Rigel Pharmaceuticals Inc (RIGL) 2016 Q2 法說會逐字稿

Welcome to Rigel Pharmaceuticals Earnings Conference Call for the second quarter of 2016.

All participants are in a listen-only mode. We will be facilitating a question-and-answer session at the end of today's conference.

(Operator Instructions)

I would like to remind you that this call is being recorded for replay purposes from Rigel website.

(Operator Instructions)

And now I will turn this conference over to our first speaker, Dolly Vance, who is Rigel's Executive Vice President, Corporate Affairs and General Counsel.

Hello, and welcome to our quarterly earnings conference call. The financial press release for the second quarter of 2016 was issued a short while ago and can be viewed in the news section of our investor relations page on our website, www.rigel.com.

As a reminder, during today's call we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. The description of these risks can be found in our most recent quarterly report in Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

At this time, I would like to turn this call over to our CEO, Raul Rodriguez.

Good afternoon. In addition to myself and Dolly, Ryan Maynard, our CFO, and Anne-Marie Duliege, our Chief Medical Officer, are participating on this call. Our point for this call is to provide an update on Rigel's fostamatinib program in immune thrombocytopenia, or ITP. More specifically, we will discuss why we think that fostamatinib is a compelling profit opportunity for Rigel and what we're doing to prepare for our US launch.

The topline results for the first of the two identical Phase 3 studies are expected later this month. When this data comes in, we will issue a press release and host a webcast. The second study is following approximately two to three months later. So we will announce those results in October-November. We expect to submit the NDA package to the FDA by the end of the first quarter of 2017.

Our goal is to transform Rigel into a profitable biotech company with a focused, specialized commercial organization with an initial focus on patients with autoimmune hemolytic diseases and their healthcare providers. During the last few months, we have spoken to patients, physicians, payers and other healthcare providers about their experiences with ITP and with currently available treatments. Universally, there is agreement that there is a need for new treatment options. There is a great deal of interest in the potential of fostamatinib with its unique mechanism of action, which targets the underlying disease process; the destruction of platelets.

I will share more about our thoughts on fostamatinib in ITP in a few minutes. But first, I'd like to ask Ryan to report on our second quarter financial results. Ryan?

Thank you, Raul. For the second quarter of 2016, we reported a net loss of $13.5 million or $0.15 per share compared to a net loss of $13.9 million or $0.16 per share in the second quarter of 2015.

Revenues of $8.6 million this quarter were comprised of $4.8 million from the amortization of a $30 million upfront payment we received from Bristol-Myers Squibb, as well as $3.7 million that we received this quarter related to our license agreement with BerGenBio. We reported total cost and expenses of $22.2 million in this quarter compared to $19.2 million in the second quarter of last year.

The increase in costs this quarter were primarily due to the increase in research and development cost related to fostamatinib as we complete the Phase 3 ITP program and continue our Phase 2 trials in autoimmune hemolytic anemia and IgA nephropathy.

As of June 30, 2016, we had cash and investments of $94.9 million, which we expect to be sufficient to fund our operations into the third quarter of 2017. Therefore, we can project that we'll have about a year of cash after both of the Phase 3 data announcements. This will put us in a good position as we evaluate financing opportunities after we have delivered the Phase 3 results for both pivotal trials.

At this time, I'd like to turn the call over to Anne-Marie Duliege, Rigel's Chief Medical Officer.

Thank you, Ryan. As Raul said, we have been learning more about the patient perspective on living with ITP, as well as understanding the decisions that must be made by physicians when caring for these patients.

The medical specialists who treat patients with ITP are hematologists or hemato-oncologists. They are the same group who treats autoimmune hemolytic anemia, another indication we're currently studying for fostamatinib.

These physicians know that treating chronic persistent ITP is challenging. The most severe patient may fail to respond to some or even all of the available therapies. The success of any patient's response to therapy is not always predictable. Some patients may be unaware of significant drops in their platelet count. And during these episodes of significant drops in platelet counts, patients are at risk of bleeding either due to treatment failure or treatment interruptions. The disease places a significant burden on the patient's quality of life, including severe fatigue. The existing therapies have limitations including lack of efficacy in some patients, or they may be inconvenient to use making patients' compliance a challenge in the long-term.

As a reminder, the platelet count in a normal healthy adult is generally above 150,000 platelets per microliter. But platelets with ITP can have platelet counts fall below 30,000, which is a generally accepted threshold for action. People whose platelet counts fall below 30,000 are considered at risk for spontaneous or trauma-induced hemorrhage. This level was used as a threshold for entry in our Phase 3 ITP program.

As you know, there are two identical clinical studies for Rigel's fostamatinib Phase 3 study program. They're designed to provide pivotal result that, if positive, will be the basis for an NDA submission. Each study enrolled approximately 75 adult patients with persistent or chronic ITP who have failed at least one prior treatment and have platelet counts below 30,000 at baseline. The subjects were randomized in a 2:1 ratio receiving fostamatinib or matching placebo to be taken orally twice a day for a period of 24 weeks.

Subjects were asked to return to the clinic regularly during this study for blood draws to monitor platelet levels. The primary endpoint for both studies is the achievement of a stable platelet count equal to or greater than 50,000 over several blood draws performed from midpoint to end of the study. The secondary endpoint include at least 50,000 platelet counts at midpoint and at final visit. Increases in platelet counts of at least 20,000 above baseline in those patients with severe thrombocytopenia defined as less than 15,000 at baseline.

In the next few weeks, we will receive the results of the first study, including the primary endpoint and the subset analysis that may provide qualitative insights into which subgroup of ITP patients could be expected to benefit most from fostamatinib therapy. We remain confident that fostamatinib will obtain statistical significance versus placebo, in which case we intend to prepare and submit an NDA dossier supporting the utility of fostamatinib as a new treatment modality.

I look forward to sharing more information with you soon. Now I will turn the call back to Raul.

Thank you, Anne-Marie. I'd like to spend a few minutes telling you why we think fostamatinib may be a very useful treatment in ITP. Fostamatinib is a unique oral SYK inhibitor developed by Rigel's R&D efforts. SYK kinase is a key player in the immune process that leads to platelet destruction in ITP. As such, fostamatinib may address the underlying disease process, the autoimmune destruction of platelets in the ITP.

Fostamatinib has a well-defined safety profile based on more than 5,000 patient use of clinical experience across multiple autoimmune indications. It has a manageable safety profile, which may make it suitable for long-term maintenance therapy in chronic ITP.

ITP is a highly heterogeneous disease, and as Anne-Marie said, there is little certainty which treatment will work with which patients. In Rigel's Phase 2 study in ITP, fostamatinib was shown to work in certain patients where other treatments had previously failed, including patients who had failed steroids, rituximab, TIPO agents and splenectomy.

The Phase 2 study also demonstrated two important things about fostamatinib; the ability to attain a rapid rise in platelets and a sustained response in platelet counts in a subset of ITP patients. The rapid response provides early feedback as to whether fostamatinib may be a viable treatment for that patient's ITP.

For more than seven years now, two patients from that Phase 2 study have successfully maintained attractive platelet counts by taking fostamatinib daily. We hope to add to that experience with our long-term extension study that is part of the FIT Phase 3 program. Fostamatinib is also a convenient oral formulation, which may help patients adhere to the treatment regimen.

We hope that by helping patients maintain a long term regimen, we potentially create a sustained management of this disease. If the Phase 3 results confirm what we think about fostamatinib, fostamatinib may likely be the treatment of choice for refractory ITP patients, since they have very few or very limited options.

We think it's an attractive medical and commercial opportunity for Rigel. With that in mind, we are working on the best approach to building a commercial enterprise which will launch this product for ITP, and subsequently, autoimmune hemolytic anemia. Approximately 900 Hem and HemOncs in the US treats most of the patients suffering from ITP.

We believe we can build our own highly focused marketing and sales organization to address this audience. We estimate building a sales force of about 30 individuals as well as additional management and marketing staff. This organization will be focused exclusively on fostamatinib and ITP at launch, and will provide the most comprehensive information on this product and the management of this disease.

In addition, we will make significant efforts to engage with patients directly to help them manage their disease and to understand their treatment options. We will also work with patient support groups to further this engagement.

We believe the fostamatinib opportunity is not limited to ITP. Its mechanism lends itself to addressing other autoimmune diseases. We are conducting a proof of concept Phase 2 study in autoimmune hemolytic anemia with fostamatinib. Autoimmune hemolytic anemia is also a rare serious blood disorder where the immune system produces antibodies that results in the destruction of the body's own red blood cells. These patients are anemic and have symptoms such as fatigue, rapid heartbeat or enlarged spleen. Currently there are no treatment options approves for autoimmune hemolytic anemia, so we believe that there is a major medical need in this area. We expect results from our Phase 2 study in early 2017.

A further point; we believe that autoimmune hemolytic anemia is highly synergistic with ITP in that the same physician specialist, Hemes and HemOncs, who treat ITP could also treat patients with autoimmune hemolytic anemia.

In addition, we are conducting a Phase 2 study of fostamatinib in IgA nephropathy. IgA nephropathy is also an autoimmune disease. It severely affects the functioning of the kidneys, which many of these patients eventually requiring dialysis or kidney transplants. We are conducting a placebo-controlled two sequential dose cohort study looking at proteinuria as the primary endpoint.

We expect results from the first dose, the 100 milligram BID dose from this study by year end. We expect a signal that we are on the right track with this readout. But the more robust readout will likely come from the second cohort, the 150 milligram BID dose group which we are currently enrolling.

Before closing, I like to say a few words about our financials, partnerships, and our next clinical candidate. As Ryan mentioned, our financial position remains strong. Our current cash position is expected to carry us for 12 months after the Phase 3 results are reported. Our current partnerships are making excellent progress, and we look forward to updating you on each of these as they advance.

For fostamatinib outside of the US, we will be seeking collaboration partners with significant presence in Europe or Asia with capabilities to capitalize on ITP, autoimmune hemolytic anemia, and IgA nephropathy opportunities. We are also seeking partners for some of our earlier pre-clinical stage projects.

And finally, we expect our next clinical candidate to come from our IRAK program. We are excited about this candidate because, like fostamatinib, it may offer multiple therapeutic opportunities in other immunology and possibly oncology.

I will close by saying we are clear about our focus in the coming months. With data from the Phase 3 ITP program, we will first prepare the NDA submission, Rigel's first by the way, for fostamatinib in ITP, and manage the subsequent regulatory process. Second, we will build a commercial organization for the potential launch of fostamatinib in the US in ITP. And third, we will grow the pipeline beyond fostamatinib in ITP; that is fostamatinib in autoimmune hemolytic anemia, in IgA nephropathy in our next clinical candidate from our IRAK program.

Now let's open the call up for your questions.

(Operator Instructions) Eun Yang with Jefferies.

For fostamatinib, the first of phase 3 study; how many patients from Phase 1 actually have enrolled in the open-label extension study? And those who chose not to involve in the extension, what was the reason?

Just to clarify, are you asking how many patients?

Yes; 75 patients in first phase 3, I wonder how many patients have been enrolled in the open-label study.

Yes, so a subset of these patients indeed have enrolled in the follow up study. We have not provided these numbers publicly, but we do monitor all their responses well. And as you know, in the long term extension studies, all of these patients receive fostamatinib. It's an open-label study.

(Multiple Speakers)

We'll disclose those numbers later on when we have the results from the study.

Then how about the reasons why they will not go over into your clinical extension studies? What were the reasons for the patients who chose not to?

We didn't take a survey of them to ask that specific question, but we do offer them to all patients. Some patients clearly have other things that they want to do with their lives than come in every other week, so I think that must be a possibility. But I think -- we do have a substantial number in the long term extension study.

It's clearly the majority of patients that have moved into the phase 2 extension or in the long-term extension program.

And then hemolytic anemia. I think initially you're expecting the Stage 1 data by end of this year. There is a slight delay. Can you give us how many patients have enrolled out of the 2017 that you are targeting in Stage 1?

We haven't disclosed those numbers. We will do so at the end of the year so you have some sense of that. But what we would like to do is - because that is an open-label study, we don't want to piece meal information from that study. We would like to make sure we have enough patients in that open label study and have those patients going through their treatment so we can say something definitive about that indication. So, we anticipate that being early of next year.

And my last question is IgA Nephropathy. Initially I think the first quarter data was expected in the first quarter, but I don't think you mentioned how and when we might expect the data. So I just want to make sure they're still on track for fourth quarter.

We are expecting the data for the first cohort, the 100 milligram BID dose group, by the end of the year.

Josh Schimmer with Piper Jaffray.

Thinking ahead to the auto-immune hemolytic anemia, I was wondering if you have had any preliminary discussions with the FDA or some thoughts as to what registration program might look like and whether you would need placebo-controlled trial for hemoglobin-based endpoints. I think the FDA tends to be receptive to open labels studies, so curious about the path forward there.

We have not had the discussion with the FDA in terms of what a pivotal program would look like for auto-immune hemolytic anemia. And we are really looking for this proof of concept trial to provide the basis for that discussion next year. So we will have that discussion and we will propose, hopefully, that a very expedited way forward with them. And given the tremendous medical need in that area, hopefully they are willing to be agreeable about that.

Anupam Rama with JP Morgan.

Hi, this is [Uko] on the call for Anupam. Just one question; in terms of baseline characteristics, what is you expectation for patient population enrolled in a phase 3, those that have failed TIPO agents, Rituxans, steroids, and have had, like, splenectomy? And also how do you think this would impact the label?

We haven't yet disclosed nor have we looked entirely at the baseline characteristics of the patient population, but we will provide this information when we disclose the results. Remember, the entry criteria our patients were failed at least one regimen and have no platelet count, obviously.

Do Kim from BMO Capital Markets.

My first question is, I was wondering if you have started discussions with insurance providers or have gotten any feedback on the reimbursement environment for ITP? Also if you could describe the type of patient mix you are expecting in terms of the distribution between Medicare and Medicaid and private payers?

We have not had discussions with insurance providers as yet. It's a little premature. We are going to get the data in this month and the next couple of months, and then we will be in a position then to do more market research in terms of reimbursement questions, pricing, etcetera. Then after that I think some time, probably more like late next year might be the time to do that. And we will have those discussions with them.

I think they will be very useful discussions because they are very important and clearly the reimbursement environment is a continual change. So we will be prepared for that but I think it is a little early as yet to have done that beyond some of the market research we have done to basically confirm that this is an area that we are able to price with some degree of flexibility.

Your second question in terms of the profile of the patients we expect to have in this trial. As Anne-Marie said, they needed to have failed just one prior therapy. Almost always that is at least a steroid. And we expect patients who have failed other things as well within the trial for sure, but we don't know exactly that until we unblind the data later this month. But we will provide the background when we release the results later this month.

Do you think you will have an opportunity to request priority review when you file your NDA? And do you think you will be dependent on the degree of benefit that you will see in the phase 3 study?

No. The answer is no to both. We're now in the situation of priority review, and the FDA will review the totality of the data somewhat independently of how significant the effect is.

(Operator Instructions) Eun Yang with Jefferies.

So, you have about $15 million from the offering agreement. Are you planning to exercise in the coming months?

You're correct; we do have $15 million left on the ATM we have with Cantor. And as you note, we did draw on that last quarter. We haven't used it in July or do we probably intend to use before the Phase 3 data. And that's pretty much the focus and the guidance we can give.

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

Thank you. And I appreciate your questions. We appreciate your continued interest in Rigel and what we are doing here and we look forward to keeping you up to date on our progress and, obviously, we will see you at the end of this month.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect.