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spk08: Greetings and welcome to the CG Therapeutics first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. The 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. I would now like to turn the call over to Jenna Bosco. Thank you. You may begin.
spk00: Thank you. Welcome, everyone, and thanks for joining us this morning. I'm Jenna Bosco, and with me today to discuss the first quarter 2023 financial results and provide a business update are Michael Weiss, our Chairman and Chief Executive Officer, Adam Waldman, our Chief Commercialization Officer, and Sean Power, our Chief Financial Officer. Following our Safe Harbor statement, Mike will provide an overview of our recent corporate developments. Adam will provide an update on our commercialization efforts. and Sean will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session. Before we begin, I'd like to remind everyone that we will be making forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected regulatory milestones, and expectations for our marketed and pipeline products. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics operations include various risk factors that can be found in our SEC filings. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. With that, I would like to turn the call over to Mike Weiss, our CEO.
spk10: Thanks, Jenna, and good morning, everyone, and thanks for joining us on today's call. 2023 is off to an excellent start for us at TG. With the U.S. approval and commercial launch of Briandvi, and we are excited to be able to offer a patient the first and only anti-CD20 monoclonal antibody approved for relapsing forms of MS that can be administered in a one-hour infusion twice a year following the starting dose. We believe that BrionV's clinical profile has best-in-class potential in the treatment of multiple sclerosis and offers an exciting value proposition for all key constituents, including patients, providers, and payers. Today, we are pleased to share the results of our first partial quarter of sales commencing on January 26, 2023. As such, we are essentially reporting on the first two months of BrionV commercial availability. Our Chief Commercialization Officer, Adam Waldman, will join us shortly to provide some detailed metrics surrounding the first quarter results. Accordingly, I will keep my comments regarding the launch at a high level and touch on a few other topics that may be of interest to investors. With respect to the launch, we have said for some time that the profile of Ryundi has been well received by healthcare providers, and we are pleased to see such enthusiasm carrying through to the launch phase. Early adoption has come from both major academic centers and community practices. Geographically, all of our territories have seen HCPs prescribing BRIUMPI and we have seen nice adoption within our target accounts. In terms of patients, we are also seeing a nice distribution of those that are new to MS treatment, new to CD20 treatment, and also switches from other CD20s, which we believe further underscores the attractiveness of the BRIUMPI profile. Overall, I believe our commercial teams and medical teams are doing a fantastic job introducing BRIOMBI to and educating healthcare providers on the attributes of BRIOMBI as well as building payer access. And I'm very pleased with the launch thus far. With that, I'll move on. I want to briefly talk about our European marketing authorization application and our ex-US launch plans. At the end of March, about a month ago, we announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency, referred to as the EMA, issued a positive opinion recommending the approval of BRIAMDI for the treatment of adult RMS patients with active disease defined by clinical or imaging features. With this opinion, we expect to hear a final decision from the EMA by early June. We continue to evaluate the best commercial pathway for us in Europe, either go-it-alone or partner, and we will seek to answer that question in the coming months to enable a European launch later this year, if approved. Whatever pathway we select, we see Europe as another opportunity to create additional shareholder value by making Brionvia available internationally. Finally, let me discuss TG's cash position. As reported, we ended the quarter with approximately 160 million in cash when you include the 20 million of additional capacity available to us under our Hercules facility. We continue to believe our current cash and associated incremental Hercules capacity, along with modest assumptions of revenue, will be sufficient to take us into mid-2024. Of course, if revenues continue to exceed those in our cash model, our current cash should last even longer. With our growing revenues and relatively stable burn, it is not clear how much, if any amount, we would need to raise prior to cash flow breakeven. Accordingly, we are quite comfortable with our current cash position and with our many options for adding to the balance sheet in non-dilutive or minimally dilutive ways. With that, let me turn the call over to Adam Waldman, our Chief Commercialization Officer to share some additional color on our first quarter of launch. Adam?
spk02: Yep, thank you, Mike, and good morning, everybody. I'm excited to provide an update on our first quarter commercial performance. As Mike noted, Breamby was approved at the end of 2022, and drugs first became available at the end of January 2023. We are pleased with the initial adoption of Breamby by the MS community, highlighted by net sales of $7.8 million in just the first two months of commercial launch, exceeding our internal expectations. We believe our commercial teams executed exceptionally well in the first quarter, successfully engaging with nearly 100% of our initial targeted accounts, educating on BrionV's product profile, proper infusion techniques, and helping to activate accounts to be ready to prescribe. We invested heavily to build on what we believe is a best-in-class patient support program, and the team is operating effectively to support our accounts and help patients to navigate the access and insurance process and the hurdles that are common in the first stages of a launch. The feedback from our customers on the responsiveness of our team has been positive, and I believe we've made a lot of progress in a short period of time establishing TG as a committed partner in the MS community. Based on the feedback from customers, we continue to believe that the BrionB profile is attractive. Many of our healthcare providers have let us know that the one-hour infusion, combined with the lowest ARR seen in a Phase III trial, are important and relevant differentiators in the competitive space. We believe an important indicator of early success is measured by both breadth and depth of use. Accordingly, we were pleased to see that over 165 physicians from more than 125 centers in the U.S. prescribed Briumvi in the first partial quarter of our launch. Additionally, we believe prescriptions leading to registrations at our patient support hub are a strong leading indicator of demand for Briumvi. Accordingly, we were pleased to see that in our first partial quarter, more than 400 patients were prescribed Briumvi and enrolled at our hub. which we believe captures approximately 80% to 90% of total prescriptions in the quarter, as not all prescriptions will lead to registration at the hub. It was also nice to see that there was significant acceleration of prescriptions in March over February, and we continue to see acceleration of prescriptions in April. Overall, we believe this represents strong demand for Brionvi in the early stages of launch, which we believe is being driven by Brionvi's highly attractive therapeutic profiles. In terms of patient access, our pricing strategy was aimed at providing broad and fast access to BrionV, and we believe that strategy is working as we continue to track ahead of our internal estimates on pair coverage. I'm pleased to share that we now have coverage policies in place for over 50% of covered lives across the U.S., which puts us well ahead of our mid-year goal and in good position to be able to hit our corporate goal of achieving broad access to BrionV with greater than 80% coverage by the end of 2023. We also recently announced that the U.S. Centers for Medicare and Medicaid Services, or CMS, has issued a permanent J-code for BrionV, which will become effective on July 1, 2023. This is great news, and in addition to streamlining the reimbursement process, we believe this will facilitate additional patient access, as there are many accounts that will wait to use BrionV until the J-code becomes effective on July 1. Additionally, some of our largest academic institutions in the country are not yet prescribing BrionV as they have formulary processes that can take up to six months or more. Accordingly, we see BrionV accelerating in the second half of the year once the permanent J code is effective and as these larger centers gain formulary approval and we continue to expand our payer coverage. So to conclude, we feel as though we are off to a solid start on the BrionV launch. We believe we have the right team focused in the right places with the drug that we believe provides an attractive profile for physicians, patients, and payers. We are seeing strong early demand and willingness to try Brionvy from the top volume MS centers and top tier physicians across the country in both the academic and private practice settings. Payer coverage is ahead of schedule, and we believe operational hurdles such as the J-code and institutional formulary access will continue to improve throughout the year. With that, let me turn the call over to Sean Power, our CFO, to discuss the quarterly financial results.
spk06: Thanks, Adam, and thanks, everyone, for joining us. Earlier this morning, we reported our detailed first quarter 2023 financial results, which can be viewed on the Investors and Media section of our website. I'd like to begin today's call by again highlighting that we are pleased to report $7.8 million of Breon Beat net product revenue in the first quarter. As for our broader financial results, our net loss for the first quarter of 2023, excluding non-cash items, was approximately $32.6 million, down more than 50% from the first quarter of 2022, where we saw net loss excluding non-cash items of approximately $67 million. The year-over-year decrease is primarily the result of our disciplined and focused approach to spending and the streamlining of our R&D programs. Our gap net loss for the first quarter of 2023 was $39.4 million, or 28 cents per share, compared to a gap net loss of $69 million, or 51 cents per share, in the first quarter of 2022. And finally, on our cash position, We ended the first quarter with approximately $140 million in cash, cash equivalents, and investment securities, which includes $25 million of capital drawn in the first quarter under our existing Hercules facility. Additionally, we recently amended our Hercules facility and now have the ability to draw $20 million at our discretion into September of this year, leaving us with available capital of approximately $160 million. We believe our available capital, when coupled with modest pre-MV revenue assumptions, will take us out into mid-2024. With that, I will now turn the call back over to the conference operator to begin the Q&A.
spk08: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you 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 your questions. Our first questions come from the line of Eric Joseph of JP Morgan. Please proceed with your questions.
spk05: Hi, good morning. Thanks for taking the questions. Nice print on the quarter. Maybe, Adam, could you elaborate a little bit more on sort of the mix you're seeing between sort of new to CD20 versus switches? Is it sort of more or less than you anticipated? And then I'm also curious about any, I guess, feedback you're getting on infusion times and the commercial setting beyond that initial dose, right, I guess, is... Are you seeing at all any deviation, I guess, from the anticipated one-hour infusion time for folks getting their follow-up treatment, follow-up infusion? Thank you.
spk10: Adam, go ahead.
spk02: Yep, yep. Thanks, Eric, for the question. Yeah, as Mike noted, we're seeing a mix of both naive and switch patients. And we're seeing, you know, with the switch patients, we're seeing a distribution of patients coming from a broad set of disease-modifying therapies. including CD20s to Sabri and the orals and injectables. So we're seeing a nice mix across all of that. It's a little too early to give more specifics here. We'll wait a little bit on that. As far as the infusion experience, all as expected. I think we have good feedback on what we're seeing right now is as expected. We're not seeing any unexpected changes. adverse events, and the feedback on the infusion so far has been largely positive.
spk10: I'll just add on top of that. I've obviously been out in the field myself, and everything I've heard is that the infusion time is on target.
spk05: Okay, great. And just unpacking the print a little bit, is there an inventory component here or a channel component we should be thinking about? And to the extent there is, I guess, how should we be thinking about that sort of building or not going forward?
spk06: Yeah, Adam, go ahead.
spk02: Adam, did we lose you? Yeah, I'm here. Sorry. We did not see a lot of stocking at the distributors in the first quarter, Eric. Inventory is what you would expect in a launch, and the vast majority of sales was demand driven.
spk05: Okay, great. Thanks for taking the questions.
spk08: Thanks, Eric. Thank you. Our next questions come from the line of Ed White with HC Wainwright. Please proceed with your questions. Morning.
spk09: Good morning. Thanks for taking my questions, and congratulations on the sales number. Thanks, Jack. You're welcome, Mike. Perhaps you can give us a few comments on percentage of free drugs. What percentage of patients you're seeing take advantage of the patient access programs? Sure. Adam?
spk02: Yeah, we saw, Ed, thanks for the question. We saw about 10% to 15% of free goods on top of the sales that we saw, so 10% to 15%. The majority of that was through our Quick Start program. We do expect that those patients will convert to commercial drug in the second half of the year.
spk09: Great, thanks. Just a question on expenses. R&D was dramatically lower in the first quarter versus the fourth quarter of last year, and the SG&A was much higher as you're proceeding with the launch. I'm just wondering if there's any guidance you can give us on what those expenses are going to look like quarter over quarter throughout the year and how to ramp. Sure. Sean, you want to tackle that one?
spk06: Yep, sure.
spk10: Sure.
spk06: Thanks, Ed. One thing to note on the R&D front is prior to approval, the manufacturing of Breon B would have run through R&D. That will now run through inventory. So that is, of course, part of the decrease there, as well as sort of the streamlining of our broader R&D programs. So I would say I'd expect R&D to remain pretty consistent with what you saw in the first quarter. over the remainder of 23, and I would express the same sentiment for SG&A as well.
spk09: Okay, great. Thanks, John, for taking my questions. Thanks, Ed.
spk08: Thank you. Our next questions come from the line of Karkar Agrawal with Cantor Fitzgerald. Please proceed with your questions.
spk01: Hi, good morning. Thanks for taking my questions, and congrats on the great quarter. So firstly, maybe a clarification. Out of the greater than 400 prescriptions, how many patients were infused in the first quarter? And I had a follow-up.
spk10: Yeah, sure. I'll take a crack and then add them on the top. So we don't know exactly how many patients get infused. We don't have access to that information. So we only actually know when the script is written. And only the scripts that go through the hub, right? So we don't have perfect information on total scripts, and we don't have very much information other than anecdotal from the field on what actually gets infused and when it gets infused. So I think the 400 plus up to maybe another 50 to 100 perhaps, we don't know exactly, prescriptions were written during the quarter. Most or some of those will be fulfilled in the quarter. We don't know. Some will be fulfilled in the next quarter, perhaps. But, and perhaps some won't get filled at all, to be honest. So I think the demand, as Anna mentioned in her remarks, was quite strong. And we'll see those conversions into final infusions over time. And we'll get some, we will, I think, over time be able to capture the, uh, the infusions that occur for people who went to the hub. Um, but that's, and that's basically just our reps going to the sites and actually collecting that information. And so at this point, that's, uh, it's way too early for us to have a good number on that. Uh, Adam, any thoughts there?
spk02: No, you're right. I mean, we, we just don't have the, uh, accurate information at this point.
spk01: Got it. And, uh, My second question, consensus for the full year is around 65 to 70 million, which based on my math would imply 2,000 to 2,500 patients on BMV, depending on how gross student discount span out. So I know you guys are not giving guidance right now, but if you can comment on your comfort level on where the street is at based on the trends you're seeing right now. Thank you.
spk10: Adam, what would you like to say to that?
spk02: Yeah, I think it's still too early. We're still early in this launch. I think we'd like another quarter of time to give you guidance on that.
spk01: I guess if I can have one more question. How do you expect the growth to net discounts to track over the course of the year? And what was the growth to net for this quarter? Thank you.
spk02: Yes. Yeah, gross to net in the quarter was 77%. We do expect that to fluctuate quarter to quarter. You know, source of business will change. There will be some fluctuation. So, you know, in the first quarter it was 77%. We're not going to give any guidance yet the full year. As we get more information, we'll continue to update you.
spk01: Thank you.
spk08: Thank you. Our next questions come from the line of Matt Kaplan with Latimer Development. Please proceed with your questions.
spk07: Hi. Good morning, guys, and congrats on the quarter. I guess just starting off a little bit, can you elaborate a little bit more on your XUS plans and how you're thinking about partnering versus going it alone?
spk10: Yeah. So, I mean, again, we're just continuing to do the analysis of what the ex-U.S. market looks like. I mean, we've kind of narrowed it down that if we were going alone, we would probably focus primarily in Germany, where we think the vast majority of the ex-U.S. market resides. There's obviously more global opportunity than that, but, again, if it's going to be a go-it-alone strategy, we'll probably be more focused and focused We start there, and obviously there's other European countries we could add on pretty easily. On the partnership side, look, we continue to evaluate potential partners. Obviously one of the biggest concerns we have is doing a partnership when we recognize the value we can achieve for a partnership is going to be less than we probably get for the ex-U.S. rights in a strategic relationship. So it's important to us to manage that. make sure we have flexibility with the ex-U.S. territory. So I think, you know, again, we're looking into and we're evaluating the opportunities available to us, both alone and with partners. And we're getting close. Hopefully we're going to make that decision in the coming months. And, again, like we said in the prepared remarks, hopefully to be prepared to launch later this year. Okay.
spk07: And then in terms of maybe a question for Adam, how – your messaging and specifically, I guess, the infusion times and the current label of the product is initially resonating with prescribers out there in the field. What type of feedback are you getting?
spk02: Yeah, thanks, Matt. I think where we're focused on the feedback that we've gotten from our customers is that it's really the efficacy combined with the efficiency. So, you know, the efficacy of the drug is important to all, you know, physicians that are taking care of patients. But what Breon V adds is the efficiency of a faster infusion and overall infusion experience. So that's what's resonating with customers. Of course, you know, the overall experience that they have with the infusion itself will certainly improve. be tracking and watching, as we noted before. And we think the consistency of being able to, in our trial, if you remember, 95% of the infusions were delivered without interruption. And that's an important thing for us to continue to watch in the real world and make sure that that's consistent with the trial results. But if that does play out, that will also be a very important thing to physicians and infusion centers going forward.
spk07: Okay, that's helpful. And then the last question in terms of IMS and Symphony databases, how should we think about the capture rate there kind of now and going forward and the usefulness of those sources?
spk10: Yeah, I'll jump in for a quick commentary and then Adam provide some more. You know, I think in the early days people should use those resources with severe caution. I don't think they track very well early on. I assume at some point later on in the launch, probably closer to third, fourth quarter into next year, there'll be an established pattern and we can get a sense of what they're actually capturing versus what's actually happening. But I think personally, I would use those numbers with extreme caution. Adam, any thoughts?
spk02: Yeah, I mean, the only thing I would add is that, you know, we do have a direct distribution program that is not captured in the Symphony data, which makes it even more difficult to interpret those numbers. So I agree with Mike's comments.
spk07: Thanks, and congrats again.
spk10: Thanks, Matt.
spk08: Thank you. Our next questions come from the line at Bianca Montani with B Rally. Please proceed with your questions.
spk04: Good morning team. Thanks for taking our questions and congrats also on the progress. So maybe just at a higher level, you know, if you could kind of talk about the distribution network and maybe specifically the prescription trends that, you know, you may have visibility from the institutional buyers versus the, you know, the direct purchase by clinics and, and what sort of revenue recognition makes, um, you know, exist given, you know, patient support programs may apply more to one channel versus the other. And if you could comment on how that trend may evolve over the course of the year, then I will follow up. Go ahead, Adam.
spk02: Yeah, Mike, if I understood the question, we have, you know, I mean, the way we set this up was to make sure that we're meeting customers where they want to be. We are selling at all the major distributors for Briambi. We also have our own direct distribution program. I'm not going to get into the percentages of each at this point, but that's the general layout of our distribution program.
spk04: Okay. And how you expect to see this evolve through the course of the year? Are there academic centers coming on board? and also the impact of J-code. And are you able to comment on how this mix may evolve through 2023 and beyond?
spk02: Yeah, I think we've been consistent, you know, in saying that we do believe this launch will gradually accelerate as some of these, you know, these operational challenges alleviate throughout the year. The J-code is one very good news that we got the J-code that will become effective on July 1st. As I mentioned, the prepared remarks will continue to see formulary wins at major academic centers. So that will continue to increase our academic prescribing. So we do expect an acceleration in the second half of the year as these operational hurdles continue to alleviate. And yeah, that's, I hope that answers your question.
spk10: Yeah, no, thank you. I could add, if you want, I'll add on top of that a little bit. I mean, I think you know, as I think Adam mentioned in his remarks, I mean, we've had a really nice distribution between community and academic, probably slightly skewed toward the community side, which again, getting back to the cautionary notes on IMS and Symphony, the community is more likely to use the direct channel, which does not get captured. So that's one portion of the distribution. I think to Adam's point, you know, as we knock down these hurdles, Each side will open up a little bit more, right? So the community side, the J code is probably more of a problem than formulary access because they're smaller and they do their own formulary and they don't have a big bureaucracy. On the academic side, you know, it's going to be the formulary, which will open up more access to a lot more academic centers. My guess is, you know, if I had a guess, my guess is the blend is, Later in the year, it probably goes back toward the academic side. But again, it's hard to really know at this point. We're seeing great demand from both sides. And we know that there's a lot of pent-up potential from both sides. So I'm looking forward to seeing how that all plays out myself, actually.
spk04: Got it. Yeah, thanks for that, Entire Color, from both of you. And then on you, just quickly, I know it's a little early, you're not in the market yet, but we know that anti-CD20 penetration, you know, may not have been that prolific that you've seen in the U.S., so... I was just curious to hear your thoughts on whether, you know, what your understanding is, you know, the reasons for that, and if at all you expect that, you know, you could participate in that increased penetration of anti-CVD drug class in the EU, if there's any incremental color there. In your cash burn estimate, are you incorporating any EU revenues? And also, on the cost side, doing additional clinical trials, for example, the sub-Q study is something, Mike, you talked about in the prior call, if there's been any progress on making a decision on that, or if you're just waiting for the Roche phase 3 readout in third quarter.
spk10: Yeah, so on the EU revenue front, I don't think we have anything incremental other than we do see a nice growth ex-US for CD20. And I think, as you noted, there's a lot of potential to grow the CD20 class. And again, we think with, you know, Brionvy's, you know, best-in-class, you know, profile potential, we think that, you know, it's a nice offering. We've had really good discussions with some KOLs in Germany. We do feel very good about the potential opportunity, and we agree with you that there's plenty of room for growth of CD20s outside the US. So I don't have much more for you on that, but I do take your point. In terms of cost of goods, the clinical trials, so in terms of some of the trial expenses, yeah, I don't see a major increase during the course of this year. uh in terms of the sub-q development uh right now it's a it's a cmc um project so we need to understand exactly what the properties the physical chemical properties of that sub-q will look like so that's that's not going to really hit probably from a clinical trial perspective significantly this year we have some other clinical trials that we're working on that are not going to be costing that much and we continue to lower the burn from the legacy trials. So there's still room to save money on clinical trials that we've had to carry on and carry forward, some for ethical reasons, but we're winding those things down at this point. So I think as those come down, some of the new clinical stuff that we're doing will come in. But as Sean mentioned, I think our R&D line should be pretty stable throughout the year. Thanks for the question. Yeah, of course.
spk08: Thank you. Our next question has come from the line of Josh Shimmer with Everco. Please proceed with your questions.
spk03: Thanks for taking the question and apologies if I missed this. But the cost of goods line is relatively low considering that you do owe a royalty. Was there capitalized cost of goods that you're working through? And if so, how much and what do you expect the normalized cost of goods as a percentage of sales to be going forward? Thanks.
spk10: Yeah, so that's a great point. I'm going to let Sean handle that. But, yes, we did capitalize from the inventory that we built up prior to launch. But go ahead, Sean. That's more detail there.
spk06: Yeah, that's exactly right, Mike. Any goods that we produce prior to approval were expensed through R&D. So the early part of the launch, we'll work through that – that stack of goods, if you will. I don't want to call it inventory because it's not that. In the first quarter, we did capitalize some inventory on the balance sheet that amounted to about $25 million. And that will likely be the sole campaign in 2023. And then we'll see some again in 24. Got it.
spk03: Thanks very much.
spk08: Thank you. That is all the time we have for questions today. I would now like to turn the call back over to Mike Weitz for any closing comments.
spk10: Great. Thank you. So, again, as I believe you've heard today, we are quite pleased with the launch to date. We remain confident that BrionV offers patients a differentiated PD20 option in a growing class. We believe the BrionV profile, along with the convenient one-hour infusion administered twice a year, at the lowest price of any branded MS treatment, together affirm our belief that Brioni has a best-in-class potential. I want to thank everyone at TG for a fabulous effort. In addition to the commercial medical teams that are on the front lines, our clinical, regulatory, safety, manufacturing, supply chain, quality, legal and compliance, and finance teams have all performed at the highest levels to make this early launch possible. Everyone at TG remains committed to serving the MS community in everything we do, We deal with the focus on improving the lives of those living with MS. Thank you again for joining us today, and have a great day.
spk08: Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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