UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 30,
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
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organization) |
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
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| Name of each exchange on which registered: |
The Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Non-accelerated filer ☐ | Smaller reporting company | |||
Emerging Growth Company |
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As of July 29, 2022, there were
RIGEL PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
RIGEL PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
(In thousands)
June 30, | December 31, | |||||
2022 |
| 2021(1) | ||||
(unaudited) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | $ | | |||
Short-term investments |
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Accounts receivable, net |
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Inventories | |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use asset | | |||||
Other assets |
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$ | $ | |||||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | $ | | |||
Accrued compensation |
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Accrued research and development |
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Other accrued liabilities |
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Lease liabilities, current portion | | | ||||
Deferred revenue | | | ||||
Other long-term liabilities, current portion | | | ||||
Total current liabilities |
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Long-term portion of lease liabilities |
| — |
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Loans payable, net of discount | | | ||||
Other long-term liabilities |
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Commitments | ||||||
Stockholders’ equity (deficit): | ||||||
Preferred stock |
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Common stock |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
| ( |
| ( | ||
Accumulated deficit |
| ( |
| ( | ||
Total stockholders’ equity (deficit) |
| ( |
| |||
$ | $ | |||||
| (1) | The balance sheet as of December 31, 2021 has been derived from the audited financial statements included in Rigel’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (SEC) on March 1, 2022. |
See Accompanying Notes to Condensed Financial Statements
3
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Revenues: | ||||||||||||
Product sales, net | $ | | $ | | $ | | $ | | ||||
Contract revenues from collaborations | | | | | ||||||||
Government contract | — | | — | | ||||||||
Total revenues | | | | | ||||||||
Costs and expenses: | ||||||||||||
Cost of product sales | | | | | ||||||||
Research and development |
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| | |
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Selling, general and administrative |
| |
| | |
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Total costs and expenses |
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Income (loss) from operations |
| ( |
| ( |
| ( |
| |||||
Interest income |
| |
| |
| |
| | ||||
Interest expense | ( | ( | ( | ( | ||||||||
Income (loss) before income taxes | ( | ( | ( | |||||||||
Provision for (benefit from) income taxes | — | ( | — | | ||||||||
Net income (loss) | $ | ( | $ | ( | $ | ( | $ | |||||
Net income (loss) per share | ||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | | ||||
Diluted | $ | ( | $ | ( | $ | ( | $ | | ||||
Weighted average shares used in computing net income (loss) per share | ||||||||||||
Basic | | | | | ||||||||
Diluted | | | | | ||||||||
See Accompanying Notes to Condensed Financial Statements
4
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net income (loss) | $ | ( | $ | ( | $ | ( | $ | | ||||
Other comprehensive income (loss): | ||||||||||||
Net unrealized gain (loss) on short-term investments |
| ( |
| |
| ( |
| | ||||
Comprehensive income (loss) | $ | ( | $ | ( | $ | ( | $ | |||||
See Accompanying Notes to Condensed Financial Statements
5
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share amounts)
(unaudited)
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Loss |
| Deficit |
| Equity (Deficit) | ||||||
Balance as of January 1, 2022 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Net loss |
| — | — | — | — | ( |
| ( | |||||||||
Net unrealized loss on short-term investments |
| — | — | — | ( | — |
| ( | |||||||||
Issuance of common stock upon exercise of options |
| | — | | — | — |
| | |||||||||
Issuance of common stock upon vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Stock-based compensation expense |
| — | — | | — | — |
| | |||||||||
Balance as of March 31, 2022 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Net loss |
| — | — | — | — | ( | ( | ||||||||||
Net unrealized loss on short-term investments |
| — | — | — | ( | — | ( | ||||||||||
Issuance of common stock upon exercise of options and participation in Purchase Plan |
| | | | — | — | | ||||||||||
Issuance of common stock upon vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of June 30, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Loss |
| Deficit |
| Equity | ||||||
Balance as of January 1, 2021 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Net income |
| — | — | — | — | |
| | |||||||||
Net unrealized gain on short-term investments |
| — | — | — | | — |
| | |||||||||
Issuance of common stock upon exercise of options |
| | | | — | — |
| | |||||||||
Stock-based compensation expense |
| — | — | | — | — |
| | |||||||||
Balance as of March 31, 2021 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Net loss |
| — | — | — | — | ( | ( | ||||||||||
Net unrealized gain on short-term investments |
| — | — | — | | — | | ||||||||||
Issuance of common stock upon exercise of options and participation in Purchase Plan |
| | | | — | — | | ||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of June 30, 2021 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
See Accompanying Notes to Condensed Financial Statements
6
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Six Months Ended June 30, | ||||||
2022 |
| 2021 | ||||
Operating activities | ||||||
Net income (loss) | $ | ( | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||
Stock-based compensation expense |
| |||||
Gain on disposal of assets | ( | — | ||||
Depreciation and amortization |
| |||||
Non-cash interest expense | | |||||
Net amortization and accretion of discount on short-term investments and term loan | ||||||
Changes in assets and liabilities: | ||||||
Accounts receivable, net |
| ( | ( | |||
Inventories | | ( | ||||
Prepaid and other current assets |
| ( | ||||
Other assets |
| ( | ||||
Right-of-use assets |
| | ||||
Accounts payable |
| ( | ( | |||
Accrued compensation |
| ( | ( | |||
Accrued research and development |
| ( | ||||
Other accrued liabilities |
| |||||
Lease liability | ( | ( | ||||
Deferred revenue | ( | |||||
Other current and long-term liabilities |
| |
| — | ||
Net cash provided by (used in) operating activities |
| ( |
| | ||
Investing activities | ||||||
Purchases of short-term investments |
| ( | ( | |||
Maturities of short-term investments |
| | ||||
Proceeds from disposal of assets | | — | ||||
Capital expenditures |
| ( | ( | |||
Net cash provided by (used in) investing activities |
|
| ( | |||
Financing activities | ||||||
Cost share advance from collaboration partner | — | |||||
Cost share payment to a collaboration partner | ( | — | ||||
Net proceeds from issuances of common stock upon exercise of options and participation in Purchase Plan |
| | ||||
Net proceeds from term loan financing | | — | ||||
Net cash provided by financing activities |
| |
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Net increase in cash and cash equivalents |
| |
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Cash and cash equivalents at beginning of period |
| | ||||
Cash and cash equivalents at end of period | $ | $ | ||||
Supplemental disclosure of cash flow information | ||||||
Interest paid | $ | $ | | |||
See Accompanying Notes to Condensed Financial Statements
7
Rigel Pharmaceuticals, Inc.
Notes to Condensed Financial Statements
(unaudited)
In this report, “Rigel,” “we,” “us” and “our” refer to Rigel Pharmaceuticals, Inc.
1. | Organization and Summary of Significant Accounting Policies |
Description of Business
We are a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with hematologic disorders, cancer and rare immune diseases. Our pioneering research focuses on signaling pathways that are critical to disease mechanisms. Our first product approved by the US Food and Drug Administration (FDA) is TAVALISSE® (fostamatinib disodium hexahydrate) tablets, the only approved oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment. The product is also commercially available in Europe, United Kingdom (UK) (TAVLESSE) and Canada (TAVALISSE) for the treatment of chronic ITP in adult patients.
Our portfolio also includes olutasidenib, an oral, small molecule inhibitor of mutated isocitrate dehydrogensase-1 (mIDH1) being investigated for the treatment of relapsed/refractory acute myeloid leukemia (R/R AML) and other malignancies. We in-licensed olutasidenib from Forma Therapeutics, Inc. (Forma) with exclusive, worldwide rights to develop, manufacture, and commercialize the investigational agent. See “Note 12 – Subsequent Events” for further discussion.
We conducted a Phase 3 clinical trial evaluating fostamatinib for the treatment of warm autoimmune hemolytic anemia (wAIHA); Fostamatinib is also currently being studied in a Phase 3 clinical trial for the treatment of hospitalized high-risk patients with COVID-19; and a National Institute of Health (NIH)/National Heart, Lung, and Blood Institute (NHLBI) sponsored Phase 3 trial (ACTIV-4 Host Tissue Trial) for the treatment of COVID-19 in hospitalized patients.
Our other clinical programs include our interleukin receptor-associated kinase (IRAK) inhibitor program and a receptor-interacting serine/threonine-protein kinase (RIPK1) inhibitor program in clinical development with partner Eli Lilly and Company (Lilly). In addition, we have product candidates in clinical development with partners BerGenBio ASA (BerGenBio) and Daiichi Sankyo (Daiichi).
Basis of Presentation
Our accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (US GAAP), for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933, as amended (Securities Act). Accordingly, they do not include all the information and notes required by US GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that we believe are necessary to fairly state our financial position and the results of our operations and cash flows. Interim-period results are not necessarily indicative of results of operations or cash flows for a full-year or any subsequent interim period. The balance sheet as of December 31, 2021 has been derived from audited financial statements at that date but does not include all disclosures required by US GAAP for complete financial statements. Because certain disclosures required by US GAAP for complete financial statements are not included herein, these interim unaudited condensed financial statements and the notes accompanying them should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.
8
Significant Accounting Policies
Our significant accounting policies are described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” to our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to these accounting policies.
Liquidity
As of June 30, 2022, we had approximately $
Based on our current operating plan, we believe that our existing cash, cash equivalents, and short-term investments will be sufficient to fund our expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of this Form 10-Q.
Recently Issued Accounting Standards
No new accounting guidance adopted during the period. Recently issued accounting guidance is not applicable or did not have, or is not expected to have, a material impact to us.
2. | Net Income (Loss) Per Share |
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period and the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive securities include stock options, restricted stock units and shares issuable under our Employee Stock Purchase Plan (Purchase Plan). The dilutive effect of these potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.
The following table sets forth the computation of basic and diluted earnings per share (in thousands except per share amounts):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
EPS Numerator: | |||||||||||||
Net income (loss) | $ | ( | $ | ( | $ | ( | $ | ||||||
EPS Denominator—Basic and Diluted: | |||||||||||||
Weighted-average common shares outstanding |
|
|
|
| |||||||||
EPS Denominator—Diluted: | |||||||||||||
Weighted-average common shares outstanding |
| ||||||||||||
Dilutive effect of stock options, restricted stock units and shares under Purchase Plan |
| — | — | — | | ||||||||
Weighted-average shares outstanding and common stock equivalents |
|
|
|
| |||||||||
Net income (loss) per share | |||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | | |||||
Diluted | $ | ( | $ | ( | $ | ( | $ | | |||||
9
The potential shares of common stock that were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been antidilutive are as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2022 |
| 2021 | 2022 |
| 2021 | |||||||
Outstanding stock options | ||||||||||||
Restricted stock units | ||||||||||||
Total | ||||||||||||
3. | Revenues |
Revenues disaggregated by category were as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2022 |
| 2021 | 2022 |
| 2021 | |||||||
Product sales: | ||||||||||||
Gross product sales | $ | $ | $ | |||||||||
Discounts and allowances | ( | ( | ( | ( | ||||||||
Total product sales, net | | | | | ||||||||
Revenues from collaborations: | ||||||||||||
License revenues | ||||||||||||
Development milestones | | — | | — | ||||||||
Research and development services and others | ||||||||||||
Total revenues from collaborations | | | | | ||||||||
Government contract | — | | — | | ||||||||
Total revenues | $ | | $ | | $ | | $ | | ||||
Our net product sales include sales of TAVALISSE in the US, net of chargebacks, discounts and fees, government and other rebates and returns. The following tables summarize the activities in chargebacks, discounts and fees, government and other rebates and returns that were accounted for within other accrued liabilities, for each of the periods presented (in thousands):
Chargebacks, | Government | |||||||||||
Discounts and | and Other | |||||||||||
Fees | Rebates | Returns | Total | |||||||||
Balance as of January 1, 2022 |
| $ | | $ | | $ | | $ | | |||
Provision related to current period sales | | | | | ||||||||
Credit or payments made during the period | ( | ( | ( | ( | ||||||||
Balance as of June 30, 2022 |
| $ | | $ | | $ | | $ | | |||
Chargebacks, | Government | |||||||||||
Discounts and | and Other | |||||||||||
Fees | Rebates | Returns | Total | |||||||||
Balance as of January 1, 2021 |
| $ | |
| $ | | $ | | $ | | ||
Provision related to current period sales | | | | | ||||||||
Credit or payments made during the period | ( | ( | ( | ( | ||||||||
Balance as of June 30, 2021 |
| $ | | $ | | $ | | $ | | |||
Of the $
10
Of the $
For detailed discussions of our revenues from collaboration and government contract, see “Note 4 – Sponsored Research and License Agreements and Government Contract” below.
The following table summarizes the percentages of revenues from each of our customers who individually accounted for 10% or more (wherein * denotes less than 10%) of the total net product sales and revenues from collaborations:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2022 |
| 2021 | 2022 |
| 2021 | ||||||||
McKesson Specialty Care Distribution Corporation | |||||||||||||
Kissei | * | * | |||||||||||
Cardinal Healthcare | * | ||||||||||||
ASD Healthcare and Oncology Supply | |||||||||||||
Lilly | * | * | |||||||||||
4. | Sponsored Research and License Agreements and Government Contract |
Sponsored Research and License Agreements
We conduct research and development programs independently and in connection with our corporate collaborators. As of June 30, 2022, we are a party to collaboration agreements with Lilly to develop and commercialize R552, a RIPK1 inhibitor, for the treatment of non-central nervous system (non-CNS) diseases and collaboration aimed at developing additional RIPK1 inhibitors for the treatment of central nervous system (CNS) diseases; with Grifols S.A. (Grifols) to commercialize fostamatinib for human diseases in all indications, including chronic ITP and autoimmune hemolytic anemia (AIHA), in Europe and Turkey; with Kissei Pharmaceutical Co., Ltd. (Kissei) to develop and commercialize fostamatinib in Japan, China, Taiwan and the Republic of Korea; with Medison Pharma Trading AG (Medison Canada) and Medison Pharma Ltd. (Medison Israel and, together with Medison Canada, Medison) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Canada and Israel, respectively; and with Knight Therapeutics International SA (Knight) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Latin America, consisting of Mexico, Central and South America, and the Caribbean (Knight territory).
Further, we are also a party to collaboration agreements, but do not have ongoing performance obligations with BerGenBio for the development and commercialization of AXL inhibitors in oncology, and with Daiichi to pursue research related to MDM2 inhibitors, a novel class of drug targets called ligases. We have an agreement with AstraZeneca AB (AZ) for the development and commercialization of R256, an inhaled JAK inhibitor. In December 2021, AZ provided a notice to terminate the agreement effective April 19, 2022 and returned to us the full rights to our propriety JAK inhibitor.
Under the above existing agreements that we entered into in the ordinary course of business, we received or may be entitled to receive upfront cash payments, payments contingent upon specified events achieved by such partners and royalties on any net sales of products sold by such partners under the agreements. As of June 30, 2022, total future contingent payments to us under all of above existing agreements, excluding terminated or terminating agreements, could exceed $
11
Global Exclusive License Agreement with Lilly
On February 18, 2021, we entered into a global exclusive license agreement and strategic collaboration with Lilly (Lilly Agreement), which became effective on March 27, 2021, to develop and commercialize R552, a RIPK1 inhibitor, for the treatment of non-CNS diseases. In addition, the collaboration is aimed at developing additional RIPK1 inhibitors for the treatment of CNS diseases. Pursuant to the terms of the license agreement, we granted to Lilly exclusive rights to develop and commercialize R552 and related RIPK1 inhibitors in all indications worldwide. The agreement became effective in March 2021 upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The parties’ collaboration is governed through a joint governance committee and appropriate subcommittees.
We are responsible for
We are responsible for performing and funding initial discovery and identification of CNS disease development candidates. Following candidate selection, Lilly will be responsible for performing and funding all future development and commercialization of the CNS disease development candidates.
Under the terms of the license agreement, we were entitled to receive a non-refundable and non-creditable upfront cash payment amounting to $