TG Therapeutics Inc (TGTX) 2021 Q1 法說會逐字稿

Greetings, and welcome to TG Therapeutics' Q1 2021 Earnings Conference Call and Business Update. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Jenna Bosco, Senior VP of Corporate Communications. Please proceed.

Thank you. Welcome, everyone, and thanks for joining us this morning. I'm Jenna Bosco, and with me today to discuss the first quarter 2021 financial results and provide a business update are Michael Weiss, our Executive Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer. Following our safe harbor statement, Mike will provide an overview of our recent corporate developments, as well as an update on our current pivotal programs and key goals for 2021. Adam will provide an update on our commercialization efforts, and Sean will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session.

Before we begin, I would like to remind everyone that various remarks that we make about our future expectations, plans, and prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics' operations include various risk factors that can be found in our filings with the Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q.

In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements.

This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. All participants on this call will be on a listen-only mode.

Now I'd like to turn the call over to Mike Weiss, our CEO.

Thank you, Jenna, and thanks to everyone for joining us this morning. With the recent accelerated approval UKONIQ for the treatment of relapsed or refractory marginal zone lymphoma and follicular lymphoma, TG has transitioned into a fully integrated commercial organization. We are extremely pleased to now have UKONIQ, the first and only dual inhibitor of PI3K-delta and CK1-Epsilon available to patients. We see the approval of UKONIQ as the first step in our broader mission of developing novel treatments for patients with B-cell diseases. With successful Phase III studies in chronic lymphocytic leukemia, referred to as CLL, and multiple sclerosis. MS, already completed and reported, we see the potential to positively impact a significantly larger group of patients on the horizon.

Beyond that, our pipeline has the potential to deliver novel combinations, building off a foundation of UKONIQ and ublituximab, our U2 combination, that can further enhance outcomes for patients with B-cell diseases.

Before I hand over the call to our Chief Commercialization Officer, Adam Waldman, to discuss the UKONIQ launch in preparations for the potential CLL and MS, launches, I wanted to review some of our recent accomplishments, as well as the current status of our ongoing programs.

First and foremost, as I mentioned at the outset of these prepared remarks, in February, the FDA granted accelerated approval of UKONIQ for the treatment of adult patients with relapsed or refractory marginal zone lymphoma who have received at least one prior anti-CD20-based regimen, and for adult patients with a relapsed or refractory follicular lymphoma who have received at least 3 prior lines of systemic therapy. This approval was primarily based on the results from the UKONIQ monotherapy cohorts of the UNITY-NHL Phase IIb trial. And the approval came just shortly after the final results from this trial were presented at the American Society of Hematology annual conference -- we refer to that as ASH -- in December 2020. Also of note, within a month of approval, these results were also published in the Journal of Clinical Oncology.

The commercial team has been hard at work educating potential prescribers about UKONIQ and building a strong foundation, which we believe will continue to translate into adoption of UKONIQ and position us well for the planned CLL launch, potentially later this year or early next.

On that note, as most of you know, we presented positive results from the UNITY-CLL Phase III trial at the ASH annual meeting in December. And more recently, at the end of March, we announced the completion of a rolling submission of a biologics license application, referred to as a BLA, to the U.S. FDA, requesting approval of ublituximab, our investigational glycoengineered anti-CD20 monoclonal antibody, in combination with UKONIQ -- the combination, as many of you know, we refer to as U2 -- as a treatment for patients with chronic lymphocytic leukemia. This BLA submission was based primarily on the results of the UNITY-CLL trial, which was conducted under special protocol assessment. And as a reminder, the FDA previously granted fast-track designation to the U2 combination for the treatment of adult patients with chronic lymphocytic leukemia, and orphan drug designation for the U2 combination for the treatment of CLL.

The next step is, we expect to hear from the FDA later this month on whether they have accepted the submission for filing. With approximately 185,000 Americans living with CLL and approximately 40,000 patients seeking treatment annually, CLL remains an incurable disease and represents a large patient population where we believe U2 will provide a needed treatment option for these patients.

Now I'd like to turn to our MS program, where our BLA submission is slated for the third quarter of this year. That BLA will be supported by the positive results from our ULTIMATE I and II Phase III trials evaluating ublituximab in relapsing forms of MS, which were presented during the AAN conference last month. Both studies met their primary endpoint, with ublituximab treatment demonstrating a statistically significant reduction in annualized relapse rate, which we call ARR, annualized relapse rate, over a 96-week period, with a p-value of less than 0.005 in both of the trials. That's compared to teriflunomide.

And the ublituximab treatment resulted in an ARR of 0.076 in ULTIMATE I and 0.091 in ULTIMATE II. For those who were on the call with the experts, which I'll talk about momentarily, they were very excited to see that those ARR numbers were below 0.1, which has never occurred before in a Phase III trial. So, really excited about those results.

We also hit key secondary MRI endpoints, including statistically significant reductions in both T1 Gd-enhancing lesions, as well as T2 lesions. Ublituximab also reduced disability progression and increased the rate of disability improvement as compared to teriflunomide. However, the former was not statistically significant.

In addition to the presentation at ANN, we hosted a call with leading neurologists to review this data. A replay of that call is available on our website, and I do encourage folks who are interested in TG to have a listen to that call. The doctors on the call were very enthusiastic about the profile of ublituximab and its potential in the treatment of MS.

For our part, we are extremely pleased with the results from the ULTIMATE I and II trials and believe these data showcase the potential of ublituximab to provide a highly efficacious treatment option with a generally well-tolerated safety profile. If approved, ublituximab will be the only CD20 offered in a convenient 1-hour infusion every 6 months -- of course, following the first infusion -- which treating physicians have shared is an important benefit for them and their patients. As a reminder, this trial was also conducted under special protocol assessment with the FDA. And as noted earlier, we are targeting a BLA submission for ublituximab to treat patients with relapsing forms of multiple sclerosis in the third quarter of this year.

The last topic I want to cover before turning the call over to Adam, is our U2 plus venetoclax program and our U2 plus 1701 program. As a reminder, 1701 is our internal BTK inhibitor. We view both of these programs to be an important part of the growth strategy for U2 and CLL.

For the U2 plus venetoclax program, we have the Phase I study, led by Dr. Paul Barr, Professor of Medicine and Director of the clinical trials office for the Wilmot Cancer Center in Rochester, New York. Preliminary results from the first 27 patients in this study to complete 12 cycles of fixed-duration therapy were presented at ASH this past December. In those patients, there was 100% overall response rate, and greater than 75% of those patients achieved undetectable minimal residual disease in the bone marrow. To my knowledge, that is the best reported rate of undetectable minimal residual disease in the bone marrow to date in patients with a relapsed refractory CLL. Later this year, we should have almost two times as many patients to report on through 12 cycles of treatment. So hopefully, that will be something we're able to present at ASH this year.

Now that Phase I set the foundation for our ULTRA-V Phase II/III trial, which is evaluating the combination of U2 plus venetoclax in patients with both treatment-naive CLL as well as relapsed refractory CLL. The Phase II portion of the ultra-V trial completed enrollment with approximately 165 patients being enrolled in just 16 months. The Phase III portion is now open to enrollment and is a multicenter, randomized trial comparing U2 plus venetoclax to an active control arm of U2. This trial is being led by Dr. Richard Furman, who is the Director of CLL Research Center at the Weill Cornell -- at Weill Cornell Medicine. We are excited about this combination and believe it can potentially offer patients a very active treatment that is of limited duration.

Finally, I'll mention that our BTK inhibitor, TG-1701, continues to impress us. We reported preliminary data at ASH, and we'll provide another update in the coming weeks at ASCO. Our goal is to explore the potential combination of UKONIQ and U2 with 1701, to offer the benefits of the triple inhibition of BTK, PI3K, and CK1-Epsilon, which would be the first of its kind, and putting them together but also dialing down the known toxicities of each of those classes. Again, this would be a very novel, first-in-class product.

As you can see, significant progress has been made across all of our pivotal programs, setting us up for an exciting remainder of 2021, and hopefully, an even more impactful 2022, with the potential of expanding our commercialization efforts into CLL and MS.

With that, I'm excited to turn the call over to our Chief Commercialization Officer, Adam Waldman, to share some highlights from our early commercialization efforts of UKONIQ.

Great. Thanks, Mike. And I am very excited to provide a commercial update on the UKONIQ launch, as we report revenues for the first time. With this launch, we are not only bringing an important new option to patients, but we are setting the foundation for multiple potential future approvals, including the combination of UKONIQ and ublituximab, known as U2, in CLL as our next major milestone.

While it is still early, we are pleased with our initial launch execution and feel we have made significant progress against our initial launch objectives. These were to build awareness of UKONIQ's differentiated profile, drive adoption with our targeted customers, ensure a positive first experience, and as I mentioned, set the foundation for TG in lymphoma as we plan for an anticipated launch of U2 in CLL.

In our first partial quarter, we achieved $0.8 million of net sales of UKONIQ. UKONIQ, as the first and only inhibitor of PI3K-delta and CK1-epsilon is a unique treatment option for patients with relapsed follicular or marginal zone lymphoma. Consistently, we have received specific and positive feedback about its clinical profile from our customers. Through market research, advisory boards, and our field team engagements, we have confirmed that UKONIQ is a different -- is seen as a differentiated product. We've consistently heard that the proven efficacy across marginal zone and follicular, its unique MOA, tolerable safety profile, low rates of discontinuation, and a lack of a black-box warning are important differentiators with health care providers and payers. We believe that these factors help establish UKONIQ in a class of its own.

We recognize that second-line marginal zone and fourth-line-plus follicular lymphoma, our label indications, represent relatively small patient populations. Therefore, our strategy out of the gate has been to target to higher-volume prescribers at academic centers and large community practices. Further reinforcing our strategy, we estimate that there is a roughly 85% overlap in the prescriber base between indolent non-Hodgkin lymphoma and CLL, so we also view the lymphoma approval as a valuable opportunity to introduce ourselves to the treating community and build the credibility and trust that will be critical to the CLL launch. So far, UKONIQ's initial uptake indicates that this strategy was well informed, with the majority of our initial use coming from targeted customers. Uptake has been roughly 50-50 between the academic and community settings, with many of our early adopters having prior clinical trial experience with UKONIQ.

While our customer-facing teams have been resourceful and strategic in our approach to engage and educate our customers, COVID restrictions have posed some challenges. Physicians report being Zoom-fatigued after a year -- after over a year of virtual engagement. However, the good news is that we are seeing live engagements continue to increase and believe COVID restrictions will continue to dissipate over the next several quarters, which should accelerate customer engagement going forward.

Our latest market research shows that over 80% of our target customers are aware of the UKONIQ approval, and approximately 90% of the physicians we surveyed that have met with a TG representative, either live or virtually, view the efficacy and safety profile of UKONIQ as favorable versus available options. We believe this to be very positive and demonstrates the effectiveness of our early launch efforts.

On the patient access fronts -- excuse me, on the patient access front, we worked hard to provide robust service offerings immediately upon approval through our TG patient support program, which we've received very positive feedback from patients and health care providers to date. We are committed to making sure that each and every health care provider and patient has a positive experience with TG and UKONIQ. In addition, we have been successful securing coverage for UKONIQ. We're happy to share that we have been able to rapidly achieve coverage of UKONIQ with large health plans, such as Cigna, Aetna, Anthem, and Kaiser. UKONIQ is now covered for 85% to 90% of Medicare and commercial lives. Additionally, UKONIQ has been added to the U.S. Oncology Clearview pathways for follicular lymphoma, consistent with our label. UKONIQ has also been added to the NCCN guidelines to a 2a option for patients with fourth-line follicular, fourth-line-plus follicular, and second-line-plus marginal zone lymphoma. Together with the payer coverage, these inclusions further enable patient access at institutions and practices.

Overall, we are pleased with the launch progress to date, and we are positioning ourselves for success as we prepare to potentially launch U2 in CLL. We have some of the most talented commercial people in the industry at TG, and despite launching during a global pandemic, I believe we have made great progress with the UKONIQ launch to date.

With that, I'll turn it over to Sean Power.

Thank you, Adam, and thanks again to everyone for joining us. Earlier this morning, we reported our detailed first quarter 2021 financial results, which can be viewed on our website at www.tgtherapeutics.com. For today's call, I'll touch on a few highlights from the quarter, beginning with our cash position.

We ended the first quarter with approximately $525 million in cash, which we believe will be sufficient to take us into 2023. As Adam noted earlier, following the FDA's accelerated approval of UKONIQ on February 5, we were pleased to report $0.8 million of UKONIQ net revenue in the first quarter. Our net loss for the first quarter of 2021, excluding noncash items, was approximately $74 million, compared to approximately $40 million in the first quarter of 2020. The increase we've seen in net loss as compared to the first quarter of 2020 is primarily related to increased selling, general, and administrative expenses associated with the preparations for and now execution of the commercialization and launch of UKONIQ, which occurred in the first quarter of 2021.

Additionally, during the first quarter of '21, we saw an increase in R&D expenses over the 2020 period, which was primarily driven by onetime licensing milestone payments of approximately $14 million, consisting in large part of a $12 million milestone due on approval of UKONIQ.

Our GAAP net loss for the first quarter of 2021, inclusive of noncash items, was $90.6 million, or $0.69 per share, compared to a net loss of $51.1 million, or $0.48 per share, during the comparable quarter in 2020.

With that, I will now turn the call back over to the conference operator to begin the Q&A.

(Operator Instructions) Our first question comes from Alethia Young with Cantor Fitzgerald.

Congrats on the progress with the launch. A couple. One, can you talk maybe a little bit about the breakout roughly in the kind of between MZL and follicular is that you're seeing? I know it's a small number, but I just wanted to kind of get a feel for which way the tide is cutting on that.

And then (inaudible) I was curious, just on, obviously, kind of early feedback around some of the GI talks that have been seen in the past and what people have -- what initially physicians have been seeing and patients have been seeing there?

And then my third question is just, was there any inventory stocking?

Adam, do you want to -- if you -- I don't know if you have any information yet on breakout between follicular and marginal zone and stocking question.

Sure, sure, sure. Yes. So, from what we've seen so far, and it's early, but what we've seen, demand for both marginal zone and follicular, it's hard to estimate exactly the breakdown, but we've seen usage in both, so we were very happy to see that.

As far as the stocking question, given that many practices will only see a few follicular marginal zone patients per year, we anticipate the pharmacy ordering generally to be on an as-needed basis. So we have placed some inventory with distributors to fulfill pharmacy orders, consistent with industry norms for a product like UKONIQ.

And then I think the third question was GI tox.

Yes, (inaudible).

Yes. So far, so good. It's obviously still early, but the reaction to the profile has been very good. Obviously, we've been educating customers to stay on top of it and be ready for it and know how they treat it if they see it. But so far, so good.

Our next question comes from Chris Howerton with Jefferies.

Congratulations on all the progress, obviously, commercial and R&D. And so, let's see, I guess, first off, for the -- I just don't recall what the status was of and maybe some information around the designs for the confirmatory studies for follicular and marginal zone. Just maybe some updates or some color on that side of the story.

And then, moving forward towards the end of the year, so I just maybe wanted to get a little bit of a level set in terms of what kind of information we can get from the pipeline. I know that you said 1701 at ASCO, but just maybe, what are kind of the key highlights and data expectations for ASH at the end of this year, if you may?

Sure. So, on the confirmatory trial, I don't want to say too much yet. We have noted in the -- as part of the approval, we had a basic design discussed with the FDA, but we do need to finalize that. So I think it's going to be in and around what other companies have announced previously from their confirmatory trials. And our hope is to get it up and running before year-end, and we'll give a lot more detail at the time. But again, there's a relatively standard trial design that's out there that other companies, (inaudible) and duvelisib have announced, and I think we'll be sort of closer in line to those kinds of studies.

In terms of pipeline updates this year, so, as I noted, we'll have some more information on 1701 at ASCO. And I was -- I've been relatively vocal that I was pretty pleased with the results that we saw at ASH. I've encouraged folks to take those results and line them up with other BTKs, both covalent and non-covalent, and see for themselves if they're seeing the same thing I'm seeing. Like I said, we'll have some more of that information available at ASCO, and I imagine we'll have even more available at ASH later this year.

For ASH as well, as I noted in my prepared remarks, we do hope to have twice as many patients or approximately twice as many patients, so nearly 50-ish patients available for that 12-month endpoint for the U2-plus-venetoclax Phase I trial, so that is what I'd say is the goal for U2 plus venetoclax would be that data set, the Phase I follow-up on -- I assume it's a follow-up on all patients at that point, or close to all patients.

And then, for the ULTRA-V Phase II portion, as we noted, we finished the enrollment early this year, earlier this year, so we don't have all 165 patients enrolled through 12 months at that time. So the question is going to be whether any of it gets presented in a partial format, or it's held until a full presentation. That will be primarily an investigator-driven decision. For me personally, I guess it doesn't matter all that much. We're going to have plenty of data from the Phase I, and then the Phase 2 will come when it can. If we can get some out from ULTRA-V at the ASH conference, we'll do it; if not, that will be a pretty fulsome data set available for ASCO, EHA approach in the June time frame of next year. So that's the ULTRA-V.

And then, 1801, we've got our fingers crossed. We'd like to present some early data at ASH this year. So 1801 is our CD47, CD19 bispecific antibody. We've just opened up the trial here in the U.S. We were -- because we started the study ex-U.S., we weren't able to move as fast as we would've liked. I think things are going to start to accelerate, but we're already in May. Having said that, the goal is to get some information out on that compound by year-end. And I think what's probably what we have to offer for the moment. There may be other cuts of data that we look at and we present, but I'd say those are probably the major updates for later this year.

Okay. All right. Well, certainly a lot going on. And then -- I mean, maybe just to remind us, the Phase II portion of the ULTRA-V study, that does have the possibility to have a registrational implication. Is that right?

Yes, it is possible. It's something that's probably going to be somewhat challenging as a single arm with multiple drugs. But once we have all the data put together, we'll definitely have a conversation with the FDA and see what their appetite is for an accelerated approval. We know that accelerated approvals in CLL are challenging these days for them, but we do feel like the data will be quite encouraging, so we'll take our shot. No guarantees -- for sure, no guarantees, but we'll take our shot.

If not, again, we think it's a very robust data set that should provide a potential update to the NCCN guidelines. Our Phase III will be well into the enrollment phase, and so that will be ongoing. And both drugs are approved, and obviously, we would not be marketing at all to U2 plus venetoclax, but physicians are capable of making their own decisions. And again, both drugs would be approved in the indications that someone might be willing to use them. So, again, we will at best have something that's useful for compendia listing. I mean, not best. Best-case scenario would be an approval. But the second option would be, it will be useful for a compendia listing, and that's pretty good, too. And then, like I said, the registration trial is on go.

Our next question comes from Josh Schimmer with Evercore.

Thanks for taking the questions, a few primarily housekeeping questions. For SG&A, the noncash comp cadence, can you help us understand? It looks like it's second half loaded, at least over the last 18 months. Is that by design, or is that coincidence?

And then for the R&D milestones that you had recorded in the first quarter, are there any additional ones that you would expect to be booking in 2021?

And then last question, maybe you can update us on your plans for ex-U.S. commercialization for territories for which you have the rights for ubli and umbra?

Sean, do you want to hit on the SG&A and R&D milestones, and I'll talk about the ex-U.S.?

Sure. I think the SG&A noncash comp being back-loaded the last year or so was certainly not by design. I think it was a function of the commercial build, certainly last year, prepping for the UKONIQ launch. I think it will probably be a bit more level in '21, although, as we do continue to ramp for a potential CLL launch, you might see a slight trend upward again in the second half.

In terms of R&D milestones left for potentially '21, there is a milestone due to LFP on the approval of ublituximab. So should that -- should we be fortunate enough for that to come in '21, that would be a '21 milestone.

Okay. What's the approximate amount of that milestone, Sean?

Low double digits.

Okay. Excellent. Okay.

And then in terms of ex-U.S., Josh, we're still working out the details there. Adam and his team have been doing kind of a full-court press evaluation of what's the best approach there. We've given ourselves a little bit of time to make those applications after the approvals for U2 and for ubli and MS, so we're going to (inaudible) the approvals here in the U.S., and we're working towards the approvals here, and then we'll work toward the approvals abroad. So we have a little bit of time to make that call. But I would say, and Adam can confirm, that this team is leaning towards keeping it internal and launching ourselves, at least in the major European markets. And then I think opportunistically, we'd look for partnerships in places like Japan or China to see if there's some value to be extracted. But probably in the major European markets, the lean today is toward doing it ourselves.

And what are the time lines for registration in Europe?

So I think the filings will remain probably 6 to 12 months after we have the approvals here in the U.S.

Our next question comes from Eric Joseph with JPMorgan.

A couple. First on UKONIQ commercial, do you have a sense of repeat prescribing patterns so far? And what are you anticipating in terms of growth in new patient adds and durational therapy over the course of 2021?

And then, just following up on the question about the registration potential of ULTRA-V, again, yes, how should we be thinking about accrual time lines in the Phase III trial if the Phase II, in and of itself, isn't strong enough for approval? And does the Phase III trial represent at all a headwind to you U2 commercial, assuming label expansion at the turn of the year?

Sure. Adam, do you want to tackle the first two, the UKONIQ commercial re-users.

Yes, certainly. Eric, it is still early, but the good news is we have seen refills, and we've also seen physicians prescribing for more than one patient, so we think this is a really positive indicator. But it is still early. As far as duration goes, we'll see, obviously, we're doing everything we can to educate physicians and health care providers on managing patients and keeping them on therapy. We think that is key to our future success.

Great. And in terms of the accrual timelines for ULTRA-V Phase III, we think there's probably going to be a 12- to 18-month accrual period, and that will be followed by a similar, probably 12 to 18 months of follow-up. Now there's two groups here that we -- so we have two separate basically separate studies almost built into the one study. So we have a cohort for relapsed refractory, and we have a cohort for frontline, so they could enroll at different paces. And certainly, the follow-up on the relapsed refractory side will be shorter, so it's altogether possible that -- and they're separately powered, so the studies can be completed independently. So the study can be completed in two parts. So we think there's probably a greater chance that the relapsed refractory would go to the FDA more quickly, potentially in sort of the say, 24- to 36-month time frame, and the frontline, probably a little bit longer.

I don't think there's really too much in terms of headwinds. Recall that the venetoclax is still not a fully accepted regimen, and that's using -- being generous, fully accepted regimen in the community, right? It's pretty -- it's use in the community is still very limited. And like I said, we -- like we said previously, not today, but previously, we've said we do think that, in time, it will get there. And our focus has been, we want to make sure we have a label within the next 3 to 5 years to the meet the move of venetoclax into the community setting.

The academic centers, we see -- we definitely see a nice uptake of venetoclax in first-line patients, so that's a market that we'd like to be in. And again, I think the academic centers are very familiar with venetoclax, and they will be familiar with U2. And with compendia listing, like I said, they will do as they wish, and the community is not quite there yet anyway. And we're still -- fingers crossed, we're still going to have our first initial launch of U2 later this year, potentially early next year. And we definitely want some time to build the U2 as U2 before we move on to the combination.

So I think the timing -- I don't perceive it any headwinds. I think the timing is working out exactly the way we'd want it to. We think there's a lot of value to be derived for U2 as U2, particularly in the community, particularly in patients who are either poor candidates for BTK therapy or have already seen BTK therapy. We think there's a lot of patients out there that will benefit from U2. And then, as the data evolves and we move into a world where venetoclax is more broadly available, then U2 plus venetoclax should be labeled at that point. And that, we believe, has a shot of becoming a standard of care for first-line treatment, and certainly, in patients who have already seen a BTK across both academic and community centers.

So, and then there's time for this market to evolve, and we're going to be, I think, lined up perfectly in a time frame for that. So I don't think there's any headwinds, in my opinion.

Okay. Got it. Maybe one quick follow-up, if I could. In terms of site locations or geographies that the ULTRA-V Phase III is recruiting from, is it primarily in the U.S.? Are you recruiting patients ex-U.S. as well?

So currently, it's exclusively the U.S. We are looking at some very high-enrolling centers ex-U.S. that we potentially may add to the trial. But currently, it's exclusively a U.S. trial. And those sites are primarily major academic centers, which is very nice. We have a good -- we have a very good group of academic centers. We've expanded even beyond those that were involved in the Phase II portion. And for the Phase III, we've also included large community centers that do use venetoclax, and so we're excited to have those folks as part of the trial as well.

Our next question comes from Ed White with H.C. Wainwright.

Just a follow-up on your European strategy. What you're saying about going alone in Europe and partner in Japan and China, does that apply for the MS opportunity as well?

As of the moment, yes, it does. It's a lean, Ed. It's not -- we haven't been confirmed yet. It's a lean right now, just to be clear. We're leaning in that direction.

Okay. And then maybe a question for Sean and just following up about the noncash compensation, you had discussed that line item for SG&A. I was curious about R&D as well as noncash compensation was up 30%, about, quarter-over-quarter. I'm just wondering if there was something onetime in nature in there or if that's sort of the new base.

Yes. Thanks, Ed. I think the -- this is probably the new base for R&D. I think the change there was likely a function of change in the stock price and a slight add in headcount, but this is probably the new base.

And then my last question, Mike, you gave updates on a few of the products. Can you just give us an update on 1501?

Yes. So 1501 is in a Phase I here in the U.S. right now in heme. Obviously, the drug itself is getting close to a registration in the non-heme area being developed by another company. But for us, we are in Phase I. We're collecting data. It's still very early. I will say that we've had some challenges with that enrollment because PD-1, PD-L1 is not viewed very attractively in heme malignancies, which is unfortunate. I think there is a role, and it needs to be vetted out. I just think some early work was not overly positive compared to other agents. But I do think in combinations, that's a mechanism that actually could be very interesting, so we're continuing to pursue it. We're adding some additional combinations to help enrollment, and we'll keep you posted.

Our next question comes from Matt Kaplan with Ladenburg Thalmann.

Just wanted to focus a little bit on the initial use you're seeing of UKONIQ, I guess, in the community versus the academic setting. You're saying that it was about 50-50 initially. Do you, I guess, expect that to change over time? And when you add kind of U2 to the commercial profile, how do you think that will roll out in terms of community versus academic?

Adam, you want to take that one?

Yes, sure. So yes, we were very pleased to see the split between academic and community in the initial uptake, which we think is good. As you know and we said before, the vast majority of these patients are treated in the community, but it's dispersed amongst many, many community physicians, where in the academic centers, it is concentrated. So we certainly have focused on the academic centers, but also getting out in the community.

I will say that this split seems about right to me. I think we'll continue to track it and see as far as your question about what we see, how this will change going forward. I think it could -- as the product becomes more in widespread use across the community, it could go up across community centers, if anything. Was there a second question beyond that? I think that was it.

No, I think you covered, yes. And then, I guess, maybe -- I don't know if this is for you, Adam, but I guess you mentioned in your prepared remarks that you're getting good payer coverage, 85%, 90%. Has there been any issue in terms of patient access, even though with that coverage in place? Are you seeing any access issues with patients either getting coverage or reimbursement and that kind of thing?

Nothing that is not typical for a launch product. So I think everything that we've seen is normal as we get on formularies. And so no, we have not seen any issues.

And then, I guess, last question in terms of the ULTIMATE I and II Phase III trials. As you're thinking about commercialization preparation there, how should we think about that product as differentiating in the marketplace?

So thanks, Matt, for that. Yes. So obviously, we were super pleased with the results from ULTIMATE I and ULTIMATE II. The easiest differentiator in the marketplace will be certainly the 1-hour infusion. We're also working -- our payer group is actively studying and meeting with payers to better understand what it will take to create the best access possible for patients with obinutuzumab. So, as we've noted multiple times, if we can identify a price that will enhance access for patients, we will do that. So we think that there's a price differentiator.

And then, on the clinical profile, look, we'll leave it to the experts to say, but in our opinion, we've got some of the best data that's ever been seen in the treatment of MS. We think that the annualized relapse rates are incredibly low in (inaudible) obinutuzumab arm, under 0.10, which is, as many of you have heard who've listened to the calls, is a pretty big hurdle in the MS landscape. With relapses, the lower patients who see lots of relapses, it's usually connected with disability progression. These are sort of relapsing-remitting disease. You have a relapse. Not every relapse results in disability progression, but very few patients will progress with their disability without -- in the absence of relapse. So keeping those relapses down is obviously super important. It's (inaudible) for these trials.

So, yes, we think that the profile across the board, every one of the end points on the efficacy side looks as good, if not better, than anything else that's out there today. So we feel that the safety and efficacy look quite good. We've got really nice differentiation on convenience, and hopefully, we'll have a differentiator on price.

Mike, that's very helpful. And congrats on the progress again.

Our next question comes from Mayank Mamtani with B. Riley.

This is Sahil Kazmi on for Mayank. Just a quick one from us, maybe. As it relates to the Phase III ULTRA-V study, could you talk to the kind of thought process and rationale about having U2 as the active comparator arm? And kind of any underlying assumptions on surrogates like ORR or PFS? And maybe any key learnings from the CLL-14 program with venetoclax and GAZYVA?

Yes, I mean, I think we -- from the studies that are being run currently, I think the venetoclax plus [ibrutinib] trial are using the GAZYVA (inaudible) as the control, still. So we think U2 is a -- based on our studies, a very active control arm. It's also a control arm that we're familiar with. We understand the properties profiles, and we've run clinical trials with U2 before, quite extensively. So, for us, it was kind of a natural go-to.

The expectation, of course, is that U2, by the time this study would read out, will be an approved regimen in CLL, both in frontline and relapsed settings. So it seems kind of a natural, and for us, it does help to separate. Obviously, it's I U2 plus venetoclax versus U2 alone, so we get to see a really nice comparison to the control arm versus using a sort of a non-regimented control arm that we're testing. So I think for us, it was kind of natural to use U2. And we think going forward, other companies are likely to use U2 as a control arm as well, as [GC] becomes less usable going forward.

Absolutely. Definitely makes sense. I think that's it from us. Congrats for the quarter.

Our next question comes from Graig Suvannavejh with Goldman Sachs.

I've got maybe two. One, just as we think about the current uptake -- and congrats on seeing first sales -- any color? And I think you provided some high-level comments early in your prepared remarks just how to think about progression of the uptake throughout the balance of the year, particularly around kind of expectations on post-COVID vaccination world and kind of when you expect kind of an inflection, if there is going to be one. And then second for me would be, just thinking about your product portfolio in terms of having products in 2 different therapeutic areas, oncology and then MS, and just wondering if you could provide your perspective around kind of where you see the most tangible synergies between those two, if there are any. And maybe it's more back-end versus, obviously, sales reps and tactics or strategy.

Sure. Adam, you want to talk about the uptake of UKONIQ and maybe progression and potential (inaudible) inflection points?

Sure. Yes. I mean, I think it's still early, obviously. We're enthused by the positive reactions we're seeing to UKONIQ's profile. However, these are small patient populations, and we've had limited time so far to defend it and to determine any definitive trends. But I think, with the increase of live engagements and restrictions sort of loosening, hopefully over the next few quarters, we hope that increased engagements will lead to meaningful discussions about the product, and hopefully, adoption. So I think it's -- just to summarize, I think it's a little too early to say, and we'll see how it goes. But we're enthused that we can get in front of physicians and have these conversations moving forward.

And to your point on the portfolio and the two therapeutic areas, I guess, first and foremost, it starts with the science, right? So these are all diseases that are characterized by aberrant B cells. Obviously, in cancer, you've got malignant B cells. And on the MS and autoimmune side, you've got these aberrant B cells that are part of the immune autoimmune cascade. So I think scientifically, there's a big overlap, and it's sort of a natural. The ability to maneuver our compounds in both therapeutic areas because of their underlying science is, I think, important to us and important for why we're doing this.

In terms of other tangible synergies, I think in terms of the commercial side, we're going to obviously need to build a sales and medical team that are focused on MS. But I do think that a lot of the commercial pieces that we've built in terms of operations and organization will support the focus in both therapeutic areas. So there's more to build, but the overlay into the current organization, I think, is a pretty nice synergy across both indications.

Adam, I don't know if you have anything more to add on the commercial side.

No, Mike, I think you covered it.

At this time, I would like to turn the call back over to Mr. Mike Weiss for closing comments.

Great. So I just want to again thank everyone for joining us. We had a nice start to the year, and we're looking forward to some exciting additional things to come for the remainder of the year. So let me just summarize some of those.

First, we're going to continue to execute on the commercial of UKONIQ, commercialization of UKONIQ, in both relapsed and refractory marginal zone follicular lymphoma. Sort of the next potentially big thing coming up is, we're waiting to hear from the FDA whether they've accepted our BLA for filing for U2 in both previously untreated in relapsed refractory CLL. And then, assuming positive news and they accept that filing, we'll be looking -- working closely with the agency to get that application approved as quickly as we can.

We're going to complete the BLA submission for ublituximab in RMS. Again, that's targeted for the third quarter of this year. And as part of that, and as we're going to be preparing our commercial organization for a potential launch in CLL. And obviously, we're going to be working also on the build-out for ublituximab in RMS, which got a little more time for. If the third quarter is the target for the filing, the target for approval would be about 12 months after that, so 4Q of '22 would be the target there, so then we get the application in 3Q this year. So a little bit of time, but again, we're working on that as well.

And then, beyond that, we're continuing to advance our pipeline. We've got a ULTRA-V Phase III trial. We're looking to potentially move TG-1701 into a Phase III this year as well. And then the earlier pipeline, we've got 1801 and 1501 that continue to progress. As asked in one of the questions, later this year, we're looking forward to presenting data on the U2-plus-venetoclax combination. More data from 1701, our BT inhibitor, both at ASCO and later this year. And as I noted, possibly Phase I data from TG-1801 or CD47 and CD19 bispecific antibody.

So, very busy remainder of the year. We've got a lot to execute on. We've got a great team coming together on all fronts. So that is our update. So, on behalf of everyone here at TG, again, I want to thank every one of you for the support and for joining us today. Have a great day.

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