Rigel Pharmaceuticals Inc (RIGL) 2022 Q4 法說會逐字稿

Greetings, and welcome to Rigel Pharmaceuticals Financial Conference Call for the fourth quarter and year-end 2022. (Operator Instructions). It is now my pleasure to introduce your first speaker, Ray Furey, Rigel's Executive Vice President, General Counsel and Corporate Secretary. Thank you. You may begin.

Hello. Welcome to our fourth quarter and year-end 2022 financial results and business update conference call. The financial press release for the fourth quarter and year-end 2022 was issued a short while ago and can be viewed along with the slides for this presentation in the News and Events section of our Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10-K for the year ended December 31, 2022, on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our President and Chief Executive Officer; Raul Rodriguez. Raul?

Thank you, Ray, and welcome to the team, and thank you, everyone, for joining today. Also with me today are Dave Santos, our Chief Commercial Officer; Dr. Wolfgang Dummer, our Chief Medical Officer; and Dean Schorno, our Chief Financial Officer. Now beginning on Slide 5. We are thrilled with the progress we made in growing our hematology oncology business in 2022, and we look forward to continuing this momentum in 2023. We are committed to driving sales growth for our first approved product, TAVALISSE and ITP. And in the fourth quarter, we achieved our highest quarterly net product sales to date. Alongside our international partners, we are focusing on making sure TAVALISSE is available for adult patients with chronic ITP across the globe.

Our partner, Kissei recently took an important step towards achieving this goal, which obtains PMDA approval of TAVALISSE. We congratulate them on this achievement. In December 2022, our commercial business was transformed with the approval and launch of our second product, REZLIDHIA for the treatment of relapsed or refractory acute myeloid leukemia. REZLIDHIA is an important treatment option with -- for patients with relapsed or refractory AML, and we are keenly focused on the execution on the commercial launch. With 2 approved products, our robust hemoc sales team and a highly experienced marketing and operations team, we are in a strong position to drive sales for both TAVALISSE and REZLIDHIA. Beyond our commercial focus, we are committed to growing our business through internal development programs, partnered programs and in-licensed opportunities. Our IRAK 1/4 inhibitor R289 continues to progress in a Phase 1b study in patients with lower-risk MDS. And we are pleased to report that we have completed enrollment in the first cohort of this study. Additionally, we continue to evaluate fostamatinib and oclacitinib for follow-on opportunities beyond their currently approved indications. Alongside our partner, Eli Lilly, we are advancing R552 a RIPK1 inhibitor, and we look forward to initiation of a Phase 2a study in rheumatoid arthritis for the first -- in the first half of 2023. Our colleagues at NIH are also continuing to evaluate fostamatinib in COVID-19 in the ACTIV-4-Phase III clinical trial.

Now moving on to Slide 6. I I want to spend some time talking about the important achievements we've garnered as we expanded our hematology/oncology portfolio with REZLIDHIA. In just a few short months, we went from announcing the license agreement with former Therapeutics to the FDA approval and then the launch of REZLIDHIA. Our ability to navigate this quick turnaround is a testament to our business development, commercial and medical affairs teams as well as Rigel's commitment to patients in this as a hemon company. On announcing the deal in August, our team began working diligently to prepare for the commercialization of REZLIDHIA. And I am proud to say that despite the early approval in December, we were ready to execute on our critical priorities for launch. Shortly after the approval, we have the opportunity to engage and educate the medical community at the 2022 ASH meeting we were able to share new longer-term data from the registrational Phase II study of REZLIDHIA in relapsed or refractory AML, highlighting its durable efficacy and well-characterized safety profile. Also in December, REZLIDHIA was made available in the U.S. by prescription and since then has been added to the NCCN Guidelines for AML and highlighted in blood advances with the publication of the Phase II registrational study. While pleased with the success we've had so far, we are focused on continuing execution of the REZLIDHIA commercial launch. So with that, I'll turn the call over to Dave for an overview of the quarter. Dave?

Thank you, Raul. Now I'd like to take a few minutes to discuss our progress with REZLIDHIA in the first 3 months of launch and then transition to our continued growth of TAVALISSE during a record Q4. On Slide 8, you will see our FDA-approved indication, which is for adult patients with relapsed or refractory acute myeloid leukemia with a susceptible IDH1 mutation as detected by an FDA-approved test. Moving to Slide 9. The American Cancer Society estimates that more than 20,000 patients will be diagnosed with AML in 2023. And unfortunately, about 11,300 patients will die from the disease this year. In terms of the eligible relapsed or refractory IDH1 positive AML patients, our research showed that up to 60% of fit patients progress in 2 years and for unfit patients, most are refractory or relapse within 2 years. With 6% to 9% of patients IDH1 positive, that gives us a near-term opportunity to impact the lives of around 1,000 new mutant IDH1 patients in the relapsed or refractory AML setting each year.

On Slide 10, we believe REZLIDHIA has the potential to address many key patient and HCP needs in the relapsed/refractory AML space. It is a promising new treatment targeting mutant IDH1 that has shown impressive durable responses in patients who have failed previous therapies. As more clinicians review the demographics of our relapsed/refractory patient population in our pivotal cohort and put that together with a complete response rate of 32%, a CR CRA trade of 35% and especially the median duration of CR CRH of longer than 2 years. They see the value of an agent like REZLIDHIA in their treatment armamentarium. Combining that efficacy with a well-characterized safety profile without the requirement for cardiac monitoring, it becomes even more compelling to adopt REZLIDHIA in their mutant IDH1 relapsed or refractory AML patients. Overall, we continue to see exciting potential to become a market-leading treatment in mutant IDH1 relapsed or refractory AML and are looking forward to continuing to execute the launch plan.

Moving to Slide 11. Our commercial and medical affairs teams have done a great job executing our launch plans to quickly raise awareness among leukemia treaters, ensure quick product availability and access for patients, accelerate launch momentum through the publication of critically important third-party references and continue educating our field team to hone our REZLIDHIA messaging. Immediately upon approval on December 1, our website was up and within the first few days of launch, we had several marketing and patient access materials available to customers online and through our field teams. It was perfect timing as our team was at the 64th Annual American Society of Hematology meeting a week later on December 9, with our booth prominently announcing approval and team members interacting with important customers who are in attendance. Then on December 22, just over a week after ASH ended, our team worked closely together to have products available to stock our distribution network before year-end. And finally, we were extremely pleased that over the holidays on December 30, our distribution network shipped out our first 2 bottles to an account for an AML patient. It was a meaningful way for us to end 2022.

On Slide 12, you will see that we continue to make strong progress on the medical affairs front as we moved into the new year. On January 13, we were delighted that the NCCN clinical practice guidelines for AML were updated to include olutasidenib as our recommended targeted therapy for relapsed/refractory disease with an IDH1 mutation. This quick unanimous decision by this recognized panel of experts is critically important for formulary and prescribing decisions by payers, GPOs and other key accounts and prescribers. We will continue to highlight this important recommendation in our messaging. Also in January, we were pleased to confirm coverage through our first paid claims for REZLIDHIA patients. We continue to work with key payer and GPO accounts as well as individual prescribers to ensure that they have everything they need to minimize any reimbursement hurdles and maximize patient access to REZLIDHIA.

And last month, our launch momentum continued with the February 1 online publication in blood advances of the data from our pivotal Phase II cohort entitled olutasidenib induces durable complete remissions in patients with relapsed or refractory IDH1-mutated AML. The conclusion states that olutasidenib monotherapy induced durable remissions and transfusion independence among patients with relapsed or refractory mutant IDH1 AML with a well-characterized and manageable safety profile. The observed efficacy is clinically meaningful and represents a therapeutic advance in this molecularly defined patient population with a poor prognosis and limited treatment options. This publication, which will soon appear in print in a well-known and respected peer-reviewed journal is another highly credible third-party reference for REZLIDHIA that will be important for years to come. And finally, just a few weeks ago, our entire commercial and medical affairs team met in person for our annual meeting. We had a highly productive meeting and continued to build on the team's foundational knowledge established upon approval. Our team left that meeting more prepared than ever to continue spreading awareness of REZLIDHIA and accelerate uptake as we move into our next phase of launch. I look forward to providing updates as we continue our REZLIDHIA-launch journey.

Now on to growing sales of TAVALISSE in ITP. I have a few brief comments on our TAVALISSE progress in Q4. On Slide 14, you will see our FDA-approved indication, which is for adult patients with chronic immune thrombocytopenia or CITP, who've had an insufficient response to a previous treatment. Moving to Slide 15. I am thrilled to announce that we had our best TAVALISSE quarter ever in Q4, shipping 2,196 bottles to patients and clinics, representing 23% growth over Q4 of last year. This robust growth was again driven by more new Park patients starting TAVALISSE. I am happy to report that we had more new patient starts in 2022 than any other year since launch. For Q4, we achieved net sales of $21.9 million, representing a 25% increase or $4.3 million more than the same quarter last year. We are extremely pleased with how we ended 2022 and the solid year-over-year growth we are seeing in ITP sales. We will continue to focus on targeted clinicians to identify appropriate patients that can benefit from TAVALISSE to grow our new patient starts beyond the record levels we saw in 2022.

And finally, on Slide 16, I wanted to update you on how we are continuing to expand access for patients globally with TAVALISSE. In December, Tsai, our partner in Japan announced PMDA approval for TAVALISSE for the treatment of chronic ITP. Tried to earn $20 million in a regulatory milestone with the approval. We remain committed to continuing to impact CITPE patients around the globe with continued expansion of TAVALISSE's commercial footprint through our partners. Thanks for your attention, and I will now turn the call over to Wolfgang to provide a brief update on our development progress. Wolfgang?

Thank you, Dave. I will briefly summarize our other programs. Slide 18, let me start with lower risk MDS. Our Phase 1b study evaluating RA-289-Ritols IRAK-1/4 2 inhibitor in lower-risk MDS has completed enrolling the first cohort and has now dose escalated to enroll patients into the next cohort. So far, the drug was well tolerated and no adverse events of concern have been seen. As you recall, the study uses a 3x3 dose escalation design to establish the maximally tolerated dose before expanding a dose level to patients to obtain additional safety data as well as preliminary efficacy information. We believe R289 may represent a promising new approach to treating patients with lower risk MDS and look forward to investigating R289 further in this study.

On Slide 19, you can see the overview of our ongoing programs. As Raul mentioned, we are primarily focused on growing our eLong business that starts with our internal development programs. I just took you through the progress is R289 in lower-risk MDS on the previous slide. We're also evaluating other opportunities for fostamatinib in olutasidenib, building on their regulatory success. This includes evaluating ex-U.S. partners to bring REZLIDHIA to AML patients around the globe. I'd also like to remind everyone that the Phase II clinical trial of olutasidenib includes additional cohorts beyond the registrational relapsed/refractory AML cohort, and we look forward to continued analysis and publications from this trial. Supplementing these internal development efforts, we continually evaluate potential new assets assets to in-license that can leverage our hemon capabilities. More opportunistically, we continue to work with Eli Lilly to advance R552 our RIP kinase inhibitor towards a Phase II study in rheumatoid arthritis and with the NIH as they continue enrollment in the ACTIVE Phase III study evaluating fostamatinib as a treatment for COVID-19. That concludes my development summary, and I will turn the call over to Dean.

Thank you, Wolfgang. I'm on Slide 21. For the fourth quarter of 2022, we shipped 2,417 bottles of TAVALISSE to our specialty distributors, resulting in $31.5 million of gross product sales. 2,196 of those bottles were shipped to patients and clinics, while 221 bottles increased the levels remaining in our distribution channels at the end of the quarter. Following our commercial launch of REZLIDHIA, on December 22, 2022, we shipped 64 bottles of REZLIDHIA to our specialty distributors, resulting in $1 million of gross product sales. 2 bottles of REZLIDHIA were shipped to patients and clinics, while 62 bottles remained in our distribution channels at the end of the quarter. We reported net product sales from TAVALISSE of $21.9 million in the fourth quarter of 2022, a 25% increase compared to the same period in 2021. We reported net product sales from REZLIDHIA of $900,000 in the fourth quarter of 2022. Our net product sales from TAVALISSE and REZLIDHIA were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $9.7 million. For the fourth quarter of 2022, our gross to net adjustment was approximately 30% and 15% of gross product sales, respectively, for TAVALISSE and REZLIDHIA.

Before we move on from net product sales, let me review our expectations for the first quarter of 2023. Let me start with TAVALISSE. Despite the typical first quarter reimbursement issues confronting our industry, such as the resetting of co-pays and the Medicare donut hole, we expect to see a small increase in bottle shipped to patients and clinics in the first quarter of this year as compared to the fourth quarter of 2022. We expect to see continued growth in bottle shipped to patients and clinics throughout the year. For REZLIDHIA, and as you know, we are still only a couple of months into our launch. As Dave highlighted, we're encouraged by the initial interactions that our field team is having with physicians who treat patients with AML with these interactions and as awareness of REZLIDHIA increases, we expect to see increasing penetration into this new market for Rigel as we add new patients and as the year progresses. We look forward to providing more specific updates in the future as our launch progresses.

Incrementally, we currently expect the gross to net adjustment for the first quarter of 2023 to be approximately 30% for TAVALISSE and approximately 15% for REZLIDHIA. On to the next slide. In addition to net product sales, our contract revenues from collaborations were $26.5 million, and our government contract revenue was $2 million in the fourth quarter of 2022. Contract revenues from collaborations consisted of $20 million in revenue from Kissei related to a milestone payment earned upon Japan's PMDA approval of TAVALISSE for the treatment of chronic ITP in noncash revenue from the collaboration agreement with Medison, $600,000 in royalty revenue from Grifols and $200,000 in revenue related to our license agreements with Lilly.

Moving on to costs and expenses. Our cost of product sales was approximately $342,000 for the fourth quarter of 2022. Our cost of product sales for the quarter were inclusive of a 15% royalty on our REZLIDHIA net product sales. Total cost and expenses were $49.2 million in the fourth quarter of 2022 versus $41.8 million for the same period in 2021. This expected increase in cost and expenses was primarily due to personnel-related costs and commercial expenses, along with higher research and development costs related to DIRC14-inhibitor program. As we look towards 2023, we currently expect our total cost and expenses for the full year of 2023 to be approximately $160 million. Finally, we ended the quarter with cash, cash equivalents and short-term investments of $58.2 million. With that, I'd like to turn the call back over to Raul. Raul?

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

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

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

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

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

Okay. Great. That's helpful. And then you disclosed the 64 bottles shipped during the fourth quarter. I guess, can you just talk a bit about how we should be thinking about inventory stocking dynamics during the first quarter and the second quarter of '23?

I can take a step at that and ask Dean or Dave to comment as well. So the 64 quarters, all but 2 of those were into the inventory into the channel. And we have a better sense now a couple of months beyond that in terms of that. Where that will stabilize, we don't really know yet. New institutions are ordering product. And so it's still too early to say something definitively in terms of a stable or even trend in inventories may end up. We do know that there has been usage from that inventory, but the dynamics are still a little bit unknown given how early it is for us. Any comments, Dave, or Dean?

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

And just one detail as we launch REZLIDHIA that TAVALISSE 1 month supply is one bottle for REZLIDHIA 2-week supply is one bottle. So as we need to translate those 64 bottles into 32, 32 months worth of treatment.

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

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

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

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

Next question comes from the line of Kyung Yang with Jefferies.

A couple of questions. At the end of last year, you had about $58 million in cash and cash burn for this year seems running higher than that. So can you talk about how you fund the operations for this year and beyond? That's the number one question. Second question is now with the 2 products on the market. Do you have some sense of when you to be able to reach profitability? And my last question is, you mentioned looking into kind of evaluating other opportunities for fostamatinib. So can you talk about what are the other opportunities are you considering?

Thank you. Let me ask Dean to address the first 2, your questions, and maybe I'll address the third.

So I'll address both of your questions, I think together here. So we ended 2022 at $58 million of cash, as you noted. Incrementally, in January, we received $20 million from TSA. So we're comfortable with our current cash position in the business that we've discussed today. We -- with respect to the path to profitability, we really do, as a company, it's a priority for our business to achieve cash flow breakeven. And as you've seen over the last year, we really have made some focused efforts on cost efficiencies and leverage as we establish the Hemonc business that we described today. We are reducing our operating expense from about $176 million in '22, the numbers we just reported, down to what we expect to be about $160 million this year. I would note that over $10 million of the operating expenses I just described are noncash, their stock cost and depreciation. So then as we look forward with respect to getting to breakeven, we haven't given guidance on our top line. So we can't be specific on when we'll get to breakeven.

But as we look at our revenue growth over time, we just reported fourth quarter run rate results of about $90 million, $90 million plus, and that's fourth quarter run rate. And that's really almost exclusively TAVALISSE. We've got the week of REZLIDHIA sales in there. Incrementally, as we look at growth in that top line in '23, we expect continued growth in TAVALISSE. We expect to now have the REZLIDHIA revenues, net revenues for the full year. And then as we've seen over time, we continue to expect collaboration revenues. And those can be collaboration revenues from our existing partners, like Lilly, Kissei, Grifols. They can also be collaboration revenues from new opportunities. And a couple of examples of new opportunities would be ex-U.S. rights for olutasidenib REZLIDHIA as well as potential partnerships for IRAK1/4 program that Wolfgang described. So haven't been specific on the time that we'll get to breakeven, but we're certainly focused on it and pleased with the progress we've made over the year as we set up and launch into 2023.

Thanks, Dean. It's worth noting, as Dean said in his comments, we're seeing in TAVALISSE in so far this quarter has been very positive. Usually, we see a downward draft of Q1. We're seeing a small increase actually in patients -- bottleship to patients in clinics. Just to remind you, last quarter, Q4 was our best quarter since launch, given that we are seeing some growth on top of that oddly Q1 is always challenging. This Q1 will be our best quarter since launch, not our best quarter -- first quarter, our best quarter since launch. So that's a very positive sign and a testament to some of the expansion and focus from our commercial team in increasing TAVALISSE sales despite Q1 headwinds.

And your third question, was other opportunities for fostamatinib. We're looking at other opportunities. As you may see in the press release, we put a little bit of information on opportunity in graft versus host. We haven't done thorough final diligence on that as the opportunity, but it is there because the data seems quite compelling. So that's one thing we might consider with Foster. But we have to look at the totality of where we want to invest our clinical dollars, and they're not infinite, they're limited. -- between olutasidenib and fostamatinib. So we're going to make those decisions and then come back to you later this year with what we'd like to launch in terms of registrational trials for these 2 drugs.

Yes. Can I ask you one quick follow-up. Are you thinking about revitalizing the one oral hemolytic anemia indication?

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

Our next question comes from the line of Guyn Kim with Piper Sandler.

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

I could give you a lot of anecdotes that I've actually just been out with customers as recently as yesterday, just flew back this morning. At the end of the day, here's a couple of things for you. First of all, when people truly understand this data and if you look at the blood advances publication, things are in there that we haven't even begun to talk about commercially yet, which is the survival data. If you look at the survival data of the responders and you see what the CR/CRH responders do in terms of survival that that's not yet reached. And as a matter of fact, that 18 months, you have 78% of patients surviving. Those are the kinds of pieces that as we take this publication and put it in a new piece and begin to talk to clinicians about it, which we have begun doing just very recently since this was published.

People become more much more kind of convinced that there is something here. I mean we have been out there with a response rate, which is clearly a CR response rate, which is clearly high at 32%, right? But the CRH rate is at 35% and people can look at that and say, "Yes, that's kind of what I get." But then when you go to the duration data, people have to recall and put that in context that these are relapsed refractory patients. And when you do that and when we passionately talk about that, it can really have an impact. So yes, there are clinicians to say it's kind of a me too, response rates look the same, but you have to really dive into that duration. And we think the 2 things that are really going to help in the blood advances publication are to be able to talk about survival number one; and then number two, to be able to also address the fact that we had patients on the trial who were on venetoclax. And so those are 2 things that are in the publication that are going to just help augment our story.

And lastly, though, we've just gotten in January, the NCCN guidelines addition. And we're going to continue to do that. As a matter of fact, if you look at our website now, we have links to both the NCCN guidelines announcement and the Blood Advances publication. So those aren't really 2 critical things that I think will help move. But so far, I would say, depending on the clinician and how much time we get with them, we can move them. And I will also say that among the top leukemia treaters in the country, you just have to remember that this is a Phase II study that was done at very few institutions in the U.S. So a lot of people haven't had a chance to kind of use this product. And it came on all at a sudden matter back last night, I was just talking about this with some clinicians. They weren't even aware that it was filed. And then all of a sudden, it was approved in December. And so this is the kind of thing. We feel very firmly though, that the more we raise awareness, especially among leukemia treaters, the more adoption we're going to get.

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

So if you look at the -- I'll take that first -- that last part of your question first. If you look at our data and we look at it through our patients that are on the product of TAVALISSE, we actually have a pretty good percentage of our patients on in second-line disease if we look at our patients through Rigel One Care. It actually makes up more than 1/4 of our patients right now. So we do believe we're making progress in earlier lines of therapy. But in terms of what's kind of driving new patients to the brand, it's all of the above. I mean at the end of the day, we have more folks out there, and they are very sharp in their messaging. They know that we are looking for new patients to start on TAVLESSE Again, if you get to our website, you see lots of patient cases that we use a lot. And again, just seeing a lot of customers over the weekend, we're continuing to get interest in this drug and people are really beginning to get it. So I really do believe it's all of the above. And certainly, access isn't hurting -- by the way, we had more commercial starts last year than we've had before. And we believe that's a direct result of the work we've done to not only do the contracting we've talked about, but also raise awareness of the access that patients have to the drug.

So as Dean and Raul mentioned, we're looking at a Q1 here where normally things slow down a bit due to the reimbursement hurdles and your whole goal is to start more new patients and get over that. And we believe we're making progress toward that as we're sitting here in the first part of March. So it's all of those things though, and it's taken some time, but I just give it to our sales team that's out there every day, searching for new patients and painting that picture for clinicians, and they're really making a difference, and our market access team has really worked so hard to ensure that patients, especially in commercial patients have access to the drug.

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

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

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

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

I think that says it well.

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

Yes. So as you know, I'll handle that. With regards to TAVALISSE, good progress, the product now available or soon to be available commercially in Japan, they got the approval at the very end of the year and have to get through pricing, which they're working on now. So look forward to that. It is available in Europe, all the major countries in Europe as well as Canada, Israel. And so I think in terms of partnerships, we are making very good progress with TAVALISSE. We are having discussions with olutasidenib. As you know, as part of the license we have global rights to all the and the opportunities are attractive ex U.S. as well. So we are in discussions with potential partners regarding that. And also, not just in terms of what the economics might be, but also what their contributions clinically might be. As you said, there's various segments in AML that are of interest and possibly their contributions with regards to those rather than just financial are very much of interest to us.

And then the IRAK program, we are -- have global rights to that program. But having a partner in place that can also help us explore the opportunity and hemonc indications is of tremendous interest it's a very attractive program that we're now generating data that we think will be helpful in terms of setting a partnership in place. So we're looking forward to those new partnerships and then progress with our Lilly kinase collaboration with the systemic program in entering a Phase 2a study in rheumatoid arthritis. We think it's a great indication. It's a very sizable indication when with the continued need for new treatments. And we're excited about their testing R552 in a Phase 2a study in rheumatoid arthritis and launching in the next handful of months because we'll get meaningful data and data that could serve as cross competitors, other agents currently available in things in development, which may show this product to be a very attractive product in rheumatoid arthritis. We're excited about that. And they also have a CNS program associated with that, that hopefully they'll in the near future move into preclinical development and then into humans. So very good progress with current collaborations, very good progress with currently marketed products and looking forward to putting a couple more in place.

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

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

Sure. So Dave, I'll ask you, let's do that take those and if you miss one, I'll remind you.

Yes. So I'll take the last one first, Gary. I think, first of all, it's a matter of time. Some of these institutions for these leukemia treaters, it takes a while to make appointments, get in there, see them, et cetera. You've got whole departments, you've got not only the MDs. You've got your nurse practitioners, PAs, fellows that you need to see. So we're working all of those angles in terms of getting into see leukemia treaters. But we also have other field team members out there. They work together across commercial and medical affairs our MSLs are out there partnering with our field sales reps. If they know clinicians, they are able to introduce those clinicians to the Territory Business Manager and vice versa. So it's just taking us some time, but we're working all the angles to ensure that we get to get in contact with as many of these leukemia specialists as possible.

In terms of reimbursement, yes, I mentioned that we've had paid claims. Our market access team, our payer field team has been out there doing many, many interactions with different payers and PBMs in presenting the clinical data. And overall, things have been very positive. We've received a number of indications that they are going to cover with a prior off to our label, which is exactly what we want. And we've had a number of patients get referred in to our Rigel One Care who have been -- we've been able to secure reimbursement. But overall, I would say that has been a lot of work across a lot of customers resulting in continued wins on that front. So I've really heard very little from customers about an issue with getting reimbursement for -- it's still early but getting reimbursement for REZLIDHIA at this time. The team has just done an exceptional job. And I think the other thing that's going to happen here is you do have the people who have touched this brand among KOLs and have seen really remarkable results and really believe in this believe in olutasidenib. And we're seeing educational programs out there where clinicians are telling their peers about olutasidenib or REZLIDHIA. And we're going to obviously do more of that as we move forward. We haven't even established our peer-to-peer education yet. So we're working on that right now. So we've got a lot of work to do, but I am not -- I'm very confident about our ability to raise awareness. What we do know is it's not -- this isn't a fluke. This is the drug. I think it's a winner, and it's just about getting the word out there to the people who seek leukemia treatment.

Diagnostic test...

I think that is -- that's not an issue at all, Gary. I mean clinicians can order it from any number they may have it in the institution. They may get through a third party. I think more than that, it's the results and what they do with the results, right? And so clearly, in the academic setting, they may be able to get results quicker. And so -- and it's more in the front line this is applicable in that they may need to wait to treat. That's the issue. But a lot of clinicians don't do that, which is why we believe we have an opportunity, a lot of clinicians, particularly in the community, just move forward with a regimen. And then that leaves the relapsed/refractory setting open to choosing an IDH1 inhibitor if they're IDH1 positive. So I think from a testing standpoint, we'll continue to talk about it. And I'm not saying there's 100% that's going on out there right now, but it's hit's a high rate of testing. And I think in the relapsed/refractory setting, we just continue to reinforce that olutasidenib is a drug of choice in mid-H1 relapsed/refractory patients.

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

On the last piece, maybe you handle the other, Wolfgang?

Yes, I start with the first dose cohort. First of all, at this stage of the life cycle of this compound, we look for safety. So as I told you, drug was well tolerated. There were really no the ease of any interest -- now we're going to the next cohort, which in the first quarter is a really low dose with a PK profile where we wouldn't really expect a big pharmacodynamic efficacy effect yet. Cohort 2 is approaching that range a little bit closer. So that will be the next 3 patients. And remember, all of these patients, they all continue to be treated, and this is an open-label study. So as the data evolve, we look at Cohort 2, takes 28 days to say it's safe to escalate to the next cohort, but then those patients also continue. And I'd say, look at 3 months, you can get a rough handle of whether there's a major signal in there might be something in Cohort 2, may be something in Cohort 3 and once we look at some of the safety and activity endpoints like transfusion independence, remission, overall response rates, things like that or hematologic improvement, we will expand those and add more patients. And then I mean you can think for yourself how many patients for how long do you want in order to discuss with a partner, whether there's a signal there, I would say probably several patients for 3 to 6 months depending on what the data looks and then we would be in a pretty good position to say we have something in our hands.

So it's -- I think in the lower dose group, you will have some data from those. Clearly, it might be more safety. As we get into the 3 or 4 dose groups, that's where more likely we'll see some signs of efficacy after 3 to 6 months' worth of dosing. And that's really what partners are probably looking at. Not only is it safe, but also is there some signs that is having a benefit in this area. So Gary, to answer your question, it's hard to say because we don't know which of these we're going to need to expand at plus 3 and that enrollment. Enrollment is going well. So that's a good sign overall. And then when we decide to do that expansion in the higher dose, one of the higher dose groups is not certain we'll have to look at the data because it is kind of a data-driven design of the study. But we and the partners want to see the same potential partners want to see exactly the same thing. It's an exciting opportunity for this product. It's certainly a mechanism that is unique. It's well adapted this mechanism to treating an inflammatory conditions such as low-risk MDS. So we're excited about the prospect of this.

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

So my first question, a little more macro. So I'd like to balance Dean's guidance for cost for '23 of around $160 million, if I heard you correctly, and your overall cost management. And if we can infer that the commercial side of the business and the sales force is essentially rightsized at this particular moment in time?

Yes. I think Dave can answer the rightsizing of that and if there's any other comments on the guidance on the $160 million?

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

Yes. I think, Joe, we've talked for some time now about just the leverage and efficiency in the whole commercial organization, not just the sales team but the field team. So I think you're seeing that in our ability to launch REZLIDHIA as we did and all the efforts that Raul described. And then we're seeing that leverage in that $160 million expected OpEx for '23.

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

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

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

Yes. I mean -- we -- Joe, we have not seen any change in our persistency. We have really focused on bringing new patients to the brand. And the team does continue to work with clinicians who are prescribing and their offices to ensure that they know things like bring the dose up to 150 to make sure you get that efficacy, make sure you keep them on the product. We're doing all of that, but we haven't seen a change in persistency, our growth as being because more patients are on the brand. And so we just would like to keep it where it is, and we haven't seen any sign of it changing. So I hope that helps. And from a post-COVID situation, yes, our team continues. I think this is part of the institutions, sometimes it can be more difficult still to get into those institutions than the office buildings. But yes, I think we're seeing more appointments, more opportunities to interact with clinicians and especially more live conferences. I think that's been a great opportunity for all of our field teams to be able to interact with customers. I think it all helps.

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

This is Andy Pleasure on for Kalpit. Regarding the investigator-sponsored trial in GVHD that you just published data on, how do you perceive the competitiveness of these results compared to other emerging agents such as Sanofi's rexorak her Syndax's axatilimab. And then as a follow-up, I know that you're still in considering development of this asset. Is this something you think you would consider potentially developing in-house or maybe through a partnership?

Let's take a stab at that Wolfgang and I can as well.

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

Dave, do you want to -- can you comment as well?

Yes. Andy, I think -- what I wanted to say is that we have done some research since, obviously, the study came out and was published. And we've tested this. It's not a large end, but clinicians -- that's the thing about GVHD, even though they are approved products and even if you look at the NCC and guidelines, what the NCCN encourages is clinical trial. And they really -- while one of the agents has category 1 evidence, they don't have one preferred over the other. And so we look at this, if we do pursue this as a development area then this is a space that there is no clear kind of leader in GVHD. And so you could -- again, I encourage you to look at the NCCN guidelines for hematopoietic transplant. And you will see that in GVHD, a number of agents are listed, both approved and not approved.

To keep in mind, we are looking at this as an opportunity. We haven't made a decision to proceed with it at this point or -- and like I said earlier, we do have a limited amount of money to spend on new registrational trials for these 2 agents. And so we have to look at all of those opportunities and place our bets where we think gives us the greatest return and near-term returns specifically.

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

Thank you, operator. Thank you for your questions and your interest in Rigel. It was a tremendous year in 2022, but challenging. But I think a year that was our best year in terms of where we started the year and where we ended the year. I think we really transformed the company with growth in TAVALISSE, really getting substantial traction. And then addition of REZLIDHIA to this highly complementary product, positioning us well really for this year in '23, and we're executing on that. And that's our commitment to you that we will continue to grow both of these products, look for other opportunities within these 2 assets that are exciting that I think will again transform the company and continue to look externally in terms of opportunities. There are quite a number of things there as well that we have interest in. So I think 2023 will be a great year for us. So thank you for your commitment to us. We aim to deliver.

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