RIGL - NASDAQ

Greetings, and welcome to the Rigel Pharmaceuticals Financial Conference Call for the First Quarter of 2023. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce our first speaker, Ray Furey, Rigel's Executive Vice President, General Counsel and Corporate Secretary. Thank you Mr. Furey, you may begin.

Hello. Welcome to our first quarter and 2023 financial results and business update conference call. The financial press release for the first quarter of 2023 was issued a short while ago and can be viewed along with the slides for this presentation in the News and Events section of the Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent filings with the SEC including our Q1 quarterly report on Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our President and Chief Executive Officer, Raul Rodriguez. Raul?

Thank you, Ray, and thank you everyone, for joining today. Also with me today are Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Now beginning on Slide 5, we are pleased with our strong start to 2023 based on our first quarter, which was marked by significant progress on our commercial business. This positions us well for continued growth in the remainder of 2023 and beyond. Our first approved product, TAVALISSE and ITP had the highest number of bottles ships to patients in clinics in a quarter since launch in a meaningful quarter-over-quarter sales growth. Despite the typical Q1's challenges such as those associated with reimbursement, we were able to provide continued momentum for TAVALISSE, which we believe is a testament to our commercial team's commitment to patients with ITP. We are also pleased to see the continued expansion of TAVALISSE in patients worldwide, most recently, with the launch of TAVALISSE in Japan by our partner Kissei, congratulations to them. In addition to TAVALISSE, we are executing on our key launched initiatives for RE

Thank you, Raul. Now I'd like to take a few minutes to discuss our early progress with RE

Thank you, Dave. I will briefly summarize our pipeline efforts. On to Slide 17, you can see - as you can see an overview of our ongoing programs, we are focused on growing our heme/onc business, starting with our internal development programs. Our ongoing Phase 1b Study of R289 in patients with lower risk MDS continues to progress well. And notably, we have finished - completed enrollment in the first dose group and are currently enrolling the second cohort. We also believe fostamatinib and olutasidenib have potential in other diseases beyond their approved indications. And we are currently evaluating several options. In addition, we are actively looking at new in-license opportunities to further bolster our heme/onc business. I will touch more on these initiatives on the next slide. More opportunistically, our partner Eli Lilly is advancing R552, a RIPK1 inhibitor towards a phase 2a study in rheumatoid arthritis and we look forward to that study starting this quarter. Moving on to Slide 18. We are keenly focused on evaluating fostamatinib and olutasidenib in additional indications beyond their approved indications. As part of this process, we have - are engaged in several discussions with KOLs and with regulators across multiple indications, as well as conducting market research to help inform our plans going forward. We look forward to providing you additional updates on these initiatives later on in 2023. Regarding our business development efforts relating to in-licensing of new assets we are continually evaluating assets that are synergistic with our existing heme/onc business infrastructure, and that are complementary or adjacent to our already approved products. We are focused on programs that are in late-stage clinical development in review for potential approval or in early stages of launch. We believe that our development capabilities and commercial infrastructure, we can grow our business with internal programs, as well as being the commercial partner of choice for in-license heme/onc opportunities. That concludes the development summary and I'll turn the call over to Dean.

Thank you, Raul. I'm on Slide number 20. For the first quarter of 2023 we shipped 2,281 bottles of TAVALISSE to our specialty distributors resulting in $31.4 million of gross product sales. 2,256 bottles of TAVALISSE were shipped to patients at clinics, while 25 bottles increase the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2023, we shipped 113 bottles of RE

Thank you, Dean. As we reviewed on this call, we had an exceptional first quarter and a very strong start to the year. We look forward to continuing to drive momentum in TAVALISSE sales in ITP both in the US and globally with our partners. While executing on the launch of RE

[Operator Instructions] Our first question comes from the line of Eun Yang with Jefferies. Please proceed with your question.

Thank you. So a question on the partnered program with Eli Lilly, with RIPK1 inhibitor. So, initially, I think you mentioned Lily was interested in psoriasis, but now they are going into rheumatoid - RA. So can you kind of comment on why the partner changed the indication there? And I understand that Lilly has the rights to CNS indications. Do you know when they might be going into CNS indications such as ALS or multiple sclerosis? Thank you,

Eun, thank you for your question. I can answer that. Lilly has always been interested in the broad applications of the RIP1 inhibitor program across immune indications including RA, psoriasis and others. So it's never been a single focus of one indication program and always with the idea of going after more than one hopefully multiple areas. In psoriasis and RA, we're always in that mix. I think their decision to go forward in RA makes a lot of sense. The opportunity is very good there. The need is great, especially as you know some setbacks with other mechanisms that have occurred. And so, I think, it's a very exciting opportunity for them and they were clearly excited by it and are prioritizing RA. That's not to say that they won't pursue other indications in sequence, though. It just hasn't been revealed with FIB or fract when they might start those. But we're looking forward to the RA trial starting. It's a good robust trial. An area, like I said, a good medical need. And in addition, because these - there's so many of these trials, it's, you can compare cross trials to a degree and get a judgment on how the product might perform in other areas. So, we're looking forward to their starting that trial very shortly. This is very important. And you're absolutely right on the second question. CNS, Lily has rights to CNS program. We've delivered to them a basket of RIP kinase inhibitors that crossed the - barrier. And they're deciding to move forward with one or multiple of those into various CNS indications. We're not able to disclose what their priorities are in those areas, but we will in the future.

Thank you. And I have just one more follow-up. So, in the first quarter, the cash you burn was like about, low-double-digit million dollars. So, how do you see your quarterly cash burn going forward? Probably question to Dean. Thank you.

Hi, Eun. So we ended the quarter with $58.7 million of cash and we noted in our last call that achieving cash flow breakeven was a priority for the business and that we're comfortable with it. Our cash position at year end, as we just reported the results for Q1 are viewed in change as a result of those - of these results. So we continue to be pleased with our progress towards breakeven and we will continue to move in that direction.

So, when do you aim to become breakeven?

We haven't provided a top-line - top-line guidance which would enable us to crisply answer that question. On our last quarterly call, we kind of walked through some of the mechanics of our view of the growth in revenues, as well as the $160 million of operating expense and the reduction in operating expense from 2022. So we see a path towards breakeven. We haven't been precise, again because of the lack of guidance that we've provided on the top-line.

Thank you.

Thank you, Eun.

Our next question comes from the line of Yigal Nochomovitz with Citi. Please proceed with your question.

Hi, team. This is Carly [Ph] on for Yigal. Thanks so much for taking our questions. First, on TAVALISSE, wondering if you can elaborate on any specific drivers behind the sequential growth you saw in the first quarter? And if you can just give an update on the progress with penetrating the earlier lines of ITP therapy. That would great. Thank you.

Thank you, Carly. I'll ask Dave to comment on that.

Sure. Great question, Carly. We were very pleased, of course, with our TAVALISSE growth in Q1. We had the highest new patient starts in any Q1 that we've had since launch. And so that's really what’s continuing to drive our growth. And what's driving that it's, we're continuing to get that message out there to as many clinicians as possible. Our sales force is really doing a terrific job of targeting ITP prescribers out there. And, whether it's virtual, whether it's live, whether it's email follow-up, they're doing it all and activity is helping. And I think the additional kind of boost that we got in terms of access with a newly approved product like RE

Thanks. That’s helpful. And then just one follow-up. Wanted to ask about where you stand with respect to partnering RE

Thank you for that. I could try to answer that. So, as you may know, we received Global rights with RE

Very helpful. Thank you for taking our questions.

Our next question comes from the line of Allison Bratzel with Piper Sandler. Please proceed with your questions.

Hi. Good afternoon guys. Thanks for taking my questions. First, just on the RE

Sure. Dave?

Sure. Great question, Allison. I'll start with your last question or last piece first in terms of what we expected. And I would say that we are very pleased with just three months and about a week of having RE

Yeah, no, that's helpful. And then, maybe just one more for you guys on ITP and on TAVALISSE as kind of a follow-up on a prior question. I'm just curious kind of what you see as the key factors in sustaining the nice momentum in new patient starts longer-term? Just I am curious if you could talk to your sense that the biggest remaining growth levers you have to pull in ITP just in the out-years. Any color there would be helpful. Thanks.

Yeah, I mean, we are starting a number of new patients on TAVALISSE, Allison, as you've heard. And I would just say there's a plenty of opportunity to continue growing those new patients on TAVALISSE because every day patients fail other therapies or need a new therapy. And I think that's really the importance of it. As I said before, we've got 6,000 some targets for TAVALISSE. And so, we still have a lot of long way to go and making sure all of those clinicians give TAVALISSE a try is especially in a second line or earlier line patient. So that's going to continue our growth. I mean, that's why we really - it's another reason that this institutional really made a lot of sense to us. We don't want to disrupt that getting that awareness message out to our targets for TAVALISSE.

One of the things that we have seen post pandemic is just more opening of various centers and being receptive I think patients for a couple of years there were less constant their houses and now are much more open to considering, and there is a better therapy out there that I'd like to avail myself there. And we want to make sure that TAVALISSE is a part of that consideration. Because if doctors are aware of our data, they tend to write substantially more and obviously if they're not aware of our data, they don't write very much at all. So, our goal is simple to tell a concise coherent story to those doctors. So they consider our product. I mean, generally we do pretty well when we do that. So I think that's what we're looking forward to continuing to raise awareness of this product and our data supporting it.

Got it. Thank you.

[Operator Instructions] Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi, everyone. This is Rick on for Kristen. Thank you for taking our questions. Maybe first, can you talk a little bit about the potential opportunity for olutasidenib in the maintenance setting, as you mentioned on the pipeline expansion slide knowing that physicians often try to get AML patients to bone marrow transplant. Do you have a sense of what percentage of IDH1 positive patients undergo transplant followed by some form of maintenance therapy?

Dave do you want to take a stab of and then I’ll add some commentary.

Yeah. Great question, Rick. And when we're speaking about maintenance therapy here, we're talking about maintaining a response in a patient who would have gone through let's say venetoclax aside of a regimen, or some other regimen. We're not particularly talking about patients who have been to transplant. Because obviously that, when you do intensive therapy with the aim of getting patients to transplant, we think, it's about 40% of the market, but of that, probably another 30% end up - 30% percent of that end up getting a treatment like Vanessa, just because it's an easier kind of outpatient treatment. So the actual number of patients getting intensive therapy is I think continuing to actually go down and it's probably now less than 30% of the market and then when you consider the challenges of getting a match being, getting a complete response in induction therapy, all of those things and it ends up being a relatively small number of patients going to transplant. So, to us, that's not where the market is, in terms of maintaining response after transplant. And we've looked at that. We think there's a greater opportunity in those patients who are receiving outpatient therapies like Vanessa who might need to be maintained in their response. I hope that makes sense.

Yes, I've got one more for you if we may. You also talked about the pivotal phase 2 olutasidenib data published in blood advances. Can you talk a little bit about having this publication in hand is influencing the awareness in addition to, of course, the data on the label when you were going in and talking to these physicians?

Sure Rick. Happy to take that one, as well. And that's a great, great question. And I'm thrilled to be able to answer because, when that publication came out, first of all I did increased awareness, among hematologists, who treat leukemia, it was important to them. But more importantly for us and the marketing team did a fantastic job creating a visual aid just around that publication. And when you look at, their new core visual aid, that has, that has now been rolled out with our new campaign, Transform Your Expectations, we really talked about a number of key messages that were in that publication, which are important to get across. And number one is that, it's almost half the patients responded like I said in my prepared remarks. Previously, we have been focused on the 35% CRCRH rate with those patients. But really when you add in other responders, you get the 48% overall response rate. So that was a key piece that we've now been able to really talk about a lot in addition to that other than aside from our duration of response that publication also contained in it that estimated 18 months survival rate for CRCRH responders of 78%. That is a clear differentiator for RE

Great. Okay. Thank you for taking our questions.

Our next question comes from the line of Kalpit Patel with B. Riley. Please proceed with your questions.

Yeah. Hey, good afternoon. Thanks for taking my questions. Maybe one starting for RE

That's a great question, Kalpit. And I wish I could be more precise. As you can see in our slides, much of our business is being directly shipped to accounts. And so, we don't have that prescriber insight that we would have if they're filled through the specialty pharmacy network. And so, our team goes back and follows up. But I can't really say what are the drivers specifically for those who prescribed it, for using it, other than they really have looked at the data. They believe it's compelling and they decide they're going to start a patient on RE

But more to come, I think go. And I think it's very early. It's hard. It's hard to be specific at this point. We're just getting data in and evaluating it.

Okay. And are you seeing, again, this might be early, but are you seeing any combination based may be off label uses with azacitidine and then to your earlier setting or do you not have the data for that?

We don't have data for what they've - they're using it with. It’s - and we would only have that for those patients who go through our RIGE. ONECARE Hub, for others we just get the diagnosis of AML. So, we don't have, if clinicians are using it with HMAs, it’s specifically azacitidine. But we suspect that that probably is going on out there. It's just difficult for us to see in any of our data.

Okay. Okay. Got it. And then one last question on fostamatinib for chronic graft-versus-host disease. We have been hearing on our end that there's additional interest from at least the KOL community for this program. So, I'm curious if there is any progress on that and whether you have decided if this might be 2023 event for that opportunity?

Yeah, very good question and thank you for your interest in a good calling yesterday and what was very – or a couple days ago. We are very interested in GVHD. We're looking at that area very closely. As I said earlier, we are speaking with KOLs in the area doing some market research, speaking with regulators, as well because we'd like to have a nice package when we come to you and say here's what we want to do for this indication or that indication of which GVHD is one of those. So I'll look forward to later this year coming back to you with specifics, here's what we want to do across these indications. And so we could share that with you at that point in much more detail. But we are doing a fair amount of work in this area. We think it's pretty exciting.

Okay, fantastic. Thank you very much.

There are no further questions in the queue. I would like to hand the call back to Mr. Rodriguez for closing remarks.

So, thank you, everyone. I'd like to thank you for joining the call and you're interested in Rigel. I would like to also thank our employees for their continued commitment to improving the lives of patients. And we look forward to updating you on future calls. This quarter was, I think a fantastic quarter, a great start to the year. The rest of the year we have, I think equally exciting things to update you on across a range of different products and indications. So, very much look forward to doing that as well in the not that distant future. So, thank you very much.