Rigel Q3 Up on Strong Sales

 

• Total Net Sales: $38.9 million, up 44% compared to Q3 2023.

• GAVRETO Net Product Sales: $7.1 million in its first full quarter.

• TAVALISSE Net Product Sales: $26.3 million, an 8% increase from Q3 2023.

• REZLIDHIA Net Product Sales: $5.5 million, a 107% increase from Q3 2023.

• Contract Revenues from Collaborations: $16.4 million, including $13 million from Kissei.

• Net Income: $12.4 million, compared to a net loss of $5.7 million in Q3 2023.

• Cash, Cash Equivalents, and Short-term Investments: $61.1 million at the end of the quarter.

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Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Rigel Pharmaceuticals Inc (NASDAQ:RIGL) reported a 44% increase in net sales for the third quarter of 2024 compared to the same period in 2023, driven by strong performance across its commercial portfolio.

• The addition of GAVRETO to Rigel's portfolio contributed $7.1 million in net product sales in its first full quarter, indicating successful integration and transition of patients and prescribers.

• Rigel expanded its international presence through a new agreement with Kissei to develop and commercialize REZLIDHIA in Japan, Korea, and Taiwan, which included a $10 million upfront payment.

• The company achieved positive net income for the third quarter and year-to-date, marking a significant financial milestone.

• Rigel is advancing its pipeline with promising developments, including the R289 dual IRAK 1 and 4 inhibitor in a Phase 1b study, and strategic collaborations with MD Anderson and CONNECT to explore new cancer treatments.

Negative Points

• Despite the positive sales growth, Rigel Pharmaceuticals Inc (NASDAQ:RIGL) faces challenges with some top centers not yet placing orders for GAVRETO, indicating potential logistical or market penetration issues.

• The company reported a gross-to-net adjustment of 36% for TAVALISSE, which may impact overall profitability.

• There are concerns about the safety profile of GAVRETO, with risks of severe and fatal infections due to off-target JAK1 and JAK2 inhibition, which could limit its uptake.

• Rigel's cost of product sales increased, driven by higher sales, royalties, and amortization of intangible assets, which could pressure margins.

• The competitive landscape for Rigel's products, such as the IRAK inhibitor space, remains challenging, with other companies exploring similar therapeutic areas.

Q & A Highlights

Q: Can you provide more color on TAVALISSE's balance between refills and new prescriptions? A: David Santos, Executive Vice President, Chief Commercial Officer: The majority of our business is carryover. Once patients start on TAVALISSE, they tend to stay on therapy, which contributes to our growth. New patient starts have also increased over the last couple of years, but the majority of growth is from existing patients continuing their treatment.

Q: Regarding GAVRETO, several top centers have not placed orders. Is this due to logistics? A: David Santos, Executive Vice President, Chief Commercial Officer: A handful of top centers haven't placed direct orders, which we are investigating. However, 45% of our business was through the distribution channel to direct accounts in Q3, and this improved to 50% in October, aligning more with our expectations.

Q: How should we think about the growth trajectory for GAVRETO, given its initial phase with Rigel? A: David Santos, Executive Vice President, Chief Commercial Officer: The majority of Q3 sales were true demand. We expect continued demand growth as more patients transition to our network. Dean Schorno, Chief Financial Officer, added that the majority of Q3 shipments were to patients and clinics, indicating strong demand.

Q: For R289 in lower risk MDS, what is the bar for success in Phase 1b to advance the program? A: Lisa Rojkjaer, Executive Vice President, Chief Medical Officer: The study is unique as it includes relapsed/refractory patients. While first-line treatments show about 40% response rates, our study's inclusion criteria differ. We are encouraged by the preliminary safety and efficacy data thus far.

Q: How might the new safety signal for GAVRETO affect its uptake, and does Retevmo have the same issue? A: Lisa Rojkjaer, Executive Vice President, Chief Medical Officer: The risk of infections is not new and is manageable by oncologists. The infections are primarily pneumonias, common in lung cancer patients. David Santos added that there have been no calls to their medical information line regarding this update, indicating no significant impact on GAVRETO's opportunity.

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