Rigel Pharmaceuticals, Inc.

conference call for the fourth quarter and full year 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 you to our first speaker, Ray Fury, Ryan Willis, Executive Vice President, General Counsel, and Corporate Secretary. Thank you, Mr. Fury. You may begin.

Welcome to our fourth quarter and year-end 2023 financial results and business update conference call. Financial press release for the fourth quarter and year-end 2023 was issued a short while ago. 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. ended December 31st, 2023 on file with the SEC. Any forward looking statements are made only as of today's date, and we undertake no obligation subsequent events or circumstances. At this time, I would like to turn the call over to our President and Chief Executive Officer, Raul Rodriguez.

Raul? Thank you, Ray, and thank you, everyone, for joining today. Also with me today are Dave Santos, our Chief Commercial Officer, Francois DiTropani, our Senior Vice President of Medical Affairs, Joe LaSaga, our Executive Vice President in Corporate Development, and Dean Shorto, our Chief Financial Officer. We have an exciting presentation today and we will provide substantial information on Gravetto, our most recent addition to our portfolio. Because of this, this presentation would run approximately 40 to 45 minutes to be followed by Q&A. Let me begin on slide four. We are thrilled with the significant progress we made in growing our hematology and oncology business in 2023 and in the early part of 2024. We look forward to maintaining this momentum throughout the remainder of the year. Our two marketed therapies, Tavalisan ITP and ResLydia in mutant IDH1 relapse or refractory AML, saw record sales in 2023 of 104 million, a 36% growth over 2022. This is an outstanding performance for both products, and this growth can be attributed to the execution of our initiatives by our commercial and medical affairs teams, and frankly, across the entire organization. We are focused on continuing this growth to drive growth for these two important treatments. Most recently, we expanded our commercial product portfolio with the acquisition of Gavretto. An FDA-approved therapy for the treatment of red fusion positive metastatic non-small cell lung cancer and advanced or metastatic thyroid cancer, Gavretta is a compelling addition to our portfolio, representing a valuable, targeted treatment option for the non-small cell lung cancer patients with red fusion positive disease. This acquisition is part of the execution of our corporate strategy, leveraging our existing commercial and medical affairs infrastructure and providing top-line growth. We will have Dave and Francois speak more about this product later on today's call. In addition to our commercial efforts, we are continuing to advance our development programs with two recent and important strategic alliances, advancing our goal of evaluating res lydia in a broad range of IDH1 mutant cancers, including AML, MDS and glioma. These alliances with MD Anderson and Connect greatly enhance our ability to further evaluate Resilidia's potential in a cost-efficient and time-efficient manner. We'll touch more on these plans later on on this call. In addition, R289, our IRAC 1 and 4 inhibitor, is advancing in a Phase 1b study of lower-risk MDS. With the growth of Tavolis and ResLydia sales and the addition of GrabVreto, which we expect to be start recognizing revenue in the third quarter of 2024, as well as our cost efficient and disciplined approach to clinical development, we are well positioned to continue growing our business and to reach financial breakeven. Now, let me give you an overview of the acquisition of GrabVreto and why we're so excited to add this product to our portfolio. to continue making this treatment available to patients in need. What makes this acquisition so compelling to us are the synergies between this product in our existing portfolio, infrastructure, and expertise. We believe we have the right people and the right systems in place to bring this product to patients and their physicians. Gavaretta is a once daily oral red inhibitor with an established foothold in the U.S. market and having generated 28 million in U.S. net product sales in 2023. Further, with patents that are issued or expected to issue with a statutory expiration date between 2036 and 2041, we're well positioned to make Gavaretta available for years to come. In exchange for U.S. rights to Gavaretta, We will pay our partner, Blueprint, a purchase price of $15 million, $10 million of which will be payable upon first commercial sale, and $5 million, which will be payable upon the first anniversary of the closing date. The deal also includes potential future regulatory and commercial milestone payments to Blueprint, as well as tiered royalties on net sales of Gabretto. We believe these are very good economics for Rigel and put us in a great position to begin recognizing product sales in the third quarter of 2024 and to begin capturing the value from this program in the near term. With that, I'll turn the call over to Dave and then Francois to talk more about Gavaretto and the opportunity it presents. Dave? Thank you, Raoul.

On slide six, I'll begin by reviewing the FDA-approved indications for Gavaretto. which include the treatment of adult patients with metastatic retfusion-positive non-small cell lung cancer, as well as adult and pediatric patients 12 years of age or older with advanced retfusion-positive thyroid cancer who require systemic therapy and who are in radioactive iodine refractory. Moving to slide seven. I want to expand on Raoul's opening remarks and why we believe Givretto is a strategic addition as the third FDA-approved oral targeted therapy in our Rigel commercial portfolio. On the left, as Raoul mentioned, Givretto generated nearly $28 million in U.S. net sales last year. Those sales grew more than 21% above reported sales of almost 23 million in 2022. So this is clearly an important opportunity to continue providing meaningful therapy to RET fusion positive patients with non-small cell lung cancer and advanced thyroid cancer. We believe this compelling Gavretto opportunity fits our business well for a few reasons. First and foremost, it enables us to immediately and efficiently move into a large solid tumor market where a lot of time and effort have already been invested to maximize both the importance of testing for actionable targets and the awareness of therapies specific to those targets. Indeed, most clinicians are already testing patients and immediately recognize RET as a biomarker associated with an FDA-approved therapy. So, we anticipate that the RET market will continue to expand as more RET fusion-positive non-small cell lung cancer and advanced thyroid patients are identified. Secondly, we believe we have built strong access capabilities that we can immediately leverage to ensure current and newly prescribed patients have access to GiveReto. We have an efficient distribution network with Tavalis and ResLydia that will soon be ready to accommodate Gavretto, combined with our Rigel OneCare patient services hub that has established a reputation for being highly responsive to patients and providers. And importantly, we have a track record of ensuring strong coverage and reimbursement for oral targeted therapies in difficult to treat diseases that we plan to continue with GiveRedO. Lastly, this opportunity makes perfect sense for us because it is highly complimentary to both the commercial and medical affairs field teams we have in place who call on both academic centers and community oncology practices. With our Rigel footprint already in these accounts, we will be able to be even more efficient with our time and resources as we discuss multiple products within these accounts. On slide eight, I'll provide a brief market overview of our biggest opportunity, non-small cell lung cancer. You will see on the left that approximately 235,000 lung cancer patients will be diagnosed this year. And of those, 80 to 85% or approximately 194,000 will be non-small cell lung cancer patients. Approximately 1 to 2% of those 194,000 non-small cell lung cancer patients will test positive for the RET fusion, giving us a total incidence of approximately 3,000 RET fusion positive non-small cell lung cancer patients this year. On the right side of the slide, the graph shows research done last year on the first-line therapies that were used in RET fusion-positive patients who were eligible for treatment. As you can see, about three-quarters of the patients were treated with one of the two FDA-approved RET inhibitors, with Gavretto used in about a fifth of patients prescribed a RET inhibitor. Importantly, you will see that there is still approximately a quarter of the market being treated by chemotherapy with or without an immune checkpoint inhibitor or a multi-kinase inhibitor. We view this quarter of patients as a growth opportunity for RET inhibitors and Govretto because as you will hear from Francois, those therapies are suboptimal in the treatment of RET fusion positive non-small cell lung cancer patients. With that background, let me turn it over to Francois to share more about the RET biomarker, its role in non-small-cell lung cancer, and the profound impact that RETO can have on RET fusion-positive non-small-cell lung cancer patients. Francois?

Thank you, Dave. Let me give you a brief overview of the role of RET fusion in solid tumors with a specific focus on non-small-cell lung cancer and the clinical data with pulsating. On slide 10, I will summarize why RET altered solid tumors have been underserved historically. RET is a non-oncogenic driver in many cancers and can lead to tumor growth and proliferation across a variety of different tumors. Two primary mechanisms have been identified, fusion and activating mutation. In red fusions, which are relevant for non-small cell lung cancer and papillary thyroid cancer, owing to aberrant DNA repair processes, the red gene is fused to another unrelated gene. Red fusions have been identified in approximately 1 to 2% of patients with non-small cell lung cancer, representing approximately 3,000 new patients a year in the United States. Incidence of red fusion positive non-small cell lung cancer is higher in adenocarcinoma, in patients with a minimal smoking history, in younger patients at diagnosis. No differences are observed between genders. Red positive fusion is also reported in 20% of papillary thyroid cancer, representing approximately 1,000 new cases a year in the United States. Historically, there is a great medical need as non-selective therapies in red-positive non-small-cell cancer have shown poor outcome with an overall response rate inferior to 30% associated with drug-related toxicity and a high rate of dose reduction in up to 75% of patients. Moving to slide 11, early clinical trials in red-fusion-positive non-small-cell cancer evaluated multi-kinase inhibitors, including Cabozantinib, Vandetanib, Lemvatinib, or Serafinib, as they had shown some degree of anti-red activity in the preclinical setting. However, these agents showed modest clinical activity with response rate ranging from 0% to 28%, short median progression for survival, and high rates of treatment-related toxicity resulting from their non-red kinase inhibition. Although PD-1 and PD-L1 expression can be elevated in some patients with an oncogenic driver such as RET, preliminary data suggests that immunotherapy is less effective in patients with RET-driven non-small cell cancer, showing 6% overall response rate and progression for survival of 2.1 months. Furthermore, practice guidelines state that that contraindication for treatment with PD-1, PD-L1 inhibitors in patients with advanced or metastatic non-small cell lung cancer may include the presence of oncogenes, such as EGFR, ELK, and RET, which may predict a lack of benefit. Therefore, the same practice guidelines recommend that targeted therapy with the oncogenic driver should take precedence over treatment with an immune checkpoint inhibitor. Owing to the low activity and toxicity concerns with both multi-kinase inhibitors and immunotherapy, treatment paradigm for advanced red fusion positive disease have been historically centered around platinum-based chemotherapy, which exhibit response rate in the 40 to 50% range and progression for survival of six to eight months, further highlighting the need for more effective and selective therapies. While chemotherapy has long been the gold standard in metastatic non-small cell and cancer, the landscape has shifted over the past two decades to the use of therapies targeting specific driver mutation. And the FDA has approved several therapies for biomarkers, non-small cell and cancer in the past 10 to 15 years. Pralsetinib is an oral tyrosine kinase inhibitor that selectively and potently targets oncogenic red fusions and mutation, including mutation associated with resistance to multi-kinase inhibitors, and has shown high selectivity for red over other tyrosine kinase. Pralsetinib is 81-fold more selective for red than VGFR2 and 20-fold more selective for red than JAK1 in biochemical assays. Preclinical studies of paracetinib have also shown blood-brain barrier penetration and activity against intracranial tumors. Finally, practice guidelines also recommend targeted therapies as first-line treatment for eligible patients with metastatic non-small-cell cancer with actionable genetic variants. Let's turn now our attention on slide 13 to the clinical results from the study that led to the approval of pralsetinib in both red fusion positive non-small cell lung cancer and red fusion advanced or metastatic thyroid cancer. I must note that the data highlighted on this slide represent a more recent data cut and therefore results presented here, while consistent, may be slightly different than the one in the prescribing information for pralsetinib. The ARRA study is a Phase I-II multicenter, open-label dose escalation and expansion study. The Phase I portion of the study had a primary endpoint of maximum tolerated dose, recommended dose for Phase II and safety. The Phase II portion of the study had co-primary endpoints of overall response rate and safety. Key secondary endpoints were duration of response, clinical benefit rates, disease control rates, progression for survival, and overall survival. From the phase 1, the investigators concluded that paracetinib was generally well tolerated at doses through 400 mg QD. Therefore, 400 mg QD was determined as the maximum tolerated dose and recommended dose for the phase 2, based on safety, PK, and antitumor activity. In the non-small cell and cancer subset, overall responses were recorded in 63% of the 130 patients with previous platinum-based chemotherapy and in 70 to 80% of the 107 treatment-naive patients. Tumor shrinkage was observed in 100% of treatment-naive and 97% of prior platinum-based chemotherapy with baseline and post-baseline measurable disease. Overall, in the subset of non-small cell and cancer patients, median duration of response, one of the key secondary endpoints in the ARL trial, was durable at 19.1 months, ranging from 14.5 to 27.3 months. In the safety population of 281 patients, median treatment duration was 15 months, with a median relative dose intensity of 86.1%. Pralsetinib was generally well tolerated with predominantly grade one to adverse events. 10% of patients discontinued Pralsetinib due to treatment related adverse events. In the red fusion positive thyroid cancer subset, Pralsetinib continues to show efficacy and a manageable safety profile. 20 out of the 22 patients with previously treated red fusion positive thyroid cancer achieve a response. Finally, in the 23 patients evaluable for efficacy from the red fusion positive solid tumor subset, patients older than thyroid or non-spinal cell cancer, and including colorectal pancreatic cancer patients, for example, the overall response rate was 57%, and the disease control rate was 83%. On slide 14, you can see that the development of CNS metastasis is common with nearly half of non-small cell and cancer patients developing brain metastasis during their lifetime. And it is a poor prognosis factor in patients with right fusion-positive non-small cell and cancer. In a study by Drillon et al., 25% of patients had brain metastasis at time of diagnosis. Non-selective therapies such as multi-kinase inhibitors have shown low intracranial response rates with short median progression for survival and overall survival, respectively at 2.1 months and 3.9 months. Patients with untreated CNS metastases were permitted in the ARROW study if not associated with progressive neurological symptoms. As I have indicated to you earlier, preclinical studies of prilacetinib have shown blood-brain barrier penetration and activity against intracranial tumors. In the present study, prilacetinib showed intracranial activity in patients with right fusion-positive non-small cell and cancer, and measurable baseline brain metastasis, with a 53% overall response rate, including the inducement of intra-cranial complete response in three out of 15 patients, all 20% of the cohort, and a median duration of response of 11.5 months. Moving to slide 15, falcetinib is the only oral once-daily therapy that selectively and potently inhibits rate alteration has demonstrated high rates of durable response regardless of treatment history, with response rate in the range of 74% to 80% for treatment-naive patients and 63% for previously treated non-small cell and cancer patients. Palcetinib is clinically proven to cross the blood-brain barrier and has demonstrated intracranial activity. It has an established safety profile with manageable adverse events and a low discontinuation rate. Palcetinib does not carry a warning and precaution for QT prolongation in non-small cell and cancer population where the incidence of cardiovascular comorbidities is approximately 20 to 40%. Finally, pralsetinib is recommended by practice guidelines as a treatment option for certain patients with red-positive advanced thyroid cancer and red-positive metastatic non-small cell cancer, and carries a Category 2a preferred recommendation as first-line therapy for red-positive metastatic non-small cell cancer. In conclusion, all those elements lead us to firmly believe that pralsetinib has a differentiated value proposition. With that, I will turn over the call back to Dave to talk about the commercial plans for pralsetinib.

Thank you, Francois. Now that we've covered both the opportunity and the clinical overview of RET, non-small cell lung cancer, and Gevretto, I wanted to provide a brief overview of the Gavretto commercialization plans and timeline as we move through an exciting 2024. I'll also briefly review our Q4 results showing continued momentum with our two other oral targeted therapies, Tavalise and ResLidio. Moving to slide 17, I want to provide a little more detail on why we believe our capabilities are especially suited to this great opportunity with GiveReddo. First, we have an efficient distribution network for Tavalise and ResLydia that swiftly and dependably delivers our products to accounts and patients overnight. Our network can readily accommodate GiveReddo accounts and patients. Second, our Rigel OneCare patient services hub has over seven years of experience working with patients, providers, and payers, and our team there will also be fully ready to provide those outstanding services to Gavretto patients and customers. And lastly, our access team has strong existing relationships with payers and networks, which we will continue to leverage to ensure the same high levels of coverage and reimbursement that have led to our 97% commercial coverage we have achieved with Tavalise. Specifically, on slide 18, we have already begun the process of working closely with Genentech and Blueprint to ensure both current and newly prescribed patients continue to have access to Givretto without interruption. Rigel OneCare will work with providers to assist in moving patients from the existing Genentech network and access programs to the Rigel network and Rigel OneCare patient programs, ensuring a seamless transition for patients. Our distribution network ensures patient and provider choice in where their prescription is filled, and we will have Rigel OneCare staff fully dedicated to Givretto to ensure the highest level access support and customer service. we anticipate beginning the transition in Q2 and completing the transfer of all patients in Q3. Slide 19 reviews what we believe are the four key drivers for continued growth as we begin our commercialization journey with Gavretto. The first is patient identification. It is important that as many as possible of those 3,000 potential RET fusion-positive non-spinal cell lung cancer patients are identified each year. Fortunately, even if clinicians aren't specifically looking for RET fusion positive patients when they do test, about 90% of them immediately recognize the RET biomarker as being associated with an FDA-approved therapy. Also, in the research conducted last year, about 80% of non-small cell lung cancer patients are being tested, and that is the same in both the academic and community settings. When clinicians don't test, it's more likely due to not having adequate tissue available. So again, we do not anticipate a need to educate clinicians about the importance of RET or testing. Awareness is high, and that will continue to drive patient identification of RET fusion positive non-small cell lung cancer patients. Secondly, and more importantly for Devretto, choice of therapy in those identified patients who are treatment eligible is an impactable growth opportunity for us. Most oncologists have yet to try Devretto in the front line. And the biggest reason for that is comfort and familiarity with other drugs. As you heard from my opening comments and from Francois' presentation, the use of chemotherapy with or without an immune checkpoint inhibitor and multi-kinase inhibitors represents about one quarter of the use in the first-line treatment of RET fusion positive patients. By growing awareness of Gavretto's efficacy, safety, and once-daily oral dosing, We believe we can grow future use of Gavretto among current non-users. Third, we believe that Gavretto will continue to grow due to its long duration of response and convenient once-daily dosing. These drivers of persistency should continue to drive our carryover business each month as patients refill their prescriptions. And finally, as we have discussed, as we leverage our strengths in coverage, reimbursement, and patient services with Rigel OneCare, we believe we can gain loyal users of Gavaretto from clinicians who view out-of-pocket costs and difficulty obtaining reimbursement as barriers for the use of RET inhibitors. In summary, we are well-positioned to continue growing Gavaretto through positive momentum in these four key drivers. And to wrap up our prepared remarks on Givretto with slide 20, I wanted to provide a high level timeline of the plans for the rest of the year. Through this month, we'll be preparing our distribution network for the addition of Givretto. Then beginning next quarter, Rigel OneCare will begin implementing the plan to transition current and newly prescribed Givretto patients. We will also begin preparing our field teams. In Q3, we expect to begin distributing Gavretto and promoting it to customers with a focus on current users. Then in Q4, we will continue expanding our breadth of prescribers by calling on non-users in both the academic and community settings. It will be an exciting year bringing Gavretto into our portfolio of oral targeted therapies, and I look forward to updating you on our progress as the year moves ahead. Moving to slide 21, just a few brief comments on our continued growth of Tavalise and our progress with ResLydia in the first full year of launch. On slide 22, you will see that 2023 was a strong year of portfolio growth, as our quarterly US net product sales grew from $24 million in the first quarter to $29 million in the fourth quarter. That consistent quarter-over-quarter growth enabled us to generate total net product sales of nearly $104 million for the full year, $28 million more than 2022, representing an impressive 36% growth rate. Tavalese, the main driver of this growth, generated approximately $94 million in net sales up 24% over the prior year. That growth was driven by our continued focus on generating new patient starts, which reached the highest daily average of the year in Q4. We believe this momentum with new patient starts will continue to fuel growth of Tavalise in 2024 and beyond. ResLydia also contributed to our top line in a meaningful way generating $10.6 million in net product sales. We are growing both breadth and depth of adoption among academic AML treaters. And for 2024, we see a great opportunity to increase awareness and adoption of ResLydia in the community setting. Overall, we are thrilled that we surpassed $100 million of U.S. net product sales in 2023, and we look forward to building on this momentum in 2024 and beyond. I look forward to updating you again on our progress next quarter. And with that, I'd like to thank you for your attention, and I will now turn the call back over to Rahul to provide a brief update on our development progress.

Rahul? Thank you, Dave. I will now summarize our pipeline expansion plans and provide updates on our other development programs, beginning on slide 24. Beyond the growth of our three approved products and their indications, here's how we're going to grow our hematology and oncology business. There are two major ways. First on the right, we will continue to in-license or acquire or possibly acquire companies with products that meet our criteria. We are looking for differentiated products in hematology or oncology or related areas, products that are late stage. What this means is with registrational data or with soon or more advanced that fit into our hematology and oncology infrastructure. Rigel as a transaction partner presents a more attractive alternative to a company with such a product versus building an entire commercial infrastructure in de novo. Two companies have already made this decision with our two recently acquired products. We have the ability to do this for other products in the hematology and oncology space, and we are actively pursuing this approach. We encourage companies to reach out to us if they have such an opportunity. On the left side of this slide is how we're going to grow our current products with new supportive data and particularly with new indications. From our current product portfolio, we believe olosutinib has potential in numerous cancers where mutant IDH1 plays a role. We see additional segments in AML, in glioma, and in MDS as promising indications for olosutinib. As mentioned earlier in this call, we've entered into strategic development alliances with MD Anderson and Connect to further evaluate these indications. I'll touch more on these agreements in the next slides. And lastly, R289, our IRAC1 and 4 inhibitor, is continuing to enroll its Phase 1B trial. We hope that this program demonstrates the potential of R289 to provide patients who have failed other agents with a much-needed treatment option. We expect to have preliminary data from the first part of this trial late this year. With that, let me turn to slide 25 to review the strategic efforts with MD Anderson. As many of you know, MD Anderson is a premier cancer center, treatment center in the U.S., and frankly, the world. They have a very large population of patients in various cancers, including AML, as well as the infrastructure and capabilities to run studies quickly. They pride themselves not in providing the standard of care of today, but rather defining the standard of care of the future. And they share with us a strong conviction in the potential of all this movement. There are four patient populations that we in MD Anderson are particularly excited about for olisutinib. We are planning to evaluate olisutinib in first-line AML, in high-risk MDS, in combination with other agents. We're also going to conduct a trial in CCUS and lower-risk MDS, and one in maintenance therapy in post-transplant patients. That's four potential clinical trials being conducted in a cost-efficient manner with up to $15 million paid over five years. This is also very time efficient as they are able to generate data quickly in these various opportunities. We expect these trials to set us up for conducting a registrational trial subsequently, and we're very proud to have MD Anderson as a partner. Moving on to slide 26, glioma is a tough cancer that has very limited treatment options that are efficacious. There are approximately 20,000 cases of glioma in the US every year. Approximately 70% of grade two and grade three patients and five to 7% of grade four patients are IDH1 positive. This is a fairly prevalent mutation in these patients and there's a high unmet need for effective treatment options. On the right side of this slide, we show data from a trial evaluating olosutinib in 26 relapsed or refractory, highly treatment-experienced patients with glioma. In this trial, no dose-limiting toxicities were observed, and olosutinib demonstrated a meaningful disease control rate, a very good outcome for a very poor prognosis patient population. Moving on to slide 27, we are excited for our collaboration with Connect Consortium to evaluate olosutinib in patients with glioma. Connect is a consortium that is currently conducting a phase 2 umbrella trial in glioma, and we are adding olosutinib to this trial to evaluate its safety and efficacy in newly diagnosed pediatric and young adult patients with IDH1 mutant positive high-grade glioma. we will be providing funding of up to $3 million and study material over a four-year period for the collaboration. Again, a very cost-efficient and time-efficient approach. We are very excited about Olasuniv's potential to provide a much-needed treatment option for these patients with such a poor prognosis. With that, let me reiterate that we are very excited with the progress we've made across our development programs, and we look forward to continuing to advance these programs. With that, I'll turn the call over to Dean for a financial update.

Dean? Thank you, Rahul. I'm on slide 29. As I begin to review our typical financial highlights for the quarter, I'd first like to highlight that we reported net income of $737,000 for the fourth quarter of 2023. You'll note in my review that this was accomplished in part through increasing net product sales, including royalty revenues, periodic drug supply purchases from our international distribution partners, and continued disciplined operating expense management across our business. We're pleased with the financial leverage that we're seeing and have been able to successfully grow sales of Tavalise and launch ResLydia in both the community and academic settings within this cost structure. I'll now provide our detailed highlights. For the fourth quarter of 2023, we shipped 2,671 bottles of Tavalise to our specialty distributors, resulting in $36.9 million of gross product sales. 2,463 bottles of Tavalise were shipped to patients and clinics, while 208 bottles increased the levels remaining in our distribution channels at the end of the quarter. For the fourth quarter of 2023, we shipped 308 bottles of Versylidia to our specialty distributors, resulting in $5 million of gross product sales. 278 bottles of Versylidia were shipped to patients and clinics, while 30 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales from Tavolis of $25.7 million in the fourth quarter of 2023, a 17% increase compared to the same period in 2022. We reported net product sales from Roslidia of $3.9 million in the fourth 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 $12.3 million. For the fourth quarter of 2023, our gross-to-net adjustment for Tavolis and Reslydia was approximately 30.4% and 21.9% of gross product sales, respectively. Before we move on from net product sales, let me review our expectations for the first quarter of 2024. Let me start with Tavolis. Despite the typical first quarter reimbursement issues confronting our industry, such as the resetting of copays and the Medicare donut hole, we expect to see a small increase in bottle shift to patients and clinics in the first quarter of this year as compared to the fourth quarter of 2023. we expect to see continued growth in bottle shift to patients and clinics throughout the year. For ResLydia, we expect to see continued strength in our bottle shift to patients and clinics in the first quarter of 2024. I would highlight that we saw increases in bottles remaining in our distribution channels at the end of the third and fourth quarters of 2023, of 139 and 208 bottles for Tabilis, respectively. Given these increases, we expect to see a drawdown of these inventory levels in the first quarter of 2024. Both the Tabilis and Reslydia inventory levels are variable and outside of our control. Incrementally, we expect our gross to net adjustment in the first quarter of 2024 to be approximately 33% for Tabilis and approximately 27% for Reslydia. Finally, as an important reminder, we do not expect to start recognizing revenue from Gavretto until the third quarter of this year. We look forward to providing further updates as the year progresses. On to the next slide. In addition to net product sales, in the fourth quarter of 2023, our contract revenues from collaborations were approximately $6.2 million, and our government contract revenues were approximately $100,000. Contract revenues from collaboration consisted of approximately $1.1 million of royalty revenue and approximately $5.1 million from periodic drug supply purchases from our international distribution partners. Moving on to cost and expenses, our cost of product sales was approximately $3.8 million for the fourth quarter of 2023. Total costs and expenses were $33.8 million in the fourth quarter of 2023, compared with $49.2 million in the same period in 2022. The decrease in costs and expenses was partly due to decreased research and development costs due to the timing of trial completion activities related to the phase three clinical trials of Fostamatinib in patients with COVID-19 and warm autoimmune hemolytic anemia, as well as the timing of trial our IRAC 1-4 inhibitor program. In addition, the decrease was also due to lower facility-related costs and a milestone payment to Forma Therapeutics recorded as in-process R&D included within costs and expenses in the fourth quarter of 2022. As we move into 2024, we currently expect our total costs and expenses for the full year of 2024 to increase by typical annual increases in compensation and other business costs, along with increases in our cost of goods sold as our business continues to expand. Incrementally, we look forward to progressing our strategic collaborations with MD Anderson and Connect in the very cost-effective manner that we've previously reported. incremental to these costs, we plan to complete the transition of the Gavaretto asset to Rigel and expect to incur certain specifically associated with this new product. While we continue to review opportunities for this asset and related costs, we currently expect our SG&A costs, along with our clinical development costs, consisting of an expected drug interaction study to be less than $10 million for 2024. We look forward to providing further updates in the future. Finally, we ended the fourth quarter of 2023 with cash, cash equivalents, and short-term We look to maintain our focus and disciplined financial approach into the future. With that, I'd like to turn the call back over to Raul. Thank you, Dean.

We're very proud of the progress we made in 2023 and in the early part of 2024 in expanding our hematology and oncology business. As we look ahead for the remainder of 2024, we're focused on continuing to grow our sales of ResLydia and Tavalise by broadening awareness and adoption of our prescriber base. Further, we are keenly focused on transitioning Gravretto to our commercial operations. We look forward to initiation of additional allosteutic clinical studies alongside our partners, MD Anderson and Connect. And we will continue to evaluate other opportunities for expanding the development of our products. And we will enroll and generate preliminary data from our Phase 1B with 289 in low-risk MDS. We are actively pursuing additional in-license deals and acquisitions, looking to do similar to our approach we've used with Gabredo and ResLydia. With the growth of our commercial products, a cost-efficient approach to clinical development and financial discipline, we remain focused on working towards financial breakeven and making Rigel a self-sustaining company. With that, I'd like to thank you for your interest in our progress in the fourth quarter, and we will now open the call to your questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would 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 comes from the line of Yigal Nokomovitz with Citigroup. Please proceed with your question.

Hi, Ro and team. Thank you for taking the questions. I have a few on Govredo. I understand that some of these approvals are currently accelerated approvals, and there were some post-marketing requirements specifically for the retfusion-positive thyroid cancer. There was the arrow trial in the tapestry trial, there were some additional data that the FDA was expecting. And then for RET fusion lung cancer, I believe there was some additional work being done with the AccelerRet lung trial. Can you just provide any updates as to what the status of those studies are and whether they are continuing or whether you need them anymore or no longer? Thank you.

Thank you, Igor. I'll ask Francois to answer and I'll pile on at the end.

Yes, so I can give a little bit of an update on the ACCELERATE study and the TAPIS-3. So as you know, ACCELERATE is the randomized open-label control phase 3 study of prilacetini versus standard-of-care for first-line treatment of right fusion-positive metastatic non-sponsored cancer. And TAPIS-3 is the non-randomized open-label agnostic phase 2 platform trial that does enroll, actually, I mean, or that did enroll, actually, I mean, patients with solid tumor and thyroid cancer. So given Blueprint Medicine's lack of global infrastructure, the company has decided to discontinue global development and wind down activities and CPAT to begin in the first quarter of 2024. That said, actually, I mean, for both studies, actually, Tapestry and, you know, Accelerate actually learned, Ryger will be looking and analyzing the data when available.

Let me add, in non-small cell lung cancer in the U.S., we have a full approval, and the only requirements are a drug-drug interaction study, so some minor work. The accelerant study was not necessary for U.S. approval or maintenance of U.S. approval, since we have a full approval. in thyroid cancer. It was conditional, as you noted, and we are in discussions with FDA in terms of maintaining that indication and what's going to be necessary for that. And we'll be sharing that when we have some conclusion to those discussions.

Okay, thanks. And then can you just expand a little bit with respect to the synergies on the existing sales infrastructure, both on the reps as well as the medical affairs, given that you're expanding into the solid tumor world beyond the hematology world? Where do you see the synergies with the current infrastructure for GovReto? Thanks.

Thank you. Dave? Sure, absolutely. I'd love to answer that question, Yigal. First of all, you know, just from an experience standpoint on our team, if we looked at our field team and there's 80% of them have solid tumor experience, And of those 80%, the experience level is nearly 10 years in solid tumors. So we have extraordinary experience on our field team. And then if you look at lung, more than half of our team has lung cancer experience with an average in those half of the field team, which includes medical affairs, of about four and a half years. So we want to exploit that experience very strongly because they're calling on the same accounts. And I'm I want to make sure everybody understands that, you know, in the community oncology setting, docs treat lung cancer quite a bit. And so now we have a product we can go in and a large tumor type. albeit with a very targeted agent, but have a discussion about a product that's very, very relevant to their practice each day. And then, of course, we'll have the opportunity to talk about Tom Elise and ResLydia 2 with those AML treaters. In the academic centers, we obviously will need to call on lung-specific treaters in those academic centers. But what makes it so efficient is we're already in those centers. And so sending one of our institutional reps into an academic center with one product is not as efficient as sending them in to cover two departments with two products. And so those are some of the synergies from a field execution standpoint. But I will say, you know, we have invested a lot of resources in making sure we have really great access services for patients and providers. And the more we can put into our distribution network and leverage our Rigel OneCare patient services hub, the better we'll be for that. And that synergy, I think, is something we really plan to capitalize and leverage as we move into this market.

Got it. Thank you very much.

Thank you. Thank you. Our next question comes from the line of Christine Kulska with Cantor Fitzgerald. Please proceed with your question.

Hi, everyone. Good afternoon and congrats on this acquisition. Very good for your portfolio. So I wanted to comment on some of your key drivers for growth. One of the Barriers for usage you noted with discomfort and familiarity with other drugs. So I know Blueprint has had some experience here with Genentech. Have they seen, are a lot of their adoption naive or is it switched? And then on that note, I guess what do you believe your team is going to do to help switch some of these patients in light of the familiarity with other drugs?

I'll ask Dave to comment on that.

Sure. Absolutely, Christine. I think, you know, when you look at that barrier, we look at that as a great opportunity for us. Genentech and Blueprint did a great job, along with other companies in the targeted space in lung cancer. raising awareness of testing, raising awareness that when you do have a biomarker with an actionable biomarker with an FDA approved product, you should be moving there. And that's what all the experts are saying over and over. yet a pretty significant portion still like to stay with chemotherapy with or without a checkpoint inhibitor and use other products. And so we view that as an opportunity. We think this market is continuing to move toward more testing, more identification of these biomarkers and more use of targeted agents versus chemotherapy and checkpoint inhibitors. in the first line, and that's why we think it's an efficient call for us. We're actually quite glad that this product has been on the market, along with other targeted therapies. As you know, in KRAS, that's now a big discussion topic among clinicians who treat lung cancer. all of this noise out there just requires us to focus the message on Gavretto. And the more people hear about Gavretto, I think the more usage we'll get. And we believe we can get our fair share of the RET inhibitor space. So, you know, that's why we believe it's a great opportunity for us. We just being a smaller company, we have the ability to focus on it. And it'll be something that we, you know, are very important to us. Not saying that it's not important to those other companies, but obviously we think it could be a driver for us. And so that's why we believe, you know, with the right direction, the right tools, and, you know, a really smart investment in this place, we can grow with the market.

Thanks so much. And then I have a lead. Can you comment on how you're seeing the breakdown between different lines of therapies? I know 2023 was a record year for you. Would you say part of that was driven by some earlier line usage and greater compliance as a result of that? Thanks again.

Yeah, thanks for that question, Christine. We have updated our data that we shared from Raja OneCare. And it's pretty similar. I will say that in Q4, we had a little bit more business in the second and third line setting that we shared previously with you. So I think that's moving in the right direction. We're continuing to focus on patients who are post-steroids or post just one TPO agent. And I think it's working. More and more clinicians continue to use Tavalise.

The good thing about those earlier lines is that response rates are better, and positive responses leads to a greater desire to use the product yet again. So that's actually a virtuous circle there.

Thank you.

Thank you, Kristen.

Thank you. Our next question comes from the line of Kalpeet Patel with B Reilly Securities. Please proceed with your question.

Good afternoon. Thanks for taking the questions. Maybe one question on Gavretto's utilization today in the real world. Do we have any color on where the utilization is? Is it in mostly treatment naive patients? or is it mostly in previously treated patients for lung cancer? And how do you anticipate that to shift over time?

You know, we have uses in both CalPIT. We, you know, at least in the market research we've reviewed, there is use in the first line, as I showed you in the data, but there's also usage in second line. We do know that patients don't generally get two RET inhibitors. They get one. And then, you know, if you start on a RET inhibitor in the front line, you'll move to chemotherapy in the second with or without an immune checkpoint inhibitor or vice versa. And so, but obviously with some patient dropout as you move from first line to second line, it's critical that patients get treated at the earliest opportunities. And so that's our focus. There is use in later lines, but we're much more focused on looking at what our opportunity is in the first line setting.

Okay, got it. And can you maybe help us understand the gap between, you know, the sales of your drug versus the other red inhibitor? It looks like they were both perhaps launched around the same time, but the sales of the competitor have taken off significantly, so at least relative to yours.

Yeah, I'll make a few comments on that, Kalpit. The first thing is, you know, Gavretto was launched second to market. And I think, you know, as I said, comfort and familiarity in this place means a lot. And second to market is a more challenging situation. And that's part of it. And it's not only second to market with approval, it's been second to market with data as well subsequent to that. And so, you know, I think Clinicians just generally think first of the first product that came to market and are very comfortable and familiar with it. And so I think that's just an awareness issue that we'll continue to assess and pursue. But I think more importantly for us, we are very focused on the patients who are not getting a RET inhibitor in the first line, because we think that's where we can make a difference in discussing with clinicians the advantages of a RET inhibitor, particularly and specifically Gevretto.

The good thing of Kelpin is that, as Dave said in his presentation, RET inhibition is testing rates are high, awareness of RET and the importance of it as treatment is high. And so now we have to introduce this product and its data to have it be a choice for these doctors. And many doctors are non-users of Prevento, 80%. So there's a lot of opportunity there to grow this brand.

Okay, got it. And one last question, and apologies if you already mentioned this earlier, but How much of an SG&A change should we expect? I know you said that there's some overlap in the community centers where you can maybe cross sell your products. But what about any increases in reps for academic centers?

Yeah, so, you know, we're looking at that still. And as Dave said, on the community side, we're already seeing most of these doctors already. On the institutional side, we're still evaluating that. The institutional side, there's different individuals who treat lung cancer versus AML, for example. So that's something under evaluation. And there may be some ads just throughout the organization now with three products relative to one not that long ago. So there will be some increases in success. some head counts across the board a bit, but not very many, frankly. We expect it to be minor in terms of those additions.

And all in, we expect the incremental Gavretto costs for SG&A, along with clinical development of the drug interaction study that we're all referred to, to be less than $10 million for 2024 CalPIT. Okay, perfect.

Thank you very much for taking the questions. Thank you, Kelvin.

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

Thank you for your questions and your interest in Rigel this past year, 23 and the start of 24. It's been an exciting year and an exciting start to 2024. We look forward to continue to keep you updated on our progress. I think it's going to be our best year yet and look forward to sharing that with you. Take care.

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