Rigel Pharmaceuticals, Inc. (RIGL) Q3 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to the Rigel Pharmaceuticals Financial Conference Call for the Third Quarter 2022. 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 our first speaker Dolly Vance, who is Rigel's Senior Advisor, Legal & Corporate Affairs. Thank you, Ms. Vance. You may begin.

Welcome to our third quarter 2022 financial results and business update conference call. The financial press release for the third 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 site on 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 risk and uncertainties that may cause actual results to differ from those forecasted. The description of these risks can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2021, and subsequent files - filings with the SEC, including our Q3 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 President and CEO, Raul Rodriguez. Raul?

Thank you, Dolly, and thank you everyone for joining today. Also with me today are Dr. Wolfgang Dummer, our Chief Medical Officer; Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Now beginning on slide five, I am pleased to report that we have made significant strides this quarter in growing our commercial and clinical stage hematology-oncology business. Starting with our newest product, olutasidenib, we are very excited with the progress we have made since announcing our exclusive worldwide license agreement with Pharma Therapeutics. As a reminder, olutasidenib is a potentially market leading oral therapy for the treatment of relapse or refractory acute myeloid leukemia or AML. In the near-term, olutasidenib has the potential to broaden our hem-onc portfolio and is highly synergistic with our current commercial and medical affairs infrastructure. As announced earlier today, we are thrilled with the longer term data from the Phase 2 registrational study of patients with mutated relapsed refractory AML that were disclosed in an abstract published today for the ASH meeting in December. Wolfgang will discuss this data in greater detail shortly. Dave will also provide further detail on the commercial opportunity for olutasidenib and an update on the launch progress as we work towards the PDUFA date of February 15th of 2023. Our next value driver is growing TAVALISSE in ITP. During the quarter, Rigel achieved the highest quarterly net product sales for TAVALISSE in ITP since our launch. This demonstrates the continued momentum we are thriving through our focused commercial activities with hem-onc prescribers. Our global partners are also making great progress. Notably, our partner Kissei has submitted its NDA in Japan for fostamatinib in ITP and we look forward to a potential approval in Q1 of 2023. Our third potential product in the hem-onc area is R289, an IRAK 1 and IRAK 4 dual inhibitor. We believe R289 has the potential to provide effective suppression of the inflammatory cytokines that cause low risk MDS. Sites are currently opening, for our Phase 1b study in low risk MDS, including a site already opened at MD Anderson. As you can see, with these three products, one marketed TAVALISSE; one nearing approval olutasidenib, and an exciting pipeline opportunity in R289, we are building a very attractive hem-onc portfolio, more to come. We also have a couple of programs where we are opportunistically leveraging partnerships to create value. Our fostamatinib COVID-19 Phase 3 clinical trial sponsored by the U.S. Department of Defense has completed and we disclosed the top line results on Tuesday of this week. Although we did not meet statistical significance, we are encouraged by the results. Rigel does not plan to commercialize fostamatinib in COVID-19 on its own, but we are exploring other options with our partner, the Department of Defense, for this product. Wolfgang will follow-up later on the call with further details on the results of the focused Phase 3 clinical trials. Fostamatinib is also being evaluated in the Phase 3 clinical trial sponsored by the NIH, NHLBI as a potential treatment in patients hospitalized with COVID-19. And finally, we are also excited about the potential of our RIP1 inhibitor R552 being developed in collaboration with our partner Eli Lilly, the first planned Phase 2 study is anticipated to start in the first half of 2023 in a large immune indication. Lilly will lead the clinical development and disclose the indication closer to the initiation of that study. Now with that, I'd like to turn the call over to Wolfgang for an overview of the updated or the student update of disclosed today. Wolfgang?

Thank you, Raul. Slide seven. Let me share some thoughts as to why AML is a very interesting disease area for us to enter. First, AML is an aggressive, highly complex malignancy and primarily disease of older adults. For 2022, the American Cancer Society estimates that more than 20,000 will be diagnosed to the AML and unfortunately, about 11,500 patients will die from the disease this year. One of the biggest advantages advance in AML over the last five years has been the establishment of guideline driven molecular and cytogenetic analysis for immediate actionable mutations or chromosomal abnormalities. That means that depending on which mutations are predominant, different therapies may be indicated. One such important mutation is IDH1 and is seen in about 6% to 9% of AML patients. Since looking for IDH1 mutation is part of the standard widespread testing upon diagnosis and prior to initiation of a new line of treatment, leukemia treating physicians are well aware of their IDH1 positive patients. Within this well defined patient population, about 60% of patients are considered fit for intensive therapy with the goal of hopefully getting those patients to transplant, if they have a complete remission or CR. The remaining 40% of patients are not treated with intensive therapy and are given less intensive outpatient therapy. In both cases, there are substantial number of patients, who are refractory to the upfront treatment or relapse after getting a response. So even though there are new agents to treat AML patients, a substantial unmet medical need persists, specifically on mIDH1 inhibitor with a higher rate of complete response, longer duration of response, and improved safety profile including less cardiotoxicity is needed. Slide eight. Forma with the help of KOLs in this area developed a very comprehensive plan for the development of olutasidenib, both as a single agent monotherapy and in combination with other agents. The monotherapy includes refractory relapsed and other settings, including some exploration of treatment naive patients, who had not received prior therapy. The olutasidenib Phase 2 registrational study, including patients with mIDH1 relapsedrefractory AML. These were older adults with a median age of 71-years, 73% had an intermediate AML cytogenetic risk, 17% had poor cytogenetic constellation, 75% had greater or equal to one co-occurring mutation, 97% had prior induction chemotherapy and a median of two prior treatments, including 8% with [indiscernible]. All patients were naïve to an mIDH1 inhibitor. Slide nine. As a reminder, Dr. Cortes presented interim data in 123 patients on our last financial call in August, which was also presented at ASCO 2021. Today, I'm showing you some new data points from a more recent data cut of the AML study. The registrational Phase 2 clinical trial evaluated olutasidenib in 153 patients with mIDH1 R/R AML. The primary efficacy evaluable population for this updated data cut was 147 patients, who received olutasidenib monotherapy 150 milligrams twice daily. The primary endpoint was a composite of a complete remission CR, plus a complete remission with partial hematological recovery CRH. CRH was defined according to modified IWG 2003 criteria is less than 5% blasts in the bone marrow, absence of circulating blasts, hematologic recovery, as evidenced by peripheral blood platelet count of greater than a 100,000 per microliter and absolute neutrophil count of greater than a 1,000 sales per micro liter, with no need for red blood cell transfusions and the absence of extramedullary disease. CRH is defined as less than 5% blast in the bone marrow, no evidence of disease and partial recovery of peripheral blood plated counts over 50,000 per microliter and absolute neutrophil count over 500 per microliter. As you can see, 35% of patients met that composite endpoint. It is worth emphasizing that over 90% of these patients achieved complete remission, which speaks for the high quality of the response. The other important outcome that is reported here is the duration of CR+CRh. With longer follow-up and more valuable patients in this updated analysis, which is 25.9 months. As a reminder, in the previous analysis, the previously reported duration of CR+CRh was 13.8 months. Reporting that patients receiving olutasidenib achieved a durable remission with a median of more than two years is highly meaningful especially for patients in the relapsed refractory setting. Furthermore, the overall response rate is 48% with a median duration of 11.7 months, meaning that approximately half of the patients derive some meaningful benefit from olutasidenib in the study. The median overall survival reported was 11.6-months, which again is nearly a year and across the efficacy evaluable population. Lastly, I should mention that olutasidenib was associated with improvement in patients, including those with prior high intensity chemotherapy and post-venetoclax therapy. With regards to safety, olutasidenib was generally well tolerated with an AE profile largely characteristic of symptoms experienced by patients undergoing treatment for AML or of the underlying disease itself. There were no new safety signals or of concern. Of note, is that there were no cardiovascular events of concerns either. Differentiation syndrome or DS, was observed in 14% of patients. This is a significant and potential life threatening risk with novel targeted AML therapies. However, the cases were generally successfully managed with dose interruptions and supportive treatments with steroids, [indiscernible] or hydroxyurea. The incidence rate of DS olutasidenib was comparable to that reported for FDA approved IDH1 and IDH2 inhibitors in similar patient populations. I'm pleased to let you know that this updated data was made public in an abstract only ASH website today and will be presented at the meeting in New Orleans on December 11. Slide 10, I'd like to repeat some key takeaways from the data shown today and to be presented at ASH in a few weeks. First, there is a substantial number of patients, 35%, who achieved Cr+CRH. Importantly, of those responders, over 90% had indeed the high quality complete response, which is very exciting. Moreover, the patients did achieve CR+CRH kept their response in remission for quite some time, a median of 25.9 months to be precise. We believe this combination of high initial rate of complete responders and the long duration of response positions the compound very well within treatment options for R/R AML patients with the IDH1 mutation. It is important to remember that the patients in this study were older adults and patients, who had failed other treatments before. Particularly noteworthy is that this study, in this study, there were patients previously treated with venetoclax and those patients had response rates to olutasidenib that were similar to the overall rates. Further, other practically important outcomes were favorable as well. For example, patients in all subgroups achieved transfusion independence, a valuable data point highlighting a reduced burden on patients and reduced stream on healthcare system resources. Importantly, olutasidenib continues to be well tolerated with a manageable side effect profile consistent with other mIDH1 inhibitors, but without evidence of cardiovascular savings. Overall, as a physician, I'm really excited with this these results and believe they may demonstrate an advancement in the treatment paradigm for patients with R/R AML. Now, I'd like to turn the call over to Dave for a review of the olutasidenib commercial opportunity. Dave?

Thank you, Wolfgang. Now, I'd like to take a few minutes to highlight why we're so excited about the prospects of expanding our hem-onc portfolio with olutasidenib. Moving to Slide 11, over the last quarter, we have continued to learn more about AML opportunity for research we conducted with AML treaters. We've confirmed that testing is widely done, both the diagnosis and relapse. So while we don't see a significant opportunity to identify more patients through increased testing, it has been really good to hear there is an increasing intent to use to full next generation sequencing, and IDH1 is a key mutation of importance. So we do have a well identified patient population with a well understood target for treatment. In terms of eligible relapsed refractory IDH1 positive AML patients, we have confirmed that up to 60% of FIT patients progress in two years, in line with our initial estimate for FIT patients relapsing. In these patients, clinicians prefer to treat with combination therapy, specifically with a hypomethylating agent. This is where having the combination data from our other non-pivotal cohorts could be very helpful in answering unsolicited medical inquiries we may receive. For unfit patients, most respond to upfront therapy for less than two years, and then unfortunately progress as we head to suit. Only a small proportion get to transplant. In the unfit patients that do not -- that do get treated in this relapse setting, clinicians prefer monotherapy with a targeted agent. So this will be a key area of focus for us at launch. We believe olutasidenib fits very well with what physicians and patients want and need. Overall, we remain confident that we have an important opportunity to positively impact the lives of mutant IDH1 AML patients, who are refractory or have relapsed from initial therapy and believe we can successfully differentiate olutasidenib monotherapy as a market leader for relapsed refractory IDH1 positive AML patients. On the next Slide, I'd like to talk a little bit about why we believe that's the case. While most of our findings have been consistent with what we understood last quarter, as we talk to more clinicians, we are hearing that there is truly a high unmet need for patients, who require a tolerable and effective therapy in the relapse setting. As some clinicians review the demographics of our patient population and our pivotal cohort, and put that together with a CR rate over 30% duration of CRH of more than two years and the tolerable adverse event profile that may not require cardiac monitoring. They see the value of an agent like olutasidenib in treatment armamentarium. In other words, they see that some of their patients, who they wouldn't consider for relapsed refractory treatment in the past might be good candidates for a drug like olutasidenib. Therefore, we believe that this may increase the treated IDH1 positive patient population in the future. Additionally, clinicians have told us that we need to clearly convey the characteristics of the patient population in our study as they are eager to learn more about how difficult the patients were to treat, what prior therapies patients have been exposed to? And importantly, how fit patients who relapse fair? These and other analyses will be done to answer clinicians' questions, but in the end, it reiterates the importance of clearly educating on our efficacy and safety data at launch in order for clinicians to best understand what differentiates our treatment for relapse refractory IDH1 positive AML patients. Overall, we see exciting potential to become a market leading treatment in the relapsed refractory mutant IDH1 AML and are looking forward to a great launch. Turning to slide 13, just a few words on our progress toward launch readiness. As I stated earlier, the team has continued to conduct research with clinicians to refine our strategies. We are also working to finalize positioning and develop our materials for launch. Across functional launch team has been working together on key priorities in commercial and medical affairs and we aim to be ready to communicate to customers immediately upon approval and have commercial product available for patients as soon as possible after approval. I want to thank the launch team for all their collaboration and hard work to ensure we're ready for this important olutasidenib launch. Now, onto our next value driver, growing sales of our TAVALISSE in ITP. I just have a few brief comments on our TAVALISSE progress in Q3. On slide 15, you'll 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 16. In Q3 2,026 bottles were shipped to patients and clinics, representing nearly 19% growth over Q3 of last year. This strong year-over-year growth has been driven by more new patients, who started TAVALISSE in the first three quarters of this year versus the first three quarters of last year. For Q3, we achieved net sales of $19.2 million, a 20% increase over the same quarter last year. We are pleased with this solid year-over-year growth we are seeing in ITP sales and continue to focus on increasing awareness of TAVALISSE among prescribing clinicians to grow new patient starts beyond the levels we have seen in 2022. And finally, on slide 17, I wanted to reiterate how important this year's ASH and New Orleans will be to us. This will be our first major conference having abstract presentations for both fostamatinib and olutasidenib. As Wolfgang discussed, we will have our pivotal results of our olutasidenib study in relapsed refractory mutant IDH1 AML, and we will have several fostamatinib abstracts presented. We view this as a great opportunity to increase awareness of Rigel our hem-onc pipeline and TAVALISSE. In addition to our exhibit booth, we have numerous key customer events planned to engage with clinicians, gain their insights on our products and data, and answer any questions they have. It promises to be a productive meeting that the entire Rigel team is looking forward to. Thanks for your attention. And I'll now turn the call back over to Wolfgang to provide a brief update on our development progress. Wolfgang?

Thank you, Dave. I will briefly summarize our other programs. Slide 19, as you know, we are investigating R289, our IRAK 1 and IRAK 4 dual inhibitor, initially in Low Risk MDS. We believe R289 has the potential to provide effective suppression of the pro inflammatory environment that causes Low Risk MDS. We've shown you the Phase 1b study design in Low Risk MDS before. The study has two parts, part one is a dose escalation phase with a commonly used 3/3 approach. It will be followed by part two, an extension phase to extend more longer term safety and preliminary efficacy data to support a larger registrational study. The study is now open for enrollment with four sites currently activated one of them at the MD Anderson Cancer Center. Shifting gears to our COVID Phase 3 results. Slide 21, as you are aware, Rigel has completed a Phase 3 trial sponsored by the DOD evaluating fostamatinib in high risk patients with COVID-19. 280 patients were randomized to give the fostamatinib plus SOC or placebo plus SOC and treated with 150 milligrams twice daily for two weeks. The primary endpoint was days on oxygen through 29 days. Secondary endpoints including mortality, ordinal scale improvements stays in the ICU and time to recovery. Slide 22. On Tuesday, Rigel put out a press release on the results from our focus study in COVID-19. Regarding the primary endpoint of the study, there was a meaningful reduction in days on oxygen over 29 days by 2.1 days. This approach but did not hit statistical significance with a p value of 0.0603. Mortality risk by day 29 was reduced by 50% from approximately 6% to 3% or eight days in the placebo arm versus four days on fostamatinib. As you can see, all other secondary endpoints namely change in ordinal scale, time to hospital discharge, patients alive and oxygen free, as well as days in the ICU, all numerically favored fostamatinib setting up a clear and consistent trend for the benefit of fostamatinib in these patients. Slide 23. In summary, our Phase 3 trial approached, but did not hit statistical significance in the primary efficacy endpoint of number of days on oxygen to day 29. However, we still consider this outcome clinically meaningful. Importantly, mortality by day 29 was cut in half with fostamatinib. It is worth noting that the most severe patients in the study with an ordinal scale 6, all survived on fostamatinib, while all odrinal scale 6 patients on placebo diseased. Moreover, as I mentioned, all pre-specified secondary endpoints in the study numerically favored fostamatinib over placebo. There were no imbalances between treatment groups at baseline, and the safety profile for fostamatinib was consistent with prior clinical experience. We will continue to fully analyze the entire dataset, including our meta analysis between the Phase 2 trial from the NHLBI and our focus study sponsored by the DOD to determine potential next steps. Onto my last slide 24, our RIP1 inhibitor program with our partner Eli Lilly, is another important value driver for Rigel, as we leverage our partnership to create value. We see a mechanistic in clinical scientific rationale for R552 in several large indications and we continue to prepare for the initiation of a Phase 2 clinical trial in an immunologic disease indication in the first half of 2023. We're also pleased to collaborate with Lilly on RIP kinase inhibitors candidates that came across the blood brain barrier for the treatment of CNS diseases. Those programs will greatly benefit from Lilly’s steep expertise in CNS therapeutic areas. That concludes my development summary. And I will now turn the call over to Dean. Dean?

Thank you, Wolfgang. I'm on slide number 26. For the third quarter of 2022, we shipped 2,072 bottles to our specialty distributors, resulting in $27 million of gross product sales. 2,026 bottles were shipped to patients and clinics, while 970 bottles were made in our distribution channels at the end of the quarter. We reported net product sales from TAVALISSE of $19.2 million, a 20% increase, compared to the same period in 2021. Our net product sales from TAVALISSE were recorded net of estimated discounts, chargebacks, rebates, returns, copay assistance and other allowances of $7.8 million. Our gross to net adjustment is approximately 28.9% of gross product sales for the third quarter of 2021. Before we move on from net product sales, let me review our expectations for the fourth quarter. We expect to see modest growth in bottles shipped to patients and clinics in the fourth quarter. Incrementally, we currently expect our gross to net adjustment to be approximately 30% in the fourth quarter of 2022. Under the next slide. We reported total revenue of $22.4 million, including contract revenues from collaborations, which were approximately $722,000 for the three months ended September 30, 2022, which consisted of approximate $600,000 of revenue from Grifols related to the delivery of fostamatinib supply and performance of certain research and development services pursuant to the collaboration agreement and approximately $122,000 of royalty revenue from EU of TAVLESSE from Grifols. We also recognized $2.5 million in government contract revenue related to the completion of enrollment in Rigel's Phase 3 COVID-19 clinical trial, which is supported by the U.S. Department of Defense government grant. Moving on to cost and expenses, our cost of product sales was approximately $250,000 for the third quarter of 2022. Total cost and expenses were $40.8 million for the third quarter of 2022 versus $41.3 million in the third quarter of 2021. The decrease in cost and expenses was primarily related to the Phase 3 clinical trial for warm autoimmune hemolytic anemia Phase 3 clinical trial in high risk hospitalized patients with COVID and the IRAK 1/4 inhibitor program. These decreases were partially offset by increased personnel related cost of commercial activities. For the fourth quarter, we expect operating expense to increase as a result of approximately $3 million related to one-time employee related charges, increases in certain one-time costs as we're ready for the potential launch of olutasidenib and a $2.5 million regulatory milestone payment to form up. With our two Phase 3 studies now complete and the reduction in workforce that we recently announced, we expect to see a significant decrease in operating expense in 2023. We ended the quarter with cash, cash equivalents and short-term investments of $81.6 million. With that, I'd like to turn the call back over to Raul.

Thank you, Dean. I wanted to conclude with these statements out, we've made meaningful progress in advancing our commercial and clinical hematology-oncology business. Regarding olutasidenib, we are thrilled with the longer term data from the interim analysis of the registrational Phase 2 cohort of patients with relapsed refractory AML that demonstrates the differentiation of our potential market leading therapy. And we look forward to that PDUFA date in February of 2023 and which will very much leverage our strength of our commercial infrastructure and lead to a successful launch of olutasidenib if approved. While we achieved the highest quarterly net product sales of TAVALISSE [Technical Difficulty] we are committed to executing our commercial priorities and believe we are well positioned to drive momentum into the upcoming quarters. We also continue to remain focused on advancing our IRAK 1/4 study in low risk MDS and look forward to data, initially data next year. We also look forward to working with our partner Eli Lilly on our RIP1 program. As we head into the last quarter of the year, we believe we're well positioned as an organization to execute across our fundamental, commercial and clinical priorities and drive value as a result. Thank you. And with that, we'll turn the call over to your questions.

[Operator Instructions] Our first questions come from the line of Yigal Nochomovitz with Citi. Please proceed with your questions.

Hi. This is Carly on for Yigal. Thanks so much for taking our questions. We had one on the ASH abstract data for olutasidenib. We thought it was interesting that you showed a much longer median duration of CRH, compared to TIBSOVO despite the two drugs having pretty similar response rate. So we were curious if you have any hypothesis as to what might be driving the better durability that you're seeing?

Thank you, Carly. Very good question and it's obviously a key piece of data we released today and we very much thank you for picking up on that. We appreciate that. We're -- I'd like to have Wolfgang and Dave comment as well. Obviously, we're excited about the results. It's an exciting result because it's a very meaningful increase in duration of CR +CRh response in these patients. And I'm sure from a patient perspective, that's wonderful. 25-months or more than two years is a great result. In terms of answering your question as to why given that both this and the competitor have fairly similar mechanisms. Why this is better than theirs? Can you speculate, Wolfgang?

Yes. So, obviously, the question is great. And we are, of course, pleased to see this quite substantial difference in our opinion. We cannot identify the one reason why all those signals look so good, but we can rule out a few things. For example, we look at the baseline demographics between the two studies with the numbers and the patient populations appear to look comparable. We do notice that we have a very high, higher number of the complete responders that I said earlier, the ones who really have full hematologic recovery. And we do know that better your initial response is the better the long-term prognosis and the duration of response, so that might contribute. But and then the two molecules are obviously very different and we don't completely understand yet what the structural differences could do, but we are certainly pleased with the observations and we'll look into this further.

Yes. Carly, I think you picked up on something that obviously is the strongest demonstration of evidence that, that both clinicians in market research and what we're hearing even from KOLs in other settings are very, very struck by. The drug just seems to have a high response rate, that's one thing or you could call them comparable, but the duration of response, the quality of that response is what is remarkable. I mean, these are -- we've been told these are results that you might expect to see potentially in the upfront setting. So you're getting that in these relapse patients and it really is meaningful. Because if you can say that a 30-year patients could potentially respond and then half of them could go out two years or more. That really is meaningful to clinicians as they review this data. And so that's why we're very excited about the fact that, that showed in the abstract today.

Carly, one last thing, it's obvious, but I -- they're saying, this data was the basis for the filing with the FDA and it is part of the review that's ongoing. So this data was shared with them.

Okay. Great, treat, that's helpful. And then we just have one follow-up question on ITP. It looked like the bottles shipped to patients and clinics was relatively flat versus last quarter. Just wondering if there were any headwinds specific to the third quarter that might have contributed to the stable station? And I guess what gives you confidence in seeing a reacceleration in the fourth quarter? Thanks so much.

Again, a very good question, Carly. Thank you much, I'll as Dave to comment on that?

Sure. Again, this is something that we've looked at very closely. You have to remember that we are up significantly from last year. We're up 19% almost 19% quarter-over-quarter last year. And if you look at the sequential quarters, you're right, we are flat versus Q2, but you have to keep in mind that last quarter was our highest quarter ever of bottleship to patients and clinics, and that was 10% percent higher than the quarter before in Q1, which was the previous high of bottles shipped to patients and clinics. So we are maintaining kind of where we were. And so what's the reason for that year-over-year growth? It's new patients who've been on the brand this year, more new patients on the brand this year than we added last year. And that's the primary driver of our year-over-year growth. And so it makes sense and we've seen this that what happened sequentially this quarter is we were flat on new patient starts this quarter, compared to last quarter. And as we've looked at this very deeply, both in who we're calling on and who the new prescribers are Carly, it's come out that we've been deploying a lot of our effort toward lower tier physicians as opposed to higher tier positions. So that makes sense because we've been making more calls, we did make more calls in the third quarter, but we just ended up deploying more of them toward lower tier targets. And so we've seen that, we see the problem. Our focus is now going to be on deploying those efforts toward higher tier targets and we think we can really accelerate our new patient starts moving forward. So we've identified what we believe the issue is, we're laser focused on it now moving forward. I hope that helps provide some perspective.

Definitely that. Thank you very much.

Thank you. Our next question is coming from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your questions.

Hi, good afternoon, everybody. Thanks for taking my questions and congrats on the new data you announced today. So for chronic ITP, are the trends that you're seeing relatively similar in terms of the higher new patient starts in terms of what line of chronic IBP they are on? And then what's been the latest you're seeing in terms of compliance and refill rates?

Thank you, Kristen. I'll let Dave comment.

So the first question is, by line of therapy, we haven't done, we can't get line of therapy data that fast that requires us to go out and do additional market research to see where clinicians have placed that. And so we haven't done that in the most recent starts that we've had this year. So I'll say that. So but we've obviously grown share overall, knowing where those patients are by line. We have made progress in second line as I recall from our last time, we looked at the data. But, you know, we're still bringing on patients in the third line as well. The second question in terms of persistency and compliance, we haven't seen any change in that. As a matter of fact, that's remained very steady. So we're still sort of mid-50s in terms of patients at four months of therapy.

Okay. Thanks for that. And then with the announced acquisition of Forma by Novo Nordisk, do you anticipate this to change anything at all related to milestones and royalties that are expected? And then would you even potentially seek options of getting full riser or anything at this point?

Thank you. As you know, our licensee Forma Therapeutics was acquired by Novo Nordisk just recently. And to answer your question, we expect no changes at all in terms of the contract or the license itself. Novo will simply step into the shoes of Forma and continue on as planned and scheduled. So this is something that won't change at all. In terms of our license, our milestones, our obligations, or their license or obligations at all. In terms of acquiring full rights, we have no plans to do that, we haven't had any discussions around that. We're very happy with the structure and in terms of the license that we signed with Forma, we're pleased with both the financials, as well as all the other material topics on that agreement. And obviously, we are incredibly happy with the data that, that's been presented and hopefully, at approval coming soon. So we really don't have any plans to do it and look forward to working with our new partners, Novo Nordisk.

Great. Thank you, see you all in New Orleans.

Thank you. Our next question is coming from the line of Eun Yang with Jefferies. Please proceed with your questions.

Thank you. So for TAVALISSE, you're expecting approval in Japan once it's approved, I believe you are entitled to about $20 million milestone payment. So do you expect that to happen in fourth quarter or first quarter next year when it happens? Would you book $20 million at once on the revenue line? And another question is on the cash. So you haven't provided a cash guidance, so you ended the quarter with about $82 million, including 20 -- potentially $20 million milestone from Kissei. How long do you think your cash will last? Thank you.

Thank you, Eun. Appreciate the question. Yes, so we are looking forward to a Japanese approval, our partner Kissei conducted a very nice trial in ITP with fostamatinib in Japan leading to a successful trial showing a very good benefit for the product in patients with ITP. And so they filed the NDA, and we look forward to an approval, most likely Q1 of next year, and that's when we should get the milestone $20 million as you said. Dean, I’ll let you comment on that in terms of how you book it and in terms of the cash points.

Sure. Thanks, Eun. So the $20 million, when we -- when that milestone is achieved and we receive the cash, we'll book the revenue. So as Raul described, we expect that in Q1 is our latest view. It could come a bit earlier, but Q1 is what we're planning on. With respect to cash, we -- as you know, we haven't provided any top line guidance nor specific guidance with respect to operating expense. And therefore, we don't provide a view of our right way. That said, with continued, as we think about the top line, you've already described the $20 million of potential cash flow from Kissei upon that approval with TAVALISSE sales growth, which we expect into the future with now olutasidenib revenues with the PDUFA date in February and the launch thereafter, we would expect ’23 revenues from our olutasidenib sales. And then from as you know, from time-to-time, we have other collaboration revenues like the Kissei revenues. So that's we don't provide guidance because it's periodic and bumpy, but those are other potential sources. On a longer term horizon, we've also described the IRAK 1/4 program and that's certainly a potential source of revenues into the future, as well as ex-U.S. rights on olutasidenib, so from a top line perspective, we have continued opportunities for revenues and also cash flows. We also have $20 million available on our mid-cap financial credit facility, so that's available to us. From an operating expense perspective, again, we haven't provided guidance, but I did say in my prepared comments that we'd expect to see a significant decrease in operating expense in ’23. And that's coming off of a year where we've completed both the Phase 3 studies in warm autoimmune hemolytic anemia, as well as COVID. And incrementally, we announced that we had the workforce reduction that we recently announced, which contributes $7 million to $8 million of savings. So when as we provide views into the future, which we'll do in the first quarter sometime, you will see a significant decrease in operating expense based on those elements I described. So at this point in time, all said, we're comfortable with that $81 million of cash we have today, and the business that I described in our ability to fund all the great programs in ITP, olutasidenib launch, as well as our IRAK 1/4 program.

Thank you.

Thank you, Eun.

Thank you. Our next questions come from the line of Gary Nachman with BMO Capital Markets. Please proceed with your questions.

Hi, good afternoon. This is Dennis Resnick on for Gary Nachman. Thank you for taking your questions. Can you just comment on the current sales force size and if there was any potential reduction to the sales force following the decision to not advance AIHA forward. Would you be adding any additional reps following the launch of olutasidenib? And then can you just talk about the engagement the sales forces had this last quarter? Thanks so much.

Thank you, Dennis. Appreciate that. I'll ask Dave to comment on salesforce.

Sure. So I think your first question was the size of our salesforce now and would we change it either, because we don't have AIHA or because we are bringing on olutasidenib and launching olutasidenib. So we have 54 territories that we have in the field, and we are not changing that due to warm autoimmune hemolytic anemia we size according to the ITP market, it's quite diffuse. As I just told you, you know, it's -- we have so many doctors out there and it’s really important to call on all of them. We just want to make more of our efforts toward the higher tier targets and we get that by maybe turning down some of our efforts at the lower tier. So we have no intention of changing the salesforce, because warm autoimmune hemolytic anemia. And the reason we brought in the molecule, Dennis, is we feel that AML is very synergistic to the organization that's calling on hem-onc’s now, that we have. So we'll have to bring leukemia treaters in who are sitting in the same institutions that we're calling on now. But it's a very targeted audience. It's about 2,000 prescribers that we see in AML. And so which compares very -- it's a very small subset of a universe of hem-onc prescribers. So we think it's very appropriately sized for both molecules that we have. And then I think your last question was interactions in the third quarter. We were actually up in total interactions versus the second quarter. I didn't show that data today, but we did make more in-person calls. We had about 83% of our calls were in-person, and we had, I think, about 20% more calls in Q3 than we had in Q2. So definitely went up on in-person calls, but we noticed about that and it’s again we need to really increase our focus on higher tier targets for ITP. So I think that answers all your questions, but let me know if I missed anything.

That's great. Thank you so much.

Thank you. Our next question will be from the line of Kalpit Patel with B. Riley Securities. Please proceed with your questions.

Good afternoon. This is [Andy] (ph) on for Kalpit. Thank you for taking our questions and congratulations on the olutasidenib data. I know you mentioned that you didn't see any cardiovascular events with olutasidenib, but just want to confirm that you aren't seeing any QTC prolongation? And then in regards to differentiation syndrome, both any grade and grade greater than 3DS appears numerically lower relative to TAVALISSE? Can you touch upon the protocols that were used for managing differentiation syndrome in terms of dose holding and/or reduction and any potential differences in the molecules maybe in terms of half life that could account for the lower DS? Thank you.

Thank you, Eddie. I'll ask Wolfgang to comment on those differentiation syndrome and how managed. And if we see any substantial QTC prolongation?

Yes. So to your first question, there was no evidence of an effect of olutasidenib on cardiac repolarization as evidenced by QTC prolongation. So in this study, we did not appear to have an issue with this, so I can confirm that. Regarding differentiation syndrome, I mentioned it happened in about 14% of patients, it’s kind of like an expression of, you know, sales normalizing again in AML. So it's not completely surprising that it appears. And it feels like physicians have gotten a little bit more comfortable with first seeing it, diagnosing it, and then treating it quickly. And so they did in the study physicians mostly use steroids, symptomatic therapy that deals with the excess fluid in organs and in the vast majority of cases could manage those differentiases syndromes cases pretty well.

And Andy, to answer the last question, not to answer, because we don't have an answer, why? This appears to be perhaps better than another product. Why is that? Is it half life? Is it others? I don't think we have a clear answer on that. It's something that we are thinking about substantially. The facts from this trial are the facts that's favorably charged for olutasidenib. We're delighted by that, and we very much though like to understand it a bit further and we will continue to study that.

That's helpful. Thank you very much.

Thank you, Andy.

Thank you. There are no further questions at this time. I would now like to turn the floor back over to Mr. Raul Rodriguez for any closing comments.

Well, thank you for your interest in listening in. We very much appreciate it. I think we're at a very exciting point for Rigel with an upcoming potential approval of what I think is a splendid drug, which adds substantially to our portfolio and which we're excited to bring to patients, because I think it has some tremendous advantages that certainly would make their lives better and it's consistent what we're trying to do as a company. So it's an exciting time to be at the company, and I hope to be able to report positive news on this product in other areas in the coming months. Thank you so much.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.