Rigel Pharmaceuticals, Inc. (RIGL) Q1 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the Rigel Pharmaceuticals’ Financial Conference Call for the First Quarter of 2021. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce our first speaker, Dolly Vance, who is Rigel’s Executive Vice President, Corporate Affairs and General Counsel. Thank you, Ms. Vance. You may begin.

Welcome to our first quarter 2021 financial results and business update conference call. The financial press release for the first quarter was issued a short while ago and can be viewed along with the accompanying slides for this presentation in the News & Events section of our Investor Relations page on our website at www.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 in our most recent Annual Report on Form 10-K for the year ended December 31, 2020 and subsequent filings with the SEC, including our Q1 quarterly report on 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.

Thank you, Dolly and thank you to everyone for joining us on our first quarter 2021 conference call. Also, with me today are Wolfgang Dummer, our Chief Medical Officer; Dave Santos, our Chief Commercial Officer; Dean Schorno, our CFO. Beginning on Slide 5. The first quarter was a quarter of progress for Rigel across several of our key value drivers. As you see on this page, we saw both continued challenges and opportunities created by the COVID-19 pandemic. And we will discuss this during our call. In ITP, we continue to see year-over-year growth in bottles shipped to patients in clinics, but a decline in comparison to a strong Q4 in 2020. This is consistent to what we have seen with all the competitors in the TPO class, all of which had sales decline in Q1 relative to Q4. In addition, and as Dean and Dave will describe in detail, decreases in bottles remaining in our distribution channels or inventory significantly impacted our sales during the quarter. Dave will also describe how we are increasing our promotional efforts to drive growth in the back half of the year as the effect of vaccines allow increased access to physicians and new opportunities for physicians and patients to switch therapies. We also made important progress in our warm autoimmune hemolytic anemia. Wolfgang will describe the recent increase in enrolment. We now have 72 of our targeted 90 patients enrolled. Only 18 to go, and we look forward to further acceleration as vaccine availability improves. This enrolment progress puts us closer to our goal to be the first approved product for the treatment of warm autoimmune hemolytic anemia, and therefore, to capture a substantial share of this very significant market opportunity. Our comprehensive COVID clinical program is advancing on multiple fronts. And as we described in more detail -- in some detail a couple weeks ago, we reported positive top line results from our Phase 2 clinical trial conducted in collaboration with the NIH and Inova. Wolfgang will provide a brief overview of these exciting and potentially impactful results along with an update on our other COVID trials. And importantly, he will cover our next steps in this program. Following that, Dave will highlight our view of this substantial opportunity for fostamatinib in COVID-19 patients, should appropriate regulatory approvals be obtained. And finally, we are excited to provide updates on our IRAK1/4 program in both heme/onc and immune diseases along with the progress of our recent RIP1 collaboration with Lilly. Today we'll start with Wolfgang's update on our clinical programs before we transition to Dave to discuss the commercial opportunities available to Rigel. Wolfgang?

Thank you, Raul. Let me start on Slide 7 by reminding you why all immune hemolytic anemia is such an exciting opportunity for Rigel. We estimate there are about 10,000 to 13,000 candidate patients with this condition in the U.S. alone. With no FDA approved therapies, significant unmet medical needs remains and the opportunity is large. Fostamatinib is in the advanced stages of Phase 3 development and would be first to market in this indication. The product has FDA fast track as well as orphan drug designation. AIHA does have many synergies with ITP, including the customer infrastructure that's already in place, because the physicians treating ITP are the same physicians who will treat AIHA. Therefore a lot of familiarity with fostamatinib already exists and will be there right at launch. Slide 8 gives you a brief update on our Phase 3 study. Despite the COVID-19 pandemic still ongoing, we continued to steadily randomize patients into the trial. As Raul mentioned, as of today, we have 72 patients randomized. 46 of those patients have also reached week 24 and 100% of those have rolled over into the extension study as well. Due to the pandemic conditions, we can't accurately project when we will complete enrolment. But we remain confident that we are very well-positioned to keep or even expand the leads to become the first drug approved in the syndication. Slide 10 is a brief status update on our other programs. Starting with IRAK. We continue to plan for clinical trial in the heme/onc space, currently targeting low-risk MDS as the lead indication. We have initiated discussions with the FDA and recently submitted a pre-IND package. We've also initiated collaboration discussions with academic partners in this indication. We will also evaluate and discuss rare immune diseases with a strong scientific rationale for IRAK inhibition, such as palmoplantar pustulosis, or hidradenitis suppurativa and obtain FDA feedback as well. Finally, we are well into the collaboration with Lily on our RIP inhibitor R552 and are planning to initiate a Phase 2 study this year. Moving to Slide 12. We've shown you a lot of preclinical and experimental data in the last few earnings call. But now we are extremely excited that this has translated into very positive clinical data in actual human patients hospitalized with COVID-19. You saw the press release informing you of the very positive outcomes from the Phase 2 NIH trial, and I will get to that in a bit. As you know, fostamatinib is a commercially available product under the brand name TAVALISSE. It has a well established safety database of approximately 4,800 patients and could be rapidly repurposed as a treatment for COVID-19 after the proper regulatory approvals. Fostamatinib is now in three clinical trials in COVID-19. We're currently enrolling our Rigel sponsored Phase 3 trial with financial support from the Department of Defense. And we have two investigator trials, one of which the NIH study just generated terrific data. Slide 13. Just a reminder to show you the SYK-inhibition with fostamatinib involves multiple pathways that are relevant for COVID-19. It is not just a one cytokine inhibitor, it is quite differentiated. Fostamatinib not only regulates several cytokines, it can also improve excessive NETosis as well as endothelial cell activation and thereby reduces risks of small and large blood vessel clotting. This hypercoagulability leads to multiple organ damage, kidney failure, respiratory distress syndrome and ultimately death. Slide 14 shows you the various patient populations covered with our clinical program. The recent data from NIH included patients with a 5, 6 or 7 rating on the widely used 8 point ordinal scale, meaning the most severe patients that has particular interest because these patients are presumably the hardest to treat. Imperial College London study now of Phase 3 clinical trial will include milder patients with scores in the 3, 4 and 5 range, and will investigate the progression of mild patients to severe disease. Slide 15 depicts the NIH study design. Approximately 30 -- 60 patients were to be randomized one-to-one to either fostamatinib plus standard of care, or placebo plus standard of care. The primary endpoint is safety as measured by the incidence of serious adverse events. In addition, a number of clinical efficacy endpoints typically included in these COVID-19 studies and generally considered meaningful were also analyzed. Moreover, NIH has incorporated very powerful translational research tools that can generate valuable mechanistic data on fostamatinib and COVID-19. For example, they have included numerous cytokine analysis, C-reactive protein and other inflammatory biomarkers, and a NETosis assay. Slide 16. Before I move on to the NIH study, I need to tell you that I will not be providing more detailed numbers beyond what was in the recent press release and presentation as to not jeopardize in any way publication of the entire data set in the best possible medical journal. Let me summarize for you the baseline characteristics from the trial. This is based on the real data now. The baseline characteristics and demographics were generally very well balanced between treatment groups, which is obviously very important. There were similar numbers of patients in both groups with underlying conditions. There was good and balanced representation of patients with a 5 or 6 on the ordinal scale. And then importantly, there were also four patients in the trial who were on mechanical ventilation; two in the fostamatinib arm and two in the standard of care arm. So these are the most severe patients with a score of 7. There's a very high risk of death for these patients. And also important all patients in both groups were on standard of care remdesivir and dexamethasone and about 40% balance between groups also received convalescent plasma in both groups. All of that means that the results should be considered credible and certainly not skewed by any baseline imbalance. Slide 17. As I said, the primary endpoint in the study is safety measured by the incidence of patients with serious adverse events in both groups. In order to fully appreciate the outcome, you need to remember that the first question in this Phase 2 study in COVID-19 patients was, is it safe to add fostamatinib on top of standard of care, such as dexamethasone and remdesivir. So, if the incident in both groups had come out about the same or similar, we will have already met those safety goals. However, the incidents turned out to be cut in half, which is substantial. If you add to that, that the number of serious adverse events of hypoxemia was reduced in the fostamatinib arm, you can say that the safety outcome is also a pretty good surrogate for efficacy. On Slide 18, let's look at some efficacy outcomes that are generally included in these COVID-19 studies and considered clinically meaningful. There were three deaths in the trial, all three occurred in the standard of care alone group. There were no deaths in the fostamatinib group. It is worth noting that among the four patients that I mentioned earlier, who entered the study on mechanical ventilation, the two in the placebo group both deceased, while the two patients on ventilation and the fostamatinib group survived. That is quite remarkable given the high likelihood of death once a patient needs to be intubated and mechanically ventilated. Several other secondary clinical endpoints in the study and I can tell you that they are all generally consistently favor fostamatinib. One shown here is ordinal scale improvement. During the study, there was a great improvement in ordinal scale in the fostamatinib group versus the control group. The time to improvement on fostamatinib was also quite a bit shorter than in the control group. The observed changes in the ordinal scale improvement were quite large. For example, a patient who met the criteria for 6 on the ordinal scale needs invasive ventilation. A 3 point improvement means that patient no longer required intervention and is ready to go home from the hospital. That is clearly a very meaningful improvement in a relatively short time. Patients on fostamatinib spent also less days in the ICU compared to standard of care patients. Their treatment effect is not only clinically meaningful, but also very relevant from a pharmacoeconomics standpoint. And finally, the clinical findings were also consistent with improvements in inflammatory biomarkers, such as NETosis, CRP, Ferritin, D-Dimer, et cetera. We see quite beautiful and supporting improvements in those biomarkers, which are generally well accepted as playing an important role in inflammation and blood clotting in COVID-19 patients. And as I said, all of these effects are in addition to remdesivir and dexamethasone and that is quite remarkable. Slide 19. So what's next? The NIH, National Heart, Lung and Blood Institute will continue to follow all the patients out today 60 and do some more biomarker work. There's also some additional subgroup analysis that can be done and could be interesting. Of course, the NIH is preparing a publication and will submit to a higher ranked medical journal very soon. We, at Rigel are in the process of preparing an emergency use authorization application and plan to submit that to the FDA as soon as possible, which will be the most expeditious way to provide clinical benefit to patients. My last Slide 20. As mentioned, we are enrolling our Rigel Phase 3 clinical trial. The study includes hospitalized patients with mild disease who have certain risk factors to develop more severe disease. If positive this trial could be the basis for potential label expansion for fostamatinib to treat patients with COVID-19. So in summary, we have a multipronged approach to COVID-19. And we are excited by the possibility to come up with a safe and effective treatment that is still desperately needed. With that, I'd like to turn the call over to Dave. Dave?

Thank you, Wolfgang. We are indeed very excited about the potential fostamatinib to help hospitalized COVID-19 patients in the near future. I'd like to spend a few minutes talking about our research to understand the market and our current projections for COVID-19 hospitalizations as the landscape continues to evolve. As you're aware, COVID-19 is a dynamic disease dependent on many different factors. On Slide 21, you see on the left that while there are decelerators that are very important in slowing the spread and impact of the disease. They are constantly challenged by accelerators of the disease. Variants can increase the number of COVID-19 cases and even if a small percentage of those patients are hospitalized, a high number of hospitalizations will persist. And with few effective treatments authorized or approved for hospitalized patients, the situation is exacerbated with more patients ending up in the ICU or on ventilators. We completed quantitative research in Q1 that took into account hospitalizations to date, and these dynamic factors to project the steady state of COVID-19 hospitalizations in the future. In 2020, out of 20 million COVID-19 cases diagnosed in the U.S., there were 1.6 million hospitalizations, or approximately 8% of cases. And because the number of cases was so high in the first part of this year, we estimate there will still be 16.2 million cases of COVID in 2021 and 8% of those patients will be hospitalized for a total of around 1.3 million hospitalized patients this year. On Slide 22, the left side depicts monthly hospitalizations to date tracked from two CDC data sources. The black solid line depicts the COVID tracker hospitalizations, and the lower orange line depicts hospitalization seen in the COVID net data. Those that actual hospitalizations have been highly volatile, particularly with the surge during the fall and the winter. To determine a steady state, we first chose a level of hospitalizations that would persist without a vaccine. We then applied an aggressive vaccine rate of 80% that we would reach rapidly by September of this year. And even with these aggressive assumptions for rapid deceleration, based on the COVID tracker data, we would still project around 165,000 to 370,000 hospitalizations in the second half of this year with around 250,000 to 360,000 hospitalizations in the steady state from 2022R [ph]. Moving to Slide 23 to provide some context on a quarter of a million or more hospitalizations each year from COVID-19. We wanted to provide the last decade of data on annual influenza hospitalizations as a comparator. There has been an average of 442,000 influenza hospitalizations each year over the last 10 years. And it ranges from a low of 140,000 in the 2011, '12 viral flu season to 810,000 in the 2017, '18 more aggressive flu season. And even though COVID-19 spreads more aggressively than the flu, with its more effective vaccine and a higher vaccine rate than the flu, we would expect to have fewer patients hospitalized. So based on the influenza data coupled with our quantitative market research, we feel comfortable with the 250,000 to 360,000 being a reasonable projection for annual COVID hospitalizations at this time. To summarize on Slide 24, we believe that there will be a large opportunity to help COVID-19 patients in both the near and longer term. That's because COVID-19 cases will continue to persist even with a highly effective vaccine and the vast majority of the population vaccinated. Even conservatively estimating that 5% to 8% of COVID diagnosed patients are hospitalized in the future. There could be approximately 250,000 to 360,000 hospitalizations each year. In the near-term, there are very few effective treatments for hospitalized patients. So should fostamatinib receive an emergency use authorization soon, there could be quick uptake with very large numbers of hospitalizations. And even as more treatments are authorized or approved in the future, we believe the drug treatment rate of hospitalized patients will continue to increase, which would potentially open up fostamatinib use in earlier patients based on our Phase 3 trial that Wolfgang referenced. I would now like to move on to Slide 25 and discuss our progress with TAVALISSE in ITP. Q1 was a challenging quarter. And I am proud of the way our team stepped up to the challenge to continue to grow TAVALISSE in the U.S. On Slide 26, you will see our FDA approved indication, which is for adult patients with chronic immune thrombocytopenia or CITP, who had an insufficient response to a previous treatment. Moving to Slide 27, while Q1 was challenging, our results were largely consistent with historic trends, and we did see a 14% increase in demand for bottles shipped to patients and clinics. In comparison to last year, we grew bottle shipped to patients and clinics from 1,397 in Q1 of 2020 to 1,599 in Q1 of this year. This 14% increase was consistent with the performance of the ITP market. We saw a small year-over-year decline of 2% in our total bottles, with 1,393 total bottles in Q1 of 2020 versus 1,364 total bottles in Q1 of this year. The key difference between this year and last year is the significant change in inventory, or bottles remaining in the distribution channel, which Dean will discuss shortly. So in order to continue driving the TAVALISSE demand growth beyond 14%, we remain focused on continuing to increase the number of prescribers by growing awareness, the number of patients by driving new starts, and persistency by continuing to improve refills. We saw stronger trends in March and as more ITP patients start new therapy or switch therapies, we believe we are poised to accelerate growth as the year continues. Finally, moving to Slide 28, we are constantly increasing our promotional efforts to improve both persistency and new patient starts for TAVALISSE as well as awareness among our hematology/oncology customers. Our three newest initiatives are shown here. First, we launched a new interactive persistency program in February, called TAVALISSE together. It was designed both for patients who are already taking TAVALISSE and for potential new patients who are interested in starting TAVALISSE. It partners with patients throughout the treatment journey, helping them to become successful with their ITP treatment and achieve their goal. Second, because our sales force is critically important in increasing TAVALISSE awareness among prescribers, in late March, we launched a new rep generated email platform that allows our team to send product rich personalized messages directly to their customers. And third, because we continue to face challenges in interacting live with customers during the pandemic. We also launched another new media program to provide online education for clinicians. This media is accessible on demand to physicians on key sites they visit and contributes to our [indiscernible] to raise TAVALISSE awareness among prescribers. I am confident that new promotional efforts such as these combined with our growing number of sales calls and speaker programs as things continue to open up will enable us to continue to grow demand through improvements in awareness, new patients and persistency as the year progresses. Thanks for your attention. And I will now turn the call over to Dean. Dean?

Thank you, Dave. I’m on Slide #30. For the first quarter of 2021, we shipped 1,364 bottles to our specialty distributors, resulting in $16.1 million of gross product sales. 1,599 of those bottles were shipped to patients and clinics, while 749 bottles remained in our distribution channels at the end of the quarter. We reported net product sales from TAVALISSE of $12.4 million, a 2% decrease compared to the first quarter of 2020. Our net product sales from TAVALISSE were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $3.7 million. Our gross to net adjustment was approximately 23% gross product sales. Before we move on net product sales, let me review our expectations for the second quarter of 2021. While we are seeing great progress in vaccinations against COVID-19, we continue to see that physician and patient access along with their desire to initiate new ITP treatment options remains constrained. In the second quarter and as we saw last year, we expect to see growth in both bottles shipped to patients and clinics as well as increases in the levels of bottles remaining in our distribution channels. Coming off our first quarter results, we expect these increases to result in significant quarterly sequential growth of our net product sales in the second quarter. In the back half of the year, we expect to see stronger growth in both new patient starts and overall demand as the significant constraints caused by the COVID-19 pandemic lessen. Incrementally, we currently expect our gross to net adjustment to be approximately 24% or 25% in the second quarter of 2021. On Slide 31, before I move on to a review of our financials for the quarter, I wanted to provide a brief review of the dynamics of the sequential decrease in net product sales that we saw during the quarter. Starting with the orange bars, in the fourth quarter of 2020, we saw 1,725 bottles shipped to patients and clinics. This is our key demand metric. Incrementally, we saw an increase to bottles remain in the distribution channel of 174 bottles, by far the largest increase that we have seen. This resulted in total bottles for the fourth quarter of 2020 of 1,899 bottles, which generated $17.8 million of net product sales. Now to review the green bars. In the first quarter of 2021, we saw 1,599 bottles shipped to patients and clinics. This 7% drop in demand was largely expected as we experienced the typical first quarter industry challenges associated with the resetting of co-pays and the Medicare doughnut hole, delaying both new prescriptions and refills. This year, we also had a full quarter of the effects of the company pandemic. You'll notice a thin red bar that this sequential 7% reduction in demand volume resulted in a sequential reduction in net product sales of $1.3 million. The bigger impact in this sequential reduction in net product sales came from the reduction of inventory levels at our distributors. The reduction from 984 bottles of inventory at our distributors in Q4 of 2020, down to 749 bottles at the end of Q1 of 2021, contributed to a sequential decline in our net product sales of $4.1 million. Thick red bar in this graphic. Inventory levels at our distributors are variable, and we do expect them to generally increase over time as our business grows. Moving on to the next slide. In addition to net product sales, Rigel's contract revenues from collaborations were $65.6 million for the 3 months ended March 31, 2021, which consisted of $60.6 million from Lilly relating to our collaboration agreement, $4 million for the grant of a non-exclusive license, and $1 million for the delivery of drugs supply pursuant to our collaboration with Grifols. Government contract revenues of $3 million was related to income we recognized pursuant to our agreement with the U.S Department of Defense for our ongoing Phase 3 clinical trial of fostamatinib in COVID-19. Moving on to costs and expenses. Our cost of product sales was approximately $316,000 for the first quarter of 2021. Total cost and expenses were $39.3 million for the first quarter of 2021 versus $34.7 million in the first quarter of 2020. The net increase in costs was primarily due to increases in personnel related costs, stock-based compensation expense and research and development costs related to our various ongoing clinical studies. During the quarter, we recorded a provision for income taxes of $1.8 million relating to estimated state income taxes. Finally, we ended the quarter with cash, cash equivalents and short-term investments of $39.3 million. In April, we then incrementally received a $125 million upfront cash payment from Lilly for the exclusive license agreement for our RIP1 inhibitor program. Moving on to Slide 33, let me take a minute to remind you of a few key aspects of our first quarter collaboration with Lilly. Lilly and Rigel will develop and commercialize Rigel RIP1 inhibitor, R552 for all indications, including autoimmune and inflammatory diseases. Lilly will lead the clinical development of central nervous system penetrating RIP1 inhibitors. In April, we received a $125 million upfront payment from Lilly, and are eligible to receive up to an additional $835 million in potential future milestone payments as well as tiered royalties on net sales. Development costs for R552 will be shared between our companies subject to certain opt-out provisions for Rigel. Most importantly, this partnership has the potential to bring forward a new class of compounds in both immune and CNS indications, which could address very large and important medical needs. With that, I'd like to turn the call back over to Raul.

Thank you, Dean. Given the progress and the opportunities that the team has described on this call, let me highlight some of the key milestones for the business that we anticipate for the remainder of the year. In ITP, we expect to look forward to lessening of significant access restrictions to physicians and patients caused by the COVID pandemic, allowing for increased interactions and an acceleration of new patients benefiting from TAVALISSE. In AIHA, we expect to complete enrollment of our Phase 3 clinical trial and continue our preparations to meet the unmet medical needs of patients with warm autoimmune hemolytic anemia and capture a significant portion of this very large market opportunity. With a significant opportunity for fostamatinib in COVID-19, we will file an EUA based on Phase 2 data from our trial conducted by the NIH and Inova and do so as soon as possible. We will continue and complete enrollment of our own Phase 3 trial later this year. We will also advance this tremendous opportunity to benefit patients suffering from COVID-19. With our RIP1 collaboration with Lily, we look forward to initiating a Phase 2 trial in a large immune indication. And we will make progress with our IRAK1/4 program in both heme/onc and immune indications. So that's quite a bit of milestones coming later this year. So with that, let me open the call up to your questions.

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

Hi, Raul and team. Thanks for taking the questions. On ITP, can you comment a little bit more on the recent market dynamics in the second quarter? And specifically, would you mind elaborating on the comment you made regarding continued ITP market constraints in the second quarter of this year given the pandemic? I guess, I would have thought that with the increased availability of vaccinations, you'll start to see physicians' offices returning to pre-COVID levels in April and going forward in this quarter. So any further comments there would be super helpful. Thanks.

Sure, Yigal. Thank you for the question. I will also ask Dave to comment on that, on those constraints. Dave, why don’t you comment first, and I'll add comment after that.

Sure, Raul. Great question, Yigal. I want to say, first of all in the first quarter, what we saw was much stronger trends as we moved into March. So clearly, we believe that this was due to those delays that Dean spoke about in the first quarter. And so we saw this stronger trends and demand as we moved into March. And I think I'll just say that April looks a lot, lot more like March than it did January and February. And so as we've moved into April, though, we have seen more things open up, but it's relative, right? I mean, as people have gotten more vaccines, you are correct, some offices are opening up, our reps are getting out. And as a matter of fact, I just got an update this morning out of our sales force, approximately more than 80% of them are able to get out on some live interactions. The trick of that is, is that some of our territories who are able to do that might have one office they can get to or one speaker program. And others, although they might have more, it's not at all like things have opened up completely in their territory. And so that's why we're saying that as we move into the back half of this year, as things return more to normal, we feel like things will be more loosened up. And we will be able to see our customers on a more frequent basis that we are now. So it's all relative, certainly compared to late last year, early this year, we're seeing more people live. And I think our speaker programs and our sales calls are showing that. But it's nothing like everybody's out in the field for a full day seeing customers each day that we're not close to that yet. So I just wanted to make that clear. I hope that makes sense, Yigal.

Yes. Thank you. And then one other question, totally unrelated -- related to IRAK4. Raul, I’d just be curious, you mentioned that you're going to start a study in MDS. Could you just comment briefly on what the evidence is supporting the role of IRAK4 inhibition in MDS as well as the evidence for IRAK4 in palmoplantar pustulosis and hidradenitis suppurativa? Thanks.

Sure, absolutely. So and as you know, IRAK4 is useful in any indications where it's IL-1 or IL-2 like receptor inhibition is useful. And as you may know, a low risk MDS effectively is inflammation of the bone marrow. And that's one of the areas that where there might be of interest in using a molecule like this in PPP and HS. Also, similarly, and there's animal data that we've posted on last year, in terms of some of those models in say psoriasis, that might be useful. And I will ask Wolfgang to comment as well. It's helpful.

Yes, Raul. You took most of it away. Just to reiterate it, in low risk MDS it is believed that the inflammatory compounds to be very strong, and that leads to the cytopenia stage. So with low blood counts of various cell types, and that could be positively impacted by IRAK inhibition. So that's the scientific rationale. And as Raul mentioned, we have some preclinical data to support that. For PPP and hidradenitis suppurativa, for hidradenitis suppurativa there's already preliminary proof-of-concept data out there from another company. And we have very good scientific rationale for the palmoplantar pustulosis. These are also indications that are not so large. So they're smaller indications, and we feel in a position that we could develop those all the way through approval at Rigel alone, if we choose to do that without a partner.

Got it. Thank you very much.

Thanks, Yigal.

Our next question comes from the line of Eun Yang with Jefferies. Please proceed with your question.

Thank you. For TAVALISSE in COVID-19, can you comment on your Phase 3 trial to pick on -- which you began earlier this year. Can you talk about enrollment rate as well as when we might expect the data? Thank you.

Thank you, Eun. I will ask Wolfgang to also take that one.

Yes, sure. Yes, we are in the process of activating all the sites. We are -- we have regulatory approvals in several countries, United States, Brazil, Argentina and we're in the process of getting all sites on board. We have started enrollment, and it's picking up quite well. We have just passed the initial DMC review of the first number of patients to establish that everything is safe and everything is safe. So we have reopened enrollment, and we -- getting up to 40 sites, across 5 countries on board. We do feel comfortable that we will have the data before the end of the year.

Okay. And then warm hemolytic anemia, so -- I mean, you mentioned that given the pandemic, it's hard to predict when the enrollment would be completed. But compared to your last update, it looks like you added about six patients from every 2 months. So by end of the third quarter or beginning of fourth quarter, is that the kind of a time that you think reasonable to expect enrollment completion? Thank you.

Yes, the short answer to that is, yes, that's what I expect. But we've seen ups and downs. Suddenly you have an outbreak somewhere else and normalization somewhere else, that's why we are a little bit cautious to name a quick date, a firm date. But as you -- as you're saying, if you take your hand calculator and follow our enrollment, yes, indeed, that would sort of put you in the third quarter.

Thank you.

Eun, to add to that, we have quite a number of sites open, as you may know, 80 to 90 sites across the world. And their goal is to get those remaining 18 patients. So when you look at 80, 90 sites open and 18 patients to go, I think we're comfortable. We could do that this year and hopefully by Q3.

Our next question comes from the line of Do Kim with BMO Capital Markets. Please proceed with your question.

Hi, good afternoon. Thanks for taking my questions. So first on TAVALISSE, understanding that the inventory channels can be volatile. Was there any particular reason that you could identify why the drawdown was so big this quarter? Is that -- is it a COVID impact? Did you have challenges in the supply chain or distribution?

I'll ask -- I'll take a stab at that and ask Dave to also comment. The answer to the latter question, no, we did not have any issues with supply on our own -- our side. So we have ample supply on hand for ITP and COVID and other indications. So that certainly wasn't the problem. Maybe Dave, you may want to comment on any other insights in terms of what happened?

Sure. The only thing I would just add to your comments, Raul, is that inventory can be variable. And the distributors try to keep a level on hand consistent with the current demand. And that's oftentimes a bit of a challenge to do. And as I said, we ended the year as you know, very strong. But then first and second months of this year, we experienced some delays. And so that affects your demand and obviously inventory levels can go down. But that certainly I don't think explains all of it. The demand driven part of the inventory, I think it's just an issue of timing, lots of different things and just the variability in the distribution channel.

Okay, got it. Thank you.

Yes, just to remind you, last year we had about almost 100 bottles increase in inventory per quarter. So obviously, December was high 174 and then negative 235 in Q1 very significantly different from that.

Yep. I see. And a question on the COVID. EUA that you're planning to apply for, is that decision somewhat driven by your ongoing discussions with regulatory agencies? Could you comment on just the quality of feedback from the FDA?

Sure. I'll ask Wolfgang to comment on that.

Yes, the answer to that is yes. We have been for a while in what's called a pre EUA discussions with the FDA that basically tell you the format and the form that which you would have to submit the data and then when the NIH data came out and we issued the press release, we discuss the press release with the agency and the agency said they would be happy to review an EUA application. And they’re probably are in the process of transferring all the data from NIH in the right format, writing up the data story for regulatory purposes and submit this, as we said, as soon as possible.

Great, that's fantastic. Congrats on the progress.

Thanks, Do.

Our next question comes from the line of Chris Raymond with Piper Sandler. Please proceed with your question.

Thanks. Just a couple of questions. I think -- so first, I just wanted to maybe probe a bit on your answer to a previous question in the warm hemolytic anemia program. So just going back to the last few quarters, it does look like the pace has slowed, if I just do the math from Q3 of '20 when you reinitiated enrollment. And I think I heard you guys say that you think you can finish enrollment, we get that last 18 patients and hopefully in the third quarter. That presupposes I guess a pretty sizable uptick from the trend. Is that correct? Is there some something that you're seeing that would give you that confidence? Can you maybe give a little more color on the -- on that please?

Sure. I'll take a stab at that and Wolfgang you also have to -- what we were doing very well, the pandemic hit, we were like 8 or 9 before pandemic. The pandemic hit towards [indiscernible] death down substantially for most of last year, things improved there. between the first and second wave. I think we had about five or so patients, maybe six in October of last year, for example. And then the second way to hit driving that down substantially at the end of last year and early part of this year. And then now more in the last couple months, we've seen an increase now in enrollment, maybe about six in 2 months, three a months. And most recently, which is very encouraging, given that we are also seeing uptick and screening as well. So as Wolfgang said, we're not clear what the number is, went up month later this year, we'll be fully enrolled. We need 18 more patients. We've enrolled six in the last 2 months. So just by simple math in 6 months, we should get those patients. 6 months from now, May, June, July, August, September, October-ish. Maybe we think there'll be some acceleration of enrollment. Because people are getting more vaccinated. We are seeing more activity as Dave and others mentioned on the call. So we do think that we're optimistic we could do a little better than three a month. And if we get to 4 months, for a month or two we'll be in Q3.

Okay, thank you. And then not to belabor the inventory point, but just I want to clarify -- and By the way, Dean, thanks for all the detail. I know you actually last quarter, you called out this 174 bottles in sort of did warn that revenue would be sequentially down this quarter. But I just want to make sure I understand that. Look, I'm just kind of speculate maybe that 235 bottle drop you saw might have even been more than you guys thought. I'm just wondering, do you guess, can you be descriptive of whatever inventory agreements you have in place? Sometimes people, will have these two, ensure that this sort of phenomenon is smoothed out. And as we all know, we sometimes you see this kind of stuff in front of an anticipated price increase, for example, can you just walk us through what parameters you have in place to sort of keep things steady state?

Maybe I could ask Dave and then Dean also to coming on that. This was it's a -- it was a very unusual and large increase at 174. And as you said, we pointed that out. And this was an unusual and a large decrease in the other way. It's hard for us to project or control that, frankly, in terms of any useful way in the short-term. Obviously, in the long-term, we expect and have been seeing a steady increase. Maybe Dave, or Dean, you want to comment on that. I would just say that, again, when you work with the distributors, they're going on their most recent demand and trying to maintain a certain level of inventory. And that's not a perfect science. And so what happened is -- as Raul said, again you're a little high or high as we've been as we move to the end of the year. And then frankly, one of the lowest that we've been in a long time. And so I think, we saw that variability kind of effect. But it's I think the important thing to get across is the underlying business. And that's what we focus on total bottle ship to patients in clinics, which is our demand. That's what we focus on. And every day when I talked with my team, that's what we focus on. We don't focus so much the bottles that we're shipping to our distributors, we focus much more on the bottle ship to patients in clinic. So I'll turn it over to Dean, if he has anything else to add.

Nothing really incremental to add other than there are factors, what data we -- the quarter ends, and there's just a variety of factors that that also come into play just from an administrative mechanics of the ordering patterns.

Great. Thank you.

Thanks, Chris.

Our next question comes from the line of Joe Pantginis with H.C. Wainwright. Please proceed with your question.

Hey, everyone. Good afternoon. Thanks for taking the question. A couple first. Maybe for Dean, I was just curious with regard to how we can view the G&A line going forward specifically with the sales force. As you look to balance the new initiatives that you're talking about today, the email program and the media program versus, actually getting out there.

Hi, Joe. Thanks. Yes. So from a G&A perspective, so we described at the last year-end call, we just -- we described a week, we believe that we'd have a 15% year-over-year increase in OpEx. And I'd say that that's still we're still on target for with respect to that view. And then the programs that Dave describes that that's really baked into those estimates we provided. Well, what was certainly continue to accelerate those programs, again, and if they're -- it's really baked into that view that we provided earlier this year.

Got it. I appreciate the clarification. And then I appreciate all the details regarding the weakness in first quarter. And a lot of it makes sense. So just curious if you're willing to share any details with regard to any negative impact from persistency. So obviously, even from when you guys launched, and being able to get people to 4 months since physicians have the experience to then be able to get to additional refill. So how much has persistency, potentially or not impacted the weakness.

Dave, maybe you want to address that?

Yes, sure. Persistency hasn't changed from the end of the fourth quarter, it's still 56% at 4 months. And so again, what we feel has happened is because the New Year changed, you have delayed in patients getting their refills and patient starting drug into that. They’re still on the drug. We don't consider them discontinued. They're still on the drug persistent, but they've been delayed. And so it really isn't a function of persistency. It's more the time of the refill. I hope that makes sense.

No, it certainly does. It's good to hear I just had to ask either way. And then my last question, I think really comes down to you might just want to answer you know, I have to ask them, but any sort of geographical updates you can provide with regard to Grifols?

Sure. I will answer what I can. As you know, Dave, launched in the U.K and Germany. And are looking to launch in other territories, the other large European countries. And they’re on track to do so. I can't give you too much guidance beyond that, in terms of the timing of that other than the products approved throughout Europe, but individual countries then have to approve pricing and so forth. So it is a little bit of a delay. And certainly the COVID pandemic has hit Europe as hard it's to submit the U.S., if not more so. So that's certainly causing some delays for sure. But they're on track to launch it. They're excited about the opportunity. It's a great fit with their overall portfolio in Europe and they look forward to making good progress. We work closely with them in the positioning of the product and sharing information on the product, even materials they can use there. So we're excited about that. You may have seen also, since you asked about partners, our key, say our partner and enrol the Phase 3 trial, and they will after that's completed file for approval in Japan.

Got it. Thanks a lot, guys.

Our final question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi, everyone. Thanks for taking my question. The first one is prior to the pandemic starting and before initiating your trials in COVID-19, you were discussing the potential of bringing fostamatinib forward in another indication. So I wanted to ask how you're thinking about the short and long-term plans here, in light of some of these conditions you've shared in the past as well as the effects you've now seen in COVID-19, which you've noted in the past, could potentially be translatable to other conditions like ARDF.

Thank you, Kristen. Good question. I will ask Wolfgang to also comment. But you're absolutely right, we were -- we evaluated a number of other additional indications for fostamatinib. The exclusivity period, as you may know, goes to 2032. So it's still a good long ways. And it's a product that has -- as a SYK-inhibitor, and frankly, the only SYK-inhibitor approved and a unique package of effects on the immune system that I think it's beneficial in broad number of areas beyond ITP and AIHA, both autoimmune diseases, but also other areas. And we're seeing that in COVID-19, hyper immune response. So this COVID opportunity really came upon us. And we're incredibly fortunate to be positioned to move fostamatinib forward in the treatment, potentially of COVID-19, hyper immune response. And it opens up the opportunity, as you mentioned, for other areas, in ARDS from other sources, other viruses, for example, maybe other pathogens, and maybe our immune diseases as a potential way forward. So we're very excited about that. But the opportunity is broader than that. Maybe Wolfgang, you want to comment on anything else.

Yes, maybe just as you can see, the data set in COVID-19 is very compelling. It's very positive, it's actually stronger than many of us would have even believed is possible. So we are excited about that. We will certainly explore and investigate how this might translate to other acute respiratory distress syndromes. That that's one option. But as you remember correctly last year, we were also investigating other indications, and [indiscernible] and things like chronic graft versus host disease, for example, or low risk MDS, by the way, we have a -- we have two ISDS, ongoing investigate a sponsored trials, one in graft versus host with encouraging early data. And we have a collaboration with a well renowned academic institution on fostamatinib in a heme/onc communication. So we certainly have that on the radar screen.

Thank you. And for chronic ITP, in terms of the physicians you're engaging with who are potentially interested or have which patients in mind. Has it been your experience or understanding during the pandemic, that the physicians would just feel more comfortable doing this once fully back to the office, and that they can monitor their patients with the normal routine visits?

Hey, Dave, do you want to reply to that?

Sure. I think that makes a lot of sense because obviously, if they are able to start a new patient and see them and have them come up, follow-up visits, it is much easier. But I just wanted to make sure, at the end of the day, it's about getting awareness out there. We really do believe, as I've stated on the last couple of calls. Since we have the BJA [ph] article, which really is our strongest evidence of efficacy. And now we've got 5 year results that have been published and really talk about the low -- the very low risk of thrombotic events. I think the kind of story of TAVALISSE, unique mechanism of action, very, very effective and can provide long-term durable results. This is what we have to get out there. And that's why I keep talking about the more we can actually see physicians and talk to them about the drugs, introduce them to the mechanism of action again or repeat it to them and really talk about the ways patients can benefit from the strike. To me that's what will really help us to acquire invitations. I do think it will help as they obviously see patients. But at the end of the day, we really do believe we get a great message and a great story to bring to patients and constantly evolving story with, as I said, a new publication that was just published. Last one.

Great, thank you. And then my last question, in light of the research that you've conducted, looking at the opportunity over the next few years here, would you or perhaps in collaboration with your partners, consider the opportunity ex U.S as well, in terms of COVID-19?

Absolutely, Kluska. Data is also coming on the opportunity in the U.S., but outside the U.S, we have partners, Grifols, our partner in Europe is very excited about the potential COVID opportunity for fostamatinib in Europe, in their territory. And they are also part of their efforts is hematology and hospital based, given what they sell there, so this is a very nice fit for them. So clearly, that's a tremendous opportunity there. Similarly, our partner in Japan, Kissei, it's very interested in the opportunity. If they have [indiscernible] in Japan, South Korea, China and Taiwan, as you may know. And so tremendous potential for this data there as well. And then other territories as well, where we're looking to put partnerships in place. So the opportunity is quite sizable, for COVID, addressing the COVID issue in outside the U.S territories will file the EUA as soon as possible here, and then work on those other territories in sequence. Any other comments on U.S?

Now, our look at the market is that even though, as I said these vaccine rates are even if you assume very, very high vaccine rates. And what we would deem basically 100% efficacy of keeping patients out of the hospital, you've still got a pretty sizable market here in the U.S. And so our job should we receive EUA would be to make sure that clinicians know about fostamatinib and certainly know how to access it. And I think those are the kinds of things we're thinking about in terms of making sure that we do our part to help COVID patients who truly do need new therapies.

Great. Thank you, everybody.

Thank you, Kristen.

There are no further questions left at this time. And now I'd like to turn the floor back over to Mr. Raul Rodriguez for closing remarks.

Well, thank you, everyone for listening and your questions. I appreciate that. I think 2021 will be a very exciting year for us. And we look forward to significant growth in TAVALISSE and ITP, completion of our AIHA trial enrollment, and then the data after that, and this COVID-19 opportunity. I can't tell you how proud we are to potentially offer what we think is as potential to really be a valuable contributor to the treatment of COVID -- hospitalized COVID patients. It's a tremendous and exciting opportunity for us and has potential to be a sizable indication, as you saw from Dave's slides. And we look forward to filling out the pipeline behind that. So an exciting year ahead. Look forward to keeping you abreast as we make progress. Thank you so much.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.