Travere Therapeutics, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (SEC) on February 24, 2020. Past operating results are not necessarily indicative of results that may occur in future periods. In addition, see the discussion under the heading “Forward-Looking Statements” immediately preceding the consolidated financial statements included under Part I of this Quarterly Report on Form 10-Q. Overview We are a biopharmaceutical company headquartered in San Diego, California, focused on identifying, developing and delivering life-changing therapies to people living with rare diseases. Uncertainty Related to the COVID-19 Pandemic In March 2020, the World Health Organization ("WHO") classified the COVID-19 outbreak as a pandemic. While the impact of the COVID-19 pandemic did not have a material adverse effect on our financial position or results of operations for the three and six months ended June 30, 2020, we have been monitoring the developments and assessing areas where there is potential for our business to be impacted. Our labor force is currently working remotely, which could, among other things, negatively impact our ability to conduct research and development activities, engage in sales-related initiatives, or efficiently conduct day-to-day operations, and we are aware that other businesses with which we engage are likely operating under similar restrictions and experiencing disruptions in their own operations, which may create obstacles in the coordination of business activities. Circumstances arising from the pandemic have slowed and could continue to slow the pace of enrollment in our clinical trials or otherwise hinder patient’s abilities to comply with the clinical trial protocols and could ultimately delay the availability of results and analysis of outcomes. Disruptions in the supply chain could negatively impact our ability to source materials or manufacture and distribute product. While we do not currently anticipate a material reduction in demand for our commercialized products, we could experience a decrease in new patient identification and increased requests for patient assistance due to increased levels of unemployment, either of which would negatively impact our revenues and hinder our cash flows. Similarly, we could face challenges with regard to healthcare programs, including access and changes in coverage. Growth in revenue could also be impeded by these factors. The financial markets have been subject to significant volatility that could impact our ability to enter into, modify, and negotiate favorable terms and conditions relative to equity and debt financing activities. We currently have $237.2 million in cash and cash equivalents and $220.2 million in available-for-sale securities as of June 30, 2020, which we believe provides sufficient capital to fund our operations for at least the next twelve months and withstand the anticipated near-term consequences of the pandemic, although liquidity constraints and access to capital markets could warrant changes to our investment strategy. While we have not yet experienced a material impact to date, the full magnitude of the pandemic cannot be measured at this time, and therefore any of the aforementioned circumstances, as well as other factors, may cause our results of operations to vary substantially from year to year and quarter to quarter. 20 Table of Contents Our Product Candidates and Approved Products *Chenodal is indicated for the treatment of patients suffering from gallstones and is also in Phase 3 development for treatment of cerebrotendinous xanthomatosis ("CTX"). Product Candidate Development Activities: Sparsentan Sparsentan, also known as RE-021, is an investigational product candidate with a dual mechanism of action, a selective endothelin receptor antagonist (“ERA”), with in vitro selectivity toward endothelin receptor type A and a potent angiotensin receptor blocker (“ARB”). Sparsentan is currently being evaluated in two pivotal Phase 3 clinical studies in the following indications: • Focal segmental glomerulosclerosis ("FSGS") , a leading cause of end-stage renal disease and nephrotic syndrome (“NS”). There are currently no United States Food and Drug Administration ("FDA") approved pharmacologic treatments for FSGS and off-label treatments are limited to ACE/ARBs, steroids, and immunosuppressant agents, which are effective in only a subset of patients. Every year approximately 5,400 patients are diagnosed with FSGS and we estimate that there are up to 40,000 FSGS patients in the United States and a similar number in Europe with approximately half of them being candidates for sparsentan. Sparsentan has orphan drug designation in the United States and European Union. In 2016, we generated positive data from our Phase 2 DUET study in FSGS. In 2018, we announced the initiation of the Phase 3 DUPLEX Study of sparsentan in FSGS. The Company continues to enroll patients with FSGS in the pivotal Phase 3 DUPLEX Study, a global, randomized, multicenter, double-blind, parallel-arm, active-controlled, clinical trial evaluating the safety and efficacy of sparsentan in approximately 300 patients. The DUPLEX Study protocol provides for an unblinded analysis of at least 190 patients to be performed after 36 weeks of treatment to evaluate the interim efficacy endpoint - the proportion of patients achieving a FSGS partial remission of proteinuria endpoint (FPRE), which is defined as urine protein-to-creatinine ratio (Up/C) ≤1.5 g/g and a >40 percent reduction in Up/C from baseline, at week 36. While the confirmatory endpoint of the study is the change in slope of estimated glomerular filtration rate (eGFR) after 108 weeks of treatment, successful achievement of the interim 36-week proteinuria endpoint is expected to serve as the basis for submission of a New Drug Application ("NDA") under the Subpart H accelerated approval pathway in the U.S. and Conditional Marketing Authorization ("CMA") consideration in Europe. The DUPLEX Study protocol also provides for a sample size re-assessment to support the confirmatory portion of the study. At this time, topline data from the 36-week proteinuria endpoint analysis are expected to become available in the first quarter of 2021, and we are monitoring the potential impact the evolving COVID-19 pandemic in conjunction with the outcome of the planned sample size reassessment may have on this timing. • Immunoglobulin A nephropathy ("IgAN") is characterized by hematuria, proteinuria, and variable rates of progressive renal failure. With an estimated prevalence of more than 100,000 people in the United States and greater numbers in Europe and Asia, IgAN is the most common primary glomerular disease. Most patients are diagnosed between the ages of 16 and 35, with up to 40% progressing to end stage renal disease within 15 years. There are currently no FDA approved treatments for IgAN. The current standard of care is renin-angiotensin-aldosterone system ("RAAS") blockade with immunosuppression also being commonly used for patients with significant proteinuria or rapidly progressive glomerulonephritis. In 2018, we announced that the first patient had been dosed in the PROTECT Study, a global, randomized, multicenter, double-blind, parallel-arm, active-controlled pivotal Phase 3 clinical trial evaluating the safety and efficacy of sparsentan in patients with IgAN, and 21 Table of Contents the study continues to enroll. The PROTECT Study protocol provides for an unblinded analysis of at least 280 patients to be performed after 36 weeks of treatment to evaluate the primary efficacy endpoint – the change in proteinuria (urine protein-to-creatinine ratio) at Week 36 from baseline. Successful achievement of the proteinuria endpoint is expected to support submission of an NDA under the Subpart H accelerated approval pathway in the U.S., as well as an application for CMA consideration in Europe. Secondary efficacy endpoints include the rate of change in eGFR following the initiation of randomized treatment over 58-week and 110-week periods, as well as the rate of change in eGFR over 52-week and 104-week periods following the first six weeks of randomized treatment in approximately 380 patients. At this time, topline data from the 36-week proteinuria endpoint analysis are expected to become available in the second half of 2021 and we are monitoring the potential impact the evolving COVID-19 pandemic may have on this timing. Chenodal In January 2020, we randomized the first patients in a Phase 3 clinical trial to evaluate the effects of Chenodal in adult and pediatric patients with cerebrotendinous xanthomatosis (“CTX”). The pivotal study, known as the RESTORE study, is intended to support a new drug application (“NDA”) submission for marketing authorization of Chenodal for CTX in the United States. Chenodal has also been the standard of care for CTX patients for more than three decades but is not currently labeled for this indication. Cooperative Research and Development Agreements ("CRADAs"): We are a participant in two CRADAs, which form a multi-stakeholder approach to pool resources with leading experts, and incorporates the patient perspective early in the identification and development process. We have partnered with the National Institutes of Health’s National Center for Advancing Translational Sciences ("NCATS") and leading patients advocacy organizations, NGLY1.org and Alagille Syndrome Alliance ("ALGSA"), aimed at the identification of potential small molecule therapeutics for NGLY1 deficiency and Alagille syndrome, respectively. There are no treatment options currently approved for these diseases. The Company has three approved products: Chenodal ® (chenodiol tablets) Chenodal is a synthetic oral form of chenodeoxycholic acid, a naturally occurring primary bile acid synthesized from cholesterol in the liver, indicated for the treatment of radiolucent stones in well-opacifying gallbladders in patients in whom selective surgery would be undertaken except for the presence of increased surgical risk due to systemic disease or age. Chenodal administration is known to reduce biliary cholesterol and the dissolution of radiolucent gallstones through suppression of hepatic synthesis of cholesterol, cholic acid and deoxycholic acid in the bile pool. Chenodal was first approved by the FDA in 1983 for the management of gallstones but its marketing was later discontinued due to lack of commercial success. In 2009, Nexgen Pharma Inc.'s ANDA for Chenodal was approved by the FDA for the treatment of gallstones. Chenodal is manufactured under this ANDA. In 2010, Chenodal was granted orphan drug designation for the treatment of CTX, a rare autosomal recessive lipid storage disease. We acquired Chenodal in March 2014. While Chenodal is not labeled for CTX, it has been used as the standard of care for over three decades. We are working to obtain FDA approval of Chenodal for the treatment of CTX and initiated a Phase 3 clinical trial for this indication in January 2020. The prevalence of CTX is estimated in the literature to be as high as 1 in 70,000 in the overall population. Pathogenesis of CTX involves deficiency of the enzyme 27-hydroxylase (encoded by the gene CYP27A1), a rate-limiting enzyme in the synthesis of primary bile acids, including CDCA, from cholesterol. The disruption of primary bile acid synthesis in CTX leads to toxic accumulation of cholesterol and cholestanol in most tissues. Most patients present with intractable diarrhea, premature cataracts, tendon xanthomas, atherosclerosis, and cardiovascular disease in childhood and adolescence. Neurological manifestations of the disease, including dementia and cognitive and cerebellar deficiencies, emerge during late adolescence and adulthood. Oral administration of CDCA has been shown to normalize primary bile acid synthesis in patients with CTX. Cholbam ® (cholic acid capsules) The FDA approved Cholbam (cholic acid capsules) in March 2015, the first FDA approved treatment for pediatric and adult patients with bile acid synthesis disorders due to single enzyme defects, and for adjunctive treatment of patients with peroxisomal disorders (including Zellweger spectrum disorders). The effectiveness of Cholbam has been demonstrated in clinical trials for bile acid synthesis disorders and the adjunctive treatment of peroxisomal disorders. An estimated 200 to 300 patients are current candidates for therapy. Cholbam was previously marketed in Europe under the branded name Kolbam. Sales of Kolbam in Europe were not a material component of our business, and in July 2020, we withdrew our European marketing approval application for Kolbam. Thiola ® and Thiola EC ® (tiopronin) Thiola and Thiola EC are approved by the FDA for the treatment of cystinuria, a rare genetic cystine transport disorder that causes high cystine levels in the urine and the formation of recurring kidney stones. The resulting long-term damage can cause loss of kidney function in addition to substantial pain and loss of productivity associated with renal colic and stone passage. The prevalence of cystinuria in the United States is estimated to be 10,000 to 12,000, indicating that there may be as many as 4,000 to 5,000 affected individuals with cystinuria in the United States that would be candidates for Thiola. In June 2019, we announced that the FDA approved 100 mg and 300 mg tablets of Thiola EC, a new enteric-coated formulation of Thiola. Thiola EC became available to patients in July 2019. 22 Table of Contents Results of Operations Results of operations for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019. Net Product Sales: The following table provides information regarding net product sales ( in thousands ): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Change 2020 2019 Change Net product revenues by product: Bile acid products $ 21,573 $ 20,929 $ 644 $ 43,854 $ 39,319 $ 4,535 Tiopronin products 26,857 23,778 3,079 52,345 44,958 7,387 Total net product revenues $ 48,430 $ 44,707 $ 3,723 $ 96,199 $ 84,277 $ 11,922 The sales increase for the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019 was due to increased patient counts, as well as the normal fluctuations in timing of new patient starts and prescription refills. Operating Expenses: The following table provides information regarding operating expenses ( in thousands ): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Change 2020 2019 Change Cost of goods sold $ 1,494 $ 979 $ 515 $ 2,864 $ 1,996 $ 868 Research and development 30,790 37,934 (7,144) 61,038 71,377 (10,339) Selling, general and administrative 34,971 38,970 (3,999) 68,110 71,639 (3,529) Change in fair value of contingent consideration 4,286 3,353 933 2,363 6,522 (4,159) Write off of L-UDCA IPR&D intangible asset — — — — 25,500 (25,500) Write off of L-UDCA contingent consideration — — — — (18,000) 18,000 $ 71,541 $ 81,236 $ (9,695) $ 134,375 $ 159,034 $ (24,659) Research and development expenses We make significant investments in research and development in support of our development programs. Research and development costs are expensed as incurred and include salaries and bonuses, benefits, non-cash share-based compensation, license fees, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials, and associated overhead expenses and facility costs. For the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019, our research and development expenses decreased by $7.1 million and $10.3 million, respectively, due to the discontinuation of the fosmetpantotenate program in PKAN. Selling, general and administrative expenses Selling, general and administrative expenses include salaries and bonuses, benefits, non-cash share-based compensation, professional fees, rent, depreciation and amortization, travel, insurance, business development, sales and marketing programs, and other operating expenses. For the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019, our selling, general and administrative expenses decreased by $4.0 million and $3.5 million, respectively. This decrease is primarily due to lower legal expenses. Change in the valuation of contingent consideration For the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, the change in fair value of contingent consideration is due to changes in market driven discount rates. For the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, the change in fair value of contingent consideration is due to a change in revenue projections. During the first quarter of 2019, we elected to discontinue development of the L-UDCA program, resulting in the removal of the intangible asset of $25.5 million, which was originally recorded in 2016, and the reversal of associated contingent consideration of $18.0 million. This resulted in a net $7.5 million non-cash charge to first quarter operations in 2019. 23 Table of Contents Other Income (Expenses): The following table provides information regarding other income (expenses), net ( in thousands ): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Change 2020 2019 Change Other income (expense), net $ 426 $ 125 $ 301 $ 235 $ (177) $ 412 Interest income 1,316 2,589 (1,273) 3,291 5,408 (2,117) Interest expense (4,634) (4,817) 183 (9,521) (9,682) 161 $ (2,892) $ (2,103) $ (789) $ (5,995) $ (4,451) $ (1,544) The change in our other income (expenses) for the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019 of $0.8 million and $1.5 million, respectively, is primarily due to lower average balances in investments in debt securities and lower interest rates. Income Tax Benefit (Provision): For the six months ended June 30, 2020, we recognized an income tax benefit of $18.9 million, primarily related to provisions of the CARES Act concerning net operating loss carrybacks. Under GAAP, quarterly effective tax rates may vary significantly depending on the actual operating results in the various tax jurisdictions, and significant transactions, as well as changes in the valuation allowance related to the expected recovery of deferred tax assets. At June 30, 2020, we had no unrecognized tax benefits. We did not recognize any interest or penalties related to unrecognized tax benefits during the six months ended June 30, 2020. Liquidity and Capital Resources We believe that our available cash and short-term investments as of the date of this filing will be sufficient to fund our anticipated level of operations beyond the next 12 months. Management believes that our operating results will vary from quarter to quarter and year to year depending upon various factors including revenues, general and administrative expenses, and research and development expenses. We had the following balances at June 30, 2020 and December 31, 2019 ( in thousands ): June 30, 2020 December 31, 2019 Cash & Cash Equivalents $ 237,170 $ 62,436 Debt securities 220,206 336,088 Accumulated Deficit (441,704) (416,444) Stockholders' Equity 318,645 221,196 Net Working Capital* $ 435,629 $ 333,615 Net Working Capital Ratio** 7.23 4.50 * Current assets less current liabilities. **Current assets divided by current liabilities. Future Minimum Rental Commitments We have future minimum rental commitments totaling $13.4 million arising from our operating leases. These commitments consist of $1.4 million in aggregate base rent for our existing office lease estimated to expire in January 2021 and $12.8 million in aggregate base rent through August 2028, less seven months of rent abatement totaling $0.9 million for the new office lease space delivered in June 2020. Excluded from these rental commitments is one month of advance rent totaling $0.1 million, and lease incentives in the form of tenant improvements allowances totaling $2.0 million for the office space delivered in June 2020. Our future minimum rental commitments will increase by $34.0 million upon taking possession of the remainder of the new office lease space, which is expected to occur in the latter part of 2020. These additional commitments consist of $36.5 million in aggregate base rent through August 2028, less seven months of rent abatement totaling $2.5 million for the new office lease space not yet delivered. Excluded from these additional rental commitments is lease incentives in the form of tenant improvements allowances totaling $5.8 million for the office space not yet delivered. See additional discussion of our operating leases within Note 6 of the financial statement disclosures. Underwritten Public Offering of Common Stock In June 2020, the Company sold an aggregate of 7.5 million shares of its common stock in an underwritten public offering, at a price to the public of $15.50 per share. The net proceeds to the Company from the offering, after deducting the underwriting discounts and offering expenses, was $108.6 million. At-the-Market Equity Offering Program In February 2020, we entered into an Open Market Sale Agreement ("ATM Agreement") with Jefferies LLC, as agent (“Jefferies”), pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering price of up to $100.0 million. Shares will be sold 24 Table of Contents pursuant to our effective registration statement on Form S-3 (Registration Statement No. 333-227182), as previously filed with the Securities and Exchange Commission. Through the period ended June 30, 2020, we have not sold any shares under the ATM Agreement. Convertible Notes Payable Convertible Senior Notes Due 2025 On September 10, 2018, we completed a registered underwritten public offering of $276.0 million aggregate principal amount of 2.50% Convertible Senior Notes due 2025 ("2025 Notes"), and entered into a base indenture and supplemental indenture agreement ("2025 Indenture") with respect to the 2025 Notes. The 2025 Notes will mature on September 15, 2025 ("Maturity Date”), unless earlier repurchased, redeemed, or converted. The 2025 Notes are senior unsecured obligations of ours and bear interest at an annual rate of 2.50%, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019. The composition of our 2025 Notes are as follows ( in thousands ): June 30, 2020 December 31, 2019 2.50% convertible senior notes due 2025 $ 276,000 $ 276,000 Unamortized debt discount (61,265) (65,963) Unamortized debt issuance costs (4,726) (5,176) Total 2025 Notes, net of unamortized debt discount and debt issuance costs $ 210,009 $ 204,861 The net proceeds from the issuance of the 2025 Notes were approximately $267.2 million, after deducting commissions and the offering expenses payable by us. A portion of the net proceeds from the 2025 Notes were used by us to repurchase $23.4 million aggregate principal amount of our then-outstanding 4.50% Senior Convertible Notes due 2019 ("2019 Notes") in privately-negotiated transactions. Holders may convert their 2025 Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock for each of at least 20 trading days, whether or not consecutive, during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price on the applicable trading day; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls the 2025 Notes for redemption; and (5) at any time from, and including, May 15, 2025 until the close of business on the scheduled trading day immediately before the Maturity Date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate for the 2025 Notes is 25.7739 shares of our common stock per $1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $38.80 per share. If a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs, then we will, in certain circumstances, increase the conversion rate for a specified period of time. The 2025 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after September 15, 2022 and, in the case of any partial redemption, on or before the 40th scheduled trading day before the Maturity Date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. If a fundamental change (as defined in the 2025 Indenture) occurs, then, subject to certain exceptions, holders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture. In the event that all of the 2025 Notes are converted, the Company would be required to repay the $276.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option). Cash Flows from Operating Activities Cash used in operating activities was $35.6 million for the six months ended June 30, 2020 compared to cash used of $39.6 million for the six months ended June 30, 2019. The change in cash used in operations is due to lower R&D expenses from the discontinuation of the fosmetpantotenate program in PKAN and lower legal expenses, offset by changes in net working capital. Cash Flows from Investing Activities Cash provided by investing activities for the six months ended June 30, 2020 was $107.4 million, compared to cash provided of $13.8 million for the six months ended June 30, 2019. The change was due to the sale and maturity of our available-for-sale investments that were not reinvested. 25 Table of Contents Cash Flows from Financing Activities Cash provided by financing activities for the six months ended June 30, 2020 was $103.0 million compared to cash used of $1.4 million for the six months ended June 30, 2019. The increase in cash provided was due to the underwritten public offering of our common stock in June 2020. Funding Requirements We believe that our available cash and short-term investments as of the date of this filing will be sufficient to fund our anticipated level of operations for at least the next 12 months. This belief is based on many factors, some of which are beyond our control. Factors that may affect financing requirements include, but are not limited to: • increases or decreases in revenue from our marketed products, including decreases in revenue resulting from the COVID-19 pandemic, if any; • the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities, including any delays resulting from the COVID-19 pandemic; • the timing of, and costs involved in, seeking and obtaining marketing approvals for our products, and in maintaining quality systems standards for our products; • debt service obligations on the 2025 Notes; • our ability to manufacture sufficient quantities of our products to meet expected demand; • the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, litigation costs and the results of litigation; • our ability to enter into collaboration, licensing or distribution arrangements and the terms and timing of these arrangements; • the potential need to expand our business, resulting in additional payroll and other overhead expenses; • the potential in-licensing of other products or technologies; and • the emergence of competing technologies or other adverse market or technological developments. Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. Other Matters Adoption of New Accounting Standards See Note 2 to our unaudited Condensed Consolidated Financial Statements in this report for a discussion of adoption of new accounting standards. Recently Issued Accounting Pronouncements See Note 2 to our unaudited Condensed Consolidated Financial Statements in this report for a discussion of recently issued accounting pronouncements. Off Balance Sheet Arrangements None. 26 Table of Contents