Rigel(RIGL) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements Rigel Pharmaceuticals reported increased Q1 2023 revenues and a narrowed net loss, with total assets of $123.6 million and a stockholders' deficit Condensed Statements of Operations (Unaudited) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Total revenues | $26,070 | $16,735 | | Total costs and expenses | $38,795 | $42,996 | | Loss from operations | $(12,725) | $(26,261) | | Net loss | $(13,536) | $(27,445) | | Net loss per share, basic and diluted | $(0.08) | $(0.16) | Condensed Balance Sheet Highlights (Unaudited) | | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $40,285 | $24,459 | | Short-term investments | $18,377 | $33,747 | | Total current assets | $106,972 | $115,903 | | Total assets | $123,612 | $134,279 | | Total current liabilities | $45,518 | $65,211 | | Loans payable, net of discount | $59,484 | $39,448 | | Total liabilities | $147,869 | $147,895 | | Total stockholders' deficit | $(24,257) | $(13,616) | Condensed Statements of Cash Flows (Unaudited) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | $(4,074) | $(25,637) | | Net cash provided by investing activities | $777 | $22,629 | | Net cash provided by financing activities | $19,123 | $8,797 | | Net increase in cash and cash equivalents | $15,826 | $5,789 | Notes to Condensed Financial Statements The notes detail accounting policies, revenue recognition, and collaboration agreements, confirming $58.7 million in cash and investments sufficient for 12 months of operations - The company's two approved products are TAVALISSE® (fostamatinib) for chronic immune thrombocytopenia (ITP) and REZLIDHIA® (olutasidenib) for relapsed or refractory acute myeloid leukemia (AML), which was commercialized in December 2022[19][20] Disaggregated Revenues (in thousands) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | 2023 | 2022 | | Product sales, net | $23,745 | $16,197 | | Gross product sales | $33,198 | $22,618 | | Discounts and allowances | $(9,453) | $(6,421) | | Revenues from collaborations | $2,325 | $538 | | Total revenues | $26,070 | $16,735 | - The company has a credit agreement with MidCap for a $60.0 million term loan facility, fully funded as of March 31, 2023, with an outstanding principal balance of $60.0 million[84] - Based on its current operating plan, management believes existing cash, cash equivalents, and short-term investments of $58.7 million are sufficient to fund operations for at least the next 12 months[26][27] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 47% increase in Q1 2023 net product sales, reduced R&D expenses, and an improved liquidity position expected to fund operations for at least 12 months Business Updates Q1 2023 saw TAVALISSE sales grow 38%, REZLIDHIA launch, and pipeline advancement with R289 entering Phase 1b and R552 progressing to Phase 2a - Net product sales of TAVALISSE were $22.3 million for Q1 2023, a 38% increase compared to the same period in 2022, driven by increased sales volume and price[102] - REZLIDHIA, launched in December 2022 for R/R AML, generated $1.5 million in net product sales in Q1 2023[103] - The company dosed the first patient in its Phase 1b trial of R289, an oral IRAK1/4 inhibitor, for low-risk myelodysplastic syndrome (MDS)[105] - Partner Eli Lilly is advancing R552 (RIPK1 inhibitor) into a Phase 2a trial for rheumatoid arthritis, expected to begin in Q2 2023[106] Results of Operations Q1 2023 total revenues increased by $9.3 million to $26.1 million, driven by product sales, while R&D expenses decreased due to trial winding down Comparison of Results of Operations (in thousands) | | Three Months Ended March 31, | Change | | :--- | :--- | :--- | :--- | | | 2023 | 2022 | ($) | | Total revenues | $26,070 | $16,735 | $9,335 | | Cost of product sales | $977 | $121 | $856 | | Research and development expense | $10,089 | $15,474 | $(5,385) | | Selling, general and administrative expense | $27,729 | $27,401 | $328 | - The decrease in R&D expense was mainly due to winding down activities for the Phase 3 COVID-19 trial ($2.5 million) and the Phase 3 wAIHA trial ($1.3 million)[193] - The increase in cost of product sales was partly due to $0.3 million in amortization of intangible assets and $0.2 million in royalty expenses related to REZLIDHIA, which were not incurred in the prior year[191] Liquidity and Capital Resources Rigel had $58.7 million in cash and investments as of March 31, 2023, sufficient for 12 months, with reduced operating cash burn and a fully drawn term loan - The company had approximately $58.7 million in cash, cash equivalents, and short-term investments as of March 31, 2023[214] - Net cash used in operating activities was $4.1 million for Q1 2023, a significant improvement from $25.6 million used in Q1 2022[217] - In March 2023, the company drew down the final $20.0 million (Tranche 5) from its term loan financing with MidCap[219] - The company has a commitment to co-fund development costs with Lilly for R552 up to a maximum of $65.0 million through April 1, 2024, with $15.9 million billed and paid as of March 31, 2023[235] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate sensitivities on investments and loans, with no material changes reported for the quarter - The company's primary market risks are interest rate sensitivities related to its short-term investments and outstanding loans, with no material changes reported for the quarter[240] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[241] - 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[242] PART II OTHER INFORMATION Legal Proceedings The company is involved in an ongoing patent infringement lawsuit against Annora Pharma regarding a generic version of TAVALISSE - In July 2022, Rigel filed a lawsuit against Annora Pharma for patent infringement following Annora's submission of an ANDA for a generic version of TAVALISSE[247] - Annora has counterclaimed for a declaratory judgment of non-infringement and invalidity of certain patents, and Rigel intends to vigorously enforce and defend its intellectual property[247] Risk Factors The company's prospects depend on product commercial success, facing risks from generic competition, clinical development challenges, and a history of operating losses - The company's prospects are highly dependent on the commercial success of TAVALISSE® and the recently launched REZLIDHIA™[250] - A significant risk is potential competition from generic versions of its products, highlighted by the ANDA submitted by Annora for a generic version of TAVALISSE[298][300] - The company faces high risk in drug development, as demonstrated by the Phase 3 trial of fostamatinib in wAIHA, which did not meet its primary efficacy endpoint, leading to the decision not to file an sNDA for this indication[262] - The company has a history of operating losses, with an accumulated deficit of approximately $1.4 billion as of March 31, 2023, and expects to continue incurring losses for at least the next 12 months[326] Unregistered Sales of Equity Securities and Use of Proceeds None Defaults Upon Senior Securities None Mine Safety Disclosures Not applicable Other Information None Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and Inline XBRL data files