Rigel Pharmaceuticals, Inc. (RIGL) Q4 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to Rigel Pharmaceuticals Financial Conference Call for the Fourth Quarter and Year End 2022. At this time, all participants are in a listen only mode. A 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 your first speaker, Ray Furey, Rigel's Executive Vice President General Counsel and Corporate Secretary. Thank you. You may begin.

Hello. Welcome to our fourth quarter and year end 20 22 financial results and business update conference call. The financial press release for the fourth quarter and year end 2022 was issued a short while ago and can be viewed along with the slides for this presentation in the News and Events section of our Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2022, 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 Chief Executive Officer, Raul Rodriguez. Raul?

Thank you, Ray, and welcome to the team. And thank you, everyone, for joining today. Also with me today are Dave Santos, our Chief Commercial Officer; Dr. Wolfgang Dummer, our Chief Medical Officer; and Dean Schorno, our Chief Financial Officer. Now beginning on Slide 5. We are thrilled with the progress we've made in growing our hematology-oncology business in 2022. And we look forward to continuing this momentum in 2023. We are committed to driving sales growth for our first approved product, TAVALISSE and ITP. And in the fourth quarter, we achieved our highest quarterly net product sales to date. Alongside our international partners, we are focusing on making sure TAVALISSE is available for adult patients with chronic ITP across the globe. Our partner Kissei recently took an important step towards achieving this goal, with Japan's PMDA approval of TAVALISSE. We congratulate them on this achievement. In December 2022, our commercial business was transformed with the approval and launch of our second product REZLIDHIA for the treatment of relapse or refractory acute myeloid leukemia. REZLIDHIA is an important treatment option with -- for patients with relapsed or refractory AML, and we are keenly focused on the execution on the commercial launch. With two approved products, our robust team -- sales team and a highly experienced marketing and operations team, we are in a strong position to drive sales for both TAVALISSE and REZLIDHIA. Beyond our commercial focus, we are committed to growing our business through internal development programs, partnered programs, and in licensed opportunities. Our IRAK1/4 R2 inhibitor R289 continues to progress in a Phase 1b study in patients with lower risk MDS. And we are pleased to report that we have completed enrollment in the first cohort of this study Additionally, we continue to evaluate fostamatinib and olutasidenib to -- for follow on opportunities beyond their currently approved indications. Alongside our partner, Eli Lilly, we are advancing R552, a RIPK1 inhibitor, and we look forward to initiation of a Phase 2a study in rheumatoid arthritis for the first -- in the first half of 2023. Our colleagues at NIH are also continuing to evaluate fostamatinib in COVID-nineteen in the active four Phase 3 clinical trial. Now moving on to Slide 6. I want to spend some time talking about the importance of achievements we've garnered as we expanded our hematology-oncology portfolio with REZLIDHIA. In just a few short months, we've went from announcing a license agreement with Forma Therapeutics to the FDA approval and then the launch of REZLIDHIA. Our ability to navigate this quick turnaround is a testament to our business development, commercial and medical affairs teams as well as Rigel's commitment to patients in this as a hemod company. While announcing the deal in August, our team began to work diligently to prepare for the commercialization of REZLIDHIA. And I am proud to say that despite the early approval in December, we were ready to execute on our critical priorities for launch. Shortly after the approval, we had the opportunity to engage and educate the medical community at the 2022 ASH meeting. We were able to share new longer term data from the registrational Phase 2 study of REZLIDHIA in relapsed or refractory AML. Highlighting its durable efficacy and well characterized safety profile. Also in December, REZLIDHIA was made available in the U.S. by prescription and since then has been added to the NCCN guidelines for AML and highlighted in Blood Advances with the publication of the Phase 2 registrational study. While pleased with the success with that so far, we are focused on continuing execution of the REZLIDHIA commercial launch. So with that, I'll turn the call over to Dave for an overview of the quarter. Dave?

Thank you, Raul. Now, I'd like to take a few minutes to discuss our progress with REZLIDHIA in the first three months of launch and then transition to our continued growth of TAVALISSE during a record Q4. On Slide 8, you will see our FDA approved indication, which is for adult patients with relapsed or refractory acute myeloid leukemia with a susceptible IDH1 mutation as detected by an FDA approved test. Moving to Slide 9, the American Cancer Society estimates that more than 20,000 patients will be diagnosed with AML in 2023. And unfortunately, about 11,300 patients will die from the disease this year. In terms of the eligible relapsed or refractory IDH1 positive AML patients, our research showed that up to 60% of fit patients progress in two years and for unfit patients, most are refractory or relapse within two years. With 6% to 9% of patients IDH1 positive, that gives us a near term opportunity to impact the lives of around 1,000 new mutant IDH1 patients in the relapsed or refractory AML setting each year. On slide 10, we believe REZLIDHIA has the potential to address many key patient and HCP needs in the relapsed/refractory AML space. It is a promising new treatment targeting mutant IDH1 that has shown impressive durable responses in patients who have failed previous therapies. As more clinicians review the demographics of our relapsed refractory patient population in our pivotal cohort, and put that together with a complete response rate of 32%, a CR, CRH rate of 35% and especially the median duration of CR, CRH of longer than two years. They see the value of an agent like REZLIDHIA in their treatment armamentarium. Combining that efficacy with a well characterized safety profile, without the requirement for cardiac monitoring, it becomes even more compelling to adopt REZLIDHIA in their mutant IDH1 relapsed refractory AML patients. Overall, we continue to see exciting potential to become a market leading treatment in mutant IDH1 relapsed or refractory AML and are looking forward to continuing to execute the launch plan. Moving to Slide 11, our commercial and medical affairs teams have done a great job executing our launch plans to quickly raise awareness among leukemia treaters, ensure quick product availability and access for patients, accelerate launch momentum through the publication of critically important third party references and continue educating our field team to hone our REZLIDHIA messaging. Immediately upon approval on December 1, our website was up and within the first few days of launch, we had several marketing and patient access materials available to customers online and through our field teams. It was perfect timing as our team was at the 64th Annual American Society of Hematology Meeting a week later on December 9, with our booth, prominently announcing approval and team members interacting with important customers who were in attendance. Then on December 22, just over a week after ASH ended, our team worked closely together to have product available to stock our distribution network for year end. And finally, we were extremely pleased that over the holidays on December 30, our distribution network shipped out our first two bottles to an account for an AML patient. It was a meaningful way for us to end 2022. On Slide 12, you will see that we continued to make strong progress on the medical affairs front as we moved into the New Year. On January 13, we were delighted that the NCCN clinical practice guidelines for AML were updated to include olutasidenib as a recommended targeted therapy for relapsed or refractory disease with an IDH1 mutation. This quick unanimous decision by this recognized panel of experts is critically important for formulary and prescribing decisions by payers, GPOs, and other key accounts and prescribers. We will continue to highlight this important recommendation in our messaging. Also in January, we were pleased to confirm coverage through our first paid claims for REZLIDHIA patients. We continued to work with key payer and GPO accounts as well as individual prescribers to ensure that they have everything they need to minimize any reimbursement hurdles and maximize patient access to REZLIDHIA. And last month, our launch momentum continued with the February first online publication in Blood Advances of the data from our pivotal Phase 2 cohort entitled olutasidenib induces durable complete remissions in patients with relapsed or refractory IDH1 mutated AML. The conclusion states that olutasidenib monotherapy induce durable remissions and transfusion independence among patients with relapsed or refractory mutant IDH1 AML with a well characterized and manageable safety profile. The observed efficacy is clinically meaningful and represents a therapeutic advance in this molecularly defined patient population with a poor prognosis and limited treatment options. This publication, which will soon appear in print in a well-known and respected peer review journal is another highly credible third party reference for REZLIDHIA that will be important for years to come. And finally, just a few weeks ago, our entire commercial and medical affairs team met in person for our annual meeting. We had a highly productive meeting and continued to build on the team's foundational knowledge established upon approval. Our team left that meeting more prepared than ever to continue spreading awareness of REZLIDHIA and accelerate uptake as we move into our next phase of launch. I look forward to providing updates as we continue our REZLIDHIA launch journey. Now, onto growing sales of TAVALISSE in ITP. I have a few brief comments on our TAVALISSE progress in Q4. On Slide 14, you will see our FDA approved indication, which is for adult patients with chronic immune thrombocytopenia or CITP, who've had an insufficient response to a previous treatment. Moving to Slide 15. I am thrilled to announce that we had our best TAVALISSE quarter ever in Q4, shipping 21,0096 bottles to patients and clinics, representing 23% growth over Q4 of last year. This robust growth was again driven by more new patients starting TAVALISSE. I am happy to report that we had more new patient starts in 2022 than any other years since launch. For Q4, we achieved net sales of $21.9 million, representing a 25% increase or $4.3 million more than the same quarter last year. We are extremely pleased with how we ended 2022 and the solid year over year growth we are seeing in ITP sales. We will continue to focus on targeted clinicians to identify appropriate patients that can benefit from TAVALISSE. To grow our new patient starts beyond the record levels we saw in 2022. And finally, on Slide 16, I wanted to update you on how we are continuing to expand access for patients globally with TAVALISSE. In December, Kissei, our partner in Japan, announced PMDA approval for TAVALISSE for the treatment of chronic ITP. Thrive to earn $20 million in a regulatory milestone with the approval. We remain committed to continuing to impact CITP patients around the globe with continued expansion of TAVALISSE's commercial footprint through our partners. Thanks for your attention. And I will now turn the call over to Wolfgang to provide a brief update on our development progress. Wolfgang?

Thank you, Dave. I will briefly summarize our other programs. Slide 18, let me start with lower risk MDS. Our Phase 1b study evaluating R289, Rigel's IRAK 1/4 inhibitor in lower risk MDS has completed enrolling the first cohort and has now dose escalated to enroll patients into the next cohort. So far, the drug was well tolerated and no adverse events of concern have been seen. As you recall, the study uses a three-by-three dose escalation design to establish the maximally tolerated dose before expanding a dose level to patients to obtain additional safety data, as well as preliminary efficacy information. We believe R289 may represent a promising new approach to treating patients with lower risk MDS, and look forward to investigating R289 further in this study. On Slide 19, you can see the overview of our ongoing programs. As Raul mentioned, we are primarily focused on growing our heme/onc business. It starts with our internal development programs. I just took you through the progress as R289 in lower risk MDS on the previous slide. We're also evaluating other opportunities for fostamatinib and olutasidenib, building on their regulatory success. This includes evaluating ex-US partners to bring REZLIDHIA to AML patients around the globe. I also like to remind everyone that the Phase 2 clinical trial of odevacitinib includes additional cohorts beyond the registrational relapsed or refractory AML cohort, and we look forward to continued analysis and applications from this trial. Supplementing these internal development efforts, we continually evaluate potential new assets to in license that can leverage our heme/onc capabilities. More optimistically we continue to work with Eli Lilly to advance R552 our RIP kinase inhibitor towards a Phase 2 study in rheumatoid arthritis and with the NIH as they continue enrollment in the active four Phase 3 study evaluating fostamatinib as a treatment for COVID-19. That concludes my development summary, and I will turn the call over to Dean. Dean?

Thank you, Wolfgang. I'm on Slide 21. For the fourth quarter of 2022, we shipped 2,417 bottles of TAVALISSE for our specialty distributors, resulting in $31.5 million of gross product sales, 2,196 of those bottles were shipped to patients and clinics, while 221 bottles increased the levels remaining in our distribution channels at the end of the quarter. Following our commercial launch of REZLIDHIA on December 22, 2022, we shipped 64 bottles of REZLIDHIA to our specialty distributors resulting in $1 million of gross product sales. Two bottles of REZLIDHIA were shipped to patients and clinics, while 62 bottles were made in our distribution channels at the end of the quarter. We reported net product sales from TAVALISSE of $21.9 million in the fourth quarter of 2022, a 25% increase compared to the same period in 2021. We reported net product sales from REZLIDHIA of $900,000 in the fourth quarter of 2022. Our net product sales from TAVALISSE REZLIDHIA were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $9.7 million For the fourth quarter of 2022, our gross to net adjustment was approximately 30% and 15% of gross product sales respectively for TAVALISSE and REZLIDHIA. Before we move on from net product sales, let me review our expectations for the first quarter of 2023. Let me start with TAVALISSE. Despite the typical first quarter reimbursement issues confronting our industry, such as the resetting of co-pays and the Medicare donut hole, we expect to see a small increase in bottles shipped to patients and clinics in the first quarter of this year as compared to the fourth quarter of 2022. We expect to see continued growth in bottles shipped to patients and clinics throughout the year. For REZLIDHIA, and as you know, we are still only a couple of months into our launch. As Dave highlighted, we're encouraged by the initial interactions that our field team is having with physicians who treat patients with AML. With these interactions and as awareness of REZLIDHIA increases, we expect to see increasing penetration into this new market for Rigel as we add new patients and as the year progresses. We look forward to providing more specific updates in the future as our launch progresses. Incrementally, we currently expect our gross to net adjustment for the first quarter of 2023 to be approximately 30% for TAVALISSE and approximately 15% for REZLIDHIA. On to the next slide, in addition to net product sales, our contract revenues from collaborations were $26.5 million and our government contract revenue was $2 million in the fourth quarter of 2022. Contract revenues from collaborations consisted of $20 million in revenue from Kissei related to milestone payment earned upon Japan's PMDA approval of TAVALISSE for the treatment of chronic ITP, $5.7 million in non-cash revenue from their collaboration agreement with Medison, $600,000 in royalty revenue from Grifols, and $200,000 in revenue related to our license agreements with Lilly. Moving on to cost and expenses. Our cost of product sales was approximately $342,000 for the fourth quarter of 2022. Our cost of product sales for the quarter were inclusive of a 15% royalty on our REZLIDHIA net product sales. Total cost and expenses were $49.2 million in the fourth quarter of 2022 versus $41.8 million for the same period in 2021. This expected increase in costs and expenses was primarily due to personnel related costs and commercial expenses, along with higher research and development costs related to the IRAK1/4 inhibitor program. As we look towards 2023, we currently expect our total cost and expenses for the full year of 2023 to be approximately $160 million. Finally, we ended the quarter with cash, cash equivalents and short term investments of $58.2 million. With that, I'd like to turn the call back over to Raul. Raul?

Thank you, Dean. As we read on this call, 2022 was a transformational year for Rigel. And we believe that this positions us very well for a year of execution in 2023. Our commercial organization is focused on accelerating TAVALISSE sales with our expanded sales force and increasing interactions. For REZLIDHIA, we are continuing our commercial launch and prioritizing physician awareness and adoption, as well as identifying ex-U.S. collaborators. To supplement our commercial initiatives and business growth, we look forward to continued progress across our development and partnered programs, while evaluating new external assets to leverage our Hemod capabilities. We are very excited about this and about our commercial and clinical initiatives in 2023. On a final note, I'd like to take a moment to recognize that our CMO Wolfgang's last stay at Rigel will be March 31. Wolfgang, on behalf of our team, I'd like to thank you for your service and contributions to Rigel. Currently, we are conducting a search for a new CMO with hematology, oncology experience. With that, I'd like to thank you for your interest in our progress in the fourth quarter and throughout 2022. Operator, if we can open up the call for questions.

Thank you. Ladies and gentlemen, at this time we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Yigal Nochomovitz with Citi. Please proceed with your question.

Hi team. This is Carly on for Yigal. Thanks so much for taking our questions. We have a few on REZLIDHIA. I guess first, can you talk a bit about how concentrated the prescriber base is here? And obviously, it's still very early, but are you able to comment on how many unique prescribers have actually written a script so far? Thanks.

Carly, thank you so much. I'll ask Dave to comment.

Yes. So, Carly, on the second part of your question, we're not going to talk today because it's in Q1. As you know, those are results from Q1 that we'll share on our Q1 call. So we won’t share specifics on prescribers. But I will say that, as we've talked about, there are about a 1,000 AML prescribers that we've -- we're calling on as targets. About half of those are consistent with our TAVALISSE targets and about half of those are leukemia treaters, who really are specialized in leukemia. And those are the people that can be more difficult to access, and it's been a little bit more difficult for us. A challenging, especially since we've only been at this now since December. But we're making progress and we're confident that we will continue to grow awareness in that group.

Okay, great. That's helpful. And then you disclosed that 64 bottles shipped during the fourth quarter. I guess can you just talk a bit about we should be thinking about inventory stocking dynamics during the first quarter and the second quarter of 2023?

Carly, I can take a stab at that and ask Dean or Dave to comment as well. So the 64 quarters all but two of those were into the inventory, into the channel. And we have a better sense now, a couple of months beyond that in terms of that. Where that will stabilize? We don't really know yet. New institutions are ordering product, and so it's still too early to say something definitively in terms of -- but a stable or even trend in inventories may end up. We do know that there has been usage from that inventory, but the dynamics are still a little bit unknown given how early it is for us. Any comments, Dave or Dean?

Yeah. The only thing I would say, Carly, is our distribution network is -- we have an SP that chips directly to patients, and then we have distributors that ship to our accounts. And we have seen orders go out from our entire distribution network. So the distributors who are shipping to hospitals and as well the SP that is shipping to patients.

And just one detail as we launch REZLIDHIA is that, TAVALISSE one month supply is one bottle for REZLIDHIA, two week supply is one bottle. So as we need to translate those 64 bottles into 32 months’ worth of worth of treatment.

Okay, got it. And then just our last question is, I think in the past you've talked a little bit about the potential frontline AML opportunity for REZLIDHIA. Can you talk about where you stand with that and thoughts on potential timing for registrational study?

Thank you, Carly. REZLIDHIA has tremendous opportunities. We think that it's shown some of the best data, the best data in IDH relapsed/refractory setting. And that gives us a molecule that I think has a lot of opportunity within it. So we are working diligently in understanding where we'd like to go with it. And we're looking at various segments both of AML and there's quite a number of segments there that are potential opportunities, as well as some things outside of AML even, because there's opportunities there as well. And these decisions take up fair amount of interactions with KOLs, potential clinical investigators and the FDA. And so that effort, that body of effort is underway. Maybe I can speak a little bit about the timing or maybe you could say a few things when we might be ready to say, Wolfgang.

Yeah. I would say, this is definitely one of our considerations. I can’t share with you, as I mentioned earlier, that we are analyzing other cohorts from the first study and both this patient population, target patient population as well as a population that has been experienced with [Venaesa] (ph) in the past, have shown very consistent efficacy numbers. I don't want to give you the actual numbers today, because we are fully analyzing it and then present it at appropriate scientific meetings. But I do think we have options and the option that you just brought up is one of several.

Craig, the only thing to add to that in terms of timing. Later this year, for sure, we'll come back to you in terms of what we'd like to do next.

Okay, perfect. Thank you so much for taking our questions.

Thank you, Carly.

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

Thank you very much. A couple of questions. So at the end of last year you had about $58 million in cash and cash you burn for this year since running higher than that. So can you talk about how you fund the operations for this year and beyond? That's number one question. Second question is, now with the two products on the market do you have some sense of when you would be able to reach profitability? And my last question is, you mentioned looking into kind of evaluating other opportunities for fostamatinib. So can you talk about what are the other opportunities are you considering? Thank you.

Thank you, Eun. Let me ask Dean to address the first of two of your questions and maybe I'll address the third.

Sure. Hi, Eun. So I'll address both of your questions I think together here. So we ended 2022 with $58 million of cash, as you noted. Incrementally in January, we received $20 million from Kissei. So we're comfortable with our current cash position in the business that we've discussed today. We -- with respect to the path to profitability, we really do as a company, it is a priority for our business to achieve cash flow breakeven. And as you've seen over the last year, we really have made some focused efforts on cost efficiencies and leverage as we established the heme/onc business that we described today. We are reducing our operating expense from about $176 million in 2022, the numbers we just reported, down to what we expect to be about $160 million this year. I would note that over $10 million of the operating expenses I just described are non-cash, they are stock comp and depreciation. So then as we look forward, with respect to getting to breakeven, we haven't given guidance on our top line. So we can't be specific on when we'll get to breakeven. But as we look at our revenue growth over time, we just reported fourth quarter run rate results of about $90 million, $90 million plus and that's fourth quarter run rate. And that's really almost exclusively TAVALISSE. We've got the weaker REZLIDHIA sales in there. Incrementally, as we look at growth in that top line, in 2023, we expect continued growth in TAVALISSE. We expect to now have the REZLIDHIA revenues, net revenues for the full year. And then as we've seen over time, we continue to expect collaboration revenues. And those can be collaboration revenues from existing partners like Lilly, Kissei, Grifols, they could also be collaboration revenues from new opportunities. And couple of examples of new opportunities would be ex-US rights for olutasidenib REZLIDHIA. As well as potential partnerships for IRAK 1/4 program that Wolfgang describes. So haven't been specific on the time we'll get to breakeven, but we're certainly focused on it and pleased with the progress we've made over the year as we set up and launch into 2023.

Thanks, Dean. It's worth noting, as Dean said in his comments, we're seeing in TAVALISSE and so far this quarter has been very positive. Usually, we see a downward drag of Q1. We're seeing a small increase actually in patients -- bottles shipped to patients and clinics. Just to remind you, last quarter Q4 was our best quarter since launch, given that we are seeing some growth on top of that. Q1, oddly, Q1 is always challenging. This Q1 will be our best quarter since launch, not our best quarter first quarter, our best quarter since launch. So that's a very positive sign and a testament to some of the expansion and focus from our commercial team in increasing TAVALISSE sales despite Q1 headwinds. On your third question Eun was other opportunities for fostamatinib. We're looking at other opportunities as you may see in the press release, we put a little bit of information on opportunity in graft versus host. We haven't done thorough and final diligence on that is the opportunity, but it is there because the data seems quite compelling. So that's one thing we might consider with foster. We have to look at the totality of where we want to invest our clinical dollars and they're not infinite, they're limited between olutasidenib and fostamatinib. So we're going to make those decisions and then come back to you later this year with what we'd like to launch in terms of registrational trials for these two drugs.

Can I ask you one quick follow-up, are you thinking about revitalizing the warm autoimmune hemolytic anemia indication?

Yeah. We -- thank you for that question. We've had interactions with FDA and what I think would be necessary in that is a de novo trial once again. And it might be a little smaller than our prior trial, but maybe not substantially less than that. And so, given that and given, frankly, other opportunities that we have in front of us with both fostamatinib, but also now with olutasidenib. Quite sizable opportunities that those probably would be the priority rather than warm autoimmune hemolytic anemia.

Thank you.

Thank you.

Our next question comes from the line of Do Kim with Piper Sandler. Please proceed with your question.

Hi. Thanks for taking my questions. I was hoping to get any initial feedback or sense of physician enthusiasm for REZLIDHIA and their willingness to use the drug? And if you've seen any kind of pushback by docs, having a preference for TIBSOVO for any reason? Anything anecdotal?

Dave?

I could give you a lot of anecdotes [indiscernible] I've actually just been out with customers as recently as yesterday just flew back this morning. At the end of the day, here's a couple things for you. First of all, when people truly understand this data, and if you look at the Blood Advances publication, things are in there that we haven't even begun to talk about commercially yet which is the survival data. If you look at the survival data of the responders, and you see what the CR, CRH responders do in terms of survival, that that's not yet reached, and it's my fact that 18 months, you have 78% of patients surviving. Those are the kinds of pieces that as we take this publication and put it in a new piece and begin to talk to clinicians about it, which we have begun doing just very recently since this was published. People become more -- much more kind of convinced that there is something here. We have been out there with a response rate, which is clearly -- a CR response rate, which is clearly high at 32%, right? But the CR, CRH rate is at 35% and people can look at that and say, yeah, that's kind of what I get. But then when you go to the duration data, people have to recall and put that in context that these are relapsed/refractory patients. And when you do that and when we passionately talked about that, it can really have an impact. So yes, there are clinicians who say it's come to me too. Response rates look the same, but you have to really dive into that duration. And we think the two things that are really going to help in the Blood Advances publication are to be able to talk about survival, number one. And then number two, to be able to also address the fact that we had patients on the trial who were on [venetoclax] (ph). And so those are two things that are in the publication that are going to just help augment our story. And lastly, though, we've just gotten in January the NCCN Guidelines addition. And we're going to continue to do that. As a matter of fact, if you look at our website now, we have links to both the NCCN guidelines announcement and the Blood Advances publication. So those are really two critical things that I think will help move. But so far, I would say, depending on the clinician and how much time we get with them, we can move them. And I will also say that among the top leukemia treaters in the country, you just have to remember that this is a Phase 2 study that was done at very few institutions in the US. So a lot of people haven't had a chance to kind of use this product. And it came on all of a sudden. As a matter of fact, last night, I was just talking about this with some clinicians. They weren't even aware that it was filed. And then all of a sudden it was approved in December. And so, this is the kind of thing. We feel very firmly, Do, that the more we raise awareness, especially among key leukemia treaters, the more adoption we're going to get.

Thanks, Dave. That's great to hear. Another question for you, but on TAVALISSE. Congrats on accelerating these sales. Can you talk about what you're seeing is the driver of the sales growth? Is it getting the product on formularies? Is it your expanded sales force? Where is the estimated market share of TAVALISSE now? And have you gotten much penetration in the earlier lines?

So if you look at them, I'll take that first -- that last part of your question first. If you look at our data and we look at it through our patients that are on the product of TAVALISSE. We actually have a pretty good percentage of our patients on in second line disease. If we look at our patients through Rigel OneCare. It actually makes up more than a quarter of our patients right now. So we do believe we're making progress in earlier lines of therapy. But in terms of what's kind of driving new patients to the brand, it's all of the above. I mean, at the end of the day we have more folks out there and they are very sharp in their messaging. They know that we are looking for new patients to start on TAVALISSE. Again, if you go to our website, you see lots of patient cases that we use a lot. And again, just seeing a lot of customers over the weekend, we're continuing to get interest in this drug and people are really beginning to get it. So I really do believe it's all of the above. And certainly access isn’t hurting; by the way, we had more commercial starts last year than we've had before. And we believe that's a direct result of the work we've done to not only do the contracting we've talked about, but also raise awareness of the access that patients have to the drug. So, as Dean and Raul mentioned, we're looking at Q1 here, where normally things slow down a bit due to the reimbursement hurdles and your whole goal is to start [indiscernible] patients and get over that. And we believe we're making progress toward that as we're sitting here in the first part of March. So it's all of those things, though, and it's taken some time, but I just give it to our sales team that's out there every day searching for new patients and painting that picture for clinicians, and they're really making a difference and our market access team has really worked so hard to ensure that patients, especially commercial patients have access to the drug.

Wonderful. Congrats on the progress and thanks for taking my questions.

Thank you, Do.

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

Hi, good afternoon. Thanks for taking our questions. So we've received some inbound interest on the cGvHD program following the data you had earlier this year. So the question is, what factors are you considering as to whether you may look to conduct further studies in this patient population? And then, what do you view as the potential market opportunity?

I'll take a stab at that, and ask Wolfgang to comment as well. Thank you, Kristen. We're looking at the whole variety of things you look at when you're looking at potential new indication for your drug. That includes the patient population, the indication, the competitive landscape presently, the competitive landscape anticipated by the time you complete your study and file for approval, as well as the fit to the current pricing and things like that. So there's quite a number of things to consider when you do that in addition to, obviously, interest from KOLs and possible sites to do that as well as FDA feedback on your thoughts on it. And sometimes they have their own views on how things should be studied as you know. So it's complicated decisions, frankly, in terms of doing a study. So we are actively evaluating that opportunity overall. Wolfgang, on the specifics of it. Anything else you'd like to add?

Yeah. Maybe just since you have seen the paper and obviously read the paper, you look at the numbers. Of course, the first thing we do is we look at these numbers and compare them with other compounds that are available right now, approved compounds. You will have seen that the numbers look pretty good. It's -- the overall response rate over a year is high. So favorable to currently approved drugs. So then we will have to work with FDA to see what a registrational trial could look like. What's the sample size? What's the exact design? And that will have an impact on timelines. And how quickly can we do that? And also on cost and how much -- how expensive is it going to be? But from a market opportunity, we do see a lot of potential. And this could be a sizable opportunity in the not too distant future as far as we can tell right now.

And I think that sets us as well.

Okay. Thank you for that. I appreciate it. And then outside of the Eli Lilly partnership, what are the key things you're looking out for in 2023 related to some of your partnered programs including your ex-U.S. partners?

Yeah. So as you know -- I’ll handle that. With regards to TAVALISSE, good progress, the product now available or soon to be available commercially in Japan. They got the approval at the very end of the year and have to get through pricing, which they're working on now. So look forward to that. It is available in Europe, all the major countries in Europe, as well as Canada, Israel. And so, I think in terms of partnerships, we are making very good progress with TAVALISSE. We are having discussions with olutasidenib. As you know, as part of the license, we have global rights to olutasidenib, and the opportunities are attractive ex U.S. as well. So we are in discussions with potential partners regarding that. And also, not just in terms of what the economics might be, but also what their contributions clinically might be. As you said, there's various segments in AML that are of interest and possibly their contributions in regards to those rather than just financial are very much of interest to us. And then the IRAK program, we have global rights to that program. But having a partner in place that can also help us explore the opportunity in hemic indications is of tremendous interest. And it's a very attractive program that we're not generating data, which we think will be helpful in terms of setting a partnership in place. So we're looking forward to those new partnerships. And then progress with our Lilly kinase collaboration, with the systemic program in entering a Phase 2a study in rheumatoid arthritis. We think it's a great indication, a very sizable indication, one with continued need for new treatments. And we're excited about their testing R552 in a Phase 2a study in rheumatoid arthritis and launching in the next handful of months, because we'll get meaningful data and data that could serve as cross competitors to other agents currently available and things in development, which may show this product to be a very attractive product in rheumatoid arthritis. We're excited about that. And we also have a CNS program associated with that that hopefully will in the near future move into preclinical development and then into humans. So very good progress with current collaborations, very good progress with currently marketed products and looking forward to putting a couple more in place.

Thank you.

Thank you, Kristen.

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

Thanks. Good afternoon. A few more for me on REZLIDHIA. So how easy is it for physicians to use a diagnostic test for an IDH1 mutation in AML patients? Is that common practice? And no issues there in identifying these patients? And then what is access been like so far for REZLIDHIA? How much are you minimizing reimbursement hurdles? You mentioned that in your prepared remarks. And then, how is the sales force being allocated between REZLIDHIA and TAVALISSE? Maybe just a little bit more on that. And what else can you do to further penetrate the leukemia specialist for REZLIDHIA? You mentioned that there are some challenges there.

Sure. So, Dave, I'll ask you, I made a list of that. I’d ask you to take those in -- if you missed one, I'll remind you.

Yeah. So I'll take the last one first, Gary. I think first of all, it's a matter of time. Some of these institutions as for these leukemia treaters, it takes a while to make appointments, get in there, see them, et cetera. You've got hole departments. You've got not only the MDs. You've got your nurse practitioners, PAs, fellows that you need to see. So we're working all of those angles in terms of getting into see leukemia treaters. But we also have other field team members out there. They work together across commercial and medical affairs. Our MSLs are out there partnering with our field sales reps. If they know clinicians, they are able to introduce those clinicians to the territory business manager and vice versa. So it's just taking us some time, but we're working all the angles to ensure that we get to -- get in contact with as many of these leukemia specialists as possible. In terms of reimbursement, yes, I mentioned that we've had paid claims. Our market access team, our payer field team has been out there doing many, many interactions with different payers and PBMs in presenting the clinical data. And overall, things have been very positive. We've received a number of -- kind of indications that they are going to cover prior off to our label, which is exactly what we want. And we've had a number of patients get referred in to our Rigel OneCare who have been -- we've been able to secure reimbursement. But overall, I would say that has been a lot of work across a lot of customers resulting in continued wins on that front. So, I've really heard very little from customers about an issue with getting reimbursement for -- it's still early, but getting reimbursement for REZLIDHIA at this time. The team has just done an exceptional job. And I think the other thing that's going to happen here is, you do have the people who have touched this brand among KOLs. And have seen really remarkable results and really believe in this -- believe in olutasidenib. And you're seeing educational programs out there where clinicians are telling their peers about olutasidenib or REZLIDHIA. And we're going to, obviously, do more of that as we move forward. We haven't even established our peer to peer education yet. So we're working on that right now. So we've got a lot of work to do, but I am not -- I'm very confident about our ability to raise awareness. What we do know is it's not -- this isn't a fluke, this isn't a drug. I think it's a winner and it's just about getting the word out there to the people who see leukemia. I don't know [Multiple Speakers]

A diagnostic test up [Multiple Speakers]

I think that is that's not an issue at all, Gary. I mean, clinicians can order it from any number. They may have it in the institution. They may get it through a third party. I think more than that, it's the results of what they do with the results. Right? And so, clearly in the academic setting, they may be able to get results quicker. And so -- and it's more in the frontline. This is applicable in that, they may need to wait to treat. That's the issue. But a lot of clinicians don't do that, which is why we believe we have an opportunity. A lot of clinicians, particularly in the community, just move forward with the regimen, and then that leaves the relapsed/refractory setting open to choosing an IDH1 inhibitor if they're IDH1 positive. So, I think from a testing standpoint, we'll continue to talk about it. And I'm not saying there's a 100% that's going on out there right now. But it's high. It's a high rate of testing. And I think in the relapsed refractory setting, we'll just continue to reinforce that olutasidenib is a drug of choice in IDH1relapsed/refractory patients.

Okay, great. All that color was helpful. And then just on 289. So what will you be looking for in the overall Phase 1b data in low risk MDS patients? And when will that data be available? Are we going to see anything, any interim data that you're going to wait for all the cohorts? And what have you learned from Cohort 1 moving into Cohort 2? Maybe a little bit on that? And then at what point would you consider maybe licensing opportunities for this asset? Thank you.

On the last piece, maybe you handle the other. I start with the first dose cohort. First of all, at this stage of the life cycle of this compound, we look for safety. So as I told you, drug was well tolerated. There were really no ease of any interest. Now we're going to the next cohort, which -- the first cohort is a really low dose with a PK profile where we wouldn't really expect a big pharmacodynamic efficacy effect yet. Cohort 2 is approaching that range a little bit closer. So that will be the next three patients. And remember, all of these patients they all continue to be treated, and this is an open label study. So as data evolve, we look at Cohort 2, it takes 28 days to say it's safe or escalate to the next cohort, but then those patients also continue and I'd say, you now look at three months, you can get a rough handle of whether there's a major signal in there. It might be something in cohort 2, it might be something in cohort 3. And once we look at some of the safety and clinical activity endpoints like transfusion dependence, remission, oral response rates, things like that or hematologic improvement. We will expand those and add more patients. And then, I mean, you can think for yourself how many patients for how long do you want in order to discuss with a partner. Whether there's a signal there, I would say, probably several patients for three to six months depending on what the data looks. And then we would be in a pretty good position to say we have something in our hands.

So it's a -- I think in the lower dose group, we will have some data from those. Clearly, it might be more safety. As we get into the three or four dose groups, that's where more likely we'll see some signs of efficacy after three to six months for dosing. And that's really what partners are probably looking at. Not only is it safe, but also is there some signs that this is having a benefit in this area. So it's -- Gary, to answer your question. It's hard to say because we don't know what -- which of these we're going to need to expand at plus three and that enrollment. The enrollment is going well, so that's a good sign overall. And then when we decide to do that expansion in the higher dose -- one of the higher dose groups is not certain, we'll have to look at the data because it is a kind of a data driven design of the study. But we and the partners want to see the same -- potential partners want to see exactly the same thing. It's an exciting opportunity for this product. It's certainly a mechanism that is unique. It's well adapted this mechanism to treating an inflammatory condition such as low risk MDS. So we're excited about the prospect of this.

Okay, great. Thank you.

Thank you.

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

Hi, everybody. Good afternoon. Thanks for taking the question. So my first question, a little more macro. So I'd like to balance Dean's guidance for cost for 2023 of around $160 million if I heard you correctly. And your overall cost management and if we can infer that the commercial side of the business and the sales force is essentially right sized at this particular moment in time?

Yeah. Well, I think Dave can answer the rightsizing of that. And if there's any other comments on the guidance on the $160 million.

Yes. I think we are -- we have the people we need and the resources we need to drive both brands. Both across commercial teams from operations to market access to marketing and sales.

Yeah. And I think, Joe, we've talked for some time now about just the leverage and efficiency in the whole commercial organization, not just the sales team, but the whole field team. But I think you're seeing that in the -- in our ability to launch REZLIDHIA as we did and all the efforts that Raul described. And then we're seeing that leverage in that $160 million expected OpEx for 2023?

Yes. The $160 million is a good number for us. We had a restructuring last year. We let go of some of our earlier colleagues in earlier areas. We also took some real rigor too in terms of managing our cost so that it allows us to do what we need to do in a more focused manner. I think it was a good practice to do that. And I think look forward to continued growth in the top line, both from products and also from partnerships. And then kind of a flat to downward trending expense line relative to last year. So in the not too distant future to get to that breakeven point.

Okay. That's helpful. And then diving down a little further into the TAVALISSE franchise. I guess, first, I don't -- didn't see it on the slides or hear the number. I'm sorry if I missed it though, with regard to what the current refill rate is. And especially with this, a new number that you put out here, it's definitely at least the way we've been looking at it and the way you guys have been describing it, an early proxy hopefully for the post-COVID pounding the pavement as you guys have been describing it. So first, the refill rate and what are the competitive headwinds that you're seeing right now potentially as you go push into the earlier lines, as well as any sort of blocking and tackling you can talk about with Grifols and other territories as they look to expand into different geographies.

Dave, can you comment on the refill rate and post-COVID conditions?

Yeah. I mean, we -- Joe, we have not seen any change in our persistency. We have really focused on bringing new patients to the brand. And the team does continue to work with clinicians who are prescribing in their offices to ensure that they know things like bring the dose up to a 150 to make sure you get that efficacy, make sure you keep them on the product. We're doing all of that, but we haven't seen a change in persistency. Our growth is being because more new -- more patients are on the brand. And so, we just would like to keep it where it is, and we haven't seen any side of it changing. So I hope that helps.

Post COVID Dave, in terms of access and so on. And from a post COVID situation, yes, our team continues. I think this is part of those institutions. Sometimes it can be more difficult still to get into those institutions than the office buildings. But yeah, I think we're seeing more appointments, more opportunities to interact with clinicians and especially more live conferences. I think that's been a great opportunity for all of our field teams to be able to interact with customers. I think it all helps.

Thank you, guys.

Thank you, Joe.

Our next question comes from the line of Kalpit Patel with B. Riley. Please proceed with your question.

Good afternoon. This is [Andy Fleasure] (ph) on for Kalpit. Thank you for taking questions. Regarding the investigator sponsored trial in GvHD that you just published data on, how do you perceive [indiscernible] competitiveness of these results compared to other emerging agents such as [Sanofi's] (ph) [indiscernible]. And then as a follow-up, I know that you're still in considering development of this asset, is this something you think you would consider potentially developing in house or maybe through a partnership? Thank you.

I think [indiscernible] as well?

Yeah. I think I responded to a similar question really. If you if you compare the numbers of overall response rates in the fostamatinib paper with approved compounds, you said reservoir, for example, Sindex has some preliminary data out there. It looks like it's in certainly in the ballpark. The sample size is limited so we don't want to over interpret the numbers, but we feel they're competitive and we do sense also some substantial investigative enthusiasm around the data. So I would say, it's certainly -- it's certainly looks competitive at this point, but it's still also early in this patient population.

Dave, you what -- can you comment as well?

Yeah. I think what I wanted to say is, we have done some research since, obviously, the study came out and was published. And we've tested this, it's not a large end. But clinicians -- that's the thing about GvHD. Even though they are approved products and even if you look at the NCCN guidelines, what the NCCN encourages is clinical trial. And they really, while one of the agents has category one evidence. They don't have one preferred over the other. And so we look at this, if we if we do pursue an angle or this as a development area that this is a space that there is no clear kind of a leader in GvHD. And so you could, again, I encourage you to look at the NCCN guidelines for hematopoietic transplant. And you will see that in in GvHD, a number of agents are listed both approved and not approved.

Yeah. And to keep in mind, we are looking at this as an opportunity. We haven't made a decision to proceed with it at this point or -- and like I said earlier, we do have a limited amount of money to spend on new registrational trials for these two agents. And so we have to look at all of those opportunities and place our bets where we think gives us a greatest return and near term return specifically.

Thanks. I appreciate the additional color.

Thank you, Andy.

No further questions in the queue. I'd like to hand the call back to Mr. Rodriguez for closing remarks.

Thank you, operator. Thank you for your questions and your interest at Rigel. It was a tremendous year in 2022, both challenging, but I think a year that was our best year in terms of where we started the year and where we ended the year. I think we really transformed the company with growth in TAVALISSE, really getting substantial traction. And then addition of REZLIDHIA to this highly complementary product, positioning us well really for this year in 2023 and we're executing on that. And that's our commitment to you that we will continue to grow both of these products, look for other opportunities within these two assets, that are exciting that I think will again transform the company and continue to look externally. In terms of opportunities, there are quite a number of things there as well that we have interest in. So I think 2023 will be a great year for us. So thank you for your commitment to us. We aim to deliver.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.