Zevra Therapeutics(ZVRA) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited financial statements show a significant net income increase due to a PRV sale Unaudited Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $226,337 | $86,027 | | Total assets | $256,277 | $178,127 | | Total current liabilities | $28,832 | $34,065 | | Total liabilities | $139,047 | $138,461 | | Total stockholders' equity | $117,230 | $39,666 | - Total assets increased to $256.3 million as of June 30, 2025, from $178.1 million at the end of 2024, driven by higher cash and securities[17] - Total stockholders' equity saw a substantial increase to $117.2 million from $39.7 million[17] Unaudited Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $25,881 | $4,449 | $46,282 | $7,874 | | Impairment of intangible assets | $58,710 | $— | $58,710 | $— | | Loss from operations | $(71,039) | $(23,795) | $(76,401) | $(44,281) | | Gain on sale of PRV | $148,325 | $— | $148,325 | $— | | Net income (loss) | $74,707 | $(19,925) | $71,608 | $(36,547) | | Diluted net income (loss) per share | $1.21 | $(0.48) | $1.16 | $(0.87) | - The company reported net income of $74.7 million for Q2 2025, a significant turnaround from a net loss of $19.9 million in Q2 2024[18] - This improvement was driven by a $148.3 million gain on the sale of a Priority Review Voucher (PRV), offsetting a $58.7 million impairment charge[18] Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,823) | $(35,274) | | Net cash provided by investing activities | $22,476 | $14,664 | | Net cash provided by financing activities | $2,988 | $16,547 | | Net increase (decrease) in cash and cash equivalents | $13,927 | $(3,789) | | Cash and cash equivalents, end of period | $47,712 | $39,260 | - For the first six months of 2025, net cash used in operating activities improved to $11.8 million from $35.3 million in the prior year period[27] - Investing activities provided $22.5 million in cash, primarily from the $150.0 million proceeds from the PRV sale[27] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the $150.0 million PRV sale, a $58.7 million asset impairment, and revenue recognition policies - The company sold a transferable rare priority review voucher (PRV) for aggregate proceeds of $150.0 million, resulting in a net gain of $148.3 million[41] - In Q2 2025, the company recorded an intangible asset impairment charge of $58.7 million related to OLPRUVA due to decreased future cash flow expectations[113] - As of June 30, 2025, the company had $60.7 million in long-term debt outstanding from a credit agreement, maturing in 2029[73] Revenue Breakdown (Six Months Ended June 30, 2025) | Revenue Source | Amount (in millions) | | :--- | :--- | | MIPLYFFA Sales | $38.6 | | Arimoclomol French AC | $5.0 | | AZSTARYS License Agreement | $2.1 | | OLPRUVA Sales | $0.4 | | Total Revenue | $46.3 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses its rare-disease strategy, financial results, and confirms sufficient liquidity for operations - The company's five-year strategic plan focuses on transforming Zevra into a leading rare-disease company[127] - Following FDA approval, MIPLYFFA became commercially available, and the company sold the associated PRV for net proceeds of $148.3 million[129][138] - Due to revised commercial expectations for OLPRUVA, the company recorded a significant intangible asset impairment charge of $58.7 million[146] - As of June 30, 2025, the company had cash, cash equivalents, and investments totaling $217.7 million, sufficient to fund operations for at least twelve months[193][214] Results of Operations | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | Revenue, net | $25,881 | $4,449 | | Impairment of intangible assets | $58,710 | $— | | Gain on sale of PRV | $148,325 | $— | | Net income (loss) | $74,707 | $(19,925) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company, as a smaller reporting company, is not required to provide this information - The company has determined that this section is not applicable[222] Item 4. Controls and Procedures Management concluded that disclosure controls and internal financial reporting controls were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[224] - There were no material changes in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[225] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is defending a breach of contract lawsuit from Commave Therapeutics SA regarding the AZSTARYS agreement - A legal dispute has arisen with Commave Therapeutics SA concerning the interpretation of the AZSTARYS License Agreement[227] - Commave filed a complaint against Zevra in September 2024 alleging breach of contract, and the case is now in the discovery phase[228][229] - Zevra believes the lawsuit is without merit and has not recorded any accrual for contingent liability, but expects to incur significant legal expenses[230][232] Item 1A. Risk Factors Key risks include geopolitical issues, asset impairment charges, and impacts from healthcare reform legislation - Geopolitical disputes and trade policies, such as tariffs and sanctions, could materially adversely affect the business by impacting manufacturing and costs[235] - The company recognized a $58.7 million impairment charge on definite-lived intangible assets during Q2 2025 and warns of potential future impairments[239] - Healthcare reform legislation, including the Inflation Reduction Act, could increase costs and create downward pressure on product pricing[240][244][245] - Failure to comply with complex governmental pricing programs like MDRP and the 340B program could lead to significant penalties and fines[255][257] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales or repurchases of its equity securities during the period - There were no unregistered sales of equity securities during the reporting period[262] - There were no purchases of equity securities by the company or its affiliates[263] Item 3. Defaults Upon Senior Securities The company reports this item is not applicable - The company reports this item is not applicable[264] Item 4. Mine Safety Disclosures The company reports this item is not applicable - The company reports this item is not applicable[265] Item 5. Other Information No material undisclosed events or changes to director nomination procedures occurred during the quarter - During the three months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[267] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including officer certifications and XBRL data - This section provides a list of exhibits filed as part of the Form 10-Q, including officer certifications and Inline XBRL documents[268]