Earnings Call Transcript
RIGEL PHARMACEUTICALS INC (RIGL)
Earnings Call Transcript - RIGL Q2 2020
Operator, Operator
Greetings and welcome to Rigel Pharmaceuticals Financial Conference Call for the Second Quarter 2020. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. 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.
Dolly Vance, Executive Vice President, Corporate Affairs and General Counsel
Welcome to our second quarter 2020 financial results and business update conference call. The financial press release for the second quarter 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 annual report on Form 10-K for the year ended December 31st, 2019 and subsequent filings with the SEC including our Q1 quarterly report on Form 10-Q. 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.
Raul Rodriguez, CEO
Thank you, Dolly, and thank you all for joining us for our second quarter 2020 financial and business update call. With me today are Tarek Sallam, our Vice President of Marketing; our Chief Medical Officer, Wolfgang Dummer; and Dean Schorno, our CFO. Now moving to slide five, we want to highlight our key value drivers. For those already familiar with our journey, there is a new value driver that we are eager to discuss. Rigel's four key value drivers include growing global sales of TAVALISSE in ITP, creating and leveraging opportunities in warm autoimmune hemolytic anemia, exploring the use of TAVALISSE or fostamatinib for treating COVID pneumonia and COVID ARDS, as well as examining other pneumonias and ARDS related to various health issues. Finally, we aim to expand our pipeline based on crucial opportunities in immune-associated diseases. In Q2, we made good progress across all these areas despite the challenges posed by the COVID pandemic. We are proud to share these updates. In the recent quarter, TAVALISSE sales grew year-over-year, with a reported 47% increase compared to the second quarter of 2019. We are very pleased, especially considering the external challenges. This success also highlights the dedication of our commercial organization and the effectiveness of our product. Tarek will provide more details shortly. As a reminder, we received approval for fostamatinib use in ITP in Europe in Q1 of this year. Recently, our product became available in Germany and the U.K. through our partner Grifols under the brand name TAVLESSE. Another significant opportunity in hematologic disorders is with warm autoimmune hemolytic anemia or AIHA, which we see as a considerable opportunity for Rigel. AIHA is an autoimmune disease similar to ITP, where the body generates antibodies against a specific type of blood cell, in this case, red blood cells. There is a substantial unmet need as there are currently no approved products for this condition. Given our progress to date, Rigel may potentially be the first approved product for AIHA. Additionally, this indication closely aligns with ITP, as both conditions are treated by the same specialized physicians. This allows us to utilize the TAVALISSE knowledge and experience being developed by our field team. As we have recently shared, we are investigating the potential of TAVALISSE in treating COVID-19 pneumonia and related complications. TAVALISSE, with its SYK inhibition, might offer a unique and effective approach to tackle the immune system’s overreaction and the damage inflicted by the virus. Wolfgang will elaborate on the scientific basis, our promising preclinical data, and the recently announced investigator-sponsored trial in this discussion. Lastly, our RIP1 inhibitor and IRAK1/4 inhibitor programs are both in Phase 1 trials, and we are excited about the potential of both assets. IRAK and RIP are compelling immune targets, and early data indicates that our molecules possess attributes that bring us optimism for their potential. We continue to make strides in discussions to secure co-development and co-promotion agreements for these assets, and we believe we will achieve this by year-end. All these key value drivers present highly attractive market opportunities, and we are well-positioned to advance them. Tarek will now provide a commercial update. Tarek?
Tarek Sallam, Vice President of Marketing
Thank you, Raul. Today, I will provide a review of our commercial efforts. As a reminder, TAVALISSE is indicated for the treatment of thrombocytopenia in adult patients with chronic ITP, who have had an insufficient response to a previous treatment. Additionally, as Raul mentioned our product has been successfully launched by Grifols, our European collaborators, under the brand name of TAVLESSE. We are excited to see the initial European markets come online, particularly with a broad indication that positions the product as a competitive alternative to the older standards of care. So moving on to slide 8. We continue to gain momentum in the U.S., which accounts for over half of the approximately $2 billion global ITP market. We achieved net product sales of approximately $15 million for the quarter which is an increase of 47% year-over-year and 18% over the previous quarter. This is our highest quarter of sales to date which is especially encouraging given the challenges that our field teams have been faced with. Additionally, we see continued strength in our persistency rate, which should improve as health care providers become more familiar with the product and utilize it in earlier lines of treatment. We are pleased with this quarter's performance and the execution of our commercial efforts particularly in these challenging times. Physicians continue to express receptivity to TAVALISSE highlighting the recent second line data analysis, the unique mechanism of action, and having an alternative oral option. All said, we believe that over time enhanced physician access will allow us to accelerate our selling efforts to unlock incremental opportunities. So I'm on Slide 9. Central to these efforts will be the recent post-hoc analysis of our Phase III trial in ITP. We have previously presented the 78% response rate of TAVALISSE when utilized in the second-line setting. And here you can see this analysis of the data further broken down in more detail. As a reminder, the initial presentation of response from our Phase III program focused on the entire overall study population, which had an average duration of disease of 8.5 years and a median of four previous treatments. While many health care practitioners were impressed at the overall response rate in this clinical setting, the additional information reflected on this graph highlights that TAVALISSE and its differentiated mechanism of action can achieve response rates similar to other treatment options when used earlier in the treatment cycle. We believe this more refined look at the data will enable clinicians to make decisions focused more on therapeutic approach and individual patient needs and less on clinical trial response rates. So let's transition to how we are educating health care providers on this new information and providing support for their patients during this unique and unprecedented environment due to the COVID-19 pandemic. Slide 10, please. As recent data suggests, unfortunately it seems that the COVID-19 pandemic is not abating in the U.S. Like other organizations, we have not seen improvements in terms of our opportunities to have face-to-face interactions with physicians. That said, our team has been doing a fantastic job, utilizing virtual engagements to stay connected with our customers and to continue educating on TAVALISSE. The new data analysis we just reviewed is a valuable tool that we have integrated into our selling materials and is being used by our field teams in clinical conversations with the physician community. Due to its recency, awareness of the data is relatively low amongst our customer base right now. But it is growing and we are encouraged by the positive feedback from physicians. Importantly, this post-hoc analysis was recently published in the British Journal of Hematology. This is a highly respected journal and we believe this recognition can help improve the awareness and conversation about this data amongst treating physicians. We believe this is a growing opportunity supported by the endorsement of KOLs and now a highly respected peer-reviewed publication that reinforces the benefits of using TAVALISSE in earlier lines of treatment. So turning to Slide 11. We are very excited to have a product that is now launched in markets outside of the U.S., namely Germany and the U.K. Our European collaborator Grifols is planning a phased rollout over the next 18 months across the rest of Europe. We also continue to make progress with our other partners listed on it and look forward to increasing the global footprint of TAVALISSE/fostamatinib. Finally, with a solid foundation in place that will support our commercial success in ITP, we are excited to execute on our strategy to make fostamatinib a franchise product, specifically the opportunity to have a potential indication in warm autoimmune hemolytic anemia or AIHA. To give us an update on the progress we are making on this development program I will now hand the call over to my colleague, Wolfgang Dummer, our Chief Medical Officer. Wolfgang?
Wolfgang Dummer, Chief Medical Officer
Thank you, Tarek. Good afternoon, everybody. I'd like to begin on slide 13. With regards to our program in warm autoimmune hemolytic anemia, we continue to be well-positioned to become the first approved drug for this indication. We're the only company currently in a Phase 3 pivotal trial and we have currently 44 patients randomized, which is approximately half of the study. I'd also like to add that we are the only company that has Phase 2 clinical data already in warm AIHA. We view AIHA as an attractive opportunity due to important synergies with our commercial ITP business. We're continuously educating physicians on mechanism of action, efficacy, safety and best clinical use of TAVALISSE in the ITP market and these doctors are generally the same that treat AIHA patients. This should generate broad awareness of TAVALISSE as a treatment option for AIHA right upon launch. Turning to slide 14. Here's a brief update on our ongoing Phase 3 trial. As mentioned, we have currently 44 patients randomized and sites have reopened recently after the pandemic shutdown. It is too early to precisely predict timing of enrollment completion at this point. We will update as we get a better understanding of how the pandemic affects recruitment over the coming months. However, I would like to emphasize that we now have over 90 sites activated in 22 countries and having an established operational foundation in this environment is very important. Since some countries are likely to normalize more quickly than others, we will be able to ramp enrollment on a country-by-country basis as the situation permits. So we believe that as soon as the COVID-19 situation normalizes, we should regain momentum rather quickly and efficiently. Slide 15. Switching to COVID-19 let me talk you through our program with TAVALISSE or fostamatinib in COVID-19. Moving to slide 16. There is still a strong need to effectively treat COVID-19 and its disease complications. Fostamatinib can have a modulatory effect in several ways on the hyper-reactive immune system, which causes the severe and life-threatening cases at a point where the viral load itself is already decreasing or eliminated. While a vaccine would be important to generate broad immunity, there still is and there will continue to be a strong need for safe and effective treatment options including possibly fostamatinib. Fostamatinib is a great candidate to study as it is an approved well-understood product, easy to take as a pill with a large safety database of over 4,500 patients treated in clinical trials. On the next three slides, I will lead you through the clear scientific rationale for SYK inhibition in COVID-19 before I speak about the clinical trial at Imperial College. This slide 17 provides a simplified overview of the role of SYK signaling in the COVID-19 pathogenesis. Please have a look at the virus particle at the top middle of the image. In the early stages of the infection, the replicating virus causes lung epithelial cell destruction and release of so-called Damage-Associated Molecular Patterns (DAMPs) and Pathogen Associated Molecular Patterns (PAMPs), which binds to C-lectin receptors on the right of the image. Signaling through C-lectin receptors can lead to excessive inflammatory cytokine release and coagulopathy from vascular endothelial cells, as well as neutrophil activation inside the cytotoxicity by a process called NETosis. All these events can damage the lung and even other organs such as the kidneys or the heart. SYK inhibition with fostamatinib can reduce this highly inflammatory process. On the top left of the image, you can see the second main reason for a hyper-reactive immune system. As a response to the viral infection, our immune systems begin to make anti-SARS-CoV-2 antibodies. These antibodies then form immune complexes with the virus, which binds to FC gamma receptor-expressing cells such as macrophages, dendritic cells, and monocytes. In some patients, this can induce excessive release of inflammatory cytokines such as IL-1 beta, IL-6, and IL-8. Here too, SYK inhibition with fostamatinib can ameliorate the cytokine storm and prevent organ damage. Fostamatinib is the only SYK inhibitor that may interfere with the pathology of COVID-19 at multiple points through multiple cell types and could, therefore, work in COVID-19 related organ damage, pneumonia, and also ARDS of viral and other etiology. This is not an entirely new concept as we have preclinical data from our model in ARDS. On slide 18, you see an executive summary of those experiments with R406, which is the active metabolite of fostamatinib. On the left, you see the histology of lung tissue under four different experimental circumstances. Upper left, healthy lung tissue with clear alveoli where transport of oxygen into the blood happens. On the top right, you see the same thing when only fostamatinib is administered with no negative impact on the lung. On the lower left, you see ARDS induced by LPS, which led to massive inflammation, fluid and cell debris in the alveoli, making oxygenation of the blood difficult or insufficient. On the lower right, you can see that fostamatinib had a clear beneficial effect on this pathology. Not surprisingly, as depicted on the panel to the far right, this led to survival of the mice with ARDS that were treated with fostamatinib. On slide 19, I show you two additional references recently published independent of Rigel that further support the scientific rationale for fostamatinib. The first on the left comes from MIT and Harvard. They screened 3,713 compounds to identify any that are FDA-approved and reduced MUC1. MUC1 is a biomarker, which predicts the development of acute lung injury and ARDS, and correlates with poor clinical outcomes. Of all those compounds screened, fostamatinib was the only to decrease expression of mucin-1 and is already FDA-approved and therefore was proposed by the authors for rapid repurposing for patients with COVID-19 lung disease. The other paper on the right referenced is from Amsterdam University Medical Center. The research there demonstrated that R406, the active metabolite of fostamatinib, blocked macrophage hyperinflammatory responses to a combination of immune complexes formed by anti-spike IgG from severely ill COVID-19 patients. Anti-spike IgG levels correlated with the severity of COVID-19. Thus, the ability of R406 to inhibit anti-spike IgG-mediated hyperinflammation suggests that it could play a role in the prevention of cytokine storm pulmonary edema as well as thrombosis associated with severe COVID-19. My last slide 20 depicts the Imperial College investigator-sponsored trial that has recently been opened. This is a 3-arm randomized trial with fostamatinib or ruxolitinib plus standard of care versus standard of care alone. The first stage will randomize 57 patients per arm for a total of 171 patients at which point an interim analysis will be conducted. Based on that, the second stage will enroll an additional 95 patients per arm for a total study size of 456. The treatment duration is 14 days and patients will be followed to day 28. We're excited to have this trial up and running because we expect this could provide initial clinical data in the relatively near future. With that, I'll hand the call over to Raul Rodriguez. Raul?
Raul Rodriguez, CEO
Thank you, Wolfgang. Slide 21 please. We wanted to give you our view of the opportunity for fostamatinib in the treatment of progression of COVID pneumonia and ARDS as well as pneumonias more broadly. It is incredibly exciting to potentially provide a much-needed therapy to address the ravages of the worst pandemic in our lifetimes. As you know, it's the overactive immune system which causes the majority of fatalities in COVID-infected patients. And as Wolfgang shared, we believe that fostamatinib may have a unique and beneficial immunomodulatory impact. This is a near-term opportunity that can be quite sizable given the large number of patients impacted. The Imperial College ISTs and other potential ISTs can provide an early read on the potential benefit of fostamatinib and do so in a broad range of hospitalized patients through COVID from mild to more severe and with a broad range of treatment backgrounds. It's exciting to possibly provide a benefit in this extraordinarily large and near-term opportunity. This also sets us up towards pursuing fostamatinib in the treatment of pneumonia and ARDS from other sources beyond COVID, both viral and non-viral. There are currently no approved agents for this. Every year in the U.S. there are over 1.3 million patients hospitalized for pneumonias. Approximately 200,000 of these progress to ARDS. With the same rationale that we laid out today, we believe that fostamatinib may have a benefit here. The COVID clinical experience would further confirm this and position us to pursue this large and enduring opportunity. Let me move on to Slide 23. On Slide 23, I'd like to tell you about our fourth key value driver expanding our pipeline. At Rigel, we have a very rich history of discovery and developing attractive molecules. These include all of the opportunities we are discussing today. We focus on the inhibition of key signaling pathways that are critical to many immune-mediated diseases. This includes both immune diseases as well as non-immune diseases, such as in areas of hematology oncology. We have three in-house programs that we have discussed today: TAVALISSE, our oral SYK inhibitor; an IRAK1/4 inhibitor; and a RIP1 inhibitor program. Our IRAK 1/4 inhibitor is the only molecule that inhibits both the IRAK1 and IRAK4 pathways and therefore is more profoundly immunosuppressive than other IRAK4 only programs. In preclinical studies, we have shown to block inflammatory cytokine production in response to toll-like receptor (TLR) and IL-1 receptor family signaling. In the Phase I healthy volunteer study, we achieved proof-of-mechanism results, lowering inflammatory cytokines from LPS challenge and demonstrated favorable pharmacokinetic profile. We also had four posters on this program presented at the recent EULAR meeting this past quarter. With our RIP1 program, we recently completed the multiple ascending dose stage of our Phase I study. Importantly, we have identified a dose range that we believe is safe and well within the expected clinical efficacy range. As previously mentioned, we are making progress in also identifying a CNS RIP inhibitor molecule for our CNS indications and moving it into the clinic next year. In addition to these, we have four partnered clinical programs, which include two JAK inhibitors, another key immune signaling pathway. As you can see these assets provide us with many options to develop and create value for Rigel, including moving our programs forward ourselves, partnering in various structures, dividing the opportunities geographically or by size of indication. For our RIP1 and IRAK1/4 program, we are currently in discussions with potential large pharma partners and plan on concluding a co-development/co-promotion agreement by year-end. In addition, we are putting in place further investigational studies to allow us to explore the broad utility of our immune modulated inhibitors. And speaking of which on Slide 24, you see the broad range of possible co-indications that are available to these molecules. Some of these we will explore with partners, say with RIP or IRAK inhibitors. Some we will explore for ourselves, such as ITP, AIHA, and potentially COVID pneumonia. Our broad portfolio of immune modulators provides us with significant opportunities. Now with that, I will turn the call over to Dean for a quarterly financial update. Dean?
Dean Schorno, CFO
Thank you, Raul. Turning to Slide 26. For the second quarter of 2020, we shipped 1,632 bottles to our specialty distributors. 1,515 of those bottles were shipped to patients and clinics, while 117 bottles remained in our distribution channels at the end of the quarter. As of June 30, a total of 708 bottles remained in our distribution channels. We reported net product sales from TAVALISSE of $15 million, a 47% increase compared to the second quarter of 2019. Our net product sales from TAVALISSE were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $3.4 million, our gross to net adjustment, which is approximately 18.3% of gross product sales. Before we move on to net product sales, let me comment briefly on our expectations for the third quarter. While we're pleased with the continued growth in our TAVALISSE sales in the second quarter and expect to see continued growth in the third quarter of 2020, the impact of COVID-19 on our business that started in the latter part of the first quarter continues and remains uncertain. As we've highlighted, we've made great strides in optimizing our ability to access our physician community remotely, and to provide the many patients suffering from chronic ITP in the U.S. with access to TAVALISSE. Once the significant impact and restrictions caused by COVID-19 are behind us and the future begins to normalize, we expect to see continued strength and growth in our business. Onto the next slide, in addition to net product sales, Rigel's contract revenues from collaborations was $1 million for the three months ended June 30th, 2020 which consists of deferred revenue from our collaboration with Grifols related to the performance of certain research and development services. Moving on to cost and expenses, our cost of product sales was approximately $279,000 for the second quarter of 2020. Total cost and expenses was $33.4 million in the second quarter of 2020, versus $31.7 million in the second quarter of 2019. The increase in total costs and expenses was primarily due to the third-party costs related to Rigel's ongoing pivotal Phase III study in warm autoimmune hemolytic anemia, research and development costs related to other clinical programs, and personnel-related costs, partially offset by stock-based compensation expense. As we look towards the back half of 2020, we continue to expect our full year total cost and expenses to increase by approximately 15% to 20%, as compared to 2019, as we continue our commercial expansion and further our research and development pipeline, inclusive of the COVID-19 efforts that our team has discussed. We ended the quarter with cash and short-term investments of approximately $92.5 million. During the second quarter, we accessed the second $10 million tranche from our $60 million term loan credit facility with MidCap Financial. This facility provides the company with access to an additional $40 million, which is subject to the achievement of certain conditions. With that, I'd like to turn the call back over to Raul.
Raul Rodriguez, CEO
Thank you, Dean. Moving on to slide 28, the COVID pandemic has clearly impacted our business. But it's also presented opportunities for us to potentially contribute to a solution. And I cannot tell you how energized we are about this prospect. Let me summarize our efforts going forward, in each of the four key value drivers for the company. We will continue to grow TAVALISSE in the U.S. ITP market. And we're excited about the use of TAVALISSE in earlier lines of therapy and the data that we have to support this position. Similarly, we look forward to supporting our partner Grifols, as they introduce physicians and patients in Europe to TAVLESSE. We will work to complete the enrollment of our AIHA Phase 3 study with the re-initiation of screening and we look forward to enrollment increasing. We will explore how to TAVALISSE could provide potentially provide patients with COVID-related pneumonia a much-needed therapy. And we will continue to advance our RIP1 and IRAK1/IRAK4 programs, putting in place a partnership by year-end. Before I turn the call over to your questions, I want to just make a quick note. I wanted to highlight an addition to our management team. Dave Santos will be joining Rigel as our Chief Commercial Officer. Dave brings over 30 years of experience in hematology/oncology areas, in various commercial leadership roles with numerous successful companies. I think he'll be a great addition to the team and we look forward to his contributions in helping us advance our commercial efforts. And, in that, I also want to thank Tarek for his contributions and look forward to those as well. So, with that, I'd like to open up the call to your questions.
Operator, Operator
Thank you. We will now be conducting a question-and-answer session. Our first question today comes from Eun Yang of Jefferies. Please proceed with your question.
Unidentified Analyst, Analyst
This is Nalin on behalf of Eun. I have a few questions regarding the COVID-19 pneumonia trial. Could you provide some details on the approval pathway for non-COVID-19 pneumonia? After conducting a trial for COVID-19 pneumonia, what type of trial would be necessary? Which patient populations would you target? And how extensive would the trial need to be? Thank you.
Raul Rodriguez, CEO
Thank you, Nalin. I'll share a few comments and then ask Wolfgang to add more. We have been very interested in pneumonia and ARDS prevention for a while, especially after the publication Wolfgang shared from 2019, prior to the onset of the COVID pandemic. We believe our product has significant potential in this area. There are various sources of pneumonia, including viral, non-viral, bacterial, and autoimmune origins, presenting multiple opportunities for our product to make a meaningful impact in halting disease progression. This is an ongoing issue we could address annually, which offers us a tremendous chance to benefit patients. Currently, there are no approved solutions in this space, meaning there isn’t an established playbook that we can follow. We may need to explore other relevant models and collaborate closely with the FDA to move forward. The experiences from COVID pneumonia will likely be valuable since it shares mechanisms with other types, potentially guiding our approach. Wolfgang?
Unidentified Analyst, Analyst
Thank you very much.
Wolfgang Dummer, Chief Medical Officer
Yes.
Unidentified Analyst, Analyst
No. Go ahead.
Wolfgang Dummer, Chief Medical Officer
We have one second delay. So I support what Raul is saying, obviously, our first step would be to generate solid data in COVID-19. Then, as always, depending on how large the effect size is, you can take your learnings onto the design of non-COVID ARDS trial. So in other words the larger the effect is, the smaller the potential trial needed. So, at this point probably a little bit too premature to determine what the sample size that trial would look like.
Unidentified Analyst, Analyst
Thank you very much. Just one more question if I may. So the quarter for Dean. So you previously mentioned that the funding for the COVID-19 trial would come out of funding intended for further work on TAVALISSE. Could you please clarify if there were other indications beyond ITP and wAIHA that the company had intended to explore? Thank you very much.
Dean Schorno, CFO
Yes. So, let me start and then I'll ask Raul to wrap up the comments on this with any incremental thoughts. But what we've described always is that we have exclusivity with fostamatinib/TAVALISSE through into 2032. And with that long runway, we've always had the intention to explore incremental opportunities with this asset. We believe that – and therefore we've always planned from a cost perspective from an operating expense perspective to make investments in those areas. We believe that today an optimal way to utilize resources is to explore COVID, COVID-related pneumonia and then the extension ARDS non-COVID that we've talked about. And so today those are really the focus of our – at least our near-term operating expense. We may make choices into the future to invest in fostamatinib in other ways. But today it's really focused on the COVID-related opportunity and then the possibility into non-COVID ARDS.
Raul Rodriguez, CEO
The only thing to add is to highlight that SYK inhibition has a very broad role. It's not just about FC receptor signaling as seen in autoimmune diseases like AIHA or ITP, although it is beneficial in those cases. It has a wider function in immune modulation across different cell types and through various mechanisms, and this COVID opportunity illustrates that well. We aim to take advantage of this because it provides us with a really useful tool. I believe we have only just begun to explore the potential of SYK inhibition.
Operator, Operator
The next question comes from Yigal Nochomovitz of Citigroup. Please proceed with your question.
Yigal Nochomovitz, Analyst
Thank you. Good evening. I guess you may have seen that Denali and Sanofi announced plans to do a COVID trial with their RIP1 inhibitor. Obviously, you have one as well. Have you given any thoughts to whether you would take R52 into a COVID study in addition to fostamatinib?
Raul Rodriguez, CEO
Yes. Thank you for your question. What's very interesting about that it's absolutely right and I may have potential as well in RIP inhibitors in the treatment of COVID. We are excited about TAVALISSE since we think the mechanism should work here. The proof-of-concept data that we shared today, not just in our hands, but really in the hands of independent collaborators is really compelling. And it has a difference from other development stage products such as our own R52 or RIP inhibitor, is that it's approved. It's on the market. It's commercially available today. If doctors wanted to use it, they very well could even today. We've manufactured large amounts of the product. Should ensure a benefit we could immediately deploy it to that effect. And that's a real difference over something that is in the pipeline and say, in Phase I clinical study. It does work the hurdles from there to actually getting to – in the hands of a patient is very challenging. There are many of them. For us if a doctor wants to use TAVALISSE in a patient with COVID today, he or she could write a script and that patient would receive TAVALISSE in a matter of hours because most hospitals have a bottle. And if they didn't have the bottle, we could send them the product overnight and that patient would get the product tomorrow. That's a real difference from a development stage product and something that is commercially available. In addition to the – as I mentioned the preclinical support is outstanding for this opportunity. So it's clear what we would do. But in the future of course, we'll consider other things including a RIP program or even a JAK for molecule as well. We have those.
Yigal Nochomovitz, Analyst
Okay. Yes. I just thought it was interesting that you could potentially pursue two molecules for COVID but that's...
Raul Rodriguez, CEO
Absolutely.
Yigal Nochomovitz, Analyst
Raul, I wanted to ask about the BJH paper. You presented a swim chart showing the responses in patients, with 78% response in the second line patients. I’m curious about the duration of response. It seems like about half of the 32 patients, maybe slightly less than half, had a duration of response of two years or more, which looks promising. Can you discuss how this compares with other second line ITP therapies like TPOs and Rituxan, specifically regarding duration of response? How does TAVALISSE compare in this regard?
Raul Rodriguez, CEO
I'll ask Tarek and Wolfgang to also contribute to this. I think it compares nicely and that's a very nice result. It's important to note that our studies were conducted in different locations, making comparisons challenging, especially considering that one study was done nearly a decade apart. However, the durability of our product is beneficial because if you respond to our treatment and remain on it, you're likely to continue to succeed for an extended period. Two years is a substantial duration in the treatment of something like ITP. Tarek? Wolfgang?
Tarek Sallam, Vice President of Marketing
Certainly. Thank you, Raul. This is Tarek. Yigal, I appreciate your question. One of the exciting aspects of the analysis, which you have pointed out, is the other side of the coin. We observe that second-line patients respond well, but from a clinical standpoint, the focus is on maintaining that response. According to the paper, when using $50,000 as the benchmark, about 83% maintain their response, and approximately 92% do so at $30,000. To address your question about making an apples-to-apples comparison, as Raul hinted at, it's unfortunate that there is no universal definition for durability across the various ITP trials. Almost every trial, including those with other TPO mimetic agents, has a different definition. However, given that we see durability rates upwards of 80% to 90%, depending on how long patients have been on therapy, I can tell you that when we presented this data during market research and advisory boards, it exceeded clinicians' expectations. Their biggest concern is that they may take a patient out of harm's way, but the effect could be temporary. The confidence based on this data comes from how the response was defined, which was based on the number of treatment days. Essentially, for the majority of the time that each patient was on fostamatinib, the response rate was determined, indicating they were consistently within a favorable range of response. This alleviated any concerns regarding a transient effect, and the overall feedback on this data analysis has been very positive.
Yigal Nochomovitz, Analyst
Okay. Thanks. And just one final question for Dean. Dean, with respect to the cash runway, could you just remind us what the runway is currently? And are you planning to access this credit facility again this year?
Dean Schorno, CFO
Thanks Yigal. So we haven't given any guidance into the future, but let me answer your question in this way. So we ended the quarter with about $93 million of cash. From a top line perspective, as we look into the future, we expect the continued growth of our TAVALISSE net revenues. And as Raul highlighted, we also expect an IRAK or RIP deal later this year, which could result in a significant milestone, significant inflow of cash. So the top line in combination with the cash we have on hand is significant for us. From an operating expense perspective, we continue to expect to be able to create increasing leverage in the business from the clinical programs we've described as well as our sales and marketing efforts where when we look forward to autoimmune hemolytic anemia, we expect to see significant leverage, no new sales force those types of opportunities. So within that context with $93 million, the $40 million available in our credit line and other sources of financing leave us in a solid position where today we don't have any intent to raise incremental capital. That said, we will continue to monitor our needs and opportunities and we'll make sure that the business is adequately funded.
Yigal Nochomovitz, Analyst
Thank you. Thanks very much.
Dean Schorno, CFO
You’re welcome.
Raul Rodriguez, CEO
Sure. Absolutely. Thank you.
Operator, Operator
Chris Raymond of Piper Sandler. Please proceed with your question.
Nicole Gabreski, Analyst
Hi, everyone. This is Nicole Gabreski on for Chris. Thanks for taking the question. So, maybe just to start on Amgen's recent endplate commentary. So the second quarter was the first quarter that Amgen cited flowing and plate new patient starts due to oral alternatives and ITP. I guess, does that match the TAVALISSE ITP market trends you guys saw during the quarter? And I guess, is it your sense that that was driven in part by COVID-19, the ASH data update or other factors?
Raul Rodriguez, CEO
Sure. I'll ask Tarek to comment on that and I'll add some color after.
Tarek Sallam, Vice President of Marketing
Yes, I appreciate it, Raul. Thank you, Nicole, for the question. I would say that it aligns with our data. We are observing a decrease in endplate presence in the overall marketplace. Causality is something we've been tracking over time. Our impression is that feedback from clinicians treating this disease, as well as from patients and patient advocates, indicates a need for more flexibility. Having oral therapeutics contributes to this by providing a therapy that can better cater to patients' needs. During the COVID-19 pandemic, as individuals sheltered in place or sought to limit healthcare contact, having an oral option that eliminates the need for weekly injections has proven beneficial. These insights have emerged from our research and discussions with providers. This trend was evident before the pandemic and accelerated during it. Raul, would you like to add anything?
Raul Rodriguez, CEO
The only further point to mention is that once these trends become normalized in a post-pandemic world, they may become lasting, and that’s something we will continue to keep an eye on.
Nicole Gabreski, Analyst
Okay, great. And as a follow-up, I understand that your sales representatives have had access to the earlier line catalyst clinical data since around February. I also realize there has been a significant shift to virtual communication due to the pandemic. However, I'm curious about why the awareness of this earlier line data remains relatively low and what steps you're taking to address this issue.
Tarek Sallam, Vice President of Marketing
Sure. Raul if you don't mind I'll jump in there again. So, great question Nicole. So, as we previously presented in other forums Nicole. We trained our salesforce in February and launched the data into their selling materials towards the end of Q1 and going into Q2 really with the momentum from that data. But the reality Nicole is the data was presented and obviously, as an esteemed meeting at ASH as a poster. But in order for data to be disseminated as I'm sure you well understand is you're also hoping that third-party outlets, trusted sources, a number of vehicles, not just our own commercial efforts are picking up on that information and communicating it, educating it, whether that's our promotional efforts, the CMEs, et cetera. And certainly having an article now in a publication as esteemed as the BJH, we just see that as an accelerator if you will. And so while the teams have been doing a fantastic job and I really do have to commend them on their commitment and tenacity of looking for opportunities for virtual communication with our providers, as you well can imagine without having the live medical conferences and other opportunities, it's something that we're just progressing and building momentum and we really see this publication as an opportunity to pull that forward if you will. Hopefully, that answers your question.
Nicole Gabreski, Analyst
Yes, yes. Very helpful color. Thank you guys.
Operator, Operator
The next question is from Joe Pantginis of H.C. Wainwright. Please proceed with your question.
Joe Pantginis, Analyst
Good afternoon everyone. Thank you for the question. I have two sets of questions; one regarding the U.S. and the other about Europe. Starting with the U.S., my question focuses on the current patients who are primarily second-line patients after TPOS. My inquiry is about the 54% persistency rate you have right now, which is impressive. How much are you aiming to increase that within this population compared to the potential benefits of expanding into the first-line setting?
Raul Rodriguez, CEO
Sure. Let me say a few words and then ask Tarek to add his thoughts. We closely monitor persistency, as you can see. When we launched the product, it was mostly used in more challenging treatment lines, and somewhat in earlier lines, but primarily in the more resistant cases, which naturally have a lower response rate, resulting in lower persistency. As we expand into earlier treatment lines, we anticipate that persistency will improve due to a larger patient population and significantly higher response rates, as highlighted in Tarek's slide. As a result, we expect persistency to keep trending upward. Tarek?
Tarek Sallam, Vice President of Marketing
Yes, I think you covered many of the important points there, Raul. So Joe, we're not really providing guidance at this time regarding our aspirational persistency rates. We believe there will be improvements as both patients and practitioners become more familiar with the product. As you mentioned, the prognosis for patients improves as we advance to earlier stages of treatment; these patients generally have a better outlook and fewer comorbid conditions. We believe that patients can achieve better overall outcomes with our product, which is supported not only by our data analysis but also by anecdotal feedback from clinicians. As patients transition from third-line to second-line treatment or enter care earlier with their healthcare providers, we are receiving individual reports suggesting that physicians find greater utility in the product.
Joe Pantginis, Analyst
Got it. No that's helpful. And then my EU question, I know things are early right now with regard to the launch that Grifols is conducting. But I guess maybe two parts. Number one, can you highlight sort of, the blocking tackling that needs to go? What are the types of hurdles that you would see obviously, from a geographical standpoint? Is it more of just reimbursement in particular geographical areas or just the variability of types of treatments in geographical areas or a combination of both, number one? And then the second part is maybe for Dean, are you guys going to look to eventually break out the royalty streams versus the actual revenues in the P&L?
Raul Rodriguez, CEO
Tarek, why don't you make some comments on the European launch and measures…
Tarek Sallam, Vice President of Marketing
Sure and then I'll hand it off to Dean. It's perfect. And Raul feel free to add any color. So Joe, great question and not surprising because it's obviously exciting news for us to now have a global footprint and frankly to know that our product is providing benefit to patients outside of the U.S. essentially to say across the globe. So that's obviously a fantastic milestone that we're very, very proud of. It is early days. So it is premature to kind of share any sort of outcomes yet. It's only been a few weeks since Germany and the U.K. have started treating patients. But from the strong collaboration that we have with Grifols obviously, we see this as a huge opportunity. As you're well aware it represents almost $900 million market opportunity. As far as the hurdles, again, I think they're facing the COVID pandemic just like we are. They're launching in the midst of this. I can tell you they've been very committed to their virtual engagements. And frankly we've been very impressed with our executional plans to get the word out. And they have serendipity on their hands in the sense that their timing of the launch does coincide with the availability of the second line data analysis. And so they're able to provide assuming, it's permissible in their marketplace to provide all the information that's part of the comprehensive story of TAVALISSE or TAVLESSE in that market that we have here in the U.S. today. So I want to make sure, I covered all the aspects of your question. Was there anything else that you would specifically ask before I hand it over to Dean?
Joe Pantginis, Analyst
No. You really addressed it. I guess, the other thing is I guess you have a country-by-country reimbursement aspect too that's going to be part of the blocking and tackling sort of retort.
Raul Rodriguez, CEO
Of course. Absolutely yeah.
Joe Pantginis, Analyst
Okay. Great. Thank you.
Raul Rodriguez, CEO
You may realize that in Europe, the launch happens in different countries and different sequences. It doesn't all happen at once like it does here in the U.S. So you'll see France, Italy, Spain other countries come in some order depending on how quickly those negotiations take place. Go ahead, Dean.
Dean Schorno, CFO
And with respect to the reporting Joe, the launch has happened, and therefore, we haven't determined exactly how we'll provide color and detail on breaking that out and specifically reporting it. I would remind everyone that in the $20 million milestone payment, we got in Q1 $2.5 million of that milestone was an advanced royalty payment. So, we've already been paid and even recognized that $2.5 million of the first tranche of royalty payments we'll receive from Grifols, but stay tuned. As Grifols starts to now sell, we'll provide incremental clarity and detail around that revenue source in those revenues.
Joe Pantginis, Analyst
Got it. Thank you, guys.
Raul Rodriguez, CEO
Thank you.
Operator, Operator
The next question is from Do Kim of BMO Capital Markets. Please proceed with your question.
Unidentified Analyst, Analyst
Hey, good afternoon, guys. This is DK on for Do. First and foremost, congratulations on the quarter for increase in sequential quarter-over-quarter sales there for TAVALISSE. My question is about TAVALISSE but more so for – in terms of wAIHA. I know you mentioned that, it's a little bit too early to definitively say, what the time lines are given the COVID situation. But is it possible to kind of give us a better sense like maybe a base-case/worst-case scenario here? Are we simply tacking on additional months that were lost, while the enrollment was suspended, or do we have to account for potential ramp-up for each site just to kind of get operations going again, before they're actually up and fully enrolling patients? A little more color on that would be helpful for us.
Raul Rodriguez, CEO
Sure. I'll ask Wolfgang to make a few comments on that.
Wolfgang Dummer, Chief Medical Officer
Yeah. Thanks for the question. First of all, let me reassure that we have a great team in place both at Rigel as well as our CRO. As you have heard, we have 90 sites open now to contribute to the additional 45 patients that we need. That said to your point, we are still in a pandemic. And our clinical trial sites just like any other clinical practice do need to work around social distancing, avoiding COVID-19 infections and focus on severe cases and things like that. But since technically, we only need one new patient from half of the sites, we are still very optimistic that a bromine can pick up suddenly and rather rapidly. But I want to stay away from giving you a precise date other than reassuring you and giving you those encouraging facts.
Unidentified Analyst, Analyst
Okay. That's fair? Thanks for that clarification. And this is not going to have any type of implications on the data integrity, correct?
Wolfgang Dummer, Chief Medical Officer
I'm pleased to share that following the shutdown, we immediately concentrated on the possibility of missing data or data quality issues, and we managed to reduce the amount of missing data for our current patients to a very minimal level. Overall, this turned out better than I had initially feared.
Unidentified Analyst, Analyst
Okay. Good deal. And my last question has to do with the pipeline. Is there a potential where you take the IRAK1/4 inhibitor and develop a little bit further to get better economics on the deal, Co-dev co-development deal as opposed to licensing it out at the end of the year? And in addition to that, what type of indications have you discussed with your partner, or just what you've been thinking about in terms of pursuing for this type of deal?
Raul Rodriguez, CEO
I'll answer that. We're confident that we'll establish a partnership that will help us achieve significant goals. One of those goals is to leverage the substantial clinical and economic resources that a large pharmaceutical partner can provide for both opportunities. Both have considerable potential across various areas, including major conditions like rheumatoid arthritis and psoriasis, as well as smaller indications like ALS. We’re keen on bringing that level of commitment into a partnership because the possibilities are substantial. We also want to actively participate in the development and believe our commercial efforts can aid in the commercialization of these products in various scenarios. We expect this to be an appealing offer for our partners and a lucrative opportunity for us as well. Additionally, we anticipate securing a favorable economic arrangement. We might choose to partner with one of the options while taking the other forward independently to enhance its value before potentially partnering later. This is certainly a viable approach, especially considering the size of the opportunities, and having more resources would be beneficial.
Unidentified Analyst, Analyst
Okay. Thank you for additional color. And congrats again on the quarter.
Raul Rodriguez, CEO
Thank you so much.
Operator, Operator
The next question is from Tessa Romero of JPMorgan. Please proceed with your question.
Tessa Romero, Analyst
Hey, guys. Good afternoon. And thank you for taking my question and congratulations from me as well on the progress this quarter. Just one on COVID-19 impact for the quarter for TAVALISSE. We're trying to get a better understanding of the dynamics that you saw with respect to refill rate versus sequential patient adds. So anything you would note there for the quarter and maybe also into July as we think about our third quarter estimates? Thanks so much guys.
Raul Rodriguez, CEO
Sure. I'll ask Tarek to comment on refill and new patient starts with TAVALISSE and COVID commercial.
Tarek Sallam, Vice President of Marketing
Sure. Thanks Raul. So I appreciate the question Tessa. And as you can imagine this was an area for us that we were highly concerned about like any organization going into the shelter-in-place. But I think as we just commented earlier about even just frankly the discussions in regards to injectable versus orals and having advantages there. Our clinicians very much quickly adapted to telemedicine in supporting their patients remotely. I think the fact that our patients have tolerated the drug, the offices that are currently utilizing, the products are familiar with the product without getting into the specifics of the numbers, I would say that we were actually very pleasantly surprised from an operational aspect, how not only were they able to maintain and frankly be able to manage their patients currently on TAVALISSE remotely, but more importantly and I think we talked about this in the previous quarter's earning call these patients were also looking for other options particularly if they were on an injectable or needing an alternative therapy. And physicians were comfortable in this remote environment especially given our value proposition to identify new patients and switch them to an alternative oral therapy. And so I think frankly speaking our value prop has actually served us quite well during this pandemic not to say that we're capitalizing on this but to say that physicians are seeing value, physicians are seeing opportunity and are receptive to our messaging.
Raul Rodriguez, CEO
The only thing to add there is that both ITP and AIHA are very serious conditions. While patients might hesitate to visit a doctor frequently, as the situation normalizes, they require additional therapies when their platelet or hemoglobin levels are extremely low. Patients actively seek new treatments, and it's positive that TAVALISSE, supported by the second-line data, can be part of that conversation. For some patients, it may be the appropriate option.
Tessa Romero, Analyst
Okay, great. Thank you for taking our question.
Raul Rodriguez, CEO
Thank you, Tessa.
Operator, Operator
The next question is from Kristen Kluska of Cantor Fitzgerald. Please proceed with your question.
Kristen Kluska, Analyst
Hi, everyone. Thanks for taking my question and congrats on a very productive quarter. So you discussed the importance of tracking the duration of response for TAVALISSE from the British Journal Hematology publication, and I wanted to touch on the other side of that on the onset or time to initial effect. So I know you've commented before that real-life experience has been different than what was observed in trials. So are you starting to see any trends or hypothesize why some patients respond quickly, whereas, others take longer? And then on that note, how does your sales team market this to make sure physicians are giving TAVALISSE a real shot before discontinuing if not seeing any effect?
Tarek Sallam, Vice President of Marketing
Sure. So Raul I can…
Raul Rodriguez, CEO
Tarek, thank you. Go ahead Tarek.
Tarek Sallam, Vice President of Marketing
Sure, thanks, Raul. I didn't mean to interrupt you. What I want to say is feel free to add details on the clinical aspects while I discuss our sales force and physician response. Kristen, you’re absolutely right. In our initial clinical trials for the FIT-1 and FIT-2 programs, we published results even before the second line. We mentioned that the median time to first response was 15.5 days. However, we've also noted that there's variability when comparing clinical trials to real-world situations. In real-life scenarios, clinicians and patients encounter various challenges. Fortunately, during the early stages of our launch, we began to hear feedback from clinicians regarding these varied responses. The product label supports giving patients at least three months to determine if they have an adequate response. Considering the complexity of this disease and the varied responses to our treatment and others available, the guidelines emphasize the need for a customized treatment approach. Our sales force has effectively utilized this language from our clinical trial findings to communicate the potential benefits, highlighting that while some patients may respond quickly, it’s important to allow enough time for the product to work effectively. This aligns with the therapy goals identified by both physicians and patients, which can differ significantly. For instance, one physician might be satisfied with a platelet increase from 10,000 to 25,000, while another may aim for an increase to 35,000. This variability underscores the importance of personalizing treatment. Allowing a full three-month period for response, as recommended by our principal investigator, reinforces the message that it’s crucial to give the product a fair chance to achieve the desired outcomes. Does that answer your question, Kristen?
Kristen Kluska, Analyst
Yes. Very helpful. Thank you. And if I may ask a follow-up related to the COVID-19 study. So the first part of the question is just based off of the standard of care. Obviously, this is a new indication that everyone is trying to understand and I know you list dexamethasone as a potential for one. But given that your lead investigator as I know has presented some of your results in ITP and is very knowledgeable about the drug, do you think that there are any therapies in general that are being studied for COVID that have the best shot to be used as a combination with fostamatinib?
Raul Rodriguez, CEO
Sure. Why don't I ask Wolfgang to make comments on that on standard of care?
Wolfgang Dummer, Chief Medical Officer
Yes. In general, we need to consider combinations with standard care if there's compelling evidence that the drug is effective. Otherwise, doctors might not participate in the trial. For instance, when we analyze the dexamethasone data more closely, it isn't groundbreaking. There is some benefit, especially for more severe patients, and given its low cost and existing data, many physicians are likely to use dexamethasone alongside other treatments. However, there's still significant potential for achieving better outcomes than we've seen so far. Regarding the other drug that received emergency approval, remdesivir, a similar observation applies. The rationale for its mechanism of action in hospitalized patients isn't as compelling, as severe cases often occur when the viral load is decreasing and the immune response becomes problematic. Therefore, reducing viral load might not be very beneficial in those situations. Nonetheless, if a hospital decides to include it as part of their standard care, we still see considerable potential for fostamatinib. I hope that clarifies things.
Kristen Kluska, Analyst
Yes. Thank you. And then just quickly on that front. I know that this study is of course much shorter than the trials you're primarily used to running. But could you talk about the rationale for just utilizing the 150-milligram dose here?
Wolfgang Dummer, Chief Medical Officer
Yes. As you know in ITP, we advised starting on 100-milligrams. And then after four weeks at the discretion of the PI, you can increase the dose to 150. So that is what we have in the label. Now we have used up to 200 in CLL trials in chronic lymphocytic lymphoma. So given that you will treat those patients in a very severe condition for two weeks maybe up to four weeks. You don't want to hear at the dose that is too low and starts with a higher dose. Also, these patients are hospitalized under supervision and all these things which alleviates any type of concerns. And we don't want to go to the 200 because again the 150 is the currently labeled dose and is the higher dose of the two they're generally using and therefore we're going with the 150.
Kristen Kluska, Analyst
Okay. Great. Thank you so much. Appreciate for hearing my question.
Wolfgang Dummer, Chief Medical Officer
Thank you, Kristen.
Operator, Operator
There are no further questions at this time. I would like to turn the floor back over to Mr. Raul Rodriguez for closing comments.
Raul Rodriguez, CEO
Thank you everyone. I appreciate your support and assistance. We have some incredible opportunities ahead of us, and the areas we are currently exploring have the potential to add significant value in the short term. Thank you for enabling us to pursue these opportunities. We will keep you updated in the coming months. Take care and stay safe.
Operator, Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.