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 SEPTEMBER 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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Securities registered pursuant to Section 12(b) of the Act:
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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 |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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As of November 2, 2023, there were
RIGEL PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
RIGEL PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
(In thousands)
As of | |||||||
September 30, 2023 |
| December 31, 2022 (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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Intangible asset, net | | ||||||
Operating lease right-of-use assets | | ||||||
Other assets |
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Total assets | $ | $ | |||||
Liabilities and stockholders’ deficit | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | | ||||
Accrued compensation |
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Accrued research and development |
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Revenue reserves and refund liability | | ||||||
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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Total liabilities | | | |||||
Commitments | |||||||
Stockholders’ 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’ deficit |
| ( |
| ( | |||
Total liabilities and stockholders’ deficit | $ | $ |
(1) | The balance sheet as of December 31, 2022 has been derived from the audited financial statements included in Rigel’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 7, 2023. |
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 September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
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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Selling, general and administrative |
| |
| | |
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Total costs and expenses |
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Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Interest income |
| |
| |
| |
| | ||||
Interest expense | ( | ( | ( | ( | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share, basic and diluted | ( | ( | ( | ( | ||||||||
Weighted average shares used in computing net loss per share, basic and diluted | | | | |
See Accompanying Notes to Condensed Financial Statements
4
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive gain (loss): | ||||||||||||
Net unrealized gain (loss) on short-term investments |
| |
| |
| |
| ( | ||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
See Accompanying Notes to Condensed Financial Statements
5
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(In thousands, except share amounts)
(unaudited)
Additional | Accumulated Other | Total | |||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Loss |
| Deficit |
| Deficit | ||||||
Balance as of January 1, 2023 |
| | $ | | $ | | $ | ( | $ | ( | $ | ( | |||||
Net loss |
| — | — | — | — | ( |
| ( | |||||||||
Net change in unrealized gain on short-term investments |
| — | — | — | | — |
| | |||||||||
Issuance of common stock upon exercise of options |
| | — | | — | — |
| | |||||||||
Issuance of common stock upon vesting of restricted stock units (RSUs) | | — | — | — | — | — | |||||||||||
Stock-based compensation expense |
| — | — | | — | — |
| | |||||||||
Balance as of March 31, 2023 |
| | | | ( | ( | ( | ||||||||||
Net loss |
| — | — | — | — | ( | ( | ||||||||||
Net change in unrealized gain on short-term investments |
| — | — | — | | — | | ||||||||||
Issuance of common stock upon exercise of options and participation in Purchase Plan |
| | | | — | — | | ||||||||||
Issuance of common stock upon vesting of RSUs | | — | — | — | — | — | |||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of June 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||
Net loss |
| — | — | — | — | ( | ( | ||||||||||
Net change in unrealized gain on short-term investments |
| — | — | — | | — | | ||||||||||
Issuance of common stock upon exercise of options |
| | — | | — | — | | ||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of September 30, 2023 |
| | $ | | $ | | $ | ( | $ | ( | $ | ( |
Additional | Accumulated 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 RSUs | | — | — | — | — | — | |||||||||||
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 RSUs | | — | — | — | — | — | |||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of June 30, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | ( | ||||||
Net loss |
| — | — | — | — | ( | ( | ||||||||||
Net unrealized gain on short-term investments |
| — | — | — | | — | | ||||||||||
Stock-based compensation expense |
| — | — | | — | — | | ||||||||||
Balance as of September 30, 2022 |
| | $ | | $ | | $ | ( | $ | ( | $ | ( |
See Accompanying Notes to Condensed Financial Statements
6
RIGEL PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine Months Ended September 30, | |||||||
2023 |
| 2022 | |||||
Operating activities | |||||||
Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Stock-based compensation expense |
| ||||||
Loss (gain) on sale and disposal of fixed 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 |
| ( | ( | ||||
Revenue reserves and refund liability | | ||||||
Other accrued liabilities |
| ( | |||||
Lease liability | ( | ( | |||||
Deferred revenue | ( | ( | |||||
Other current and long-term liabilities |
| ( |
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Net cash provided by (used in) operating activities |
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| ( | ||||
Investing activities | |||||||
Maturities of short-term investments |
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Purchases of short-term investments |
| ( | ( | ||||
Purchases of intangible asset |
| ( | — | ||||
Proceeds from sale of property and equipment | | ||||||
Purchases of property and equipment |
| — | ( | ||||
Net cash provided by investing activities |
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Financing activities | |||||||
Net proceeds from term loan financing | | ||||||
Net proceeds from issuances of common stock upon exercise of options and participation in Purchase Plan |
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Cost share payments to a collaboration partner | ( | ( | |||||
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 |
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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 therapies that significantly improve the lives of patients with hematologic disorders and cancer. We focus on products that address 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 and the United Kingdom (UK) (as TAVLESSE), and in Canada, Israel and Japan (as TAVALISSE) for the treatment of chronic ITP in adult patients.
Our second FDA approved product is REZLIDHIA® (olutasidenib) capsules for the treatment of adult patients with relapsed or refractory (R/R) acute myeloid leukemia (AML) with a susceptible isocitrate dehydrogenase-1 (IDH1) mutation as detected by an FDA-approved test. We began our commercialization of REZLIDHIA in December 2022. We in-licensed olutasidenib from Forma Therapeutics, Inc. (now Novo Nordisk), with exclusive, worldwide rights for its development, manufacturing and commercialization.
We continue to advance the development of our interleukin receptor-associated kinase (IRAK) 1/4 inhibitor program, in an open-label, Phase 1b trial to determine the tolerability and preliminary efficacy of the drug in patients with lower-risk myelodysplastic syndrome (MDS) who are refractory or resistant to prior therapies.
We have a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor program in clinical development with our partner Eli Lilly and Company (Lilly). We also 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, 2022 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, 2022 filed with the SEC on March 7, 2023.
8
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.
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, 2022. There have been no material changes to these accounting policies.
Liquidity
As of September 30, 2023, 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
Recently issued accounting guidance is either not applicable or did not have, or is not expected to have, a material impact to us.
2. | Net Loss Per Share |
Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net 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, RSUs 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 using 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 potential shares of common stock that were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 |
| 2022 | 2023 |
| 2022 | |||||||
Outstanding stock options | ||||||||||||
RSUs | ||||||||||||
Purchase Plan | ||||||||||||
Total |
9
3. | Revenues |
Revenues disaggregated by category were as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2023 |
| 2022 | 2023 |
| 2022 | |||||||
Product sales: | ||||||||||||
Gross product sales | $ | $ | $ | |||||||||
Discounts and allowances | ( | ( | ( | ( | ||||||||
Total product sales, net | | | | | ||||||||
Revenues from collaborations: | ||||||||||||
License revenues | — | — | — | | ||||||||
Development milestones | | — | | | ||||||||
Royalty, delivery of drug supplies and others | ||||||||||||
Total revenues from collaborations | | | | | ||||||||
Government contract | — | | | | ||||||||
Total revenues | $ | | $ | | $ | | $ | |
Revenue from product sales are related to sales of our commercial products, TAVALISSE and REZLIDHIA, to our specialty distributors. For detailed discussions of our revenues from collaboration and government contract, see “Note 4 – Sponsored Research and License Agreements and Government Contract.”
Our net product sales include gross product sales, net of chargebacks, discounts and fees, government and other rebates and returns. Of the total discounts and allowances from gross product sales for the nine months ended September 30, 2023 and 2022, $
Chargebacks, | Government | |||||||||||
Discounts and | and Other | |||||||||||
Fees | Rebates | Returns | Total | |||||||||
Balance as of January 1, 2023 |
| $ | | $ | | $ | | $ | | |||
Provision related to current period sales | | | | | ||||||||
Credit or payments made during the period | ( | ( | ( | ( | ||||||||
Balance as of September 30, 2023 |
| $ | | $ | | $ | | $ | |
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 September 30, 2022 |
| $ | | $ | | $ | | $ | |
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 September 30, | Nine Months Ended September 30, | ||||||||||||
2023 |
| 2022 | 2023 |
| 2022 | ||||||||
McKesson Specialty Care Distribution Corporation | |||||||||||||
Cardinal Healthcare | |||||||||||||
ASD Healthcare and Oncology Supply | |||||||||||||
Kissei | * | * | * |
10
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 September 30, 2023, 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 Grifols territory which includes Europe, the UK, Turkey, the Middle East, North Africa and Russia (including Commonwealth of Independent States); with Kissei Pharmaceutical Co., Ltd. (Kissei) to develop and commercialize fostamatinib in Kissei territory which includes 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 Medison territory which includes Canada and Israel; and with Knight Therapeutics International SA (Knight) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Knight territory which includes 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 receptor tyrosine kinase (AXL) inhibitors in oncology, and with Daiichi to pursue research related to murine double minute 2 (MDM2) inhibitors, a novel class of drug targets called ligases.
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 September 30, 2023, total future contingent payments to us under all of the above existing agreements, excluding terminated agreements, could exceed $
Global Exclusive License Agreement with Lilly
We have a global exclusive license agreement and strategic collaboration with Lilly (Lilly Agreement) entered in February 2021, which became effective on March 27, 2021, upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, to develop and commercialize R552 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 Lilly Agreement, we granted Lilly the exclusive rights to develop and commercialize R552 and related RIPK1 inhibitors in all indications worldwide. The parties’ collaboration is governed through a joint governance committee and appropriate subcommittees.