Rigel Pharmaceuticals Inc (RIGL) 2021 Q1 法說會逐字稿

Greetings and welcome to Rigel pharmaceuticals financial conference call for the first quarter of 2021. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce our first speaker Dolly Vance, who's Rigel's Executive Vice President Corporate Affairs and General Counsel. Thank you. Ms. Vance, you may begin.

Welcome to our first quarter 2021 financial results in business update conference call. The financial press release for the first quarter was issued a short while ago and can be viewed along with the company Slides for this presentation in the news and events section of our investor relations page on our website at www.rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development.

These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10-K for the year ended December 31st, 2020, and subsequent filings with the SEC, including our Q1 quarterly report on Form 10-Q on file with SEC. Any forward-looking statements are made only as of today's date and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

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

Thank you, Dolly, and thank you to everyone for joining us on our first quarter 2021 conference call. Also with me today are Wolfgang Dummer, our Chief Medical Officer; Dave Santos, our Chief Commercial Officer; and Dean Schorno, our CFO.

Beginning on Slide 5, the first quarter was a quarter of progress for rides across several of our key value drivers, as you see on this page. We saw both continued challenges and opportunities created by the COVID-19 pandemic, and we'll discuss this during our call. In ITP, we continue to see year-over-year growth in bottles shipped to patients through clinics, but it declined in comparison to a strong Q4 in 2020. This is consistent to what we have seen with quite the competitors in the TPO class, all of which had sales decline in Q1 relative to Q4.

In addition, and as Dean and Dave will describe in detail, decreases in bottles remaining in our distribution channels for inventory significantly impacted our sales during the quarter. They will also describe how we are increasing our promotional efforts to drive growth in the back half of the year, as the effect of vaccines allow increased access to physicians and new opportunities for physicians and patients to switch therapies.

We also made important progress in our warm autoimmune hemolytic anemia. Wolfgang describe the recent increase in enrollment. We now have 72 of our targeted 90 patients enrolled, only 18 to go. And we look forward to further acceleration as vaccine availability improves. This enrollment progress puts us closer to our goal to be the first approved product for the treatment of warm autoimmune hemolytic anemia and therefore to capture a substantial share of this very significant market opportunity. Our comprehensive COVID clinical program is advancing on multiple fronts. And as we described in more detail -- in some detail a couple of weeks ago, we reported positive top line results from our Phase II clinical trial conducted in collaboration with the NIH and Inova.

Wolfgang will provide a brief overview of these exciting and potentially impactful results along with an update on our other COVID trials. And importantly, he will cover our next steps in this program. Following that, Dave will highlight our view of this substantial opportunity for fostamatinib in COVID-19 patients, should appropriate regulatory approvals be obtained. And finally, we are excited to provide updates on our IRAK1/4 program in both Hem/Onc and immune diseases, along with the progress of our recent RIP1 collaboration with Lilly. Today, we'll start with Wolfgang's updates on our clinical programs before we transition to Dave to discuss the commercial opportunities available to Rigel. Wolfgang?

Thank you, Raul. Let me start on Slide 7 by reminding you why autoimmune hemolytic anemia is such an exciting opportunity for Rigel. We estimate there are about 10,000 to 13,000 candidates patients with this condition in the U.S. alone. With no FDA-approved therapies, a significant unmet medical need remains and the opportunity is large. fostamatinib is in the advanced stages of Phase III development and would be first to market in this indication. The product has FDA Fast Track as well as orphan drug designation. AIHA does have many synergies with ITP, including the customer infrastructure that's already in place because the physicians treating ITP or the same physicians who will treat AIHA. Therefore, a lot of familiarity with fostamatinib already exists and will be there right at launch.

Slide 8 gives you a brief update on our Phase III study. Despite the COVID-19 pandemic still ongoing, we continued to steadily randomized patients into the trial. As Raul mentioned, as of today, we have 72 patients randomized, 46 of those patients have also reached week 24 and a hundred percent of those who have rolled over into the extension study as well. Due to the pandemic conditions, we can't accurately project when we will complete enrollment, but we remain confident that we are very well positioned to keep or even expand the lead to become the first drug approved in this indication.

Slide 10 is a brief status update on our other programs starting with IRAK. We continue to plan for clinical trial in the Hem/Onc space, currently targeting low-risk MDS as the lead indication. We have initiated discussions with the FDA and recently submitted a pre-IND package. We've also initiated collaboration discussions with academic partners in this indication. We will also evaluate and discuss rare immune diseases with a strong scientific rationale for IRAK inhibition, such as palmoplantar pustulosis or hidradenitis suppurativa and obtain FDA feedback as well. Finally, we are well into the collaboration with Lilly on our RIP inhibitor R552 and are planning to initiate a Phase II study this year.

Moving to Slide 12. We've shown you a lot of preclinical and experimental data in the last few earnings call, but now we are extremely excited that this has translated into very positive clinical data in actual human patients hospitalized with COVID-19. You saw the press release informing you of the very positive outcomes from the Phase II NIH trial, and I will get to that in a bit. As you know, fostamatinib is a commercially available product under the brand name TAVALISSE. It has a well-established safety database of approximately 4,800 patients and could be rapidly repurposed as a treatment for COVID-19 after the proper regulatory approvals. fostamatinib is now in 3 clinical trials in COVID-19. We are currently enrolling our Rigel-sponsored Phase III trial with financial support from the Department of Defense and we have 2 investigator trials, one of which, the NIH study, just generated terrific data.

Slide 13, just a reminder to show you that seeking inhibition with fostamatinib involves multiple pathways that are relevant for COVID-19. It is not just a one cytokine inhibitor. It is quite differentiated. fostamatinib not only regulate several cytokines, it can also improve existing NETosis as well as endothelial cell activation and thereby reduces risks of small and large blood vessel clotting. This hypercoagulability leads to multiple organ damage, kidney failure, respiratory distress syndrome, and ultimately death.

Slide 14 shows you the various patient populations covered with our clinical program, the recent data from NIH included patients with a 5, 6 or 7 rating on the widely used 8 point ordinal scale, meaning the most severe patients that has particular interest because these patients are presumably the hardest to treat. The Imperial College London study in our Phase III clinical trial will include milder patients with scores in the 3, 4 and 5 range, and we'll investigate the progression of mild patients to severe disease.

Slide 15 depicts the NIH study design, approximately 60 patients were to be randomized one-to-one to either fostamatinib plus standard of care or placebo plus standard of care. The primary endpoint is safety, is measured by the incidents of serious adverse events. In addition, a number of clinical efficacy end points typically included in these COVID-19 studies in January considered meaningful were also analyzed. Moreover, NIH has incorporated very powerful translational research tools that can generate valuable mechanistic data on fostamatinib in COVID-19. For example, they have included numerous cytokine analyses, C-reactive protein and other inflammatory biomarkers and mitosis essay.

Slide 16, before I move on to the NIH study, I need to tell you that I will not be providing more detailed numbers beyond what was in the recent press release and presentation as to not jeopardize in any way, the publication of the entire dataset in the best possible medical journal. Let me summarize for you the baseline characteristics from the trial. This is based on real data now.

The baseline characteristics and demographics were generally very well balanced between treatment groups, which is obviously very important. There were similar numbers of patients in both groups with underlying conditions. There was good and balanced representation of patients with a 5 or 6 on the ordinal scale. And then importantly, there were also 4 patients in the trial who were on mechanical ventilation, 2 in the fostamatinib arm and 2 in the standard-of-care arm. So these are the most severe patients with a score of 7. There's a very high risk of death for these patients.

And also important, all patients in both groups were on standard-of-care remdesivir and dexamethasone. And about 40% balance between groups also receive convalescent plasma in both groups. All of that means that the results should be considered credible and certainly not skewed by any baseline imbalance.

Slide 17, as I said, the primary endpoint in this study is a safety measure by the incident of patients with serious adverse events in both groups. In order to fully appreciate the outcome you need to remember that the first question in this Phase to study in COVID-19 patients was, is it safe to add fostamatinib on top of standard of care, such as dexamethasone and remdesivir. If the incident in both groups had come out about the same or similar, we would have already met those safety goals. However, the incidents turned out to be cut in half, which is substantial. If you're up to that the number of serious adverse events of hypoxemia was reduced in the fostamatinib arm. You can say that the safety outcome is also a pretty good surrogate for efficacy.

On Slide 18, let's look at some efficacy outcomes that are generally included in this COVID-19 studies and considered clinically meaningful. There were 3 deaths in the trial, all 3 occurred in the standard of care alone group. There are no deaths in the group. It is worth noting that among the 4 patients that I mentioned earlier, who entered the study on mechanical ventilation, the 2 in the placebo group, both deceased while the 2 patients on ventilation and the fostamatinib group survived. That is quite remarkable given the high likelihood of death, once a patient needs to be intubated and mechanically ventilated.

There were other secondary clinical end points in the study and I can tell you that they are all generally consistently favor fostamatinib. One shown here is ordinary daily improvement during the study, there was a great improvement in ordinal scale in the fostamatinib group versus the control group. The time to improvement on fostamatinib was also quite a bit shorter than in the control group. The observed changes in the ordinal scale improvements were quite large. For example, a patient who meets the criteria for 6 on the ordinal scale needs invasive ventilation.

A 3 point improvement means that that patient no longer required intervention and is ready to go home from the hospital. That is clearly a very meaningful improvement in a relatively short time. Patients on fostamatinib spent also less space in the ICU compared to standard of care patients. That treatment effect is not only clinically meaningful, but also very relevant from our pharmacoeconomic standpoint. And finally, the clinical findings were also consistent with improvements in inflammatory biomarkers, such as no NETosis, CRP, ferritin, D-Dimer, et cetera. We see quite beautiful and supporting improvements in those biomarkers, which are generally well accepted as playing an important role in inflammation and blood clotting in COVID-19 patients. And as I said, all of these effects are in addition to remdesivir and dexamethasone and that is quite remarkable.

Slide 19. So what's next? The NIH, National Heart, Lung, and Blood Institute will continue to follow all the patients out of day 60 and do some more biomarker work. There's also some additional subgroup analysis that can be done and could be interesting. Of course, the NIH is preparing a publication and will submit to a higher ranked medical journal very soon. We at Rigel are in the process of preparing an emergency use authorization application and plan to submit that to the FDA as soon as possible, which would be the most expeditious way to provide a clinical benefit to patients.

My last Slide 20, as mentioned, we are enrolling our racial Phase III clinical trial. The study includes hospitalized patients with mild disease.

The study includes hospitalized patients with mild disease who have certain risk factors to develop more severe disease. If positive, this trial could be the basis for potential label expansion for fostamatinib to treat patients with COVID-19. So in summary, we have a multi-pronged approach to COVID-19 and we are excited by the possibility to come up with a safe and effective treatment that is still desperately needed.

With that, I'd like to turn the call over to Dave. Dave?

Thank you, Wolfgang. We are indeed very excited about the potential of fostamatinib to help hospitalized COVID-19 patients in the near future. I'd like to spend a few minutes talking about our research to understand the market and our current projections for COVID-19 hospitalizations as the landscape continues to evolve. As you're aware, COVID-19 is a dynamic disease dependent on many different factors.

On Slide 21 you see on the left that while there are decelerators that are very important in slowing the spread and impact of the disease, they are constantly challenged by accelerators of the disease. Variants can increase the number of COVID-19 cases and even if a small percentage of those patients are hospitalized, a high number of hospitalizations will persist. And with few effective treatments authorized or approved for hospitalized patients, the situation is exacerbated with more patients ending up in the ICU or on ventilators.

We completed quantitative research in Q1 that took into account hospitalizations to date, and these dynamic factors to project the steady state of COVID-19 hospitalizations in the future. In 2020, out of 20 million COVID-19 cases diagnosed in the U.S. there were 1.6 million hospitalizations or approximately 8% of cases. And because the number of cases was so high in the first part of this year, we estimate there will still be 16.2 million cases of COVID in 2021 and 8% of those patients will be hospitalized for a total of around 1.3 million hospitalized patients this year.

On Slide 22, the left side depicts monthly hospitalizations to date, tracked from 2 CDC data sources, the black solid line depicts the COVID tracker hospitalizations and the lower orange line depicts hospitalization seen in the COVID net data. Note that actual hospitalization has been highly volatile, particularly with the surge during the fall and the winter.

To determine a steady state we first chose a level of hospitalizations that would persist without a backseat. We then applied an aggressive vaccine rate of 80% that we would reach rapidly by September of this year. And even with these aggressive assumptions for rapid deceleration, based on the COVID tracker data, we would still project around 165,000 to 370,000 hospitalizations in the second half of this year, with around 250,000 to 360,000 hospitalizations in the steady state from 2022 on.

Moving to Slide 23 to provide some context on 250,000 or more hospitalizations each year from COVID-19, we wanted to provide the last decade of data on annual influenza of hospitalizations as a comparator. There has been an average of 442,000 influenza of hospitalizations each year over the last 10 years. And it ranges from a low of 140,000 in the 2011-12 bio flu season to 810,000 in the 2017-18 more aggressive flu season.

And even though COVID-19 spreads more aggressively than the flu, with its more effective vaccine and a higher vaccine rate than the flu, we would expect to have fewer patients hospitalized. So based on the influence of data, coupled with our quantitative market research, we feel comfortable with the 250,000 to 360,000 being a reasonable projection for annual COVID hospitalizations at this time.

To summarize on Slide 24, we believe that there will be a large opportunity to help COVID-19 patients in both the near and longer term. That's because COVID-19 cases will continue to persist even with a highly effective vaccine and the vast majority of the population vaccinated, even conservatively estimating that 5% to 8% of COVID diagnosed patients are hospitalized in the future, there could be approximately 250,000 to 360,000 hospitalizations each year.

In the near term, there are very few effective treatments for hospitalized patients. So should fostamatinib receive an emergency use authorization soon, there could be quick uptake with very large numbers of hospitalizations, and even as more treatments are authorized or approved in the future, we believe the drug treatment rate of hospitalized patients will continue to increase, which would potentially open up fostamatinib use in earlier patients based on our Phase III trial that Wolfgang referenced.

I would now like to move on to Slide 25 and discuss our progress with TAVALISSE in ITP. Q1 was a challenging quarter, and I am proud of the way our team stepped up to the challenge to continue to grow TAVALISSE in the U.S.

On Slide 26, you will see our FDA-approved indication, which is for adult patients with chronic immune thrombocytopenia, or CITP, who had an insufficient response to a previous treatment.

Moving to Slide 27. While Q1 was challenging, our results were largely consistent with historic trends, and we did see a 14% increase in demand or bottles shipped to patients in clinics. In comparison to last year, we grew bottles shipped to patients in clinics from 1,397 in Q1 of 2020 to 1,599 in Q1 of this year. This 14% increase was consistent with the performance of the ITP market. We saw a small year-over-year decline of 2% in our total bottles with 1,393 total bottles in Q1 of 2020 versus 1,364 total bottles in Q1 of this year.

The key difference between this year and last year is the significant change in inventory or bottles remaining in the distribution channel, which Dean will discuss shortly. So in order to continue driving the TAVALISSE demand growth beyond 14%, we remain focused on continuing to increase the number of prescribers by growing awareness, the number of patients by driving new starts, and persistency by continuing to improve refills. We saw stronger trends in March and as more ITP patients start new therapy or switch therapies, we believe we are poised to accelerate growth as the year continues.

Finally, moving to Slide 28 we are constantly increasing our promotional efforts to improve both persistency and new patient starts for TAVALISSE, as well as awareness among our Hematology-Oncology customers. Our 3 newest initiatives are shown here. First, we launched a new interactive persistency program in February called TAVALISSE Together. It was designed both for patients who are already taking comparator and for potential new patients who are interested in starting TAVALISSE. It partners with patients throughout their treatment journey, helping them to become successful with their ITP treatment and achieve their goals.

Second, because our sales force is critically important in increasing TAVALISSE awareness among prescribers, in late March, we launched a new rep-generated e-mail platform that allows our team to send product-rich personalized messages directly to their customers.

And third, because we continue to face challenges in interacting live with customers during the pandemic, we also launched another new media program to provide online education for clinicians. This media is accessible on demand to physicians on key sites they visit and contributes to our surround sound to raise TAVALISSE awareness among prescribers. I am confident that new promotional efforts such as these, combined with our growing number of sales calls and speaker programs, as things continue to open up, will enable us to continue to grow demand through improvements in awareness, new patients and persistency as the year progresses.

Thanks for your attention. And then I will now turn the call over to Dean. Dean?

Thank you, Dave. I'm on Slide number 30 for the first quarter of 2021 we shipped 1,364 bottles to our specialty distributors resulting in $16.1 million of gross product sales. 1,599 of those bottles were shipped to patients in clinics while 749 bottles remained in our distribution channels at the end of the quarter. We reported net product sales from TAVALISSE to $12.4 million, a 2% decrease compared to the first quarter of 2020. Our net product sales from TAVALISSE were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $3.7 million. Our gross to net adjustment was approximately 23% gross product sales.

Before we move on from net product sales, let me review our expectations for the second quarter of 2021. While we are seeing great progress in vaccinations against COVID-19, we continue to see that physician and patient access along with their desire to initiate new ITP treatment options remains constrained.

In the second quarter, and as we saw last year, we expect to see growth in both bottles shipped to patients in clinics as well as increases in the levels of bottles remaining in our distribution channels. Coming off our first quarter results we expect these increases to result in significant quarterly sequential growth of our net product sales in the second quarter. In the back half of the year, we expect to see stronger growth in both new patient starts and overall demands as the significant constraints caused by the COVID-19 pandemic lessen. Incrementally, we currently expect our gross to net adjustment to be approximately 24% or 25% in the second quarter of 2021.

On Slide 31, before I move on to a review of our financials for the quarter, I wanted to provide a brief review of the dynamics of the sequential decrease in net product sales that we saw during the quarter, starting with the orange bars in the fourth quarter of 2020, we saw 1,725 bottles shipped to patients in clinics, this is our key demand metric. Incrementally, we saw an increase of bottles remaining in the distribution channel of 174 bottles by far the largest increase we have seen. This resulted in total bottles for the fourth quarter of 2020 of 1,899 bottles, which generated $17.8 million of net product sales.

Now to review the green bars. In the first quarter of 2021, we saw 1,599 bottles shipped to patients at clinics. This 7% drop in demand was largely expected as we experienced the typical first quarter industry challenges associated with the resetting of co-pays and the Medicare doughnut hole, delaying both new prescriptions and refills. This year we also had a full quarter of the effects of the COVID-19 pandemic. You'll note in the thin red bar that this sequential 7% reduction in demand volume resulted in a sequential reduction in net product sales of $1.3 million. The bigger impact in this sequential reduction in net product sales came from the reduction of inventory levels that our distributors, the reduction from 984 bottles of inventory at our distributors in Q4 of 2020 down to 749 bottles at the end of Q1 of 2021 contributed to a sequential decline in our net product sales of $4.1 million, the thick red bar in this graphic. Inventory levels at our distributors are variable, and we do expect them to generally increase over time as our business grows.

Moving onto the next Slide, in addition to net product sales, Rigel's contract revenues from collaborations were $65.6 million for the 3 months ended March 31st, 2021, which consisted of $60.6 million from Lilly relating to our collaboration agreement, $4 million for the grant of a nonexclusive license, and $1 million to the delivery of drug supply pursuant to our collaboration with Grifols. Government contract revenues at $3 million was related to income we recognized pursuant to our agreement with the U.S. Department of Defense for our ongoing Phase III clinical trial of fostamatinib in COVID-19.

Moving on to cost and expenses, our cost of product sales was approximately $316,000 for the first quarter of 2021. Total costs and expenses were $39.3 million for the first quarter of 2021 versus $34.7 million in the first quarter of 2020. The net increase in costs was primarily due to increases in personnel-related costs, stock-based compensation expense and research and development costs related to our various ongoing clinical studies. During the quarter, we recorded a provision for income taxes at $1.8 million relating to estimated state income taxes. Finally, we ended the quarter with cash, cash equivalents and short-term investments of $39.3 million. In April, we then incrementally receive a $125 million upfront cash payment from Lilly for the exclusive license agreement for our RIP1 inhibitor program.

Moving on to Slide 33, let me take a minute to remind you of a few key aspects of our first quarter collaboration with Lilly. Lilly's RIP1 was developed and commercialized to a RIP1 Inhibitor R552 for all indications, including auto-immune and inflammatory diseases. Lilly will lead the clinical development of central nervous system penetrating RIP1 inhibitors. In April, we received a $125 million upfront payment from Lilly and are eligible to receive up to an additional $835 million in potential future milestone payments as well as tiered royalties on net sales. Development costs for R552 will be shared between our companies, subject to certain opt-out provisions for Rigel. Most importantly, this partnership has the potential to bring forward a new class of compounds, in both immune and CNS indications, which could address very large and important medical needs.

With that, I'd like to turn the call back over to Raul.

Thank you, Dean. Given the progress and the opportunity that the team has described on this call, let me highlight some of the key milestones for the business that we anticipate for the remainder of the year. In ITP, we expect to look forward to the lessening of significant access restrictions to physicians and patients caused by the COVID pandemic, allowing for increased interactions and an acceleration of new patients benefiting from TAVALISSE.

In the AIHA, we expect to complete enrollment of our Phase III clinical trial, and continue our preparations to meet the unmet medical needs of patients with warm immune-mediated hemolytic anemia and capture a significant portion of this very large market opportunity. With the significant opportunity for fostamatinib COVID-19, we will file an EUA, based on Phase II data from our trial conducted by the NIH and Inova, and do so as soon as possible. We will continue and complete enrollment of our own Phase III trial later this year. We will also advance this tremendous opportunity to benefit patients suffering from COVID-19.

With our RIP1 I collaboration with Lilly, we looked forward to initiating a Phase II trial with a large immune indication. And we will make progress with our IRAK1/4 program in both Hem/Onc and Immune indications. So that's quite a bit of milestones coming later this year.

So with that let me open the call up to your questions.

(Operator Instructions) Our first question comes from Yigal Nochomovitz with Citigroup.

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

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

Sure Raul. Great question, Yigal. I want to say, first of all, that in the first quarter what we saw was much stronger trends as we moved into March. So clearly, we believe that this was due to those delays that Dean spoke about in the first quarter. And so we saw those stronger trends in demand as we moved into March. And I think, I'll just say that April looks a lot, lot more like March than it did like a January and February. And so, as we've moved into April though, we have seen more things open up, but it's relative, right? I mean, as people have gotten more vaccines, you are correct, some offices are opening up. Our reps are getting out, and as a matter of fact I just got an update this morning. Out of our sales force approximately, more than 80% of them are able to get out on some live interactions.

The trick of that is, is that some of our territories who are able to that might have one office that they are able to go to or one speaker program. And others, although they might have more, it's not at all like things have opened up completely in their territory. And so, that's why we're saying that as we move into the back half of this year, as things return more to normal, we feel like things will be more loosened up and we will be able to see our customers on a more frequent basis than we are now. So it's all relative. Certainly compared to late last year, early this year, we're seeing more people live, and I think our speaker programs and our sales calls are showing that. But it's nothing like everybody's out in the field for a full day seeing customers each day. We're not close to that yet, so I just wanted to make that clear. I hope that makes sense, Yigal.

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

Sure, absolutely. And as you know, IRAK4 is useful in any indications where its IL-1 or IL -- Toll-like receptors inhibition is useful. And as you may know, low-risk MDS effectively is inflammation of the bone marrow. And that's one of the areas where there might be an interest in using a molecule like this. In PPP and HS, also similarly, and there's animal data that we've posted last year in terms of some of those models in say, psoriasis, that might be useful.

And I'll ask Wolfgang to comment as well, if it's helpful.

Yes. Raul, you took most of it away. Just to reiterate, yes, in low-risk MDS it is believed that there's the inflammatory compound to be very strong and that leads to the cytopenic stage. So that lower blood counts or various cell types, and that could be positively impacted by IRAK inhibition. So that's the scientific rationale. And as Raul mentioned, we have some pre-clinical data to support that. For PPP and Hidradenitis Suppurativa, Hidradenitis Suppurativa there's already preliminary proof of concept data from another company. And we have very good scientific rationale for the Palmoplantar Pustulosis.

These are also indications that are not so large. So they are smaller indications and we feel in a position that we could develop those all the way through approval and much further along if we choose to do that without a part then.

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

For TAVALISSE in COVID-19, can you comment on your Phase III trial, which began earlier this year, can you talk about enrollment rate as well as to when you might expect data?

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

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

Okay. And then, warm hemolytic anemia, so I mean, you mentioned that given the pandemic it's hard to predict when the enrollment would be completed, but compared to your last update it looks like you added about 6 patients every 2 months. So by the end of the third quarter, or beginning of the fourth quarter, is that kind of the time that you think originally you'd expect enrollment completion?

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

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

And our next question comes from the line of Do Kim with BMO Capital Markets.

So first, on TAVALISSE. Understanding that the inventory channels can be volatile, was there any particular reason that you could identify why the drawdown was so big this quarter? Is it a COVID impact, did you have challenges in the supply chain or distribution?

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

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

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

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

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

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

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

Just a couple questions. So first I wanted to maybe probe a bit on your answer to a previous question on warm hemolytic anemia program. So just going back to the last 2 quarters, it does look like the pace has slowed. If I just do the math from Q3 of '20 when you reinitiated enrollment. And I think I heard you guys say that you think you can finish enrollment, get that last 18 patients hopefully in the 3rd quarter. That presupposes, I guess, a pretty sizeable uptick from the trend. Is that not correct? Is there something that you're seeing that would give you that confidence? Can you maybe give a little more color on that, please?

Sure, I'll take a stab at that and then Wolfgang also after. Well, we were doing very well, the pandemic hit. Before, like 8 or 9, before the pandemic hit, so driven that down substantially for most of last year. Things improved there between the first and second wave, I think we had about 5 or so patients, maybe it was 6 in October of last year, for example. And then the second wave hit, driving that down substantially in the end of last year and early part of this year.

And then, now more in the last couple of months, we've seen an increase now in enrollment. Maybe about 6 in 2 months, 3 a month, most recently, which is very encouraging given that. We're also seeing upticks in screening as well. So as Wolfgang said, we're not clear what the number is when the month later this year we'll be fully enrolled, we need 18 more patients. We've enrolled 6 in the last 2 months. So just by simple math in 6 months, we should get those patients. 6 months from now, May, June, July, August, September, October-ish maybe, we think there'll be some acceleration of enrollment, because people are getting more vaccinate. We are seeing more activity, as Dave and others mentioned on the call. So we do think that, we're optimistic we can do a little better than 3 a month. And if we get to 4 a month for a month or 2, we'll be in Q3.

And then, not to belabor the inventory point, but just I want to clarify. And by the way, Dean, thanks for all the detail. I know you actually last quarter, you called out the 174 bottles and sort of did warn that revenue would be sequentially down this quarter. But I just want to make sure I understand. I'm just kind of speculating that 235 bottle drop might have been even more than you guys thought.

I'm just wondering, can you guys -- can you be descriptive of whatever inventory agreements you have in place. I mean sometimes people will have these to ensure that this sort of phenomenon is smoothed out, and as we all know, sometimes you see this kind of stuff in front of an anticipated price increase, for example. Can you just walk us through what parameters you have in place to sort of keep things steady state?

Maybe I could ask Dave and Dean also to comment on that. The answer is, it was a very unusual and large increase at 174, and as you said, we pointed that out. And this was an unusual and a large decrease in the other way. It's hard for us to project or control that, frankly, in terms of any useful way in the short term. Obviously in the long term, we expect and have been seeing a steady increase. Maybe Dave or Dean, do you want to comment on that?

I would just say that again, when you work with the distributors, they're going on their most recent demand, and trying to maintain a certain level of inventory, and that's not a perfect science. And so what happened as Raul said again, you're a little high, or high as we've been as we've moved to the end of the year, and then frankly, one of the lowest that we've been in a long time. And so I think we saw that variability kind of affect us, but I think the important thing to get across is the underlying business, and that's what we focus on, total bottles shipped to patients in clinics, which is our demand. That's what we focus on, and every day when I talk with my team, that's what we focus on. We don't focus so much on the bottles that we're shipping to our distributors, we focus much more on the bottles shipped to patients in clinic.

So I'll turn it over to Dean if he has anything else to add.

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

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

A couple first, maybe for Dean, I was just curious with regard to how we can view the G&A line going forward, specifically with the sales force. As you look to balance the new initiatives that you're talking about today, the e-mail program and the media program versus actually getting out there.

Joe, thanks. So from a G&A perspective, so we described at our year-end call, we described that we believe that we'd have a 15% year-over-year increase in OPEX, and I'd say that's still -- we're still on target with respect to that view. And then the programs that Dave describes, that's really baked into those estimates we've provided. While we'll certainly continue to accelerate those programs again, and it's really baked into that view that we provided earlier this year.

Got it. I appreciate the clarification. And then I appreciate all the details regarding the weakness in first quarter, a lot of it makes sense. So I was just curious if you're willing to share any details with regard to any negative impact from persistency. So obviously, even from when you guys launched, and being able to get people to 4 months since physicians have the experience to then be able to get 2 additional refills. So how much has persistency potentially or not impacted the weakness?

Dave, maybe you want to address that?

You want me to?

Yes.

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

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

Sure, I'll answer what I can. As you know, they've launched in the U.K. and Germany, and they're looking to launch in other territories, the other large European countries, and they're on track to do so. I can't give you too much guidance beyond that in terms of the timing of that, other than the products approved throughout Europe, but individual countries then have to approve pricing and so forth. So it is a little bit of a delay and certainly the COVID pandemic has hit Europe as hard as it hit the U.S. if not more so. So that's really causing some delays for sure.

But they're on track to launch that, they're excited about the opportunity. It's a great fit with their overall portfolio in Europe, and they look forward to making good progress. We work closely with them in the positioning of the product and sharing information on the product now, even materials they can use there. So we're excited about that. You may have seen also since you asked about partners, we see our partner enrolled a Phase III trial and they will, after that's completed, file for approval in Japan.

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

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

Thank you, Kristen, good question. I'll ask Wolfgang to also comment. But you're absolutely right, we evaluated and the number of other additional indications for fostamatinib the exclusivity period, as you may know, goes through 2032, so it's still a good long ways. And it's a product that has a SIK inhibitor and frankly, the only SIK inhibitor approved, and a unique package of effects on the immune system that I think is beneficial in broad number of areas beyond ITP and AIHA, both auto-immune diseases, but also other areas. And we're seeing that in COVID-19 hyper-immune response.

So this COVID opportunity really came upon us, and we're in incredibly fortunate to be positioned to move fostamatinib forward in the treatment potentially of COVID-19 hyper-immune response. And it opens up the opportunity, as you mentioned, for other areas in ARDS, from other sources, other viruses for example, maybe other pathogens, and maybe auto-immune diseases as a potential way forward. So we're very excited about that, but the opportunity is broader than that.

And maybe Wolfgang you want to comment on anything else?

Yes. Maybe just as you can see, the data set in COVID-19 is very compelling, it's very positive, it's actually stronger than many of us would have even believed it's possible. So we're very excited about that. We will certainly explore and investigate how this might translate to other acute respiratory distress syndromes, that's one option. But as you remember correctly, last year, we were also investigating other heme indications, and certainly it seems like a chronic growth versus host disease, for example, or low-risk MDS. By the way, we have 2 ISTs ongoing, investigator-sponsored trials, one in graft versus host with encouraging early data. And we have a collaboration with very renowned academic institution on the first fostamatinib in human communication. So we certainly have that on the radar screen.

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

Dave, maybe you want to reply to that.

Sure, I think that makes a lot of sense, because obviously if they are able to start a new patient and see them and have them come up, follow up visit, it is much easier. But I just wanted to make sure at the end of the day, it's about getting awareness out there. We really do believe, as I've stated on the last couple of calls, since we had the BJH article, which really is our strongest evidence of efficacy, and now we've got 5-year results that have been published and really talk about the very low risk of a thrombotic event. I think the kind of story of TAVALISSE unique mechanism of action, very, very effective, and can provide long-term durable results.

This is what we have to get out there. And that's why I keep talking about the more we can actually see physicians and talk to them about the drug, introduce them to the mechanism of action again, or repeat it to them, and really talk about the ways patients can benefit from this drug. To me, that's what will really, help us to acquire new patients. I do think it will help as they obviously see patients, but at the end of the day, we really do believe we'd get a great message and a great story to bring to patients, and constantly evolving story with, as I said, a new publication that was just published the last month.

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

Absolutely. I'll ask Dave to also comment on the opportunity in the U.S. But outside the U.S., we have partners. Grifols, our partner in Europe is very excited about the potential COVID opportunity for fostamatinib in Europe, in their territory. And a part of their efforts is hematology and hospital-based, given what they sell there. So this is a very nice fit for them. So clearly that's a tremendous opportunity there. Similarly, our partner in Japan, Kissei is very interested in the opportunity, they have rights in Japan, South Korea, China, and Taiwan, as you may know, and so tremendous potential for this data there as well. And then other territories as well, where we're looking to put partnerships in place. So the opportunity is quite sizable, addressing the COVID issue outside of the U.S. territories. We'll file the EUA as soon as possible here, and then work on those other territories in sequence.

Dave, any other comments on U.S.?

No, our look at the market is that even though, as I said, these vaccine rates are, even if you assume very, very high vaccine rate, and what we would deem basically a 100% efficacy, keeping patients out of the hospital, you've still got a pretty sizeable market here in the U.S. And so our job should we receive EUA would be to make sure that, clinicians know about them, fostamatinib, and certainly know how to access it. And I think those are the kinds of things we're thinking about in terms of making sure that we do our part to help COVID patients who truly do need new therapies.

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

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

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