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spk07: Greetings and welcome to Rigel Pharmaceuticals financial conference call for the first quarter 2024. At this time all participants are in listen only mode. A brief question and answer session will follow the formal presentation. If anyone today 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 Furey, Rigel's Executive Vice President, General Counsel, and Corporate Secretary. Thank you, Mr. Furey. You may now begin.
spk05: Thank you. Welcome to our first quarter 2024 financial results and business update conference call. The financial press release for the first quarter 2024 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 product development. These statements are subject to risks and uncertainty that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10K for the year ended December 31st, 2023, and subsequent findings with the SEC including our quarter one 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'd like to turn the call over to our President and Chief Executive Officer Raul Rodriguez.
spk02: Raul. Thank you, Ray, and thank you everyone for joining today. With me today are Dave Santos, our Chief Commercial Officer, and Dean Shornow, our Chief Financial Officer. Additionally, I'd like to introduce Lisa Roycare, our new Chief Medical Officer. Lisa joined us in March and brings over 20 years of clinical development, regulatory, and medical affairs experience to Rigel. We are thrilled to have her on the team. Now beginning on slide four, we continue to grow our hematology and oncology business in the first quarter of the year, positioning us well for the remainder of 2024 and beyond. We started 2024 with strong commercial demand for our two marketed products, Tavalis and ITP and Reslydia in Mutant IDH1 Relapsal Refractory AML, with demand bottles for each of these two products reaching a new quarterly high since their launch. This is particularly impressive since the first quarter of the year is typically one where our industry faces headwinds due to insurance copays and resets and the medical doughnut hold. The decline in net product sales from the prior quarter is primarily due to a decrease in Tavalis bottles remaining in our distribution channel or inventory. In addition, we are also expanding our commercial product portfolio with the recent 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. Gavretto offers a valuable targeted treatment option for non-small cell lung cancer patients with red fusion positive disease. Gavretto will provide us with top line growth as well as leverage our existing commercial and medical affairs infrastructure. We remain on track to complete the transition of this asset in July of this year. In parallel, we're advancing our programs including the evaluation of ResLydia in a broad range of IDH1 mutant cancers with our strategic partners MD Anderson Cancer Center and Connect. These alliances greatly enhance our ability to further evaluate ResLydia's potential in a cost and time efficient manner. As we grow our commercial product portfolio and prioritize prudent clinical development, we are well positioned to advance our business and work towards financial breakeven. Before I turn the call over to Dave, I'll provide a summary of our previously announced acquisition of U.S. rights to Gavretto. On slide five, we are working diligently to ensure a smooth transition of Gavretto into our commercial product portfolio, which we expect to complete in July. There are strong synergies between this product and our existing portfolio, infrastructure, and expertise. We believe we have the right people and systems in place to bring this product to physicians and their patients. Gavretto is a once daily oral red inhibitor with an established foothold in the U.S. market, having generated 28 million in U.S. net product sales in 2023. Further, with patents that have issued or expected to issue with statutory expiration dates between 2036 and 2041, we are well positioned to make Gavretto available for years to come. In exchange for U.S. rights to Gavretto, we will pay our partner, Blueprint, a purchase price of $15 million, 10 million of which is payable upon first commercial sale and 5 million of which is 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 Gavretto. We believe this puts Rigel in a favorable position to begin capturing value from this program in the near term. Now, I will turn the call over to Dave to provide updates on our commercial product portfolio. Dave?
spk03: Thank you, Raul. First, on to growing demand of Tavelyse and ITP. I have a few brief comments on our continued momentum with Tavelyse and QY. On slide 7, you will see our FDA approved indication, which is for adult patients with chronic immune thrombocytopenia, or CITP, who have had an insufficient response to a previous treatment. Moving to slide 8, I'm happy to report that in Q1, Tavelyse achieved its sixth consecutive quarterly record high for bottle ship to patients in clinics. Over those six quarters, we have increased Tavelyse quarterly demand volume by 23 percent, and Q1 2024 demand grew 10 percent over the same period last year. We are pleased that our team has continued to produce double digit -over-year growth, starting our sixth full year after approval. Total bottles sold in Q1 were 290 bottles less than our bottles shipped to patients in clinics as our distribution channel reduced inventory. Dean will discuss this later in our presentation. This resulted in Tavelyse net sales of $21.1 million for Q1. On slide 9, the driver of our continued demand growth with Tavelyse is our new patient starts. The graph on the left shows that since 2021, after we emerged from the pandemic, our new patient starts have continued to improve each year. In Q1, we achieved the highest first quarter new patient start since launch. We generated this new patient start growth through continued focus on expanding the breadth and depth of prescribers, ensuring strong coverage and reimbursement with greater than 95 percent commercial coverage, and constantly reinforcing the clinical efficacy and safety of Tavelyse with our customers. I want to thank our entire team for their continued focus and execution to impact more CITP patients with Tavelyse. We are very pleased with the consistent growth in new patient starts and how that has continued to drive our demand, both in Q1 and as we move forward through 2024. Moving to slide 10, now I'd like to take a few minutes to discuss our strong quarter growing ResLidia sales. On slide 11, you will see our FDA approved indication for ResLidia, which is for adult patients with relapsed or refractory acute myeloid leukemia with the susceptible IDH1 mutation as detected by an FDA approved test. Moving to slide 12, we shipped 326 bottles of ResLidia to patients and clinics in Q1, representing strong 17 percent growth versus Q4 of 2023, and nearly tripling the demand generated a year ago in Q1, our first full quarter of launch. We sold 390 bottles of ResLidia into our distribution channel, resulting in $4.9 million in Q1 net 2024 net sales. This was 26 percent above what we sold in Q4 and more than triple the net sales of the same period last year. We are very encouraged by the momentum we are now building with ResLidia. On slide 13, I wanted to update you on how our ResLidia institutional business continues to be the driver of our growth. Eighty-four percent of our total bottles shipped to patients and clinics were generated from use in institutional accounts. Our breadth and depth of use in institutions continues to grow as more academic leukemia treaters are becoming more aware of ResLidia's data in relapsed refractory mutant IDH1 AML. As we've discussed on prior calls, we believe we have an opportunity to grow ResLidia use further in the community, as in that segment of our business, quarterly demand has remained stable. We did see a highly encouraging trend in Q1, as the community drove more than one quarter of our new patient starts. This signals that community leukemia treaters are also becoming aware of ResLidia and are trying it in their mutant IDH1 AML relapsed to refractory patients. We believe a significant opportunity remains to grow ResLidia among community AML treaters, particularly because their adoption of Venetoclax-based regimens for their newly diagnosed patients. We feel ResLidia's data in post-Venetoclax patients will be particularly compelling to them. I want to thank our entire team for their hard work in growing awareness of ResLidia, both in academic institutions and community practices. They have worked closely across functions as one united team to broaden ResLidia's impact on mutant IDH1 relapsed refractory AML patients. Moving to slide 14, I wanted to provide an update on our commercialization plans for Givretto. On slide 15, I'll begin by reviewing the FDA approved indications for Givretto, which include the treatment of adult patients with metastatic -fusion-positive non-small cell lung cancer, as well as adult and pediatric patients 12 years of age or older with advanced -fusion-positive thyroid cancer who require systemic therapy and who are radioactive iodine refractory. Moving to slide 16, I want to reiterate why we believe Givretto is an important strategic addition as the third FDA approved oral targeted therapy in our Rigel commercial portfolio. As you'll recall from Rel's remarks, Givretto generated nearly $28 million in U.S. net sales last year. So this is an excellent opportunity for us to continue providing meaningful therapy to -fusion-positive patients with non-small cell lung cancer and advanced thyroid cancer. We believe this compelling Givretto opportunity suits our business well for a few reasons. Number one, it enables us to immediately and efficiently move into a large solid tumor market where most clinicians are already testing patients and immediately recognize RET as a biomarker associated with FDA approved therapies. So we anticipate that the RET market will continue to expand as more -fusion-positive non-small cell lung cancer and advanced thyroid patients are identified. Number two, we believe we have built strong access capabilities that we can fully leverage to ensure current and newly prescribed patients have access to Givretto. Our efficient and customer-friendly distribution network with Tavoliz and Residia will soon be ready to accommodate Givretto as will our Rigel OneCare patient services hub that has established a reputation for being highly responsive to patients and providers. We also 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 Givretto. And number three, this opportunity makes perfect sense for us because it is a highly complimentary one to both the commercial and medical affairs teams we have in place who call on both academic centers and community oncology practices. With our Rigel footprint already in these accounts, we'll be able to be even more efficient with our time and resources as we discuss multiple products within these accounts. On the right side of the slide, I wanted to highlight our biggest opportunity with Givretto and that is in non-small cell lung cancer. As you'll recall, approximately one to two percent of the 194,000 non-small cell lung cancer patients each year will test positive for the RET-Fusion, translating to approximately 3,000 RET-Fusion positive non-small cell lung cancer patients this year. The graphic shows research done last year on the first line therapies that were used RET-Fusion positive patients who were eligible for treatment. Three quarters of the patients were treated with one of the two FDA approved RET inhibitors with Givretto used in about a fifth of patients prescribed a RET inhibitor. Importantly, there is still approximately a quarter of the market being treated by chemotherapy with or without an immune checkpoint inhibitor or multi-kinase inhibitor. We view this quarter of patients as the growth opportunity for RET inhibitors and Givretto. Slide 17 reviews what we believe are the four key drivers for continued growth as we begin our commercialization journey with Givretto. The first driver is patient identification. It is important that as many as possible of the 3,000 potential RET-Fusion positive non-small 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 research conducted last year, about 80% of non-small cell lung cancer patients are being tested and that rate is improving. When clinicians don't test, it is more likely due to not having adequate tissue available. And in addition to inadequate tissue being the top barrier for testing, a significant portion of HCPs are concerned about delaying treatment while waiting for test results. We believe that especially with the recent data and adjuvant approvals of targeted therapies for biomarkers such as EGFR and ALK in early stage lung cancer, biomarker testing to identify appropriate test patients will expand even further in non-small cell lung cancer. Both patient and HCP education on biomarker testing and the importance of targeted therapies in non-small cell lung cancer are growing and that's a laying clinician's concerns about delaying treatment. Secondly, and more importantly for Givretto, optimizing the choice of therapy in those identified patients who are treatment eligible is an impactable growth opportunity for us. Most oncologists have yet to try Givretto in the front line and the biggest reason for that is comfort and familiarity with other drugs. From the prior slide, the use of chemotherapy with or Givretto inhibitors represents about one quarter of the use in the first line treatment of ret fusion positive patients. By growing awareness of Givretto's efficacy, safety, and once daily oral dosing, we believe we can grow future use of Givretto among current non-users. And importantly, as more clinicians are educated about testing and the impact of targeted therapies in lung cancer, we believe the number of clinicians who are concerned about delaying treatment and therefore initially treat with a non-targeted treatment will decrease, resulting in more ret fusion positive non-small cell lung cancer patients currently treated with chemotherapy-based regimens or other agents moving to ret targeted therapy like Givretto. Third, we believe that Givretto will continue to grow due to its high response rates, long duration of response, and convenient once daily dosing. Lisa will discuss these and other impressive Givretto efficacy data in her presentation. These important drivers of persistency should continue to grow 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-1 care, we believe we can gain loyal Givretto users from clinicians who view -of-pocket costs and difficulty obtaining reimbursement as barriers for the use of ret inhibitors. In summary, we are well positioned to continue growing Givretto through positive momentum in these four key drivers. On slide 18, we have made continued progress in working closely with Genentech and Blueprint to ensure both current and newly prescribed patients continue to have access to Givretto without interruption. RIGEL-1 care is preparing to work with providers to assist in transitioning patients from the existing Genentech network and access programs to the RIGEL network and RIGEL-1 care patient programs, ensuring patients experience no interruption to therapy. Our distribution network ensures patient and provider choice in where their prescription is filled, and we will have RIGEL-1 care staff fully dedicated to Givretto to ensure the highest level access support and customer service. I am pleased to report that everything is on track for RIGEL to begin supplying patients and clinics with Givretto in July. And to wrap up Givretto with slide 19, I just wanted to update our high level timeline of our plans for the rest of the year. Our market access team made excellent progress in preparing our distribution network for the addition of Givretto in Q1, and everything is on track for this quarter to prepare RIGEL-1 care and our field teams for the transition. We anticipate that in July, we will begin shipping Givretto to patients and clinics, and RIGEL-1 care will transition the majority of current and newly prescribed Givretto patients. Our field teams will simultaneously begin discussing Givretto with customers, with a focus on the accounts that have current patients on Givretto. Then in Q4, we will continue expanding our breadth of prescribers by calling on users and non-users, particularly in the community setting. It'll be an exciting year bringing Givretto into our portfolio of oral targeted therapies, and I look forward to continuing to update you on our progress as the year moves ahead. Now, I'd also like to say how thrilled we are to have our new Chief Medical Officer with us, and I'll now turn the call over to her for an update on our development activities.
spk01: Welcome, Lisa. Thank you, Dave, and good afternoon, everyone. I'm excited to have joined RIGEL just a couple of months ago at an important inflection point for the company as we expand our hematology and oncology portfolio. First, I'd like to begin by underscoring how precision medicine approaches to lung cancer are positively impacting patient outcomes, including those patients with rat fusions, and why, from the clinical perspective, we are excited about Givretto. On slide 21, rat fusions are present in approximately 2% of all non-small cell lung cancers, representing approximately 3,000 new patients per year in the U.S., and in around 20% of papillary thyroid cancers for around 1,000 new cases per year. Testing for rat fusions is an essential part of the pretreatment evaluation of non-small cell lung cancer. In fact, clinical practice guidelines recommend the use of targeted therapies as first-line treatment for eligible patients with metastatic non-small cell lung cancer, harbouring actionable genetic variants such as rat fusions. Prior to the advent of rat targeted therapy, patients with advanced rat fusion-positive non-small cell lung cancer receive platinum-based chemotherapy regimens, with overall response rates in the 50% range and median progression-free survival of six to eight months. The use of non-selective multichinase inhibitors with anti-rat activity has shown only modest efficacy and high rates of treatment-related toxicity. Because rat fusion-positive non-small cell lung cancers exhibit low PDL-1 expression, immune checkpoint inhibitors have demonstrated only limited efficacy here, with overall response rates less than 10% and progression-free survival in the range of two to three months. Gavretto is an oral, highly potent selective rat inhibitor with once-daily dosing that is FDA approved for rat fusion-positive non-small cell lung cancer or thyroid cancer as first-line or subsequent-line therapy. On the next slide, I will review updated clinical data from the Phase 1-2 ARROW study, which led to the approvals. Slide 22 summarizes updated clinical results from the ARROW study with a data cutoff date of March 2022. This Phase 1-2 multi-center open-label dose escalation and expansion study was conducted at 71 sites in 13 countries, with an original data cutoff date of May 2020. In Phase 1, pro-cetinib at a dose of 400 milligrams daily was determined to be the recommended Phase 2 dose. In Phase 2, the safety and efficacy of pro-cetinib 400 milligrams daily was evaluated in patients with rat fusion-positive advanced non-small cell lung cancer, thyroid cancer, and other rat fusion-positive solid tumors. The primary endpoint was overall response rate. In the lung cancer subgroup, clinical activity was observed irrespective of prior therapy. The overall response rate in 130 patients with previous platinum-based chemotherapy was 63 percent, and 74 to 80 percent in 107 treatment naive patients, with tumor shrinkage observed in all previously untreated patients. In the overall subset of 260 non-small cell lung cancer patients, median duration of response, one of the key endpoints, was 19.1 months. Pro-cetinib was generally well tolerated with predominantly low-grade toxicity, with only 10 percent discontinuing therapy due to treatment-related adverse events. In the subgroup of 22 patients with rat fusion-positive thyroid cancer, 91 percent of previously treated patients achieved a response. And finally, in the subgroup of 23 patients with rat fusion-positive solid tumors, the overall response was 57 percent. These results underscore the benefit of utilizing rat targeted therapy with pro-cetinib in first or later lines of treatment for patients with rat fusion-positive non-small cell lung and thyroid cancer. Moving to slide 23, patients with rat fusion-positive non-small cell lung cancer have a 25 percent of patients at the time of diagnosis, and approximately 50 percent of patients will develop brain metastases over the course of their lifetime. In the AROW study, the intracranial response rate for 15 patients with brain metastases was 53 percent, and complete responses were seen in three patients. Overall, the median duration of response was 11.5 months. On slide 24, based on these data, we believe that pro-cetinib has a differentiated value proposition. It's the only once daily oral rat inhibitor approved for patients with non-small cell lung and thyroid cancer with rat gene fusions. When considering the spectrum of prior treatment approaches we previously reviewed, pro-cetinib is associated with favorable response rates and durable activity regardless of treatment history. Pro-cetinib has also demonstrated promising intracranial activity in patients with brain metastases and has an established safety profile with manageable adverse events and a low discontinuation rate. Finally, pro-cetinib is a recommended treatment option for patients with rat fusion-positive non-small cell lung cancer and advanced thyroid cancer. So to summarize, we believe that pro-cetinib is a differentiated target treatment option for patients, and we look forward to fully integrating the product into our portfolio. I would now like to provide an update on our development programs and clinical research collaborations which foster continued growth of our HEMOG pipeline. Moving to slide 26, we shift focus to our strategy to continue expanding our HEMOG-based immunology and oncology pipeline. First, we are focused on advancing our IDH1 inhibitor, eluticidinib, into new clinical indications. We believe eluticidinib has potential in a number of cancers where mutated IDH1 plays a role, such as additional AML segments, myelodysplastic syndrome or MDS, and glioma, either as a monotherapy or in combination. To further evaluate eluticidinib in indications, we have entered into strategic development collaborations with the MD Anderson Cancer Centre and the Connect Consortium. We are also advancing R289, our novel IRAC1-4 inhibitor in patients with lower-risk MDS. Enrollment continues into our phase 1b trial, and we expect to have preliminary data on the first part of this trial later this year. In addition, we remain focused on evaluating potential opportunities to enlicence or acquire products that would be a strategic fit for our portfolio. We are looking for differentiated products in hematology, oncology, or related areas, products that are late-stage, possibly with registrational data, -to-have registrational data, or more advanced, and products that can leverage our hematology and oncology infrastructure. As demonstrated with our acquisitions of eluticidinib and prousetinib, our goal is to continue to find assets that are a strategic fit with our organization, pipeline, and ability to execute. First, we're very pleased to have started a development collaboration with the MD Anderson Cancer Centre to advance eluticidinib more broadly into AML, MDS, and beyond. Through our partnership, we are planning to evaluate eluticidinib in combination with other and first-line IDH1 mutated AML and higher-risk MDS. We also plan to evaluate eluticidinib as a monotherapy and lower-risk MDS and CCUS, a condition associated with an increased risk of developing MDS, and in the post-transplant maintenance setting. That's four potential clinical trials on the horizon, with up to $15 million paid over five years. We expect these to position us to conduct a subsequent registrational trial or trials. We look forward to working with MD Anderson and providing updates as our collaboration progresses. Moving to slide 28, another important development collaboration we have is with the Connect Consortium to conduct a phase two trial in patients with IDH1 mutated glioma. Gliomas account for around 30% of CNS tumours in children, adolescents, and young adults, with approximately one-third of these being high-grade gliomas, translating to approximately 800 to 1,000 new cases each year in the US. High-grade gliomas are a leading cause of cancer-related death in adolescents and young adults. Despite available therapies, the five-year survival of IDH1 mutations are found in approximately 6% of pediatrics and up to 36% of high-grade gliomas in adolescents and young adults. The safety and preliminary activity of single-agent allutacidinib in a cohort of 26 patients with relapsed or refractory high-grade IDH1 mutant gliomas were recently reported. Based on these data, we believe that allutacidinib has potential in the future. The study was concluded in Connect's Target D trial, a molecularly guided phase two umbrella clinical trial for high-grade glioma. The phase two Connect open label study intends to enroll approximately 60 patients, and the Rigel-sponsored arm, adolescents and young patients that are 39 years old and younger, with newly diagnosed IDH1 mutation-positive high-grade glioma, will receive maintenance therapy with allutacidinib in combination with temozolomide for the first year after radiotherapy, followed by allutacidinib monotherapy for the second year. The primary objectives are to evaluate safety and tolerability of allutacidinib with and without temozolomide and progression-free survival. We anticipate the trial to initiate this summer. We will provide funding of up to $3 million in study material over the four-year collaboration. We, along with Connect, are excited about allutacidinib's potential to provide a much needed new treatment option to this underserved patient population. And finally, on slide 29, I'd like to tell you about our novel dual IRAC1-4 inhibitor R289, which we are evaluating in a phase 1b trial in patients with lower-risk MDS. This is another area of high unmet need in a primarily elderly patient population facing progressive cytopenias, particularly anemia resulting in transfusion dependency and increased risk of infections and a risk of progression to acute leukemia. The therapeutic strategy for MDS depends upon the patient's MDS risk classification. For lower-risk MDS patients, first-line treatment options include the use of red cell transfusions, erythroid stimulating agents, Lispatircept, and lenalidomide for those with a deletion 5q abnormality. In second and later lines of therapy, durable responses are difficult to attain, and toxicity becomes more of an issue. There are currently no approved therapies for lower-risk MDS patients that have failed hypomethylating agents. We believe that R289 has the potential to address the unmet needs in this patient population. Moving to slide 30, I'd like to highlight why we are excited about R289. Dysregulation of the immune and inflammatory signaling pathways is associated with MDS, with chronic stimulation of both the toll-like and IL1 receptor pathways involving IR1 and IR4, leading to a pro-inflammatory marrow environment and cytopenias. The activation of IR1 and IR4 were recently reported to also occur independently of this signaling pathway, leading to persistent inhibition of hematopoietic cell differentiation, and that co-targeting both is required to fully suppress inflammation, leukemic stem cell and progenitor function and restore hematopoiesis and MDS. Clinically, IR4 inhibitors and MDS and AML have thus far shown only modest activity supporting this concept. In preclinical and healthy volunteer studies, R835, a dual IR1-4 inhibitor, suppressed pro-inflammatory cytokine production, and R289, an oral prodrug that is rapidly converted to R835, was well tolerated with once and twice daily dosing and is now being evaluated in a phase 1B study in lower-risk MDS. Slide 31 shows the design of our ongoing open-label, multi-centred phase 1B study of R289 in patients with relapsed refractory lower-risk MDS, which has a dose escalation phase with a -plus-3 design and a dose expansion phase for confirmatory safety. The primary endpoints for this trial are safety and selection of the recommended dose for expansion, and secondary endpoints include response rates and PK. Based on emerging data from the study, we have recently included two additional dose levels with twice daily dosing regimens. The study continues to present preliminary data from the first part of the trial later this year. Lastly, on slide 32, our RIP-K1 inhibitor programs are progressing well with our partner, Lily. RIP-K1 is implicated in a broad range of inflammatory cellular processes and plays a key role in tumor necrosis factor signaling. OCADU-SERTIB, our non-CNS penetrant RIP-K1 inhibitor, previously referred to as R552, or LY387-1801, is currently being studied in an adaptive phase 2A-2B clinical trial in up to 380 patients with active moderate to severe rheumatoid arthritis. Phase 2A enrollment of approximately 100 patients is advancing well, with preliminary analysis of the phase 2A results anticipated by the end of the year. Our pre-clinical CNS penetrant RIP-K1 inhibitor program is also progressing toward lead candidate nomination. We are excited about the progress of our programs and their broad potential in RA and other immune and CNS diseases. To conclude, I'm excited to have joined Rigel at this time of progress and expansion in our development programs. I look forward to contributing to the growth of our hematology and oncology portfolio. I will now turn the call over to Dean.
spk09: Thank you, Lisa. I'm on slide 34. For the first quarter of 2024, we shipped 2193 bottles of Tablis to our specialty distributors, resulting in $21.1 million in net product sales. 2,483 bottles of Tablis were shipped to patients and clinics, while 290 bottles decreased the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2024, we shipped 390 bottles of Resilidia to our specialty distributors, resulting in $4.9 million in net product sales. 326 bottles of Resilidia were shipped to patients and clinics, while 64 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales in Tablis of $21.1 million in the first quarter of 2024, a 5% decrease compared to the same period in 2023, resulting from the decrease in bottles remaining in our distribution channels at the end of the quarter. I will describe this in a bit more detail in the next slide. We reported net product sales from Resilidia of $4.9 million in the first quarter of 2024, compared to $1.5 million in the same period in 2023. As a reminder, Resilidia was launched in the United States in December of 2022. Our net product sales from Tablis and Resilidia were recorded net of estimated discounts, chargebacks, rebates, returns, copay assistance, and other allowances of $12.4 million. For the first quarter of 2024, our growth to net adjustment for Tablis and Resilidia was approximately 34% and 24% of gross product sales respectively. Before we move on from net product sales, let me review our expectations for the second quarter of 2024. We're pleased with the strength of our business and expect to see continued growth in bottles shipped to patients and clinics for both Tablis and Resilidia. We expect our growth to net adjustment in the second quarter of 2024 to be approximately 35% for Tablis and approximately 26% for Resilidia. On slide 35, before I move on to a review of our financials for the quarter, I want to provide a brief review of the dynamics of the sequential decrease in net product sales we saw during the quarter. Starting with the orange bars, in the fourth quarter of 2023, we saw 2,463 bottles shipped to patients and clinics. This is our key demand metric, as Dave highlighted, our highest demand volume since launch. Incrementally, we saw a significant increase in bottles remaining in distribution channel of 208 bottles. This resulted in total bottles for the fourth quarter of 2023 of 2,671 bottles, which generated $25.7 million of net product sales. Now to discuss the green bars. In the first quarter of 2024, we saw 2,483 bottles shipped to patients and clinics. This small increase is despite the typical first quarter industry challenges associated with the resetting of copays and the Medicare donor hole to lay in both new prescriptions and refills that both we and our industry experience each year. You'll note in the thin green bar that this small increase in demand volume resulted in a sequential increase in net product sales of $200,000. The bigger impact in this sequential reduction in net product sales came from the reduction of inventory levels of our distributors. The reduction from 1,374 bottles of inventory to our distributors in Q4 of 2023 down to 1,084 bottles at the end of Q1 of 2024 contributed to a sequential decline in our net product sales of $4.8 million, the thick red bar in this graphic. Inventory levels at our distributors are variable, though we do expect them to generally increase over time as our business grows. To illustrate the effect of change in inventory levels on our net revenues, let me provide an example. Well, we have said that we expect to see continued growth and shift to patients and clinics for tonneau lease and that our inventory levels are variable. If we assume that both inventory levels and demand volume are flat as compared to the first quarter of 2024, we would expect to see quarter over quarter growth of approximately 12% for the second quarter of 2024. This is calculated with our current wholesale price and anticipate growth net adjustment. Again, this calculation is intended to be illustrative. Under the next slide, in addition to net product sales, our contract revenues from collaborations were $3.5 million in the first quarter of 2024. Contract revenues from collaborations consisted of $2.3 million from Qisei, $1.1 million from Griffles, and $100,000 from Medisod. Moving on to cost and expenses, our cost of product sales was approximately $2 million for the first quarter of 2024. Total cost and expenses were $36.5 million compared to $38.8 million in the same period for 2023. The decrease in cost and expenses was primarily due to decreased research and development costs due to the timing of clinical trial activities related to the -1-4 inhibitor program, as well as the timing of trial completion activities related to two phase three clinical trials of foster matinib in patients with COVID-19 and warm autoimmune hemoleic anemia. In addition, the decrease was also due to lower consulting and third party services as well as lower facility related costs. These decreases were partially offset by higher stock compensation expenses, mainly from performance-based awards. We ended the quarter with cash, cash equivalents, and short-term investments of $49.6 million. We look to maintain our focus and discipline financial approach into the future. Lastly, in April, we entered into an amendment to our credit agreement with MidCap Financial. As part of the amendment, we extended the maturity date, an interest only period by one year. Our principal repayment period now starts in Q4 of 2025 and extends for 24 months. With that, I'd like to turn the call back over to Raul.
spk02: Thank you, Dean. Looking ahead to the remainder of 2024, we are focused on continuing to grow sales of reslydia and tavalice while adding grabretto to our commercial operations in July of this year. With the help of our strategic collaborators, we look forward to initiating additional clinical studies and we will evaluate other opportunities for expanding the development of our products. We'll also enroll and generate preliminary data from our phase 1B clinical trial of R289 and lower risk MDS. And lastly, we will actively pursue additional in-licensing deals and acquisitions, similar to our strategy with reslydia and grabretto. And as we execute on our strategy to grow our hematology and oncology business, we remain committed to working towards financial breakeven and making Rigel a self-sustaining company. With that, I thank you for your interest in our progress in the first quarter and now we will open the call to your questions. Operator.
spk07: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. If you'd like to withdraw your question from the queue, you may press star two. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please for the first question. Thank you. And our first question is from the line of Yagal Nachamit with Citigroup. Please proceed with your question.
spk06: Hi, thank you very much for taking the question. On the cash guidance, you're burning about $8 million a quarter. You mentioned getting to breakeven and also investing in licensing activities. Could you just help us walk through the path to getting to breakeven as far as the existing burn and the revenue picture as well as the investment in the portfolio? Thank you.
spk02: Thanks, Yagal. I'll ask Dean to comment on
spk09: that and I'll add on to that. Sure. Hi, Yagal. So as it relates to the current quarter and from a cash burn perspective, I'd encourage you to look back a couple of quarters and then some general comments as we look forward. We haven't given top line guidance. In our last quarterly call in March, we did describe our expectations for 2024 OPEC. So that's available. With respect to Q1, I would note a couple of things. One is the dynamic of the net sales that I described. So we did have the inventory reduction, which impacted net sales, also impacted our cash flows as a result of that. Incrementally, I would note that we paid $2 million and this is in our queue. We paid $2 million on the MD Anderson collaboration. So from a cash flow perspective, there's a variety of elements going into that burn that you described. With respect to our future point of financial breakeven and that continues to be a focus of the business, we do expect to see revenues increase. We look to launch Gavretto and start to recognize revenues in the third quarter. With that, we've described that we believe that there's less than $10 million of SG&A and clinical spend with respect to Gavretto. So we believe that that will become rapidly accretive. All that said, we believe we're on a path to financial breakeven. We just haven't provided the guidance to say exactly when that will occur.
spk06: Thank you, David. Okay. Thanks. And then switching to a clinical science question, it's interesting regarding the brain activity for the Gavretto as well as your interest in glioma for Olatuzidinib. I'm just curious, could you comment on the, if you have details on the brain plasma ratio, whether you information on that for both of those drugs? Just curious how brain penetrant are they each?
spk02: Yeah. You know, Yigal, thank you for the question. I think it's very helpful. Clearly, they cross the blood brain barrier, which is critical. And we've been able to show in clinical studies for Gavretto as Lisa discussed, as well as we also know that Olatuzidinib also crosses the blood brain barrier. And so we're excited about opportunity of trying both of those molecules in this area and obviously generating the data on Gavretto already based on the Aero study, which is very helpful. Anything else, Lisa?
spk01: Yeah. I would say that the actual ratios that you're asking about though, aren't known. That hasn't been determined.
spk02: But we know that there's a therapeutic effect on both. Absolutely. In relevant studies, one is that we have a study that shows that the brain is very sensitive to the brain cells. And we've been able to do that already with the Aero study in the brain meds. And then we did publish, and Lisa referenced this, on Oluda, a smaller study that showed a benefit in patients that were highly refractory.
spk06: Okay.
spk07: Thanks.
spk02: Thank you, Yigal.
spk07: Our next question is from the line of Kristen Kluska with Candor Fitzgerald. Lisa, see if there are questions.
spk08: Hi, everyone. Thanks for taking the question. Maybe to follow up on the last one and ask in a different way, can you talk about how you're going to balance the current pipeline where each of these assets in itself could potentially be evaluated in other indications? And then also the continued appetite for more of these bolt-on deals would fit your pipeline. And maybe another way to ask it is, where do you see the company maybe in two years from now?
spk02: Yeah. Let me take a crack at that, if I may. Thank you for the question, Chris. Appreciate that. So we're excited to have Tavales, and Tavales continues to grow very nicely. And the demand bottles were, again, a new quarterly high. And that's really the fundamental basis of that excitement in terms of the growth of the product. Inventories go up and down on a quarterly basis. They were huge last quarter, I mean, in Q4 and even in Q3 of last year in the other way. And Resilidia, we're excited because of the launch of the product. It's really just underway in many ways, and it's still being introduced to clinicians. And we think there's good opportunity there as well. And with the addition of Gavoretto, again, a oral targeted therapy, having three products in the bag where our sales organizations, institutional and community, can make tremendous headway with all of those. So we look for the top line to continue to grow very nicely. We also can look for the apex to be growing, but relatively much more modestly than the top line. That was two things. And we gave some guidance, as Dean said last quarter, in terms of our view of the year, still holds. And so put those together, we see us being able to generate sufficient resources to be able to execute on clinical trials ourselves. And we're looking at various opportunities, particularly with Aluta in areas like AML and GLIOMA, which are very exciting in terms of the things that we could do ourselves. We're delighted to have Lisa with us now and her experience in this very area to be able to help us evaluate, design, and then launch studies in this area in future years based on increased cash flows from the ongoing business. We also want to continue to grow the business. And the addition of each of these two products, ResLydia and then Gavoretto in sequence, have been very, very useful in terms of growing the top line and importantly, fully leveraging the infrastructure that we have in place. It's really an excellent oncology-oriented and ability to sell into both institutions and community-based clinicians, I think is tremendous. And we've been able to leverage the organization with fairly small increments in terms of infrastructure growth to be able to do that. The results of that is that we're all that much further along in terms of reaching that financial break even and then subsequently generating cash to do more. More clinical studies on our own, registrational studies, and more in continued acquisitions or in licenses of other products. So that's how we see the business growing in the next few years, two years for sure and beyond that. I think it's very exciting to be able to have growing-based business, exciting trials that we may launch that are addressing major areas in AML and gliomasa and then continuing to look externally for additional products to add on that do so without having to increase our infrastructure very much if at all.
spk08: Thank you.
spk02: Thank you, Chris.
spk07: As a reminder, if you'd like to ask a question today, you may press star one from your telephone or your iPad. Our next question is from the line of Farben Hainke with Jeff Reiss. Please use your question.
spk04: Thank you for taking our questions. So for TAPLIs, based on the distribution channels inventory in one queue, how should we think about this for the rest of the year? And how variable is it like? You just showed the numbers for the four-queue levels, but is it really variable across quarters?
spk02: Yeah, I'll ask Dave to comment on that and then we can point you another place you can look at the variability of that.
spk03: Yeah, I understand your question as kind of the variability of inventory through the quarters and I will say queue one was a bit unique in terms of, again, that's why Dean explained the drawdown of inventory of 290 bottles. We do believe that we have inventory because it's sitting in either our distributors which distribute to our direct accounts or SPs which distribute to patients and they purchase from us and then they sell out to those two portions of the network and what's left is the inventory. And so they did purchase a little bit more in queue four, but I think the key is that in queue one that kind of went down, but as Dean kind of demonstrated in his example, even if we don't build any inventory this quarter and we stay flat on demand, we're expecting double digit growth versus last year in terms of net sales. So we wouldn't expect continued significant variability, but this does happen particularly with queue four around the holidays moving into queue one and also as Dean mentioned, you start out the quarter with usually a little bit lower demand and I think that was reflected in the purchases that happened early in the quarter and then we ended the quarter with very high demand which is why we increased our demand quarter over quarter. So I think there's a number of variables that contributed to this drawdown in particular this quarter, but we don't see any significant variability up or down as we move forward
spk00: and
spk03: I would invite Brown or Dean to provide any more clarity on that, but that's my view.
spk02: Yeah, I think we have seen some in some cases highly large numbers. In fact, this drawdown hasn't been the largest. We've had a larger one in early 21, for example, so it does vary substantially. I think what is consistent though in the longer term, the inventory levels grow as the business grows and that is consistent. It's not in any specific quarter, any one quarter, and we see oscillations in both sides. It's just the overall trajectory is a growth trajectory when the business is growing. Tavales is growing. I can share some prior quarter numbers as well if you wish. In our corporate deck, we include a nice little table that has the inventory changes on a quarterly basis going back to as early as 2021.
spk04: That's helpful. And then for ResLydia, you had a nice uptake. So wondering what proportion of the sales were from new patients versus the existing patients and then what needs to be done to better compete with serviers that absorb in de novo patients.
spk03: Go ahead, David. Sure. Actually, if you look at demand bottles, the percentages I showed you is pretty still strongly toward institutions. And similarly, our demand bottles are strongly from patients who previously started. And that's because, as you know, you only have a max three months to get business from the patients who started in Q1. And actually, we did have a number of patients starts in March. So those would have only had a small number of bottles. So I don't have the exact percentage, but it's around the percentage of, I'd say around 20 or so percent of the bottles were in new patients in Q1. And so we think that's an excellent sign, obviously, that more new patients started in Q1. That clearly drove the sales. But I think what you're also seeing is that carryover growing from last year. And then secondly, in terms of I wouldn't say we're competing. I would just say that we are really trying to differentiate elitist-idinib in mutant IDH1, relapsed refractory disease. We feel we have a very long duration of response. That's getting out there. And in particular, when you look at the subset of patients who've had previous venetoclax, we believe we have a great story to tell there in terms of response rates and duration of response. So at the end of the day, those are the pieces. When you're able to talk about the duration of response that we have in the relapse refractory setting, and then talk about in a venetoclax-treated population, you have a consistent response rate and duration, that becomes very compelling to clinicians. Because I think, as you're probably aware, venetoclax continues to grow use, particularly in first-line AML.
spk02: Thank you, first. Any other questions?
spk07: Okay.
spk02: Thank you.
spk07: Thank you. There are no further questions at this time. I would like to turn the floor back over to Mr. Raul Rodriguez for closing comments.
spk02: Thank you. In closing, I'd like to thank everyone on this call and for your continued interest in Rigel in our progress. And as always, I'd like to thank our employees for their commitment to improving the lives of patients because every day does count. We look forward to updating you on our progress in future calls. And with that, have a great day.
spk07: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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