Rigel(RIGL) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Rigel Pharmaceuticals, Inc.'s unaudited condensed financial statements for the quarter ended June 30, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' deficit, and cash flows, along with accompanying notes detailing significant accounting policies, revenue breakdowns, collaboration agreements, and other financial components Condensed Balance Sheets The condensed balance sheet shows an increase in total assets to $128.4 million as of June 30, 2024, from $117.2 million at December 31, 2023, primarily driven by an increase in intangible assets and cash/cash equivalents, while total liabilities also increased to $158.3 million from $145.9 million, with a notable increase in acquisition-related liabilities | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :-------------------------- | :------------------------ | :---------------- | | Total Assets | $128,408 | $117,225 | | Total Current Assets | $94,723 | $99,266 | | Intangible Assets, net | $28,275 | $13,878 | | Total Liabilities | $158,322 | $145,869 | | Total Current Liabilities | $58,649 | $53,267 | | Acquisition-related liabilities | $15,000 | — | | Total Stockholders' Deficit | $(29,914) | $(28,644) | Condensed Statements of Operations Rigel Pharmaceuticals reported a significant improvement in operational performance for the three and six months ended June 30, 2024, reducing its net loss, with total revenues increasing due to product sales and collaboration revenues, while the loss from operations narrowed considerably | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product sales, net | $33,450 | $23,881 | $59,453 | $47,626 | | Contract revenues from collaborations | $3,391 | $2,005 | $6,922 | $4,330 | | Government contracts | — | $1,000 | — | $1,000 | | Total revenues | $36,841 | $26,886 | $66,375 | $52,956 | | Total costs and expenses | $36,394 | $32,153 | $72,894 | $70,948 | | Income (loss) from operations | $447 | $(5,267) | $(6,519) | $(17,992) | | Net loss | $(1,030) | $(6,600) | $(9,277) | $(20,136) | | Net loss per share, basic and diluted | $(0.06) | $(0.38) | $(0.53) | $(1.16) | Condensed Statements of Comprehensive Loss The condensed statements of comprehensive loss show a net loss of $(1.03) million for the three months ended June 30, 2024, and $(9.28) million for the six months ended June 30, 2024, representing a significant improvement compared to net losses of $(6.60) million and $(20.14) million for the same periods in 2023 | Metric (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(1,030) | $(6,600) | $(9,277) | $(20,136) | | Net unrealized (loss) gain on short-term investments | $(4) | $2 | $(17) | $128 | | Comprehensive loss | $(1,034) | $(6,598) | $(9,294) | $(20,008) | Condensed Statements of Stockholders' Deficit The stockholders' deficit increased from $(28.64) million at January 1, 2024, to $(29.91) million at June 30, 2024, primarily due to the net loss incurred, partially offset by stock-based compensation and common stock issuances | Metric (in thousands) | Balance as of January 1, 2024 | Balance as of June 30, 2024 | | :-------------------------------- | :---------------------------- | :-------------------------- | | Common Stock Amount | $17 | $17 | | Additional Paid-in Capital | $1,378,881 | $1,386,905 | | Accumulated Other Comprehensive (Loss) Income | $8 | $(9) | | Accumulated Deficit | $(1,407,550) | $(1,416,827) | | Total Stockholders' Deficit | $(28,644) | $(29,914) | - The company effected a 1-for-10 reverse stock split on June 27, 2024, retroactively adjusting all share and per share amounts presented[7] Condensed Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities was $(4.71) million, a decrease from net cash provided by operating activities of $1.86 million in the prior year, with investing activities providing $11.24 million and financing activities using $(3.26) million | Activity (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :---------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(4,711) | $1,856 | | Investing activities | $11,242 | $3,747 | | Financing activities | $(3,264) | $18,750 | | Net increase in cash and cash equivalents | $3,267 | $24,353 | | Cash and cash equivalents at end of period | $36,053 | $48,812 | Notes to Condensed Financial Statements The notes provide detailed disclosures on Rigel's business, significant accounting policies, revenue recognition, collaboration agreements, in-licensing and acquisitions, stock-based compensation, and other balance sheet components, offering context to the unaudited financial statements 1. Organization and Summary of Significant Accounting Policies This section outlines Rigel's business as a biotechnology company focused on hematologic disorders and cancer, details its FDA-approved products (TAVALISSE, REZLIDHIA, GAVRETO), and describes the 1-for-10 reverse stock split effective June 27, 2024, also covering financial statement presentation, estimates, accounting policies, liquidity, and recent accounting standards - Rigel Pharmaceuticals is a biotechnology company developing novel therapies for hematologic disorders and cancer, with three FDA-approved products: TAVALISSE, REZLIDHIA, and GAVRETO[12][13][14] - A 1-for-10 reverse stock split was effected on June 27, 2024, retroactively adjusting all share and per share amounts in the financial statements[17] - As of June 30, 2024, the company had $49.1 million in cash, cash equivalents, and short-term investments, sufficient to fund operations for at least the next 12 months[20][21] 2. Net Loss Per Share Net loss per share calculations are based on basic and diluted weighted-average common stock outstanding, with potentially dilutive securities excluded when their inclusion would be antidilutive, as was the case for all periods presented | Potentially Dilutive Securities (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Outstanding stock options | 3,691 | 3,524 | 3,691 | 3,524 | | RSUs | 388 | 196 | 388 | 196 | | Total | 4,079 | 3,720 | 4,079 | 3,720 | 3. Revenues Total revenues for the three months ended June 30, 2024, increased to $36.8 million from $26.9 million in 2023, and for the six months, increased to $66.4 million from $53.0 million, primarily driven by higher net product sales and increased contract revenues from collaborations, partially offset by the absence of government contract revenue in 2024 | Revenue Category (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross product sales | $48,980 | $33,456 | $87,406 | $66,654 | | Discounts and allowances | $(15,530) | $(9,575) | $(27,953) | $(19,028) | | Total product sales, net | $33,450 | $23,881 | $59,453 | $47,626 | | Total revenues from collaborations | $3,391 | $2,005 | $6,922 | $4,330 | | Government contracts | — | $1,000 | — | $1,000 | | Total revenues | $36,841 | $26,886 | $66,375 | $52,956 | | Major Customers (as % of total net product sales and collaboration revenues) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | McKesson Corporation | 49% | 44% | 46% | 45% | | Cardinal Health, Inc. | 21% | 28% | 22% | 26% | | Cencora Inc. (formerly ASD Healthcare) | 20% | 19% | 21% | 21% | 4. Sponsored Research, License Agreements and Government Contracts Rigel has multiple collaboration agreements for the development and commercialization of its products, with potential future contingent payments exceeding $1.3 billion, including key agreements with Lilly for RIPK1 inhibitors, Grifols, Kissei, Medison, and Knight for fostamatinib, and strategic development collaborations with MDACC and CONNECT for REZLIDHIA - Total future contingent payments to Rigel under existing collaboration agreements could exceed $1.3 billion, excluding estimated royalties, if all potential product candidates achieve specified development, regulatory, and commercial milestones[31][178] - Rigel's cost share obligation for ocadusertib development with Lilly ended on April 1, 2024, after providing $21.4 million in funding, with an outstanding liability of $40.0 million remaining, not recognized as revenue due to uncertainty regarding exercising an opt-in right[39][40][185] - Revenue from delivery of drug supply to Kissei for commercial use was $2.2 million and $4.5 million for the three and six months ended June 30, 2024, respectively, with no such revenue in the prior year periods[46] - Rigel provided $2.0 million funding to MDACC through June 30, 2024, for a five-year strategic collaboration to expand REZLIDHIA evaluation in AML and other hematologic cancers[51] 5. In-licensing and Acquisition Rigel acquired US rights to GAVRETO from Blueprint for $15.0 million, with $10.0 million paid in July 2024, and potential future milestone payments and tiered royalties, also in-licensing REZLIDHIA from Forma, involving an upfront fee and potential milestone payments, with $17.5 million in milestones met in 2022 - Rigel acquired US rights to GAVRETO from Blueprint for a purchase price of $15.0 million, with $10.0 million paid in July 2024 and an additional $5.0 million due on the first anniversary, and Blueprint is also eligible for up to $97.5 million in commercial milestones, $5.0 million in regulatory milestones, and tiered royalties (10-30%)[53][54][186] - The GAVRETO acquisition was accounted for as an asset acquisition, with the total purchase consideration of $15.36 million recorded as intangible assets, amortized over 12 years[54][55][56] - Rigel in-licensed REZLIDHIA from Forma, paying a $2.0 million upfront fee (expensed as R&D) and incurring $17.5 million in milestone payments in 2022 (capitalized as intangible assets) following FDA approval and first commercial sale[58][59][60] 6. Stock-Based Compensation Stock-based compensation expense for the six months ended June 30, 2024, increased to $7.66 million from $4.93 million in 2023, with the company granting 599,772 stock options and 291,373 RSUs during the period, and $14.0 million in unrecognized stock-based compensation cost remaining | Stock-Based Compensation (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative | $2,223 | $1,796 | $6,707 | $3,531 | | Research and development | $305 | $376 | $955 | $1,399 | | Total stock-based compensation expense | $2,528 | $2,172 | $7,662 | $4,930 | - During the six months ended June 30, 2024, Rigel granted 599,772 stock options (weighted-average fair value $9.64/share) and 291,373 RSUs (weighted-average fair value $12.52/share)[62][63] - As of June 30, 2024, $14.0 million of unrecognized stock-based compensation cost is expected to be recognized over a weighted-average period of 2.15 years[64] 7. Other Balance Sheet Components Inventories increased to $12.5 million at June 30, 2024, from $8.0 million at December 31, 2023, reflecting acquisitions from Forma and Blueprint, while intangible assets, net, significantly increased to $28.3 million from $13.9 million, primarily due to the GAVRETO acquisition, with estimated future amortization of $28.3 million | Inventories (in thousands) | June 30, 2024 | December 31, 2023 | | :------------------------- | :------------ | :---------------- | | Raw materials | $2,145 | $4,609 | | Work in process | $6,006 | $1,876 | | Finished goods | $4,368 | $1,508 | | Total | $12,519 | $7,993 | | Reported as: | | | | Inventories | $8,059 | $5,522 | | Other assets | $4,460 | $2,471 | | Intangible Assets (in thousands) | June 30, 2024 | December 31, 2023 | | :------------------------------- | :------------ | :---------------- | | Intangible asset cost | $30,360 | $15,000 | | Accumulated amortization | $(2,085) | $(1,122) | | Intangible asset, net | $28,275 | $13,878 | | Estimated Future Amortization Expense (in thousands) | | :--------------------------------------------------- | | Remainder of 2024 | $1,176 | | 2025 | $2,351 | | 2026 | $2,351 | | 2027 | $2,351 | | 2028 | $2,351 | | Thereafter | $17,695 | | Total | $28,275 | 8. Cash, Cash Equivalents and Short-Term Investments As of June 30, 2024, Rigel held $49.1 million in cash, cash equivalents, and short-term investments, down from $56.9 million at December 31, 2023, with the portfolio primarily consisting of money market funds, US treasury bills, government-sponsored enterprise securities, and corporate bonds, with a weighted-average time to maturity of approximately 68 days | Category (in thousands) | June 30, 2024 | December 31, 2023 | | :---------------------- | :------------ | :---------------- | | Cash | $6,126 | $8,247 | | Money market funds | $13,805 | $9,685 | | US treasury bills | $4,963 | $12,594 | | Government-sponsored enterprise securities | $10,444 | $11,233 | | Corporate bonds and commercial paper | $13,764 | $15,174 | | Total | $49,102 | $56,933 | | Reported as: | | | | Cash and cash equivalents | $36,053 | $32,786 | | Short-term investments | $13,049 | $24,147 | - The weighted-average time to maturity for cash equivalents and short-term investments was approximately 68 days as of June 30, 2024, down from 82 days at December 31, 2023[72] 9. Fair Value The fair value of Rigel's financial assets, primarily money market funds and various securities, totaled $43.0 million as of June 30, 2024, categorized into Level 1 (money market funds) and Level 2 (US treasury bills, government-sponsored enterprise securities, corporate bonds and commercial paper) based on valuation inputs | Assets at Fair Value (in thousands) | Level 1 (June 30, 2024) | Level 2 (June 30, 2024) | Level 3 (June 30, 2024) | Total (June 30, 2024) | | :---------------------------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $13,805 | — | — | $13,805 | | US treasury bills | — | $4,963 | — | $4,963 | | Government-sponsored enterprise securities | — | $10,444 | — | $10,444 | | Corporate bonds and commercial paper | — | $13,764 | — | $13,764 | | Total | $13,805 | $29,171 | — | $42,976 | 10. Debt Rigel's outstanding loan payable, net, was $59.7 million as of June 30, 2024, related to a $60.0 million term loan credit facility with MidCap Financial Trust, maturing on September 1, 2027, with an interest-only period through October 1, 2025, and bearing interest at SOFR plus 0.11448% (subject to a 4.00% floor) plus a 6.50% margin | Loans Payable, Net (in thousands) | June 30, 2024 | December 31, 2023 | | :-------------------------------- | :------------ | :---------------- | | Principal outstanding | $60,000 | $60,000 | | Unamortized debt issuance costs | $(308) | $(398) | | Principal outstanding, net | $59,692 | $59,602 | | Reported as: | | | | Loans payable, net, current portion | — | $7,229 | | Long-term portion of loans payable, net | $59,692 | $52,373 | - The $60.0 million term loan credit facility with MidCap Financial Trust was fully funded as of June 30, 2024, with no remaining funds available for draw[77] - Following the Fourth Amendment in April 2024, the term loans mature on September 1, 2027, with an interest-only period through October 1, 2025, and the interest rate is one-month SOFR + 0.11448% (4.00% floor) + 6.50% margin, with a 4.25% final payment fee due at maturity[79] | Future Minimum Principal Payments (in thousands) | | :----------------------------------------------- | | Remainder of 2024 | — | | 2025 | $7,500 | | 2026 | $30,000 | | 2027 | $22,500 | | Principal amount (Tranches 1, 2, 3 and 4) | $60,000 | 11. Leases Rigel's operating lease expense for the six months ended June 30, 2024, was $0.39 million, a decrease from $0.81 million in the prior year, with a weighted-average remaining lease term of 0.92 years as of June 30, 2024 | Operating Lease Expense (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed operating lease expense | $166 | $166 | $332 | $778 | | Variable operating lease expense (net credit) | $28 | $(42) | $56 | $30 | | Total operating lease expense | $194 | $124 | $388 | $808 | - The weighted average remaining term of Rigel's leases as of June 30, 2024, was 0.92 years[83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Rigel's financial condition and operational results, highlighting business updates for its commercial products (TAVALISSE, REZLIDHIA, GAVRETO), clinical pipeline progress, and financial performance drivers, also discussing critical accounting policies, liquidity, and capital resources Overview Rigel Pharmaceuticals is a biotechnology company focused on developing novel therapies for hematologic disorders and cancer, with a commercial portfolio including FDA-approved TAVALISSE, REZLIDHIA, and recently commercialized GAVRETO, while also advancing its R289 IRAK 1/4 inhibitor program and strategic collaborations for REZLIDHIA and RIPK1 inhibitors - Rigel's commercial products include TAVALISSE (for chronic ITP), REZLIDHIA (for R/R AML with IDH1 mutation), and GAVRETO (for metastatic RET fusion-positive NSCLC and advanced thyroid cancers), with GAVRETO commercialization starting June 27, 2024[89][90][91] - The company is advancing its R289 IRAK 1/4 inhibitor program in a Phase 1b trial for lower-risk myelodysplastic syndrome (MDS) and has strategic collaborations for REZLIDHIA in AML and glioma, and a RIPK1 inhibitor program with Lilly[92] - A 1-for-10 reverse stock split was effective June 27, 2024, with all share and per share amounts retroactively adjusted[93] Business Updates Rigel's business updates highlight strong growth in product sales for TAVALISSE and REZLIDHIA, the recent commercial launch of GAVRETO, and ongoing clinical development for R289 and REZLIDHIA through strategic collaborations, with the company also actively involved in patent infringement litigation for TAVALISSE | Product | Six Months Ended June 30, 2024 Net Product Sales | Six Months Ended June 30, 2023 Net Product Sales | YoY Change | | :------ | :----------------------------------------------- | :----------------------------------------------- | :--------- | | TAVALISSE | $47.5 million | $43.6 million | +9% | | REZLIDHIA | $10.0 million | $4.0 million | +150% | - Rigel began commercializing GAVRETO on June 27, 2024, recognizing approximately $1.9 million in net product sales by the end of June 2024[96] - Enrollment is underway for the fourth dose level of the Phase 1b trial for R289 in lower-risk MDS, with preliminary data expected by the end of 2024[98] - A Phase 1b/2 trial of decitabine and venetoclax in combination with olutasidenib in IDH1-mutated AML, in collaboration with MDACC, opened enrollment in early August 2024[99] - Lilly's Phase 2a trial for ocadusertib in rheumatoid arthritis is advancing well, with preliminary results anticipated in the first half of 2025[101] - Rigel is engaged in a patent infringement lawsuit against Annora Pharma Private Limited regarding a generic version of TAVALISSE, with litigation ongoing and no trial date set[103] Our Product Portfolio Rigel's product portfolio includes commercial products TAVALISSE, REZLIDHIA, and GAVRETO, each addressing specific hematologic disorders and cancers, with the company detailing their mechanisms of action, clinical trial results, competitive landscapes, and commercialization strategies, alongside updates on its clinical-stage and partnered programs - TAVALISSE (fostamatinib) is the only approved oral SYK inhibitor for chronic ITP, with FDA approval in April 2018, and it competes with corticosteroids, TPO-Ras, and immunosuppressants[104][105][107] - REZLIDHIA (olutasidenib) is FDA-approved for R/R AML with IDH1 mutation, demonstrating a 35% CR+CRh rate with a median duration of 25.9 months in the registrational Phase 2 trial, and it competes with TIBSOVO (ivosidenib)[118][119][123][130] - GAVRETO (pralsetinib) is FDA-approved for metastatic RET fusion-positive NSCLC and advanced thyroid cancers, with commercialization in the US starting June 27, 2024, and it competes with Lilly's selpercatinib and other therapies[133][134][136] - R289, an oral IRAK 1/4 inhibitor, is in a Phase 1b trial for R/R lower-risk MDS, with preliminary data expected by end of 2024[139] - Partnered clinical programs include ocadusertib (RIPK1 inhibitor) with Lilly in Phase 2a for rheumatoid arthritis, bemcentinib (AXL inhibitor) with BerGenBio in Phase 2 for NSCLC, and milademetan (MDM2 inhibitor) with Daiichi (now Pathos AI, Inc.) for hematological malignancies[140][141][142] Results of Operations Rigel's total revenues increased significantly for both the three and six months ended June 30, 2024, driven by strong product sales of TAVALISSE, REZLIDHIA, and the new GAVRETO, as well as higher collaboration revenues, while cost of product sales increased due to higher royalties and amortization, R&D expenses decreased for the six-month period due to reduced trial activities, and SG&A expenses rose due to increased personnel and stock-based compensation costs | Revenue Category (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product sales, net | $33,450 | $23,881 | $59,453 | $47,626 | | Contract revenues from collaborations | $3,391 | $2,005 | $6,922 | $4,330 | | Government contracts | — | $1,000 | — | $1,000 | | Total revenues | $36,841 | $26,886 | $66,375 | $52,956 | - TAVALISSE net product sales increased by 24% to $26.4 million (3 months) and 9% to $47.5 million (6 months) YoY, driven by increased quantities and price per bottle[148] - REZLIDHIA net product sales increased by 102% to $5.2 million (3 months) and 150% to $10.0 million (6 months) YoY, due to increased quantities sold and more patients under therapy[148] - GAVRETO generated $1.9 million in net product sales during the three and six months ended June 30, 2024, following its commercialization on June 27, 2024[148] | Expense Category (in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of product sales | $2,807 | $1,075 | $4,832 | $2,052 | | Research and development | $5,540 | $4,772 | $11,566 | $14,861 | | Selling, general and administrative | $28,047 | $26,306 | $56,496 | $54,035 | | Interest income | $552 | $529 | $1,145 | $922 | | Interest expense | $(2,029) | $(1,862) | $(3,903) | $(3,066) | - The increase in cost of product sales was partly due to increased royalty expense and amortization of intangible assets ($0.9 million for 3 months, $1.5 million for 6 months)[151] - R&D expense increased by $0.8 million for the three months ended June 30, 2024, but decreased by $3.3 million for the six months ended June 30, 2024, primarily due to reduced clinical trial activities for fostamatinib in COVID-19 and wAIHA[153][154] - SG&A expense increased by $1.7 million for the three months and $2.5 million for the six months ended June 30, 2024, driven by higher personnel-related costs and stock-based compensation[163] Critical Accounting Policies and Use of Estimates Rigel's financial statements are prepared in accordance with US GAAP, requiring management to make estimates and assumptions that affect reported amounts, with no material changes to critical accounting policies, except for those related to the Asset Purchase Agreement with Blueprint - Financial statements are prepared in conformity with US GAAP, requiring management estimates and assumptions[167] - No material changes to accounting policies, except for the accounting consideration related to the Asset Purchase Agreement with Blueprint[168] Recent Accounting Pronouncements Rigel is evaluating the impact of recently issued accounting standards, including ASU 2023-07 (Segment Reporting) effective December 31, 2024, and ASU 2023-09 (Income Tax Disclosures) effective December 31, 2025, with the company not expecting ASU 2023-09 to have a significant impact - FASB issued ASU 2023-07, Segment Reporting, effective for Rigel's Annual Report on Form 10-K for the fiscal year ending December 31, 2024, requiring expanded segment disclosures[22] - FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, effective for Rigel's fiscal year ending December 31, 2025, which is not expected to have a significant impact[23] Liquidity and Capital Resources Rigel had $49.1 million in cash, cash equivalents, and short-term investments as of June 30, 2024, and believes these resources are sufficient for the next 12 months, with the company's operations financed through equity sales, debt, collaboration payments, and product sales, though future funding requirements are substantial and depend on commercial success, clinical trial progress, and strategic partnerships | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(4,711) | $1,856 | | Investing activities | $11,242 | $3,747 | | Financing activities | $(3,264) | $18,750 | | Net increase in cash and cash equivalents | $3,267 | $24,353 | - As of June 30, 2024, Rigel had $49.1 million in cash, cash equivalents, and short-term investments, which are expected to fund operations for at least the next 12 months[170][176] - Future funding requirements are significant and depend on commercialization costs, clinical trial success, patent protection, and ability to secure new collaborations and financing[182][272][283] - Contractual commitments include $0.7 million for leased facilities (within 12 months) and $60.0 million outstanding principal on the MidCap credit facility, with $17.6 million in future interest and fees, of which $6.6 million is payable within 12 months[188][189] Item 3. Quantitative and Qualitative Disclosures About Market Risk Rigel is exposed to market risks primarily related to interest rate sensitivities on its investments and borrowings, with no material changes to these disclosures during the six months ended June 30, 2024, compared to the Annual Report on Form 10-K for 2023 - Rigel's primary market risks are interest rate sensitivities related to investments and borrowings[191] - No material changes to quantitative and qualitative market risk disclosures occurred during the six months ended June 30, 2024[191] Item 4. Controls and Procedures Rigel's disclosure controls and procedures were deemed effective as of June 30, 2024, with no changes in internal control over financial reporting materially affecting or reasonably likely to materially affect internal control during the quarter - Rigel's disclosure controls and procedures were effective as of June 30, 2024[192] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024[192] PART II. OTHER INFORMATION Item 1. Legal Proceedings Rigel is involved in a patent infringement lawsuit against Annora Pharma Private Limited, which filed an ANDA seeking approval for a generic version of TAVALISSE, with the lawsuit, filed in July 2022, asserting infringement of several US patents, and litigation ongoing with no trial date set - Rigel filed a patent infringement lawsuit against Annora Pharma Private Limited in July 2022, following Annora's ANDA submission for a generic TAVALISSE, asserting non-infringement and invalidity of Rigel's patents[195][256] - The litigation is ongoing, with no trial date currently set, and Rigel intends to vigorously enforce and defend its intellectual property related to TAVALISSE[195][256] Item 1A. Risk Factors This section outlines significant risks to Rigel's business, categorized into those related to its business and industry, clinical development and regulatory approval, and commercialization, with key risks including dependence on commercial products, challenges in drug development, regulatory compliance, market acceptance, and financial stability - Rigel's prospects are highly dependent on the commercial success of its existing products (TAVALISSE, REZLIDHIA, GAVRETO) and the successful development of product candidates[197][390] - Significant risks include potential failures in clinical testing, inability to obtain regulatory approvals, intense competition, evolving healthcare regulations, and the need for additional capital[198][199][200][212][272] - New or substantively changed risk factors are marked with an asterisk (*), indicating updates from the previous Annual Report on Form 10-K[196] Risk Factor Summary The summary highlights key risks including dependence on commercial products, challenges in product development and regulatory approval, difficulties in expanding the pipeline, unfavorable pricing regulations, and the impact of generic competition and unforeseen safety issues - Key risks include high dependence on commercial products (TAVALISSE, REZLIDHIA, GAVRETO), challenges in clinical testing and regulatory approval, and the potential for unsuccessful pipeline expansion through acquisitions or partnerships[197][198] - Other significant risks involve unfavorable pricing regulations, third-party payor reimbursement practices, generic competition, unforeseen safety issues, and stringent healthcare regulatory compliance[199][200] Risks Related to Our Business and Our Industry This section details risks such as inaccurate market opportunity forecasts, challenges in managing organizational growth, difficulties in pipeline expansion through acquisitions or in-licensing, and the inherent uncertainties of drug discovery, also covering the impact of pandemics, compliance with healthcare fraud laws, and the potential for generic competition - Inaccurate market opportunity forecasts for products and product candidates could adversely affect revenues and business[205] - Drug discovery and development efforts carry a high risk of failure, with no assurance that identified compounds will lead to successful product development or regulatory approval[212][213] - The business is exposed to federal and state healthcare fraud and abuse laws, false claims laws, and other healthcare regulations, with non-compliance potentially leading to substantial penalties[217][218] - Pandemics can materially and adversely affect sales force, supply chain, regulatory, clinical development, and other business operations[260][261][264] - The company faces risks from generic versions of its products, such as the ongoing ANDA lawsuit for TAVALISSE, which could significantly decrease revenue[253][256] - Unforeseen safety issues post-approval could lead to labeling changes, use limitations, litigation, and decreased market acceptance[257][258][259] Risks Related to Clinical Development and Regulatory Approval This section addresses the extensive and uncertain nature of clinical development and regulatory approval processes, including risks from healthcare reform on pricing, limitations of regulatory approvals, potential for off-label promotion liability, delays in clinical trials, and reliance on third-party manufacturers, also covering challenges of maintaining orphan drug designations and effects of global geopolitical events on clinical operations - Enacted or future legislation, including healthcare reform initiatives like the Inflation Reduction Act, may increase the difficulty and cost of obtaining regulatory approval and commercializing products, affecting pricing and reimbursement[345][346][348][349] - Regulatory approval is limited to specific indications and conditions, and promoting 'off-label' uses could result in significant liability and enforcement actions[356][357] - Delays in clinical testing due to patient enrollment issues, slow pace, or third-party contractor failures can increase costs and harm commercial prospects[359][360] - The company lacks internal manufacturing capabilities and relies on third-party manufacturers, posing risks of supply disruptions, quality issues, and regulatory non-compliance[365][366][369][371] - Ongoing regulatory requirements post-approval, including manufacturing, labeling, and post-marketing surveillance, can lead to penalties, market withdrawal, or revenue loss if not complied with[372][373][376][377] - Maintaining orphan drug designations and exclusivity is uncertain, and changes in regulations could adversely affect market exclusivity benefits[385][388][389] Risks Related to Commercialization Commercialization risks include high dependence on existing products, challenges in achieving market acceptance, and the impact of pricing regulations and third-party payor reimbursement, with the company also facing risks related to maintaining an effective sales force, potential delays in clinical testing, and the effects of global economic conditions and geopolitical events on business operations - Commercial success is highly dependent on sustained market acceptance of TAVALISSE, REZLIDHIA, and GAVRETO by physicians, patients, and payors, which is subject to numerous factors including competition and pricing[390][392][393] - Unfavorable pricing regulations, third-party payor reimbursement practices, or labeling restrictions, which vary by country, could significantly harm business and revenue generation[397][398][400] - Inability to successfully market and distribute products and retain experienced commercial personnel could substantially harm the business[402][405] - Delays in clinical testing, including those caused by global pandemics or geopolitical tensions (e.g., Russian-Ukrainian war, Hamas-Israel war), can increase costs and harm commercial prospects[359][360][361][362] - Global economic conditions, including inflation, interest rates, and geopolitical events, could adversely impact business operations, liquidity, and capital raising abilities[412][413][414] General Risk Factors General risks include the adverse impact of global economic conditions, potential bank failures affecting liquidity, shareholder activism, and the challenges of attracting and retaining key employees, with the company also facing risks from its facilities being located near earthquake fault zones and the potential for social media use to create liabilities - Global economic conditions, including inflation, interest rates, and geopolitical events, could adversely impact business operations, liquidity, and capital raising abilities[412][413][414] - Bank failures or other events affecting financial institutions could adversely impact Rigel's liquidity and access to funds[416][417] - Shareholder activism and private securities-related litigation could cause material disruption, divert management's attention, and incur substantial costs[418][420] - The company's future success depends on its ability to attract and retain key employees and scientific consultants, with intense competition for talent[427] - Facilities located near earthquake fault zones and vulnerability to other disasters could cause damage and disrupt operations[428] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the three months ended June 30, 2024 - No unregistered sales of equity securities or use of proceeds occurred during the three months ended June 30, 2024[429] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the three months ended June 30, 2024 - No defaults upon senior securities occurred during the three months ended June 30, 2024[429] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to Rigel Pharmaceuticals, Inc - Mine safety disclosures are not applicable[429] Item 5. Other Information No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2024 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2024[429] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amended and restated agreements, certificates of incorporation, equity incentive plans, and certifications required by the Exchange Act - The exhibits include an Amended and Restated Open Market Sale Agreement with Jefferies LLC, various amendments to the Certificate of Incorporation, Equity Incentive Plans, and certifications required by the Exchange Act[430] Signatures The report is duly signed on behalf of Rigel Pharmaceuticals, Inc. by Raul R. Rodriguez, Chief Executive Officer, and Dean L. Schorno, Chief Financial Officer, on August 6, 2024 - The report is signed by Raul R. Rodriguez, Chief Executive Officer, and Dean L. Schorno, Chief Financial Officer, on August 6, 2024[433]