Good afternoon, ladies and gentlemen, and welcome to the Retrophin Inc. Second Quarter 2019 Financial Results and Corporate Update Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

[Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Chris Cline. You may begin, sir..

Thanks, Rusty. Good afternoon, everyone, and welcome to Retrophin's Second Quarter 2019 Financial Results and Corporate Update Call. Today's call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined for the prepared remarks by our Chief Medical Officer, Dr. Noah Rosenberg; and our Chief Financial Officer, Laura Clague. Dr.

Bill Rote, our Senior Vice President of Research and Development will also be joining us for the Q&A session.

Before we begin, I'd like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance.

They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement.

Please see the forward-looking statement disclaimer on the company's press release that was issued earlier today, as well as the Risk Factors section in our Forms 10-Q and 10-K filed with the SEC.

In addition, any forward-looking statements represent our views only as of the date such statements are made, August 6, 2019, and Retrophin specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, let me now turn the call over to Eric.

Eric?.

Thank you, Chris. And good afternoon, everyone. It's an exciting time for Retrophin. Our team members and leadership continue to demonstrate an unwavering focus on execution and delivering new treatment options for patients living with rare disease.

Core to our mission, is to focus on developing innovative treatments like fosmetpantotenate and sparsentan, as potential first-in-class treatment.

A number of team members and I recently had the honor of attending a Patient Community meeting and hearing directly from patients and parents about the challenges of living with PKAN and the desperate need for an approved treatment. We've been working for the past several years in an effort to bring a treatment to the PKAN Community.

We believe fosmetpantotenate has the potential to help fill the significant unmet need and to become the first approved therapy to give these families hope. The key to making fosmetpantotenate available for patients with PKAN is our ongoing Phase 3/4 studies.

I am pleased to report that everything remains on track for us to obtain and share top-line results later this quarter. While we remain blinded to the data, we are planning for success and positioning ourselves to move quickly to file our NDA and MAA submissions in 2020, in the event of positive results.

In addition, we're making sound progress with launch readiness activity. We now have in place key roles such as market access, medical affairs and marketing to be ready to support launches in the U.S. and Europe. Sparsentan also advanced in our two Phase 3 studies during the quarter.

And we continue to build our position as a leader in rare glomerular diseases. The growing support for sparsentan's potential to become the new treatment standard for conditions like FSGS and IgA nephropathy is underpinning our position strength. Our lead study DUPLEX and FSGS continues to open new sites globally.

As we learned through our Phase 2 DUET study, enrollments in FSGS can be difficult to project the times. In recent months enrollment trends in DUPLEX have not increased at the rate we have forecasted during the beginning of these critical summer months.

Importantly, giving our experience with DUET, we were prepared and moved quickly to accelerate planned initiatives when this arose. Those initiatives are already starting to have a positive impact on screening and enrollment.

However, based upon where we stand today, we believe it would be appropriate to adjust our guidance for top-line results of the proteinuria end point from the second half of 2020 to the first half of 2021. I remain confident in our team's ability to execute. We’ve recognized that any delay in getting this treatment to patients is meaningful.

So we are continuing to act with a great sense of urgency while maintaining the high quality of study recruitment we have seen thus far. Over the balance of the year, our goal will be to ensure our initiatives for enrollment accelerate these timelines if possible.

Our Phase 3 PROTECT study and IgA nephropathy is progressing nicely and we are seeing strong execution across sites. The team is doing a good job of leveraging the lead work and footprint forged by DUPLEX to drive considerable participation in the study. And we remained on-track to have top-line proteinuria results, in the first half of 2022.

Further on our research and development efforts during the second quarter, we entered into a Cooperative Research and Development Agreement or CRADA, which is dedicating early research efforts towards the identification of potential therapeutics for Alagille Syndrome.

Alagille Syndrome is a rare and debilitating disease characterized by severe liver and cardiovascular abnormalities, and there are currently no approved therapies.

In this collaboration, we're working with the NIHS National Center for Advancing Translational Sciences, and the Alagille Syndrome Alliance, the leading Alagille patient advocacy foundation.

This is our second CRADA with NCATS and it establishes our innovative strategy of collaborating with leading scientists and patient communities to advance early research. By pooling resources with the best talent, we believe this allows us to take a disciplined approach to increasing our probability of success in identifying new treatment pathways.

It also allows for our operational teams to remain clearly focused on our late stage programs. We look forward to updating you in the future as these collaborations progress. I'll briefly touch on our decision, to decline to exercise our option to acquire Censa, and accordingly to discontinue the joint development program for CNSA-001 in PKU.

We’ve recently completed our review of the Phase 2 program in PKU. While there may be potential for CNSA-001, to ultimately become a treatment option for PKU, it did not meet Retrophin’s specific requirements for acquiring Censa Pharmaceuticals.

Censa has a talented drug development team and we are very thankful for their collaboration over the last 18 months. Consistent with our patient focus and mission of delivering life changing therapies, we will look to further diversify our pipeline with additional programs that focus on areas of high unmet need.

Turning to the base business, I'm very pleased with our commercial teams continued execution. We have a strong second quarter and delivered another quarter of year-over-year net product sales growth. This was driven primarily by new patients initiating treatment with all three of our proof products. THIOLA’s performance remain steady.

Notably, we started off this summer with the approval of THIOLA EC, a great step towards forward in the cystinuria community, that will provide a new treatment choice for patients. THIOLAs utility in cystinuria has been well established. But we know there are some patients who face challenges with the original formulation.

Two of the most common challenges we heard from patients, were that there can oftentimes be a high pill burden, and that it can be difficult to remain compliant when taking the original formulation one hour before or two hours after meals, particularly when many patients are also prescribed potassium citrate, a concomitant medication that is indicated to be taken with food three times a day.

Importantly, THIOLA EC is indicated to be taken with or without food, which should provide a welcome element of freedom for administration. And, the THIOLA EC 300 milligram option provides patients with the potential to reduce the number of tablets necessary to manage their cystinuria.

Our launch is underway, and I'm pleased to report that the first THIOLA EC prescriptions were shipped to patients as planned, at the end of July. Our commercial team has done an excellent job, of making this new option available to patients within weeks of approval.

And we are encouraged by the early reception, the new brand is getting from prescribers and patients. Our approach is simple. We're providing patients with a choice of which therapy they and their physicians believe is best for managing their cystinuria, we are ensuring clear access to both forms of THIOLA.

And we do not have plans to remove the original formulation and THIOLA EC is available at the same price as the original formulation. Importantly, our market research tells us that there is likely to be significant demand from new and current patients who would prefer the additional flexibility and convenience that THIOLA EC offers.

And it also tells us that there's an opportunity for patients who may have discontinued THIOLA treatment over the years to revisit the brand and see if they may find benefit from the new formulation. As a result, we're confident in the outlook for the franchise.

While there is limited data to share given the very recent launch, we look forward to giving more detail about the uptake of THIOLA EC, in the coming quarters, once we have more time engaging with physicians and gathering additional feedback for patients.

Regarding our final asset portfolio, we were pleased with the recent strong performance, which was driven by new patient starts across the products during the second quarter. Overall, our commercial team has shown an ability to drive consistent organic growth over the last several years.

This gives us great confidence going into the critical period of the ongoing THIOLA EC launch and ultimately for maximizing the potential for fosmetpantotenate and sparsentan if approved. Let me not turn the call over for Noah, for some updates on the pipeline.

Noah?.

Thank you, Eric and good afternoon. I'll start with the fosmetpantotenate program. Our novel substrate replacement therapy, being evaluated for the treatment of pantothenate kinase-associated neurodegeneration, or PKAN.

We are nearing the top-line readout to FORT Study, which is our pivotal Phase 3 trials being conducted under a Special Protocol Assessment agreement or SPA with the FDA.

The FORT study enrolled 84 patients with PKAN and will measure changes in the PKAN activities of Daily Living scale, or PKAN-ADL in patients receiving either fosmetpantotenate or placebo. The primary endpoint of this study will evaluate the average change in the PKAN-ADL from baseline after 24 weeks of treatment.

And its power to show a three point difference between treatment groups. As outlined in our SPA agreement, a 3 point change in the scale will be considered clinically meaningful for patients and physicians. The treatment effect will be measured looking at the change from a baseline to end of study in the PKAN-ADL score on each visit, through 24 weeks.

While we remain blinded to the data, we continue to be very pleased with the conduct of the study. And our clinical biometrics teams and our CRO are working to complete our data validation activities.

As we mentioned on our last call, the baseline characteristics of the study include a baseline PKAN-ADL score in the upper 20 range and are consistent with a representative population, as well as what we have seen with the four patients outside United States, who remain in their physician initiated programs and with the work done to validate the PKAN-ADL scale.

Also, the variability of the overall population we're looking at the study on a blinded basis is within the expected range to support the pairing of FORT. These 2 key points give us confidence in the study design.

At this point, all patients who completed the double-blind portion of the study entered the open label extension and are continue with study visits. We now have some patients in FORT that receiving therapy for more than 2 years.

Given the continued participation in the open label extension, we anticipate having a robust data set to examine and to support our NDA and MAA filings, if FORT data are positive. Our development team is advancing our regulatory submission materials, and we are well positioned to submit our filings in 2020. I'll now shift over to sparsentan.

During the second quarter, we continue to engage with thought leaders and physicians at key Medical Congresses, like ERA-EDTA. The recurring theme in all of our discussions is that there is a significant unmet need in both FSGS or focal segmental glomerulosclerosis, and IgA nephropathy.

Specifically, physicians are eager to explore non-immunosuppressive treatment options or IS -- non-ISTs [ph] with a potential profile that will be appropriate for long-term use.

We continue to believe and hear from our advisors that are pivotal Phase 3 DUPLEX or PROTECT studies are well designed, to evaluate how sparsentan could work, as a treatment option for patient and nephrologists and potentially position sparsentan as a therapy of choice in rare renal disease.

During the second quarter, we had our first scheduled Data Monitoring Committee meeting for both DUPLEX and PROTECT. And I'm pleased to report that the DMC recommended to proceed as plan with both studies. DUPLEX which is evaluating nephro protected potential sparsentan and FSGS continues to enroll and remain pleased with the conduct of the study.

As Eric mentioned, the rate of enrollment did not increase at our expected pace in recent months. But we've been able to act quickly to move up the implementation of some of our planned initiatives.

For example, we’ve recently accelerated activities with partners at registries [ph] and renal pathology centers to broaden the reach for an eligible patients’ study. We know from our experience with DUET, that there are significant numbers of patients outside of academic sites or centers of excellence.

These referral efforts allow us to reach a broader population. We are seeing promising momentum as a result of these efforts. Most importantly, we continue to be very pleased with the conduct of the study and that we are getting the right patients enrolled in DUPLEX.

This gives us increasing confidence and the potential to have a positive outcome from the study, and deliver a new treatment standard for FSGS. Our phase 3 PROTECT Study, which is evaluating the potential of sparsentan and IgA nephropathy remains on track.

Our clinical teams have done an exceptional job of leveraging the knowledge we have obtained and the footprint we build while rolling out the DUPLEX study. This has allowed us to develop tailored best practices and drive engagement in PROTECT and we are seeing that translate to strong enrollment trends.

Let me now turn the call over to Laura, for a financial update.

Laura?.

Thank you, Noah. During the second quarter, net product sales from our commercial portfolio grew to $44.7 million, an 8% increase over the same period in 2018. This strong performance keeps us on track to reach our guided growth for the full year. We’ve reported a GAAP net loss of $38.7 million for the second quarter 2019.

After adjusting for non-cash expenses and income tax, we’ve reported a non-GAAP net loss of $24.5 million. On a GAAP basis R&D expenses were $37.9 million for the second quarter of 2019.

The increase over the same period in 2018 is largely attributable to higher expenses to support our clinical and product development efforts, including our three Phase 3 trials evaluating fosmetpantotenate and sparsentan. On an adjusted basis, R&D expenses were $35.8 million for the second quarter.

Relevant non-cash expenses for the second quarter included $2.2 million of stock based compensation and amortization. Selling, general and administrative expenses for the quarter were $39 million, the increase over the same period in 2018 is largely attributable to headcount and support of our operational growth and increased professional fees.

Professional fees during the quarter were materially higher due to legal fees pertaining to litigation and arbitration matters, including the settlement of our outstanding dispute between the Company and its founding CEO, that was completed during the quarter. On an adjusted basis non-GAAP SG&A expenses for the second quarter were $30.4 million.

Significant non-cash adjustments for the quarter consisted of $8.6 million in stock based compensation and depreciation and amortization. Our balance sheet remains strong. During the second quarter to roughly $23 million of our remaining 2019 convertible notes were converted to common shares outstanding.

This leaves us to a $276 million in 2025 convertible notes that were issued last September. As of June 30th 2019 we have $425.9 million of cash and cash equivalents to support ongoing development effort.

For the remainder of 2019 we anticipate our R&D expenses may vary by quarter, as a result of manufacturing clinical material and scaling for commercial readiness, but overall, we anticipate this resulting in a modest upward trend from current levels as we continue to advance our three Phase 3 programs throughout the year.

Our base SG&A expense should return to level seen in the first quarter, but there maybe continued variability in professional fees throughout the balance of 2019. As a result of a recently announced decision on the CNSA-001 program, we anticipate an approximate $15 million write-off of the associated long-term investment during the third quarter.

Let me now turn the call back to Eric for his closing remarks, Eric?.

Thank you, Laura. We made good progress in the first half of the year and also continue to strengthen our organization. During the quarter, we were pleased to welcome Sandra Poole to our Board of Directors.

Sandra joins us at a pivotal time and brings to the board more than 25 years of Biopharmaceutical product development and manufacturing experience, that will be invaluable as we further our mission to develop -- to delivering life-changing therapies to people living with rare disease.

For the balance of 2019, our priority will be to focus on execution. We're looking forward to the upcoming data readout from our Phase 3 FORT study later in the quarter, which if successful would support NDA and MAA submissions to potentially make fosmetpantotenate the first approved treatment for PKAN.

Beyond our fosmetpantotenate program, we are focused on executing and accelerating enrollment in our two pivotal studies that have the potential to make sparsentan, the new treatment standard for FSGS and IgA nephropathy.

And with the recent approval of THIOLA EC, we are focused on achieving a successful launch to continue to growth of the franchise that has become this treatment of choice for patients with cystinuria. Let me now turn the call back over to Chris, to open it up for questions.

Chris?.

Great, thanks Eric.

Rusty, can we go ahead and open up the lines for Q&A please?.

[Operator Instructions] Our first question comes from the line of Maury Raycroft from Jefferies. Your line is open..

Hi, everyone. Good afternoon, and thanks for taking my questions. First question is for Noah. So you mentioned the acceleration of activities at registries is one example of an initiative taken to enhance enrollment in FSGS.

Just wondering if you can comment on any of the other initiatives that were made to potentially enhance enrollment?.

Yeah. Thanks Maury, great question. First, let me say that, regarding the delay in enrollment, we are confident in our new timelines. And we've been very pleased with the cognitive study to-date. So, the main thing that we focus on is ensuring a high quality study.

And as you know, enrollment in these types of clinical trials continue to pick up, as you open more sites and begin to gain traction. DUPLEX is doing that, the challenges the rate of acceleration was not as fast as we expected to be in the early summer months, which caused a shift for our timelines.

And I just want to give a lot of credit to our team for recognizing this and pulling these plan tactics forward.

Our leadership to get to your question in FSGS built through the DUET study has allowed us to leverage key relationships with registries and pathology groups, to build and drive patient identification outside of the key academic centers, and the centers of excellence.

So, I just want to re-emphasize that, we found in our DUET work that being able to reach these sort of geographic foundational databases can have a significant meaningful impact on enrollment, and we're starting to see that..

Got it.

Can you provide any granularity into what you're seeing at sites, are there some sites that may be underperforming and you may have to add additional more sites than anticipated?.

Yeah, Maury, let me comment, this is Eric. Just based on the -- what Noah mentioned, we're really pleased with the conduct of both of the studies in terms of the site engagement, the number and the type of patients that we're receiving into the study. And so I think that there's not anything that would be concerning there.

I think one other things, if we take a step back, that we've continue to see as the leader within the rare glomerular space. Nephrology was one of the therapy areas that had the lowest clinical trial activity over the last few decades and glomerular disease was the lowest among nephrology.

And so, we have to really make sure that we're building that foundation, not just the few hundred academic sites, but how do we link those academic and clinical trial sites to the broader, -- in the U.S. over 8,500 [ph] regional and community nephrology centers where the majority of patients were seen.

And so I think what Noah mentioned and a lot of the tactics that we have been focusing on and increasing is really building that productivity.

And I think what a registry does, is to help build that connectivity into the sites that we have ongoing, the sites that we have planned, and to make sure that we continue to build this capability within the nephrology clinical trial area..

Got it. That's really helpful. And then just a question on THIOLA. So you mentioned that some of the patients who have discontinued THIOLA at one point could potentially come back to the drug for the new formulation. So I'm just wondering if you can provide any specifics as to why the patients would have discontinued in the first place.

And if they would primarily be coming back for the lower pill burden or what else you can say about that? And then if the new formulation, if that could help support your conversation with USPTO for potentially your patent approval there?.

Yeah, so let me first start with, what we're seeing in terms of the potential and the types of patients. I'd say, first of all, it's early and I wouldn't be able to provide any specific details on what we're seeing. Other than, we're seeing a very positive response from physicians and patients.

We knew going in through the development over the last couple of years that there would be a significant demand for this formulation just based on the challenges that we've heard from patients, and the profile of THIOLA EC was very much informed by prior and current THIOLA patients.

And so, our focus is to make sure that we continue to build awareness and education around cystinuria and the potential treatment options. And really, there are three areas of focus that we have for the uptake of THIOLA EC.

The first is, of course, to continue to drive new patients and their physicians to therapy and to allow them to think about THIOLA EC as a choice for them because of the profile. The second, is to work with current patients that may see this choice for them, given the different aspects of food or without food and the pill burden.

And with regard to your question around reengaging patients who stops therapy for a number of reasons, we want to make sure that they reengage with therapy and whether THIOLA EC or THIOLA is the right choice for them. We know that for some patients, those are the reasons why they discontinued.

We also know that it may just be that, patients discontinue for a whole host of reasons. But most importantly, we want to make sure that these patients are on therapy and that their therapy is optimized. And that's very much our goal and why we talked about not putting any barriers up for these patients.

And I think we're confident in the outlook of being able to continue the growth of this franchise just based on those but particularly in reengaging patients. And I'm pleased to say, that we have shipped a number of prescriptions, to patients for THIOLA EC, including a number of patients who stopped therapy, as far back as 2017.

And so we're really pleased to see, as we would have expected from market research, that THIOLA EC is meeting a need for these patients. Now with regard to your question about patent, we have mentioned that there has been a patent that was filed with the US Patent Office. That is pending, it's undergoing review.

And as you know, those review periods are iterative. We can't really say whether and when we would receive any type of coverage for THIOLA EC. And so our focus remains ensuring access and to support education for the cystinuria community and to bring THIOLA EC as another choice for these patients..

Got it. That's very helpful. Thank you very much. And I'll hop back in the queue..

Thanks Mark. Rusty, can we go ahead, and go to the next question, please..

Sure, sir, our next question comes from the line of Michelle Gilson from Canaccord Genuity. Your line is open..

Hi, thank you for taking my question.

I was just wondering if you could tell us a little bit more about what kinds of analysis are planned around the Phase 3 FORT results, and what we should be expecting from a top-line release? And then I think you've talked in the past about looking at the different sub-domains of the PKAN-ADL score, are there certain domains that you view as more important from a regulatory or commercial perspective?.

Thanks, Michelle, this is Eric, let me let me start and I'll ask Noah to provide a little bit more detail. I think first and foremost, our analysis priority is very much around the primary endpoint of PKAN-ADL, as well as the safety and tolerability for the 24 weeks double blind period.

And our data release, as we've mentioned, will be sometime this quarter. So, it is certainly a near-term. We also are looking at a couple of conferences, depending on the timing and acceptance of those abstracts, including NDS [ph], which is in September, and then there's another conference in October, for some reason we're not able to meet that.

I think with regard to the domains, I'll first start with what I heard from that conference I mentioned in my early comments, as well as some publications that really focus on the experience of patients and families with PKAN.

Some of the most debilitating symptoms that these patients face are oftentimes the first symptoms that emerged, such as speech, writing and walking difficulties.

And I think what we see and understand from some of these patients is that these are the symptoms that are oftentimes most debilitating, or make it very difficult to stay connected or communicate between patients and their families or caregivers, or that require much more care giving knowing that the majority of patients with PKAN require part or full time care giving.

I think that's really what we're thinking about in terms of what we hope to see in these. And, our focus is ensuring, as we've powered the study, to see at least a three point difference versus placebo over the double-blind period, which we believe would likely then reflect improvements in more than one of those domains.

Noah, I'd like to turn it over to you, see if there's any additional analysis or comments, if you would like to provide..

Sure, Eric. I think you provide a quite a bit of depth there. But I'll just add a couple things. I think, Michelle, you asked about sub analysis or subgroup analysis, just to kind of highlight I mean, clearly one of the important populations with pediatric, about a third of the populations, we reveal the pediatric patients.

Important to see what the effect would be there. There's also a classic for see typical presentation of the disease. Look at age of onset, you’re fairly traditional risk factors that are seen in these PKAN studies.

But it really important to get those groups and understand the progression, there is some heterogeneity, as you know, in progression of disease. So we've already got plans in place to analyze those populations.

And then as far as regulatory domains, I'll just touch upon what Eric said, we've got a three point change agreed upon with the SPA, with FDA, I mean not really covers the waterfront, mainly for us.

And some of the domains that Eric mentioned, are really key couple of others to think about too, are swelling and walking, always look at those because there's disease modification potential there, patient can’t swallow, they can have potentially pneumonia, aspiration pneumonia, be hospitalized and has death.

Obviously, we're not going to show that in six months. But there we might, but unlikely, but these are the kinds of things we want to follow-up and make sure and look carefully at, because they also have compelling reasons.

And finally, the last thing I will say is, even just, when Eric and I talk to patients, families, even this ability to be more independent, ability to give the patient caregiver a little bit of a break being able to dress themselves. Speech, as are better articulation, these are really important to patients.

And again, back to the PKAN-ADL scale, it was designed by patients, caregivers, and physicians, so there’s been a one point change on any of those domains would have a clinical meaningfulness, for them..

Okay, and then can you talk a little bit about what you're doing to prepare for launch in terms of patient identification efforts. And, you've talked a lot about the worldwide population for PKAN as well.

So how you're thinking about access the rest of the world outside the U.S.?.

Yeah, thank you, Michelle. So certainly, we are focusing our efforts, first, on the U.S. and Europe, where many of these patients are and has been linked to care.

Some of our efforts is to identify the number of patients in those centers of excellence, or with specialty centers that have looked to engage in clinical trials or have been seen by those clinicians. And we've mentioned previously that there are over 400 patients that been identified through those efforts.

And that's in the context of, what the literature says have about 5000 patients worldwide. What we're doing currently, is to refine some of the epidemiology in this space to make sure that we really understand where the number of patients and where they are country-by-country.

We also are making sure that we identify, who the treating clinicians are and what the experience and this patient journey is to diagnosis.

We know in rare disease, and particularly with an ultra-rare disease, that oftentimes the biggest challenge in identifying patients is in the number of years it takes between the symptom onset, and proper diagnosis. And so we want to make sure that we can close that gap. And that's really by understanding that patient journey.

I think we've really made some good progress on that front. And part of what we're also trying to do is make sure that we have the team in place in those key roles that I mentioned before, so that we can move very quickly once we do gain approval..

Okay, thank you..

Thanks, Michelle..

Our next question comes from the line of Tim Lugo from William Blair. Your line is open..

Thanks for taking the question. Going back to the THIOLA EC.

Can you maybe provide some quantification about how much growth you think this could be to the base business? Also, some of the numbers of patients who tried the legacy formulation and discontinued and maybe how long you expect to convert or prior formulation patients on to EC?.

Yes. Thanks, Tim, for the question. So we do expect the market to continue to grow for the foreseeable future, especially with the introduction of the new treatment options in THIOLA EC. Cystinuria, like so many other rare diseases has been under serve despite having therapies available.

And that's why increasing access awareness and education has been a central focus of ours. And since acquiring the rights to THIOLA five years ago, we’ve seen a number of patients being treated with THIOLA increase from about 400 to more than 1200.

And to answer your question around the number of patients, we've seen the total number of patients was about 30% of those that over that period of time have discontinued therapy. And we know that even beyond that, that the majority of cystinuria patients are still untreated. And that's despite THIOLA’s utility as the treatment of choice.

And there are many challenges for these patients to overcome, not just with diagnosis, but with the existing formulation that have led those patients to discontinue treatment. Our goal is to continue our commitment to this community through making THIOLA EC available, which addresses a number of those challenges.

And by furthering our education and awareness efforts about the treatment options available.

We also want to make sure that once the patient is treated, that they're optimally treated, so that we have an opportunity to build upon our work with the cystinuria community and provide patients with a choice for their treatment, whether at some point, there's a generic, I really can't say, and we have a policy to provide samples to bonafide requesters.

And we're in the process of providing THIOLA samples during the third quarter. What I will say in terms of the future growth is that we remain focused in our commitment to education and access, and bringing the new treatment option of THIOLA EC to patients to help address some of the challenges we know that they've lived with over the years.

And as a result of this, we're confident in the potential for THIOLA EC uptake, and the number of treatment -- treated patients to continue to grow for the foreseeable future. So I think, all-in-all, it reinforces what we heard early on, about the challenges of this disease and its treatment, and we're optimistic in the early signs of this launch..

Thank you for the thorough answer. Maybe if I could squeeze one more in on PKAN.

Can you remind me -- perhaps Noah, can you to remind me what the expectations are for placebo response in this study?.

Yes, that's a great question, Tim. So, if you recall, we don't expect a meaningful change in the placebo arm over the 6 months or 24 week period. While the natural history in PKAN is limited, we do know from our research interactions over the years, disease has not been typically characterized by what I would call spontaneous improvement.

So these are pretty sick debilitated patients, they're expected to decline but at varying rates, depending on disease presentation.

So, we think about that in the context of placebo effect, while there is some work in Parkinson's, and you can see some improvement on these types of scales UPDRS is usually low improvement, given how severe these patients are, it's pretty unlikely that would be sustained.

And I just want to emphasize, there was a recent study, another studying this population, placebo arm declined 2 to 3 points on UPDRS Part II over 18 months. So I think that supports that thesis. And, the most important part, Tim, as we look at the study on the blinded basis, we're really seeing overall variability within our powering assumptions.

I hope that helps answer the question..

Very helpful. We're looking forward to the results. Thanks for the answer..

Awesome. Thanks Tim..

Our next question comes from the line of Joseph Schwartz from SVB Leerink. Your line is open..

Thanks very much. So I was wondering if you can give us any more insight into when in the third quarter, we should expect the FORT data to be announced. I heard you mentioned a couple meetings, one of which is actually just in the fourth quarter.

Do you think that if the data were not accepted at the meeting in September, if the data might slip into the fourth quarter? Or in any event, do you think we might -- should we expect a press release for the top-line data in advance of a medical meeting?.

Yes, thank you, Joe. So I'd say with regard to specific timing, we haven't mentioned anything beyond third quarter. And I will tell you that once we unblind the data, we’ll work very quickly to have an announcement, press release.

And we want to make sure given to high unmet need, and the real hope for therapy here that we're going to very quickly work on getting a more complete communication within the medical space or conference in that, and obviously peer reviewed journal.

Certainly, you'll hear from us very shortly after we unblind the top-line and that will be in the third quarter..

Okay, good luck. And then given your plans to establish a commercial footprint for addressing PKAN outside the US, and what you know about cystinuria, from your work, we feel it inside the US. I was wondering, now that THIOLA EC has been FDA approved.

Do you have any thoughts on maybe bringing that outside the US in order to leverage your footprint and hopefully you're able to use it for PKAN?.

Yes, it's a great question, Joe. I mean, certainly, we're looking at how do we have a first and foremost an effective model outside of the U.S. And, having worked outside of the U.S. we have to really think about what's right for that region, what would work in the U.S. is not going to work in every country and in Europe.

But what we want to make sure that we can do is work in the right centers, make sure that we have a distribution model that is able to effectively reach these patients. And, we'll look at whether, some of our current portfolio, or, through our business development activities.

Things to be able to leverage the infrastructure that we're building, much like we have within the U.S. And I think, the launch of fosmet outside of the U.S. really will be the foundation for future growth for the company..

Great, thank you..

Our next question comes from the line of Christopher Marai from Nomura Securities. Your line is open..

Hey, good afternoon. Thanks for taking the question. Just maybe regarding your decision on the PKU program I was wondering, if you could elaborate a little bit more that was based on sort of the competitive landscape emerging there, or data very specifically.

So was it one or the other, or perhaps could you comment on any other -- perhaps data that you're seeing, like, increased confidence out of the FORT trial blinded data that had had helped to make you -- helps you make that decision? And then I've got a follow-up..

Sure. Yes. Chris, thanks for the questions. Let me first let me start with the last question, which is around FORT and, is that we have greater confidence.

I'd say we have confidence in the FORT study, that study remains blinded, and we made the decision around Censa independent and a mutually exclusive, we want to make sure that we're very disciplined in each of our programs and company decisions.

With regard to the CNSA programs, I want to remind you and everyone that this was a joint development program with Censa Pharmaceuticals. And so, we really are not in a position to disclose or comments on the data. So what I would say is, despite the treatment, in PKU, we’ve recognized that there continues to be an unmet need in PKU.

Unfortunately, we're not in a position really to go into a level of detail on our assessment form the data, since we don't own the program. And while there maybe potential for CNSA-001, to ultimately become a treatment option, it didn't meet our requirements for moving forward with the acquisition in terms of pharmaceuticals.

And so I just want to make sure that, we’ve recognized that we're just not going to be able to disclose any of the data that we've seen. That's really the decision for Censa..

Got it.

And then maybe just with respect to the FORT study, and the open label extension, you had highlighted there's some patients that have been on drug for about two years, that's well past the primary endpoint study, I was wondering if you had any anecdotes of benefit that you could share or secondarily perhaps any details on compliance I guess the pill burden, three times daily that kind of thing could be something that would be of interest? Thanks..

Thank you, Chris. Let me say that we are not going to be in a position to able to talk about any anecdotes, I mean the study remains blinded and we want to make sure that we respect that blind, including the patients in open label extension.

I will remind everyone that the real objective of the open label extension are really two fold, first and foremost to be able to gather longer-term safety and efficacy data in the treatment of fosmet and secondly, to be able that those patients to receive placebo in the double-blind period. but then switch after 24 weeks to active treatment.

And so we will certainly look to explore that but first and foremost our priority remains on a high quality analysis and readout of the double-blind period. So, I think we will save the anecdotes for later, our focus remains on that analysis of top-line.

The other thing that I will say is that with regard to the overall study, the dropout rate remains low and all patients that completed that double-blind period have switched over. Whether we can conquer anything around compliance, pill burden et cetera, I think that remains to be seen at certain will be something we look at.

But I think it's encouraging that we will have a robust data set to be able to support a high quality analysis of this study..

Got it. And then just maybe one last one kind of two part. The NDA and MAA you expect to file at the same time roughly, and then would you be looking at EU partner and then maybe time that into an earlier question, given you're not opting into the CNSA program, how do you look at potential other license -- assets to license there require.

Maybe if you could explain some of your thought process around that potential? Thank you..

Sure, yeah, thanks, Chris. Okay, so first with regard to the NDA and MAA submission, we want to make sure that those are submitted as close as possible. They won't be simultaneous but certainly they will be closed. I think we’ll be in a better position to provide timing after that they readout et cetera.

With regard to our commercial model or go-to market model in Europe and a potential partner, this is one where I believe that we will be able to do this on our own.

We have the understanding of what it takes in rare disease and a lot of the focus that we have with regard to identifying patients having strong relationships with centers of excellence in the referral pattern and we believe that the opportunity for PKAN is reasonable enough for us to start that approach of building that operating model in Europe.

Certainly, we will have partners with regard to market access and distribution, et cetera, but really the overall model will be driven by Retrophin.

And then, your final question around business development, as we look at the what's in front of us, both the completion of the joint development agreement with Censa and then the completion of the Phase 3 program with fosmet in PKU, we do want to make sure that we refill our pipeline and so we are continuing to be very active within business development.

We want to continue to stay focused, in rare and ultra-rare disease where there is such a high unmet need. We believe that we have a strong foundation that is only getting stronger as we focus on late stage development and also our launch capabilities that we think makes this company an attractive partner for future assets.

So stay tuned, but nothing specific beyond that..

Sorry, one quick one on that, just anything biologics will be considered as well as small molecules traditionally small molecule? And then I'll jump back in queue. Thank you so much..

Yeah, thanks, Chris. So I would say we are certainly being open to that and I think we've got the opportunity to really look beyond small molecule.

I would say nothing is off the table at this point, we want to make sure that we understand what the capabilities that are required for development, manufacturing and commercialization, whether it's a small molecule or by logic or as we begin to see within genetic diseases advance therapy.

So, I think this is also where the addition of Sandra to our Board will help us in making even more informed choices..

Thank you..

Our next question comes from the line of Liisa Bayko from JMP Securities. Your line is open..

Hi, just a probably off that last question. Could you just maybe comment, are you kind of looking for more later stage assets? I know you just recently did a partnership for Alagille Syndrome, is that more indicative of the kind of early stage investment you're looking to do.

Perhaps, if you could just comment on kind of where you see the need in terms of the stage of the pipeline?.

Yeah. Thanks, Liisa. We will certainly look as early and in late stage, I think what we want to make sure is that we have an asset that's going to fit within our capabilities. And to fit within our portfolio, I'd say, as we now have move one asset through Phase 3, we've got two Phase 3.

We will certainly look to fill that pipeline, but I would say we don't want to shut off something that is in Phase 3, just because we've got something in Phase 3, for example. So, probably a long way of saying we're going to be opportunistic, with regard to the stage of development.

We'll assess what the risks are, of that asset and make sure that we have a deal structure that would be reflective of the risk involved..

Okay. And then just shifting to PKAN, can you maybe talk like, a little bit about how you're thinking about the data and its totality, short of hitting stats on the primary endpoint, which of course would be a no brainer.

What kind of FDA flexibility do you anticipate also EMA, in terms of this indication, and what would be some of the key things you'd be looking for in the data to give you confidence that there's a clear drug signal?.

Yeah, so likely, so I mean, obviously, our main focus is to ensure that we have a positive study that meets the terms of the SPA, which would be a three point difference versus placebo. That said, I'll turn it over to Bill, to get his views on regulatory approach, for some reason, we do not see that..

Certainly, the -- I think at that point, it's going to come down to what the signal is that you see, and how differentiated that is from placebo. How durable the effect is, and then a discussion with the agencies on both sides of the Atlantic [ph], around how significant they view that, relative to how we see it. Certainly, both the U.S.

and European regulatory agencies have demonstrated with prior drug approvals, that in situations where there was borderline results from clinical trials, there was regulatory flexibility that was allowed to come to bear, especially in cases where you have such severe diseases, and no existing therapies.

I think that, when you're in that space, the agencies are really partnering with you and trying to find solutions. So, not the situation where we want to be, but if we are there, we're going to certainly be thinking about what's best for patients, and how do we have that going forward.

And we have to talk to the FDA at that point and develop that path..

Okay, great.

And then could you comment on how you're thinking about patient numbers, on one of the KOL calls we hosted recently, there was a report that, like a feeling that there was more patients out there then report on literature, and I was wondering if you could just comment on that?.

Yeah, Liisa, I'll comment on that, this is Eric. I would say that, there certainly could be and there's prevalence with other rare ultra-rare diseases that one. There is an effective therapy, and then approval that you do see increased numbers. We want to be cautious on that.

And so, part of the work that we're doing to prepare for launch is to update some of the epidemiology within this disease. We know that there hasn't been as much around NBIAs [ph] including PKAN. And so, it's only really recently whether it’s been literature around this, which led us to the 5000 worldwide.

And once we have completed that work and have anything that would be updated, we'll certainly share that. But at this point, we're continuing to focus on the worldwide prevalence of 5000 patients..

Okay, great. And then just the final question, the write-down for the Censa option is that it will be fully taken in 3Q? And that's my final question. Thank you..

Thanks Liisa..

Hi, Liisa. Yeah, sorry, Eric. Yeah, we will take that full write-down at once in Q3..

Thank you..

Our last question comes from the line of Gena Wang from Barclays. Your line is open..

Thank you for taking my questions. I also have a few questions regarding PKAN program.

First, just wondering what is the PKAN-ADL natural history data for pediatric patients and adult patients? More like in terms, of course and domains affected at the disease onset and then the progression for the year?.

Thank you, Liisa -- Gena for your question. I would say that the PKAN natural history has been evolving over the last couple of years with greater recognition of an understanding of this disease. We don't have a published natural history within PKAN.

Where we've been focusing our efforts is in some of the work that we have done to validate the PKAN-ADL, which was conducted with about 40 patients and their caregivers to really understand what the symptom burden is, across those, the domains within the PKAN-ADL.

And just for background, the PKAN-ADL was based on the UPDRS scale in Parkinson's disease given a similar symptomatology of that condition. What we do know about PKAN is that this is a progressive disease. You mentioned specifically pediatric patients. And we know that for an earlier age of onset does confer a more rapid progression of this disease.

And one of the things that we wanted to do in the validation study, as well as the FORT study, is to enroll a broader population to ensure that we have clinical data and safety data to support the broad use within the PKAN community. And also say that the PKAN-ADL was validated in patients age six, and older.

So we believe that the -- that we have nice validity for the pediatric patients, and I think we'll be able to assess with a placebo arm here in the prior study that no one mentioned, to understand what the progression is for this condition..

Okay..

Gena, I know that long answer, but I think there's quite a bit that we're really helping to inform within this disease..

Thank you.

So like another way of asking question is like, the baseline scores between pediatric patients and adult patients, would they be very different, or you would try to balance like fit them around the stimulus course?.

Yes, it's a great question, and certainly one that we’ll look, once we have headline data for the overall sample of the FORT study. And that was part of the reason why we included that broad age group within the PKAN-ADL validation scale, to make sure we understand, where patients are within their disease.

And I think as Noah mentioned, what we're seeing in both the baseline scores, as well as the variability in the conduct of the double-blind, is consistent with our assumptions and how we power the study. Whether that varies by pediatric or adult, we will be able to assess, but overall in the sample, where we see consistent with our assumptions..

Just wondering if you….

Just to emphasize, Eric, your point that, that's why I think it was really important for us to get that third of the patients in the pediatric population. So we can do an analysis there, look independently at that cohort. I think also, the recent evidence suggests that the pediatric population at the earlier age of onset can progress quicker.

And that may be related to current [ph] levels, that hasn't been proven. But it's expected that in those younger groups, there may actually be less [indiscernible] and therefore they progress more quickly. But we are certainly encouraged by the fact that we're going to have a status soon.

And we're really looking forward and excited and speak to our KOL about being able to study this both in the pediatric and adult population. I think they believe that there's potential benefit there and we'll see shortly..

Okay. I'm just wondering if you can share, like you mentioned that based on your assumption.

So what is your assumption for pediatric patients and also for adult patients? And then lastly, do you have a pre-specify subgroup analysis on pediatric patient and adult patient?.

So we're comfortable with where we are now with our assumptions in terms of the pediatric group. And we will be doing a pre-specified analysis in our fiscal analysis plan..

Okay, great. Thank you..

Thanks, Gena..

There are no questions at this time. I would now like to turn back the call to Chris Cline..

Great. Thank you, Rusty. Thank you all. This concludes our second quarter update. We look forward to speaking with you again here soon..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect..