Greetings, and welcome to Rigel Pharmaceuticals' Financial Conference Call for the First Quarter 2024. At this time, all participants are in 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, Ray Furey, Rigel's Executive Vice President, General Counsel and Corporate Secretary. Thank you, Mr. Furey, you may now begin.

Thank you. Welcome to our first quarter 2024 financial results and business update conference call. The financial press release for the first quarter of 2024 was issued a short while ago and can be viewed, along with the slides for this presentation, in the News & Events section of our Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainty 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, 2023 and subsequent filings with the SEC, including our quarter 1 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 Chief Executive Officer, Raul Rodriguez. Raul?

Thank you, Ray, and thank you, everyone, for joining today. With me today are Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Additionally, I'd like to introduce Lisa Rojkjaer, our new Chief Medical Officer. Lisa joined us in March and brings over 20 years of clinical development, regulatory and medical affairs experience to Rigel. We are thrilled to have her on the team. Now, beginning on Slide 4, we continue to grow our hematology and oncology business in the first quarter of the year, positioning us well for the remainder of 2024 and beyond. We started 2024 with strong commercial demand for our 2 marketed products, TAVALISSE in ITP and REZLIDHIA in mutant IDH1 relapsed or refractory AML with demand bottles for each of these 2 products reaching a new quarterly high since their launch. This is particularly impressive since the first quarter of the year is typically one where our industry faces headwinds due to insurance co-pays and resets and the Medicare donut hole. The decline in net product sales from the prior quarter is primarily due to a decrease in TAVALISSE bottles remaining in our distribution channel or inventory. In addition, we are also expanding our commercial product portfolio with the recent acquisition of GAVRETO, an FDA-approved therapy for the treatment of RET fusion-positive metastatic non-small cell lung cancer and advanced or metastatic thyroid cancer. GAVRETO offers a valuable targeted treatment option for non-small cell lung cancer patients with RET fusion-positive disease. GAVRETO will provide us with top line growth as well as leverage our existing commercial and medical affairs infrastructure. We remain on track to complete the transition of this asset in July of this year. In parallel, we are advancing our development programs, including the evaluation of REZLIDHIA in a broad…

Thank you, Raul. First, on to growing demand of TAVALISSE in ITP, I have a few brief comments on our continued momentum with TAVALISSE in Q1. On Slide 7, 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 8, I'm happy to report that, in Q1, TAVALISSE achieved its sixth consecutive quarterly record high for bottles shipped to patients and clinics. Over those 6 quarters, we have increased TAVALISSE quarterly demand volume by 23% and Q1 2024 demand grew 10% over the same period last year. We are pleased that our team has continued to produce double-digit year-over-year growth starting our sixth full year after approval. Total bottles sold in Q1 were 290 bottles less than our bottles shipped to patients and clinics as our distribution channel reduced inventory. Dean will discuss this later in our presentation. This resulted in TAVALISSE net sales of $21.1 million for Q1. On Slide 9, the driver of our continued demand growth with TAVALISSE is our new patient starts. The graph on the left shows that, since 2021, after we emerged from the pandemic, our new patient starts have continued to improve each year. In Q1, we achieved the highest first quarter new patient starts since launch. We generated this new patient start growth through continued focus on expanding the breadth and depth of prescribers, ensuring strong coverage and reimbursement with greater than 95% commercial coverage, and constantly reinforcing the clinical efficacy and safety of TAVALISSE with our customers. I want to thank our entire team for their continued focus and execution to impact more cITP patients with TAVALISSE. We are very pleased with the consistent growth in new patient starts and how…

Thank you, Dave, and good afternoon, everyone. I'm excited to have joined Rigel just a couple of months ago at an important inflection point for the company as we expand our hematology and oncology portfolio. First, I'd like to begin by underscoring how precision medicine approaches to lung cancer are positively impacting patient outcomes, including those patients with RET fusions and why, from the clinical perspective, we are excited about GAVRETO. On Slide 21, RET fusions are present in approximately 2% of all non-small cell lung cancers, representing approximately 3,000 new patients per year in the U.S. and then around 20% of papillary thyroid cancers for around 1,000 new cases per year. Testing for RET fusions is an essential part of the pretreatment evaluation of non-small cell lung cancer. In fact, clinical practice guidelines recommend the use of targeted therapies as first-line treatment for eligible patients with metastatic non-small cell lung cancer harboring actionable genetic variants such as RET fusions. Prior to the advent of RET-targeted therapy, patients with advanced RET fusion-positive non-small cell lung cancer received platinum-based chemotherapy regimens with overall response rates in the 50% range and median progression-free survival of 6 to 8 months. The use of nonselective multi-kinase inhibitors with anti-RET activity has shown only modest efficacy and high rates of treatment-related toxicity. Because RET fusion-positive non-small cell lung cancers exhibit low PD-L1 expression, immune checkpoint inhibitors have demonstrated only limited efficacy here with overall response rates less than 10% and progression-free survival in the range of 2 to 3 months. GAVRETO is an oral, highly potent, selective RET inhibitor with once-daily dosing that is FDA-approved for RET fusion-positive non-small cell lung cancer or thyroid cancer as first-line or subsequent-line therapy. On the next slide, I will review updated clinical data from the Phase I/II ARROW…

Thank you, Lisa. I'm on Slide 34. For the first quarter of 2024, we shipped 2,193 bottles of TAVALISSE to our specialty distributors, resulting in $21.1 million in net product sales. 2,483 bottles of TAVALISSE were shipped to patients and clinics, while 290 bottles decreased the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2024, we shipped 390 bottles of REZLIDHIA our specialty distributors, resulting in $4.9 million in net product sales. 326 bottles of REZLIDHIA were shipped to patients and clinics, while 64 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales in TAVALISSE of $21.1 million in the first quarter of 2024, a 5% decrease compared to the same period in 2023, resulting from the decrease in bottles remaining in our distribution channels at the end of the quarter. I will describe this in a bit more detail on the next slide. We reported net product sales from REZLIDHIA of $4.9 million in the first quarter of 2024 compared to $1.5 million in the same period in 2023. As a reminder, REZLIDHIA was launched in the United States in December of 2022. Our net product sales from TAVALISSE and REZLIDHIA were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $12.4 million. For the first quarter of 2024, our gross-to-net adjustment for TAVALISSE and REZLIDHIA was approximately 34% and 24% of gross product sales, respectively. Before we move on to net product sales, let me review our expectations for the second quarter of 2024. We're pleased with the strength of our business and expect to see continued growth in bottles shipped to patients and clinics for both TAVALISSE and REZLIDHIA. We expect our…

Thank you, Dean. Looking ahead to the remainder of 2024, we are focused on continuing to grow sales of REZLIDHIA and TAVALISSE while adding GAVRETO to our commercial operations in July of this year. With the help of our strategic collaborators, we look forward to initiating additional olutasidenib clinical studies, and we will evaluate other opportunities for expanding the development of our products. We'll also enroll and generate preliminary data from our Phase Ib clinical trial of R289 in lower-risk MDS. And lastly, we will continue -- we will actively pursue additional in-licensing deals and acquisitions similar to our strategy with REZLIDHIA and GAVRETO. And as we execute on our strategy to grow our hematology and oncology business, we remain committed to working towards financial breakeven and making Rigel a self-sustaining company. With that, I thank you for your interest in our progress in the first quarter. And now we will open the call to your questions. Operator?

Thank you. [Operator Instructions] One moment please for the first question. And our first question is from the line of Yigal Nochomovitz with Citigroup.

On the cash guidance, you're burning about $8 million a quarter. You mentioned getting to breakeven and also investing in in-licensing activities. Could you just help us walk through the path to getting to breakeven as far as the existing burn and the revenue picture as well as the investment in the portfolio?

Thanks, Yigal. I'll ask Dean to comment on that, and I'll add on to that.

Sure. So as it relates to the current quarter and from a cash burn perspective, I'd encourage you to look back a couple of quarters. And then, as some general comments as we look forward, we haven't given top line guidance. In our last quarterly call in March, we did describe our expectations for 2024 OpEx. So that's available. With respect to Q1, I would note a couple of things. One is the dynamic of the net sales that I described. So we did have the inventory reduction, which impacted net sales, also impacted our cash flows as a result of that. Incrementally, I would note that we paid $2 million, and this is in our Q. We paid $2 million on the MD Anderson collaboration. So from a cash flow perspective, there's a variety of elements going into that burn that you described. With respect to our future point of financial breakeven, and that continues to be a focus of the business, we do expect to see revenues increase. We look to launch GAVRETO and start to recognize revenues in the third quarter. With that, we've described that we believe that there's less than $10 million of SG&A and clinical spend with respect to GAVRETO. So we believe that that will become rapidly accretive. All that said, we believe we're on a path to financial breakeven. We just haven't provided the guidance to say exactly when that will occur.

Thank you, Dean.

and then switching to a clinical science question, it's interesting regarding the brain activity for the GAVRETO as well as your interest in glioma for olutasidenib. I'm just curious. Could you comment on the -- if you have details on the brain plasma ratio, whether you have information on that for both of those drugs? Just curious how brain-penetrant are they, each?

Yes. Thank you for the question. I think it's very helpful. Clearly, they cross the blood-brain barrier, which is critical, and we've been able to show in clinical studies for GAVRETO, as Lisa discussed, as well as we also know that olutasidenib also crosses the BBB. And so we're excited about the opportunity of trying both of those molecules in this area, and obviously, generating the data on GAVRETO already based on the ARROW study, which is very helpful. Anything else, Lisa?

Yes. I would say that the actual ratios that you're asking about, though, aren't known. That hasn't been determined.

But we know that there's a therapeutic effect of both...

Absolutely.

...in relevant studies, one already with the ARROW study in the brain meds. And then we did publish, and Lisa referenced this, on [indiscernible], a smaller study that showed a benefit in patients that were highly refractory.

Our next question is from the line of Kristen Kluska with Cantor Fitzgerald.

Maybe to follow up on the last one and ask in a different way, can you talk about how you're going to balance the current pipeline where each of these assets in itself could potentially be evaluated in other indications? And then also the continued appetite for more of these bolt-on deals which fit your pipeline? And maybe another way to ask it is, like, where do you see the company maybe in 2 years from now?

Let me take a crack at that, if I may. Thank you for the question, Kris. I appreciate that. So we're excited to have TAVALISSE, and TAVALISSE continues to grow very nicely. And the demand bottles were, again, a new quarterly high, and that's really the fundamental basis of that excitement in terms of the growth of the product. Inventories go up and down on a quarterly basis. They were huge last quarter -- I mean, in Q4 and even in Q3 of last year in the other way. And REZLIDHIA, we're excited because of -- the launch of the product is really just underway in many ways, and it's still being introduced to clinicians. And we think there's good opportunity there as well. And with the addition of GAVRETO, again, the oral targeted therapy, having 3 products in the bag where our sales organizations, institutional and community, can make tremendous headway with all of those. So we look for the top line to continue to grow very nicely. We also can look for the OpEx to be growing, but relatively more -- much more modestly than the top line. That was 2 things. And we gave some guidance, as Dean said, last quarter in terms of our view of the year. That still holds. And so put those together, we see us being able to generate sufficient resources to be able to execute on clinical trials ourselves. And we're looking at various opportunities, particularly with [Eluna], in areas like AML and glioma, which are very exciting in terms of the things that we could do ourselves. We're delighted to have Lisa with us now and her experience in this very area to be able to help us evaluate, design and then launch studies in this area in future years…

[Operator Instructions] Our next question is from the line of Farzin Haque with Jefferies.

So for TAVALISSE, based on the distribution channels inventory in 1Q, how should we think about this for the rest of the year? And how variable is it? Like, you just showed the numbers for the 4Q levels, but is it really variable across quarters?

Yes, I'll ask Dave to comment on that, and then we can point you to another place you can look at the variability of that.

Yes. I understand your question as kind of the variability of inventory through the quarters. And I will say Q1 was a bit unique in terms of -- again, that's why Dean explained the drawdown of inventory of 290 bottles. We do believe that we have inventory because it's sitting in either our distributors, which distribute to our direct accounts or SPs, which distribute to patients. And they purchase from us. Then they sell out to those 2 portions of the network and what's left is the inventory. And so they did purchase a little bit more in Q4. But I think the key is that, in Q1, that kind of went down. But as Dean kind of demonstrated in his example, even if we don't build any inventory this quarter and we stay flat on demand, we're expecting double-digit growth versus last year in terms of net sales. So we wouldn't expect continued significant variability, but this does happen, particularly with Q4 around the holidays moving into Q1. And also, as Dean mentioned, you start out the quarter with usually a little bit lower demand. And I think that was reflected in the purchases that happened early in the quarter. And then we ended the quarter with very high demand, which is why we increased our demand quarter-over-quarter. So I think there's a number of variables that contributed to this drawdown, in particular this quarter, but we don't see any significant variability up or down as we move forward. And I would invite Raul to provide any more clarity on that, but that's my view.

Yes, I think we have seen, in some cases, highly larger numbers. In fact, this drawdown wasn't the largest. We've had a larger one in early '21, for example. So it does vary substantially. I think what is consistent, though, in the longer term, the inventory levels grow as the business grows. And that is consistent. It's not in any specific quarter or any one quarter, and we see oscillations in both sides. It's just the overall trajectory is a growth trajectory when the business is growing. TAVALISSE is growing. I could share some prior quarter numbers as well, if you wish. In our corporate deck, we include a nice little table that has the inventory changes on a quarterly basis, going back to as early as 2021.

Helpful. And then for REZLIDHIA, you had a nice uptake. So wondering what proportion of the sales were from new patients versus the existing patients. And then what needs to be done to better compete with the [indiscernible] in de novo patients?

Sure. Actually, if you look at total demand bottles, the percentages I showed you is pretty still strongly toward institutions. And similarly, our demand bottles are strongly from patients who previously started. And that's because, as you know, you only have a max 3 months to get business from the patients who started in Q1. And actually, we did have a number of patient starts in March. So this would have only had a small number of bottles. So I don't have the exact percentage, but it's around the percentage of, I'd say, around 20-or-so percent of the bottles were in new patients in Q1. And so we think that's an excellent sign, obviously, that new patients -- more new patients started in Q1. That clearly drove the sales. But I think what you're also seeing is that carryover growing from last year. And then secondly, in terms of -- I wouldn't say we're competing. I would just say that we are really trying to differentiate olutasidenib in mutant IDH1 relapsed/refractory disease. We feel we have a very long duration of response. That's getting out there. And in particular, when you look at the subset of patients who've had previous venetoclax, we believe we have a great story to tell there in terms of response rates and duration of response. So at the end of the day, those are the pieces -- when you're able to talk about the duration of response that we have in the relapsed/refractory setting and then talk about that in a venetoclax-treated population, you have a consistent response rate and duration. That becomes very compelling to clinicians because, I think, as you're probably aware, venetoclax continues to grow use, particularly in first-line AML.

Thank you, Farzin. Any other questions?

No.

Okay. Thank you.

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

Thank you. In closing, I'd like to thank everyone on this call for your continued interest in Rigel and our progress. And as always, I'd like to thank our employees for their commitment to improving the lives of patients because every single day does count. We look forward to updating you on our progress in future calls. And with that, have a great day.

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