Travere Therapeutics, Inc. (TVTX) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to the Retrophin Third Quarter 2015 Final Results Corporate Update Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I’d now like to turn the conference over to Chris Cline. Please go ahead.

Thank you, Jessica. Good afternoon everyone and thank you for joining Retrophin's third quarter 2015 financial results and corporate update call. With me today are Steve Aselage, Chief Executive Officer; Laura Clague, Chief Financial Officer; and Dr. Alvin Shih, Executive Vice President and Global Head of R&D. Before we begin, I have to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of Retrophin. I encourage you to review the Company’s filings with the Securities and Exchange Commission, which identify specific risk factors that may cause actual results or events to materially differ from those described in the forward-looking statements. The content of this conference call contains time sensitive information that is accurate only as of today’s date, November 3, 2015. And the Company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that, I'll now turn the call over to Steve. Steve?

Thanks you, Chris. Good afternoon, everyone. Thank you for joining us on the call today. The third quarter marked the Company's best operating performance in our short history. Our commercial progress and focused investment in the business enabled us to reach operating cash flow positive and better ahead of schedule, while still allocating significant investments to the pipeline which is critical to long-term value creation for Retrophin. Starting with our commercial performance, we were able to continue top line growth with $28 million of sales for the quarter, a 16% increase from Q2. Thiola continues to add patients, Chenodal remains stable and Cholbam contributed its first full quarter of revenue. Moving specifically to Thiola, which continues to grow and add patients on a weekly basis, the number of patients initiating therapy in the third quarter slowed moderately, compared to last quarter due to reduction in new starts in July and August. Importantly, we saw the trajectory pick back up in September and we expect to be able to add a significant number of patients in the fourth quarter. Compliance levels remained stable in the 80% to 85% range compared to the approximately 50% levels when we acquired the product, which is a testament to the work being done for patients in our THIOLA Total Care Hub. The Total Care Hub provides support to patients related to adherence, which is critical to optimizing therapeutic outcomes and also ensures continuous supply, helps patients navigate reimbursement channels, delivers Thiola to the patient’s doorstep and provides a counselor available 24/7 to assist with any treatment related issues, including co-pay assessment. These specialty services provided by the hub are integral to optimizing therapeutic outcomes. To remind everyone, we believe there are approximately 4,000 to 5,000 candidates for Thiola. So, there is still many patients out there that are not receiving optimal therapy. And our teams are in the field trying to gain traction with new prescribers with a goal of reaching as many patients as possible. As many of you know, we have been evaluating formulation changes that may create a more patient-friendly dosage regimen for some time. I'm pleased to say that we have now committed efforts to that end. Our goal will be to make Thiola easier to take, more tolerable in the current formulation. Moving to Cholbam, where we had a first full quarter of use and had a handful of new patients come on to therapy. We initiated some market research, surely after launching program last quarter and the initial results would indicate that there may be as many as 200 to 300 patients that would benefit from therapy. We're currently engaged in trying to identify those patients. This is an ultra-orphan patient population that if left untreated, may develop life threatening liver injury which can lead to transplant or death. So, we will make sure we make every effort possible to reach as many patients as possible. Looking to development for Cholbam outside the United States, revenues ex-U.S. represented less than 2% of our third quarter top line results and we don't expect that to change meaningfully in the near-term. Of note however is that in late September, the CHMP has offered a revised opinion, recommending the grant of a marketing authorization in the EU. After the general enquiry, [ph] EU had ruled to resume Cholbam's marketing authorization in June. We anticipate reinstatement of full marketing authorization by the end of the year but many hurdles will remain in Europe. And it’s unclear at this point, what contribution that EU will be able to make to the Company's commercial growth. We continue to revise the various international agreements we inherited and we'll provide additional clarity as we make progress. Lastly, in the commercial portfolio, Chenodal patient base remained steady throughout the quarter. Discussions with the FDA regarding the inclusion of CTX to the Chenodal label continued. At this time, there is a gap between what the agency would like to see and what we can provide without doing a prospective study which we do not see as a viable option at this time. As such, we have not yet been able to come to an agreement with the agency on this issue. We continue to believe that having the label change to accurately reflect current usage is in the best interest of all concerned parties. And we'll continue to engage with the FDA in an effort to eventually find an agreement. Shifting to the financial performance, I'm very pleased with the progress we were able to make in the quarter. Closing the sale of the PRV, bringing $145 million net this quarter and will bring an additional $95 million over the next two years, which significantly bolsters our balance sheet. The proceeds of the PRV also enable us to repay our high interest debt which gives us added flexibility to pursue additional assets and push our pipeline forward. Our business development team continues to be on the hunt and is engaged on some exciting opportunities. Our focus since the end of last September has been on finding assets that fall into very specific categories. These would include commercial assets with IP or orphan exclusivity and also later stage clinical assets that may not be as well known but have a clear path forward and would not require significant additional infrastructure or resources to support. While these types of assets are not easier to find, we have a team that is working diligently and they've been able to cover some opportunities that we are excited about. My optimism for the pipeline continues to grow with the progress Alvin and his team have been able to make. Despite the some enrollment slowdown, I’m particularly encouraged by the uptake and patients rolling into the direct DUET trial at the end of the quarter and the clean results of the Phase 1 data for RE-024 we have seen to-date. We're getting closer to key catalysts such as a DUET trial readout and the expected transition of RE-024 in to PKAN patients next year. I'm confident that these assets will create significant long term value for patients, Retrophin and our many stakeholders. With that I will now turn the call over to Alvin to give you a more in-depth update on the research and development progress. Alvin?

Thanks, Steve. Our R&D efforts continued to move forward during the third quarter with advancement in the development of our key pipeline programs, sparsentan and RE-024 as well as efforts to improve the quality and lifecycle of our current marketed therapies. Regarding sparsentan which is our lead pipeline program, our clinical team remains focused on getting the DUET trial fully enrolled. Sparsentan is a dual endothelin receptor antagonist, an angiotensin receptor blocker that’s in development for the treatment of focal segmental glomerulosclerosis or FSGS. FSGS affects approximately 40,000 patients in the U.S. and is a significant cause of end-stage renal disease. The DUET trial is the largest industry sponsored trial to be attempted in FSGS. During the third quarter, we saw some seasonality in enrollment during the peak summer months, but we've been encouraged by substantial reacceleration in patient screening over the last couple of months. We've put some additional resources in place to continue the reacceleration trend. And at this point, we expect that our 100 subjects will be randomized in early 2016. If we can get that last patient randomized by early 2016, we expect top line data would likely be available in the third quarter of next year. In addition to our clinical efforts, we've also been working hand-in-hand with key opinion leaders and patient advocacy groups to put ourselves in position to act quickly, once the DUET data are available. Our goal is to make most impact and deliver a therapy for patients suffering from this potentially deadly condition, as soon as possible, if we see data next year that supports our belief that sparsentan has a meaningful impact on proteinuria caused by FSGS. We are also encouraged that last month, the committee for Orphan Medicinal Products of the European Medicines Agency gave a positive opinion on orphan status for sparsentan and we anticipate that the European Commission will deliver its decision on orphan status in the coming months. Turning to RE-024, which is our novel phosphopantothenate replacement therapy for the treatment of pantothenate kinase-associated neurodegeneration or PKAN. We continued the progress made in the beginning of the year by completing the Phase 1 single ascending dose study which was evaluating safety and tolerability of RE-024 and healthy volunteers. 40 subjects received RE-024 across five dose cohorts and dose escalation proceeded as planned, based on the safety review at each dose level. The data analysis is currently being finalized but the results we've seen to-date give us confidence to move forward with planning of trial in PKAN patients. We have a meeting with the FDA planned for later this year where we'll discuss the Phase 1 data and design of the next clinical trial. We'll be going into that meeting with the proposed clinical strategy that'll enable us to demonstrate the efficacy of our RE-024 in the PKAN population. We look forward to engaging with the agency with the goal of initiating that trial in the PKAN patients in the first half of 2016. We continue to work closely with the patient advocates in the space to ensure full engagement in the lead up to the anticipated PKAN clinical trial. The feedback from the community has been instrumental and helping us develop our proposed clinical trial design that will demonstrate efficacy in a way that's meaningful to PKAN patients. We're grateful for their ongoing support and we look forward to working together on this very important effort to develop a treatment for PKAN. In addition all four ex-U.S. patients who have been on RE-024 through physician initiated studies, remain on therapy. The duration of treatment for these patients now ranges between 11 months and 17 months. Further data on these patients has been submitted for publication in a peer-reviewed journal and we hope to see that data become available for public review, if and when it is published. Moving to the early stage portfolio and RE-034 which is our novel synthetic formulation of the first 24 amino acids of naturally occurring ACTH. We're currently scaling up materials to be used in the exploratory PKPD studies and which also may serve as the basis for IND-enabling studies. Based on our assessment of manufacturability and the outcome of these initial studies, we'll decide whether to initiate the full package of IND-enabling studies in 2016. We believe the steps we're undertaking now could pave the way for multiple potential rare disease indications that align well with our current areas of therapeutic area expertise. And we're keeping our options open at this point. Our regulatory medical affairs teams were very productive while supporting our portfolio of marketed products during the quarter. As an organization, we're committed to delivering optimal value for patients. And that means we're constantly focused and investing in ways to improve the patient experience while on therapy. As Steve mentioned earlier, after planning for some time, we're now committed to developing a new formulation of Thiola. We listen to the patients then we'll start working on an alternative formulation with the aim of improving patient compliance, convenience and tolerability. We’ll work on delivering this alternative formulation as soon as possible. With regard to Chenodal, we continued our efforts in working with the FDA to get a label that reflects the true nature of Chenodal's current use which is the treatment of patients with cerebrotendinous xanthomatosis or CTX. To-date, we haven't yet reached agreement with the agency on an acceptable path for the addition of CTX to the Chenodal label. We believe that based on our discussions with the patient community that the agency’s request for one or more prospective randomized trials will not be feasible or alternately productive, given the patients currently have access to Chenodal outside the context of clinical trial. Our medical team continues its work with treating physicians to gather data in support of the safety and efficacy for Chenodal for patients suffering from CTX. And we plan to re-approach the FDA with the best data set we believe is available on the treatment of CTX patients with Chenodal. The medical team is also implementing the CTX prevalence study which will enroll and screen patients at academic sites across the country. We’re in the patient screening phase which will expand as we activate multiple sites in the coming weeks. Our hope is that this study will contribute to the earlier diagnosis and treatment of CTX patients. Now regarding Cholbam, the medical team has been working diligently to support the product launch and implementing the post-marketing commitments that were agreed to during the FDA’s approval for Cholbam in March of this year. We’re designing a registry study which will monitor the long-term safety and efficacy of Cholbam and both bile acid synthesis disorders and peroxisomal disorders. The protocol has been submitted to the FDA for a review and we expect to launch this registry study in 2016, pending agency agreement. As part of our post-marketing commitment, we’re also developing a quantitative urinary bile acid assay which will aid into diagnosis of these patients. We expect the assay development and validation process to be completed in 2017. Regarding our earlier stage efforts, we continue to work on novel mechanisms that may ultimately result in transformative therapies for rare genetic diseases. Our main focus is forging collaborations with patient adequacy groups and academic researchers in order to leverage the knowledge and resources within the rare disease community. We are working on some potential collaborations that will enable us to have the best chance of developing a therapeutic that can make this significant difference for patients. And we hope to be able to share some of these details with you soon. With that I’ll turn it over to Laura to walk through the financials.

Thank you, Alvin. Net sales from our three products, Thiola, Cholbam, and Chenodal were $28 million in the third quarter. The significant increase over the same period in 2014 is due to the addition of Thiola and Cholbam to our commercial portfolio. The 16% increase over the second quarter is mainly attributable to the continued uptake of Thiola and also our first full quarter of Cholbam revenue. We reported a GAAP net income of $105.6 million for the third quarter of 2015. Adjusting for extraordinary and one-time expenses, we ended the quarter with a net loss of $1.5 million. Significant adjustments and one-time items for the quarter included a $140 million gain on the disposal of assets related to the sale of our Pediatric PRV and a net benefit of $30 million for the change in fair value of the Company’s derivative instruments. These were offset by an income tax provision $38.8 million and $24.2 million of non-GAAP operating loss adjustments. Research and development expenses on a GAAP basis were $14.1 million for the third quarter compared to $12.6 million in the same period last year. The increase is a result of increased compensation and clinical trial expense related to the advancement of our lead development candidate sparsentan, as we continue to enroll more patients in the DUET study. On an adjusted basis, R&D expense for the third quarter was $11.2 million. Relevant non-cash expenses for the third quarter included $2.7 million of stock-based compensation. Selling, general and administrative expenses were $22.3 million on a GAAP basis in the third quarter compared to $17.4 million in the same quarter last year. The increase is largely due to increased stock-based compensation and amortization. On an adjusted basis, SG&A expense for the third quarter was $12.6 million with the significant one-time and non-cash adjustments for the quarter consisting of $9 million related to stock compensation and depreciation and amortization, and $700,000 of legal expenses. Also during the quarter, we incurred a $6.9 million expense associated with the periodic revaluation of acquisition related contingent consideration and a $4.7 million charge as a result of the Company writing off the entire value of intangible assets related to development candidate carbetocin, after the decision was made not to pursue internal development of this asset. The write-off was a result of our strategic focus to invest in only those assets that we believe have a highest potential for future value creation. We expect operating expenses to fluctuate throughout the end of the year and into 2016 with the continued enrollment of DUET and our efforts to advance our RE-024, as quickly as possible. We will continue to focus on optimizing our operating performance. As [indiscernible], our new focus has resulted in a reduction of cash burn in each of the last four quarters and reaching positive cash flow. I do want to caution everyone, however, that we believe the greatest future value for patients and Retrophin stakeholders resides within our development assets. And if we see a need for additional resources that can make a meaningful difference in their probability of success, we will continue to make measured investments. As of September 30, 2015, we had approximately $327.1 million in cash and cash equivalents, marketable securities and notes receivable from the sale of our PRV. I will now turn the call back to Steve for his closing comments. Steve?

Thanks Laura. This was another strong quarter which has the progress we have been able to make in a short period. We strengthened our balance sheet further which gives us flexibility and operations and business development opportunities. And we improved operating performance through commercial growth and measured expenditures to a point where we can support our investments in the future. We will move through the balance for the year and into 2016 focused on the significant catalysts ahead for sparsentan and RE-024 which we expect will create significant long-term value for our shareholders. I'll now turn the call back over to Chris to open up the lines for questions.

Thanks, Steve. Jessica, can we open the line for Q&A please?

[Operator Instructions] And our first question comes from Joseph Schwartz from Leerink Partners.

First of all, congrats on the progress continuing to grow Retrophin. I was wondering if I could start with Thiola, how do you feel about some of the previous calls you've shared with us such as growing that franchise by at least 30 patients per month; how should we take that in terms of the context that you are providing this quarter in terms of the a pretty slowdown and where -- how these sales -- the expanded sales force doing and how're they being allocated going forward? And then other than the sales force, are there any other initiatives that you're considering to drive more uptake into it?

This sales force has done great. We hired a very talented group of people that hit the ground running. One of those things we are seeing is some seasonality in the marketplace. That's not particularly unusual. I think I've both seen that before with other products and other companies. And we saw some slowdown during the summer. I think it's important to recognize even during the dark days of summer, July and August, we saw a growth week-over-week; we saw back closer to 30 new patients per month, once we got past Labor Day and into the fall. So, we're still very positive about the growth of Thiola. We're very happy with the performance of the new sales folks that came into the field. And we have our marketing group as I think a very creative group who've come up with very interesting new ideas about expanding reach through some non-traditional sales efforts including some telemarketing efforts to give our sales folks better leads and some other creative ways of getting more patients tested to see if they’re so -- as you know there are significant number of patients or patients not been diagnosed yet. And as we work our way through the known patients, it’s important for us to improve diagnostic efforts in urology and nephrology to find those additional patients and we're doing that.

And then may be one on Cholbam before I get back in the queue. Can you give us some more color on your ability to grow that franchise and your strategy to do so? How does the patient pipeline look there and what does it take to get more patients on therapy for Cholbam?

Cholbam, we're kind of on the front edge of the learning curve. I think our guys did a great job in moving clinical trial patients over to commercial therapy. That happened very quickly, very efficiently. We really, to be candid, expected to find more patients faster, once we got out into additional centers and started looking for non-study patients. That's been a slower process that we've anticipated. And we are stepping back at this point and trying to come up with some better approaches to have more targeted efforts and to -- which should be a relatively small number of centers, roughly 70 or so centers to treat these patients. But we have found pure patients in first couple of months after launch, than we expected. And it is causing us to step back and take a look at how we can maybe dig a little bit deeper to find those patients.

And our next question comes from Lisa from JMP Securities. [Ph]

I just want to dig in a little further on your efforts to increase diagnostics -- diagnosis rate, sorry, for sale. I know that was a big part of the driver for next year in terms of adding new patients. Can you maybe speak to little more specifics on your efforts there?

Sure. There are specific American Urologic Association guidelines on both testing, diagnosing, treatment, monitoring. Unfortunately those guidelines haven't been routinely followed. I think part of that is simply because the product hasn't been available, hasn't been supported up until relatively recently. So, we don't need to create new materials or come up with some kind of nifty new device to get people to do better testing or more routine testing. We simply need to utilize guidelines already in place, do educational work within urology and nephrology to encourage physicians, to do that testing, so that they can give patients optimal therapy. Our initial approach with Thiola as I think you know, was raised basically to focus on the known patients who’ve been on therapy, came off therapy for whatever reason. We feel like we've worked through most of that group now. And we're kind of moving into Phase 2 of a product launch which is to improve diagnosis. And as you said, that's critical for our growth over the next 12 months or so.

We’re sort of one month into the next quarter, can you say if return to the 30 patients per month in September has sort of continued through October?

We’ve seen the uptake we saw in September continuing to this month, yes.

Okay.

Excuse me, into last month, yes.

For Chenodal, can you maybe talk a little bit more specifically about what the agency is requesting?

Sure, I'm going to ask Alvin to grab that one, if you will.

Our discussions with the agency that have centered around what type of data would support the safety and efficacy claims of CTX. And I think the agency’s defaults mode is to always look for one or more controlled randomize prospective studies. And indeed that's what the starting position has been. We've had a very constructive dialogue with them to help them understand what the CTX patient population is like and what the dynamics are in that population and also for us to understand what level of data they think will be acceptable, if any short of a prospective study. And so that discussion is still ongoing and we hope to be able to get to an agreement on that.

Okay. When will you be kind of maybe meet them again, when will be the next update?

So, it depends on when our team can generate the data required to go to back to them with an improved proposal. And so we're working on that. We anticipate that the next interaction occur in the next couple of months.

Okay.

Maybe worth noting as well, if I can just add a quick footnote. Alvin and his team have really worked hard with both thought leaders within physician community and with patient advocacy groups in this area. And there has just been really clear feedback to us that our prospective study is not something that would be acceptable to the community.

Okay. I mean, does FDA kind of -- do they get that or not so much?

I think that they understand that difficulties and they're trying to work with us to figure out a way to address them. It's just a matter of being able to meet in the middle and where that middle ground is going to be.

Okay.

They certainly do understand and they've done the process through multiple rare diseases. So I think it’s just a matter of helping them understand the dynamics in this particular patient disease.

For Cholbam, you mentioned 200 to 300 patients that you think are out there. How does this break down to the single enzyme defect and peroxisomal?

Yes, we actually believe that that's the single enzyme defect group that's result of market research and trying to triangulate literature and primary market research that we've had through physician interviews and get individual physician estimates. But it is market research, it is epidemiologic. Until you actually have feet on the ground and all the centers are finding those patients, it’s unfortunately kind of a theoretical number. And we really need to do a better job of finding the individual patients. And as I said, we're working on our couple of ways to do that right now.

And what are your plans now for Europe that you have back on track for approval there? What's your commercial plan?

Right now, our only indication, meaningful indication in Europe is CTX for cholic acid. The next step before we do anything is to get the full marketing authorization. We hope to have that by the end of the year, not a guarantee but we believe we are on track to do that. We have European structure set up now, have European General Manager. And he has a plan in place to point some additional resources as soon as we have that marketing authorization to do a very controlled launch and to four target countries in the EU and to generate revenues in that way. We have had a -- we inherited a distribution partner in the EU and we have negotiated a transition period with that partner. They're helping us to transition to handling a product ourselves. And that's going to be a process that takes place really over the next probably five months or so.

And what countries that those include?

Initially, we would look at France, Germany, probably Italy and the Benelux area.

And our next question comes from Evan Seigerman from Deutsche Bank.

Just few on Thiola first. Was the slowdown during the summer just basically a seasonality thing or was there something else going on there that we should be aware about?

Good question, I'm not sure that I know the answer to that.

Okay.

Our assumption is, that it’s seasonal, seen that with other oral medications in the rare disease space in the past. So, it’s not particularly shocking. But sometimes it's important to step back and remember this is our first real year with this product. We just got Thiola, Chenodal last year and Cholbam we just launched a couple of months ago. So, whether you look at the summer or as we go into Q4 or we’ll go through the Thanksgiving and Christmas, New Year seasons, so be our first time through in those kind of an area. Products, we have seen big uptakes right before the end of the year, products we have seen slowdown, right before the end of the year; same thing in the summer. And I think our second year going around, we have a little better handle on what to expect, but this year we’re learning as we go.

That’s fair. And then was there any specific commercial push that happened in September or would set up September to accelerate the increase in the number of patients added on therapy?

There was no change in promotional strategy or efforts between August and September, no.

And then kind of looking at the broader Thiola franchise, what are you doing to kind of ensure like the longer term viability aside from the potential reformulation; is there anything else in place to kind of make sure that this can be sustained at least a few years out?

We have system set up that we think is designed to optimize patient experience. We feel like we have significant loyalty within our patient group and within our prescriber group and we have a system in place that gives them help with insurance, help with co-pays, help with medical information. So, I think the thing that we are doing is -- everything we can do from a support system standpoint and now after a fair amount of assessment on exactly what to do, we’ve made a decision and we won’t move forward, we’re trying to come up with a formulation for the product that enables a patient to go on a regimen that’s a little bit easier for them to maintain.

And then just a quick one on Cholbam, from the clinical trial, have all those patients converted to commercial drug at this point?

On the two patients who are on commercial drug, we have two patients on patient assistance which is essentially free drug and my understanding is that both of those patients were patients who were not U.S. citizens and that had a connection in United States and who were in the U.S. and were receiving drug as part of the trial protocol. And as you might guess, when you’ve got a non-U.S. citizen in States, it's a little trickier process getting them insured. We’re working that.

And then one for Alvin with sparsentan, so you had mentioned that you hope to get the 100 patients randomized by early 2016. If that’s the case, why are we looking at top line results into the quarter if it's only an eight-week end point?

Yes, because it does take a while even after the randomization to get the patients fully treated and then to -- again it will be a process of locking the database and going through all of the back end theses that need to happen in closing out the trial. It’s going to be a very complex process. And so, we’re going to put all the pieces in place to line it up as closely as we can to do it. But that really is a key, it’s just getting the patients treated and then being able to lock the database.

And then I know kind of again with the summer, it seems that enrolment slowed down a little bit, have you seen that pick up again? I guess similar to what we saw with Thiola, different stories there, but similar kind of slowdown and speed up?

Yes, absolutely. And there, this was completely expected and we’ve seen a kind of lot of trials because in the summer time patients don’t go to their physicians as frequently; people travel a lot and it just becomes harder to enroll patients during the summer time. And we’ve baked some of that in, but I’ll say that we experienced a lot of seasonality and similarly we saw a very sharp uptake after Labor Day because people started getting back into their routines. We were once -- we have always kept on top of these investigators keep this front of mind and we just saw the bounce back. And it's fair to say, I like the current trajectory that we’re on.

And then one final question kind of on the BD front. Is that still on the horizon for year-end or are we going to be looking at this maybe early 2016?

It's impossible to predict any specific time that a deal will get done. We’ve had -- we always have multiple different opportunities moving at any given moment. Frankly, we just walked away from one within the last couple of weeks, we’re moving on to other opportunities at this point. So, until you actually have the deal signed and can announce it, you just can’t accurately predict when a deal is going to happen.

And our next question comes from Joseph Schwartz from Leerink Partners.

I was wondering just following on the last question, if you could just characterize the number of type of business development opportunities that you're considering now, as the overall landscape continues to evolve. Are you evolving the types of things that you're targeting at all?

Well, to some extent that’s evolved a bit, largely due to the fact that we have a little bit of cash in the bank now that we didn’t have even a few quarters ago. But really, general focus has stayed the same ever since the management changed last fall. I mean for look for products that have exclusivity through either intellectual property or through orphan exclusivity that are either commercial products that maybe are brought some way that we feel like we can fix or late stage clinical products that we feel like we can jump in and help support to bring to market, things similar to the Cholbam deal that we did there last January. So, in very general terms, not much has changed in the last 12 months. We’re looking for assets that can create value by having our support move them forward. And we want to see that value creation take place in a near term timeframe, not further than two to three years out. One of the things that many of the folks on this call know is so many times we get spending so much of our time talking about how long a runway do we have with Thiola. We really want to diversify our portfolio in a way that takes some of that risk away, so that both the company and our investors know that we have long term prospects with the products we're adding in.

And then on Thiola, you mentioned that you'd like to increase the size of your safety stock, so where do you stand now and where would you like that to be?

I don't think we've given out specifics on where we stand but we've got reasonably comfortable right now. Short of some type of real surprise setting us, we would never have a problem. But we'd like to get -- I'd like to get safety stock up to at least a two-year stock of finished product and API. And that gives us safety net, so that if there should be a temporary interruption and either API or a finish line going down, that we're not cutting things too close. The history of Thiola is in an out of stock, was very tough on patients, I think most of you know, product had been available for about two months from we first took it over. One of the commitments we made was that we would spend the money, invest in pulling supplies, so that they would never have to go through that. Again we're continuing to do that right now on a little more aggressive pace than we have in the past as we have seen the market grow substantially.

And Joe, the other benefit of having that added supply is that it helps as we initiate the reformulation efforts. And so all of that ties together really nicely.

And then during the summer slowdown, did you see that there were patients that you were aware of but you were unable to start them on therapy because they didn't want to switch from something previously or start medical therapy at all or were you just finding fewer patients in that timeframe? Can you give us a little bit more color on what was going on in the trenches around then?

I'm not sure I can give you a specific reason. It's probably some combination of things which you get. Patients on vacation, you've got positions on vacations, you’ve got sales reps on vacation and you put the whole package together and things just go a little bit slower.

And our next question comes from Lisa from JMP Securities. [Ph]

I was just wondering if there's any updates on the new formulation of Thiola.

Yes, we've given that some thought in terms of how much we want to say about that. And as you know we don't have idea on Thiola. We want to develop and improve formulation, but we're not particularly eager to share specifics of that new formulation. And I think until we come relatively close to being able to put it out into the marketplace, we're probably going to stay pretty quiet about exactly what goes into that formulation work.

I'm showing no further questions at this time. I would now like to turn the call back over to Chris Cline for any closing remarks.

Thanks, Jessica. Thank you all for joining today. That concludes the call. We look forward to updating you on our progress next quarter.