Earnings Call Transcript - RIGL Q1 2024

Operator, Operator

Greetings, and welcome to Rigel Pharmaceuticals' Financial Conference Call for the First Quarter 2024. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Raymond Furey, Executive Vice President, General Counsel and Corporate Secretary

Thank you. Welcome to our first quarter 2024 financial results and business update conference call. The financial press release for the first quarter of 2024 was issued a short while ago and can be viewed, along with the slides for this presentation, in the News & Events section of our Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainty that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10-K for the year ended December 31, 2023 and subsequent filings with the SEC, including our quarter 1 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 President and Chief Executive Officer, Raul Rodriguez. Raul?

Raul Rodriguez, President and Chief Executive Officer

Thank you, Ray, and thank you, everyone, for joining today. With me today are Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Additionally, I'd like to introduce Lisa Rojkjaer, our new Chief Medical Officer. Lisa joined us in March and brings over 20 years of clinical development, regulatory and medical affairs experience to Rigel. We are thrilled to have her on the team. Now, beginning on Slide 4, we continue to grow our hematology and oncology business in the first quarter of the year, positioning us well for the remainder of 2024 and beyond. We started 2024 with strong commercial demand for our two marketed products, TAVALISSE in ITP and REZLIDHIA in mutant IDH1 relapsed or refractory AML, with demand bottles for each of these two products reaching a new quarterly high since their launch. This is particularly impressive since the first quarter of the year is typically one where our industry faces headwinds due to insurance co-pays and resets and the Medicare donut hole. The decline in net product sales from the prior quarter is primarily due to a decrease in TAVALISSE bottles remaining in our distribution channel or inventory. In addition, we are also expanding our commercial product portfolio with the recent acquisition of GAVRETO, an FDA-approved therapy for the treatment of RET fusion-positive metastatic non-small cell lung cancer and advanced or metastatic thyroid cancer. GAVRETO offers a valuable targeted treatment option for non-small cell lung cancer patients with RET fusion-positive disease. GAVRETO will provide us with top line growth as well as leverage our existing commercial and medical affairs infrastructure. We remain on track to complete the transition of this asset in July of this year. In parallel, we are advancing our development programs, including the evaluation of REZLIDHIA in a broad range of IDH1 mutant cancers with our strategic partners, MD Anderson Cancer Center and CONNECT. These alliances greatly enhance our ability to further evaluate REZLIDHIA's potential in a cost and time-efficient manner. As we grow our commercial product portfolio and prioritize prudent clinical development, we are well positioned to advance our business and work towards financial breakeven. Before I turn the call over to Dave, I'll provide a summary of our previously announced acquisition of U.S. rights to GAVRETO. On Slide 5, we are working diligently to ensure a smooth transition of GAVRETO into our commercial product portfolio, which we expect to complete in July. There are strong synergies between this product and our existing portfolio, infrastructure and expertise. We believe we have the right people and systems in place to bring this product to physicians and their patients. GAVRETO is a once-daily oral RET inhibitor with an established foothold in the U.S. market, having generated $28 million in U.S. net product sales in 2023. Further, with patents that have issued or are expected to issue with statutory expiration dates between 2036 and 2041, we are well positioned to make GAVRETO available for years to come. In exchange for U.S. rights to GAVRETO, we will pay our partner, Blueprint, a purchase price of $15 million, $10 million of which is payable upon first commercial sale and $5 million of which is payable upon the first anniversary of the closing date. The deal also includes potential future regulatory and commercial milestone payments to Blueprint, as well as tiered royalties on net sales of GAVRETO. We believe this puts Rigel in a favorable position to begin capturing value from this program in the near term. Now I will turn the call over to Dave to provide updates on our commercial product portfolio. Dave?

David Santos, Chief Commercial Officer

Thank you, Raul. First, on to growing demand for TAVALISSE in ITP, I have a few brief comments on our continued momentum with TAVALISSE in Q1. On Slide 7, you will see our FDA-approved indication, which is for adult patients with chronic immune thrombocytopenia, or cITP, who've had an insufficient response to a previous treatment. Moving to Slide 8, I'm happy to report that, in Q1, TAVALISSE achieved its sixth consecutive quarterly record high for bottles shipped to patients and clinics. Over those six quarters, we have increased TAVALISSE quarterly demand volume by 23%, and Q1 2024 demand grew 10% over the same period last year. We are pleased that our team has continued to produce double-digit year-over-year growth starting our sixth full year after approval. Total bottles sold in Q1 were 290 bottles less than our bottles shipped to patients and clinics as our distribution channel reduced inventory. Dean will discuss this later in our presentation. This resulted in TAVALISSE net sales of $21.1 million for Q1. On Slide 9, the driver of our continued demand growth with TAVALISSE is our new patient starts. The graph on the left shows that, since 2021, after we emerged from the pandemic, our new patient starts have continued to improve each year. In Q1, we achieved the highest first quarter new patient starts since launch. We generated this new patient start growth through continued focus on expanding the breadth and depth of prescribers, ensuring strong coverage and reimbursement with greater than 95% commercial coverage, and constantly reinforcing the clinical efficacy and safety of TAVALISSE with our customers. I want to thank our entire team for their continued focus and execution to impact more cITP patients with TAVALISSE. We are very pleased with the consistent growth in new patient starts and how that has continued to drive our demand, both in Q1 and as we move forward through 2024. Moving to Slide 10, now I'd like to take a few minutes to discuss our strong quarter growing REZLIDHIA sales. On Slide 11, you will see our FDA-approved indication for REZLIDHIA, which is for adult patients with relapsed or refractory acute myeloid leukemia with the susceptible IDH1 mutation as detected by an FDA-approved test. Moving to Slide 12, we shipped 326 bottles of REZLIDHIA to patients and clinics in Q1, representing strong 17% growth versus Q4 of 2023 and nearly tripling the demand generated a year ago in Q1, our first full quarter of launch. We sold 390 bottles of REZLIDHIA into our distribution channel, resulting in $4.9 million in Q1 2024 net sales. This was 26% above what we sold in Q4 and more than triple the net sales of the same period last year. We are very encouraged by the momentum we are now building with REZLIDHIA. On Slide 13, I wanted to update you on how our REZLIDHIA institutional business continues to be the driver of our growth. 84% of our total bottles shipped to patients and clinics were generated from use in institutional accounts. Our breadth and depth of use in institutions continues to grow as more academic leukemia treaters are becoming more aware of REZLIDHIA's data in relapsed/refractory mutant IDH1 AML. As we've discussed on prior calls, we believe we have an opportunity to grow REZLIDHIA use further in the community. As in that segment of our business, quarterly demand has remained stable. We did see a highly encouraging trend in Q1 as the community drove more than a quarter of our new patient starts. This signals that community leukemia treaters are also becoming aware of REZLIDHIA and are trying it in their mutant IDH1 AML relapsed or refractory patients. We believe a significant opportunity remains to grow REZLIDHIA use among community AML treaters, particularly because of their adoption of venetoclax-based regimens for their newly diagnosed patients. We feel REZLIDHIA's data in post-venetoclax patients will be particularly compelling to them. I want to thank our entire team for their hard work in growing awareness of REZLIDHIA, both in academic institutions and community practices. They have worked closely across functions as one united team to broaden REZLIDHIA's impact on mutant IDH1 relapsed/refractory AML patients. Moving to Slide 14, I wanted to provide an update on our commercialization plans for GAVRETO. On Slide 15, I'll begin by reviewing the FDA-approved indications for GAVRETO, which include the treatment of adult patients with metastatic RET fusion-positive non-small cell lung cancer as well as adult and pediatric patients 12 years of age or older with advanced RET fusion-positive thyroid cancer who requires systemic therapy and who are radioactive iodine refractory. Moving to Slide 16, I want to reiterate why we believe GAVRETO is an important strategic addition as the third FDA-approved oral targeted therapy in our Rigel commercial portfolio. As you'll recall from Raul's remarks, GAVRETO generated nearly $28 million in U.S. net sales last year, so this is an excellent opportunity for us to continue providing meaningful therapy to RET fusion-positive patients with non-small cell lung cancer and advanced thyroid cancer. We believe this compelling GAVRETO opportunity suits our business well for a few reasons. Number one, it enables us to immediately and efficiently move into a large solid tumor market where most clinicians are already testing patients and immediately recognize RET as a biomarker associated with FDA-approved therapies. So we anticipate that the RET market will continue to expand as more RET fusion-positive non-small cell lung cancer and advanced thyroid patients are identified. Number two, we believe we have built strong access capabilities that we can fully leverage to ensure current and newly prescribed patients have access to GAVRETO. Our efficient and customer-friendly distribution network with TAVALISSE and REZLIDHIA will soon be ready to accommodate GAVRETO, as will our RIGEL ONECARE patient services hub that has established a reputation for being highly responsive to patients and providers. We also have a track record of ensuring strong coverage and reimbursement for oral targeted therapies in difficult-to-treat diseases that we plan to continue with GAVRETO. And number three, this opportunity makes perfect sense for us because it is a highly complementary one to both the commercial and medical affairs teams we have in place who call on both academic centers and community oncology practices. With our Rigel footprint already in these accounts, we'll be able to be even more efficient with our time and resources as we discuss multiple products within these accounts. On the right side of the slide, I wanted to highlight our biggest opportunity with GAVRETO, and that is in non-small cell lung cancer. As you'll recall, approximately 1% to 2% of the 194,000 non-small cell lung cancer patients each year will test positive for the RET fusion, translating to approximately 3,000 RET fusion-positive non-small cell lung cancer patients this year. The graphic shows research done last year on the first-line therapies that were used in RET fusion-positive patients who were eligible for treatment. Three-quarters of the patients were treated with one of the two FDA-approved RET inhibitors, with GAVRETO used in about one-fifth of patients prescribed a RET inhibitor. Importantly, there is still approximately one-quarter of the market being treated by chemotherapy with or without an immune checkpoint inhibitor or a multi-kinase inhibitor. We view this one-quarter of patients as the growth opportunity for RET inhibitors and GAVRETO. Slide 17 reviews what we believe are the four key drivers for continued growth as we begin our commercialization journey with GAVRETO. The first driver is patient identification. It is important that as many as possible of the 3,000 potential RET fusion-positive non-small cell lung cancer patients are identified each year. Fortunately, even if clinicians aren't specifically looking for RET fusion-positive patients when they test, about 90% of them immediately recognize the RET biomarker as being associated with an FDA-approved therapy. Also, in research conducted last year, about 80% of non-small cell lung cancer patients are being tested, and that rate is improving. When clinicians don't test, it is more likely due to not having adequate tissue available. And in addition to inadequate tissue being the top barrier for testing, a significant portion of HCPs are concerned about delaying treatment while waiting for test results. We believe that especially with the recent data and adjuvant approvals of targeted therapies for biomarkers such as EGFR and ALK in early-stage lung cancer, biomarker testing to identify appropriate test patients will expand even further in non-small cell lung cancer. Both patient and HCP education on biomarker testing and the importance of targeted therapies in non-small cell lung cancer are growing, and that's allaying clinicians' concerns about delaying treatment. Secondly, and more importantly for GAVRETO, optimizing the choice of therapy in those identified patients who are treatment eligible is an impactable growth opportunity for us. Most oncologists have yet to try GAVRETO in the front line. And the biggest reason for that is comfort and familiarity with other drugs. From the prior slide, the use of chemotherapy with or without immune checkpoint inhibitors and multi-kinase inhibitors represents about one-quarter of the use in the first-line treatment of RET fusion-positive patients. By growing awareness of GAVRETO's efficacy, safety and once-daily oral dosing, we believe we can grow future use of GAVRETO among current nonusers. And importantly, as more clinicians are educated about testing and the impact of targeted therapies in lung cancer, we believe the number of clinicians who are concerned about delaying treatment and therefore initially treat with a nontargeted treatment will decrease, resulting in more RET fusion-positive non-small cell lung cancer patients currently treated with chemotherapy-based regimens or other agents moving to a RET-targeted therapy like GAVRETO. Third, we believe that GAVRETO will continue to grow due to its high response rates, long duration of response and convenient once-daily dosing. Lisa will discuss these and other impressive GAVRETO efficacy data in her presentation. These important drivers of persistency should continue to grow our carryover business each month as patients refill their prescriptions. And finally, as we have discussed, as we leverage our strengths in coverage, reimbursement, and patient services with RIGEL ONECARE, we believe we can gain loyal GAVRETO users from clinicians who view out-of-pocket costs and difficulty obtaining reimbursement as barriers to the use of RET inhibitors. In summary, we are well positioned to continue growing GAVRETO through positive momentum in these four key drivers.

Lisa Rojkjaer, Chief Medical Officer

Thank you, Dave, and good afternoon, everyone. I'm excited to have joined Rigel just a couple of months ago at an important inflection point for the company as we expand our hematology and oncology portfolio. First, I'd like to begin by underscoring how precision medicine approaches to lung cancer are positively impacting patient outcomes, including those patients with RET fusions and why, from the clinical perspective, we are excited about GAVRETO. On Slide 21, RET fusions are present in approximately 2% of all non-small cell lung cancers, representing approximately 3,000 new patients per year in the U.S., and then around 20% of papillary thyroid cancers for around 1,000 new cases per year. Testing for RET fusions is an essential part of the pretreatment evaluation of non-small cell lung cancer. In fact, clinical practice guidelines recommend the use of targeted therapies as first-line treatment for eligible patients with metastatic non-small cell lung cancer harboring actionable genetic variants such as RET fusions. Prior to the advent of RET-targeted therapy, patients with advanced RET fusion-positive non-small cell lung cancer received platinum-based chemotherapy regimens with overall response rates in the 50% range and median progression-free survival of 6 to 8 months. The use of nonselective multi-kinase inhibitors with anti-RET activity has shown only modest efficacy and high rates of treatment-related toxicity. Because RET fusion-positive non-small cell lung cancers exhibit low PD-L1 expression, immune checkpoint inhibitors have demonstrated only limited efficacy here with overall response rates less than 10% and progression-free survival in the range of 2 to 3 months. GAVRETO is an oral, highly potent, selective RET inhibitor with once-daily dosing that is FDA-approved for RET fusion-positive non-small cell lung cancer or thyroid cancer as first-line or subsequent-line therapy. On the next slide, I will review updated clinical data from the Phase I/II ARROW study, which led to the approvals. Slide 22 summarizes updated clinical results from the ARROW study with a data cutoff date of March 2022. This Phase I/II multicenter open-label dose escalation and expansion study was conducted at 71 sites in 13 countries with an original data cutoff date of May 2020. In Phase I, Pralsetinib at a dose of 400 milligrams daily was determined to be the recommended Phase II dose. In Phase II, the safety and efficacy of Pralsetinib 400 milligrams daily was evaluated in patients with RET fusion-positive advanced non-small cell lung cancer, thyroid cancer and other RET fusion-positive solid tumors. The primary endpoint was overall response rate. In the lung cancer subgroup, clinical activity was observed irrespective of prior therapy. The overall response rate in 130 patients with previous platinum-based chemotherapy was 63% and 74% to 80% in 107 treatment-naive patients with tumor shrinkage observed in all previously untreated patients. In the overall subset of 260 non-small cell lung cancer patients, median duration of response, one of the key secondary endpoints, was 19.1 months. Pralsetinib was generally well tolerated with predominantly low-grade toxicity with only 10% discontinuing therapy due to treatment-related adverse events. In the subgroup of 22 patients with RET fusion-positive thyroid cancer, 91% of previously treated patients achieved a response. And finally, in the subgroup of 23 patients with RET fusion-positive solid tumors, the overall response was 57%. These results underscore the benefit of utilizing RET-targeted therapy with Pralsetinib in first or later lines of treatment for patients with RET fusion-positive non-small lung and thyroid cancer.

Dean Schorno, Chief Financial Officer

Thank you, Lisa. I'm on Slide 34. For the first quarter of 2024, we shipped 2,193 bottles of TAVALISSE to our specialty distributors, resulting in $21.1 million in net product sales. 2,483 bottles of TAVALISSE were shipped to patients and clinics, while 290 bottles decreased the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2024, we shipped 390 bottles of REZLIDHIA to our specialty distributors, resulting in $4.9 million in net product sales. 326 bottles of REZLIDHIA were shipped to patients and clinics, while 64 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales in TAVALISSE of $21.1 million in the first quarter of 2024, a 5% decrease compared to the same period in 2023, resulting from the decrease in bottles remaining in our distribution channels at the end of the quarter. I will describe this in a bit more detail on the next slide. We reported net product sales from REZLIDHIA of $4.9 million in the first quarter of 2024 compared to $1.5 million in the same period in 2023. As a reminder, REZLIDHIA was launched in the United States in December of 2022. Our net product sales from TAVALISSE and REZLIDHIA were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $12.4 million. For the first quarter of 2024, our gross-to-net adjustment for TAVALISSE and REZLIDHIA was approximately 34% and 24% of gross product sales, respectively. Before we move on to net product sales, let me review our expectations for the second quarter of 2024. We're pleased with the strength of our business and expect to see continued growth in bottles shipped to patients and clinics for both TAVALISSE and REZLIDHIA. We expect our gross-to-net adjustment in the second quarter of 2024 to be approximately 35% for TAVALISSE and approximately 26% for REZLIDHIA. On Slide 35, before I move on to a review of our financials for the quarter, I want to provide a brief review of the dynamics and the sequential decrease in net product sales we saw during the quarter. Starting with the orange bars, in the fourth quarter of 2023, we saw 2,463 bottles shipped to patients and clinics. This is our key demand metric, as Dave highlighted, our highest demand volume since launch. Incrementally, we saw a significant increase in bottles remaining in the distribution channel of 208 bottles. This resulted in total bottles for the fourth quarter of 2023 of 2,671 bottles, which generated $25.7 million of net product sales. Now, to discuss the green bars, in the first quarter of 2024, we saw 2,483 bottles shipped to patients and clinics. This small increase is despite the typical first quarter industry challenges associated with the resetting of co-pays and the Medicare donut hole delaying both new prescriptions and refills that both we and our industry experience each year. You'll note in the thin green bar that this small increase in demand volume resulted in a sequential increase in net product sales of $200,000. The bigger impact in this sequential reduction in net product sales came from the reduction of inventory levels at our distributors. The reduction from 1,374 bottles of inventory at our distributors in Q4 of 2023 down to 1,084 bottles at the end of Q1 of 2024 contributed to a sequential decline in our net product sales of $4.8 million. Inventory levels at our distributors are variable, but we do expect them to generally increase over time as our business grows. To illustrate the effective change in inventory levels on our net revenues, let me provide an example. While we have said that we expect to see continued growth in bottles shipped to patients and clinics for TAVALISSE and that our inventory levels are variable, if we assume that both inventory levels and demand volume are flat as compared to the first quarter of 2024, we would expect to see quarter-over-quarter growth of approximately 12% for the second quarter of 2024. This is calculated with our current wholesale price and anticipated gross-to-net adjustment. Again, this calculation is intended to be illustrative. On to the next slide, in addition to net product sales, our contract revenues from collaborations were $3.5 million in the first quarter of 2024. Contract revenues from collaborations consisted of $2.3 million from Kissei, $1.1 million from Grifols and $100,000 from Medison.

Raul Rodriguez, President and Chief Executive Officer

Thank you, Dean. As we look forward to the rest of 2024, we are committed to growing sales of REZLIDHIA and TAVALISSE while incorporating GAVRETO into our commercial operations in July. With the support of our strategic partners, we anticipate starting additional clinical studies for olutasidenib and will explore other opportunities to expand product development. We also plan to enroll participants and collect preliminary data from our Phase Ib clinical trial of R289 in lower-risk MDS. Furthermore, we will actively seek additional in-licensing deals and acquisitions, similar to our approach with REZLIDHIA and GAVRETO. As we implement our strategy to enhance our hematology and oncology business, we remain dedicated to achieving financial breakeven and developing Rigel into a self-sustaining company. Thank you for your interest in our progress in the first quarter. We will now open the call to your questions.

Operator, Operator

Thank you. One moment please for the first question. And our first question is from the line of Yigal Nochomovitz with Citigroup.

Yigal Nochomovitz, Analyst

On the cash guidance, you're burning about $8 million a quarter. You mentioned getting to breakeven and also investing in in-licensing activities. Could you just help us walk through the path to getting to breakeven as far as the existing burn and the revenue picture as well as the investment in the portfolio?

Raul Rodriguez, President and Chief Executive Officer

Thanks, Yigal. I'll ask Dean to comment on that, and I'll add on to that.

Dean Schorno, Chief Financial Officer

Sure. So as it relates to the current quarter and from a cash burn perspective, I'd encourage you to look back a couple of quarters. And then, as some general comments as we look forward, we haven't given top line guidance. In our last quarterly call in March, we did describe our expectations for 2024 OpEx. So that's available. With respect to Q1, I would note a couple of things. One is the dynamic of the net sales that I described. So we did have the inventory reduction, which impacted net sales, also impacted our cash flows as a result of that. Incrementally, I would note that we paid $2 million, and this is in our Q. We paid $2 million on the MD Anderson collaboration. So from a cash flow perspective, there are a variety of elements going into that burn that you described. With respect to our future point of financial breakeven, and that continues to be a focus of the business, we do expect to see revenues increase. We look to launch GAVRETO and start to recognize revenues in the third quarter. With that, we've described that we believe that there's less than $10 million of SG&A and clinical spend with respect to GAVRETO. So we believe that will become rapidly accretive. All that said, we believe we're on a path to financial breakeven. We just haven't provided the guidance to say exactly when that will occur.

Raul Rodriguez, President and Chief Executive Officer

Thank you, Dean.

Yigal Nochomovitz, Analyst

I'm interested in the brain activity related to GAVRETO and your focus on glioma for olutasidenib. Can you share any details about the brain plasma ratio for each of these drugs? I'm curious about how well they penetrate the brain.

Raul Rodriguez, President and Chief Executive Officer

Yes. Thank you for the question. I think it's very helpful. Clearly, they cross the blood-brain barrier, which is critical, and we've been able to show in clinical studies for GAVRETO, as Lisa discussed, and we also know that olutasidenib also crosses the BBB. And so we're excited about the opportunity of trying both of those molecules in this area, and obviously, generating the data on GAVRETO already based on the ARROW study, which is very helpful. Anything else, Lisa?

Lisa Rojkjaer, Chief Medical Officer

Yes. I would say that the actual ratios that you're asking about, though, aren't known. That hasn't been determined.

Raul Rodriguez, President and Chief Executive Officer

But we know that there's a therapeutic effect of both...

Lisa Rojkjaer, Chief Medical Officer

Absolutely.

Operator, Operator

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

Kristen Kluska, Analyst

Maybe to follow up on the last one and ask in a different way, can you talk about how you're going to balance the current pipeline where each of these assets in itself could potentially be evaluated in other indications? And then also the continued appetite for more of these bolt-on deals which fit your pipeline? And maybe another way to ask it is, like, where do you see the company maybe in 2 years from now?

Raul Rodriguez, President and Chief Executive Officer

Thank you for the question, Kris. We're excited about TAVALISSE, which continues to experience strong growth, and we set a new quarterly high in demand bottles, driving our enthusiasm for the product's progress. While inventory levels fluctuate from quarter to quarter—being quite high in Q4 and even in Q3 of last year—REZLIDHIA is just beginning its launch phase and being introduced to clinicians, presenting a promising opportunity. The addition of GAVRETO, an oral targeted therapy, allows our sales teams to effectively promote three products, which we anticipate will lead to significant top-line growth. Although we expect operational expenses to increase, we anticipate this growth to be more modest compared to top-line gains. As mentioned by Dean last quarter, our guidance remains consistent, and we believe we'll generate enough resources to carry out our clinical trials. We're exploring various opportunities, especially in areas like AML and glioma, which are quite promising for potential development. We're thrilled to have Lisa on board, utilizing her expertise to help us design and implement studies in these areas as our cash flows from ongoing operations grow. We aim to continue expanding our business, and the sequential addition of REZLIDHIA and GAVRETO has been instrumental in driving our revenue, allowing us to make full use of our existing infrastructure. Our ability to tap into both institutional and community-based clinicians with minimal incremental infrastructure growth has been extremely beneficial. Consequently, we are progressing toward achieving financial breakeven and creating cash flow to support more clinical studies, regulatory studies, and acquisitions or in-licenses of additional products. This outlines our growth strategy for the coming years, particularly the next two years and beyond. We're excited about our growing business, the potential trials we may launch in key areas like AML and glioma, and our ongoing search for new products that align with our existing infrastructure without significant expansion.

Operator, Operator

Our next question is from Farzin Haque with Jefferies.

Farzin Haque, Analyst

So for TAVALISSE, based on the distribution channels inventory in 1Q, how should we think about this for the rest of the year? And how variable is it? Like, you just showed the numbers for the 4Q levels, but is it really variable across quarters?

Raul Rodriguez, President and Chief Executive Officer

Yes, I'll ask Dave to comment on that, and then we can point you to another place you can look at the variability of that.

David Santos, Chief Commercial Officer

I understand your question regarding the fluctuations in inventory throughout the quarters. Q1 was somewhat unique, which is why Dean mentioned the reduction in inventory of 290 bottles. We believe our inventory is accounted for, as it is located with our distributors, who supply our direct accounts or specialty pharmacies that serve patients. They purchase from us and then sell to those segments of the market, leaving us with the remaining inventory. They purchased a bit more in Q4, but the key point is that in Q1, that level decreased. However, as Dean illustrated with his example, even if we do not increase inventory this quarter and maintain steady demand, we are anticipating double-digit growth in net sales compared to last year. Therefore, we do not expect significant variability, although this can occur, especially with Q4 being around the holiday season and transitioning into Q1. Additionally, as Dean pointed out, demand typically starts lower at the beginning of the quarter, which was evident in the early purchases. By the end of the quarter, demand increased significantly, leading to quarter-over-quarter growth in demand. There are several factors that affected this inventory drawdown this quarter, but we do not foresee substantial variability moving forward. I would encourage Raul to offer further insights on this matter, but that’s my perspective.

Raul Rodriguez, President and Chief Executive Officer

Yes, I think we have seen, in some cases, larger numbers. In fact, this drawdown wasn't the largest. We've had a larger one in early '21, for example. So it does vary substantially. I think what is consistent, though, in the longer term, the inventory levels grow as the business grows. And that is consistent. It's not in any specific quarter or any one quarter, and we see oscillations in both sides. It's just that the overall trajectory is a growth trajectory when the business is growing. TAVALISSE is growing. I could share some prior quarter numbers as well if you wish. In our corporate deck, we include a nice little table that has the inventory changes on a quarterly basis, going back to as early as 2021.

Farzin Haque, Analyst

You had a strong uptake for REZLIDHIA, so I'm curious about the percentage of sales coming from new patients compared to existing ones. Additionally, what actions are necessary to enhance our competitiveness with the [indiscernible] among new patients?

David Santos, Chief Commercial Officer

Sure. If you look at the total demand for bottles, the percentages I shared indicate a strong preference toward institutions. Similarly, the demand for our bottles primarily comes from patients who have previously started treatment. This is important because there is a maximum of three months to secure business from patients who started in Q1. We saw several patient starts in March, which would account for only a small number of bottles. While I can't provide an exact percentage, I estimate that around 20% of the bottles were for new patients in Q1. This is a positive indicator that more new patients began treatment in Q1, contributing significantly to our sales. Additionally, it appears that the carryover from last year is increasing. As for competition, I wouldn't describe it as such; rather, we are focused on differentiating olutasidenib in the mutant IDH1 relapsed/refractory disease space. We believe we have a very long duration of response, which is becoming well-known. Particularly for patients who have previously received venetoclax, we have a compelling narrative regarding response rates and duration. Ultimately, discussing our duration of response in the relapsed/refractory context, especially among those treated with venetoclax, demonstrates consistent response rates and duration, which is very appealing to clinicians. As you're likely aware, venetoclax is increasingly used, especially in first-line AML.

Raul Rodriguez, President and Chief Executive Officer

Thank you, Farzin. Any other questions?

Farzin Haque, Analyst

No.

Raul Rodriguez, President and Chief Executive Officer

Okay. Thank you.

Operator, Operator

Thank you. 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, President and Chief Executive Officer

Thank you. In closing, I'd like to thank everyone on this call for your continued interest in Rigel and our progress. And as always, I'd like to thank our employees for their commitment to improving the lives of patients because every single day does count. We look forward to updating you on our progress in future calls. And with that, have a great day.

Operator, Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.