RIGL - NASDAQ

Greetings, and welcome to Rigel Pharmaceuticals' Financial Conference Call for the First Quarter 2024. At this time, all participants are in 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 now begin.

Thank you. Welcome to our first quarter 2024 financial results and business update conference call. The financial press release for the first quarter of 2024 was issued a short while ago and can be viewed, along with the slides for this presentation, in the News & Events section of our 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 uncertainty 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, 2023 and subsequent filings with the SEC, including our quarter 1 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. With me today are Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Additionally, I'd like to introduce Lisa Rojkjaer, our new Chief Medical Officer. Lisa joined us in March and brings over 20 years of clinical development, regulatory and medical affairs experience to Rigel. We are thrilled to have her on the team. Now, beginning on Slide 4, we continue to grow our hematology and oncology business in the first quarter of the year, positioning us well for the remainder of 2024 and beyond. We started 2024 with strong commercial demand for our 2 marketed products, TAVALISSE in ITP and RE

Thank you, Raul. First, on to growing demand of TAVALISSE in ITP, I have a few brief comments on our continued momentum with TAVALISSE in Q1. On Slide 7, you will see our FDA approved indication, which is for adult patients with chronic immune thrombocytopenia, or cITP, who've had an insufficient response to a previous treatment. Moving to Slide 8, I'm happy to report that, in Q1, TAVALISSE achieved its sixth consecutive quarterly record high for bottles shipped to patients and clinics. Over those 6 quarters, we have increased TAVALISSE quarterly demand volume by 23% and Q1 2024 demand grew 10% over the same period last year. We are pleased that our team has continued to produce double-digit year-over-year growth starting our sixth full year after approval. Total bottles sold in Q1 were 290 bottles less than our bottles shipped to patients and clinics as our distribution channel reduced inventory. Dean will discuss this later in our presentation. This resulted in TAVALISSE net sales of $21.1 million for Q1. On Slide 9, the driver of our continued demand growth with TAVALISSE is our new patient starts. The graph on the left shows that, since 2021, after we emerged from the pandemic, our new patient starts have continued to improve each year. In Q1, we achieved the highest first quarter new patient starts since launch. We generated this new patient start growth through continued focus on expanding the breadth and depth of prescribers, ensuring strong coverage and reimbursement with greater than 95% commercial coverage, and constantly reinforcing the clinical efficacy and safety of TAVALISSE with our customers. I want to thank our entire team for their continued focus and execution to impact more cITP patients with TAVALISSE. We are very pleased with the consistent growth in new patient starts and how that has continued to drive our demand, both in Q1 and as we move forward through 2024. Moving to Slide 10, now I'd like to take a few minutes to discuss our strong quarter growing RE

Thank you, Dave, and good afternoon, everyone. I'm excited to have joined Rigel just a couple of months ago at an important inflection point for the company as we expand our hematology and oncology portfolio. First, I'd like to begin by underscoring how precision medicine approaches to lung cancer are positively impacting patient outcomes, including those patients with RET fusions and why, from the clinical perspective, we are excited about GAVRETO. On Slide 21, RET fusions are present in approximately 2% of all non-small cell lung cancers, representing approximately 3,000 new patients per year in the U.S. and then around 20% of papillary thyroid cancers for around 1,000 new cases per year. Testing for RET fusions is an essential part of the pretreatment evaluation of non-small cell lung cancer. In fact, clinical practice guidelines recommend the use of targeted therapies as first-line treatment for eligible patients with metastatic non-small cell lung cancer harboring actionable genetic variants such as RET fusions. Prior to the advent of RET-targeted therapy, patients with advanced RET fusion-positive non-small cell lung cancer received platinum-based chemotherapy regimens with overall response rates in the 50% range and median progression-free survival of 6 to 8 months. The use of nonselective multi-kinase inhibitors with anti-RET activity has shown only modest efficacy and high rates of treatment-related toxicity. Because RET fusion-positive non-small cell lung cancers exhibit low PD-L1 expression, immune checkpoint inhibitors have demonstrated only limited efficacy here with overall response rates less than 10% and progression-free survival in the range of 2 to 3 months. GAVRETO is an oral, highly potent, selective RET inhibitor with once-daily dosing that is FDA-approved for RET fusion-positive non-small cell lung cancer or thyroid cancer as first-line or subsequent-line therapy. On the next slide, I will review updated clinical data from the Phase I/II ARROW study, which led to the approvals. Slide 22 summarizes updated clinical results from the ARROW study with a data cutoff date of March 2022. This Phase I/II multicenter open-label dose escalation and expansion study was conducted at 71 sites in 13 countries with an original data cutoff date of May 2020. In Phase I, Pralsetinib at a dose of 400 milligrams daily was determined to be the recommended Phase II dose. In Phase II, the safety and efficacy of Pralsetinib 400 milligrams daily was evaluated in patients with RET fusion-positive advanced non-small cell lung cancer, thyroid cancer and other RET fusion-positive solid tumors. The primary endpoint was overall response rate. In the lung cancer subgroup, clinical activity was observed irrespective of prior therapy. The overall response rate in 130 patients with previous platinum-based chemotherapy was 63% and 74% to 80% in 107 treatment-naive patients with tumor shrinkage observed in all previously untreated patients. In the overall subset of 260 non-small cell lung cancer patients, median duration of response, one of the key secondary endpoints, was 19.1 months. Pralsetinib was generally well tolerated with predominantly low-grade toxicity with only 10% discontinuing therapy due to treatment-related adverse events. In the subgroup of 22 patients with RET fusion-positive thyroid cancer, 91% of previously treated patients achieved a response. And finally, in the subgroup of 23 patients with RET fusion-positive solid tumors, the overall response was 57%. These results underscore the benefit of utilizing RET-targeted therapy with Pralsetinib in first or later lines of treatment for patients with RET fusion-positive non-small cell lung and thyroid cancer. Moving to Slide 23, patients with RET-fusion positive non-small cell lung cancer have a high rate of brain metastases, which are present in 25% of patients at the time of diagnosis, and approximately 50% of patients will develop brain metastases over the course of their lifetime. In the ARROW study, the intracranial response rate for 15 patients with brain metastases was 53%, and complete responses were seen in 3 patients. Overall, the median duration of response was 11.5 months. On Slide 24, based on these data, we believe that Pralsetinib has a differentiated value proposition. It's the only once-daily oral RET inhibitor approved for patients with non-small cell lung and thyroid cancer with RET gene fusions. When considering the spectrum of prior treatment approaches we previously reviewed, Pralsetinib is associated with favorable response rates and durable activity regardless of prior treatment history. Pralsetinib has also demonstrated promising intracranial activity in patients with brain metastases and has an established safety profile with manageable adverse events and a low discontinuation rate. Finally, Pralsetinib is a recommended treatment option for patients with RET fusion-positive non-small cell lung cancer and advanced thyroid cancer. So to summarize, we believe that Pralsetinib is a differentiated target treatment option for patients, and we look forward to fully integrating the product into our portfolio. I would now like to provide an update on our development programs and clinical research collaborations which foster continued growth of our hem/onc pipeline. Moving to Slide 26, we shift focus to our strategy to continue expanding our hematology and oncology pipeline. First, we are focused on advancing our IDH1 inhibitor, olutasidenib, into new clinical indications. We believe olutasidenib has potential in a number of cancers where mutated IDH1 plays a role, such as additional AML segments, myelodysplastic syndrome, or MDS, and glioma either as a monotherapy or in combination. To further evaluate olutasidenib in these indications, we've entered into strategic development collaborations with the MD Adderson Cancer Center and the CONNECT Consortium. We're also advancing R289, our novel IRAK 1/4 inhibitor in patients with lower-risk MDS. Enrollment continues into our Phase Ib trial, and we expect to have preliminary data in the first part of this trial later this year. In addition, we remain focused on evaluating potential opportunities to in-license or acquire products that would be a strategic fit for our portfolio. We are looking for differentiated products in hematology, oncology, or related areas, products that are late-stage, possibly with registrational data, soon to have registrational data, or more advanced, and products that can leverage our hematology and oncology infrastructure. As demonstrated with our acquisitions of olutasidenib and Pralsetinib, our goal is to continue to find assets that are a strategic fit with our organization, pipeline and ability to execute. First, we're very pleased to have started a development collaboration with the MD Anderson Cancer Center to advance olutasidenib more broadly into AML, MDS and beyond. Through our partnership, we are planning to evaluate olutasidenib in combination with other agents in first-line IDH1 mutated AML and higher-risk MDS. We also plan to evaluate olutasidenib as a monotherapy in lower-risk MDS and CCUS, a condition associated with an increased risk of developing MDS, and in the post-transplant maintenance setting. That's 4 potential clinical trials on the horizon with up to $15 million paid over 5 years. We expect these trials to position us to conduct a subsequent registrational trial, or trials, and we look forward to working with MD Anderson and providing updates as our collaboration progresses. Moving to Slide 28, another important development collaboration we have is with the CONNECT Consortium to conduct a Phase II trial in patients with IDH mutated -- IDH1 mutated glioma. Gliomas account for around 30% of CNS tumors in children, adolescents and young adults with approximately 1/3 of these being high-grade gliomas, translating to approximately 800 to 1,000 new cases each year in the U.S. High-grade gliomas are a leading cause of cancer-related death in adolescents and young adults. Despite available therapies, the 5-year survival of this population is less than 10%. IDH1 mutations are found in approximately 6% of pediatrics and up to 36% of high-grade gliomas in adolescents and young adults. The safety and preliminary activity of single-agent olutasidenib in a cohort of 26 patients with relapsed or refractory high-grade IDH1 mutant gliomas were recently reported. Based on these data, we believe that olutasidenib has potential in this indication, and olutasidenib will be included in CONNECT's TarGeT-D trial, a molecularly guided Phase II umbrella clinical trial for high-grade glioma. The Phase II CONNECT open-label study intends to enroll approximately 60 patients. In the Rigel-sponsored arm, adolescents and young patients that are 39 years old and younger with newly diagnosed IDH1 mutation-positive high-grade glioma will receive maintenance therapy with olutasidenib in combination with temozolomide for the first year after radiotherapy, followed by olutasidenib monotherapy for the second year. The primary objectives are to evaluate safety and tolerability of olutasidenib with and without temozolomide and progression-free survival. We anticipate the trial to initiate this summer. We will provide funding of up to $3 million in study material over the 4-year collaboration. We, along with CONNECT, are excited about olutasidenib's potential to provide a much-needed new treatment option to this underserved patient population. And finally, on Slide 29, I'd like to tell you about our novel dual IRAK 1/4 inhibitor, R289, which we are evaluating in a Phase Ib trial in patients with lower-risk MDS. This is another area of high unmet need in a primarily elderly patient population facing progressive cytopenias, particularly anemia, resulting in transfusion dependency and increased risk of infections and the risk of progression to acute leukemia. The therapeutic strategy for MDS depends upon the patient's MDS risk classification. For lower-risk MDS patients, first-line treatment options include the use of red cell transfusions, erythroid stimulating agents, Luspatercept and lenalidomide for those with the deletion5q abnormality. And second, in later lines of therapy, durable responses are difficult to attain and toxicity becomes more of an issue. There are currently no approved therapies for lower-risk MDS patients that have failed hypomethylating agents. We believe that R289 has the potential to address the unmet needs in this patient population. Moving to Slide 30, I'd like to highlight why we are excited about R289. This regulation of the immune and inflammatory signaling pathways is associated with MDS with chronic stimulation of both the toll-like and IL-1 receptor pathways involving IRAK1 and IRAK4, leading to a pro-inflammatory marrow environment and cytopenias. The activation of IRAK1 and 4 were recently reported to also occur independently of this signaling pathway, leading to persistent inhibition of hematopoietic cell differentiation and that co-targeting both is required to fully suppress inflammation, leukemic stem cell progenitor function, and restore hematopoiesis in MDS. Clinically, IRAK4 inhibitors in MDS and AML have thus far shown only modest activity supporting this concept. In preclinical and healthy volunteer studies, R835, a dual IRAK 1/4 inhibitor, suppressed pro-inflammatory cytokine production. And R289, an oral prodrug that is rapidly converted to R835, was well tolerated with once- and twice-daily dosing and is now being evaluated in a Phase Ib study in lower-risk MDS. Slide 31 shows the design of our ongoing open-label multicenter Phase Ib study of R289 in patients with relapsed/refractory lower-risk MDS which has a dose escalation phase with a standard 3+3 design and the dose expansion phase for confirmatory safety. The primary endpoints for this trial are safety and selection of the recommended dose for expansion and secondary endpoints include response rates and PK. Based on emerging data from the study, we have recently included 2 additional dose levels with twice-daily dosing regimens. The study continues to progress well. We completed enrollment in the third cohort and we anticipate presenting preliminary data from the first part of the trial later this year. Lastly, on Slide 32, our RIPK1 inhibitor programs are progressing well with our partner, Lilly. RIPK1 is implicated in a broad range of inflammatory cellular processes and plays a key role in tumor necrosis factor signaling. Ocadusertib, our non-CNS penetrant RIPK1 inhibitor, previously referred to as R552 or LY3871801, is currently being studied in an adaptive Phase IIa/IIb clinical trial in up to 380 patients with active moderate-to-severe rheumatoid arthritis. Phase IIa enrollment of approximately 100 patients is advancing well with preliminary analysis of the Phase IIa results anticipated by the end of the year. Our preclinical CNS-penetrant RIPK1 inhibitor program is also progressing towards lead candidate nomination. We are excited about the progress of our programs and their broad potential in RA and other immune and CNS diseases. To conclude, I'm excited to have joined Rigel at this time of progress and expansion in our development programs. I look forward to contributing to the growth of our hematology and oncology portfolio. I will now turn the call over to Dean.

Thank you, Lisa. I'm on Slide 34. For the first quarter of 2024, we shipped 2,193 bottles of TAVALISSE to our specialty distributors, resulting in $21.1 million in net product sales. 2,483 bottles of TAVALISSE were shipped to patients and clinics, while 290 bottles decreased the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2024, we shipped 390 bottles of RE

Thank you, Dean. Looking ahead to the remainder of 2024, we are focused on continuing to grow sales of RE

Thank you. [Operator Instructions] One moment please for the first question. And our first question is from the line of Yigal Nochomovitz with Citigroup.

On the cash guidance, you're burning about $8 million a quarter. You mentioned getting to breakeven and also investing in in-licensing activities. Could you just help us walk through the path to getting to breakeven as far as the existing burn and the revenue picture as well as the investment in the portfolio?

Thanks, Yigal. I'll ask Dean to comment on that, and I'll add on to that.

Sure. So as it relates to the current quarter and from a cash burn perspective, I'd encourage you to look back a couple of quarters. And then, as some general comments as we look forward, we haven't given top line guidance. In our last quarterly call in March, we did describe our expectations for 2024 OpEx. So that's available. With respect to Q1, I would note a couple of things. One is the dynamic of the net sales that I described. So we did have the inventory reduction, which impacted net sales, also impacted our cash flows as a result of that. Incrementally, I would note that we paid $2 million, and this is in our Q. We paid $2 million on the MD Anderson collaboration. So from a cash flow perspective, there's a variety of elements going into that burn that you described. With respect to our future point of financial breakeven, and that continues to be a focus of the business, we do expect to see revenues increase. We look to launch GAVRETO and start to recognize revenues in the third quarter. With that, we've described that we believe that there's less than $10 million of SG&A and clinical spend with respect to GAVRETO. So we believe that that will become rapidly accretive. All that said, we believe we're on a path to financial breakeven. We just haven't provided the guidance to say exactly when that will occur.

Thank you, Dean.

and then switching to a clinical science question, it's interesting regarding the brain activity for the GAVRETO as well as your interest in glioma for olutasidenib. I'm just curious. Could you comment on the -- if you have details on the brain plasma ratio, whether you have information on that for both of those drugs? Just curious how brain-penetrant are they, each?

Yes. Thank you for the question. I think it's very helpful. Clearly, they cross the blood-brain barrier, which is critical, and we've been able to show in clinical studies for GAVRETO, as Lisa discussed, as well as we also know that olutasidenib also crosses the BBB. And so we're excited about the opportunity of trying both of those molecules in this area, and obviously, generating the data on GAVRETO already based on the ARROW study, which is very helpful. Anything else, Lisa?

Yes. I would say that the actual ratios that you're asking about, though, aren't known. That hasn't been determined.

But we know that there's a therapeutic effect of both...

Absolutely.

...in relevant studies, one already with the ARROW study in the brain meds. And then we did publish, and Lisa referenced this, on [indiscernible], a smaller study that showed a benefit in patients that were highly refractory.

Our next question is from the line of Kristen Kluska with Cantor Fitzgerald.

Maybe to follow up on the last one and ask in a different way, can you talk about how you're going to balance the current pipeline where each of these assets in itself could potentially be evaluated in other indications? And then also the continued appetite for more of these bolt-on deals which fit your pipeline? And maybe another way to ask it is, like, where do you see the company maybe in 2 years from now?

Let me take a crack at that, if I may. Thank you for the question, Kris. I appreciate that. So we're excited to have TAVALISSE, and TAVALISSE continues to grow very nicely. And the demand bottles were, again, a new quarterly high, and that's really the fundamental basis of that excitement in terms of the growth of the product. Inventories go up and down on a quarterly basis. They were huge last quarter -- I mean, in Q4 and even in Q3 of last year in the other way. And RE

[Operator Instructions] Our next question is from the line of Farzin Haque with Jefferies.

So for TAVALISSE, based on the distribution channels inventory in 1Q, how should we think about this for the rest of the year? And how variable is it? Like, you just showed the numbers for the 4Q levels, but is it really variable across quarters?

Yes, I'll ask Dave to comment on that, and then we can point you to another place you can look at the variability of that.

Yes. I understand your question as kind of the variability of inventory through the quarters. And I will say Q1 was a bit unique in terms of -- again, that's why Dean explained the drawdown of inventory of 290 bottles. We do believe that we have inventory because it's sitting in either our distributors, which distribute to our direct accounts or SPs, which distribute to patients. And they purchase from us. Then they sell out to those 2 portions of the network and what's left is the inventory. And so they did purchase a little bit more in Q4. But I think the key is that, in Q1, that kind of went down. But as Dean kind of demonstrated in his example, even if we don't build any inventory this quarter and we stay flat on demand, we're expecting double-digit growth versus last year in terms of net sales. So we wouldn't expect continued significant variability, but this does happen, particularly with Q4 around the holidays moving into Q1. And also, as Dean mentioned, you start out the quarter with usually a little bit lower demand. And I think that was reflected in the purchases that happened early in the quarter. And then we ended the quarter with very high demand, which is why we increased our demand quarter-over-quarter. So I think there's a number of variables that contributed to this drawdown, in particular this quarter, but we don't see any significant variability up or down as we move forward. And I would invite Raul to provide any more clarity on that, but that's my view.

Yes, I think we have seen, in some cases, highly larger numbers. In fact, this drawdown wasn't the largest. We've had a larger one in early '21, for example. So it does vary substantially. I think what is consistent, though, in the longer term, the inventory levels grow as the business grows. And that is consistent. It's not in any specific quarter or any one quarter, and we see oscillations in both sides. It's just the overall trajectory is a growth trajectory when the business is growing. TAVALISSE is growing. I could share some prior quarter numbers as well, if you wish. In our corporate deck, we include a nice little table that has the inventory changes on a quarterly basis, going back to as early as 2021.

Helpful. And then for RE

Sure. Actually, if you look at total demand bottles, the percentages I showed you is pretty still strongly toward institutions. And similarly, our demand bottles are strongly from patients who previously started. And that's because, as you know, you only have a max 3 months to get business from the patients who started in Q1. And actually, we did have a number of patient starts in March. So this would have only had a small number of bottles. So I don't have the exact percentage, but it's around the percentage of, I'd say, around 20-or-so percent of the bottles were in new patients in Q1. And so we think that's an excellent sign, obviously, that new patients -- more new patients started in Q1. That clearly drove the sales. But I think what you're also seeing is that carryover growing from last year. And then secondly, in terms of -- I wouldn't say we're competing. I would just say that we are really trying to differentiate olutasidenib in mutant IDH1 relapsed/refractory disease. We feel we have a very long duration of response. That's getting out there. And in particular, when you look at the subset of patients who've had previous venetoclax, we believe we have a great story to tell there in terms of response rates and duration of response. So at the end of the day, those are the pieces -- when you're able to talk about the duration of response that we have in the relapsed/refractory setting and then talk about that in a venetoclax-treated population, you have a consistent response rate and duration. That becomes very compelling to clinicians because, I think, as you're probably aware, venetoclax continues to grow use, particularly in first-line AML.

Thank you, Farzin. Any other questions?

No.

Okay. Thank you.

Thank you. There are no further questions at this time. I would like to turn the floor back over to Mr. Raul Rodriguez for closing comments.

Thank you. In closing, I'd like to thank everyone on this call for your continued interest in Rigel and our progress. And as always, I'd like to thank our employees for their commitment to improving the lives of patients because every single day does count. We look forward to updating you on our progress in future calls. And with that, have a great day.