $497,682 | $429,064 | | Total assets | $692,220 | $604,800 | | **Liabilities & Equity** | | | | Total current liabilities | $75,426 | $95,449 | | Convertible debt | $212,651 | $204,861 | | Total liabilities | $390,807 | $383,604 | | Total stockholders' equity | $301,413 | $221,196 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $51,139 | $44,373 | $147,338 | $128,651 | | Total operating expenses | $70,574 | $78,810 | $204,950 | $237,844 | | Operating loss | $(19,435) | $(34,437) | $(57,612) | $(109,193) | | Net loss | $(22,549) | $(36,490) | $(47,809) | $(116,168) | | Net loss per share (basic & diluted) | $(0.44) | $(0.85) | $(1.03) | $(2.76) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(28,873) | $(53,722) | | Net cash provided by investing activities | $64,184 | $18,283 | | Net cash provided by (used in) financing activities | $102,674 | $(2,172) | | **Net change in cash and cash equivalents** | **$138,045** | **$(37,685)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - The company is a biopharmaceutical firm focused on rare diseases, with key clinical programs like Sparsentan and Chenodal, and approved products including Chenodal, Cholbam, and Thiola/Thiola EC[26](index=26&type=chunk)[28](index=28&type=chunk)[32](index=32&type=chunk) Net Product Revenues (in thousands) | Product Line | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Bile acid products | $22,912 | $19,938 | $66,766 | $59,258 | | Tiopronin products | $28,227 | $24,435 | $80,572 | $69,393 | | **Total** | **$51,139** | **$44,373** | **$147,338** | **$128,651** | - In June 2020, the company raised **$108.7 million** in net proceeds from an underwritten public offering of **7.5 million shares** of common stock at **$15.50 per share**[113](index=113&type=chunk) - Post-quarter, on October 21, 2020, the company agreed to acquire Orphan Technologies Limited and its candidate OT-58 for a **$90 million upfront cash payment** and up to **$427 million in contingent payments**[115](index=115&type=chunk)[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net product sales increased for the first nine months of 2020 due to higher patient counts, operating expenses decreased from R&D program discontinuation, and liquidity was significantly enhanced by an equity offering [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Net Product Sales Analysis (in thousands) | Product Line | 9 Months 2020 | 9 Months 2019 | Change | | :--- | :--- | :--- | :--- | | Bile acid products | $66,766 | $59,258 | $7,508 | | Tiopronin products | $80,572 | $69,393 | $11,179 | | **Total** | **$147,338** | **$128,651** | **$18,687** | - The increase in sales for the three and nine months ended September 30, 2020, was attributed to **higher patient counts** and fluctuations in the timing of new patient starts and refills[136](index=136&type=chunk) - Research and development expenses decreased by **$11.2 million** for the nine months ended September 30, 2020, primarily due to the discontinuation of the fosmetpantotenate program in PKAN[139](index=139&type=chunk)[162](index=162&type=chunk) - For the nine months ended September 30, 2020, the company recognized an **income tax benefit of $18.9 million**, primarily related to CARES Act provisions for net operating loss carrybacks[146](index=146&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - Management believes available cash and short-term investments are sufficient to fund anticipated operations for at least the next **12 months**[148](index=148&type=chunk)[165](index=165&type=chunk) Key Liquidity Metrics (in thousands) | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash & Cash Equivalents | $200,481 | $62,436 | | Debt securities | $255,786 | $336,088 | | Net Working Capital | $422,256 | $333,615 | - Cash from financing activities increased significantly to **$102.7 million** for the nine months ended September 30, 2020, primarily due to the June 2020 public offering of common stock[164](index=164&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate changes affecting its debt securities, with a hypothetical **1% adverse change** decreasing value by approximately **$1.4 million** - The company invests excess cash in U.S. government-backed securities and investment-grade corporate debt with maturities not exceeding **two years**[170](index=170&type=chunk) - A hypothetical **1% adverse move** in interest rates would decrease the value of the company's available-for-sale debt securities by approximately **$1.4 million** as of September 30, 2020[170](index=170&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2020, with no significant changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[172](index=172&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[173](index=173&type=chunk) [PART II – OTHER INFORMATION](index=29&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings include advancing legal fees for former CEO Martin Shkreli and a dismissed antitrust lawsuit from Spring Pharmaceuticals regarding Thiola® samples - The company advanced legal fees for its former CEO, Martin Shkreli, with **$3.8 million** reimbursed by insurance carriers who reserve recovery rights[97](index=97&type=chunk) - A lawsuit by Spring Pharmaceuticals alleging antitrust violations related to Thiola® samples was voluntarily dismissed in April 2020[98](index=98&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential clinical trial failures, generic competition, manufacturing dependence, significant convertible debt, regulatory and reimbursement changes, and challenges with the planned Orphan Technologies acquisition, exacerbated by COVID-19 impacts [Risks Related to Product Candidate Development](index=29&type=section&id=Risks%20Related%20to%20the%20Development%20of%20our%20Product%20Candidates) - Clinical trials for product candidates like sparsentan may fail to demonstrate safety and efficacy, potentially delaying or preventing regulatory approval, with risks amplified by the COVID-19 pandemic[176](index=176&type=chunk)[179](index=179&type=chunk) - The company is pursuing an accelerated approval pathway (Subpart H) for sparsentan based on a proteinuria endpoint, but regulatory bodies may not deem the data sufficient for approval[188](index=188&type=chunk)[189](index=189&type=chunk) - Delays in patient enrollment for DUPLEX or PROTECT studies, potentially due to COVID-19, could push back timelines for top-line results and regulatory approval filings[193](index=193&type=chunk) [Risks Related to Commercialization](index=33&type=section&id=Risks%20Related%20to%20the%20Commercialization%20of%20Our%20Products) - The company faces generic competition for products like Thiola, with legislative changes such as the CREATES Act designed to encourage this competition[206](index=206&type=chunk)[207](index=207&type=chunk) - Changes in third-party payer reimbursement practices and potential loss of patient insurance coverage due to economic factors like COVID-19 could negatively affect product demand and pricing[211](index=211&type=chunk)[215](index=215&type=chunk) - The company relies on sole-source third-party manufacturers and a single third-party distributor for its commercial products, creating significant supply chain risk due to a lack of internal manufacturing capabilities[216](index=216&type=chunk)[217](index=217&type=chunk) [Risks Related to Business Operations](index=40&type=section&id=Risks%20Related%20to%20Our%20Business) - The COVID-19 pandemic could materially adversely affect business by disrupting clinical trials, impacting the supply chain, and reducing access to capital markets[266](index=266&type=chunk)[267](index=267&type=chunk) - The company may require substantial additional funding for development and commercialization, and market conditions could hinder raising capital on attractive terms[282](index=282&type=chunk) - The planned acquisition of Orphan Technologies is subject to closing conditions and may not be completed, or if completed, integrating the new business presents potential difficulties[288](index=288&type=chunk)[289](index=289&type=chunk) [Risks Related to Indebtedness](index=49&type=section&id=Risks%20Related%20to%20our%20Indebtedness%20and%20Investments) - As of September 30, 2020, the company had approximately **$276 million** of total debt outstanding from its **2.50% Convertible Senior Notes due 2025**, which could adversely affect its financial condition[338](index=338&type=chunk) - The company may lack sufficient cash to repurchase the 2025 Notes after a fundamental change or to pay cash upon conversion, potentially leading to default[340](index=340&type=chunk)[342](index=342&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None [Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None [Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable [Other Information](index=50&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, convertible note indentures, agreements, and CEO/CFO certifications - Exhibits include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002, and indentures related to the company's convertible notes[351](index=351&type=chunk)

Sparsentan Clinical Development - Sparsentan is in Phase 3 development for FSGS and IgAN, rare kidney disorders with no approved medicines, targeting ~40,000 FSGS patients in the U S and EU and ~100,000+ IgAN patients in the U S and EU [58] - Phase 2 DUET study showed Sparsentan more than doubled the reduction of proteinuria vs Irbesartan (44 8% vs 18 5%, p=0 006) [30] - In the DUET study, 28 1% of Sparsentan-treated patients achieved FPRE (UP/C ≤ 1 5 g/g and >40% reduction in UP/C) compared to 9 4% in the Irbesartan group (p=0 040) [33, 35] - eGFR remained stable in Sparsentan-treated patients over 84 weeks in the DUET study [40] - Phase 3 DUPLEX study for FSGS and PROTECT study for IgAN are enrolling, with top-line data expected in 1Q21 and 2H21, respectively [45, 48] Financial Overview - Retrophin reported net sales of $48 4 million in 2Q20 and $175 3 million in FY19 [56] - The company's operating expenses were $71 5 million in 2Q20 and $312 7 million in FY19 [56] - Retrophin had a cash balance of approximately $457 4 million as of June 30, 2020, which is expected to fund operations beyond the planned proteinuria readout of pivotal studies and into 2023 [56, 59] Commercial Portfolio - Retrophin has a diversified product portfolio for rare diseases, including Chenodal, Cholbam, and Thiola [51] - The company estimates an addressable population of 4,000 to 5,000 cystinuria patients for Thiola [51] - Net product sales have grown from $28 million in FY 2014 to $175 million in FY 2019 [53]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Financial statements reflect increased cash and equity from a June 2020 offering, alongside product sales growth and a narrowed net loss [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased due to a substantial rise in cash from an equity offering, while liabilities decreased and equity grew Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $237,170 | $62,436 | | Total current assets | $505,562 | $429,064 | | Total assets | $678,694 | $604,800 | | **Liabilities & Equity** | | | | Total current liabilities | $69,933 | $95,449 | | Convertible debt | $210,009 | $204,861 | | Total liabilities | $360,049 | $383,604 | | Total stockholders' equity | $318,645 | $221,196 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net product sales increased, and net loss significantly narrowed for both the quarter and six-month period, aided by lower expenses and a tax benefit Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $48,430 | $44,707 | $96,199 | $84,277 | | Research and development | $30,790 | $37,934 | $61,038 | $71,377 | | Selling, general and administrative | $34,971 | $38,970 | $68,110 | $71,639 | | Operating loss | ($23,111) | ($36,529) | ($38,176) | ($74,757) | | Net loss | ($26,068) | ($38,701) | ($25,260) | ($79,678) | | Basic and diluted net loss per share | ($0.58) | ($0.92) | ($0.57) | ($1.91) | - For the six months ended June 30, 2020, the company recorded an income tax benefit of **$18.9 million**, compared to an expense of $470 thousand in the prior year period[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased significantly due to financing activities, primarily from common stock issuance, despite cash used in operations Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($35,608) | ($39,601) | | Net cash provided by investing activities | $107,353 | $13,818 | | Net cash provided by (used in) financing activities | $103,022 | ($1,434) | | **Net change in cash and cash equivalents** | **$174,734** | **($27,216)** | | Cash and cash equivalents, end of period | $237,170 | $75,657 | - The primary source of financing cash flow was **$108.6 million** in net proceeds from the issuance of common stock[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's biopharmaceutical focus, approved products, clinical programs, debt, and key financial events including a tax benefit and stock offering - The company is a biopharmaceutical firm focused on rare diseases with three approved products: **Chenodal®**, **Cholbam®**, and **Thiola®/Thiola EC®**[26](index=26&type=chunk)[32](index=32&type=chunk) - Key clinical programs include two pivotal Phase 3 studies for **sparsentan** in FSGS and IgAN, and a Phase 3 study for **Chenodal** in CTX[28](index=28&type=chunk) Net Product Revenue by Category (in thousands) | Product Category | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Bile acid products | $21,573 | $20,929 | $43,854 | $39,319 | | Tiopronin products | $26,857 | $23,778 | $52,345 | $44,958 | | **Total** | **$48,430** | **$44,707** | **$96,199** | **$84,277** | - The company has **$276.0 million** in aggregate principal of 2.50% Convertible Senior Notes due 2025[78](index=78&type=chunk) - A discrete income tax benefit of **$18.9 million** was recorded in the first six months of 2020 due to the CARES Act, which allows for the carryback of net operating losses[106](index=106&type=chunk) - In June 2020, the company sold **7.5 million shares** of common stock in a public offering, raising net proceeds of **$108.6 million**[114](index=114&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses rare disease focus, COVID-19 impact, increased net product sales, decreased operating expenses, and sufficient cash for future operations - The **COVID-19 pandemic** has the potential to impact business, including slowing the pace of enrollment in clinical trials, but did not have a material adverse effect on financial results for the first half of 2020[118](index=118&type=chunk) Net Product Sales Comparison (in thousands) | Product Line | Six Months 2020 | Six Months 2019 | Change | | :--- | :--- | :--- | :--- | | Bile acid products | $43,854 | $39,319 | $4,535 | | Tiopronin products | $52,345 | $44,958 | $7,387 | | **Total** | **$96,199** | **$84,277** | **$11,922** | - R&D expenses decreased by **$10.3 million** for the first six months of 2020 compared to the same period in 2019, mainly due to the discontinuation of the fosmetpantotenate program in PKAN[139](index=139&type=chunk) - SG&A expenses decreased by **$3.5 million** for the first six months of 2020 compared to 2019, primarily due to lower legal expenses[141](index=141&type=chunk) - The company believes its available cash and short-term investments are **sufficient** to fund operations beyond the next 12 months[148](index=148&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to changes in interest rates on its portfolio of debt securities, with a hypothetical 1% adverse move decreasing value by approximately $1.1 million - The company's main market risk is **interest rate risk** on its portfolio of cash and debt securities[170](index=170&type=chunk) - A hypothetical **1% adverse change** in interest rates would result in a decrease of approximately **$1.1 million** in the fair value of the company's available-for-sale debt securities[170](index=170&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2020, with no significant changes in internal control - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** at a reasonable assurance level as of the end of the quarter[172](index=172&type=chunk) - **No significant changes** to internal control over financial reporting were identified during the quarter ended June 30, 2020[173](index=173&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) A lawsuit alleging antitrust violations against the company was voluntarily dismissed in April 2020, with no other material adverse proceedings identified - Information on legal proceedings is incorporated by reference from Note 12 of the financial statements[174](index=174&type=chunk) - A lawsuit by Spring Pharmaceuticals alleging antitrust violations was **voluntarily dismissed** in April 2020[99](index=99&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks including clinical trial failures, commercialization challenges, lack of patent protection, convertible debt, and extensive regulatory compliance [Risks Related to the Development of our Product Candidates](index=28&type=section&id=Risks%20Related%20to%20the%20Development%20of%20our%20Product%20Candidates) Risks include potential clinical trial failures for product candidates like sparsentan, exacerbated by COVID-19, and uncertainty regarding regulatory acceptance of surrogate endpoints - Clinical trials for product candidates like sparsentan may **fail to demonstrate safety and efficacy**, which could prevent or delay regulatory approval[176](index=176&type=chunk) - The **COVID-19 pandemic** has amplified risks and may **delay clinical trial timelines** due to slower patient enrollment and other disruptions[180](index=180&type=chunk)[193](index=193&type=chunk)[269](index=269&type=chunk) - There is **no guarantee** that the FDA or EMA will accept **proteinuria as a surrogate endpoint** for accelerated or conditional approval for sparsentan, despite prior feedback[189](index=189&type=chunk)[190](index=190&type=chunk) - The company **relies on independent investigators and CROs**, whose performance may be substandard or impacted by competing interests, a risk heightened by the introduction of new home health providers due to COVID-19[201](index=201&type=chunk) [Risks Related to the Commercialization of Our Products](index=32&type=section&id=Risks%20Related%20to%20the%20Commercialization%20of%20Our%20Products) Commercialization risks include generic competition, changes in reimbursement practices, and supply chain vulnerability due to reliance on sole-source third-party manufacturers and distributors - The company is subject to **generic competition** for products like Thiola, and recent legislative changes like the CREATES Act are designed to encourage such competition[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - **Changes in reimbursement policies** from government and private payers, and potential **loss of insurance coverage** by patients due to unemployment, could adversely affect demand and pricing[211](index=211&type=chunk)[212](index=212&type=chunk)[214](index=214&type=chunk) - The company has no manufacturing capabilities and relies on **sole-source third-party manufacturers and a single third-party distributor** for its products[216](index=216&type=chunk)[217](index=217&type=chunk) [Risks Related to our Products and Product Candidates](index=33&type=section&id=Risks%20Related%20to%20our%20Products%20and%20Product%20Candidates) Key product risks include lack of patent protection for commercial products, potential product liability, and dependence on third-party manufacturers for regulatory compliance and supply - The company **does not have patent protection** for its commercial products Thiola, Chenodal, or Cholbam[233](index=233&type=chunk)[236](index=236&type=chunk) - The product candidate **sparsentan** is covered by **use patents expiring in 2030**, but its **composition of matter patent expired in 2019**[237](index=237&type=chunk) - The company faces potential **product liability exposure** in excess of its insurance coverage, which is **$10 million per occurrence** and **$25 million in aggregate** for clinical trials[256](index=256&type=chunk) - The company is **entirely dependent on third-party manufacturers**, which entails risks related to regulatory compliance (cGMP), supply capacity, and quality control[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) [Risks Related to Our Business](index=39&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include COVID-19 disruptions, uncertain profitability, extensive government regulation, potential need for additional funding, and vulnerability to cyber-attacks - The **COVID-19 pandemic** could **materially adversely affect business** by disrupting clinical trials, the supply chain, and access to capital markets[268](index=268&type=chunk) - The company is subject to **extensive and complex federal and state regulations**, including the Anti-Kickback statute, False Claims Act, and data privacy laws like HIPAA and CCPA, with **significant penalties** for non-compliance[297](index=297&type=chunk)[298](index=298&type=chunk)[308](index=308&type=chunk) - The company may need **substantial additional funding** for its development programs and commercialization, and **access to capital may be difficult**[281](index=281&type=chunk) - Internal computer systems are **vulnerable to security breaches and cyber-attacks**, which could result in data loss, liability, and disruption of development programs[322](index=322&type=chunk)[323](index=323&type=chunk) [Risks Related to our Indebtedness and Investments](index=48&type=section&id=Risks%20Related%20to%20our%20Indebtedness%20and%20Investments) Significant risks relate to the $276 million convertible senior notes, including cash flow requirements, potential inability to repurchase notes, and dilution of existing stockholders upon conversion - The company has approximately **$276 million of total debt** outstanding from its 2025 Convertible Senior Notes, which could adversely affect its financial condition and limit flexibility[333](index=333&type=chunk)[334](index=334&type=chunk) - The company may be **unable to raise the funds necessary to repurchase the notes** upon a 'fundamental change' or to pay cash amounts due upon conversion, which would constitute a default[335](index=335&type=chunk)[336](index=336&type=chunk) - Conversion of the notes into common stock will **dilute the ownership interests** of existing stockholders[341](index=341&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[342](index=342&type=chunk) [Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[343](index=343&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[344](index=344&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed in this item - None[345](index=345&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists various exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance and debt agreements - Lists various exhibits filed with the report, including indentures for convertible notes, equity incentive plans, and CEO/CFO certifications[347](index=347&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-Q _________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-36257 RETROPHIN, INC. (Exact name of registran ...