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North Bay Business Journal

Friday, November 16, 2012, 3:08 pm

Raptor cites R&D costs in fiscal 2012 loss

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    NOVATO — Raptor Pharmaceutical (Nasdaq: RPTP) reported its net loss increased year over year by 168 percent in its fourth quarter and by nearly 4 percent for the fiscal year, attributing the larger losses to higher research-and-development costs for the 7-year-old developer of drugs to treat rare human disorders.

    Fourth-quarter net loss was about $10.2 million, or 20 cents per share, compared with $3.8 million, or 11 cents per share, a year before.

    For fiscal 2012, ended Aug. 31, losses were about $38.6 million, or 80 cents per share, up from $37.2 million, or $1.15 a share, in fiscal 2011.

    Research-and-development costs increased 42 percent to $6.4 million in fiscal 2012 from $4.5 million in the prior year. That increase was attributed primarily to an increase in manufacturing expenses for the drug RP103, designed to treat nephropathic cystinosis.

    It’s a genetic disorder that leads to damaging buildup of crystalized cystine amino acids in various tissues and organs, particularly kidneys, brain, liver, thyroid, pancreas, muscles and eyes. If left untreated, patients usually don’t live past 10 years old. The condition affects an estimated 2,000 worldwide, including 500 in the U.S. and 800 in Europe. 

    The manufacturing expenses  support the ramp-up for potential commercial launch of RP103, the NASH phase 2b clinical trial, which began in June, and a noncash write off of $900,000 in intangible assets.

    General and administrative expenses in the company’s fourth quarter were $5.8 million, an increase of $4.2 million or 262 percent, from $1.6 million in the same period of fiscal 2011. Raptor attributed that increase primarily to precommercial expenses related to marketing, planning, reimbursement studies and tax strategy in preparation for the potential launch of the  RP103 drug. Finance and human resources, along with increased noncash stock option compensation expenses also increased.

    Research and development expenses for fiscal 2012 were about $21.4 million, up $6.6 million, or 45 percent, from about $14.8 million for the prior fiscal year. Raptor linked that primarily to the same reasons described above and the loss of favorable tax grants available in fiscal 2011 but not in fiscal 2012.

    General and administrative expenses for fiscal 2012 were about $14.7 million, an increase of approximately $8.5 million, or 138%, from approximately $6.2 million in fiscal 2011. The increase was primarily due to the same reasons described above for the fourth quarter of fiscal 2012.

    Despite increased losses, Raptor said its cash, cash equivalents and short-term investments totaled were $38.9 million as of Aug. 31 and increased to $401 million as of Oct. 19. Cash on hand will be sufficient to meet operating requirements and obligations into the third quarter of calendar year 2013, according to Raptor.

    The cash balance includes about $6.5 million in net proceeds from the sale of common stock under a finance agreement that may allow Raptor to  sell up to an additional $26 million of common stock not included in the overall cash balance. 

    The share price of Raptor stock increased 0.21 percent Friday to $4.75.

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