Rigel Pharmaceuticals, Inc.

Greetings. Welcome to Rigel Pharmaceuticals' financial conference call for the first quarter 2022. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce our first speaker, Dolly Vance, who is Rigel's Executive Vice President, Corporate Affairs and General Counsel. Thank you, Ms. Vance. You may now begin.

Thank you.

Welcome to our first quarter 2022 financial results and business update conference call. The financial press release for the first quarter was issued a short while ago and can be viewed, along with the accompanying slides for this presentation, in the news and events section of our investor relations site on www.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 and 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, 2021 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 CEO, Raul Rodriguez. Raul?

Thank you, Dolly, and thank you, everyone, for joining today. Also with me today are Dave Santos, our Chief Commercial Officer, Dr. Wolfgang Dummer, our chief medical officer, and Dean Shorno, our chief financial officer. Moving on to slide five, we are also thrilled to introduce you to Caroline Piotek, MD, who is joining us on the call today. Dr. Piotek is associate professor of clinical medicine at the Jane Ann Knoll Division of Hematology at USC's Keck School of Medicine. She has deep expertise in ITP and warm autoimmune hemolytic anemia, or WARM AIHA. She's also an investigator on the FORWARD trial, Rigel's Phase III clinical trial in WARM AIHA. During this call, Dr. Piotik will discuss the disease state, treatment landscape, and patient journey in WARM AIHA. She will also provide clinical insights into how she treats WARM AIHA patients and her experience in treating patients with ITP with Talvalise. Lastly, she will discuss how she views the opportunity for tabloids in warm AIHA. I'd like to thank Dr. Piatik for joining us today and look forward to her perspectives. Beginning on slide six, we have made significant progress growing our commercial hematology oncology organization while executing several near-term value drivers in our late and mid-stage pipelines. Starting with the first value driver, growing ITP sales. During the first quarter, we began to see momentum build for Tavalisa sales and ITP, with the highest quarterly demand since launch. We believe this is a direct result of our commercial initiatives. As you may recall, last year we undertook a Salesforce expansion to broaden our reach, improve efficiency, and increase in-person interactions. We also secured preferred status on three major national formularies. We are pleased to see that these initiatives have translated into a positive growth trend in both bottle demand and new patient starts for Tavolis. We believe that we have built a foundation that will enable continued growth and also positions us favorably for a potential launch of Tavolis in warm AIHA. In global ITP news, our collaboration partner, Kisei, has submitted their MDA in Japan for foster management in ITP. We look forward to news on the approval in Q1 of 2023. We're also on track for top-line data from our pivotal phase three forward trial in warm AIHA in mid-2022. If the data is positive, we expect to move forward with regulatory filings and commercial launch preparations. With no currently approved therapy in this indication, we believe there's a tremendous opportunity for Tavalise to improve the outcomes of patients with this disease. Importantly, an approved indication for warm AIHA would be synergistic with our current Tavalise commercial efforts, providing another treatment to market to our current physician segment. In just a moment, Dave will provide perspective on the market opportunity for Tavalise and warm AIHA. followed by Wolfgang, who will provide a brief overview of the previous Phase 2 results and the current Phase 3 study. Dr. Piatik will then share her experience and insight treating patients with form AIHA. In COVID-19, our pivotal Phase 3 trial continues to progress. As you may know, COVID hospitalizations have slowed, and we now anticipate completing enrollment and reporting top-line data by year-end. Fosamandim is also being evaluated in a Phase III trial sponsored by NIH and NHLBI as a potential treatment for high-risk patients hospitalized with COVID-19. These trials have the potential to show the benefit of Fosamandim as a potential treatment for patients with severe COVID-19. Wolfgang will discuss our COVID-19 program later on the call. Lastly, during our turning to our earlier stage pipeline programs. Start of activities for our Phase 1B trial evaluating R289, our IRAC1 and 4 inhibitor in low-risk MDS patients are ongoing. R289 has the potential to provide a better suppression of the pro-inflammatory environment that causes low-risk MDS. We look forward to keeping you updated as this trial progresses. We're also excited about the advancement of our RIP1 inhibitor, being developed in collaboration with our partner, Eli Lilly, into Phase II development. Wolfgang will also provide an update on this program. Now I'd like to turn the call over to Dave to discuss our commercial progress in ITP and opportunities in warm AIHA. Dave?

Thank you, Rahul. On slide eight, you will see our FDA-approved indication, which is for adult patients with chronic immune thrombocytopenia, or CITP, who had an insufficient response to a previous treatment. Moving to slide nine, Q1 was the second quarter in a row that we achieved a new high in bottles shipped to patients at clinics. Achieving this new high during a quarter when we have declined over the past two years was particularly good to see, especially given the typical Q1 challenges associated with reimbursement and access limitations due to COVID. We view this as a highly positive sign that we are back on a growth trajectory. Our 1,836 bottles shipped to patients and clinics represented 15% growth over Q1 last year and were driven by more new patient starts than any other quarter during COVID, particularly as we move into the latter part of the quarter. We achieved net sales of $16.2 million a 31% increase over the same quarter last year. Although the increase compared to a year ago was partially driven by the absence of an inventory drawdown, we are pleased with the positive momentum we're seeing in ITP sales. On slide 10, you see how our customer interactions continued to grow above where they were in Q4, despite starting the quarter with major access challenges due to Omicron. Our team accelerated our in-person customer interactions in Q1 to more than five times the number of in-person interactions that we did a year earlier. As Omicron faded and we moved into March, we were able to have more in-person interactions than ever during the past two years, exceeding our previous high in November by more than 25%. Moving forward, We expect to see a continued increase in in-person interactions, creating even more opportunities for us to positively impact our customers. We believe that these increased interactions were a major driver.

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Thank you. Apologies for we were disconnected there momentarily. I'll ask Dave to continue and begin on slide 10, please.

Great. Thank you, Raul. So on slide 10, you'll see how our customer interactions continued to grow above where they were in Q4, despite starting the quarter with major access challenges due to Omicron. Our team accelerated our in-person customer interactions in Q1, to more than five times the number of in-person interactions that we did a year earlier. As Omicron faded and we moved into March, we were able to have more in-person interactions than ever during the past two years, exceeding our previous high in November by more than 25%. So moving forward, we expect to see a continued increase in in-person interactions, creating more opportunities for us to positively impact our customers. We believe these increased interactions were a major driver of our growing new patient starts in the latter part of Q1, and we are optimistic that the trend will continue to grow as we move through Q2. Additionally, our in-person speaker programs have continued to be an important part of spreading Tavoli's awareness and education, and we executed significantly more programs in Q1 of this year than we did in Q1 of last year. And lastly, on slide 11, we have several additional initiatives to expand awareness and access for patients this quarter. In June, we'll attend our first live ASCO meeting since 2019. We will have solid commercial and medical affairs presence there, just as we did at ASH in December, and we are planning many activities to interact with customers throughout the meeting. Additionally, In our efforts to expand our patient access globally, our partner Kisei recently submitted an MBA for Fosfamatinib in ITP to Japan's PMBA. And lastly, in the first quarter, we continued to improve access for commercial patients in the U.S. Cavalese is now preferred on the national formularies of three key PBMs, continuing to improve our broad coverage of commercial lives. We're extremely proud of these achievements and our ability to provide broader patient access to top of the list with easier reimbursement processes for clinicians. We are quickly spreading the news of preferred formulary status via our Salesforce and other non-personal tactics, and customer feedback continues to be positive. Overall, we continue to leverage our expanded commercial team to grow awareness of Tavolis and CITP among our customers as the reopening continues. We are pleased that we are increasing our in-person interaction and look forward to continued growth of new patients in demand as we move through Q2. Now, I'd like to provide a brief overview of the commercial opportunity in warm autoimmune hemolytic anemia. Moving to slide 13, we believe that WAI-CHECK is a very attractive market opportunity for total ACE. Our qualitative and quantitative research found that of 45,000 adults with autoimmune hemolytic anemia, 20% of them have cold or gluten disease, leaving 36,000 patients with warm autoimmune hemolytic anemia. In our quantitative research last year, we found that approximately 65% of those patients, or about 23,000, are treated each year, And of those, about 9,000 are treated with first-line therapy, which overwhelmingly includes steroids. That leaves a significant patient population of up to 14,000 patients each year who are looking for additional options, and that represents an exciting opportunity for Topolese. On slide 14, the results of our latest quantitative research from last year show how WAIJ patients in each line of therapy are currently treated and further highlight the complexities around the current prescribing landscape. In conducting this research, we asked 150 clinicians to think about their WAIHA patients in each line of therapy and then assign a percentage for the treatments they utilize in those patients. As previously discussed, there is no currently approved targeted therapy for the treatment of WAIHA. and treating patients using the existing therapies can be challenging. This often results in a mix and match approach taken by physicians as illustrated by the bars in each line of therapy adding up to more than 100%. Further confounding prescribing landscape are a variety of treatment approaches from chronic to intermittent use of these therapies. Also, As you look at the gray and dark blue portions of the bar, you see that splenectomy and other cytotoxics and immunosuppressants like cyclophosphamide and azathioprine make up significant portions of second-line, third-line, and fourth-line and later therapies. Given the burdensome effect of these treatments, it is important to consider patient characteristics such as preexisting conditions when analyzing lycopherapy. Our research shows that determining a patient's line of therapy and choice of therapy can be complex. However, we view this data as showing multiple entry points for Tavalise in WAIHA, especially because the heterogeneity of treatment beyond the first line. Particularly, we view Tavalise as the potential to significantly change the treatment landscape with its well-established side effect profile, and significantly reduced the treatment burden on patients associated with the current therapies. On slide 15, you see this lines up very well with how physicians perceive a need for a new approved therapy in warm autoimmune hemolytic anemia. They perceive a very high unmet need in third line and later, where they do resort to cytotoxics, immunosuppressants, and splenectomy. We believe adoption of Tavolise, will be faster in patients who are third line and later because of this perception. And it will be our goal at launch to quickly drive awareness and appropriate patient selection so we can become the standard of care here to satisfy that high unmet need. The real opportunity will be to elevate the value of a first approved targeted agent used chronically instead of cyclically and moved earlier in treatment. Being first to market will be a great advantage for us to differentiate tablis from other agents. That said, changing perceptions from using cyclical therapies in this disease to using a chronic one will be a challenge to overcome. And we're continuing to understand the WAIHA treatment journey through claims analyses and market research with WAIHA treaters that we are currently conducting. An early finding of that claims analysis shows that approximately 56% of WAIHA patients received multiple therapies in the first six months following diagnosis. We have also seen in early market research interviews that physicians appear to be receptive to using chronic therapies, as many have acknowledged the need for a long-term, tolerable treatment option for WAIHA patients who are refractory to or unsatisfied with steroids. And our claims analysis revealed that treatment duration can last multiple years, so Tavalese could really fulfill the needs of both physicians and patients. I am confident that our continuing efforts to gain further WAIHA treatment insights this year will enable us to leverage the many opportunities ahead and address any challenges to rapid Tavalese adoption in treating WAIHA patients. I'll turn the call over to Wolfgang to talk about the WIHA Phase II trial results and Phase III trial design.

Wolfgang? Thank you for that overview, Dave. I'd like to reiterate our excitement as we are getting close to top-line results from our pivotal Phase III forward trial with Tavalis in AIHA. I remind you of Tavalis' targeted mechanism of action, our Phase II clinical trial results, and the design of the forward trial on the next few slides. Slide 17 pretty much explains how and why TAVALYs should work in AIHA. Very similar to ITP, in AIHA, the human body begins to produce also antibodies that bind to components of the red blood cells. The constant region of those antibodies for the FC region then binds to cells that carry FC receptors, for example, macrophages. The intracellular signaling downstream from the FC receptor is sick-dependent, and leads to phagocytosis and destruction of the antibody-bearing red blood cells. Some of the destroyed red blood cell antigens are presented to CD4-positive T helper cells, which in turn again prime more B cells to make even more antibodies, thus perpetuating the disease further. This B cell activation and differentiation process is also mediated by ZIK and inhibited by prostamatinib. Taken together, there is compelling scientific rationale to expect that posthumatinib works in AIHA and should not lead to broad immunosuppression, as immunosuppression is not an issue in the large safety database of almost 5,000 patients treated with Tavalis. Slide 18. In this first clinical data set, we evaluated Tavalis in adult patients with warm AIHA in a Phase II study. 11 of 24 patients, 46%, achieved a hemoglobin level greater than 10, and an increase from baseline of greater than plus 2 grams per deciliter by week 24. We saw substantial increases in median hemoglobin levels detected as early as week 2 and sustained over time. The safety profile was favorable and consistent with the experience in previous ITP and rheumatoid arthritis trials. This data was recently published in the American Journal of Hematology. When we looked at this Phase II data to see how many subjects would have met the FDA-agreed approvable primary endpoint, which is greater or equal than 10 and greater or equal than plus 2 from baseline on three consecutive available time points, we see that about 29% of patients on post-dermatitis did meet those criteria. This endpoint is quite a high bar, so we expect very few placebo patients to meet that goal I believe with 90 patients, we are adequately powered to demonstrate statistically significance in phase 3. Moving to slide 19, as you know, our pivotal phase 3 study has completed enrollment. Patients are treated with active or placebo for 24 weeks. After week 24, patients have the option to roll over into an open-label extension study. The vast majority of patients who reached week 24 indeed took the option of continuing in the open-label extension. Some patients have been treated now for two and a half years. As I mentioned on the previous slide, the primary endpoint is a high bar to meet, but let me emphasize that this primary endpoint alone does not capture the entire clinical benefits. There are other important benefits for patients, such as reduced use of rescue therapy, steroids bearing potential, or quality of life improvements. These benefits are captured through pre-specified secondary endpoints in the protocol. Taking these additional endpoints into account in the totality of the data set, we believe TAVALIS can provide clinically meaningful benefits to a substantial percentage of patients. We're looking forward to reporting data from this trial around mid-year. With that, I now hand the call over to my colleague and clinical expert, Dr. Caroline Piadek, to discuss her experience and insights treating AIHA patients. To kick things off, I'm interested to hear your thoughts on this endpoint and how clinicians might use them to determine which of their patients may benefit from this therapy. Dr. Piadek?

Thank you. I would mention that while achieving a statistical significance with a primary endpoint is a regulatory bar for success, it's really the totality of the data that will provide physicians with the full picture of which patients will derive meaningful benefit from the therapy. I would like to point out the significance of the secondary endpoints. An improvement in hemoglobin defined in the secondary endpoints and no need for rescue therapies are clinically meaningful. Improved hemoglobin values in this disease mean our patients feel better, need less frequent monitoring, less use of rescue medications or transfusions, and less frequent hospitalization. Next slide. Okay, so let's talk some more about WAIHA. There are approximately 36,000 adults with WAIHA in the U.S., with approximately 9,000 receiving first-line treatment. There are about 14,300 patients requiring second or later lines of treatment. Similar to ITP, patients are cycling on and off of treatment, and we'll discuss more about this in a few moments. WAIHA is an autoimmune disorder characterized by low hemoglobin levels and laboratory evidence of hemolysis. The severity of symptoms is related to the degree of anemia and includes fatigue, severe weakness, dyspnea, jaundice, photomegaly, palpitations, and other cardiovascular complications. There's an increased risk of thromboembolic events with an incidence of TEE highest early after diagnosis and more common in patients with severe hemolysis. The mortality rate rate is reported at 8% to 11%, which is related to vascular events including pulmonary embolism, myocardial infarction, stroke, as well as infection or sepsis related to WAIHA treatments. Based on this description, you can see that these are sick patients. For ITP, we often manage relapses in the outpatient setting. However, WAIHA patients often require hospitalization at diagnosis as well as relapse. and it can take days to potentially several weeks to get some of these patients to achieve a stable improvement in hemoglobin with rescue medications and transfusions. Next slide. WAIHA is a chronic heterogeneous disease with several immunologic mechanisms involved in its pathogenesis, making it challenging to treat. It's thought to be mediated by accelerated clearance of circulating IgG-coated red blood cells by immune globulin FC receptor-bearing macrophages in the spleen and liver, which is the pathway that's targeted by Foscomatinib. The type and extent of immune dysregulation may be different in each patient and may change over time, often resulting in an unpredictable clinical course. There are currently no approved treatments for WAIHA. There are new therapies under active development, which will offer increased therapeutic opportunities to treat this disease. Next slide. As we talk about the current treatment landscape for WAIJ, I will again mention that there are no approved treatments for this disease. The available therapies are limited by waning efficacy over time, as well as their side effect profiles, which add to the patient's symptom burden. As Dave pointed out earlier in his presentation, the lines of therapy are not clearly defined, and various therapies can be used in combination. Steroids are the standard first-line therapy for newly diagnosed patients. They work by reducing antibody production, which results in decreased red blood cell destruction. While the initial response rates are high, most patients relapse upon discontinuation. Additionally, there are a number of short- and long-term adverse events, which limit their tolerability in use. Steroids are also often used as rescue therapy at times of relapse to raise the hemoglobin and to allow time to bridge to another therapy. Rituximab has long been used as an off-label treatment for WAIHA. It's a monoclonal anti-CD20 antibody that works by depleting B cells. Among its side effect profile, it notably is associated with an increased risk of infection. Additionally, it impairs vaccine response for at least six months, which have come into particular focus during the COVID era. While the initial response rates are high in WAIHA, it often takes time to see the response to rituximab therapy, with responses noted out to as far out as 16 weeks. Rituximab is typically used in the second-line setting, but it can also be used in combination with steroids in the front-line setting as well, and at times if relapsed. Now let's talk about slenectomy. Since the spleen is the major site of red blood cell destruction, removing the spleen can be an effective treatment for WAIHA. However, the complete response rate is around 40%. There are also risks of surgical complications. Patients may have prolonged recovery. There's also a long-term increased risk of thromboembolic events as well as serious infection. With this in mind, splenectomy may not be tolerated in those who are older with significant comorbidities or those who are otherwise deconditioned. Splenectomy remains an option following rituximab therapy. In practice, splenectomy is often deferred because of the short and long-term risk associated with it. Other immunosuppressive and cytotoxic medications can be used with limited data regarding their efficacy, and notably, immunosuppressive therapies carry a risk of infection. Again, patients are cycling on and off of treatment and in between treatments through the course of their disease. Lines of therapy are not clearly defined, and therapies may be used in combination. Next slide. The severity of anemia initial presentation of WAIHA is a strong predictor of outcome. The patient's symptoms vary and depend on the rate of onset, degree of hemolysis, as well as underlying disorders. Quality of life may be negatively impacted by the symptoms of the disease, as well as the side effects associated with current therapies. About 50% of cases relapse after first-line therapy. Well, my usual approach is to use steroids often in combination with rituximab in the frontline setting for severe cases. In the past, some of the severe cases treated at our center have also had the addition of cyclophosphamide into the regimen, as you'll see in a moment. The approach following relapse includes repeating prior therapy depending on the duration of prior response or use of alternative immunosuppressants such as azathiogram. Next slide. With that setup, I'm going to go through a few cases with you from my clinical practice. The first case illustrates the cycling through various treatments that we've touched on a few times now and highlights the long clinical journey experienced by some patients with this disease. So this is a 45-year-old woman with a history of grave disease, previously treated with radioactive iodine ablation in 2013. In 2013, she was also diagnosed with Edmonds Syndrome, which is a combination of ITP and WAIHA. At the time of presentation, she had both ITP and WAIHA. She was treated with steroids, and because of disease severity, was escalated to combination therapy with rituximab, cycloplasmide, and dexamethasone. While this was effective for her WAIHA, her ITP was still not controlled and thus was treated with prednisone, romoplastin, and eventually splenectomy. She did well for several years until 2017 when she presented with relapsed WAIHA. At that time, she was retreated with combination therapy of rituximab, cyclophosphamide, and dexamethasone given the duration of her prior response, which was followed by a prednisone taping. She did well for several years again until she relapsed this past year. She was given a pulse of dexamethasone to control hemolysis. And so as we look at this case, I would point out that there's a couple times during this patient's journey where fostamatinib could have been a reasonable option. Fostamatinib certainly could have been an option for the management of her ITP in 2014. Additionally, it would have been an option for her WAIHA at her relapse in 2017 and her most recent relapse. The second case is that of a 33-year-old woman with primary WAHA diagnosed in 2019. At initial presentation, she was treated with steroids and rituximab. However, following the steroid taper, she continued to have ongoing hemolysis, and azathioprine was initiated. This led to some stabilization of the hemoglobin, but still with some ongoing hemolysis on labs. Eventually, her hemoglobin met the threshold for treatment change. So as we review this case, there's also several time points where this patient, where, excuse me, where Fosamatinib could have been used for this patient. It was an option instead of azathioprine, as well as after azathioprine therapy. Both cases demonstrate that the currently available therapies are not sufficient in treating patients with this disease, even when used in combination, emphasizing the need for additional therapies such as Fosamatinib for WAIHA. Next slide. Now let's turn to talk about Fosamotinib as a potential treatment for WAIHA. In contrast to malignant hematology, where response rates are the primary driver of treatment selection, WAIHA is considered a chronic, benign disease that requires treatment over years. So it's of greater importance here to have a therapy that will manage the disease consistently with a favorable long-term safety profile. If Fostimatinib is approved for this indication, it would offer the following potential advantages. Fostimatinib has a unique mechanism of action targeting the underlying pathophysiology of the disease. It's an oral therapy, which is not immunosuppressive, which has come into particular focus during the COVID era. The safety profile is well characterized. It has a rapid response, which is durable. From the clinical perspective, a rapid and durable response results in less use of rescue medications and decreased need for hospitalization. Additionally, since it is approved for ITP, physicians already have experience using the therapy, and having another indication will likely reinforce its use in ITP. I will finish by saying that from my years in clinical practice treating WAIHA and other serious blood disorders, I know firsthand that the available treatments for WAIHA are insufficient, and there's a clear unmet need for new therapies in this disease. Thank you.

Thank you, Dr. Paradek. Shifting gears now to a quick update on our COVID-19 program. Moving to slide 28, we continue to believe that Fosamatinib can provide therapeutic benefit in COVID-19. There are several scientific pieces of external research at independent institutions. Most importantly, last year we reported positive clinical data from the NIH NHLBI Phase II study in hospitalized patients with severe COVID. That data was published last fall. Additional data will be presented by collaborators at this year's ATS conference in May. Given persistent resistance to vaccination in some places and the possibility of new virus variants we believe a need for effective treatment options for severely ill patients remains. We have two ongoing phase three studies that will provide us with pivotal data, and if approved in this indication, TAVALYs would be available for immediate use for these patients. Slide 29. Before I discuss our pivotal phase three study, I would like to provide an update on two other trials from collaborators. For METIS phase two study at the Imperial College of London, and the ACTIV-4 host tissue phase three study from NIH. Regarding MADIS, an independent data review board recommended not to continue Fostermatinib into the second phase of the trial. That recommendation was not due to any safety concern. The focus of the study was the prevention of progression of mild to severe disease. Regarding the NIH ACTIV-4 study, An interim analysis was run on two of the three experimental drug arms of the study, and enrollment was discontinued for both. So, Fosdamatinib is now the only remaining active arm on the study and continues to enroll patients. Reisel's own amended Phase III trial is also continuing. As mentioned earlier this year, we updated the inclusion criteria for the trial to focus on more severe patients, and changed the primary endpoint to days on oxygen for a more sensitive measure and better comparison to the NIH active trials. Both studies now focus on Fosdam-Adnip as a treatment for COVID rather than a preventive agent. As Raoul mentioned earlier, due to the recent decline in COVID-19 hospitalizations, enrollment has been slower than anticipated. To date, we have 268 patients nearly 90% of our targeted enrollments. We are reviewing strategies to complete enrollment and report top-line results by year-end, including potentially completing the trial with fewer patients than the initially targeted 308. Now let's turn to our pipeline programs, IREC1-4 and RIP1 inhibitor, starting on slide 31. We have shared with you before we are evaluating R289, our IRAC1 and IRAC4 dual inhibitor, initially in low-risk MDS. We believe R289 has the potential to provide effective suppression of the pro-inflammatory environment that causes low-risk MDS. Slide 32 shows our Phase 1 retrial for patients with low-risk MDS. The study has two parts. Part 1 is a dose escalation phase with a commonly used 3x3 approach. before those levels are being supported by our favorable safety data from already completed studies in Healthy Volunteers. After dose escalation and thorough evaluation of all safety, clinical activity, PK, and biomarker data, we will take a dose into an extension phase to obtain more longer-term safety and preliminary efficacy data to support a larger registration of study. Study startup activities are currently ongoing and we are targeting the second quarter of the year to achieve study initiation. Moving to slide 33, our RIP1 inhibitor program, developed together with our partner Eli Lilly, is another important value driver for RIGEL. We see a mechanistic and clinical scientific rationale for R552 in several large indications, and we continue to prepare for a Phase II clinical trial in an immunologic disease indication. As we noted in our press release, the initial phase two study is now anticipated to start in Q1 2023. As is common in drug development, we encountered opportunities for formulation optimization that we plan to leverage and take forward into the program. The results being a delay in the timing for the first indication, which really will disclose closer to the initiation of the study. Additionally, we are advancing our work to select a RIP1 inhibitor candidate that can cross the blood-brain barrier for the treatment of central nervous system diseases. Lilly will then lead the clinical development of these brain penetrating RIP1 inhibitors. We're pleased to collaborate with Lilly on those very exciting opportunities, knowing their deep expertise in these CNS therapeutic areas. That concludes my development summary. And I will now turn the call over to Dean. Dean?

Thank you, Wolfgang. I'm on slide 36. For the first quarter of 2022, we shipped 1,824 bottles to our specialty distributors, resulting in $22.6 million of gross product sales. 1,836 of those bottles were shipped to patients at clinics, while 925 bottles were made in our distribution channels at the end of the quarter. We reported net product sales from Topolese of $16.2 million, a 31% increase compared to the same period in 2021. Our net product sales from Topolese were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance, and other allowances of $6.4 million. Our gross to net adjustment is approximately 28.4% of gross product sales for the first quarter of 2022. Before we move on from net product sales, Let me review our expectations for the second quarter of 2022. We're pleased with the strength of our bottle shift to patients and clinics at the end of the first quarter that Dave described and expect growth to continue as access to physicians and new patients starts continues to expand. Incrementally, we currently expect our growth to net adjustment to be approximately 30% in the second quarter of 2022. We don't typically comment on potential collaboration milestone payments due to payment variability and uncertainty. We wanted to provide a brief financial update as it relates to Kisei's NBA filing in Japan that Rahul highlighted. With this filing, we expect to receive a $5 million milestone in the current quarter. If approved, we would expect to receive an incremental $20 million milestone in the first quarter of 2023. We'll continue to provide updates on Kisei's progress with this important filing. On to the next slide. In addition to net product sales, Roger's contract revenues from collaborations were $500,000 for the three months ended March 31st, 2022, which consisted of $200,000 from our license agreement with Lilly and $300,000 from our collaboration agreement with Griffles. Moving on to cost and expenses, our cost of product sales was approximately $121,000 for the first quarter of 2022. Total costs and expenses were $43 million in the first quarter of 2022 versus $39.3 million in the first quarter of 2021. The increase in costs and expenses was primarily due to increased commercial activities related to the Salesforce expansion in late 2021, increased research and development costs for the development of Rogers IRAC 1.4 inhibitor program, and increased personnel-related costs and stock-based compensation expense. partially offset by decreased research and development costs related to our Phase III clinical trial of Fosfamatinib for warm autoimmune hemolytic anemia and our ongoing Phase III clinical trial of Fosfamatinib in hospitalized patients with COVID-19. Finally, we ended the quarter with cash, cash equivalents and short-term investments of $107.5 million. With that, I'd like to turn the call back over to Raul.

Thank you, Dean. Weidel's performance in the first quarter has given us a strong start to the year, and we will continue to execute on our strategic priorities, as you see here. Looking forward, we expect the momentum that we were seeing in the commercial front to continue into the upcoming quarters, facilitating ITP sales growth. Most importantly is our upcoming Phase III trial readout at WARM AIHA. We're excited about this readout because it is a key step in building our HEMONC portfolio. Warm AIHA is complementary to our current commercial focus and so will be highly synergistic and accretive. It will be great to be able to deliver a new and helpful medicine for the first time to patients suffering from Warm AIHA and to do so as early as 2023. Now let's open the call to your questions and given that Dr. Piatik is with us, let's prioritize Warm AIHA related questions. Operator

Thank you. If you'd like to ask a question, please press star 1 from your telephone keypad, and a confirmation tone indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from the line of Yunyun Yang with Jefferies. Please proceed with your question.

Thank you. I have one question to Dr. Payetic. So in Phase III for the trial, if I remember it correctly, patients have active hemolysis and also they are on some background therapy. So with the entry criteria, what do you expect the placebo response to be according to Phase III primary endpoints?

Thank you, Yoon. Dr. Piaty?

I'd like Wolfgang's input on this as well, but I would anticipate there would be a low response rate for placebo. And the correlate here is that in the phase two data, the non-responders did not achieve a hemoglobin response. So kind of using that here, we would anticipate a low response rate in the female for the phase three.

Yeah, I would agree with that. We do not see patients generally just bounce up and down two units. That's a pretty large jump up from any baseline, and to stay up there for three consecutive visits would be very surprising unless the patient is on an effective therapy.

Okay, and I have a question to the company. So in Phase 2, I think about 38% of patients were second-line and the remainder of the patients were third or fourth-line, later line of therapies. And although the overall response rate was around 45%, I think there was a higher response in second-line patients. So my question to the company is that in terms of baseline patient characteristics by the line of therapy, in Phase 3, is that kind of similar to Phase 2?

I'll ask Wolfgang to comment.

Yeah, so in general, I would say we've had probably somewhat more patients in earlier lines because, as you are aware, we are conducting this trial in the United States but also in a number of countries in Europe, including Eastern Europe, where compounds such as rituxan, for example, are a little bit less used or available. So in general, it's most like a similar patient population, but maybe somewhat earlier line. And we do expect certainly comparable or even slightly better data from phase three than what we have seen in phase two.

Thank you.

Our next question is from the line of Yigal Nahwitz with Citi. Please proceed with your questions.

Hi, this is Carly on for Yigal. Thanks for taking our questions. We have one for Dr. Piatik. We're wondering how the 46% response rate and the 29% durable responder rate seen in the Phase II study compared to experience with rituximab and other therapies currently used post-steroids. And I guess if the phase two data are largely replicated in the phase three, could you go into a bit more detail on how you would think about using Tavlis in your practice in terms of line of therapy? Thank you.

Thank you, Carly. Dr. Piatik?

So, I mean, I think if Pavlis is approved, it would be the only approved medication for this indication. I think in the third line setting, there's a clear role. In the second line setting, it would also be a reasonable choice. And I would like to see within the baseline demographics for the phase three, we see a lot of patients who had not received prior rituximab. So, it would be beneficial to see the data there, to see how these patients benefit. But our anticipation, similar to the ITP data, is that the earlier on you use tabulis, the higher the efficacy would be, suggesting a role in the second-line setting.

Go ahead and move back into this topic.

Yeah, I would just add to that, and we sort of elaborated a little bit on this. Again, the primary endpoint that was acquired by regulatory agencies is a very high bar, but we have a number of secondary endpoints that also capture clinical benefit. So we really think there's a substantial percentage of patients that can have clinical benefit, and it's going to be a totality of the data, and Dr. Paddock will confirm that, the totality of the data that will make a treatment decision and also in collaboration with the patient. A patient might want to have an oral drug over an infusion or vice versa. So I think we are well positioned to play an important role there. The last comment that I want to make is when you refer to other compounds such as Rituxan, if you want to make comparisons, feel free to do so, but you need to be very, very stringent in in really understanding what the endpoints were and how it's not apples to apples when you talk about overall response rates versus our primary endpoint, that's not comparable. So I believe we can certainly come out in a similar ballpark.

Okay, got it. That's really helpful. And then just one sort of housekeeping question for the company. Are you able to refine the timing guidance at all for the forward data from mid-year to maybe around which month this summer we could expect to see the data? Thanks so much again.

I can clarify that. I think we could tell you that it's going to be in June, to be more specific. Not more specific than that, though.

Okay, great.

So it's in the upcoming months.

Our next question comes from the line of Gary Nachman with BMO Capital Markets. Please receive your questions. Hi. For Dr. Piotik, first, you know, when you see Tavoli fitting into the treatment paradigm for warm AIHA, will there be a lot of combination use with this product? And do you envision any challenges in terms of access with that? And what would it take for the product to potentially be a first-line drug, is that even a possibility over time?

Hi, thank you. I'll ask Dr. Baddick to comment, but also Dave to comment, because we've done some market research in that area.

Go ahead.

So we don't have any data to conform on combination use. You know, the clinical trials do have washout periods and time for stability on steroids. So the potential is that it would be overlapped more closely with steroids with the effort for it to be a steroid-sparing agent. We do not have any data in the first-line setting. There is a role for steroids in WAHA just as ITP. So I... or to go beyond that.

Thank you. Yeah, Gary. One thing I would like to mention here is that, you know, it depends on where patients are relapsing. If they are in an acute setting in the hospital, sometimes it's very difficult, as we've learned from recent market research, for clinicians to prescribe Rituxan and administer it in the inpatient setting. So they have to wait for the patient to be discharged and use it in the outpatient setting. It's not everywhere. but certainly in the community that is happening. And so you think about a drug like bosmatinib, which could be used starting in the inpatient setting, patient takes it and moves it into the outpatient setting, and then because of its potentially rapid response, the ability then to taper steroids. And that appears to be very interesting to clinicians as we talk to them now.

And you saw in the slide that Dave provided earlier, there's substantial mixing and matching, including in first-line therapies with AIHA. It's a little bit different than ITMP in that regard.

Yes, okay, that's helpful. And then I guess for both Dr. Piotik and the company, for the 14.3 thousand addressable patients in second-line plus, how many of these are easy to tap into? And will there be challenges getting to any of these patients to get treated in the later lines, or are they readily available for the most part? So I'm curious, how much of an effort is required to increase awareness for WAIHA, or, you know, is it well known that the clinicians are treating most of these patients already? Thanks.

Thank you, Gary. I'll ask Dave to comment first, and then Dr. Baddick, if you would like to as well.

Yeah, so what I would say, Gary, is that, you know, it is 14,000 patients out there who are actively undergoing treatment every year. But it will require us to reach a broad number of physicians because particularly in the community, it's pretty evident that clinicians see a handful of these patients over time. And they manage them and some will be on treatment and some won't. So I think they're aware of patients that are out there. They know that, you know, if they do relapse, that they're going to need to treat them. But we will have to reach a large number of prescribers in order to get that awareness out there.

Keep in mind on that point before I ask Dr. Paddock to comment also is, is that it's not unlike ITP, where it's a rare disease in hematology, benign hematology, and these doctors see a small number of these patients. When you add these two indications together, it becomes a much more substantial patient population within that doctor visit. As I said, substantial, almost complete overlap in the doctors treat both of these indications. So it's something that we're knowledgeable of and experienced in handling. Dr. Paddock, anything to add beyond that?

I think that was fairly covered everything that I would have said. I would just add that the multiply refractory patients often get referred to an academic center, and in that setting, then Fosnotinib would probably have a higher awareness.

Okay. That's great. Thank you. The next question is coming from the line of Doe Kim with Piper Sandler. Please proceed with your questions.

Hi, everyone. This is E.K. on for Doe. Thanks for taking the question, and congrats on the continued progress. For Dr. Pyattick, just a quick one. I don't know if I might have missed it, but if you can just speak on your belief of the receptivity of your colleagues and yourself of tabloids in warm IHA given the current dynamics of how you're treating patients and the relapse rate. I don't know if there is a kind of entrenchment of sorts with the current therapies and your colleagues are looking for something novel or, you know, just your brief thoughts on it would be helpful for us.

Sure. So our... Okay. So I would say that there is definitely a clinical need for targeted therapies in this disease. You can see from some of the cases we discussed that especially in these multiply refractory patients, we really just don't know how to treat these patients. And it leads to that cycling through therapies with unclear efficacy. So it kind of It's challenging for the patients as well as the physicians to treat these types of patients. During the COVID times, we found that a preference towards oral therapies, keeping our patients out of infusion centers when possible, and a patient preference for oral treatment. So I think there definitely is a need and the targeted mechanism of action is compelling to and is of interest to treating physicians.

Okay, great. And just a quick... Oh, someone... Sorry. So just a quick follow-up on available treatments or emerging treatments. I don't know if you have any experience with some of the different therapies that are coming down the pike, such as, like, FCRN antagonists. If you are, I don't know if you can kind of speak to what you think about the mechanisms of action for those therapies compared to tablis.

Sure.

So I think what we're seeing is that this is a heterogeneous disease and some patients may respond to some therapy versus another. I think it's clear that we're moving to an era of targeted therapy in this disease, but to really contrast the different mechanisms is a little bit beyond the data that we have right now.

One thing to add on my behalf is that many of these doctors, and the objective for us is to have doctors that are already using Talvalise for ITP. So they already know the product. They know its mechanism. They have some experience with it. And I think that'll help the receptivity for a new indication, AIHA, where there's even less available treatments for that indication. So I think that should help in terms of the receptivity. In part, the reason we expanded the commercial organization last year is to raise that awareness for Tavalisa and ITP so as to facilitate the receptivity for AIHA

Okay, great. Thanks for that, Raul. Just one last question for Dean. Can you tell us what happened with the non-recognition of the government revenues? I believe there's $6 million just left within those contracts and didn't see anything in the queue. Is there any correlation with the timelines of the current COVID-sponsored trial or is it completely distinct from that.

Yeah, thanks, E.K., for the question. So just to remind everyone, we have a $16.5 million overall grant from the DOD, which is supportive of our Phase 3 study in COVID, which largely pays for the costs or external costs of that study. To date, we've recognized $10 million of revenue and collected $10 million of cash. That contract specifies that over the course of the study, there are certain milestones that we get paid for. And therefore, as you point out, EK, we've got $6 million remaining of that $16.5 million that we'll incur during the future of the study, or we'll recognize the revenue and collect the cash over the course of the remainder of the study. So stay tuned. That will come out in future quarters. But there was no recognition, no milestone in Q1, as you highlight.

That sounds good. Thanks, everyone.

Thank you. The next question is coming from the line of Kalpit Patel. This is B. Riley. Please proceed with your questions.

Yes, hi. Thanks for taking my questions. I'll start with Dr. Piatik. For the Phase III trial, what is the delta that you're looking for between the active arm and the placebo arm that would be clinically meaningful in your view? I mean, is there a percentage, like 20%, 30%, that you would view as impressive in addition to hitting STAT-SIG? And then I will follow.

Dr. Paddy, do you have a comment?

There isn't a specific delta that I'm looking for in the phase three. What I'm interested in is seeing that there's a clear group of responders with durable responses and trying to parse out, you know, which patients derive benefit from Fos-Tenotinib and kind of sorting out those characteristics. And again, just kind of highlighting that these secondary endpoints, a number of them are clinically meaningful in clinical practice.

Okay, fair enough. And then I know the protocol allows the use of rescue therapies, but the patients that receive the rescue therapies, they won't be counted as a responder if it's received within a certain time period. So I guess my question for you, doctor, is that if you were to receive an RBC transfusion, how long is a hemoglobin improvement good for in the real world?

So the red blood cells that these patients are transfused are also hemolyzed. So it varies a little bit, but you can see no response to maybe a response that lasts for several days, but it does not last the same duration as somebody who is transfused for another reason. without hemolysis.

Okay. I just want to remind you that you have to be off of that rescue therapy for at least four weeks after it stops before you can start counting as a responder, if that's clear. So like a response for a few days or even a couple of weeks after transfusion is very unlikely, making a durable responder possible.

Okay. And then one question for the company. Now that you have three years of experience launching Tavalise, do you have any metrics on the median duration of treatment with real-world patients? And then if you can also break down the new starts versus continued treatment in your sales metric for the latest quarter, that would be useful for me.

Thanks. I'll ask Dave to comment. I'm not sure that we provided the latter as yet. So maybe you can comment on the first how long the longevity perhaps of patients on ITPT.

Yes. So currently we have in the mid-50s is our persistency rate, which we've maintained for quite a while for patients at four months of therapy. So generally about five bottles is what you would say that most patients would get on therapy if you averaged it out over all the patients. And all I would say is, you know, when we saw this growth in Q1, it was clearly that we were putting more patients in the top of the funnel than we were actually that patients were going out at the bottom of the funnel as they were coming off drug. So although we're not telling you the percent of our business that is new patients right now, it's a growing percentage.

As you saw, a good increase in new patient starts, which I think bodes really well for future quarters as we see that entering. So we're excited about having achieved that in Q1, which is really a good place to start the year.

Okay. That's very helpful. Thank you.

Thank you. Our next question is coming from the line of Joe Pink. And this is with H.E. Wainwright. Please proceed with your questions.

Hi, everybody. Good afternoon. Thanks for taking the question. Just wanted to ask Dr. Piotik the sort of a combination of the questions that's been asked, and also Raul made a comment earlier about a lot of the same treating physicians that use Tavalise now will also look to potentially dose Tavalise for these patients. So I want to look at it of how you look at the evolution of the market, and you did touch upon it in certain ways. But the way I want to approach it is, If you look at the slide 14, now this is the one that has the different bar graphs for the different lines of treatment and how heterogeneous it is. The numbers might be different, obviously, but the typical view of this chart is virtually identical to what is seen in ITP with multiple approved therapies, and it took quite some time to be able to have the ITP community agree on different treatment guidelines. So even though Tavalise might be the first approved drug, which could gain obviously good traction presumably, do you see the heterogeneity still remaining for a while?

Thank you. Thank you for the question. I'll ask Dave to comment and I'll add a comment after.

Yeah, I can just say that And we're currently conducting market research on a daily basis at this point, talking to clinicians. And they are very interested in having something that they can use in this disease. Even though it has similarities to ITP, it concerns them more. And sometimes these patients can get into a lot of trouble. and so they want to have new options. So I think there's going to be a lot of very willing people to listen to the message that we're going to bring as we're shaping that message now to clinicians if we do have approval, and I think it's going to be a very solid add to their argumentarium, which is probably a little bit different than an ITP where they had TIPOs existing for quite a while, and probably the unmet need was not nearly as high.

Yeah, but maybe somewhat similar to the ITP market pre-TPOs, exactly the place to start. And you saw how the market evolved there with the TPOs gaining a predominant or very substantial share of the ITP market over the course of years. So if we could achieve anything nearly that, we'd be tremendously happy.

That's definitely a good analogy, yep.

Thank you, Joe. Thank you.

Our next question is from the line of Bert Haslett with BTIG. Please proceed with your questions.

Thank you, and thank you for taking the question. It's for Dr. Piatyk. And as we consider the Phase III data upcoming, you had mentioned during your initial comments a focus on the secondary endpoints as being material as well. I'd love for you to elaborate just a bit with regard to what might be important and significant out of the secondary endpoints that we've seen previously, the rapidity response, the magnitude, or even the use of rescue meds. But a little elaboration there would be helpful. And thank you for taking the question.

Sure. So I think the secondary endpoints are a little bit interwoven. So basically meaning that if you're seeing these hemoglobin responses this in turn leads to less need of rescue medications. So if you're roughly thinking of a hemoglobin of seven as the usual transfusion threshold, basically at the threshold of where people are starting to feel bad, if we're getting people up closer, you know, well above that transfusion threshold, that's clinically meaningful. An improvement from baseline means, you know, less intensive therapy, less... potential need for transfusion. So, so, um, what we're trying to do is kind of get our patients out of the hospital and, and feeling like they can do their activities of daily living, or if not more than that. So, um, so the farther we can get from these numbers around seven, the better and for the longer periods of time.

Thank you for that.

Thank you, Bert.

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

Thank you, and thank you, everyone, for joining and for your questions on this and your continued interest in Rigel. In addition, I'd like to thank Dr. Piatik for joining us on the call and giving us her thoughts on warm autoimmune hemolytic anemia and tavalese. Very much appreciated and very helpful to all of us. As you know, we've made great progress this past quarter, and we have exciting milestones coming, most importantly, a Phase III milestone in AIHA in the very near term, as you know. I'd also like to thank our employees for their consistent, constant commitment to improving the lives of these patients. Thank you. We look forward to updating you on our progress in future calls. Have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.