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Edited Transcript of RIGL earnings conference call or presentation 6-Aug-19 8:30pm GMT

Q2 2019 Rigel Pharmaceuticals Inc Earnings Call

South San Francisco Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Rigel Pharmaceuticals Inc earnings conference call or presentation Tuesday, August 6, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Anne-Marie S. Duliege

Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer

* Dean L. Schorno

Rigel Pharmaceuticals, Inc. - Executive VP & CFO

* Dolly A. Vance

Rigel Pharmaceuticals, Inc. - Executive VP of Corporate Affairs, General Counsel & Corporate Secretary

* Eldon C. Mayer

Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer

* Raul R. Rodriguez

Rigel Pharmaceuticals, Inc. - President, CEO & Director

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Conference Call Participants

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* Allison Marie Bratzel

Piper Jaffray Companies, Research Division - Research Analyst

* Eun Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Kristen Brianne Kluska

Cantor Fitzgerald & Co., Research Division - Analyst

* Yigal Dov Nochomovitz

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Greetings, and welcome to Rigel Pharmaceuticals Financial Conference Call for the second quarter 2019. (Operator Instructions) As a reminder, this conference is being recorded.

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

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Dolly A. Vance, Rigel Pharmaceuticals, Inc. - Executive VP of Corporate Affairs, General Counsel & Corporate Secretary [2]

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Welcome to our financial results and business update conference call. The financial press release for the second quarter of 2019 was issued a short while ago and can be viewed, along with the accompanying slides for this presentation in the News and Events section of our Investor Relations page on our website at www.rigel.com.

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

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

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thank you, Dolly. And thank you for joining us on our second quarter 2019 financial and business update call. Also joining me on the call today are Eldon Mayer, our Chief Commercial Officer; Anne-Marie Duliege, our Chief Medical Officer; and Dean Schorno, our Chief Financial Officer.

I'd like to start with Slide 5. Rigel is focusing on developing opportunities that will drive both near-term and long-term value. And we have a clear path to creating this value for the company and its shareholders. Our main priority now is execution, so let me show you how we're going to do that. From a commercial perspective, we brought TAVALISSE to the market approximately 12 months ago. TAVALISSE is the first approved SYK inhibitor for the treatment of ITP. TAVALISSE is highly differentiated as the only therapy that prevents the body's immune system from destroying its own platelets. And so addresses the underlying pathophysiology of this disease.

Chronic adult ITP is a $1 billion market in the U.S., and we are establishing ourselves in this rare disease market with important unmet medical need, and we are gaining market share.

As we look at other opportunities for revenue generation, we are focusing on expanding the range of potential indications for TAVALISSE. We believe that SYK inhibition plays an important role in a number of other immune-mediated diseases.

Our plan is to continue development efforts on new indications, such as autoimmune hemolytic anemia and others. The investment is worthwhile since TAVALISSE has exclusivity until 2031.

Our pipeline of opportunities come from Rigel's proprietary research, the foundation of the company. We are proud of our research and development accomplishments to date and their contributions towards creating further long-term value for the company.

Going on to Slide 6. We are executing to drive value for Rigel. Sales were $10.2 million in the first -- in the second quarter, which was a 26% growth from Q1. Clearly, the launch is going quite well.

We're also seeing growing awareness for TAVALISSE, including understanding optimal dosing, duration of treatment and broader use amongst physicians and patients. These trends are exciting in regards to our future growth potential.

We continue to progress with the EMA approvals process and we're responding to the Day 180 questions. Based on the expected time line, we should have a decision from the EMA by the end of the year, which could potentially mean a sizable milestone as well as a royalty stream from Europe beginning next year.

On the last call, we announced that the sites for our Phase III trial in AIHA opened, and subsequently, we announced the enrollment of the first patient. We have seen -- very -- been very strategic in our approach to this trial enrollment in order to complete this in a timely manner. Anne-Marie will discuss this further in greater detail.

Going on to Slide 7. Before Eldon dives into the commercial business, I'd like to talk a little bit about the opportunity in warm autoimmune hemolytic anemia and why we're so excited about this indication.

First, based on external market research, this market has potential to be a $1 billion market. The patient population is approximately 40,000 and with no FDA-approved therapies for this disease, this is a clear unmet medical need. TAVALISSE may bring -- begin to address this important unmet need, and has already shown the benefit in its Phase II clinical trials.

Similar to ITP, steroids are the primary option for patients today, but they are known to have side effects that are difficult to manage, especially in the long term. And so they are not an optimal choice for chronic treatment. Potentially becoming the first product approved for warm autoimmune hemolytic anemia with a safety profile for long-term use, would provide a significant advantage for Rigel in this market.

Finally, the AIHA opportunity is extremely synergistic with TAVALISSE and ITP. The physicians that treat ITP are also the ones that treat AIHA. Our team is already educating the market on SYK inhibition in ITP and the mechanism of action is similar in AIHA.

We have a commercial infrastructure already in place. It would require minimal change to begin selling TAVALISSE for warm autoimmune hemolytic anemia.

So with that, I'd like to turn the call over to Eldon for an update on our commercial progress and the exciting inroads we're making with TAVALISSE. Eldon?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [4]

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Thanks, Raul. It was a great quarter for TAVALISSE following a significant uptake in the first year of commercialization. Our Q2 product sales were strong with bottles shipped up 25% over Q2, bringing in $10.2 million in net revenues.

Importantly, we continue to see strong persistency. Our patient refill rate for TAVALISSE at 4 months suggests that approximately half the patients are receiving a benefit with manageable side effects. As a product in its commercial entity, we believe this is very encouraging. With further experience and knowledge of the product among HCPs as well as use in earlier lines of therapy, we believe there is potential for this to improve over time. To that end, we continue to see trends towards using earlier lines of therapy. The next 2 lines of therapy in the post-steroid market comprise about 75% of the addressable market. So it's critical that we capture a significant share of this subset of patients. We believe it's very achievable given the TAVALISSE product profile and the unmet need in this market.

We're also seeing expansion of the prescriber base, good repeat prescribers year-to-date and consistency of adding new prescribers quarter-over-quarter, all of which can be attributed to the positive results that physicians and patients are having with TAVALISSE as well as strong execution of our customer-facing team.

Next slide. When TAVALISSE entered the market as the first product in 10 years with a different mechanism of action, we had the challenge of changing the mindset and the habits of physicians, patients and payers. In just 1 year, we've seen our efforts have an impact on how physicians are thinking about ITP treatment, how patients are looking at their options and how payers are valuing our product. Our core objectives have been to: number one, highlight the different mechanism of action that addresses the destruction of platelets; number two, communicate the benefit of TAVALISSE across lines of therapy; three, educate on dose titration to achieve an optimal benefit as well as the ability of our product to be used continuously to address the chronic nature of this disease; and four, support access and adherence.

One of the ways in which we're doing this is through RIGEL ONECARE, our physician and patient assistance center and its support programs.

These efforts have led to a positive reception of TAVALISSE by the ITP community as demonstrated by the following. Physicians recognized this is a very different product compared to others, and many physicians agree that preventing the destruction of platelets is an important way to treat ITP as opposed to stimulating the bone marrow to increase platelet production or by weakening the immune system to slow the destruction of platelets.

Additionally, patients are expressing their excitement for another treatment option. While we have an attractive safety profile and convenient oral dosing the patients can really appreciate, we're also demonstrating a meaningful clinical benefit. And finally, since launch, payers have shown they understand the value of our product, and coverage continues to be strong.

Next slide. Obviously, you don't drive change overnight with a physician and patient community. The majority tend to demonstrate caution when a new treatment comes to market and need to fully understand the product or wait to see the type of success early adopters are having. To address this, we continue to drive physician access and awareness and create as many touch points as possible. For example, we support physician peer-to-peer education, particularly among those engaging in initial use of TAVALISSE, so that they have the knowledge and confidence to titrate and treat patients successfully.

Here on this slide is a real-world example of how our multiple points of direct and indirect engagement, including exposure at conferences, sales force engagement, peer-to-peer engagement and experience converted a physician into a repeat prescriber.

Initially, the physicians learn TAVALISSE at our exhibit booth at ASCO. They then receive a follow-up from Rigel and identified an appropriate patient. Patient received a meaningful clinical benefit after a short time on treatment and the physician gained further confidence through peer-to-peer speaker forums and is now using TAVALISSE more broadly across numerous patient types and lines of therapy. And on this next slide is another real-world example of how we are successfully reaching physicians and how experience and education of optimal dosing are resulting in patients benefiting from treatment with TAVALISSE. This physician was recommended TAVALISSE by a peer that had success using it with different patients across various lines of therapy. The patient was identified who is frustrated with their current therapy and then switched from a TPO drug to TAVALISSE. The patient experienced a modest benefit in the first month, but the physician spoke to a colleague who suggested titrating the dose of TAVALISSE up to 150 milligram BID and then extended treatment for up to 12 weeks before potentially discontinuing. Patient received a clinically meaningful response and continues on treatment today.

Final slide. To summarize, our success to date has been driven by the broad efforts of our customer-facing team. It's also important to note that over time our team has gained and will continue to gain additional tools to help educate and change the mindset of physicians who have been using the same products for years with varying degrees of success. We believe engagement, experience and education are essential components that will drive our market share growth in the coming quarters, and these efforts continue to increase and improve over time.

Since the beginning, the sales team has been the foundation of TAVALISSE success and will continue to be the main driver of uptick, however, other channels of physician engagement are also important in growing awareness and adoption, and we are very active with speaker bureaus and at medical conferences.

We continue to hear TAVALISSE success stories and see physicians sharing their experiences, which are driving use and increased interest. And by continuing to educate the market and grow our database with insights from our extension study and post-hoc analysis, publications and educational programs, we believe we can attract further physician interest and continue to change the mindset of prescribers.

I would also like to point out that we are not just educating the market on our product, we are also educating ourselves on the market. Through educational advisory boards and ongoing market research, we continue to grow our understanding of the market, which we believe will help us to achieve a leading market position for TAVALISSE. Thank you. Anne-Marie?

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [5]

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Thank you, Eldon. I would like to walk you through our initiative on the clinical development side that has the potential to create meaningful near-term value for Rigel.

As an update, we remain on track with the -- we remain on track for the EMA's decision on our marketing authorization application for fostamatinib in chronic ITP. We have been collaborating with Grifols as they prepare for the potential launch in Europe and with the lead time they have as well as the relationships and infrastructure they have established over the years, revenue generation in Europe could begin next year.

Kissei is moving along as well, working to finalize the trial protocol for a bridging study in Japan. Based on their expectations for the trial, they expect to be in a position to file an NDA by -- at the end of the fourth quarter in 2021 or during the first quarter of 2022.

We're also continuing to move forward with the next indication for TAVALISSE in the U.S., which is warm autoimmune hemolytic anemia. We have enrolled the first patient as planned and have several sites that are approved for participation.

With enrollment up and running, we're on track to complete enrollment in the middle of next year and have top line results in 2021.

Next slide, Slide 16. Raul described why we're so excited about the potential opportunity for TAVALISSE in warm antibody autoimmune hemolytic anemia. This is a wide open market, and our goal is to become the first FDA-approved product.

In order to achieve this goal, we need to be thorough but also efficient in our Phase III trials. We have been able to leverage our experience with ITP to help develop a strategy that we believe will enable us to enroll the trial in a timely manner.

Our trial protocol calls for 80 patients. However, we'll be targeting over 90 sites in 22 countries to enroll the trial. Since this is a rare disease, the pool of patients is relatively small. So being aggressive in the number of trial sites we enlist and being thoughtful as to which geographies we utilize will help compensate for potential hurdles.

With that said, the relationships and knowledge we gained from the ITP trial and the subsequent commercial launch in the U.S. will also help mitigate potential challenges that come with recruiting from a smaller patient population.

Early on, we have seen contributions from our ITP experience as we have had 9 out of the 11 Phase III sites in the U.S. enlist in our autoimmune hemolytic anemia trial.

Additionally, we have received interest from physicians whom have had success treating ITP patients with TAVALISSE and understand how the mechanism of action could potentially work well in warm autoimmune hemolytic anemia.

The trial is being managed by a CRO that has substantial experience in the field of autoimmune hemolytic anemia, which we believe provides a significant advantage.

Finally, we're being very diligent in selecting 12 sites and how we work with them to identify patients. While patient identification is core to any clinical trial site, we're taking extra steps to stay informed on all the potential patients a site will have. Our system enables us to maintain close contact with sites around the time that prospective patients will be making office visits. And we will work with the investigators to make sure that these patients understand the value of TAVALISSE and are aware of the trial opportunity.

Our enrollment efforts are very robust, and we believe they will provide significant value to our execution efforts.

I will now turn the call over to Dean Schorno.

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [6]

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Thank you, Anne-Marie. I'm looking at Slide 18. For the second quarter of 2019, we shipped 1,270 bottles to our specialty distributors, resulting in $12.5 million of gross product sales. 1,163 of those bottles were shipped to patients at clinics, while 107 bottles remained in our distribution channels at the end of the quarter. As of June 30, a total of 436 bottles remained in our distribution channels.

We reported net product sales from TAVALISSE of $10.2 million, which was recorded net of estimated discounts, charge backs, rebates, returns, co-pay assistance and other allowances of $2.3 million, a gross-to-net adjustment which is 18.5% of gross product sales. This 26% quarter-over-quarter increase in net product sales of TAVALISSE reflects the continuing growth of our business since commercial launch in May of 2018.

As a reminder, and as we expected, our first quarter sequential net product sales growth rate of 10% was impacted by typical first quarter reimbursement issues such as the resetting of co-pays and the Medicare donut hole. As a result, our second quarter sequential net product sales growth rate of 26% was positively impacted. For the third quarter, this sequential growth rate is likely to moderate.

Onto the next slide. In addition to our net product sales, contract revenues from collaborations were $234,000 for the 3 months ended June 30, 2019, which were related to our collaboration agreements with Kissei Pharmaceutical Company Limited and Grifols, S.A. There were no contract revenues from collaborations during the 3 months ended June 30, 2018.

As a reminder, we entered into the collaboration agreement and license agreement with Grifols during the first quarter of 2019 to commercialize fostamatinib in Europe. In the first quarter, we discussed the revenue accounting as well as the key terms under the agreement.

Moving on to costs and expenses. Our cost of product sales was approximately $311,000 for the second quarter of 2019. Overall, cost and expenses were $31.7 million versus $27.9 million in the second quarter of 2018.

The increase in cost was primarily due to increased personnel costs for Rigel's customer-facing team and third-party costs related to the commercial launch of TAVALISSE in chronic ITP as well as R&D costs related to our Phase III pivotal trial TAVALISSE in patients with warm autoimmune hemolytic anemia, which was initiated during the quarter.

We expect our cost and expenses to increase in the second half of 2019 compared to the first half as we continue to ramp up our activities in our Phase III study in warm autoimmune hemolytic anemia and as we continue our commercial expansion at TAVALISSE.

We ended the quarter with cash and short-term investments of approximately $112.4 million. We currently expect our cash runway to extend into the second half of 2020 and provide for our continued commercial expansion as well as expansion of our clinical programs.

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

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [7]

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Thank you, Dean. And I am on Slide 21. I'd like to reemphasize how pleased we are with the performance of TAVALISSE in its first year on the market for the treatment of ITP. Our commercial team did an excellent job in preparing for the product launch and then executing on that plan, and these efforts are clearly paying off.

For our first year, we generated over $32 million in net product revenues, owing to steady double-digit increase in sales quarter-over-quarter. That's fantastic. And most importantly, over 1,000 patients have been treated with TAVALISSE to date, and many of them are succeeding on our product.

The momentum and trends we are seeing as we emerge from the first year are incredibly encouraging.

Slide 22. The results for the first half of 2019 speak for themselves, but let me remind you of our priorities for this entire year. Most importantly, continue growth of TAVALISSE. We are growing awareness of TAVALISSE amongst physicians and patients alike, and importantly, physicians are gaining experience and becoming more educated on the product and its use, and this will continue to drive increased usage and durability of treatment.

For our next indication AIHA, we are enrolling patients in the pivotal trial for TAVALISSE. We're also working to make fostamatinib available globally, including seeking EU approval for TAVALISSE in ITP and its launch potentially next year. In addition, we have been actively progressing our other pipeline initiatives, and we expect to talk more about these in the coming quarters.

With that, I'd like to turn the call over to the operator for your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today is coming from Eun Yang from Jefferies.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [2]

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I have a couple of questions. So last October, you gave us the data pointing to about 16% second-line use and about 25% total-line use. Can you give us an update on your number? And also, what percent of patients currently on TAVALISSE are post-TPO mimetics?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [3]

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Yes. Eun, this is Eldon. I will answer your question and -- as best I can. We haven't revealed any specific metrics by line of therapy since then. I think as I've mentioned on prior calls, it's -- that data we are continuing to monitor, and as we collect more data, I think that we'll be able to report on that -- report out on that in the future. And we think we have sufficient data that those figures are reliable. I can tell you, though, as we monitor it, we are seeing continued trend towards earlier warrant treatment. So we are being used across all lines. But are -- we are seeing a gradual movement upward in warrant.

Also, as you may understand about the market, there are many different styles of treatment. Some doctors prefer to use Rituxan or rituximab or TPO drugs and there are many variations. There's a lot of heterogeneity in disease and a lot of variability in treatment. And therefore, there are many different entry points for how our drug can be used. So the usage of our drug is across all lines for a number of reasons, but -- in part because physicians have different treatment styles, and they see the value proposition and role for our product differently, depending on how they prefer to treat the disease. So hope that helps.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [4]

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So what percent of patients are currently on TAVALISSE post-TPO mimetics?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [5]

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Yes. I don't think we have a reliable number for you. We could check and possibly follow-up at another time.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [6]

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Okay. And then another question is a doptelet was recently launched, it's another TPO mimetic. Do you -- are you seeing any impact on TAVALISSE. I know it's probably really too early, but do you -- more importantly, do you expect that to have an impact on earlier use of TAVALISSE?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [7]

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Let me try to answer that and then take it over to Eldon. I think our view has been and continues to be that the value proposition of TAVALISSE is driven by its mechanism of action, which is unique and different in the treatment of ITP, addressing the underlying disease mechanism. And that has resonated quite well with physicians and many other health care providers. And so that's what the real focus of us, and for that, I think it continues on unchanged, even with the recent launch of avatrombopag. Eldon, you want to add some comments?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [8]

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Yes, I mean it goes along consistent with what I said before. I mean we are being used across all lines. And I think there are physicians that are using our product for more TPOs, and physicians that are using our product after that. So there are physicians that may choose to use a TPO and they can pick one of their choice. But we believe that we are well-differentiated from that class. And we think there's a lot rationale for using our product. When a TPO has not resulted in a good clinical response, it makes more sense to use products with different mechanism of action like ours before moving on to yet another TPO. So again, of course, as you sanctioned it's quite too early to see the impact.

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Eun Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [9]

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All right. And the last question is, so autoimmune hemolytic anemia, patient enrollment is going to be -- completion is going to be expected within next year. And you see that in the 24-week study, so why not data earlier than mid-2021?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [10]

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Yes, Eun. So we initiated enrollment. We expect to have it enrolled mid next year. And it is a rare disease, so keep in mind it is a challenging disease to enroll trial patients in this. The fact that we're going to 22 countries is kind of a testament to that. And so we, nonetheless, plan on having completion of enrollment by mid next year. Mid is broadly defined sometime this summer, most likely. And with that, it's a 6-month study, and couple of more months of that after completion of the last patient, last visit. And so that could bring us into mid-2021.

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Operator [11]

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Our next question today is coming from Chris Raymond from Piper Jaffray.

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Allison Marie Bratzel, Piper Jaffray Companies, Research Division - Research Analyst [12]

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This is Ally Bratzel on for Chris today. So we saw you guys took a -- I think a 9.5% price increase on TAVALISSE effective late July. I think that's the second price increase this year after a smaller one in January. So just hoping you guys could talk about the strategy there. And what kind of net price tailwind we should think about as we model 2019 and 2020? And then related to that, I think you mentioned that Q3 sequential growth trends are expected to moderate. Is that talking about sequential volume growth? Or does that include any price impact?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [13]

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Yes. Okay. I will talk about the -- our thoughts on the pricing and our strategy there, and then I'll hand it over to Dean. Yes, first off, our pricing is aligned with the category. In the ITP category, we've seen year-over-year price increases in the range of 10% to 14%, with price increases usually taking in early and mid-year. Our price adjustments this year are within that range for the industry norm and the category, the ITP category. We believe that payer and patient access will be maintained prior to any pricing action. We ensure that any adjustment, we'll maintain affordable access to patients and continue to deliver good value for payers. So we thoroughly assess a number of things working with physicians and payers, making sure there is minimal-to-no impact to patient access, competition as well. As well as overall, just considering the costs that are required to make TAVALISSE available to patients. So that's some overall thought on the pricing. And you also had question on margin of our future growth.

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [14]

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Yes. And then with respect to the gross and net adjustments. During the quarter, we reported 18.5% gross to net adjustment. And as you suggest, we don't capture the entirety of these price increases as a result of the mix of government and commercial payers. That said, we do think that gross-to-net rate will remain in the 19% area through the rest of the year. With respect to the comment on moderation of the sequential growth rate, that was intended to be around net revenues. I would remind everyone that we're not intending to give guidance. And therefore, it is a general comment. We are excited about the 26% sequential growth in Q2. And as I said in the comments, that that's coming off of the 10% growth in Q1 that has the reimbursement headwinds. So as we think about Q3, we believe that we'll continue to have robust growth, which will be a combination of both bottle count as well as price increase.

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Operator [15]

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Our next question today is coming from Yigal Nochomovitz from Citigroup.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [16]

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Raul and team, I think you -- in previous quarters you had given the statistic on the physicians with multiple patients. I didn't see that for this quarter. Could you provide any color there?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [17]

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Sure. Yes. I'll take that one. Eldon again. So we're seeing a positive trend of repeat prescribers. I think that's what you're referring to in the 20% range. And we do expect this to gradually increase over the long run as more physicians become familiar with TAVALISSE and its value proposition and see a benefit -- a clinical benefit for the patients.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [18]

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Okay. So it's in the 20% range, got it. And then Eldon, I think you mentioned that -- in your comments that you're educating yourselves on the market. And I was just curious, what have you confirmed from your market research in your -- in the launch that has been consistent with your market research? And what has been the sort of biggest misconception once you went live with the launch and how have those learnings shaped your overall strategy?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [19]

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Yes. I think initially, when we did the market research. I think some of the unmet needs in the market were a little bit understated. Often when you're doing market research, well prior to launch, and physicians aren't as aware of what's coming, they're thinking about the unmet need in the framework of what they have. And they've accepted things about products that may not be optimal or they'd like to see a change. And so I think that was a little bit of a surprise on the positive side. I think also that one of the things that we did get right I think is our positioning of the product. I don't think I would change that going back and doing it again. I think we heard about the unmet need, but we also heard about that, as I alluded to just now. But we heard about the unmet need relative to the disease. And we heard something about platelet production as a type of physiology. We heard a great deal about platelet destruction. That remains to be something that's important to physicians and we'd like to under -- to address that underline pathophysiology. And I think that's been validated. Some of the things that I was alluding to earlier about some of the things that doctors had accepted were things like the lack of a food effect for our product. I think that was something that's been perceived well. I think that we haven't received as much concern as -- about the eating profile. I think that's been -- the product profile has been well accepted by the physician community. So those are some things that are sort of on the positive and as expected. I hope that answers your question. But it's something we continue to monitor, of course, as I mentioned, as in our advisory boards and our ongoing market research.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [20]

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Okay. And then just a question on the quarter. Obviously, good numbers. So Raul and team, I just kind of -- want to understand if this is more of a reflection of just the relatively weaker comp in 1Q given the reimbursement headwinds that you alluded to? Or is there something that's changed? Are you doing something different on the commercial side that is ramping things better? Just -- especially since the refill rate is the same. Just wondered if you could comment a little more on that?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [21]

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Yes. I think this is -- I'll let my colleagues also comment. I think it's a mix of those things. I think clearly, there was some benefit that we derive from a muted Q1 that helped this quarter out a bit. But in addition to that, I think the story is resonating and doctors are trying the product, trying it in more patients. Patients are staying on the product longer, especially as we tap into additional doctors. We hired additional reps early in the year, and they're clearly showing a benefit in terms of talking to new doctors. So really -- it's really driving and executing on the strategy overall that I think is the underlying results of -- that causes this substantial increase.

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Operator [22]

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Our next question today is coming from Joe Pantginis from H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [23]

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I wanted to ask a question about your physician experience when you talked about the patient that had modest benefit then went on to titrate state on therapy. So I wanted to go off of that and say, do you have any evidence regarding -- or do you see patients that have not necessarily stayed on therapy long enough that you believe could have received benefit? And if so, how are you addressing that?

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [24]

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You mean that's what -- you are asking for the commercial experience?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [25]

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Okay. So yes, Joe, this is Eldon. So I can tell you that one of the things that we -- method at launch is the rapid response. And so sometimes what we saw is some physicians discontinuing a little prematurely and not getting into full 12 weeks and also not escalating. So these are things that we've educated to as well. And I think that's helped with that. And so we did see in our clinical studies and it was -- in our packaging inserts that some patients took a little bit longer. So I think messaging that is general, in addition to just getting comfortable with the drug has helped in that area.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [26]

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Okay. And like to ask a more macro question if you don't mind. I've been discussing this point with multiple ITP players and physicians. When you look at the upcoming finalized guidance for ITP, discussed coming out of ASH '18. How do you feel these guidelines could benefit TAVALISSE? But even more importantly, do you think these guidelines will help in general, because even though the indication is so heterogeneous?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [27]

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Yes. I'll comment and then ask Anne-Marie to comment as well. The guidelines currently existing are really quite outdated and they precede the approval and introduction of uptake of the TPO agent. So it's good to have the guidelines being updated. In particular, we're interested in the international working group guidelines is also updating in addition to the ASH guidelines being updated. And so we're happy to be contributors to that, and I'll let Anne-Marie maybe talk a little bit more about those.

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [28]

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Yes. We know that fostamatinib is going to be mentioned in the guidelines. What we don't know yet exactly is what will be the position of fostamatinib. And so we'll be eager to see how it's positioned in the guidelines.

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Operator [29]

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(Operator Instructions) Our next question today is coming from Kristen Kluska from Cantor Fitzgerald.

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Kristen Brianne Kluska, Cantor Fitzgerald & Co., Research Division - Analyst [30]

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Could you talk about the breakdown of specific types of physicians who are prescribing TAVALISSE? And of this, how many do you expect might also have some experience in treating AIHA?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [31]

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Sure. I will take a stab at that and anyone else, if you want to chime in. And when you say different types, I'll interpret that as -- in the best way that I can, but feel free to follow-up. We look at that and overall we are seeing very broad usage of the product. We've actually looked as carefully as we can, based on the data sets that we have to see if there's any kind of a niche or a particular segment of physicians when you stop seeing that. We're seeing, as I said, usage across lines, usage before Rituxan, after Rituxan, before TPOs, after TPOs. So there's a lot of experimentation with the drug. I think that also, when you look at whether it's academic or community-based, we're being used in both settings. Additionally, we're looking at the deciles, if you will, of the prescribing by volume. And so sometimes the higher deciles of physicians who want to prescribe the highest volumes can be the most difficult to penetrate. But we're not seeing that either. We're seeing usage across different deciles as well. Yes. And that's -- I think we're doing a lot there with our customer-facing team. We've added 5 more reps in 35 reps. We're engaging with our field-based reimbursement team. And as well, of course, as a support of that for education with the MSLs. And so the combination of all of these things. And then I also did not mention our field-based marketing team. So we've been gradually adding more resources there to our customer-facing team, and they're getting better and better at engaging. It'll just take time.

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [32]

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And -- so the second question, which is whether patients treating -- physicians treating patients with ITP are also likely to see patients window to immune hemolytic anemia. The

answer is clearly yes. This is the same specialty of hematology even for hemato oncologists. They would likely see on those 2 types of patients. However, to autoimmune hemolytic anemia, as we have mentioned, is a rarer disease than is ITP. So they would see fewer such patients.

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Operator [33]

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We reached the end of our question-and-answer session. I'd like to turn the floor back over to Raul for any further closing comments.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [34]

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Thank you. And thank you for your questions. It's been a year since we launched this product, and I can honestly say that we're delighted with how the launch has gone and how this year has progressed. I think just the numbers speak for themselves. $32 million in net revenue. But most importantly, over 1,000 patients having tried TAVALISSE, and many of them, nearly half, are showing a benefit in month-4 refills. That's fantastic outcome I think for the first year of the product. And I think we're equally optimistic about what the next year is going to bring.

I was at the PDSA, the Platelet Disorder Support Association meeting about 10 days ago. Every year they have an excellent meeting that is very patient-focused. And it's one of my favorite meetings of the year. And this year was no different.

Here, you get to learn the patients' struggle with this disease. And I have to say more than even prior years was really a session that brought tears to many people in the audience on how difficult this disease is and what a toll it takes on the patients but also their families. And so it was great to be able to say that we're bringing a new product to these patients with a different mechanism that hopefully will help some of them. And we're so excited about being able to continue to do that in our second year of being on the market.

So thank you, and thank you for your support, and look forward to keeping you updated.

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Operator [35]

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Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.