Rigel Pharmaceuticals - Earnings Call - Q2 2025

Executive Summary

• Rigel delivered a strong quarter: revenue $101.7M, diluted EPS $3.28, and net income $59.6M, with net product sales up 76% YoY; management raised FY25 guidance materially.
• Results exceeded Wall Street consensus on revenue ($72.6M*) and EPS ($1.612*) as actuals came in at $101.7M and $3.28, respectively; EBITDA also ran above consensus (actual $61.7M vs $47.6M*).
• Guidance raised to total revenue $270–$280M (from $200–$210M), net product sales $210–$220M (from $185–$192M), and collaborations ~$60M (from $15–$18M); includes $40M non-cash contract revenue from Lilly.
• Key catalysts: favorable patient affordability and gross-to-net dynamics under IRA, strong product demand across TAVALISSE/GAVRETO/REZLIDHIA, and R289 Phase 1b progression with dose-escalation enrollment completed.

What Went Well and What Went Wrong

What Went Well

• “This was a really great quarter for Rigel… net product sales of more than $58M… total revenue $101.7M” (CEO).
• Commercial execution drove 76% YoY net product sales growth, aided by improved patient affordability and favorable gross-to-net dynamics (CCO).
• Pipeline progress: completed dose-escalation enrollment for R289 Phase 1b in lower-risk MDS; updated data expected later this year (PR/8-K).

What Went Wrong

• Results include $40M non-cash collaboration revenue from Lilly; investors should adjust underlying trends accordingly.
• IRA tailwind likely moderates in 2H (coverage gap impact strongest in 1H), potentially tempering sequential benefit (CCO).
• Data integrity refinement in R289: one previously reported minor responder no longer qualifies after an updated data cut (CMO).

Transcript

Speaker 4

Welcome to Rigel Pharmaceuticals' financial conference call for the second quarter 2025. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. 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 begin.

Speaker 1

Welcome to our second quarter 2025 financial results and business update conference call. The financial press release for the second quarter 2025 was issued a short while ago and can be viewed along with the slides for this presentation in the news and 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 and product development. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent annual report on Form 10-K for the year ended December 31, 2024, and subsequent filings with the SEC, including our Q2 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'd like to turn the call over to our President and Chief Executive Officer, Raul Rodriguez. Raul.

Speaker 0

Thank you, Ray, and thank you everyone for joining us today. Also with me today are Dave Santos, our Chief Commercial Officer, Lisa Rojkjaer, our Chief Medical Officer, and Dean Schorno, our Chief Financial Officer. Beginning on slide four, I will provide an overview of Rigel Pharmaceuticals' accomplishments across the business and our financial results for the second quarter of 2025. Let me start by saying that this was a really great quarter for Rigel Pharmaceuticals. We continued to make significant progress on the execution of our corporate strategy. For those not familiar with Rigel Pharmaceuticals, our focus is on growing our hematology and oncology business through commercial execution, advancing our pipeline, product in-licensing and acquisition, and financial discipline. With this in mind, in the second quarter, we achieved net product sales of more than $58 million, an increase of 76% year over year and our best quarter ever.

This all-time high was driven by our growing commercial portfolio and increased sales across all our commercial products. Dave will provide a more detailed update on our three products and their second quarter contributions later on in the call. Total revenue for the second quarter was $101.7 million, including $42.7 million in contract revenues from collaborations. As I discussed during our May call, we notified Eli Lilly that we would not exercise our right to share in future development expenses for OKADYSERTIB, Rigel Pharmaceuticals' RIPK1 inhibitor, previously known as R552. As a result, we recognized $40 million in non-cash revenue in the second quarter. Dean will discuss the accounting of this in his remarks. Now let's talk about our development opportunities. We are excited about the potential of our development pipeline and our ability to fund the clinical development of R289 and oluracitinib.

R289, our novel and selective dual IRAK1/4 inhibitor, is currently being evaluated in a phase 1B clinical study in patients with relapsed or refractory lower-risk MDS. We completed enrollment in the dose escalation part of the study in July and expect to share updated data from the study later on this year. Lisa will walk us through the latest updates on our development pipeline. While we're focused on our internal development, we're also excited about the potential of OKADYSERTIB, a potent oral and selective inhibitor of RIPK1, and Eli Lilly's efforts to advance this molecule. In parallel with growing our commercial business and expanding our development pipeline, we remain committed to pursuing additional in-licensing deals or acquisitions of assets that fit our capabilities commercially and our product focus, such as we've already done successfully with both Brizlyvia and Gavreto.

Underscoring this effort is an emphasis on maintaining financial discipline while making the clinical development investments. This has resulted in both top-line and bottom-line growth and allowed us to generate $59.6 million in net income and to increase our cash balance to more than $108 million in the second quarter. Moving on to slide five, you'll see the growth of our net product sales year over year. We have consistently delivered top-line growth, as evidenced by the 32% compound annual growth rate, or CAGR, from 2021 to 2024. Year to date, in 2025, we have generated $102.5 million in net product sales. This is nearly the same net sales that we generated for the full year of 2023, and so a tremendous start to this year.

We are now raising our total revenue guidance in 2025 to between $270 million and $280 million from the previous range of $200 million and $210 million, which includes net product sales of $210 million to $220 million, an increase from the prior range of $185 million to $192 million. This new outlook reflects anticipated growth of 45% to 52% compared to 2024, exceeding the roughly 30% growth rate that we delivered over the last few years. Rigel Pharmaceuticals is in a unique position as a self-sustaining company with the added benefit of a promising pipeline of assets. We remain focused on the execution of our corporate strategy and continuing our progress throughout 2025 and beyond. Now, with that, I will turn the call over to Dave to provide more information on our commercial business for you. Dave?

Speaker 3

Thank you, Raul. On slide seven, you'll see our three commercial products: TOPELYS, Gavreto, and Brizlyvia. Moving to slide eight, we are thrilled to report another excellent quarter from our commercial portfolio, marked by strong year-over-year growth and an all-time high in revenues in the second quarter of 2025. You can see on the slide how our quarterly and annual net product sales have increased since 2021. We have grown each quarter's sales over the previous year, and that growth continues. In the second quarter of 2024, we reported $33.5 million, and now, for the second quarter of 2025, we generated $58.9 million. Our second quarter results reflect accelerated demand through improved patient affordability in 2025, augmented by favorable growth dynamics, which drove a 76% increase year over year.

Our commercial team has been dedicated to execution, driving continued momentum for TOPELYS, raising awareness for Gavreto after a successful transition into our portfolio, and improving demand for Brizlyvia. Slide nine shows a summary of our commercial performance by product. First on TOPELYS, I'm pleased to report another record quarter in which we generated $40.1 million in net product sales, an increase of 52% compared to the second quarter of 2024. This growth was driven by continued strong new patient demand, with another consecutive quarterly record high, and increased carryover demand from new patients that started therapy in prior quarters. For Gavreto, we delivered $11.8 million in net product sales in Q2. As a reminder, in the second quarter of 2024, we recorded $1.9 million of revenue as Gavreto just became commercially available from Rigel in late June of 2024.

On a sequential basis, we saw 32% revenue growth versus the first quarter of 2025, as we continued to see an increase in new patients and carryover demand. We are focused on driving awareness of Gavreto and ensuring patients are educated on the latest treatment guidelines that recommend the use of a RET inhibitor in the front-line setting. Lastly, for Brizlyvia, we reported $7 million in net product sales, an increase of 36% compared to the prior year period, reflecting demand growth. We continue to focus on educating healthcare providers about the potential benefits of Brizlyvia for patients with relapsed or refractory IDH1 mutant AML. Driving awareness of the efficacy data for Brizlyvia in the post-venetoclax setting, which we believe is important to physicians, continues to be a key priority for us.

We also believe we have compelling data for the earlier use of Brizlyvia in mutant IDH1 patients who relapse or are refractory to front-line therapy. To that end, at ASCO in June, we presented data for patients who received Brizlyvia after either one to two lines of therapy or three or more lines of prior therapy. Patients in the one to two prior regimens group showed a higher overall response rate and longer median overall survival than those who had three or more prior lines of therapy, providing a rationale for initiating treatment with Brizlyvia earlier in the relapsed or refractory treatment paradigm. This supporting data shows why we believe we have significant opportunity to grow Brizlyvia in relapsed or refractory IDH1 mutant AML.

Overall, we're very pleased by our commercial performance in the second quarter, and I would like to express our sincere thanks to the entire team for their outstanding performance in Q2. Moving to slide 10, we continue to work on expanding access to our products in markets outside of the U.S. TOPELYS is commercially available in Japan, in Europe under the brand name TEBLESS, and in Canada and Israel via our partners Keysay, Grifols, and Medison. In addition, our partners continue to pursue regulatory approvals for TOPELYS in new markets. Most recently, in early July, Keysay's licensing partner, JW Pharmaceutical Corporation, launched TOPELYS in South Korea. For Brizlyvia, in 2024, we expanded our relationship with Keysay to include several countries in Asia for all potential indications, and we entered into an exclusive license agreement with Dr. Reddy's for all potential indications throughout Dr. Reddy's territory.

We are pleased that access to our products is expanding outside the U.S., and we continue to explore other opportunities for partnerships to bring our products to other markets around the globe. I will now pass the call over to Lisa to provide an update on our development pipeline. Lisa?

Speaker 6

Thanks, Dave. I will now provide an overview of our pipeline progress and plans for the remainder of the year. I'm on slide 12. Our hematology and oncology pipeline strategy is focused on the clinical development of R289, our novel dual IRAK1/4 inhibitor in lower-risk myelodysplastic syndrome, or MDS, and the expansion of oluracitinib beyond relapsed or refractory IDH1-mutated AML into other cancers with IDH1 mutations, such as recurrent glioma. Beginning with R289, our phase 1B study in patients with relapsed or refractory lower-risk MDS is progressing well, and enrollment in the dose escalation part of the study was completed in July. We plan to share updated dose escalation data later this year.

We remain on track to initiate the dose expansion part of the study in the second half of the year, which will be a randomized comparison of two doses of R289 in order to select the recommended phase 2 dose for future studies. For oluracitinib, we believe it has potential in several cancers where mutated IDH1 plays a role. Regarding our partners, oluracitinib is being evaluated as maintenance therapy in IDH1 mutation-positive glioma by the CONNECT Cancer Consortium and in IDH1 mutation-positive AML and low and high-risk MDS by MD Anderson Cancer Center. We remain open to additional opportunities or collaborations to evaluate oluracitinib in IDH1-mutated cancers. Rigel Pharmaceuticals also remains focused on evaluating potential acquisition and in-licensing opportunities that strategically fit our hematology and oncology portfolio and infrastructure. We're focused on evaluating differentiated assets in hematology, oncology, or related areas that are late-stage programs.

Now, we'll spend a few moments on R289, our dual IRAK1/4 inhibitor. On slide 14, I'd like to spend a few minutes reviewing the value proposition of R289 in lower-risk MDS. There are about 12,000 previously treated lower-risk MDS patients in the U.S. There's a high unmet need for therapies in this disease area, particularly for transfusion-dependent patients. Dysregulation of inflammatory signaling is key to the pathogenesis of lower-risk MDS, and IRAK1/4 mediate this process. Blocking both IRAK1/4 may suppress marrow inflammation and leukemic stem and progenitor cell function and restore normal hematopoiesis. R835, the active moiety of R289, blocks toll-like receptor and IL-1 receptor signaling in vitro and was active in various preclinical models of inflammation. Clinical proof of concept of this anti-inflammatory effect came from a healthy volunteer study in which R835 markedly suppressed LPS-induced cytokine release compared to placebo.

As a reminder, R289, which is currently being evaluated in the clinic, is the oral prodrug that is rapidly converted to R835 in the gut. R289 has both Fast Track and Orphan Drug designations from the FDA, giving the molecule an expedited regulatory pathway, potential priority review, and seven years of market exclusivity upon approval. Both of these designations underscore the agency's interest in this rare disease, the unmet need of the patient population, and the FDA's willingness to collaborate with Rigel Pharmaceuticals in the development of R289. In addition, R289 has thus far demonstrated a promising clinical profile in a phase 1B study. The initial dose escalation data that were presented at last year's ASH annual meeting demonstrated promising preliminary safety and clinical activity in elderly, heavily pretreated patients with relapsed or refractory lower-risk MDS.

While I'm here, I wanted to mention that we noted that with a recent data cut, there was a change in status for one patient previously reported with a minor response, that is, a reduction in the number of red cell transfusions by more than 50% compared to baseline. We discovered that this patient had received additional red cell transfusions that were not entered into the database at the time of the initial analysis. Thus, this patient is no longer considered a responder. I'll discuss the study design in a moment. On slide 15, I'd like to update you on several key milestones for the program that we're focused on this year. First, as mentioned, we completed enrollment in the dose escalation part of our ongoing phase 1B study in July.

We remain on track to initiate the dose expansion phase in the second half of this year, potentially within the third quarter. We recently engaged with the FDA to discuss the dose expansion phase and to seek preliminary input on a potential path to registration. We're aligned with the FDA on the dose expansion part of the study and will provide more details on the registrational path following completion of the phase 1B study and once we've aligned with the agency on the design of our pivotal study. Lastly, we look forward to sharing updated data from the study later in the year. On the next slide, I'll review the study design. This is our multicenter open-label phase 1B study in patients with relapsed refractory lower-risk MDS that are either transfusion-dependent or have symptomatic anemia. Initial data from the study was presented at ASH in late 2024.

The study aims to evaluate the safety, PK, and preliminary efficacy of R289 in this patient population, as well as select a dose for future studies. It includes a dose escalation part utilizing a modified 3 plus 3 design evaluating six dose regimens of R289 and a dose expansion phase, which will compare two doses of R289 head-to-head in order to select the recommended phase 2 dose. Once this occurs, we'll open up a cohort of patients to explore upfront dosing of R289 in patients that are relapsed, refractory to, or ineligible for ESAs. On slide 17, I'd like to talk about the treatment landscape for lower-risk MDS. MDS is a clonal disorder of hematopoietic stem cells leading to dysplasia and ineffective hematopoiesis. The main consequences for patients are anemia and transfusion dependence, which adversely impact quality of life.

In addition, infections, iron overload from transfusions, and subsequent organ dysfunction all negatively impact the patient. Therapies used in the upfront setting include erythropoiesis-stimulating agents, or ESAs, if patients are eligible, or Luspatercept. Luspatercept and more recently imetastat are also approved for ESA failure transfusion-dependent lower-risk MDS patients. Finally, hypomethylating agents, or HMAs, are also approved, however, the percentage of patients achieving transfusion independence is low. With eight-week transfusion independence rates approaching 40% with Luspatercept and imetastat, there's still a need for safe, effective therapies for transfusion-dependent lower-risk MDS patients that are relapsed refractory to or ineligible for ESAs. Now I'll shift focus to our strategic collaborations. As I've mentioned, we have collaborations in place with CONNECT and MD Anderson to evaluate oluracitinib in other cancers harboring IDH1 mutations. I'm now on slide 19. CONNECT is a global pediatric neuro-oncology consortium that we entered into a collaboration with last year.

In CONNECT's TARGET trial, a molecularly guided phase 2 umbrella clinical trial for high-grade glioma, the Rigel-sponsored arm of the study, called TARGET-D, will evaluate a post-radiotherapy maintenance regimen of oluracitinib in combination with temozolomide, followed by oluracitinib monotherapy in newly diagnosed patients between 12 and 39 years of age with IDH1 mutation-positive high-grade glioma. This study is open for enrollment. In addition to this collaboration with CONNECT, we continue to look at other opportunities to expand our studies of IDH1-mutated cancers through our own studies or collaborative partners, including a potential Rigel-led phase 2 glioma study. We, along with CONNECT, are excited about oluracitinib's potential to provide a much-needed new treatment option to this underserved patient population with significant unmet need. On slide 20, we summarize our strategic alliance with the MD Anderson Cancer Center to advance oluracitinib more broadly into AML, MDS, and beyond.

All four studies within this collaboration are open for enrollment, and we look forward to sharing updates in the future. Now, I'll pass the call to Dean to discuss our partnered program with Eli Lilly and our financial results for the quarter. Dean?

Speaker 1

Thank you, Lisa. I'm on slide 22. Before I review our financial results for the quarter, I wanted to provide a brief update on our collaboration with Eli Lilly and the related impact to our financial statements during the quarter. The RIPK1 inhibitor programs are progressing well, and we're excited about the program's potential. OKADYSERTIB, the non-CNS penetrant RIPK1 inhibitor, previously referred to as R552, is currently being studied in an adaptive phase 2A, 2B clinical trial in up to 380 patients with active, moderate to severe rheumatoid arthritis. Enrollment in the phase 2A study is ongoing. The preclinical CNS penetrant RIPK1 inhibitor program is also progressing toward lead candidate nomination. As Raul mentioned, we notified Eli Lilly that we will not exercise our opt-in right related to the development and commercialization of OKADYSERTIB. As a result, we recognize $40 million in collaboration revenue in the second quarter.

This is non-cash and related to the release of the remaining cost-share liability that was on our balance sheet. Note that under the terms of our collaboration agreement, Rigel Pharmaceuticals will continue to be entitled to receive milestone and tiered royalty payments on future net sales. Moving on to our financials, I'm on slide number 24. We reported net product sales of $58.9 million for the second quarter, a growth of 76% year over year, including TOPELYS net product sales of $40.1 million, a growth of 52% year over year, Gavreto net product sales of $11.8 million. As a reminder, Gavreto became commercially available from Rigel Pharmaceuticals in late June of 2024, and we reported $1.9 million in revenue for the second quarter of 2024. Lastly, we reported Brizlyvia net product sales of $7 million, a growth of 36% year over year.

Our net product sales were recorded net of estimated discounts, chargebacks, rebates, returns, copay assistance, and other allowances of $20.7 million. We also reported $42.7 million in contract revenues from our collaborations for the second quarter, primarily consisting of the $40 million of non-cash revenue from Eli Lilly, as well as contributions from Grifols, Keysay, and Medison related to delivery of drug supply and earned royalties, bringing our total revenues for the second quarter to $101.7 million. Moving to slide 25 and down the income statement to cost and expenses, our cost of product sales were approximately $4.5 million for the second quarter of 2025. Total cost and expenses were $40.6 million compared to $36.4 million for the same period of 2024.

The increase in costs and expenses was mainly due to higher cost of product sales, increased research and development costs driven by the timing of clinical activities related to oluracitinib and R289, and higher personnel-related costs and stock-based compensation expense. We reported net income of $59.6 million for the second quarter compared to a net loss of $1 million in the same period in 2024. We ended the quarter with cash, cash equivalents, and short-term investments of $108.4 million compared to $77.3 million as of the end of 2024. Turning to our financial outlook for 2025, we're raising our total revenue guidance to approximately $270 to $280 million, an increase from our prior range of $200 to $210 million.

This includes updated net product sales expectations of approximately $210 to $220 million, an increase from the prior range of $185 to $192 million, and contract revenues from collaborations of approximately $60 million, an increase from the prior range of $15 to $18 million. The updated total revenues and contract revenues from collaborations expectations are inclusive of the $40 million in non-cash contract revenue related to Rigel Pharmaceuticals' agreement with Eli Lilly. In addition, we continue to anticipate that we will report positive net income for the full year 2025 while funding existing and new clinical development programs. To wrap up my section, we look forward to continued financial discipline for the remainder of 2025 and beyond. With that, I'd like to turn the call back over to Raul.

Speaker 0

Thank you, Dean. Moving on to slide 26. To reiterate, we have made significant advancements over the last several years in expanding our hematology and oncology business. We have consistently delivered meaningful top-line growth, enabling us to fund our business and strategic priorities. We have now raised our net product sales expectations for 2025 and now expect to generate 45% to 52% year-over-year growth, an increase from the roughly 30% growth that we delivered in the prior four years. Moving on to slide 27. For the remainder of the year, we continue to focus on increasing sales of our three commercial products and delivering on our revenue guidance. We are committed to advancing our phase 1B clinical study, evaluating R289 for the treatment of patients with lower-risk MDS. We plan to share updated data by year-end and potentially initiate the dose expansion phase of the study in the third quarter.

For oluracitinib, we plan to continue progress to initiate a Rigel-sponsored phase 2 study in recurrent glioma while supporting our strategic collaborations with the CONNECT Cancer Consortium as well as MD Anderson Cancer Center. We will also continue to look for opportunities to expand our product portfolio through in-license and/or acquisition of synergistic late-stage assets. With our anticipated strong revenue growth and continued financial discipline, Rigel Pharmaceuticals is well positioned for the near term and for the long term. In closing on slide 28, Rigel Pharmaceuticals has delivered a strong first half of 2025, and we are focused on continuing that momentum throughout the remainder of the year. Our proven strategy has built Rigel Pharmaceuticals into a profitable, growing, and sustainable business. With that, I'd like to thank you for your interest, and we will now open the call to your questions. Back to you, operator.

Speaker 4

Thank you. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press *2 if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. Once again, to ask a question, press *1 on your telephone keypad. Your first question comes from Joe Pantginis with H.C. Wainwright. Please state your question.

Speaker 5

Hi everybody. Thanks for taking the questions. It really, I mean, great growth. Nice blocking and tackling on Gavreto and Brizlyvia. Excuse me for the pronunciation. With regard to TOPELYS, it looks like it saw a very nice inflection, obviously, with regard to the 52% growth. You mentioned, obviously, it's due to new patient demand and increase of carryover. Just curious, can you split up the % contribution to this growth here?

Speaker 0

Dave, can you comment on that? Thank you, Joe. Thank you for the question.

Speaker 3

Yeah, Joe, great question. I will say that, particularly in the first half of the year, we did have more new patient starts than ever before. Our percentage of our growth due to new patient starts was higher. I think you heard me say in my prepared remarks that that was accelerated by improved patient affordability in 2025.

Speaker 5

No, that's great. Just curious, what level of surprise, if any, and I'm sort of playing devil's advocate, surprise did you have about that growth and the affordability, versus a potential bear case out there that TOPELYS has reached a level of steady state?

Speaker 3

We have been planning to continue to grow TOPELYS. As you know, we've remained focused on new patient growth. What did happen this year, as you know, is the coverage gap was eliminated in 2025 due to the Inflation Reduction Act. We knew that this could potentially help us this year because, as you know, Part D drugs or oral drugs, what happened in the past is patients would enter into that coverage gap, particularly at the beginning of the year, and it would be difficult for them to access product. This year, with a $2,000 annual out-of-pocket cap for patients and their ability to potentially even smooth those payments out through the year, they have much easier ability to access a drug like TOPELYS, an oral agent.

I think we were prepared to ensure that patients, that we were ready to address this change at the beginning of the year. I will say that we've always been focused on new patient starts. Is it potentially a little more benefit from improved affordability than we had anticipated? I'm not sure I would say that, but I think the team executed extremely well. Because we have a portfolio of oral therapies, I think the entire portfolio benefited from improved affordability in 2025. That also helped us improve our gross-to-net dynamics.

Speaker 0

It's a confluence of those things. Thanks, Raul. It's a confluence of those things, Joe. I think we were well aware of this coming in and well prepared to it. It required both of those things to know it's coming, to know what you're going to do about it. We executed, I'd say, very well in the first half of the year. Many of those patients carry over into subsequent quarters. What used to be, you know, difficult Q1s in the past, this IRA has helped that. Needless to say, more patients are getting drugs that perhaps in the past couldn't have gotten them because of the change. That's a good thing overall.

Speaker 5

No, fantastic. Appreciate all the added color and very nice to see.

Speaker 4

Thank you. Your next question comes from Yigal Nochomovitz with Citigroup. Please state your question.

Hey, guys. Congrats on a nice progress commercially and on the pipeline. I'm curious about the comment regarding the 32% CAGR, which you noted from 2021 to 2024, and then the apparent inflection higher, substantially higher, 45% to 52%. Is the statement that this is the expectation sort of for the business on a go-forward basis, not only this year, but into 2026 and beyond? Are we on a new sort of trajectory here? How would you frame that inflection point in terms of thinking about the longer-term performance of the business?

Speaker 0

Yeah, I can take that, but I'll also ask Dave to comment on that. This has been a fantastic start to the year. I think things have happened, dynamics. Dave has just explained a few of them that occurred earlier in this year that I think gave us a boost. The underlying business had been growing quite nicely, 32% year on year, and TOPELYS specifically, a strong performer throughout those years, even though it's been on the market already. Really, a confluence of various things drove this increase in sales this year. We haven't given guidance beyond this year, other than to say we continue to expect growth in the business, and we continue to have confidence that the product provides meaningful value to these patients. Now we can make sure that more of them benefit from these products, being that they're oral in particular.

We're very, very enthusiastic about what's to come. I think a good, great first half of the year, the best ever, and we expect the dynamics to not change dramatically going forward.

Speaker 3

Yeah, Raul, I would just add that we've got a growing business, obviously. We have been laser-focused on ensuring patients have the opportunity to try TOPELYS, Brizlyvia, or Gavreto, depending on what the clinician, which type of patient the clinician has. We do everything possible to make sure we're efficient in that targeting. I think what you're seeing is our ability to grow revenues with very little incremental costs on a three-product portfolio. That's exactly what we're executing on, looking at our impactable opportunities, targeting those, with laser-like focus and going out and getting it. Yes, we definitely plan to continue to grow new patient starts and demand as we move forward.

Speaker 0

You also note the leverage in the business. You have a stable, good quality commercial organization that really has delivered in the past. Now you add additional products to it, and you see the economic benefit of that.

OK, thanks. I had a few more specific questions on glioma and the oluracitinib development. What more can you say with respect to the phase 2 design? How would you do that study? What would be the right comparator arm? Regarding the work you're doing with this CONNECT Cancer Consortium and the TARGET-D trial, if that looks good, what would you do with that data? Is that something you could then use for a submission in pediatric, or would you need to then pursue another company-sponsored study to take that pediatric segment to market?

Let's leave it to comment on those two.

Speaker 6

Thank you, Raul, and thanks for the question, Yigal. Regarding our plans for glioma, we will be disclosing more about the design of the study in recurrent glioma probably later this year. We're not yet in the position to do that, but stay tuned. For the CONNECT Cancer Consortium study, that's a very good question as well. We still have to discuss a little bit more with CONNECT Cancer Consortium and potentially with the agency on a potential for looking at that to support a filing. We haven't done any of that yet. I don't anticipate that we would be doing an additional study in that same space.

OK, gotcha. Thank you very much.

Speaker 0

Thank you, Joe.

Speaker 4

Your next question comes from Farzin Haque with Jefferies. Please state your question.

Hi. This is Farzin Haque. Congrats on the quarter, and thank you for taking our questions. A couple of questions from us. Based on what you're seeing so far in 3Q in numbers of bottles shipped and the IRA impact, how does that shape your thinking around the guidance going forward? Are there any anticipated headwinds or tailwinds specifically around TOPELYS sales and Gavreto ramp at this point? I have a follow-on.

Speaker 0

Thank you, Farzin. My last day to comment on that.

Speaker 3

Yeah, so we just grew, if you take the six months that we just completed, and you look at the six months prior to that, or the back half of 2024, we just grew 20% in revenues. In our guidance, at the midpoint of our guidance, we're still projecting double-digit growth in our revenues. At the top end, it's about 15%. We are expecting growth to continue. When I said that about improved affordability dynamics in the first half of the year, as I said in my earlier remarks, the coverage gap was really an issue at the beginning of the year when patients hadn't been on medications and they were restarting the clock. That was the time the donut hole experience was more. We do expect that as we move into the second half of the year, there are fewer patients that kind of fall into that.

I don't think the impact of that will be as strong in the second half of the year. I hope that helps.

Yes, very helpful. How much impact are you seeing on the gross-to-net for the three drugs with the PARTD?

Speaker 5

We haven't been specific on the gross-to-net. I will say that from a gross-to-net consideration, there's a variety of factors. We made some distribution channel changes that we talked about in the back half of last year, which has had an effect and a favorable effect. The mix also impacts gross-to-net, and there's some favorability, as Dave said, with respect to the IRA adjustments. On a go-forward basis, the mix and some of the programs we do will have an impact on gross-to-net. We haven't been specific on the individual products, but we expect to see some favorable gross-to-net as we've seen in the last couple of quarters persist.

Thank you very much.

Speaker 0

Thank you, Farzin.

Speaker 4

Thank you. A reminder to the audience, to ask a question, press *1 on your telephone keypad. To remove yourself from the queue, press *2. Once again, to ask a question now, press *1 on your telephone keypad. Your next question comes from Kristen Klesko with Cantor Fitzgerald. Please state your question.

Hi, this is Ayan on Kristen's line. Thank you for taking our question. I understand that the primary goal in treating lower-risk MDS is to reduce or eliminate transfusion dependence. What have you heard from physicians on the degree of transfusion reduction or independence that is actually considered clinically meaningful in this setting?

Speaker 6

Yeah, I could take that. I mean, as I mentioned in my prepared remarks, the approvals of Luspatercept and Imetelstat were based on an eight-week transfusion independence rate of around 38% to 40% for both agents. There's around 60% of patients who are still not benefiting. I think that there's still room for improvement in this area. With hypomethylating agents that were approved around 25 years ago, it's really not much better. Lots of room to improve. I don't know that the physicians are, I think anything above this is something people would be looking forward to. Also, considering those agents, there are also associated toxicities and a bit of an inconvenience with the route of administration. I think aside from the activity there, there's also room for improvement in administration.

Thank you. Understood.

Speaker 4

Thank you. There are no further questions at this time. I would like to turn the floor back over to Mr. Raul Rodriguez for closing comments. Thank you.

Speaker 0

Thank you. I'm grateful for your attendance to this call and your interest in Rigel Pharmaceuticals. I think this first half of the year, we've really delivered well. I'm extremely proud of what we've been able to accomplish, both in the commercial business and the financial position of the company, which is much stronger today and stronger than, I believe, it's ever been, and really good advancements also in terms of our product portfolio. For that, I'd like to thank the employees of Rigel Pharmaceuticals and their dedication to what we're trying to accomplish here. This was a substantial step forward this first half of the year, and we look forward to continuing that. Take care.

Speaker 4

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