Operator: Greetings and welcome to Rigel Pharmaceuticals Financial 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. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce you to our first speaker, Ray Furey, Rigel’s Executive Vice President, General Counsel and Corporate Secretary. Thank you Mr. Furey. You may begin.

Ray Furey: 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 and can be viewed along with the slides for this presentation in the News & Events section of our Investor Relations site on rigel.com. As a reminder, during today’s call we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found on our most recent annual report on Form 10-K for the year 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 to update those forward-looking statements to reflect 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?

Raul Rodriguez: Thank you, Ray and thank you, everyone for joining today. Also with me today are Dave Santos, our Chief Commercial Officer; Francois Di Trapani, our Senior Vice President of Medical Affairs; Joe Lasaga, our Executive Vice President and Corporate Development; and Dean Schorno, our Chief Financial Officer. We have an exciting presentation today and we will provide substantial information on GAVRETO, 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 4. 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, TAVALISSE in ITP and REZLIDHIA in mutant-IDH1 relapsed 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 GAVRETO, an FDA-approved therapy for the treatment of RET fusion-positive, metastatic non-small cell lung cancer and advanced or metastatic thyroid cancer. GAVRETO is a compelling addition to our portfolio, representing a valuable, targeted treatment option for the non-small cell lung cancer patients with RET 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 REZLIDHIA 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 REZLIDHIA’s potential in a cost efficient and time efficient manner. We’ll touch more on these plans later on this call. In addition, R289, our IRAK1 and 4 inhibitor, is advancing in a Phase 1b study of lower-risk MDS.

With the growth of TAVALISSE and REZLIDHIA sales and the addition of GAVRETO, 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 GAVRETO and why we’re so excited to add this product to our portfolio. First, let me say that we are delighted to have acquired the US rights to GAVRETO and more importantly, 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. GAVRETO is a once daily, oral RET inhibitor with an established foothold in the US market and having generated $28 million in US 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 are well positioned to make GAVRETO available for years to come. In exchange for US rights to GAVRETO, 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 GAVRETO.

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 GAVRETO and the opportunity it presents. Dave?

Dave Santos: Thank you, Raul. On Slide 6, I’ll begin by reviewing the FDA-approved indications for GAVRETO, which include the treatment of adult patients with metastatic, RET fusion-positive non-small cell lung cancer, as well as adult and pediatric patients 12 years of age or older with advanced RET fusion-positive thyroid cancer who require systemic therapy and who are in radioactive iodine-refractory. Moving to Slide 7, I want to expand on Raul’s opening remarks and why we believe GAVRETO is a strategic addition as the third FDA-approved oral targeted therapy in our Rigel commercial portfolio. On the left, as Raul mentioned, GAVRETO generated nearly $28 million in US 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 GAVRETO 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 GAVRETO. We have an efficient distribution network with TAVALISSE and REZLIDHIA that will soon be ready to accommodate GAVRETO 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 GAVRETO. Lastly, this opportunity makes perfect sense for us, because it is highly complementary 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 8, 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 GAVRETO 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 GAVRETO, 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 GAVRETO can have on RET fusion-positive non-small cell lung cancer patients.

Francois?

Francois Di Trapani: 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 pralsetinib. 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 mutations. In RET fusions, which are relevant for non-small cell lung cancer and papillary thyroid cancer, owing to aberrant DNA repair processes, the RET gene is fused to another unrelated gene. RET fusions have been identified in approximately 1% to 2% of patients with non-small cell lung cancer, representing approximately 3,000 new patient a year in the United States.

Incidence of RET fusion-positive non-small cell lung cancer is higher in adenocarcinoma, in patients with a minimal smoking history, in younger patient at diagnosis, no differences are observed between genders. RET+ fusion is also reported in 20% of papillary thyroid cancer, representing approximately 1,000 new case a year in the United States. Historically, there is a great medical need as non-selective therapies in RET+ non-small cell lung cancer have shown poor outcome with an overall response rate inferior to 30% are 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 RET fusion-positive non-small cell lung cancer evaluated multi-kinase inhibitors, including Cabozantinib, Vandetanib, Lenvatinib or Sorafenib, as they had shown some degree of anti-RET 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-RET kinase inhibition. Although PD1 and PD-L1 expression can be elevated in some patient with an oncogenic driver such as RET, preliminary data suggest that immunotherapy is less effective in patient with RET-driven non-small cell lung cancer, showing 6% overall response rate and progression for survival of 2.1 month. Furthermore, practice guidelines state that contraindication for treatment with PD1/PD-L1 inhibitors in patient with advanced or metastatic non-small cell lung cancer may include the presence of oncogenes such as EGFR, ALK and RET, which may predict a lack of benefits.

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 RET fusion-positive disease have been historically centered around platinum-based chemotherapy, which exhibit response rate in the 40% to 50% range and progression free survival of 6 to 8 months, further highlighting the need for more effective and selected therapies. While chemotherapy has long been the gold standard in metastatic non-small cell lung 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 lung cancer in the past 10 to 15 years.

Pralsetinib is an oral tyrosine kinase inhibitor that selectively and potently targets oncogenic RET fusions and mutation, including mutation associated with resistance to multi-kinase inhibitors and has shown high selectivity for RET over other tyrosine kinase. Pralsetinib is 81 fold more selective for RET than VGFR2 and 20 fold more selective for RET than JAK-1 in biochemical assays. Preclinical studies of pralsetinib 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 patient with metastatic non-small cell lung cancer with actionable genetic variants. Let’s turn now our attention on Slide 13, to the clinical result from the study that led to the approval of pralsetinib in both RET fusion-positive non-small cell lung cancer and RET 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 Arrow study is a Phase 1, 2, multicenter, open-label dose escalation and expansion study. The Phase 1 portion of the study had a primary endpoint of maximum tolerated dose, recommended dose for Phase 2 and safety. The Phase 2 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 free survival and overall survival. From the Phase 1, the investigators concluded that pralsetinib is generally well tolerated at doses to 400 milligram QD.

Therefore, 400 milligram 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 patient with previous platinum-based chemotherapy, and in 70% to 80% of the 107 treatment naive patient. 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 lung cancer patient, median duration of response one of the key secondary endpoints in the Arrow trial was durable at 19.1 month, 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 1, II adverse events, 10% of patients discontinued pralsetinib due to treatment-related adverse events. In the RET fusion-positive thyroid cancer subset, pralsetinib continues to show efficacy and a manageable safety profiles. 20 out of the 22 patient with previously treated RET fusion-positive thyroid cancer achieve a response. Finally, in the 23 patient evaluable for efficacy from the RET fusion-positive solid tumor subset, patient other than thyroid or non-small cell lung cancer, and including colorectal pancreatic cancer patient, 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 Metastases is common with nearly half of non-small cell lung cancer patient developing brain metastasis during their lifetime, and is a prognosis factor in patient with RET fusion-positive non-small cell lung cancer.

In a study by Drilon et al, 25% of patients had brain metastasis is the 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 month 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 pralsetinib have shown blood-brain barrier penetration and activity against intracranial tumors. In the present study, pralsetinib showed intracranial activity in patients with RET fusion-positive non-small cell lung cancer and measurable baseline brain metastasis with a 53% overall response rate, including the inducement of intracranial complete response in 3 out of 15 patients or 20% of the cohort, and a median duration of response of 11.5 months.

Moving to Slide 15, pralsetinib is the only oral, once daily therapy that selectively and potently inhibits RET alteration has demonstrated high rates of durable response regardless of treatment history, with response rate in the range of 74% to 80% for treatment naïve patients and 63% for previously treated non-small cell lung cancer patients. Pralsetinib 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. Pralsetinib does not carry a warning and precaution for QT prolongation in non-small cell lung 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 RET+ advanced thyroid cancer and RET+ metastatic non-small cell lung cancer, and carry a category 2a preferred recommendation as first-line therapy for RET+ metastatic non-small lung 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.

A researcher in a lab coat monitoring a biotechnological experiment.

Dave Santos: Thank you, Francois. Now that we’ve covered both the opportunity and the clinical overview of RET non-small cell lung cancer and GAVRETO, I wanted to provide a brief overview of the GAVRETO 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, TAVALISSE and REZLIDHIA. 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 GAVRETO. First, we have an efficient distribution network for TAVALISSE and REZLIDHIA that swiftly and dependably delivers our products to accounts and patients overnight.

Our network can readily accommodate GAVRETO 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 GAVRETO 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 TAVALISSE. 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 GAVRETO 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 GAVRETO 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 GAVRETO. The first is patient identification. It is important that as many as possible, of those 3,000 potential RET fusion-positive non-small cell lung 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 GAVRETO, choice of therapy in those identified patients who are treatment eligible is an impactable growth opportunity for us.

Most oncologists have yet to try GAVRETO 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 GAVRETO’s efficacy, safety and once daily oral dosing, we believe we can grow future use of GAVRETO among current non-users. Third, we believe that GAVRETO 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 GAVRETO 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 GAVRETO through positive momentum in these four key drivers. And to wrap up our prepared remarks on GAVRETO 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 GAVRETO. Then, beginning next quarter, Rigel ONECARE will begin implementing the plan to transition current and newly prescribed GAVRETO patients.

We will also begin preparing our field teams. In Q3, we expect to begin distributing GAVRETO 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 GAVRETO 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 TAVALISSE and our progress with REZLIDHIA 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. TAVALISSE, 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 TAVALISSE in 2024 and beyond. REZLIDHIA 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 REZLIDHIA in the community setting.

Overall, we are thrilled that we surpassed $100 million of US 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 Raul to provide a brief update on our development progress. Raul?

Raul Rodriguez: 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 RET, 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 to have registrational data 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 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 olutasidenib 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 olutasidenib.

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 IRAK1 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 US 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 olutasidenib. There are four patient populations that we and MD Anderson are particularly excited about for olutasidenib. We are planning to evaluate olutasidenib 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 and 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 II and grade III patients and 5% to 7% of grade IV patients are IDH1 positive. This is a fairly prevalent mutation in these patients and there is a high unmet need for effective treatment options. On the right side of this Slide, we show data from a trial evaluating olutasidenib in 26 relapsed or refractory, highly treatment experienced patients with glioma. In this trial, no dose limiting toxicities were observed and olutasidenib 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 olutasidenib in patients with glioma. CONNECT is a consortium that is currently conducting a Phase 2 umbrella trial in glioma and we are adding olutasidenib 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 olutasidenib’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?

Dean Schorno: Thank you, Raul. 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 TAVALISSE and launch REZLIDHIA 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 TAVALISSE to our specialty distributors, resulting in $36.9 million of gross product sales. 2,463 bottles of TAVALISSE 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 REZLIDHIA to our specialty distributors, resulting in $5 million of gross product sales. 278 bottles of REZLIDHIA 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 TAVALISSE at $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 REZLIDHIA of $3.9 million in the fourth quarter of 2023. Our net product sales from TAVALISSE and REZLIDHIA 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 TAVALISSE and REZLIDHIA 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 TAVALISSE. 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 bottles shipped 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 bottles shipped to patients and clinics throughout the year. For REZLIDHIA, we expect to see continued strength in our bottles shipped 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 of TAVALISSE, respectively. Given these increases, we expect to see a drawdown of these inventory levels in the first quarter of 2024. Both the TAVALISSE and REZLIDHIA 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 TAVALISSE and approximately 27% for REZLIDHIA.

Finally, as an important reminder, we do not expect to start recognizing revenue from GAVRETO until the third quarter of 2000 – 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 cost 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 cost and expenses was partly due to decreased research and development costs due to the timing of trial completion activities related to the Phase 3 clinical trials of fostamatinib in patients with COVID-19 and warm autoimmune hemolytic anemia, as well as the timing of trial activities related to our IRAK1/4 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 cost and expenses in the fourth quarter of 2022. As we move into 2024, we currently expect our total cost 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 GAVRETO asset to Rigel and expect to incur certain costs 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 investments of $56.9 million.

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. Raul?

Raul Rodriguez: 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 REZLIDHIA and TAVALISSE by broadening awareness and adoption of our prescriber base. Further, we are keenly focused on transitioning GAVRETO to our commercial operations. We look forward to initiation of additional olutasidenib 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-licensed deals and acquisitions, looking to do similar to our approach we’ve used with GAVRETO and REZLIDHIA. 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 and our progress in the fourth quarter and we will now open the call to your questions. Operator?

Operator: Thank you. [Operator Instructions] Thank you. Our first question comes from the line of Yigal Nochomovitz with Citigroup. Please proceed with your question.

Yigal Nochomovitz: Hi, Raul and team, thank you for taking the questions. I have two on GAVRETO. I understand that some of these approvals are currently accelerated approvals and there were some post-marketing requirements specifically for the RET fusion-positive thyroid cancer. There was the Arrow trial and 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 AcceleRET-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.

Raul Rodriguez: Thank you, Yigal. I’ll ask Francois to answer and I’ll pile on it at the end.

Francois Di Trapani: Yeah. So I can give a little bit of an update on the AcceleRET study and the TAPISTRY. So as you know, AcceleRET is the randomized, open-label controlled Phase 3 study of pralsetinib versus standard of care for first-line treatment of RET fusion-positive metastatic non-small cell lung cancer. And TAPISTRY is the non-randomized, open-label, agnostic Phase 2 platform trial that does enroll – that did enroll actually in patient 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 anticipated to begin in the first quarter of 2024. That said, actually, I mean, for both studies, actually TAPISTRY and AcceleRET, actually learn, Rigel will be looking and analyzing the data when available.

Raul Rodriguez: I might add, in non-small cell lung cancer in the US, we have a full approval and the only requirements are a drug-drug interaction study. So some minor work, the AcceleRET study was not necessary for US approval or maintenance of US 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.

Yigal Nochomovitz: 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 GAVRETO? Thanks.

Raul Rodriguez: Thank you. Dave?

Dave Santos: Sure, absolutely. I’d love to answer that question, Yigal. First of all, 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 want to make sure everybody understands that, in the community oncology setting, docs treat lung cancer quite a bit.

And so now we have a product we can go in, in a large tumor type, albeit with a very targeted agent, but have a discussion about a product that’s very relevant to their practice each day. And then of course, we’ll have the opportunity to talk about TAVALISSE and REZLIDHIA too 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, 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.

Yigal Nochomovitz: Got it. Thank you very much.

Raul Rodriguez: Thank you, Yigal.

Operator: Thank you. Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Kristen Kluska: 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 what you said you noted was discomfort and familiarity with other drugs. So I know Blueprint has had some experience here with Genentech. Have they seen – or a lot of their adoption naive, or is it switch? 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?

Raul Rodriguez: I’ll ask Dave to comment on that.

Dave Santos: Absolutely, Kristen. I think 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 drug or 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 GAVRETO. And the more people hear about GAVRETO, I think the more usage we’ll get. And we believe we can get our fair share of the RET inhibitor space. So that’s why we believe it’s a great opportunity for us. Just being a smaller company, we have the ability to focus on it and it’ll be something that we – 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 with the right direction, the right tools and a really smart investment in this place, we can grow with the market.

Kristen Kluska: Thanks so much. And then on TAVALISSE, 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.

Dave Santos: Yeah, thanks for that question, Kristen. We have updated our data that we shared from Rigel 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 than we did – 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 TAVALISSE.

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

Kristen Kluska: Thank you.

Raul Rodriguez: Thank you, Kristen.

Operator: Thank you. Our next question comes from the line of Kalpit Patel with B. Riley Securities. Please proceed with your question.

Kalpit Patel: Good afternoon. Thanks for taking the questions. Maybe one question on GAVRETO’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?

Dave Santos: We have uses in both, Kalpit, 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, if you start on a RET inhibitor in the front-line, you 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 opportunity. 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.

Kalpit Patel: Okay, got it. Can you maybe help us understand the gap between the sales of your drug versus the other RET 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.

Dave Santos: Yeah, I’ll make a few comments on that, Kalpit. The first thing is, GAVRETO was launched second to market. And I think, 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 I think clinicians just generally think first of the first product that came to market and are very comfortable and familiarity – 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, GAVRETO.

Raul Rodriguez: The good thing, Kalpit, is that, as Dave said in his presentation, RET inhibition is, the 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 GAVRETO, 80%. So there’s a lot of opportunity there to grow this brand.

Kalpit Patel: 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?

Raul Rodriguez: Yeah, so 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 some headcounts across the board a bit, but not very many, frankly. We expect it to be minor in terms of those additions.

Dean Schorno: And all-in, we expect the incremental GAVRETO costs for SG&A along with clinical development of the drug interaction study that were all referred to be less than $10 million for 2024, Kalpit.

Kalpit Patel: Okay, perfect. Thank you very much for taking the questions.

Raul Rodriguez: Thank you, Kalpit.

Operator: 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.

Raul Rodriguez: 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 them with you. Take care.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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RIGEL PHARMACEUTICALS INC

Q4 2023

Earnings Transcript

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