TG Therapeutics - Q2 2023

Transcript

Operator (participant)

Greetings. Welcome to the TG Therapeutics second quarter 2023 financial results and business update call. 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 star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Bosco. Thank you, Ms. Bosco. You may begin.

Jenna Bosco (Chief Communications Officer)

Thank you. Welcome, everyone, and thanks for joining us this morning. I am Jenna Bosco, with me today to discuss this morning's news of our ex-US commercialization partner, as well as the results for the second quarter of 2023, are Michael Weiss, our Chairman and Chief Executive Officer; Adam Waldman, our Chief Commercialization Officer; and Sean Power, our Chief Financial Officer. Following our safe harbor statement, Mike will provide an overview of today's news as well as our recent corporate developments. Adam will give an update on our commercialization efforts, and Sean will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session. Before we begin, I'd like to remind everyone that we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements about our anticipated future operating and financial performance, including sales performance, projected milestones, and expectations for our marketed and pipeline products. TG cautions that these forward-looking statements are subject to risks that may cause our actual results to differ materially from those indicated. Factors that may affect TG Therapeutics operations include various risk factors that can be found in our SEC filings. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This conference call is being recorded for audio rebroadcast on TG's website, www.tgtherapeutics.com, where it will be available for the next 30 days. Now, I would like to turn the call over to Mike Weiss, our CEO.

Michael Weiss (Chairman and CEO)

Thanks, Jenna. Good morning, everyone, and thanks for joining us on today's call. We are excited to present to you our second quarter 2023 financial results, representing the first full quarter of BRIUMVI sales, which, like the first quarter of 2023, exceeded our expectations. Before I do, I want to kick off today's call by highlighting this morning's news relating to our agreement for ex-US commercialization of BRIUMVI. As you may recall, in June, BRIUMVI was approved in the European Union to treat adult patients with relapsing forms of MS who have active disease defined by clinical or imaging features. Today, we are very happy to announce that we've entered into an ex-US commercialization agreement for BRIUMVI with Neuraxpharm, a leading European specialty pharmaceutical company focused on the treatment of central nervous system disorders or CNS disorders.

We are very excited to be partnering with them to launch BRIUMVI in Europe. Their neurology-focused approach, broad European platform, and entrepreneurial organization really resonated with us as an attractive partner for BRIUMVI and TG. Neuraxpharm has over 35 years of experience in the CNS space, a direct presence in 20 European countries, and an extensive commercial CNS team. In addition, they have committed to add over 100 additional field-based commercial and medical MS specialists dedicated to BRIUMVI. Moreover, they have the backing of one of the preeminent global private equity firms, Permira. For all of these reasons, we are confident in their ability to succeed in making BRIUMVI a leading treatment for patients with RMS worldwide.

From a deal perspective, the terms provide us with many important benefits that we were seeking when evaluating potential ex-US partnerships, including a meaningful upfront payment, which, together with a near-term milestone, total over $150 million, solidifying our balance sheet. We're also eligible to receive up to an additional $500 million in milestone payments based on the achievement of certain launch and commercial objectives, for a total deal value at up to approximately $650 million. We will also receive tiered double-digit royalties on net product sales, up to 30%, which we think provides significant participation in the success of BRIUMVI in Europe and the rest of the world.

Lastly, and very importantly, as part of the deal, we retain strategic flexibility in the event of an acquisition of TG within the next two years, with an option to buy back all rights under the commercialization agreement. As we noted previously, retaining this type of strategic flexibility was core to our considering an ex-US transaction, and NeuraxPharm and their backers appreciated that need. In exchange, Neuraxpharm will have the exclusive right to commercialize BRIUMVI in territories outside the United States, Canada, and Mexico, which we have retained, and excluding certain Asian countries, which we had previously partnered. As I said earlier, we are very excited to partner with Neuraxpharm and believe they are well positioned to successfully launch BRIUMVI in Europe, which we expect to commence in Germany in the next 6 months.

With that, let me touch upon the U.S. BRIUMVI launch efforts, which remains our primary focus. As a reminder, BRIUMVI received U.S. FDA approval late last year and officially launched at the end of January of this year as the first and only anti-CD20 monoclonal antibody to treat patients with relapsing forms of MS that can be administered in a 1-hour infusion twice per year following the starting dose. I'm delighted to share that we experienced significant growth in revenues and prescriptions over the first quarter of this year, illustrating what we believe is strong early demand for BRIUMVI. Equally noteworthy is the breadth of centers and providers willing to embrace this new treatment option, demonstrating the trust and confidence they have in BRIUMVI and TG.

Our early performance is a testament to the dedication and passion of our entire TG team, who have relentlessly worked to bring BRIUMVI to patients with RMS. The enthusiasm for BRIUMVI continues to build, and the feedback we have received continues to encourage us that the unique attributes of BRIUMVI are supportive of its best-in-class potential, including its glycoengineering for efficient B-cell depletion, lowest reported annualized relapse rates of any CD20 monoclonal antibody in MS phase 3 trials, and a rapid and reliable 1-hour infusion. As we move into the third quarter, we believe we are building a solid foundation for future BRIUMVI growth. We continue to see adoption from both major academic centers and community centers and believe that that adoption will continue to grow, especially now that we have a permanent J code in place and improving insurance coverage for BRIUMVI.

All of these factors, along with the continuing growth of the CD20 market within the overall MS treatment landscape, further strengthen our confidence in the future potential of BRIUMVI. I'll stop there as our Chief Commercialization Officer, Adam Waldman, will join us shortly to provide more detailed launch metrics. As you can hear, I'm extremely impressed with the progress the team has made to date and look forward to an impactful second half of 2023. Before I turn the call over to Adam, I just want to touch briefly on TG's cash position. Following the Neuraxpharm transaction, we have pro forma cash balance of approximately $285 million. Given our relatively stable OpEx and growing revenues, we believe we now have sufficient capital to fund our operations into the foreseeable future without the need to raise additional capital.

Of course, this projection is subject to many variables, but suffice to say, as of today, we are confident with our cash position. With that, let me turn the call over to Adam Waldman, our Chief Commercialization Officer, to share some additional color on our first full quarter of launch. Adam?

Adam Waldman (Chief Commercialization Officer)

Yep. Thank you, Mike. Good morning, everybody. Before I jump into the quarter results in the US, let me start by saying how excited I am to be partnering Neuraxpharm to launch BRIUMVI in Europe and other markets around the world. They share our entrepreneurial mindset and urgency and will undoubtedly make BRIUMVI a top priority. From a commercial perspective, I am very impressed with their capabilities, expertise, and presence in the neurology space, and I believe they will do an excellent job accelerating the launch and quickly bringing BRIUMVI to patients around the world. As far as the US performance in the second quarter, which, as Mike mentioned, is our first full, full quarter in the market, we are very pleased with the progress we're seeing with BRIUMVI, and we continue to exceed our internal expectations.

We have built positive momentum in the first half of the year and encouraged by the launch trajectory to date, with second quarter net sales for BRIUMVI of $16 million, representing over 100% growth quarter-over-quarter. Key highlights from the quarter include increases in patient demand growth, where we saw daily average hub enrollments nearly double quarter-over-quarter, with greater than 800 BRIUMVI prescriptions coming through our hub in the second quarter, bringing our launch-to-date total to more than 1,200 new patient scripts. As we have mentioned in the past, we believe this figure, figure is capturing 80%-90% of the total new scripts written. While it is challenging to determine the exact number, we saw dramatic increases in new patient infusion, infusions in the second quarter. Importantly, patient and physician feedback continues to be overwhelmingly positive.

In our market research, the majority of BRIUMVI prescribers report having very positive experience so far, with nearly all patients completing the 1-hour infusions as expected. We also continue to increase our breadth of adoption, adding more than 100 plus incremental accounts and over 170 incremental prescribers, bringing the total to over 225 accounts and over 340 prescribers launched to date. This includes both academic and community centers across all regions of the U.S. At this point, we have seen a high percentage of our initially targeted accounts prescribe BRIUMVI, and we intend to broaden our focus in the 2nd half of the year. We also continue to see broad utilization across patient types, including newly diagnosed and switches that are both new to CD20 and from other CD20s. Importantly, we have received...

We have, importantly, the feedback we've received from customers on the unique profile of BRIUMVI continues to be encouraging. We routinely hear that the predictability of the 1-hour infusion, combined with the annualized relapse rate of less than 0.1, are important differentiators for BRIUMVI. Through our market research, we have also found the vast majority of BRIUMVI prescribers plan to increase their use of BRIUMVI over the next six months. We've launched with a focused strategy to maximize our market opportunity with a nimble and experienced team who are producing early results. Neurologist perceptions of TD rep performance is outstanding and outpaces our competition on almost all attributes. The team is actively engaging with accounts and has shown strong share of voice among customers on par with leading MS therapies. I'm extremely proud of the team's performance to date and their continued commitment to the MS community.

Our growing patient demand in the form of enrollments and new patient infusions, increasing, increasing breadth of adoption by prescribers and centers and an effective J-code as of July 1st, we believe puts us in great position into the going into the second half of the year. I'm also very pleased to report that we now have achieved payer coverage for approximately 80% of commercial and Medicare lives, giving us coverage for BRIUMVI at parity with Ocrevus across the vast majority of these plans. If you recall, our corporate goal was to achieve 80% coverage by the end of the year. Accomplishing that by mid-year far exceeds our expectations and is a testament to the attractiveness of BRIUMVI to payers and the strong, strong efforts of our market access team. We also made solid, solid progress in the quarter, securing additional institutional formulary coverage.

While many of these institutions have been slower moving than we had anticipated, we expect they will increase adoption into the second half of the year. Following a strong start in Q1, this was another very solid quarter for the BRIUMVI launch. We continue to make progress across all fronts and believe BRIUMVI offers a best-in-class profile. We continue to see MS specialists expand their use of CD20s and anticipate this trend will continue, given the therapeutic index of the drugs in this class, and further believe IV therapies will continue to lead the market. We now have a permanent J-code in effect, which helps on reimbursement. Payer coverage is significantly ahead of schedule, and major health systems have added and are continuing to add BRIUMVI to their formularies.

While we still have a lot of work to do, we are really pleased with the progress we've made in Q2. With that, I'll now turn the call over to Sean Power, our CFO.

Sean Power (CFO)

Thank you, Adam. Thanks everyone for joining us. Earlier this morning, we reported our detailed second quarter 2023 financial results, which can be viewed on the Investors and Media section of our website. I'd like to begin today's call by touching on our cash position. As we released earlier this morning and highlighted by Mike, we are pleased to report that the ex-U.S. commercialization agreement with Neuraxpharm contains an upfront cash payment of $140 million and additional near-term cash milestones of approximately $12.5 million. During the second quarter, we were also able to take advantage of favorable market conditions to bolster our balance sheet and raised approximately $46 million in net proceeds from the utilization of our ATM facility at an average price of approximately $34.

All told, we ended the second quarter with approximately $145 million in cash, and when accounting for the $140 million upfront payment, have a current pro forma cash balance of approximately $285 million. We believe our current capital, when coupled with modest BRIUMVI revenue assumptions, will take us out into the foreseeable future without the need to raise incremental capital. Turning to some of the other key financial metrics for the quarter. First, as Adam previously reported, we are pleased to announce $16 million in BRIUMVI net sales in our first full, full quarter since launch, representing 100% growth over the first quarter of 2023, and $23.8 million in cumulative net sales since launch.

As for our broader financial results, our net loss for the second quarter of 2023, excluding non-cash items, was approximately $35.1 million, roughly in line with the first quarter of 2023, where we saw a net loss of $32.4 million when excluding non-cash items. Our GAAP net loss for the second quarter of 2023 was approximately $47.6 million, or $0.34 per share, compared to a GAAP net loss of $40.5 million, or $0.30 per share in the second quarter of 2022. With that, I will now turn the call back over to the conference operator to begin the Q&A.

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is from Eric Joseph with JPMorgan. Please proceed with your question.

Eric Joseph (Senior Analyst)

Good morning. Thanks for taking the questions. Can you, can you talk a little bit about the, the cadence of new prescriptions for BRIUMVI over the course of 2Q and throughout July to date? I'm curious to know whether the demand curve is accelerating, plateauing, is it choppy? And then are you, are you seeing a material impact so far from now having the J-code in place?

Sean Power (CFO)

Yeah. Thanks, Eric. Adam, you want to go ahead and tackle that?

Adam Waldman (Chief Commercialization Officer)

Yeah, I would characterize it as, as steady growth. I, I would say, you know, we saw a little bit of a slowdown in the July 4th week, you know, which is a down week, I think, across the board. We've seen acceleration since. That said, you know, we wouldn't expect, you know, an immediate impact on the J-code. It takes time for this J-code to get loaded into payer systems, loaded into the institutional systems. We do believe it's a net positive. We do believe that it will, will lead to continued growth, and will lead to more pickup of BRIUMVI, but it will take time, as I think I've said, in the past.

Eric Joseph (Senior Analyst)

Okay, that's helpful. Maybe just a follow-up, if I could. Just when it comes to your updated cash guidance, right, having being funded through operations for the foreseeable future, can you just talk about what that encompasses, if anything, beyond BRIUMVI commercialization in the U.S.? Does it anticipate any further development of the product, perhaps for other indications or formulations? Thanks.

Michael Weiss (Chairman and CEO)

Yeah, thanks, Eric. Yeah, it does. I mean, we are continuing to evaluate the subcu formulation of BRIUMVI, so that's also included in that. We've got our eye on potentially additional clinical studies for BRIUMVI. We've got some other. We've obviously got the BTK inhibitor in our portfolio that we're evaluating. We're kind of waiting to see what the data looks like from some of the competitive products to see if there's an avenue for us to move forward there. We've, we've said, and we continue to be active in looking at new opportunities, and all of that would, would be included in that cash guidance. None of it would be so material to impact where we're going, which, you know, appears to be quarter-over-quarter, our net loss should continue to decline.

Eric Joseph (Senior Analyst)

Great. Thanks for taking the questions.

Michael Weiss (Chairman and CEO)

Thanks, Eric.

Operator (participant)

Thank you. Our next question is from Ed White with H.C. Wainwright. Please proceed with your question.

Edward White (Managing Director and Senior Biotechnology Analyst)

Good morning. Congratulations on the second quarter sales and also on the deal announced this morning.

Michael Weiss (Chairman and CEO)

Thanks, Ed.

Edward White (Managing Director and Senior Biotechnology Analyst)

You're welcome, Mike. Just two questions for me. First, Mike, I just wanted to get your thoughts on the Ocrevus subcutaneous phase III data and the potential impact that will have on the market, and, you know, where you are as far as you had just mentioned your subcutaneous formulation. The second question I have is just for Sean. You know, the R&D was up dramatically sequentially in the second quarter. I just wanted to get your thoughts on R&D expenses over the second half of the year.

Michael Weiss (Chairman and CEO)

Great. Thanks, Ed. Yeah, so, so Ocrevus subcu. You know, a few points on that. Obviously, it, it's made somewhat of a splash among the investment community, which I find interesting in that it wasn't a surprise, right? This has been telegraphed for quite some time that this data was coming. I think the data that they presented is in line with what one would expect from a top-line data release. I do think that the details of, what's the expression? The devil's in the details. We all look forward to seeing the detailed data presentation. I do know that there's a pain measure, I think it's a co-primary endpoint, so we'll, we'll be interested to see what that pain level looks like. Anecdotally, we, we have heard that pain associated with the subcu can be significant in some patients.

I think we're, we're all in a position of waiting to see what the actual profile of that product looks like. I think as we sit here today, BRIUMVI, with its 1-hour infusion, is the, is the gold standard for convenience and efficacy in the CD20 space. I think the, the, the fact that folks are excited and potentially interested, and the fact that Roche is excited and interested in a faster and more convenient, I'll call it a quote, unquote, "infusion option," since it's, it's not a, a rapid infuse, you know, it's not a simple subcu similar to, to Kesimpta, but it's a process which will take 10 to 15 minutes.

It will require significant nursing attention to get that in, which we think also will deter from centers getting too excited potentially about using it as a more efficient product. There's nothing more efficient than setting up an hour infusion for multiple patients and sitting there. We do think that BRIUMVI is setting the standard. We're excited that investors and our competitors are excited about it, trying to improve the patient experience and try to compete with us in that patient experience. For the next year or more, we're gonna have a monopoly on that, that part of the market, and potentially longer, and we'll see what their product looks like. I think overall to us, it's all net positive.

I think it highlights the fact that there is a need in the marketplace for a more convenient product, and BRIUMVI is, is the gold standard today. Sean, do you want to tackle that R&D difference?

Sean Power (CFO)

Yeah, sure. Good morning, Ed. Thanks for, thanks for the question. The increase in R&D over the first quarter of 2023 relates primarily to a milestone due to LFB on the EU approval of BRIUMVI at $6 million.

Edward White (Managing Director and Senior Biotechnology Analyst)

Great. Thank you for taking my questions.

Eric Joseph (Senior Analyst)

Thanks, Ed.

Operator (participant)

Thank you. Our next question is from Roger Song with Jefferies. Please proceed with your question.

Roger Song (Senior Equity Research Analyst)

Great. Thanks for taking the question. Maybe Mike, if you can, to give us a little bit color around the ex-US deal regarding the buyback options. What's the term associated? For example, what will be the valuation for the buyback, and, will that be tied to the commercialization results? Thank you.

Michael Weiss (Chairman and CEO)

Sure. Thanks for the question, Roger. Yeah, the buyback option is, is basically designed to provide Neurax a, a return essentially on investment. Whatever they pay us, we basically will pay them back that amount plus a return on their investment. We think it's, we think it's a very reasonable approach. We think it accounts for the risk that they're taking in, in building out what they need to build out to commercialize and building out the market for us and then losing that. But it's also not punitive at all, that would inhibit our ability to conduct a strategic transaction.

Roger Song (Senior Equity Research Analyst)

Got it. Yeah, that's helpful. Then in terms of the sales, we all track IQVIA and the Symphony. Seems the number, in terms of dollar value, are pretty on track from, at least from Symphony. We know you're market this through the specialty and you have your own hub. How should we think about reconciliation of, you know, multiple third-party database versus your Q-on-Q sales numbers? Thank you.

Michael Weiss (Chairman and CEO)

Yeah. I'll take a quick crack at this, and I'll, I'll let Adam talk as well, speak on this as well. You know, we've been cautioning all along that trying to create some sort of reconciliation between Symphony or IQVIA and our numbers at this point is not a useful endeavor. We have said that we believe that over time, once we have several quarters to maybe more than several quarters of utilization, that we'll reach what I've, what I've described as steady state. At that point, I think people can probably take that data and try to use a, a multiplier effect or some sort of algorithm to calculate the, what the sales are going to be. But since we're so early in the launch, I think that's a pretty dangerous game to play.

We've warned everyone, multiple times publicly, in every setting we can, that that's, that's not a good idea at this point, to try to gauge. Having said that, you know, we, you know, net sales for the quarter were ahead of our expectations. We're ahead of all of Wall Street's expectations, honestly, until about two days ago. We think it was a very good quarter. We're obviously super excited about it. We're right on track of where we want to be. It's, it's obviously a little disheartening when folks somehow, you know, change the consensus two days before the reporting and then assume that it was a bad quarter.

Similarly, to, to use Symphony numbers to try to gauge, what that, that, that sales number is going to be. Again, I, I just like I said, we, we find that to be, a very dangerous game to play, and we've said that multiple times. On that note, I'll let Adam add some more color there.

Adam Waldman (Chief Commercialization Officer)

Sure. I mean, Roger, thanks for the question. If you look at other IV products, including in the MS space, you know, you'll see the ratio between Symphony and IQVIA, and reported net sales is often highest in the launch quarter. You know, I think it can be, and it, and it does come down often. As we've said, it can be perhaps helpful in understanding directional trends, but it does a poor job capturing, launch dynamics that all new products experience. And as I've said, and I think Mike has said, it doesn't capture sales through our direct channel. We've also said that that's going to be highly variable quarter to quarter, especially in the beginning, as people figure out how they want to purchase. And that, that will also impact the ratio between Symphony sales and net sales.

Again, we recommend not using Symphony or IQVIA as a way to estimate our quarterly net sales going forward. I hope that helps.

Roger Song (Senior Equity Research Analyst)

Excellent. Thank you. That's it from us.

Adam Waldman (Chief Commercialization Officer)

Thanks, Roger.

Operator (participant)

Thank you. Our next question is from Mayank Mamtani with B. Riley Securities. Please proceed with your question.

Mayank Mamtani (Senior Managing Director)

Good morning, team. Thanks for taking the questions. Just to quickly follow up on, you know, questions previously asked, if you could comment on inventory on average held by distributors and offices and also on those, some of those launch metrics, what % you're tracking for, you know, free drug sampling? Lastly, if you could comment on, you know, the TRX volume split between newly diagnosed versus switch patients, that would be super helpful.

Michael Weiss (Chairman and CEO)

Adam, you want to tackle this one?

Adam Waldman (Chief Commercialization Officer)

Sure. I mean, inventory is, is within, you know, industry standards. There's no, no, no surprises there and, pretty much what you would expect. As far as the free goods, you know, we, we had free goods of about 20% in the quarter. The majority of that is through our Quick Start program, and as we said before, that, that is a program to get patients started. Eventually, our hope is that they would convert to commercial product at some point in the future. As far as the, you know, the patient mix, we haven't said. We're still not in a position yet, I don't think, to, to comment on the percentages. What we have said is we've seen a nice distribution.

Michael Weiss (Chairman and CEO)

... across all 3 segments, both, you know, newly diagnosed and switches, both from CD20s and, and non-CD20. I think that covered the question.

Mayank Mamtani (Senior Managing Director)

Great. Thank you for that comprehensive answer. Maybe, Mike, if you could comment on, you know, the bidding process for the ex-US deal and would be really helpful to understand, how much, you know, the, the sort of competitive nature of MS marketplace, you know, especially in context of, you know, BTK inhibitors coming down the pipe. Also, obviously, you commented on subcu. Like, how much of that is sort of, you know, part of that discussion? 'Cause, 'cause obviously, you know, your partners or future, even strategics would want to, you know, incorporate that as part of the long-range planning. Thanks for taking our questions.

Michael Weiss (Chairman and CEO)

Yeah, thanks. You know, look, we, we've said for quite a while that we're going to do the analysis on whether we should go it alone in Europe or we should seek a partner. To help us evaluate that and make that decision, we engaged with JPMorgan to run a what I think was a very professional, very competitive process to see what kind of economics we can get on an ex-US deal. It was, it was a competitive process. Neuraxpharm was clearly the most eager and hungry and provided us with the best economic terms, but also we felt the best overall terms in terms, you know, especially with respect to the strategic flexibility that the deal offers us.

The combination of the deal terms, the economic terms, plus the buyback option, really made the Neuraxpharm the top choice. I think culturally, they're a great fit with us. You know, I think we'll be able to work closely with them. I, I think we can help them with what we've learned in the U.S. I think, you know, in terms of their ability to execute on this plan, I, I... we're feeling very confident and very good about it. Really, to us, the deal kind of offered us everything we wanted. It's almost a hybrid way of getting BRIUMVI to the market as quickly as possible without cutting off our strategic options. That was the process, and like I said, it was very competitive.

In terms of, the BTKs or the subcu, you know, I, I think most folks are, are, are quite comfortable with the, what that competitive landscape is going to look like in the future in terms of the real risk of BTK and the real risk of, of subcu. I don't think that was a major consideration in, in the process.

Mayank Mamtani (Senior Managing Director)

Maybe just one more question, Mike. If, you know, on the guidance, at, at some point, I think you had mentioned, you know, you might be 1, 2, 3 quarters away from maybe, you know, having a good idea of what demand looks like to, to be able to, you know, put out a guidance number. Like, we would love to hear your most recent thoughts on that and if, if that could come into the picture at some point.

Michael Weiss (Chairman and CEO)

Yeah, I mean, in terms of U.S. revenue guidance, Mayank? When we might be.

Mayank Mamtani (Senior Managing Director)

Yes.

Michael Weiss (Chairman and CEO)

in a position to do that? Yeah, I mean, again, I, I, I, I think we are. What I've said in the past is probably, you know, going into next year, we'll be in a much better position to, to give some sort of guidance. I think for the remainder of this year, we're going to keep to our, you know, to ourselves, and we're going to keep working on it. You know, I think, like I said, this quarter we, we exceeded our expectations. We exceeded the street expectations until about two days ago when they changed. Short of that, we feel like we're, we're on track, and we're doing, doing great in terms of where we're, we're heading.

Yeah, my guess is that we'll, we'll probably, you know, wait to get this whole year under our belt. We'll get a good sense of, of how, you know, how the, how the sales are tracking. One, we'll know how many patients we treated in 2023, which will give us a base case for 2024. We'll know where we are in terms of new patient starts in the fourth quarter of 2023, which will help us start to think about what the first quarter of 2024 will look like in terms of new patient starts. I think we'll, we'll just have a lot more information to be in a better position to, to do that. We'll also understand the dynamics.

You know, we're still so early on in this process. We, we, we don't have the full dynamics of, of prescription to the hub, to total prescriptions, to total infusions, right? Because, you know, at the early phases, it's going to take longer to go from prescription to vein. As that compresses over, over the next few quarters, then once we have that piece of information also, that will help us give a better sense of, you know, how long and where those revenues are going to fall. I, I just think it's, it's so early. We're literally in our first full quarter. I think, you know, we're, we're quite happy. Again, you know, we've got a lot of centers that have tried the drug.

We've got a lot of physicians that have tried the drug, and things are going quite well, and there's so much untapped potential here. Even within those centers, you know, many of those centers have multiple providers, and perhaps only one or two of those providers are already involved in BRIUMVI, and we think that, that should grow. There's still, unfortunately, and I think Adam touched on this, there's still many centers where formulary, internal formulary process just takes much longer than, than we anticipated. There's a, a lot of major centers that are still yet to, to be able to prescribe BRIUMVI. We think that's a, a nice area that, that we'll see some nice growth going forward. Again, I think we're, we're on the right trajectory that, that we expected.

When we get to the end of the year, as we get into next year, I think we'll be in a better position to, to, to give some guidance.

Mayank Mamtani (Senior Managing Director)

Makes a lot of sense. Again, congrats on the progress and look forward to an equally exciting second half.

Michael Weiss (Chairman and CEO)

Thanks, Man. Appreciate it.

Operator (participant)

Thank you. Our next question is from Michael DiFiore with Evercore. Please proceed with your question.

Michael DiFiore (Director and Equity Research Analyst)

Hi, guys. Thanks so much for taking my question and congrats on all the progress. A few from me. Number one, how should we think about uptake and adoption in the EU, just considering the back-end loaded nature of the deal? I have two follow-ups.

Michael Weiss (Chairman and CEO)

Yeah. Adam, you want to tackle that uptake and adoption in the EU?

Adam Waldman (Chief Commercialization Officer)

Yeah. You know, as you know, Michael, thanks for the question. As you know, you know, Europe is a country-by-country approach, each country having a slightly different reimbursement timeline. I think Germany is first, and then we will layer in other countries as they come aboard from a reimbursement standpoint. That process does take some time and will play out over, you know, the next year to 2 in terms of getting up to full speed in Europe. Hopefully that answers the question. Thanks.

Michael DiFiore (Director and Equity Research Analyst)

Okay. Also separately, in the past, you said that among MS patients opting for anti-CD20 treatments, roughly 30% prefer subQ. My question is: How do you see this changing over the next 12 months as Alzheimer's therapies gradually encroach on the infusion chair capacity? Could this 30% figure increase as it gets harder and harder for patients to schedule chair time?

Michael Weiss (Chairman and CEO)

Yeah, I mean, I think that plays, you know, into, into the BRIUMVI value proposition. Again, if you're, if you're an infuser, you want to optimize your infusion suite. And I, I would assume instead of sending out patients for subcu, you'd, you'd prefer to keep them in-house. There's again, there's a lot of good reasons. I hear it all the time, the, the doctors want to know the patient's getting the infusion. The sending out for subcu, we think, is, is not the first alternative. We think the first alternative is going to be switching all your patients from Ocrevus to BRIUMVI to free up the chair time, and see how that goes. Again, we think this is something that will really play into, into our favor.

I, I mean, I assume there will be some uptick in subQ as a result, but I also think there'll be a, a nice uptick in, in BRIUMVI use for that same very reason. Again, if you're going to optimize your infusion suite to the best that you can, and certainly, moving patients from Ocrevus to BRIUMVI in that setting, if that's what you're trying to achieve and getting more patients in, then we think that's a, a nice tailwind for us.

Michael DiFiore (Director and Equity Research Analyst)

finally, just any comments on gross to net metrics during Q2? Has it changed from the 70%-75% that you cited in Q1?

Adam Waldman (Chief Commercialization Officer)

I don't know. Yeah, it was largely in line with Q1.

Michael DiFiore (Director and Equity Research Analyst)

Thank you.

Operator (participant)

Thank you. Our next question is from Prakhar Agrawal with Cantor Fitzgerald. Please proceed with your question.

Prakhar Agrawal (Director)

Hi, good morning, and thanks for taking my questions. I had a question on the quarter. The 800 prescriptions in the BRIUMVI hub that you reported in 2Q. There seems to be a lag between prescriptions and the revenue reported. Could you help us bridge that gap? What is causing the lag? Is it the percentage paid Rx's? Gross net seems to be stable, like, any color you could provide on that. Would you expect permanent J-code to improve the conversion from prescriptions to patient infusions? I had a follow-up.

Michael Weiss (Chairman and CEO)

Adam, you want to take a crack?

Adam Waldman (Chief Commercialization Officer)

Sure. Yeah, I think, thanks for the question. I think, as we've said in the past, there is a time lag between when a script comes into the hub and when you get the actual infusion. I believe what we said is even Ocrevus, that's, you know, 5 years into the market, they're averaging around 6 weeks. You know, we continue to look at our, our, you know, time frame and, you know, it's in that range. And hopefully will compress over time, as we continue to get more insurance coverage. I don't think the J-code will necessarily affect that. It'll give people more confidence around reimbursement, but the increased insurance coverage and confidence around insurance coverage should help as we smooth out the process.

Over time, that, that number should come down.

Prakhar Agrawal (Director)

Okay. Thanks, Adam. Secondly, if the subcutaneous Ocrevus safety tolerability looks good, do you have any plans for subcutaneous formulation for BRIUMVI?

Michael Weiss (Chairman and CEO)

Yeah. we've, we've said on multiple calls that we are evaluating the physical biological properties of, of our material around a subcu and to, to understand what is feasible. With, with BRIUMVI in a, in a subcu. That is, that work is ongoing as we speak, and we're going to make a determination, you know, at some point toward the end of the year, early next year, of, of what, what we, what we might do with that, assuming we have a profile that we think makes sense. But, you know, I think to, to the Ocrevus subcu point, I don't know that we've seen all the, the safety and tolerability data. I think it would be premature to say that it, that it looks, it looks good.

I think we, we haven't seen that data, and we're looking forward to seeing it, and I assume we will see that at ECTRIMS. The jury is still out on what the exact profile of the Ocrevus subQ and what that will look like and what the patient experience will be. Like I said, anecdotally, we do hear, you know, that there's some possibility of pain and, of course, pain is a co-primary endpoint. It'll be interesting to see how that pain endpoint stacks up against placebo.

Adam Waldman (Chief Commercialization Officer)

Thank you.

Michael Weiss (Chairman and CEO)

Thank you.

Operator (participant)

Thank you. Our next question is from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Matt Kaplan (Managing Director)

Hey, guys. Good morning, and thanks for taking the question. Just wanted to follow up a little bit on the ex-US deal. Can you give us a little bit more color on the $500 million+ in milestones? What, what would trigger those and, and how those could roll out?

Michael Weiss (Chairman and CEO)

Yeah, absolutely. Sean, you want to take a crack at that?

Sean Power (CFO)

Yeah, sure. Good morning, Matt. As you, as you may expect, they're, they're mostly, mostly tied to sales milestones in the U.S., escalating on a tiered basis. Beyond that, not providing a whole lot more detail at this point.

Matt Kaplan (Managing Director)

Okay. Then, then, Sean, similarly for the, for the royalty, tiered royalty up to 30%, how, how, how should we think about that? How does that work?

Sean Power (CFO)

I'd say sort of in a similar fashion, Matt. Escalating from double digits up to 30% is sort of what we're guiding at the moment.

Matt Kaplan (Managing Director)

Okay. Okay, thanks. Then I guess maybe for, for Adam, can you give us some more detail on the feedback that you're hearing from the different stakeholders, the payers, the doctors, patients, and, and also infusion centers, current feedback that you're getting, with, for BRIUMVI?

Adam Waldman (Chief Commercialization Officer)

Yeah, sure. Thanks for the question, Matt. Yes, you know, from a payer perspective, I think the proof is in the pudding, with 80% coverage now. You know, they're talking with their policies, and I think we're in good shape there. Patient feedback has been very positive in terms of the infusion time and ability to get in and out of the center. Infusion centers have been very impressed with the overall tolerability and the efficiency that BRIUMVI provides. Doctors have given us great feedback in terms of, you know, the efficacy of the drug, and the 1-hour infusion as being attractive, as I mentioned in my remarks. I would say across the board, we're getting very positive and consistent feedback.

Matt Kaplan (Managing Director)

All right. Great. Well, thanks for taking the questions and congrats on the ex-US deal.

Michael Weiss (Chairman and CEO)

Thanks, Matt. Appreciate it.

Operator (participant)

Thank you. We have reached the end of our question-and-answer session, and with that, I would like to turn the floor back over to CEO Michael Weiss for closing comments.

Michael Weiss (Chairman and CEO)

Great. Thank you. On behalf of all the senior management team on this call today, I want to thank all of our shareholders for their continued support and to the entire TG team for their tireless efforts in support of the MS community. As we've mentioned a few times today, we, we do believe that BRIUMVI has set a high bar for activity and convenience in the treatment of MS, with the goal of permitting folks with MS to live their best lives. It's really what we're here for, and we work toward it every day, and I know everyone at the company feels the same way. With that, we are looking forward to a great and exciting second half, and thanks again for joining us and have a great day.

Operator (participant)

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