NOVATO — Raptor Pharmaceutical Corp. (Nasdaq: RPTP) on Thursday reported second-quarter and first-half sales of $16.3 million and $28.4 million, respectively, now a year since the company’s main product was first approved for sale.
Net product sales for Procysbi for quarter ended June 30 were 34 percent higher than in first quarter of this year. Only $21,000 in sales were logged in the second quarter of last year. Procysbi became commercially available in the U.S. in June 2013 and in Germany in April of this year.
The consensus of analysts’ expectations was for second-quarter sales $1.73 million lower.
“We continue to be very pleased by the rapid adoption of Procysbi in the U.S. and anticipate a solid market expansion outside the U.S. starting in Germany,” said Christopher Starr, Ph.D., CEO. “Our steady commercial build out in the EU is proceeding according to plan and we anticipate the introduction of Procysbi in additional EU and global country markets over the next year. In addition, we are meeting with regulatory agencies this quarter to discuss the future development activities for RP103 as a potential treatment for Huntington’s disease in the U.S. and EU.”
As of June 30, 237 cumulative unique patients have received Procysbi, which compares to 199 patients at the end of the first quarter of 2014.
The launch of Procysbi began in Germany during April, representing the first market in the EU where the product is available to cystinosis patients.
Cash and cash equivalents as of June 30 were $58.1 million, down from $68.1 million at the end of the first quarter.
On July 1, Raptor announced a private placement of $70 million with HealthCare Royalty Partners and its affiliates. The funding includes $60 million in new convertible senior notes and an additional $10 million of funding pursuant to an amended and restated loan agreement, originally signed on December 20, 2012. Cash and cash equivalents including net proceeds from this financing were approximately $124.0 million at July 31, 2014.
In June, data from a two-year open label extension study of delayed-release cysteamine bitartrate (Procysbi) in 40 patients with nephropathic cystinosis was published in the Journal of Pediatrics. The study demonstrated that patients who took Procysbi for two years were able to sustain optimal cystine control in their white blood cells and preserve kidney function over the long term.
Procysbiis a cystine-depleting agent approved in the U.S. for the management of nephropathic cystinosis in adults and children 6 years and older.
Raptor received orphan designation from the European Commission for RP103 in the treatment of Huntington’s disease. RP103 also has orphan designation for Huntington’s disease in the U.S.
Raptor recently appointed Françoise De Craecker to the position of senior vice president and general manager of European operations. Ms. De Craecker will be responsible for managing Raptor’s European operations and executing Raptor’s plans for launching Procysbi in select markets across Europe. Francoise has over 30 years of experience in sales, marketing and leadership positions in the pharmaceutical and medical device sectors and most recently served at Shire as the vice president and general manager for the European Region’s rare disease business.
In the U.S., revenue is recognized once Procysbi has been shipped by the specialty pharmacy and accepted by the patient.
Cost of sales for the second quarter ended June 30, 2014 was $1.0 million, which was 6 percent of net sales, and $2.3 million for the six months ended June 30, 2014, which was 8 percent of net sales. Cost of sales includes third-party manufacturing cost of products sold, royalty fees, amortization of capitalized milestones, shipping, supplies and other indirect manufacturing related costs including compensation cost of personnel. Nominal cost of sales was reported for the comparable prior year periods.
For the second quarter, research and development expenses were $11.1 million versus $6.2 million for the second quarter of 2013. For the six months ended June 30, R&D expenses were $20.6 million versus $14.6 million for the six months ended June 30, 2013. The increase over the prior year comparable periods was primarily due to increases in staffing and associated salaries and benefits for medical, clinical and regulatory personnel, preclinical studies, clinical trials and non-commercial drug manufacturing expenses. R&D expenses include CRO fees, investigator fees, data service fees, lab supplies and chemicals related to ongoing clinical trials in cystinosis, Huntington’s disease, NASH, Leigh syndrome, our preclinical discovery operations and our genetic screening program, costs related to medical affairs and pharmacovigilance, and R&D related personnel expenses.
Selling, general and administrative expenses were $13.3 million for the second quarter of 2014 compared to $9.4 million for the prior year period. SG&A expenses were $25.4 million for the six months ended June 30, 2014 compared to $17.2 million for the prior year period. The increase in the current year was primarily due to additional sales and marketing costs for the commercialization of Procysbi in the U.S., the establishment of our EU commercial headquarters and build out of our German team, compensation, and other administrative and facilities costs.
Interest expense for the second quarter of 2014 was $3.5 million compared to $1.1 million in the second quarter of 2013. Interest expense for the six months ended June 30, 2014 was $6.5 million compared to $1.8 million for the six months ended June 30, 2013. The increase over the prior year period was due to the $50.0 million debt facility the company entered into with HealthCare Royalty Partners in December 2012 and currently includes a fixed component based on the outstanding principal and a variable interest expense royalty fee based on net product sales. There were nominal product sales reported for the comparable prior year period as Procysbi became commercially available in the U.S. in June 2013.
Net loss in the second quarter of 2014 was $12.7 million, or 20 cents per share, compared with a net loss of $24.1 million, or 43 cents per share, in the second quarter 2013. On a non-GAAP basis, excluding non-cash common stock-based compensation expense, net loss for the second quarter of 2014 was $9.4 million, or 15 cents per share, compared with a net loss of $22.3 million, or 40 per share, in the second quarter of 2013.
Analysts were expecting a non-GAAP loss of 21 cents a share.
Net loss for the six months ended June 30, 2014 was $27.6 million, or $0.44 per share, compared to a net loss of $40.0 million, or $0.73 per share, in the six months ended June 30, 2013. On a non-GAAP basis, excluding non-cash stock-based compensation expense, net loss for the six months ended June 30, 2014 was $21.9 million or $0.35 per share, compared to a net loss of $36.5 million, or $0.66 per share in the six months ended June 30, 2013. 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" for a full discussion on this subject.
Cash and cash equivalents as of June 30, 2014 were $58.1 million, compared to $68.1 million as of March 31, 2014 and $83.1 million as of December 31, 2013. Cash and cash equivalents including net proceeds from the July 2014 private placement with HealthCare Royalty Partners and its affiliates were $124.0 million at July 31, 2014.
Based on the continued steady growth we are experiencing in the U.S. and strong initial demand in Germany, Raptor is increasing net product sales guidance for Procysbi to a range of $65 million to $70 million for 2014 compared to our previous guidance of $55 million to $65 million. On a non-GAAP basis, excluding non-cash stock-based compensation expense, operating expenses consisting of SG&A and R&D are expected to be in the range of $80 million to $90 million in 2014. GAAP operating expenses for 2014 are not readily determinable due to the volatility of the company’s common stock, which directly affects stock-based compensation expense. The company’s cash and cash equivalents, after the recent financing in July, are expected to be sufficient to fund operations through at least the first half of 2016, based on current operating plan assumptions.
Raptor’s stock price dipped virtually 5 percent to $8.24 a share at the close of trading Thursday, before the company reported results.
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