Rigel(RIGL) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Rigel Pharmaceuticals' unaudited condensed financial statements, showing increased assets and a shift to net income driven by collaboration revenue Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $30,403 | $30,373 | | Short-term investments | $112,743 | $26,954 | | Total current assets | $171,104 | $88,983 | | Total assets | $186,518 | $110,378 | | Liabilities & Equity | | | | Total current liabilities | $59,282 | $40,841 | | Total liabilities | $136,848 | $76,352 | | Total stockholders' equity | $49,670 | $34,026 | Condensed Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $21,543 | $18,389 | $128,827 | $90,171 | | Total costs and expenses | $41,328 | $32,170 | $119,905 | $100,317 | | Income (loss) from operations | $(19,785) | $(13,781) | $8,922 | $(10,146) | | Net income (loss) | $(20,952) | $(14,174) | $4,727 | $(10,507) | | Diluted EPS | $(0.12) | $(0.08) | $0.03 | $(0.06) | Condensed Statements of Cash Flows Highlights (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $24,964 | $(36,613) | | Net cash (used in) provided by investing activities | $(86,524) | $38,755 | | Net cash provided by financing activities | $61,590 | $11,904 | | Net increase in cash and cash equivalents | $30 | $14,046 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, TAVALISSE® sales, the Eli Lilly collaboration, and clinical trial updates, noting sufficient liquidity for the next 12 months Business Update and Product Portfolio This section details TAVALISSE® sales growth, the Eli Lilly collaboration with a $125 million upfront payment, and updates on fostamatinib clinical trials for wAIHA and COVID-19 - Net product sales of TAVALISSE were $45.4 million for the nine months ended September 30, 2021, a 3% increase year-over-year, driven by higher quantities sold and price increases, though partially offset by higher rebates and inventory fluctuations[149] - In February 2021, Rigel entered into a global exclusive license and strategic collaboration with Eli Lilly for its RIP1 inhibitor, R552, receiving a $125.0 million upfront cash payment and eligible for up to $835.0 million in potential milestone payments plus tiered royalties[152][154] - The FDA informed Rigel that data from the Phase 2 trial of fostamatinib in hospitalized COVID-19 patients was insufficient to support an Emergency Use Authorization (EUA), with the company continuing its larger Phase 3 trial[155] - Enrollment for the pivotal Phase 3 FORWARD study of fostamatinib in warm autoimmune hemolytic anemia (wAIHA) is complete, with topline data expected in mid-2022, potentially making TAVALISSE the first approved therapy for wAIHA[191] Results of Operations Operations analysis reveals total revenues increased to $128.8 million driven by collaboration and government contracts, while R&D and SG&A expenses also rose due to clinical and commercial activities Revenues Breakdown (in thousands) | Revenue Source | 9 Months 2021 | 9 Months 2020 | Change | | :--- | :--- | :--- | :--- | | Product sales, net | $45,441 | $43,943 | $1,498 | | Contract revenues from collaborations | $73,886 | $46,228 | $27,658 | | Government contract | $9,500 | $0 | $9,500 | | Total revenues | $128,827 | $90,171 | $38,656 | - The significant increase in contract revenues for the nine months ended Sep 30, 2021, was primarily driven by $66.4 million related to the license agreement with Lilly[221][222] Operating Expenses (in thousands) | Expense Category | 9 Months 2021 | 9 Months 2020 | Change | | :--- | :--- | :--- | :--- | | Cost of product sales | $596 | $574 | $22 | | Research and development | $51,933 | $44,963 | $6,970 | | Selling, general and administrative | $67,376 | $54,780 | $12,596 | - The increase in R&D expense for the nine months of 2021 was mainly due to a $10.2 million increase in costs for the ongoing Phase 3 clinical trial in hospitalized COVID-19 patients[230] - The increase in SG&A expense for the nine months of 2021 was primarily due to higher costs for consultants and third-party services ($4.6 million) and commercial activities ($3.1 million)[243] Liquidity and Capital Resources Rigel's liquidity significantly strengthened to $143.1 million by September 30, 2021, primarily due to the $125.0 million Lilly upfront payment, with sufficient capital for at least the next 12 months - Cash, cash equivalents, and short-term investments increased by $85.8 million to $143.1 million as of September 30, 2021, primarily due to the $125.0 million upfront payment from Lilly[252] - Net cash from financing activities for the nine months of 2021 was $61.6 million, which included $57.9 million from Lilly allocated as a financing component related to future R&D cost-sharing[257] - The company believes its existing capital resources are sufficient to support funding requirements for at least the next 12 months from the filing date[258] - Rigel has access to an additional $40.0 million under its term loan credit facility with MidCap, subject to the achievement of certain conditions[263] Quantitative and Qualitative Disclosures About Market Risk This section indicates that the company has no applicable quantitative or qualitative disclosures regarding market risk for the reporting period - This section is not applicable[275] Controls and Procedures The company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective[276] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[277] PART II. OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the current reporting period - None[279] Risk Factors This section outlines significant risks including dependence on TAVALISSE®, COVID-19 impacts, clinical trial uncertainties, potential generic competition, and regulatory compliance challenges - The company's prospects are highly dependent on the commercial success of its first product, TAVALISSE, and any negative impact on its sales could adversely affect the business[283][479] - The COVID-19 pandemic is adversely affecting the business through its impact on commercialization efforts, supply chain, regulatory processes, and clinical development activities[283][507] - The company may not be able to obtain an Emergency Use Authorization (EUA) for fostamatinib for COVID-19, as the FDA has already deemed the initial Phase 2 data insufficient; a resubmission depends on the success of the ongoing Phase 3 trial[283][426] - The company faces risks from potential generic competition for TAVALISSE, unfavorable pricing regulations, and challenges in securing reimbursement from third-party payors[283][316][488] - The company is subject to stringent and evolving privacy and information security laws (e.g., GDPR, CCPA), and failure to comply could result in significant fines and penalties[283][299]