Rigel Pharmaceuticals, Inc. (RIGL) Q1 2017 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Rigel Pharmaceutical's Financial Conference Call for the First Quarter of 2017. All participants are in listen-only mode. We will be facilitating a question-and-answer session at the end of today's conference. [Operator Instructions] I would like to remind you that this call is being recorded for replay purpose from Rigel's website. [Operator Instructions] And now, I will turn this conference over to our first speaker, Dolly Vance, who is Rigel's Executive Vice President, Corporate Affairs and General Counsel.

Hello and welcome to our financial results and business update conference call. The financial press release for the first quarter of 2017 was issued a short while ago and can be viewed in the news and events section of our Investor Relations page on our website, www.rigel.com. Joining me on the call today from Rigel are Raul Rodriguez, our CEO; Ryan Maynard, our CFO; and Anne-Marie Duliege, our Chief Medical Officer. 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 risk and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Quarterly Report in Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our CEO, Raul Rodriguez.

Thanks, Dolly, and welcome everyone. Thank you for your time this afternoon. As you know, this year we achieved significant clinical and business milestones and supported by our transition for Rigel into a commercial stage biotechnology company. This work aimed to provide new therapeutics to patients with chronic immune thrombocytopenia or ITP, as well as for other indications. We are very pleased with our momentum and we will take this opportunity to recap our efforts over the last few months, and what we expect to achieve in the balance of 2017 and beyond. In mid-April, we resubmitted our new drug application to the U.S. FDA for fostamatinib for patients with patients with chronic and persistent ITP. We expect to receive notification regarding their decision on an acceptance of the NDA in June. Last week we announced that the U.S. FDA has conditionally accepted the proprietary name Tavalisse for our lead investigational drug candidate, fostamatinib disodium, Tavalisse. Data from our FIT Phase 3 clinical program were consistent across our two pivotal studies, 047 and 048 as well as the long term open label extension study 049. Patients who responded to Tavalisse had a timely, robust and a sustain response to treatment. These three themes, timely, robust and sustain underscore the potential value of Tavalisse -- which Tavalisse may offer patients. The rapid response gives an early feedback as to whether Tavalisse may be a viable treatment option for patients with ITP. The robust response becomes clear when you see that in the pivotal studies 047 and 048, patients' platelet counts rose and then held study at about 100,000 platelets per microliter of blood. Our analysis also demonstrates that Tavalisse may provide an enduring benefit. Based on the median data of 16 months' treatment from studies 047 and 048 and increasing, which gives patients and their doctors confidence that the disease is controlled in the long term. As expected, the FIT Phase 3 clinical program confirmed that Tavalisse has a consistent and predictable safety profile. The profile aligned with the safety database of over 5,000 patient years which we have accrued. Later Anne-Marie will provide additional backlog on the NDA submission and regulatory milestones, as well as additional details regarding fostamatinib for the treatment of other disorders. But first I would like to briefly review a few additional first quarter activities. In January of '17, we've reported results from the first cohort of the Phase 2 clinical study of fostamatinib in IgA Nephropathy. The study found that at 24 weeks fostamatinib at 100 milligram BID was well tolerated. The data also suggested that our trend exist towards a greater reduction in proteinuria in fostamatinib treated patients relative to placebo. We expect that the second cohort evaluating a higher dose of fostamatinib and a 150 milligram BID will finish enrollment in 2017, with results in 2018. In addition, enrollment remains on track for stage one of our Phase 2 open label study of fostamatinib for the treatment of warm autoimmune hemolytic anemia, also known as AIHA. We expect to have results from stage one of the trial in 2017. And finally, in February of 2017, we completed an underwritten public offering of 23 million shares of common stock, which resulted in net proceeds to Rigel of about $43 million. Or as you can see, the first quarter has been a very productive one for Rigel, I think a monumental one in the history of the company. I will now turn the call over to Anne-Marie for her presentation. Afterwards Ryan will report our first quarter financials. Anne-Marie.

Thank you, Raul. First I want to congratulate and thank all of my colleagues for their hard work to assemble an extremely comprehensive NDA in support of fostamatinib for patients with chronic ITP. Looking at Slide 10, we provide an overview of what this NDA submission is, including results from the FIT phase 3 program for fostamatinib including chronic ITP. The NDA was comprised of 47 people trial, 163 patients with ITP, over 4600 patients total and approximately 5,200 patient years of data. The NDA included of course sections on critical studies and manufacturing. As an aside, if we were to actually print out the NDA submission, it would total approximately 1.6 million pages, that would stack over 500 feet high. Very, very briefly, as shown on slide 11 and 12, Rigel focused on fostamatinib for chronic ITP because there is a significant unmet medical need. There are approximately 60,000 to 125,000 patients with chronic ITP in the U.S., and it qualifies as an orphan disease. The chronic ITP patient population is very heterogeneous, meaning that it is challenging to predict which patient will respond to which of the currently available treatment if any. SYK kinase is a key player in the immune system destruction of platelets in ITP. Fostamatinib is a SYK inhibitor and therefore has a unique mechanism of action in the context of ITP. ITP patients can have platelet counts that fall below 30,000, a level at which they're generally considered at risk for spontaneous or trauma induced hemorrhage. Through our clinical program, we demonstrated that fostamatinib may help certain ITP patients and that the benefit was consistent across all subgroups analyzed including people with fierce patients who have had limited treatment options remaining. A quick review of the phase 3 clinical program on slide 13 shows that the two-identical placebo controlled studies, O-47 and O-48 that included a total of 150 adult patients with chronic or persistent ITP. Patients were randomized in a 2 to 1 ratio into fostamatinib or placebo group and then dosed for up to 24 weeks. The primary end point with the achievement of a stable platelet count, equaled to greater than 50,000 per microliter on at least four of the last six clinics visit from weeks 14 to 24. At the conclusion of the participation in either of the two studies, patients were invited to enroll in an open label, long term extension study O-49, where all patients received fostamatinib. Results from the O-47 and O-48 studies shown on Slide 14, show a consistent stable platelet response of 18% in the fostamatinib groups. Review of the data provided additional insight. When patients respond to fostamatinib, they respond quickly with a robust and sustained response. Looking at the chart on Slide 15, you can see how quickly the median platelet numbers for fostamatinib responders begun to occur. That’s the green line. The platelet count continued to rise to approximately 100,000 per micro meter where they held steady. In a post talk analysis, when adding the stable and intermediate response rate, the overall response rate for studies O-47 and O-48 shown on Slide 16, is 29% which is 29 out of 101 for the fostamatinib group, compared to 2% for placebo, and the difference is highly significant at less than 0.0001. The important point is that the primary endpoint is a stable response and this is the basis for discussions with the FDA. The intermediate response is a post analysis that supports a clear treatment effect of fostamatinib. Lastly, the last table on Slide 17, show adverse events in the fostamatinib group in studies O-47 and O-48 and they were generally mild to moderate with GI, gastrointestinal, blood pressure and adverse events reported with most frequency. All adverse events were manageable and reversible. With the NDA submitted to the FDA the expected regulatory milestones are FDA's acceptance of the NDA submission, likely an ODAC panel, FDA's decision on approval being anticipated in 2018. Also, by the way, we were recently accepted for an oral presentation at the [indiscernible] in Madrid in June of our two pivotal phase 3 trials O-47 and O-48. Now I want to spend a bit of time providing an overview of our additional clinical results studies on fostamatinib and other indications. Moving to Slide 18, Raul mentioned our study of fostamatinib in IgA nephropathy, the most common glomerulonephritis worldwide. The disease causes inflammation and scarring of the kidney. People with this rare condition are at risk of serious complications from kidney dysfunction, including high blood pressure and renal failure. The first cohort in the Phase 2 study, outlined on Slide 19 was completed at various centers throughout Asia, the U.S. and Europe. This cohort evaluated the efficacy, safety and tolerability of lower dose of fostamatinib as measured by change in proteinuria, renal function and histology. New primary efficacy endpoint was a mean change of proteinuria from baseline at 24 shown on Slide 20. The study found that at 24 weeks fostamatinib was well tolerated with no new safety signal detected, as well mentioned the initial data suggested trend towards a greater reduction criteria in fostamatinib treated patients relative to placebo. We expect that the second cohort will finish enrollment in 2017, with results in 2018. Briefly, I also want to comment on fostamatinib in autoimmune hemolytic anemia or AIHA. Affecting approximately 40,000 of those patients, AIHA is a rare serious blood disorder, where the immune system produces antibodies that result in the destruction of the bodies' own red blood cells. Enrollment remained on track for stage one of our Phase 2 open label study of fostamatinib for this indication. As seen on Slide 22, stage one of the Phase 2 study would evaluate the safety and efficacy of fostamatinib in approximately 17 patients with autoimmune hemolytic anemia, was previously received treatment for the disorder that has not benefited from the treatment. We plan to have results from stage one of the trail in 2017. Now, I will turn the stage over to Ryan to provide a financial update. Ryan?

Thanks, Anne-Marie. For the first quarter of 2017, we reported a net loss of $15.3 million or $0.13 per share compared to a net loss of $17.5 million or $0.19 per share in the first quarter of 2016. Contract revenues from collaborations of $3.6 million in the first quarter of 2017 was comprised primarily of the $3.3 million payment from BerGenBio that we receive as they advanced BGP324 of the small molecule actual inhibitor into Phase 2. Contract revenues from collaborations of 5 million during the first quarter of 2016 were primarily comprised of the $4.8 million amortization of the $30 million upfront from BMS related to potential immune-oncology therapeutics. We reported total cost and expenses of $19.8 million in the first quarter of 2017, compared to $22.6 million in the first quarter of 2016. The decrease in cost and expenses was primarily due to the decrease in personnel and research related costs that resulted from the reduction in workforce that happened in September of 2016. This was offset by increases in cost related to the NDA preparation as well as preparation for the potential commercial launch of Tavalisse in ITP. As Raul mentioned in the first quarter of 2017, we completed a successful follow on offering and we brought in over $43 million in net proceeds. As of March 31, 2017, we had cash, cash equivalents and short-term investments of $98.1 million, compared to $74.8 million as of December 31, 2016. We expect that this amount will be sufficient to support our current and projected funding requirements, including the aforementioned preparation of the potential commercial launch of Tavalisse in ITP through at least the next 12 months. However, we are actively evaluating ex-USA partnerships for Tavalisse as well as other partnering opportunities across our pipeline. Back to you Raul.

Thank you, Ryan. So before turning the call over to your questions, I'd like to take a step back and make a few comments if I may. So this quarter really has been an exceptional one for Rigel. And the team here as Anne-Marie said has really done an extraordinary amount of effort to submit our NDA to the FDA, and at the same time preparing for our first commercial launch in the U.S. And it really does take a whole company and it takes a whole lot of companies working for a long, long time and many weekends to achieve that success. So I'd like to thank everyone of those individuals who worked so hard to getting us to file the NDA, and through the people that preceded them, that worked so hard on this product to getting it to the stage where we could contemplate the NDA. So thank you all of those people. Reflecting on we've accomplished in the last 12 to 15 months, I'd like to just take you through some of that just to remind you. One we showed that Tavalisse may be a viable treatment option for some ITP patients. That was an important accomplishment. We put together the NDA and we are moving ahead with it through regulatory milestones to get the product to the ITP patient community. We've also met in the last 12 months with ITP patients, ITP patient advocates and doctors, who told us about that disease and the burden the disease places on their lives and the need for new treatment options. And here I think it's very inspirational for us, when we see our drug in the hands of the patients, albeit in the context of a clinical trial for now, that we're seeing that drug help that patient, and make their lives appreciably better. That really is inspirational to me, and I think for everyone else in this company. And in fact, the reason why we're here as a company to get a drug to a patient who makes their lives substantially better by benefitting that drug. So it's really an inspiration to move ahead and it causes us to work all the harder, to move the program forward. In addition, our partnered programs have also made some very substantial progress in the last 12 months. Some of our partners have started now Phase II trials, and some partners have started clinical trials and others are preparing the work necessary to file an IND, all with molecules discovered here at Rigel. So we're very pleased with that, and look forward to making progress against some serious diseases. And then finally, the fund raising this year and the restructuring, as difficult as it was provided the resources that have allowed us to invest in regulatory and commercial readiness for this product. You know the progress is always slower than you would like. It always proceeds in fits and starts, and it's always more work than you expected it to be. But the progress really is on the macrolevel steady, and it’s forward and that's what we're happy with. So we’re very pleased what we've been able to do in the last 12 to 15 months. All of this position us very well for moving forward, first managing the NDA towards potential approval for Tavalisse for chronic ITP, preparing for potential commercial launch in the U.S. in 2018, and then the continued expansion of our pipeline. So with that, what I'd like to do is open the call up to your questions.

Thank you, [Operator Instructions] and your first question comes from the line of Eun Yang of Jefferies, your line is now open.

Hi, thanks for taking the question. Couple of them on the fostamatinib. When you submitted an NDA did you apply for priority review?

Eun, thanks for the question. So we had a decision on that. We did not, and the reason is that we felt that such a thing would narrow the label of the product. And we thought we very much would like a very broad label for this product. And while we thought that was obviously something that was a judgment call, we prefer having a broader label than a narrower label. And filing for such a review would necessitate us asking for a narrower one than we've wanted. So we decided against it.

Does that narrow label mean refractory patients?

Yes.

[Indiscernible].

Correct, and we did the trial as you probably know in all patients, after one prior drug at sale, that some call as steroid, and including naive [ph] patients and people refractory patients. And the product works across all of those subgroups. And so, we would prefer having a label that’s broader, that includes all those subgroups and instead of arguing for a narrower label with slightly faster review, we thought that, that was just not a smart strategy for us for this product.

Do you still expect an FDA panel in the fourth quarter of this year?

We do. It's going to be in the fourth quarter, it also could be in January, though it's not really that what the exact month will be. But it'd be toward the end of this year or maybe very early next year. We don’t know that for certain of course as yet.

On immolated anemia, how many patients have been enrolled in this stage, one part of the phase 2, and when you present the data into this year, will that be all 17 patients?

We think it will be all 17 patients, and its later this year. So we'd rather wait on giving you an update on that until we either put press release out about the status and reaffirm the timing. But for now, the goal is to enroll these patients have the results by the end of the year.

Thank you and our next question comes from the line of Josh Schimmer of Piper Jaffray. Your line is open.

Hi this is Monica on for Josh, thanks for taking the questions. During the split studies in ITP, what has the experience been with the respond mutation that shock therapy for other reasons? Have they lost their platelet response? And if so what's your plan?

So, in January indeed fostamatinib as source duration of action. And so when patients stop fostamatinib for other reasons, adverse events or relocation or so, for the limited information we have, because we do not pull these patients thereafter for too long term, we see a drop of platelet count pretty much down to where they were in baseline.

Thank you and our next question comes from Anupam Rama of JPMorgan. Your line is now open.

Just two quick ones for me. Looking to EHA, what additional analysis should we be thinking about beyond what we learned in the top line data? And then as you look to a panel, sort of later in the year or early next year how are you guys preparing and sort of what are the key questions you guys are thinking about?

Question is in the EHA study, we all focus on O-47, O-48, mainly over primary end points and secondary end points and some of the ad hoc end points as well. So you will have a little bit more news around the description of the result. Your second question was?

Whether the questions we're working towards as we prepare for -- say an ODAC panel or from the FDA?

Certainly, we expect the FDA to ask us more questions about the safety profile of the drug, how it compared with the background safety information that we had and method and try this in binary [ph], there was obviously new signal in patient with ITP compared to the rheumatoid arthritis patient. We are prepared to answer question about the duration of response and overall engaging to hopefully a dialog with the FDA on the benefit risk equation.

As you know Anupam, preparing for managing the NDA process and interactions with the FDA take a tremendous amount of work. Some people think it's a tremendous amount of work to put the NDA together and submit it. It actually -- the work doesn’t decrease after that. In frankly expands. And it is a tremendous amount of effort across all functions.

Thank you. [Operator Instruction] And our next question comes from line of Do Kim of BMO Capital Markets. Your line is now open.

I was hoping you could perhaps tell us what your expectations are in terms of FDA communications, from now until the PDUFA date?

In terms of communication, I think there is regular communications as we hear from them on various topic. So it really could span anything that they may ask us questions at almost any time. In fact, it's even possible that they have inspections at any time as well. So it really could be just about anything at any area. So we are working hard to effectively prepare for possible questions that they may shoot over at us. So we are expecting just about anything to be honest with you in terms of that. And that’s fairly normal.

Okay, thank you. And in the open label portion of the ITP study, how much of that data has been submitted as part of the NDA -- to what duration of treatment, and have you been seeing any loss of effect in the responders?

So we have provided the data as of last September was our cut date for the data and in some patients have been there for a not for the year, but others have been beyond the year or close to two years. So we had certainly a long duration of response for some of them. The response is generally maintained over time. Most of the patients stay on time generally.

Okay.

And we are on target of [indiscernible].

Okay thank you. And a question for Ryan. What's can expect in terms of operating expense for the remainder of the year. Is first quarter a good sense of what the run rate?

Yes, I would say it is a good sense of run way -- run rate sorry. The cost that we took in the first quarter that related to putting the NDA together as Raul mentioned, there is a large effort underway to defend the NDA and to get ready for all of the inspections and work that is going to go on as we prepare for the potential outcome as well as the approval. So I would call the run rate of R&D in the first quarter to be a good measure as well as administrative line item as we start ramping the commercial organization, and they get ready for the potential commercial launch.

Thank you, and I am showing no further questions at this time. I would now like to turn the call over to Mr. Raul Rodriguez for closing remarks.

So thank you all of you for your time and your questions. I think this has been a very productive quarter for the company and I think in total will be exciting year for Rigel. We will continue to provide you updates on our regulatory milestones and our pipeline as appropriate. And with, that I wish you well and thank you so much for your support.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.