Earnings Call Transcript - RIGL Q3 2021

Operator, Operator

Greetings, and welcome to Rigel Pharmaceuticals Financial Conference Call for the Third Quarter 2021. 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 third quarter 2021 financial results and business update conference call. The financial press release for the third quarter was issued a short while ago and can be viewed along with the accompanying slides for this presentation on our Investor Relations page on our website, www.rigel.com. As a reminder, during today’s call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent filings with the SEC, including our Q3 quarterly report on Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today’s date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our CEO, Raul Rodriguez.

Raul Rodriguez, CEO

Thank you, Dolly, and thank you, everyone, for joining our third quarter 2021 conference call. Also with me today are Wolfgang Dummer, our Chief Medical Officer; Dave Santos, our Chief Commercial Officer; and Dean Schorno, our CFO. Now, beginning on slide 5. During the third quarter, we made significant progress that sets us up for success in each of our key value drivers, now and into 2022. On this call, we’ll tell you about growing ITP sales, advancing our clinical program in autoimmune hemolytic anemia, treating hospitalized COVID-19 patients, as well as preparing our earlier stage pipeline programs for mid-stage clinical trials. Today, let me start with our second key value driver, warm autoimmune hemolytic anemia or warm AIHA. Warm AIHA, in warm AIHA, we achieved an important milestone this quarter. I’m happy to announce that the pivotal Phase 3 forward trial is now fully enrolled. This brings us closer to delivering robust evidence for TAVALISSE as potentially new first-in-class medicine for the treatment of patients with warm AIHA. Dave will provide an overview of the opportunity in warm AIHA and Wolfgang will discuss what we expect to see from the forward trial and provide insights into why this is an important step forward for patients suffering from this disease. In the past quarter, we completed the expansion of our hem-onc commercial organization. We added 16 new sales reps, who are now fully trained, out in the field and are looking to make an impact, starting in this quarter. We have an incredibly capable and experienced organization, and now one with even greater reach. Dave will speak about the caliber of this team he assembled, and how this positions us to drive further awareness of TAVALISSE in ITP, and prepares us for a potential opportunity in warm autoimmune hemolytic anemia. In ITP, we continue to see growth in demand this year. But, we’re also encouraged by some key metrics that marked the potential for future growth, specifically new patient starts, which are the strongest we’ve seen since 2019, when the pandemic started. Dave and Dean will describe the sale trend in a little bit more detail during this call. On our COVID-19 program, we continue to move forward with 210 patients now enrolled in our Phase 3 study. In early September, results from the Phase 2 study conducted by the NIH were published in the journal, Clinical Infectious Disease. This publication provides important clinical data on the use of fostamatinib in patients hospitalized with COVID-19. Wolfgang will discuss our progress in this program. Regarding our earlier pipeline programs, our IRAK1/4 program is moving forward with preparations for the Phase 1b/2 study in low-risk MDS. This is an area where there’s high unmet need. And we think that our IRAK1 and 4 molecule, R289, is ideally suited to address this. Our RIP1 inhibitor program partnered with Eli Lilly includes a systemic molecule R552, which is targeting autoimmune diseases, and we are jointly working on starting a Phase 2 trial in 2022. The program also includes a molecule that can penetrate the blood-brain barrier for applications in CNS diseases such as Alzheimer’s and ALS. We made progress across all our value drivers this quarter, and we are setting the stage for a transformative year for the Company in 2022. To tell you more about this, we’ll start with Dave’s discussion on our commercial progress and expansion, followed by Wolfgang’s update on our clinical programs, and then Dean’s financial update. Over to you, Dave.

Dave Santos, Chief Commercial Officer

Thanks very much, Raul. I’d like to now move to slide 7, where you’ll 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. We continued to grow demand for TAVALISSE in Q3, again, reaching over 1,700 total bottles shipped to patients and clinics. This represented 5% growth over our demand volume during Q3 of 2020. We were encouraged by the new patients starting therapy in Q3, and believe that will translate into higher demand volume as we move through this quarter. Despite growing demand, our total bottle volume decreased, resulting in net sales of $16 million for Q3. The reason for this volume decline is seen on slide 9. As you can see, our demand grew by 5% to 1,710 bottles, while total bottles decreased by 4% to 1,657 bottles. This decline was due to the impact of inventory, or bottles remaining in the distribution channel. Last year, we built up 102 bottles, and this year we declined by 53 bottles. While inventory impacted our total bottles and its sales, we remain confident that we can continue to grow demand through accelerating our awareness among prescribers, continuing to increase the number of new patients starting on TAVALISSE, and maximizing the benefits to those patients by ensuring they get timely refills. To achieve those growth objectives, we continue to focus on expanding our reach to customers. Moving to slide 10. We are pleased to report that our interactions with customers continued a strong growth trend during Q3, even though there were persisting COVID challenges relative to Q2, based on the Delta surge. We saw more than a 30% increase in in-person interactions versus Q2 and virtual interactions still represented 40% of our calls. This was solid productivity in a transition quarter, given that it was a period where we were focused on recruiting and training to complete our expansion. Overall, we’re getting more opportunities to get in front of customers and spread the efficacy messages of TAVALISSE. On slide 11, you will see why we are so confident that this strong interaction trend should continue to accelerate in Q4 and beyond. We completed our expansion to 55 territories on schedule in Q3, fully trained our new team members. That expanded team is now in place, calling on customers. We were able to attract and recruit highly experienced salespeople to join our expanded team. And as you see on the right, they not only know that hem-onc space, they have on average nearly a decade of experience in their geographies, so they’re familiar with our customers. While it will take some time to realize the full benefit of this expansion, we do expect the team will have an accelerated impact on prescribers and new patients, because of their depth of knowledge and relationships in their territories. Additionally, on slide 12, we’re excited to be preparing for the first live ASH meeting since 2019. We are planning to connect and reconnect with many customers in Atlanta, even through our exhibit booth, which has a sizable footprint near one of the entrances to the exhibit hall, or other key customer activities we have planned at the meeting. My thanks to the entire U.S. commercial team for all their efforts to continue to impact more customers with our expanded team and ultimately grow our impact on patients. Turning to slide 13. Outside the U.S., our partners are making steady progress to extend our reach globally. In September, our partner Grifols announced the continuation of the commercial rollout of TAVALISSE in Europe, with launches in France, Italy, and Spain. With the UK and Germany, TAVALISSE is now available in the top five markets in Europe. The phased rollout across the rest of Europe planned over the coming months will include the Czech Republic, Denmark, Finland, Norway, and Sweden. So, in summary, we are looking forward to continued progress in ITP as we move through Q4 and into 2022. We believe we have the tools and team in place to accelerate our growth across a broad group of prescribers. Moving to slide 14, we are also extremely excited that we have another potential opportunity ahead with warm autoimmune hemolytic anemia. On slide 15, warm AIHA is an indication which has a highly synergistic customer base and the same set of established treatments with steroids and rituximab, but lacks an approved agent to use post-steroids. We believe we are uniquely positioned to leverage our knowledge and experience in ITP to fully capitalize on our potential first-mover advantage and significantly build the TAVALISSE franchise upon FDA approval and launch. I look forward to talking with you more on future calls about our plans. Thanks for your attention. And I will now turn the call over to Wolfgang to further discuss this exciting opportunity in warm autoimmune hemolytic anemia.

Wolfgang Dummer, Chief Medical Officer

Thank you, Dave. As mentioned, we have completed enrollment for our Phase 3 AIHA trial. I would like to take a moment to update everyone on the program and explain why we are enthusiastic about this opportunity. Warm autoimmune hemolytic anemia is a serious, rare disorder affecting approximately 10,000 to 13,000 patients in the U.S. who do not respond adequately to steroids and require additional therapies. Currently, there are no FDA-approved drugs for this condition. Rituximab is often used off-label as a second-line treatment, but its long-term use is limited by significant B-cell depletion. Splenectomy, another common treatment, is invasive and removes the spleen, leading to unknown long-term consequences. Hence, there is a clear unmet medical need for an effective, well-tolerated immune modulator with a long-term safety profile that can be easily prescribed. Securing an indication for TAVALISSE in AIHA would complement its existing approval for ITP, as the same physicians treat both conditions and are already familiar with TAVALISSE’s safety and efficacy. The mechanism of action for TAVALISSE in warm AIHA closely resembles its action in ITP, providing a strong rationale for its potential effectiveness in AIHA as well. Encouraging Phase 2 data from a prior study further supports our optimism for a positive outcome in the Phase 3 trial. This Phase 2 open-label study involved adults with warm AIHA who had hemoglobin levels below 10 grams per deciliter and had failed at least one prior treatment. The primary endpoint was to achieve a hemoglobin level greater than 10 grams per deciliter with at least a 2 grams per deciliter increase from baseline by week 24, without rescue therapy or blood transfusions. 44% of the 25 patients met this goal, and if a late responder around week 30 is included, the percentage increases to 48%. Moreover, we observed notable increases in median hemoglobin levels as early as week two that were sustained over time. The safety profile was favorable and consistent with previous trials for ITP and RA. We have reached an agreement with the FDA regarding the primary endpoint for our Phase 3 trial, which includes a durability measure considering the challenges posed by the COVID-19 pandemic. We established the endpoint of three consecutive time points with a hemoglobin level of at least 10 and a change from baseline of at least 2. Applying this high standard retrospectively to our Phase 2 data shows that about 27% of patients on fostamatinib would meet these criteria. Given the high standard, very few placebo patients should reach this target, thus we are adequately powered to demonstrate statistical significance in the ongoing Phase 3 study. This pivotal Phase 3 study is now fully enrolled, with patients randomly assigned to either the fostamatinib or placebo group and treated for 24 weeks. We expect the last patient to complete their final visit in about six months. After week 24, patients can choose to transition to an open-label extension study, which we anticipate will be the choice of most patients. I want to emphasize that the patients who meet the primary endpoint represent only a segment of those who may gain meaningful clinical benefits. Other clinical improvements, such as the need for rescue therapy or enhancements in quality of life, will also be assessed through pre-specified secondary and tertiary endpoints. We believe the percentage of patients experiencing clinically meaningful benefits beyond the primary endpoint will be significantly higher than 27%. This comprehensive data set will provide a robust package around the time of unblinding and the announcement of top-line results. I mentioned earlier that the last patient’s visit will occur in about six months, around early May, with top-line data expected in mid-2022. Shifting to COVID-19, we have previously highlighted the strong scientific rationale for TAVALISSE in treating COVID-19, supported by various independent studies. This rationale was backed by promising clinical data from the NIH published in September. Ongoing studies include our sponsored Phase 3 trial supported by the Department of Defense, which we believe will yield sufficient data for TAVALISSE's approval for this indication. With vaccination efforts facing challenges and COVID cases remaining a reality, there is still a pressing need for effective treatment options for hospitalized patients. Upon approval, TAVALISSE would be ready for immediate use. We have ongoing COVID-19 trials using TAVALISSE, with multiple developments to note. Our Phase 3 trials represent a significant milestone, alongside the substantial ACTIV-4 NIH trial, which is progressing well. All these studies examine hospitalized populations across various severities of the disease. Our Rigel-led Phase 3 study, which includes hospitalized patients with mild disease but risk factors for severe disease, will assess whether we can prevent progression to severe conditions. If successful, this trial could lead to an expanded label for fostamatinib to treat COVID-19 patients. The trial has currently enrolled 2,010 patients; however, enrollment has slowed recently due to geographic variability in case numbers. Many sites in Brazil and Argentina were enrolling rapidly during their winter months, but as they transition into spring, cases have decreased. To address this, we are opening additional sites in regions like Mexico and the U.S. We initially aimed to complete enrollment by year-end, but we now anticipate it could be closer to the end of Q1, with updates scheduled for January. Turning to our pipeline, we are excited about our IRAK1/4 and RIP1 programs. Our IRAK inhibitor R289 and its active metabolite R835 target both IRAK1 and 4, showing more complete inflammation suppression in preclinical studies compared to selective IRAK4 inhibitors. We view the IRAK1/4 pathways as ideal targets for treating low-risk MDS, which stems from inflammation in the bone marrow leading to deficiencies. Preparations are underway for a Phase 1b/2 study in low-risk MDS patients, aiming to begin Q1 2022. We look forward to sharing more details as we approach the study's start. We are also exploring indications in rare autoimmune diseases such as palmoplantar pustulosis and hidradenitis suppurativa, where we see potential for IRAK inhibition. Finally, I want to highlight our RIP1 inhibitor program, partnered with Eli Lilly. Our first candidate, R552, is an oral systemic RIP inhibitor for inflammatory conditions. We are collaborating closely with Lilly to initiate the first Phase 2 studies in an autoimmune indication and are enthusiastic about the broad potential for RIP1 inhibitors. Additionally, we are selecting a RIP1 inhibitor candidate capable of crossing the blood-brain barrier. Lilly will lead the clinical development of these brain-penetrating RIP1 inhibitors in CNS diseases, making them an ideal partner for these significant opportunities. Now, I will turn the call over to Dean for a finance update.

Dean Schorno, CFO

Thank you, Wolfgang. I’m on Slide 26. For the third quarter of 2021, we shipped 1,657 bottles to our specialty distributors, resulting in $20.5 million of gross product sales. 1,710 of those bottles were shipped to patients and clinics, while 908 bottles remained in our distribution channels at the end of the quarter. We reported net product sales of TAVALISSE of $16 million, a 2% decrease compared to the third quarter of 2020. Our net product sales from TAVALISSE were recorded net of estimated discounts, chargebacks, rebates, returns, co-pay assistance and other allowances of $4.5 million. Our gross to net adjustment was approximately 22.1% of gross product sales. Let me briefly provide a bit more color around this year-over-year decrease in our net product sales. While we expect our channel inventory to generally track our sales growth, there are numerous factors that will create fluctuations that we’re likely to see from time to time, and we saw this quarter. As Dave pointed out, we saw a 5% year-over-year increase during the quarter in bottles shipped to patients and clinics while we saw a sequential decrease in our channel inventory. If you were to remove the effects of channel inventory fluctuation, we would have seen year-over-year net product sales growth of approximately 8%. This net revenue growth rate is higher than the demand growth rate, as a result of net price increases. Before we move on from net product sales, let me review our expectations for the fourth quarter. With our sales force expansion now complete, we expect to see growth in bottles shipped to patients and clinics in the fourth quarter. Incrementally, we expect our gross to net adjustment to be approximately 23% to 24% in the fourth quarter of 2021. Moving on to slide 27. In addition to net product sales, Rigel’s contract revenues from collaborations were $4.5 million for the three months ended September 30, 2021, which consisted of revenues recognized from our deferred revenues of $2.4 million from our license agreement with Lilly, $1.8 million with the achievement of a Daiichi milestone, $225,000 related to the performance of certain research and development services pursuant to our Rigel collaboration with Grifols and a $75,000 milestone payment from Medison. Government contract revenue of $1 million was related to income we recognized pursuant to our agreement with the U.S. Department of Defense for our ongoing Phase 3 clinical trial of fostamatinib in COVID-19. Moving on to cost and expenses. Our cost of product sales was approximately $151,000 for the third quarter of 2021. Total cost and expenses were $41.3 million in the third quarter of 2021 versus $32.2 million in the third quarter of 2020. The net increase in costs and expenses was primarily due to research and development costs related to our ongoing Phase 3 clinical trial of fostamatinib for the treatment of hospitalized patients with COVID-19, as well as increased commercial activities, including the recent sales force expansion. Finally, we ended the quarter with cash, cash equivalents and short-term investments of $143.1 million. With that, I’d like to turn the call back over to Raul.

Raul Rodriguez, CEO

Thank you, Dean. In 2021, we set ourselves up for a number of exciting catalysts, and we believe 2022 will be a transformative year for the Company. I’m now on slide 28. Despite the challenges of the pandemic, we are regaining a good trajectory in growing ITP sales as access to physicians improves for both patients and our newly expanded field organization. Our enrollment in Phase 3 with warm autoimmune hemolytic anemia sets us up for data in mid-2022. If the data is positive, we will file for a new indication for TAVALISSE, a potentially new first-in-class medicine for the treatment of patients with warm autoimmune hemolytic anemia. In COVID-19, we made important steps forward this year that provided us with clinical data that illustrates the potential of TAVALISSE in treating hospitalized COVID patients. We expect pivotal data in 2022 from our Phase 3 trial and we will file an EUA if the data is positive. And lastly, we are advancing two of our pipeline candidates into mid-stage trials. We are initiating a Phase 1b/2 study with a wholly-owned IRAK1/4 molecule, R289 in low-risk MDS. We’ll also be starting a Phase 2 study in an autoimmune indication with our RIP1 inhibitor with our partner, Lilly. As we look forward to 2022, we are very excited about these significant clinical milestones and the potential they have for transforming our business. Thank you again for your interest in our progress in this quarter. And we will now turn the call over to your questions.

Operator, Operator

Thank you. Our first question comes from Yigal Nochomovitz with Citi.

Unidentified Analyst, Analyst

Hi. This is Carly on for Yigal. Thanks so much for taking our question. We had two questions on AIHA. First, can you talk about the bar you need to meet on the primary endpoint of durable hemoglobin response rate compared to placebo for the Phase 3 trial to be positive? And then, second, is there any reason to expect differences in patient baseline characteristics between the Phase 2 study and the Phase 3?

Raul Rodriguez, CEO

Thank you, Carly. Wolfgang, would you like to take those? First question on the bar?

Wolfgang Dummer, Chief Medical Officer

Yes, we analyzed the Phase 2 data, and I mentioned that if we applied the primary endpoint criteria, we would have fallen short in 27% of the patients. Therefore, we based our modeling on that information. With 90 patients, the trial remains statistically significant even if three placebo patients meet that criterion, although that is quite unlikely due to the high standard. The primary endpoint is critical because we anticipate a very low placebo response rate. Specifically, as experts indicate, the plus 2 criterion is highly improbable for a placebo patient to achieve. I believe we are sufficiently powered to demonstrate that effect. Regarding your question about the comparison between the Phase 3 and Phase 2 populations, I am optimistic because the Phase 2 population was selected in the United States, consisting of very severe cases, with patients averaging about six years of AIHA and most having had more than one prior treatment. Therefore, they were quite treatment-experienced. Our Phase 3 trial, however, is global, conducted across several countries, where access to rituximab may not be as straightforward as in the U.S. As a result, we might enroll somewhat earlier-stage patients than those in Phase 2. I think this could make the Phase 3 population appear even more promising than the Phase 2 dataset.

Unidentified Analyst, Analyst

Great. That’s very helpful. And then, we just had one on ITP. I guess, putting aside sort of the negative impact from the inventory drawdown this quarter, it seemed like the growth in bottles shipped to patients and clinics was a bit lighter than your prior expectations for a number closer to what was reported in the second quarter. So, just curious if you could provide any sort of additional perspective on what drove a bit of deceleration there?

Raul Rodriguez, CEO

I think I'll ask Dave to answer that. There was slight growth in demand for the bottles this quarter compared to last quarter. Dave, could you provide some insight?

Dave Santos, Chief Commercial Officer

Yes. Thanks very much, Carly, for the question. As we moved through Q3, we saw a nice positive trend in not only those demand bottles, but in new patient starts on TAVALISSE. And as Raul said, they were among the highest levels we’ve seen since the pandemic began, which includes last quarter. We believe truly that our increased ability to engage customers this quarter contributed to that. And that’s why we are so encouraged by the new patients last quarter. And remember, when patients start in a quarter, you’re only going to get so many bottles out of them, depending on when they start, particularly those that start in the back half of the quarter. So, again, it’s hard because I, of course, just like everyone else would love to see more increased demand than we had over the 5%. But to us, the metric we’re watching is how many patients are starting on TAVALISSE. That’s the metric that, at least for us, during the pandemic, this is a positive quarter. So, we do expect that as we move forward and those patients stay on therapy, demand should grow and that sales should follow that. So, I hope that helps.

Raul Rodriguez, CEO

I would like to mention that we significantly expanded our sales organization this past quarter, increasing the number of team members by 40%. We are thrilled to have fantastic new people joining the company. We recognize that this is a promotion-sensitive category, and it's crucial to maintain a consistent volume in our messaging. With these new representatives on board and more openings becoming available, we are better positioned to effectively communicate our story. We are excited about this development.

Operator, Operator

Our next question comes from Gary Nachman with BMO Capital Markets.

Gary Nachman, Analyst

First on TAVALISSE for ITP, have the inventory levels normalized after the first three quarters so that sales will reflect the increased demand expected in the fourth quarter? I believe you mentioned anticipating higher shipments. I want to ensure that inventory is moving in the right direction for the next quarter. Can you also discuss the new sales force and their promotional efforts? Will they be highlighting the five-year platelet data? When do you believe that information will resonate with physicians, and when can we expect to see a significant increase in volumes from that? Regarding warm AIHA, since there is considerable overlap and synergies, do you plan to expand the sales force for that indication, or do you believe the newly increased sales team will be adequate? Thank you.

Raul Rodriguez, CEO

Thank you, Gary. I’ll ask my colleague, Dave, to comment on those in the sequence: ITP, normalized inventory next quarter; the new sales force, what are they focusing on, and when we’ll see an inflection; and warm autoimmune hemolytic anemia, do we expect an increase in sales force for that?

Dave Santos, Chief Commercial Officer

I guess, first of all on the inventory, I just like to remind everyone that if you look at our distribution channel, we hold inventory at both our distributors and at the specialty pharmacies. And you have to think of it as each of those entities maintaining dynamic inventory levels based on what they’re shipping to patients and clinics. So, where we end the quarter is a point in time that can change up or down based on their inventories. And in Q4 and Q2 it was up, and in Q1 and Q3 it was down relative to demand. So, that’s why we tend to focus on demand more. We believe that if we continue to grow new prescribers, new patients, and are successful at keeping them on therapy, our demand will grow and corresponding inventory throughout the channel will grow to supply that demand, ultimately growing our total bottles and our net sales. So, that’s kind of in a nutshell what happened. It’s the point in time it went down this quarter. But yes, of course, if we can continue to increase demand, we expect inventory levels to follow. Your second question on the new sales force, I guess, I’d first like to say that we were tremendously pleased at the job our sales management team did in recruiting outstanding hem-onc experienced sales talent to the team. As I said, they not only know hem, but they knew the customers in their territory. So, we do think we’ll continue to grow interactions in Q4 and increase our reach to more prescribers as we move into ‘22, but it’ll take some time to leverage those opportunities fully into what we ultimately want, right, new prescribers, new patients and then ultimately accelerated demand growth. I think there are lots of different factors that influence how quickly the sales grow. But I can’t tell you one thing: I have tremendous confidence in the team and the passion and energy they bring to every single interaction they have with customers to create that awareness of TAVALISSE and keep it top of mind. So, when the clinician is ready to switch or start a new patient, after our story, it can happen. I really do believe our interactions will grow, new prescribers will grow, and new patients will grow as we move forward, and that’s what it’s all about. Finally, regarding warm autoimmune hemolytic anemia, as I mentioned in my opening comments, it’s incredibly synergistic, right? We’re scaled up now to call on a group of treaters in ITP, and it’s pretty much the same treaters in warm autoimmune hemolytic anemia. That’s why we’re so excited about this opportunity. So, we’ve got the team in place that can do that. So, we don’t foresee any need to continue expanding to tap into that market. It’s very synergistic. I hope that helps.

Operator, Operator

Our next question comes from Joe Pantginis with H.C. Wainwright.

Joe Pantginis, Analyst

A couple of questions. I guess, I’d like to focus first on a mechanistic question for TAVALISSE. During Wolfgang’s prepared comments, obviously mentioned a late responder in the wAIHA Phase 2 study that could have increased the response rate. I think also if you look at the ITP data in the past, there were also some potential late responders. So, I’m just curious if you can just remind us or discuss a little bit of the underlying MoA that could lead to some of these late responders?

Raul Rodriguez, CEO

Wolfgang, would you like to take that?

Wolfgang Dummer, Chief Medical Officer

Yes. Sure. Thank you for your question. I will say, I personally don’t really think that the underlying MoA would be responsible for a late responder. I can tell you that there are some patients who get better from baseline, say they started at 7.8 or 8. And then, they do improve but bounce around at like 9.5 and 9.7. And that is already an improvement. They just haven’t met that one threshold yet. Some patients still have a chance to meet that threshold a little bit later. So, I think that’s the key reason why there might be some patients who respond later. It’s not that they have some sort of a different underlying mechanism of disease or something like that. It just takes a little longer for them to respond.

Joe Pantginis, Analyst

I don’t want to dwell on the questions about the reduction in bottles and inventory. I'm curious about whether any global supply chain issues have affected the shipping of the bottles or related matters. Additionally, during Dave’s prepared remarks, I wanted to see if there was any further clarification regarding the desire for timely refills and whether that has impacted the supply chains or the bottles in inventory.

Raul Rodriguez, CEO

Thank you, Joe. Dave, do you want to comment on that?

Dave Santos, Chief Commercial Officer

Yes, Raul. Regarding your question about persistency, I'll address the second part first. During the pandemic, we've successfully maintained a four-month persistency in the mid-50s. This is important as we want to ensure that patients receive their refills on time and continue using the product to benefit from it for as long as possible. As for supply, there have been no issues, and this has not contributed to any inventory problems in the third quarter. The situation is primarily related to specialty pharmacies and our distributors, who manage their inventory levels based on the amount of product being shipped and our position in the quarter.

Joe Pantginis, Analyst

Got it. Nice to hear, and thanks for the color. Sorry. Go ahead, Raul.

Raul Rodriguez, CEO

No, just a comment. We have ample inventories in-house of our product and in the U.S. So, we don’t think that the global supply chain issues that you read about will have any meaningful impact on those levels in the U.S. for quite some time.

Operator, Operator

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Kristen Kluska, Analyst

Just to comment on ASH. This is really one of the first big conferences that you’ll be attending since you first presented some of these post-hoc analysis data two years ago at the conference. So, I was just wondering how this format change might help you in terms of your conversations and helping to further get the message out.

Raul Rodriguez, CEO

Thank you, Kristen. Good question. Dave?

Dave Santos, Chief Commercial Officer

Sure. Thanks for the question, Kristen. And that’s why we are really doing a lot of preparation for ASH and invested the resources to have a really nice booth there close to the entrance to ensure that the customers that are there, we’re able to engage them and tell them exactly that story, boast about our post-hoc analysis and the higher response rates in earlier lines. Secondly, that you not only have a chance for a response, particularly in earlier line patients, but it will be a durable response. We will be out there talking about that message in the booth, and we have a lot of engagement planned with folks that we’ve already confirmed are going to be on-site. We’ll be attacking this from many different angles. Again, we do look at it as a great sign. That is the largest hematology conference, and it is being held live in Atlanta. We are investing the time, the resources and the people to make sure it’s worked fully. We know it’s likely not going to be where it was in 2019, but we’re going to be giving the effort to get the messages that we have out there. We really will be talking about that five-year data, the BJH article, and the lineup therapy responses as well as the numerous case studies that we have. All of those panels have been built in our booth, and our team is going to be prepared to drive that message.

Kristen Kluska, Analyst

Okay. Thank you for that. And as you begin to move the expanded sales force for TAVALISSE into the field, are you encountering any specific geographic regions where it’s easier to get face-to-face interactions with prescribers due to COVID-19? And then, going forward, how do you anticipate the ongoing case numbers might affect this strategy?

Dave Santos, Chief Commercial Officer

I appreciate the question. There are certainly regional differences that can change quickly based on searches. We can't control that, but it’s important to point out that our in-person interactions are increasing, while our virtual interactions remain about 40% of our total interactions. Whether the interactions are virtual or live, we aim to effectively communicate our message, with a preference for more live interactions. We have expanded our efforts, and despite the pandemic, we expect to see an increase in the number of patients treated. It's crucial to spread the message. Our strategy is solid for both the short and long term, especially considering the potential future launch related to warm autoimmune hemolytic anemia.

Operator, Operator

Our next question comes from Eun Yang with Jefferies.

Unidentified Analyst, Analyst

Hi. This is Nalin on for Eun. Thank you very much for taking the questions. I have two questions, please. Number one, could you please comment on any off-label use of TAVALISSE in COVID-19? And number two, aside from the COVID impacts? Why did enrollment take so long for Phase 3 for wAIHA? Given that there is no approved therapy out there, does it have anything to do with the entry criteria? Thank you very much.

Dave Santos, Chief Commercial Officer

Yes, Raul. And I appreciate the question. Obviously, with COVID-19, we do not have any approval or an EUA. So, there is little awareness, except those who are intimately familiar and have read the publication. We’ve seen very limited use of TAVALISSE or fostamatinib in COVID-19. That’s what I can share for now.

Raul Rodriguez, CEO

Just to add to that, the publication was available this quarter, which is very good. And obviously, we’re very restrictive in terms of what we can do based on that. And on the second question, maybe Wolfgang, aside from COVID-19, why did it take so long to enroll the Phase 3 study in the AIHA?

Wolfgang Dummer, Chief Medical Officer

We're pleased to share that we have completed enrollment, which is great news. Regarding your question about the time it took, there are several factors to consider. Firstly, we had to increase the number of sites. More importantly, during the height of the pandemic last year, almost no studies, whether oncology-related or COVID-19-related, could proceed at a normal pace due to social distancing rules and patient hesitancy. Many patients were reluctant to visit healthcare facilities, opting to delay visits or continue with medications like steroids until they felt safe to go to a doctor. This was a significant reason for the slower recruitment of patients. I'm relieved we have moved past this challenge and are now looking forward to unblinding and obtaining valuable Phase 3 data.

Raul Rodriguez, CEO

I believe this was a significant milestone for us. To enroll 90 patients, we had to open about 90 sites globally, which underscores its importance. We were fortunate, as many of our competitors paused or entirely halted their trials during this time. We managed to enroll patients, albeit in limited numbers some months, but we kept moving forward and became the first to fully enroll a Phase 3 trial in warm autoimmune hemolytic anemia. In fact, we are the only trial with Phase 2 data that we find very compelling. Completing this during such challenging times is a testament to our determination. We recognize that there are patients who, during COVID, may have been hesitant to seek new treatments, but they are out there. Once the pandemic subsides, they will require new therapies, and we believe we will have one ready for them, pending FDA approval.

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. Thank you.

Raul Rodriguez, CEO

Thank you so much. I appreciate that. In closing, I’d like to thank everyone for joining us on this call and your continued interest in Rigel. I’d also like to thank our employees for their commitment to improving the lives of patients, a commitment that now stretches beyond hem-onc conditions and rare immune conditions but also now includes COVID-19. We look forward to updating you on our progress on all these programs in future calls, and in other press releases throughout the next year. Thank you so much for your participation. Have a great day.

Operator, Operator

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