Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) Q1 2024 Earnings Call Transcript May 7, 2024
Rigel Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings and welcome to Rigel Pharmaceuticals Financial Conference Call for the First Quarter 2024. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce our first speaker, Ray Furey, Rigel’s Executive Vice President, General Counsel and Corporate Secretary. Thank you, Mr. Furey. You may now begin.
Ray Furey: Thank you. Welcome to our first quarter 2024 financial results and business update conference call. The financial press release for the first quarter 2024 was issued a short while ago and can be viewed along with the slides for this presentation in the News & Events section of our Investor Relations site on rigel.com. As a reminder, during today’s call, we may make forward-looking statements regarding our financial outlook and our plans and timing for regulatory product development. These statements are subject to risks and uncertainty that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10-K for the year ended December 31st, 2023 and subsequent filings with the SEC, including our Quarter 1 quarterly report on Form 10-Q on file with the SEC.
Any forward-looking statements are made only as of today’s date and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our President and Chief Executive Officer, Raul Rodriguez. Raul?
Raul Rodriguez: Thank you, Ray and thank you, everyone for joining today. With me today are; Dave Santos, our Chief Commercial Officer; and Dean Schorno, our Chief Financial Officer. Additionally, I’d like to introduce Lisa Rojkjaer, our new Chief Medical Officer. Lisa joined us in March and brings over 20 years of clinical development, regulatory and medical affairs experience to Rigel. We are thrilled to have her on the team. Now, beginning on Slide 4. We continue to grow our Hematology and Oncology business in the first quarter of the year, positioning us well for the remainder of 2024 and beyond. We started 2024 with strong commercial demand for our two marketed products, TAVALISSE in ITP and REZLIDHIA in mutant-IDH1 relapsed or refractory AML, with demand bottles for each of these two products reaching a new quarterly high since their launch.
This is particularly impressive since the first quarter of the year is typically one where our industry faces headwinds due to insurance copays and resets and the Medicare doughnut hole. The decline in net product sales from the prior quarter is primarily due to a decrease in TAVALISSE bottles remaining in our distribution channel or inventory. In addition, we are also expanding our commercial product portfolio. With the recent acquisition of GAVRETO, an FDA-approved therapy for the treatment of RET fusion-positive metastatic non-small cell lung cancer and advanced or metastatic thyroid cancer. GAVRETO offers a valuable, targeted treatment option for non-small cell lung cancer patients with RET fusion-positive disease. GAVRETO will provide us with top line growth as well as leverage our existing commercial and medical affairs infrastructure.
We remain on track to complete the transition of this asset in July of this year. In parallel, we are advancing our development programs, including the evaluation of REZLIDHIA in a broad range of IDH1 mutant cancers with our strategic partners, MD Anderson Cancer Center and CONNECT. These alliances greatly enhance our ability to further evaluate REZLIDHIA’s potential in a cost and time efficient manner. As we grow our commercial product portfolio and prioritize prudent clinical development, we are well positioned to advance our business and work towards financial breakeven. Before I turn the call over to Dave, I’ll provide a summary of our previously announced acquisition of US rights to GAVRETO. On Slide 5. We are working diligently to ensure a smooth transition of GAVRETO into our commercial product portfolio, which we expect to complete in July.
There are strong synergies between this product and our existing portfolio, infrastructure and expertise. We believe we have the right people and systems in place to bring this product to physicians and their patients. GAVRETO is a once daily oral RET inhibitor with an established foothold in the US market, having generated $28 million in US net product sales in 2023. Further, with patents that have issued or expected to issue with statutory expiration dates between 2036 and 2041, we are well positioned to make GAVRETO available for years to come. In exchange for US rights to GAVRETO, we will pay our partner, Blueprint, a purchase price of $15 million, $10 million of which is payable upon first commercial sale and $5 million of which is payable upon the first anniversary of the closing date.
The deal also includes potential future regulatory and commercial milestone payments to Blueprint, as well as tiered royalties on net sales of GAVRETO. We believe this puts Rigel in a favorable position to begin capturing value from this program in the near-term. Now, I will turn the call over to Dave to provide updates on our commercial product portfolio. Dave?
Dave Santos: Thank you, Raul. First onto growing demand of TAVALISSE in ITP. I have a few brief comments on our continued momentum with TAVALISSE in Q11. On Slide 7, you will see our FDA-approved indication, which is for adult patients with chronic immune thrombocytopenia or cITP, who’ve had an insufficient response to a previous treatment. MOVING to Slide 8, I’m happy to report that in Q1, TAVALISSE achieved its sixth consecutive quarterly record high for bottles shipped to patients and clinics. Over those six quarters, we have increased TAVALISSE’ quarterly demand volume by 23% and Q1 2024 demand grew 10% over the same period last year. We are pleased that our team has continued to produce double-digit year-over-year growth starting our six full year after approval.
Total bottles sold in Q1 were 290 bottles less than our bottles shipped to patients and clinics as our distribution channel reduced inventory. Dean will discuss this later in our presentation. This resulted in TAVALISSE net sales of $21.1 million for Q1. On Slide 9, the driver of our continued demand growth with TAVALISSE is our new patient starts. The graph on the left shows that since 2021, after we emerged from the pandemic, our new patient starts have continued to improve each year. In Q1, we achieved the highest first quarter new patient starts since launch. We generated this new patient start growth through continued focus on expanding the breadth and depth of prescribers, ensuring strong coverage and reimbursement with greater than 95% commercial coverage, and constantly reinforcing the clinical efficacy and safety of TAVALISSE with our customers.
I want to thank our entire team for their continued focus and execution to impact more cITP patients with TAVALISSE. We are very pleased with the consistent growth in new patient starts and how that has continued to drive our demand both in Q1 and as we move forward through 2024. Moving to Slide 10, now I’d like to take a few minutes to discuss our strong quarter growing REZLIDHIA sales. On Slide 11, you will see our FDA-approved indication for REZLIDHIA, which is for adult patients with relapsed or refractory acute myeloid leukemia with the susceptible IDH1 mutation as detected by an FDA-approved test. Moving to Slide 12, we shipped 326 bottles of REZLIDHIA to patients and clinics in Q1, representing strong 17% growth versus Q4 of 2023, and nearly tripling the demand generated a year ago in Q1, our first full quarter of launch.
We sold 390 bottles of REZLIDHIA into our distribution channel, resulting in $4.9 million in Q1 net – 2024 net sales. This was 26% above what we sold in Q4 and more than triple the net sales of the same period last year. We are very encouraged by the momentum we are now building with REZLIDHIA. On Slide 13, I wanted to update you on how our REZLIDHIA institutional business continues to be the driver of our growth. 84% of our total bottles shipped to patients and clinics were generated from use in institutional accounts. Our breadth and depth of use in institutions continues to grow as more academic leukemia treaters are becoming more aware of REZLIDHIA’s data in relapsed/refractory mutant-IDH1 AML. As we’ve discussed on prior calls, we believe we have an opportunity to grow REZLIDHIA use further in the community.
As in that segment of our business, quarterly demand has remained stable. We did see a highly encouraging trend in Q1, as the community drove more than one quarter of our new patient starts. This signals that community leukemia treaters are also becoming aware of REZLIDHIA and are trying it in their mutant-IDH1 AML relapsed or refractory patients. We believe a significant opportunity remains to grow REZLIDHIA use among community AML treaters, particularly because their adoption of venetoclax-based regimens for their newly diagnosed patients. We feel REZLIDHIA’s data in post-venetoclax patients will be particularly compelling to them. I want to thank our entire team for their hard work in growing awareness of REZLIDHIA, both in academic institutions and community practices.
They have worked closely across functions as one united team to broaden REZLIDHIA’s impact on mutant-IDH1 relapsed/refractory AML patients. Moving to Slide 14, I wanted to provide an update on our commercialization plans for GAVRETO. On Slide 15, I’ll begin by reviewing the FDA-approved indications for GAVRETO, which include the treatment of adult patients with metastatic RET fusion-positive non-small cell lung cancer, as well as adult and pediatric patients 12 years of age or older with advanced RET fusion-positive thyroid cancer who require systemic therapy and who are radioactive iodine-refractory. Moving to Slide 16, I want to reiterate why we believe GAVRETO is an important strategic addition as the third FDA-approved oral targeted therapy in our Rigel commercial portfolio.
As you’ll recall from Raul’s remarks, GAVRETO generated nearly $28 million in US net sales last year. So this is an excellent opportunity for us to continue providing meaningful therapy to RET fusion-positive patients with non-small cell lung cancer and advanced thyroid cancer. We believe this compelling GAVRETO opportunity suits our business well for a few reasons. Number one, it enables us to immediately and efficiently move into a large solid tumor market, where most clinicians are already testing patients and immediately recognize RET as a biomarker associated with FDA-approved therapies. So we anticipate that the RET market will continue to expand as more RET fusion-positive non-small cell lung cancer and advanced thyroid patients are identified.
Number two, we believe we have built strong access capabilities that we can fully leverage to ensure current and newly prescribed patients have access to GAVRETO. Our efficient and customer-friendly distribution network with TAVALISSE and REZLIDHIA will soon be ready to accommodate GAVRETO, as will our Rigel ONECARE patient services hub that has established a reputation for being highly responsive to patients and providers. We also have a track record of ensuring strong coverage and reimbursement for oral targeted therapies in difficult to treat diseases that we plan to continue with GAVRETO. And number three, this opportunity makes perfect sense for us, because it is a highly complementary one to both the commercial and medical affairs teams we have in place who call on both academic centers and community oncology practices.
With our Rigel footprint already in these accounts, we’ll be able to be even more efficient with our time and resources as we discuss multiple products within these accounts. On the right side of the slide, I wanted to highlight our biggest opportunity with GAVRETO, and that is in non-small cell lung cancer. As you’ll recall, approximately 1% to 2% of the 194,000 non-small cell lung cancer patients each year will test positive for the RET fusion, translating to approximately 3,000 RET fusion-positive non-small cell lung cancer patients this year. The graphic shows research done last year on the first-line therapies that were used in RET fusion-positive patients who were eligible for treatment. Three quarters of the patients were treated with one of the two FDA-approved RET inhibitors, with GAVRETO used in about a fifth of patients prescribed to RET inhibitor.
Importantly, there is still approximately a quarter of the market being treated by chemotherapy with or without an immune checkpoint inhibitor or multi-kinase inhibitor. We view this quarter of patients as the growth opportunity for RET inhibitors and GAVRETO. Slide 17 reviews what we believe are the four key drivers for continued growth as we begin our commercialization journey with GAVRETO. The first driver is patient identification. It is important that as many as possible of the 3,000 potential RET fusion-positive non-small cell lung cancer patients are identified each year. Fortunately, even if clinicians aren’t specifically looking for RET fusion-positive patients when they do test, about 90% of them immediately recognize the RET biomarker as being associated with an FDA-approved therapy.
Also, in research conducted last year, about 80% of non-small cell lung cancer patients are being tested and that rate is improving. When clinicians don’t test, it is more likely due to not having adequate tissue available. And in addition to inadequate tissue being the top barrier for testing, a significant portion of HCPs are concerned about delaying treatment, while waiting for test results. We believe that, especially with the recent data and adjuvant approvals of targeted therapies for biomarkers such as EGFR and ALK in early-stage lung cancer, biomarker testing to identify appropriate test patients will expand even further in non-small cell lung cancer. Both patient and HCP education on biomarker testing and the importance of targeted therapies in non-small cell lung cancer are growing, and that’s a – is clinicians’ concerns about delaying treatment.
Secondly, and more importantly for GAVRETO, optimizing the choice of therapy in those identified patients who are treatment eligible is an impactable growth opportunity for us. Most oncologists have yet to try GAVRETO in the front-line, and the biggest reason for that is comfort and familiarity with other drugs. From the prior slide, the use of chemotherapy with or without immune checkpoint inhibitors and multi-kinase inhibitors represents about one quarter of the use in the first-line treatment of RET fusion-positive patients. By growing awareness of GAVRETO’s efficacy, safety and once daily oral dosing, we believe we can grow future use of GAVRETO among current non-users. And importantly, as more clinicians are educated about testing and the impact of targeted therapies in lung cancer, we believe the number of clinicians who are concerned about delaying treatment and therefore initially treat with a non-targeted treatment will decrease, resulting in more RET fusion-positive non-small cell lung cancer patients currently treated with chemotherapy-based regimens or other agents moving to RET targeted therapy like GAVRETO.
Third, we believe that GAVRETO will continue to grow due to its high response rates, long duration of response and convenient once daily dosing. Lisa will discuss these and other impressive GAVRETO efficacy data in her presentation. These important drivers of persistency should continue to grow our carryover business each month as patients refill their prescriptions. And finally, as we have discussed, as we leverage our strengths in coverage, reimbursement and patient services with Rigel ONECARE, we believe we can gain loyal GAVRETO users from clinicians who view out-of-pocket costs and difficulty obtaining reimbursement as barriers for the use of RET inhibitors. In summary, we are well positioned to continue growing GAVRETO through positive momentum in these four key drivers.
On Slide 18, we have made continued progress in working closely with Genentech and Blueprint to ensure both current and newly prescribed patients continue to have access to GAVRETO without interruption. Rigel ONECARE is preparing to work with providers to assist in transitioning patients from the existing Genentech network and Access programs to the Rigel network and Rigel ONECARE patient programs, ensuring patients experience no interruption to therapy. Our distribution network ensures patient and provider choice in where their prescription is filled and we will have Rigel ONECARE staff fully dedicated to GAVRETO to ensure the highest level access support and customer service. I am pleased to report that everything is on track for Rigel to begin supplying patients and clinics with GAVRETO in July.
And to wrap up GAVRETO with Slide 19, I just wanted to update our high-level timeline of our plans for the rest of the year. Our market access team made excellent progress in preparing our distribution network for the addition of GAVRETO in Q1, and everything is on track for this quarter to prepare Rigel ONECARE and our field teams for the transition. We anticipate that in July, we will begin shipping GAVRETO to patients and clinics, and Rigel ONECARE will transition the majority of current and newly prescribed GAVRETO patients. Our field teams will simultaneously begin discussing GAVRETO with customers, with a focus on the accounts that have current patients on GAVRETO. Then in Q4, we will continue expanding our breadth of prescribers by calling on users and non-users, particularly in the community setting.
It’ll be an exciting year bringing GAVRETO into our portfolio of oral targeted therapies, and I look forward to continuing to update you on our progress as the year moves ahead. Now, I’d also like to say how thrilled we are to have our new Chief Medical Officer with us, and I’ll now turn the call over to her for an update on our development activities. Welcome, Lisa.
Lisa Rojkjaer: Thank you, Dave and good afternoon, everyone. I’m excited to have joined Rigel just a couple of months ago at an important inflection point for the company as we expand our Hematology and Oncology portfolio. First, I’d like to begin by underscoring how precision medicine approaches to lung cancer are positively impacting patient outcomes, including those patients with RET fusions, and why from the clinical perspective, we are excited about GAVRETO. On Slide 21, RET fusions are present in approximately 2% of all non-small cell lung cancers, representing approximately 3,000 new patients per year in the US and in around 20% of papillary thyroid cancers for around 1,000 new cases per year. Testing for RET fusions is an essential part of the pre-treatment evaluation of non-small cell lung cancer.
In fact, clinical practice guidelines recommend the use of targeted therapies as first-line treatment for eligible patients with metastatic non-small cell lung cancer, harboring actionable genetic variants such as RET fusions. Prior to the advent of RET targeted therapy, patients with advanced RET fusion-positive non-small cell lung cancer receive platinum-based chemotherapy regimens with overall response rates in the 50% range and median progression-free survival of six to eight months. The use of non-selective multi-kinase inhibitors with anti-RET activity has shown only modest efficacy and high rates of treatment related toxicity. Because RET fusion-positive non-small cell lung cancers exhibit low PD-L1 expression, immune checkpoint inhibitors have demonstrated only limited efficacy here with overall response rates less than 10% and progression-free survival in the range of two to three months.
GAVRETO is an oral, highly potent selective RET inhibitor with once daily dosing that is FDA-approved for RET fusion-positive non-small cell lung cancer or thyroid cancer as first-line or subsequent-line therapy. On the next slide, I will review updated clinical data from the Phase ½ ARROW study, which led to the approvals. Slide 22 summarizes updated clinical results from the ARROW study with the data cutoff date of March 2022. This Phase 1/2, multicenter, open-label dose escalation and expansion study was conducted at 71 sites in 13 countries with an original data cutoff date of May 2020. In Phase 1, pralsetinib at a dose of 400 milligrams daily was determined to be the recommended Phase 2 dose. In Phase 2, the safety and efficacy of pralsetinib 400 milligrams daily was evaluated in patients with RET fusion-positive advanced non-small cell lung cancer, thyroid cancer and other RET fusion-positive solid tumors.
The primary endpoint was overall response rate. In the lung cancer subgroup, clinical activity was observed irrespective of prior therapy. The overall response rate in 130 patients with previous platinum-based chemotherapy was 63% and 74% to 80% in 107 treatment-naive patients, with tumor shrinkage observed in all previously untreated patients. In the overall subset of 260 non-small cell lung cancer patients, median duration of response one of the key secondary endpoints was 19.1 months. Pralsetinib was generally well-tolerated with predominantly low-grade toxicity with only 10% discontinuing therapy due to treatment-related adverse events. In the subgroup of 22 patients with RET fusion-positive thyroid cancer, 91% of previously-treated patients achieved a response.
And finally, in the subgroup of 23 patients with RET fusion-positive solid tumors, the overall response was 57%. These results underscore the benefit of utilizing RET targeted therapy with pralsetinib in first or later lines of treatment for patients with RET fusion-positive non-small cell lung and thyroid cancer. Moving to Slide 23, patients with RET fusion-positive non-small cell lung cancer have a high rate of brain metastases, which are present in 25% of patients at the time of diagnosis, and approximately 50% of patients will develop brain metastases over the course of their lifetime. In the ARROW study, the intracranial response rate for 15 patients with brain metastases was 53% and complete responses were seen in three patients. Overall, the median duration of response was 11.5 months.
On Slide 24, based on these data, we believe that pralsetinib has a differentiated value proposition. It’s the only, once daily, oral RET inhibitor approved for patients with non-small cell lung and thyroid cancer with RET gene fusions. When considering the spectrum of prior treatment approaches we previously reviewed, pralsetinib is associated with favorable response rates and durable activity regardless of prior treatment history. Pralsetinib has also demonstrated promising intracranial activity in patients with brain metastases and has an established safety profile with manageable adverse events and a low discontinuation rate. Finally, pralsetinib is a recommended treatment option for patients with RET fusion-positive non-small cell lung cancer and advanced thyroid cancer.
So, to summarize, we believe that pralsetinib is a differentiated target treatment option for patients, and we look forward to fully integrating the product into our portfolio. I would now like to provide an update on our development programs and clinical research collaborations, which foster continued growth of our Heme/Onc pipeline. Moving to Slide 26, we shift focus to our strategy to continue expanding our Hematology and Oncology pipeline. First, we are focused on advancing our IDH1 inhibitor, olutasidenib into new clinical indications. We believe olutasidenib has potential in a number of cancers where mutated-IDH1 plays a role, such as additional AML segments, myelodysplastic syndrome or MDS, and glioma, either as a monotherapy or in combination.
To further evaluate olutasidenib in these indications, we’ve entered into strategic development collaborations with the MD Anderson Cancer Center and the CONNECT Consortium. We’re also advancing R289, our novel IRAK1 and 4 inhibitor in patients with lower-risk MDS. Enrollment continues into our Phase 1b trial, and we expect to have preliminary data from the first part of this trial later this year. In addition, we remain focused on evaluating potential opportunities to end license or acquire products that would be a strategic fit for our portfolio. We are looking for differentiated products in Hematology, Oncology or related areas, products that are late-stage, possibly with registrational data, soon to have registrational data or more advanced and products that can leverage our Hematology and Oncology infrastructure.
As demonstrated with our acquisitions of olutasidenib and pralsetinib, our goal is to continue to find assets that are a strategic fit with our organization pipeline and ability to execute. First, we’re very pleased to have started a development collaboration with the MD Anderson Cancer Center to advance olutasidenib more broadly into AML, MDS and beyond. Through our partnership, we are planning to evaluate olutasidenib in combination with other agents in first-line IDH1-mutated AML and higher-risk MDS. We also plan to evaluate olutasidenib as a monotherapy in lower-risk MDS and CCUS, a condition associated with an increased risk of developing MDS and in the post-transplant maintenance setting. That’s four potential clinical trials on the horizon with up to $15 million paid over five years.
We expect these trials to position us to conduct a subsequent registrational trial or trials, and we look forward to working with MD Anderson and providing updates as our collaboration progresses. Moving to Slide 28, another important development collaboration we have is with the CONNECT Consortium to conduct a Phase 2 trial in patients with IDH1-mutated glioma. Gliomas account for around 30% of CNS tumors in children, adolescents and young adults with approximately one-third of these being high grade gliomas, translating to approximately 800 to 1,000 new cases each year in the US. High grade gliomas are a leading cause of cancer-related death in adolescents and young adults. Despite available therapies, the five-year survival of this population is less than 10%.
IDH1-mutations are found in approximately 6% of pediatrics and up to 36% of high grade gliomas in adolescents and young adults. The safety and preliminary activity of single-agent olutasidenib in a cohort of 26 patients with relapsed or refractory high grade IDH1-mutant gliomas were recently reported. Based on these data, we believe that olutasidenib has potential in this indication and olutasidenib will be included in CONNECT’s TarGeT-D trial, a molecularly-guided Phase 2 umbrella clinical trial for high grade glioma. The Phase 2 CONNECT, open-label study intends to enroll approximately 60 patients in the Rigel-sponsored arm, adolescents and young patients that are 39 years old and younger with newly diagnosed IDH1 mutation-positive high grade glioma will receive maintenance therapy with olutasidenib in combination with temozolomide for the first year after radiotherapy, followed by olutasidenib monotherapy for the second year.
The primary objectives are to evaluate safety and tolerability of olutasidenib with and without temozolomide and progression-free survival. We anticipate the trial to initiate this summer. We will provide funding of up to $3 million in study material over the four-year collaboration. We, along with CONNECT, are excited about olutasidenib’s potential to provide a much needed new treatment option to this underserved patient population. And finally, on Slide 29, I’d like to tell you about our novel dual IRAK1 and 4 inhibitor, R289, which we are evaluating in a Phase 1b trial in patients with lower-risk MDS. This is another area of high unmet need in a primarily elderly patient population facing progressive cytopenias, particularly anemia, resulting in transfusion dependency, an increased risk of infections, and a risk of progression to acute leukemia.
The therapeutic strategy for MDS depends upon the patient’s MDS risk classification. For lower-risk MDS patients, first-line treatment options include the use of red cell transfusions, erythroid-stimulating agents, luspatercept, and lenalidomide for those with a deletion 5q abnormality. In second and later lines of therapy, durable responses are difficult to attain and toxicity becomes more of an issue. There are currently no approved therapies for lower-risk MDS patients that have failed hypomethylating agents. We believe that R289 has the potential to address the unmet needs in this patient population. Moving to Slide 30, I’d like to highlight why we are excited about R289. Dysregulation of the immune and inflammatory signaling pathways is associated with MDS with chronic stimulation of both the toll-like and IL-1 receptor pathways involving IRAK1 and IRAK 4, leading to a proinflammatory marrow environment and cytopenias.
The activation of IRAK1 and 4 were recently reported to also occur independently of this signaling pathway, leading to persistent inhibition of hematopoietic cell differentiation and that co-targeting both is required to fully suppress inflammation, leukemic stem cell progenitor function and restore hematopoiesis in MDS. Clinically, IRAK 4 inhibitors in MDS and AML have thus far shown only modest activity supporting this concept. In preclinical and healthy volunteer studies, R835, a dual IRAK 1/4 inhibitor, suppressed proinflammatory cytokine production. And R289, an oral pro-drug that is rapidly converted to R835, was well-tolerated with once and twice daily dosing and is now being evaluated in a Phase 1b study in lower-risk MDS. Slide 31 shows the design of our ongoing open-label, multi-center, Phase 1b study of R289 in patients with relapsed/refractory lower-risk MDS, which has a dose escalation phase with a standard 3+3 design and a dose expansion phase for confirmatory safety.
The primary endpoints for this trial are safety and selection of the recommended dose for expansion, and secondary endpoints include response rates and PK. Based on emerging data from the study, we have recently included two additional dose levels with twice daily dosing regimens. The study continues to progress well. We completed enrollment in the third cohort and we anticipate presenting preliminary data from the first part of the trial later this year. Lastly, on Slide 32, our RIPK1 inhibitor programs are progressing well with our partner Lilly. RIPK1 is implicated in a broad range of inflammatory cellular processes and plays a key role in tumor necrosis factor signaling. Ocadusertib, our non-CNS Penetrant RIPK1 inhibitor, previously referred to as R552 or LY3871801, is currently being studied in an adaptive Phase 2a/2b clinical trial in up to 380 patients with active moderate-to-severe rheumatoid arthritis.
Phase 2a enrollment of approximately 100 patients is advancing well, with preliminary analysis of the Phase 2a results anticipated by the end of the year. Our preclinical CNS Penetrant RIPK1 inhibitor program is also progressing toward lead candidate nomination. We are excited about the progress of our programs and their broad potential in RA and other immune and CNS diseases. To conclude, I’m excited to have joined Rigel at this time of progress and expansion in our development programs. I look forward to contributing to the growth of our Hematology and Oncology portfolio. I will now turn the call over to Dean.
Dean Schorno: Thank you, Lisa. I’m on Slide 34. For the first quarter of 2024, we shipped 2,193 bottles of TAVALISSE to our specialty distributors, resulting in $21.1 million in net product sales. 2,483 bottles of TAVALISSE were shipped to patients and clinics, while 290 bottles decreased the levels remaining in our distribution channels at the end of the quarter. For the first quarter of 2024, we shipped 390 bottles of REZLIDHIA to our specialty distributors, resulting in $4.9 million in net product sales. 326 bottles of REZLIDHIA were shipped to patients and clinics, while 64 bottles increased the levels remaining in our distribution channels at the end of the quarter. We reported net product sales in TAVALISSE of $21.1 million in the first quarter of 2024, a 5% decrease compared to the same period in 2023, resulting from the decrease in bottles remaining in our distribution channels at the end of the quarter.
I will describe this in a bit more detail in the next slide. We reported net product sales from REZLIDHIA of $4.9 million in the first quarter of 2024 compared to $1.5 million in the same period in 2023. As a reminder, REZLIDHIA was launched in the United States in December of 2022. Our net product sales from TAVALISSE and REZLIDHIA were recorded net of estimated discounts, chargebacks, rebates, returns, copay assistance and other allowances of $12.4 million. For the first quarter of 2024, our gross to net adjustment for TAVALISSE and REZLIDHIA was approximately 34% and 24% of gross product sales, respectively. Before we move onto net product sales, let me review our expectations for the second quarter of 2024. We’re pleased with the strength of our business and expect to see continued growth in bottles shipped to patients and clinics for both TAVALISSE and REZLIDHIA.
We expect our gross to net adjustment in the second quarter of 2024 to be approximately 35% for TAVALISSE and approximately 26% for REZLIDHIA. On Slide 35. Before I move on to a review of our financials for the quarter, I want to provide a brief review of the dynamics of the sequential decrease in net product sales we saw during the quarter. Starting with the orange bars. In the fourth quarter of 2023, we saw 2,463 bottles shipped to patients and clinics. This is our key demand metric, as Dave highlighted, our highest demand volume since launch. Incrementally, we saw a significant increase in bottles remaining at distribution channel of 208 bottles. This resulted in total bottles for the fourth quarter of 2023 of 2,671 bottles, which generated $25.7 million of net product sales.
Now to discuss the green bars. In the first quarter of 2024, we saw 2,483 bottles shipped to patients and clinics. This small increase is despite the typical first quarter industry challenges associated with the resetting of copays and the Medicare donut hole, delaying both new prescriptions and refills that both we and our industry experience each year. You’ll note in the thin green bar that this small increase in demand volume resulted in a sequential increase in net product sales of $200,000. The bigger impact in this sequential reduction in net product sales came from the reduction of inventory levels at our distributors. The reduction from 1,374 bottles of inventory at our distributors in Q4 of 2023 down to 1,084 bottles at the end of Q1 of 2024 contribute to a sequential decline in our net product sales of $4.8 million, the thick red bar in this graphic.
Inventory levels at our distributors are variable, though we do expect them to generally increase over time as our business grows. To illustrate the effective change in inventory levels on our net revenues, let me provide an example. While we have said that we expect to see continued growth in bottles shipped to patients and clinics for TAVALISSE, and that our inventory levels are variable, if we assume that both inventory levels and demand volume are flat as compared to the first quarter of 2024, we would expect to see quarter-over-quarter growth of approximately 12% for the second quarter of 2024. This is calculated with our current wholesale price and anticipate gross to net adjustment. Again, this calculation is intended to be illustrative.
Onto the next slide. In addition to net product sales, our contract revenues from collaborations were $3.5 million in the first quarter of 2024. Contract revenues from collaborations consisted of $2.3 million from Kissei, $1.1 million from Grifols, and $100,000 from Medison. Moving on cost and expenses. Our cost of product sales was approximately $2 million for the first quarter of 2024. Total cost and expenses were $36.5 million compared to $38.8 million in the same period for 2023. The decrease in cost and expenses was primarily due to decreased research and development costs due to the timing of clinical trial activities related to that IRAK1 and 4 inhibitor program, as well as the timing of trial completion activities related to two Phase 3 clinical trials of fostamatinib in patients with COVID-19 in warm autoimmune hemolytic anemia.
In addition, the decrease was also due to lower consulting and third-party services as well as lower facility-related costs. These decreases were partially offset by higher stock-based compensation expenses, mainly from performance-based awards. We ended the quarter with cash, cash equivalents and short-term investments of $49.6 million. We look to maintain our focus and disciplined financial approach into the future. Lastly, in April, we entered into an amendment to our credit agreement with MidCap Financial. As part of the amendment, we extended the maturity date and interest-only period by one year. Our principal repayment period now starts in Q4 of 2025 and extends for 24 months. With that, I’d like to turn the call back over to Raul.
Raul?
Raul Rodriguez: Thank you, Dean. Looking ahead to the remainder of 2024, we are focused on continuing to grow sales of REZLIDHIA and TAVALISSE, while adding GAVRETO to our commercial operations in July of this year. With the help of our strategic collaborators, we look forward to initiating additional olutasidenib clinical studies and we will evaluate other opportunities for expanding the development of our products. We’ll also enroll and generate preliminary data from our Phase 1b clinical trial of R289 in lower-risk MDS. And lastly, we will continue, we will actively pursue additional in-licensing deals and acquisitions, similar to our strategy with REZLIDHIA and GAVRETO. And as we execute on our strategy to grow our Hematology and Oncology business, we remain committed to working towards financial breakeven and making Rigel a self-sustaining company.
With that, I thank you for your interest in our progress in the first quarter. And now, we will open the call to your questions. Operator?
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