Rigel Pharmaceuticals, Inc.

Greetings and welcome to the Rigel Pharmaceuticals Financial Conference Call for the second 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. 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, Ray Fury, Rigel's Executive Vice President, General Counsel, and Corporate Secretary. Thank you, Mr. Fury. You may begin.

Welcome to our second quarter 2023 financial results and business update conference call. The financial press release for the second quarter 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 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 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 31st, 2022, and the subsequent filings with the SEC including our second quarter quarterly report on Form 10Q 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 Raul, to our President and Chief Executive 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 Shorno, our chief financial officer. I'll be getting on slide four. We are pleased with the progress we've made in the first half of 2023 as we continue to build our hematology oncology company with our commercially available products and our development programs. In the second quarter, we continue to see year-over-year growth in demand for our first approved product, Tavalis, for adult chronic ITP. We're also pleased with the progress that we've made on the launch of our second approved product, Reslydia, for adult relapsal refractory IDH-positive AML. As we navigate the launch, the core focus of our commercial and medical affairs team has been driving awareness for Reslydia and establishing relationships with new doctors. A few key highlights on these initiatives from the quarter include robust engagement with the medical community at the 2023 ASCO Annual Meeting, the presentation of promising data in the post-venetoclast treated patients at the European Hematology Association 2023 Congress, and a second publication in Blood Advances, examining the preclinical and clinical development of res lydia and its role in the treatment landscape. These are important data that we recently published and presented. Dave will touch on these items a little bit later in this presentation. Looking at our development and expansion initiatives, we've made progress in the enrollment of our Phase 1b study of R289, our IRAC1 and IV inhibitor in lower risk MDS. And we are evaluating opportunities to expand our hematology oncology business further with clinical development for our already approved products into new indications. Additionally, our RIP-K1 program has advanced with our partner, Eli Lilly, and continues to progress with the initiation of a Phase 2A trial in patients with rheumatoid arthritis in the second quarter of 2023. I will provide further updates on our progress and strategies for these efforts later on in today's presentations. With that, I'll turn the call over to Dave for an overview of the quarter. To you, Dave. Thank you, Raoul.

Now I'd like to take a few minutes to discuss our continued growth of TAVALYs during another record quarter and our progress with the ResLydia launch in the first half of 2023. On slide six, you'll see our FDA-approved indication for TAVALYs, which is for adult patients with chronic immune thrombocytopenia, or CITP, who've had an insufficient response to a previous treatment. Moving to slide seven, I'm pleased that we achieved another new quarterly all-time high with Tavalise and Q2, shipping 2,265 bottles to patients and clinics, representing 10% growth over Q2 of 2022. We have now achieved three consecutive record highs for the number of bottles shipped to patients and clinics in a quarter since launch. we continue to grow our demand through a consistent flow of new patients starting Tavalese. And for Q2, we achieved net sales of $21.3 million, $2.8 million more than the same quarter last year, representing a 15% year-over-year increase. We are pleased with how we have grown our Tavalese business during the first half of 2023 and look forward to carrying this momentum into the second half of the year. we will continue to focus on targeted clinicians to identify appropriate patients who can benefit from Tavalise to grow our new patient starts beyond the record levels we saw in 2022. I'm grateful to the entire team for continuing our growth with Tavalise and ITP while we launch ResLydia. Moving to slide eight, I wanted to review the opportunity we have with TAVALY Synchronic ITP and provide an update on our progress in moving to earlier lines of therapy. First on the left, recall that we estimate there are more than 80,000 patients with ITP and more than half of them are actively treated. While most of the patients are on steroids as their first line therapy, there are still more than 24,000 patients who are eligible to be treated after steroids and three-quarters of those patients are in the second or third line. On the right, you will see how the portion of second and third line new patients on Tavalese has grown since 2021. For three consecutive quarters, more than 70% of the new Tavalese patients that we captured through our hub have been either second or third line. we are very pleased to see this consistency of earlier usage in patients on tablis over the past three quarters. As more patients are being treated with tablis earlier in their course of treatment, we expect our refilled bottles to continue to grow due to the improved persistency we should see from those patients. On slide nine, we believe the reason we have been successful in getting more of our Tavalese patients earlier in the treatment continuum is that our efficacy message is hitting home. Clinicians are impressed that the earlier they use Tavalese, the better their results, and when they do use Tavalese, they can count on clinically meaningful and durable increases in platelet counts over time. These messages are resonating, and our business is continuing to grow. We'll continue to promote the benefits of using Tavalise earlier after steroids and how the durable, predictable platelet increases are meaningful to patients who live with chronic ITP each day. On slide 10, a reminder that in April, our partner Kisei announced the launch of Tavalise for the treatment of chronic ITP in Japan. we remain committed to continuing to impact CITP patients around the globe with the expansion of Tavalisa's commercial footprint through our partners. Moving to slide 11, I'll take a few minutes to discuss our continued progress launching ResLydia in the first half of 2023. On slide 12, you'll see our FDA-approved indication for ResLydia, which is for adult patients with relapsed or refractory acute myeloid leukemia with a susceptible IDH1 mutation as detected by an FDA-approved test. As an introduction on slide 13, there continues to be an unmet need for efficacious targeted treatments in relapsed or refractory AML, and in particular, agents that provide longer durations of response and an acceptable balance of efficacy and toxicity are needed. we continue to strongly believe that ResLydia addresses exactly those needs. Moving to slide 14 and our view of the currently eligible patient population for ResLydia. The American Cancer Society estimates that more than 20,000 patients will be diagnosed with AML in 2023, and of those patients, our research showed that whether patients are treated with intensive therapy or not, Most are refractory to treatment or relapse within two years. Specifically, with 6% to 9% of patients having the IDH1 mutation, we believe we have a near-term opportunity to impact the lives of around 1,000 new mutant IDH1 patients in the relapse to refractory setting each year. Slide 15 shows shows our continued early launch progress in bringing ResLidia to those 1,000 mutant IDH1 relapsed to refractory AML patients. We sold a total of 200 bottles of ResLidia in the second quarter, representing 77% growth over Q1. 187 of those bottles were shipped directly to patients and clinics, and our demand grew second quarter net product sales to $2.6 million. with our total launch-to-date sales now at $4.9 million. We continue to remain focused on growing awareness of ResLydia through our field teams and other activities. Moving to slide 16, we made solid progress in Q2 on growing that awareness through both promotional activities and scientific publications. First on the left, We had a strong presence at the ASCO Annual Meeting in early June. It was the first major conference opportunity for Rigel to promote both TAVALIS and ResLydia. And we officially launched our ResLydia Transform Your Expectations, Durable Remission Is Possible campaign there. To go along with that, we have updated both our HCP and patient websites with our campaign. and visitors to reslydia.com have a wealth of information and resources at their fingertips. On the right side of the slide, you will see the significant progress we have made on the scientific front in Q2. First, in May, there was an excellent olutacidinib review article published in Blood Advances discussing the positioning of reslydia in the mutant IDH1 AML treatment landscape. In the conclusion, the authors, quote, recommend olitacidinib in venetoclax plus HMA failures given the available data, unquote. The data they were referring to was also presented this quarter at the European Hematology Association 2023 Hybrid Congress held in Frankfurt during June. That poster focuses on this very clinically relevant population of patients, who were previously treated with venetoclax. The conclusions were very consistent with our previously reported results. The authors wrote that olivacidinib induced durable remissions and that the observed activity is clinically meaningful and represent a therapeutic advance in the treatment of this molecularly defined poor prognosis patient population with relapsed or refractory mutant IDH1 AML. Our commercial and medical affairs team members have had several recent discussions with key academic leukemia specialists since that data was presented in June, and they have expressed the same sentiments as the authors. They view the data as promising, and interest in elutisidinib continues to grow. Overall, we made significant progress during Q2, and importantly, some key drivers to the elutisidinib Sidnip's story, such as the compelling activity in post-Venetoclax patients, just began at the end of the quarter. In addition to those key drivers in late Q2, on slide 17, we have other activities planned for the second half of this year that we expect will enable us to continue building momentum with ResLydia. First on the left, we now have the institutional team we announced last quarter in place. Recall that a significant portion of our AML business is concentrated in academic institutions, and the leukemia treaters in these key leukemia centers influence how the community treats AML. We hired eight institutional business managers across the country who will be accountable for leading ResLydia promotional activities with these top leukemia treaters and facilitating formulary placement at key leukemia centers. They have impressive experience. On average, the members of this team have more than 19 years of HEMONC experience, with 14 of that calling on hospitals. They are also experienced in other key commercial functions, including sales management, market access, marketing, KOL Development, and Key Account Management. I want to warmly welcome them to the ResLydia team. I'm looking forward to reporting on their accomplishments as we move forward. In addition to the institutional team, we continue to schedule and complete more peer-to-peer speaker programs, improve our presence at key leukemia and hematology conferences, and we'll be utilizing timely non-personal promotion through innovative channels during the second half of the year. And of course, we will continue to maximize access for patients through our hub and other patient and HCP resources. On the scientific side, we are planning additional publications from the phase two trial, highlighting more key mutant IDH1 relapse refractory patients along with the post venetoclax population, as well as providing more elutacidinib evidence from populations outside of our pivotal cohort. In addition, we'll be working to generate supportive data in difficult to treat mutant IDH1 relapsed and refractory patients to bolster our current story. And finally, our medical affairs team will continue to provide relevant information and education for HCPs involved in AML treatment and gather insights from the KOLs to deepen our understanding of where else we may need to develop elucidinib. Overall, we're looking forward to building additional momentum with all of these initiatives as we move through the second half of 2023. And finally, on slide 18, after our experience during the first six months until launch, We believe now more than ever that Roslidia has the potential to address many key patient and HCP needs in relapsed refractory AML. It's a promising treatment targeting mutant IDH1 that has shown impressive durable responses in patients who failed previous therapies. Overall, we continue to see exciting potential to become a market-leading treatment in mutant IDH1 relapsed refractory AML and are looking forward to continuing to execute our launch plan. My thanks to the entire team for all their efforts during the first half of 2023 with ResLydia, and I look forward to providing you with additional launch updates in the future. Thanks for your attention, and I'll now turn the call back over to Raul to provide a brief update on our development progress.

Raul? Thank you, Dave. I will now summarize our development programs. Going on to slide 20. Thank you. We outline our ongoing development programs. We are focusing on growing our hemat business with our internal development plans. We believe both Fostermatinib and Olisutinib has potential in other diseases beyond their already approved indications, and we're currently evaluating several options. In addition, we are evaluating potential in-license opportunities similar to the approach we took with ResLidia. Our ongoing phase 1b study of R289, our IRAC1-4 inhibitor, in patients with lower risk MDS continues to progress well. We have completed enrollment in the targeted number of patients in the second cohort of the trial and expect to begin enrollment in the third cohort in the near future. I will touch more on this program in a minute. More opportunistically, our partner Eli Lilly is advancing R552, our RIPK1 inhibitor, with the initiation of their Phase IIa study in rheumatoid arthritis. As a reminder, this study will enroll approximately 100 patients with moderate to severely active rheumatoid arthritis, and the analysis is expected at the end of 2024. Moving on to slide 21, I wanted to spend a few moments discussing the treatment landscape for lower-risk MDS and how we think about our IRAC14 inhibitor, R289. and how it could address an unmet need. For background, MDS is a disorder of hematopoietic stem cells, resulting in dysplasia and ineffective hematopoiesis in the bone marrow. For patients with lower-risk MDS, risks include autoimmune abnormalities, cytopenias, progression to AML, and death. Patients undergo treatment via blood transfusions or erythropoiesis stimulating agents, or ESAs, for anemia in the first-line setting. followed by lenalidomide, luspatercept, HMAs, and immunosuppressive therapies in the second-line setting. But durable responses in this setting are not common. Substance of patients show limited hematopoietic responses, and these agents result in significant adverse effects. Loss of response following second-line therapy represents a poor prognosis for patients associated with significant morbidity and cytopenias. So there remains a significant unmet need for lower-risk MDS patients who are refractory or resistant to current therapies, and we believe R289 has potential to address this need in this underserved patient population. On slide 22, you see our ongoing open-label Phase 1B study of R289. As mentioned, we have completed enrolling the targeted number of patients in the second cohort of the trial and expect to begin enrollment of the third cohort in the near future. Moving on to slide 23. We continue to evaluate Fostermandib and Olisutidib in additional indications beyond their approved indications, working with KOLs, regulators, We are evaluating these programs across multiple indications, lines of therapy, and treatment regimens, as well as conducting market research to help inform our plans moving forward. We look forward to providing additional updates on these initiatives later on in 2023. Regarding our business development efforts related to the in-licensing of new assets, we are continually evaluating assets that are synergistic with our existing Hemonc 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 the early stages of commercial launch. With our development capabilities and commercial infrastructure, we have the potential to grow our business from internal programs, as well as being the potential commercial partner for in-licensed or acquired Hemonc products. With that, let me turn the call over to Dean for a financial update.

Thank you, Raul. I'm on slide 25. For the second quarter of 2023, we shipped 2,191 bottles of tablis to our specialty distributors, resulting in $30.2 million of gross product sales. 2,265 bottles of tablis were shipped to patients and clinics, while 74 bottles decreased the levels remaining in their distribution channels at the end of the quarter. For the second quarter of 2023, we shipped 200 bottles of Reslydia to our specialty distributors, resulting in $3.2 million of gross product sales. 187 bottles of Reslydia were shipped to patients and clinics, while 13 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales from Tavoise of $21.3 million in the second quarter of 2023, a 15% increase compared to the same period in 2022. We reported net product sales from ResLydia of $2.6 million in the second quarter of 2023, Our net product sales from Tavolis and Reslydia were recorded net of estimated discounts, chargebacks, rebates, returns, copay assistance and other allowances of $9.6 million. For the second quarter of 2023, our gross to net adjustment for Tavolis and Reslydia was approximately 29.5 and 20.7% of gross product sales respectively. Before we move on from net product sales, let me review our expectations for the third quarter of 2023. We are pleased with the strength of our business in the second quarter and expect to see continued strength in our year-over-year total net product sales growth rate as bottles shipped to patients and clinics continues to grow across our business. Incrementally, we expect our growth-to-net adjustment in the third quarter of 2023 to be approximately 31% for Tavalise and approximately 21% to 22% for Resilidia. Onto the next slide. In addition to net product sales, for the three months ended June 30th, 2023, Rigel's contract revenues from collaborations were approximately $2 million, of which $1.2 million was from the delivery of drug supplies, and $800,000 was from royalties from our collaboration agreement with Griffles. We also recognized $1 million in government contract revenue related to income recognized pursuant to the agreement with the U.S. Department of Defense to support our Phase III clinical trial of Fostamatinib in high-risk hospitalized patients with COVID-19. Moving on to cost and expenses, our cost of product sales was approximately $1.1 million for the second quarter of 2023. Total costs and expenses were $32.2 million in the second quarter of 2023 versus $42.8 million in the second quarter of 2022. The decrease in cost and expenses was primarily due to trial completion activities related to the Phase 3 clinical trial for warm autoimmune hemolytic anemia and the Phase 3 clinical trial at high-risk hospitalized patients with COVID-19, as well as timing of activities related to our IRAC1-4 inhibitor program. While we did see a significant drop in operating expense during the quarter, we're expecting operating expenses in the back half of the year, to return to at least first quarter of 2023 levels, as we expect to both further our current clinical efforts and expect to ready for the initiation of new clinical studies, as Raul described. We look forward to providing updates on these potential studies in upcoming quarters, and we'll continue to provide operating expense updates along the way. We ended the quarter with cash, cash equivalents, and short-term investments of $64.4 million. With that, I'd like to turn the call back over to Raul.

Thank you, Dean. As we reviewed on this call, we had a productive first half of the year, and we are focused on our 2023 catalyst. In Q2, we just exceeded our quarterly high for demand bottles for Tavalise, and we look forward to continue to drive momentum for Tavalise sales in ITV, both in the U.S. and globally with our partners. We are executing on the launch of Reslydia and Relapse for Track 3 AML, and now with our academic institution-focused sales team fully on board and several recent Reslydia publications and presentations, we are well-positioned to grow awareness for this product as a new treatment option. In addition, we are identifying ex-US collaborators for this product. We will evaluate new potential opportunities for both FOSTA and NOLA, continue to advance our R289 Phase 1B study, and actively pursue business development product opportunities. So with that, I want to thank you for your interest in the second quarter, and we will now open up the call to your questions. Operator.

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two 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 Igal Nishomovitz with Citi. Please proceed with your question.

Igal Nishomovitz Yeah, hi. Hi, everyone on the team. Thank you. I'm just trying to get a better understanding of how you're managing the business with respect to the path to profitability. I think this quarter was the closest to break even, excluding some of the one-timers where you had net profit given collaboration on a milestone. You mentioned that you're going to be potentially investing in new opportunities for prostamatinib and L-acidinib as well as in licensing, but the top line obviously is growing too. And you mentioned that the expense line might increase a little bit back to the 1Q23 levels. So could you just talk about all that together and how you're thinking about managing the business to get to break even or beyond over the next coming years? Thanks.

Thank you, Yigal. I sure will. Let me turn to Dean to give you an overview on how we're looking at this path towards break even and our investments further.

Hi, Yigal, and thanks for the question. So let me start with just the change in cash for the quarter, which you highlighted a little bit in your question. So the cash increased by $5.6 million for the quarter. The basis of that increase in cash was really the strength of sales. which is offset by the operating expense. That operating expense, as you highlight, is a fairly low level of clinical spend. And that's simply a result of just timing of our activities. As you look back a year, we wrapped up the warm autoimmune hemolytic anemia, as well as the COVID phase three efforts, as well as there's some variability in the timing of our IRAC spend. So that really resulted in about the $32 million of operating expense for the quarter. The net loss for the quarter, $6.6 million, $2.5 million of which was non-cash, also contributed to strength in cash. And then finally, we had about an $8.5 million pickup in accounts receivable. So we had a slightly high accounts receivable balance in Q1. And that normalized in Q2. So all said, we're at about $5.6 million of increase. As you highlight in your question, getting to profitability and the path to profitability is important to us. And this quarter highlights the potential for that path to profitability. We do expect in the back half, as I said in my prepared comments, to get back to Q1-like operating expense levels. But we do expect the revenues to continue to grow. We expect to continue to manage operating expense very effectively as we have. And that will ultimately, we believe, lead us to profitability. All that said, we haven't given top line guidance and therefore can't be specific on when we'll cross over. But again, I'll reiterate that it certainly is a focus of the business to get to that profitability.

Thanks, Gene. The only thing I'd like to add further is that it's an important priority for us, but it also is important to fund the new opportunities that both are internal as well as things we might unlicense, because that continues to be a priority for both of those things. We like the business. We like the growth of the business. We want it to grow and be even greater and bigger in the future.

Okay. Thank you very much.

Thank you, Egon.

Thank you. Our next question is from Kristin Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi, everyone. Thanks for taking my questions. I found it really helpful to understand a little bit more about what you're seeing in terms of new patients. So thanks for sharing that with us. So I wanted to see if you could talk about what the compliances you're seeing amongst the different lines of treatment and also if the responses are pretty much in line with your own analysis since you've been tracking this for a couple quarters now.

Thank you for asking that question. We're excited to share some of that information. Dave?

Thanks, Kristen. And, you know, I will say that it's fascinating We don't have an ability to kind of take the patients that are on therapy in the second and third and determine response rates, if that was your question. But I will comment on kind of what we've looked at in terms of persistency. And it is still early. But what we've looked at is the patients who started in Q4 of last year when we saw this higher percentage of third and fourth line patients. And we compared it to patients who started in Q4 of 21 and Q4 of 2020. And if you look at their persistency at four months and beyond versus the persistency of patients who were in 21 or 20, It is trending higher. And so we do think this is a positive trend. Again, this has only been happening for three quarters. So it's going to take some time for this to reflect in a larger number of refills. But certainly we believe our business is going in the right direction.

Okay, thank you for that. And then you mentioned for ResLydia that you're looking at potentially populations outside of what was evaluated in the pivotal cohort. Can you please just elaborate a little bit more on that?

Let me make a couple of comments on that, certainly. So, you know, IDH-positive patients in AML, there's numerous opportunities within IDH-positive AML patients that we're looking at. Earlier line, for example, in certain subsegments we think are interesting to study further. Some already in the relapsed refractory area where we want more data. But we're also looking in areas outside of AML where there's been shown to have some opportunities for IDH-positive, a product that is an IDH-positive mutant product such as Resilidia. Dave?

Yeah, I would just say that, you know, all of the patients in the Phase II, if you consider outside of the pivotal cohort, I mean, some key populations that are really important to clinicians out there, include patients who were enrolled with MDS versus AML, patients who were enrolled treatment-naive, and patients who were on combination therapy versus a single agent. Because as you know, in our pivotal cohort, it was just monotherapy, and it was all relapsed refractory AML. So those are the populations that clinicians have expressed interest in. Some of the data has been presented, the combination data, but we're looking to make sure that the other cohorts, that data is out there as well for clinicians to learn from.

And just to highlight, we did publish the post-Vanetta class data at the e-health meeting, which was very helpful. It was a question we frequently get. Now, how do patients who have been through Vanetta class perform with your product? And the answer was very affirmative in that presentation.

Okay, thanks. And last question for me. I know you made it very clear that you're looking at a couple different options on the table here in terms of next opportunities, but one that comes up pretty consistently for us is GVHD. So I know you shared some promising data earlier this year. Just wondering what the next steps are for following up with those patients in that program in particular. I know you haven't officially declared it as a next candidate, just one that you may consider. Thanks again.

Sure. You know, it's a very attractive opportunity. The data that our colleagues at Duke were able to present and publish, I think, is very compelling data. It's a segment that continues to be important medical need and where Fostermatinib may have a very good benefit. It takes, you know, we're in the middle of evaluating that opportunity alongside other opportunities for Olasunuk, for example, and weighing one against the others as well. So we'll have to make some decisions and not, of course, do everything. But GBHD is a very attractive one. And like I said, later this year, we'll come back to you and discuss how we're going forward with GBHD or other areas.

Thank you. Our next question is from Joe Penn Guinness with HC Wainwright. Please proceed with your question.

Hey, guys. Good afternoon. Thanks for all the details today. So, first, Raul, I'm just wondering if you could share maybe the maturity levels of your discussions to potentially in-licensed students.

Yeah, I really cannot, actually, because I've learned I've been in business development for a long, long time, and until the contract is signed, the contract's not signed, all sorts of things happen. But needless to say, importantly, that we're looking for he-monk opportunities in late stage, either with data or at registration or just launched, as opportunities that we are very interested in. We're particularly interested in opportunities that are a good fit with the audiences of physicians we call on. But if they're in slightly adjacent areas, say transplant, that actually may be a good opportunity as well. So we're looking at those types of opportunities, a lot like with ResLydia, something that we could slot into our portfolio with really only needing a minor increase perhaps in infrastructure, but fully leveraging the infrastructure we have currently in place. And we'd like to have these in place so that we can obviously launch them successfully, just like we're doing with ResLydia in the not that distant future. So we're looking at those type of opportunities. I can't be more specific in terms of what they are or certainly not the timing of that, because it's just challenging until the contracts are done to announce anything in advance like that. But we're excited about the continued effort to look at that. We think that we have a superb Hemonc commercial capability, broadly speaking, and we'd like to leverage that for other companies and other products. So if there's a company out there listening in that has a late-stage Hemonc opportunity, we'd be delighted to speak to you about it. We have a compelling reason why we should be your partner of choice to commercialize here in the U.S. So I'll add an advertisement there. Joe, apologies.

No, absolutely. No, totally fair enough. Thank you. And then... Look, I think the chart regarding the breakout in Tavoli's population by quarter is extremely valuable. So I think, you know, obviously your goal is to continue to expand the population into earlier lines. Right now, it appears on the chart that you're, you know, a little over 30% in the second line population. So I guess, you know, what would you define as your key inflection steps to be able to grow those percentage numbers?

You know, I'll ask Dave to comment on that, but let me, before he does that, let me say we're delighted with the progress we've made here. Recall quite a while ago when we launched this product, we were predominantly used in that later line, fourth plus, and now you see the evolution. It's really satisfying to see the range of patients that could benefit from Tavalise, and hopefully they benefit profoundly.

Yes. So, Joe, let me just make sure I understand your question. So, 75% of the posterity market is in second and third line. We've got approximately 70, based on our, these are internal numbers of patients that we know of and we have their backgrounds and we know what line of therapy they're on. So it represents a subset. But we've got about 70 or up to 75 percent of patients in second and third line. I think what you're saying is the second line is relatively smaller than the third line. And are we going to be able to reverse that? And I think the answer is, yeah, we think over time that we'll continue to get more second-line use. As you know, that is much more challenging because clinicians have been very used to using rituxan, T-pose in that space for a long time. And I think, frankly, that the fact that a third of our patients that we are monitoring here are on T-pose tablis in the second line setting shows that we are making progress. I think that the key is for us is to get usage where we can get it, meet the clinician where they are with their patient. And when they see these results, they tend to move it up. And that's what our most, you know, our most loyal tablis prescribers tell us that, you know, they really like the drug. It's kind of, you know, you give the patient the dose, they take it, their platelets go up over time. And they're very happy to move it up. And they see posterity patients as a great opportunity for Tavalese. And that's how we've gotten where we are. I mean, we do have a great team out there that's committed to talking about Tavalese each and every day. And I think once you saw that things had opened up post-COVID, our promotional efforts have been successful in getting more patients earlier. in their treatment continuum. So I don't have a specific number we're trying to get to. We're not trying to necessarily get to that same proportion that 11,400 patients in the second line would represent. But yeah, we're trying to grow our second line use, but we're also trying to make sure both second and third line are the predominant part of our business.

No, that's very helpful. And luckily, we're not testing my short-term memory now, so that's good. But If I'm thinking long-term, Davis, I heard you correctly. I mean, even going back a couple years ago, you know, I think you've now translated your initial wish list to actual data supporting what you wanted to do, being able to have patients get used to the drug, you know, coming out of COVID, being used to the drug, seeing the refill rates based on the platelet data and what have you. So these are, you know, real data to look at versus the original wish list you had. So I appreciate it.

Absolutely. We're happy to see these results and provide them to you.

Thanks, guys.

Thanks, Joe.

Thank you. Our next question is from Yun Yang with Jefferies. Please proceed with your question.

Thank you. So you showed us a number of bottles of Tavolis shipped or sold. per quarter, but can you actually talk about how many patients were on tablis at the end of the quarter? And then also based on the tablis patients by line of therapy, for second line, it's a little over 30% of tablis use. So based on the number of eligible patients, is it fair to assume that currently You have about middle single digit percentage penetration in second line and about 15% in third line. Thank you.

I'm not sure I'm quite following your math, Ute, but I will say that, you know, first of all, from a new patient perspective, we have more new patients last year, clearly more new patients last year than we've ever had in the history of the brand. And we're continuing that trend this year. So we don't share specific patient numbers, but the fact But we are very happy with our progress, our consistent progress in having new patients on the brand. And yes, I mean, this is our book of business, our best estimate based on the patients we do capture, what their line of therapy is. But to project this over the entire market is... is not something I would necessarily do right now. This is our own internal data that we're sharing, and we're very happy with the trend as opposed to necessarily the specific percentages there. But the trend is clear, and that's why we wanted to share it with you.

And it's been over several quarters, which is why we didn't share it earlier. We wanted to make sure it was somewhat consistent. And you see that it begins to approach that. And as Dave said, some caveats. This is a subset of patients that go through our hub. And so it's not all patients out there. We can't capture all patients out there. But the trend, I think, is clear. Hopefully continue to grow, though, and opportunity in further growth in the second line.

Thank you.

Thank you, Yoon.

Thank you. Our next question is from Allison Brathel with Piper Sandler. Please proceed with your question.

Thank you. Thanks for all the detail on today's call and thanks for taking my question. Maybe first one on the pipeline, just for R289 and lower risk MDS and that initial readout slated for this year, you know, just considering that update should include the first few dose cohorts, could you kind of frame what you would view as a successful readout there? And then just second, following up on a prior question and prior discussion about cash burn and break-even point, could you help us maybe understand what's gating to providing revenue guidance, at least on the Tavolese front now that it's in year five or so of launch? How should we be thinking about that, the potential for that heading into next year and going forward? Thanks.

I'll ask Dean to answer the second, but let me try to answer the first one. So the low-risk MDS Phase 1B study is ongoing, and we've completed enrollment of the required number in dose cohort 1 and cohort 2. These two lower dose cohorts are still, we think, might be too low in terms of seeing any remarkable responses in terms of efficacy. They're primarily safety doses. There's some chance we'll see some benefit in some of the hematologic improvements, but more likely we want to see safety out of these first two cohorts. And so far, so good. And we're going to discuss with FDA to allow us to go into cohort three and cohort four, where we think we're more likely to see some efficacy signals and hopefully continued safety. So I think we hope to share this information at a meeting on the lower cohorts, since we've already had them enrolled and we'll have further data on those by the end of the year. The other cohorts, if we can get to enrolling those, you do need to wait a number of months, maybe up to six months, for showing some efficacy signals in the higher dose groups. So that might not be, it's certainly not this year. And I think it'll be more likely next year in terms of the timing of that. Dean, on terms of guidance. Sure.

On terms of guidance, we've, It's important to note that as we look at our top line, we've got Tavolis, which to your point is growing consistently in a quarter over quarter consistent growth pattern. So we agree with you there that there's a There's a potential to provide guidance with respect to that singular number. With respect to the rest of the top line, as we look at AML, still early in the launch phase, and we've talked about a lot of activities that are going to create the momentum in that phase. We've got the royalty revenues, and then we've got the collaboration revenues. The collaboration revenues, they can be periodic. Certainly over time, we've highlighted... some of the large payments that we expect. But all of those elements all factor into that top line guidance. And we don't plan to, at least in the near term, provide the top line until we really see some of that specificity and clarity as it relates to ResLineas. So that's on the top line. With respect to the path to break even, obviously, The top line is critical there. And as Raul suggested also, as he described the possibilities with respect to further development of Fosthematinib as well as Lutacitinib, as we really finalize what those final plans are with advisors and the different work we're doing, we'll be able to provide more clarity in what the operating expense looks like into the future as we really finalize our plans with respect to the incremental studies we plan to do.

Great. Thank you.

Thank you, Allison.

Thank you. Our next question is from Kalpit Patel with B. Reilly Securities. Please proceed with your question.

Yeah, hey, good afternoon. Thanks for taking the question. One more on R289. I know you just mentioned that the focus there is just on safety for the first two cohorts, but would you plan on showing any sort of biomarker data? I know hemoglobin tends to increase early on with some of these competing agents. You know, it just might be useful to see any sort of evidence of preliminary clinical activity, even if there is a trend.

Yeah. You know, it's just too early. We haven't actually analyzed all the data yet. And so we do want to share the information on the first two cohorts. So I can't make a commitment because I don't know what we'll see there. But we certainly will share some of that as we get it. But like I said, I think really we'll just need to wait until next year to see cohort three, cohort four data. That will be more compelling data.

Okay. Okay. And then for your plan to potentially in-license additional EMON assets, could you give us a little more color on how you might be thinking about financing or structuring such transactions given your current balance sheet?

Yeah, there's a number of options on the table for doing so. And so we're looking at a range of different possibilities for that. The important thing is that this be a late stage opportunity that is not requiring any substantive clinical type of investment. And so therefore, it's a quick timing to get to an approval opportunity. and therefore to the market. And because we hope that this and would expect that this product be highly synergistic, that is fully leveraging our current commercial capability, that is not requiring to build more or any of substance, that it'll be accreted very quickly after launch. So those are important aspects to the product. But many products in Himach Hemonc tends to be a multi-niche category where there are many products in a smaller category, like 1,000 patients like with ResLydia. That's what we're looking for to do that. And therefore, we're hoping that that will help the economics of the thing. But we haven't gone far enough to be able to articulate that. Though when we do announce a product, we certainly will discuss with you how we hope to finance such an acquisition.

Okay, got it. And one last question on ResLydia. Do you anticipate to make any milestone payments to FORMA or Novo now related to the acquisition in the next 12 months, maybe commercial-related milestones?

We certainly have royalty payments that we will make and happy to make them, but I don't think there's anything of substance, and certainly we'll look at it, but I don't recall anything of substance in the near term.

Okay. Thank you. Sure.

Great.

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

Thank you, operator, for your help today. In closing, I'd like to thank everyone for joining us on the call and your continued interest in Rigel and what we're doing. But I'd also like to take a moment to thank our employees for their continued commitment to improving the lives of patients, some with diseases as awful as AML, because every day does count. And they certainly keep that in their minds as they work very diligently on moving these products and projects forward. So thank you for that and look forward to keeping you updated on future calls. Have a good afternoon or evening.

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