Rigel Pharmaceuticals, Inc. — Q3 2017 Form 10-Q
Reporting period: Three and nine months ended September 30, 2017. Rigel is a clinical-stage biotechnology company developing small-molecule medicines for immune and hematological disorders, cancer, and rare diseases. Its lead program, fostamatinib, was under FDA review for chronic or persistent immune thrombocytopenia (ITP).
Financial performance and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Collaboration revenue | $0.9 | $3.8 | $4.5 | $17.4 |
| Research and development expense | $10.8 | $16.2 | $34.7 | $51.8 |
| General and administrative expense | $7.9 | $4.6 | $23.2 | $13.8 |
| Operating loss | $17.9 | $22.7 | $53.4 | $54.0 |
| Net loss | $17.7 | $22.6 | $52.1 | $53.6 |
| Net loss per share, basic and diluted | $0.14 | $0.24 | $0.43 | $0.58 |
- At September 30, cash, cash equivalents, and short-term investments totaled $68.1 million, versus $74.8 million at December 31, 2016. Current assets were $69.6 million and current liabilities $15.0 million. No borrowings are shown on the balance sheet.
- For the first nine months, operating cash use was $57.8 million, investing cash provided $15.8 million, and financing cash provided $50.3 million. Financing included $43.0 million net proceeds from the February stock offering and $5.7 million from the Cantor sales agreement. Cash and cash equivalents increased $8.2 million to $25.9 million.
- Accumulated deficit was $1.113 billion. Facilities lease commitments totaled $54.1 million; the company expected $23.0 million of sublease income through January 2023.
Changes versus prior comparable periods
- Collaboration revenue fell substantially: the 2016 periods included amortization of the $30.0 million Bristol Myers Squibb upfront payment, fully recognized by September 2016. 2017 revenue primarily reflected BerGenBio’s $3.3 million Phase 2 milestone and other license payments.
- R&D expense declined, mainly due to the 2016 workforce reduction, lower facility and stock-compensation costs, and completion of the pivotal ITP Phase 3 trials; NDA-related costs partly offset the decline.
- G&A expense rose as Rigel prepared for a potential fostamatinib commercial launch. The $5.8 million restructuring charge recorded in Q3 2016 did not recur in 2017.
- Net loss improved year over year, while the nine-month operating loss was broadly similar. The 2017 nine-month results included a $0.7 million gain on disposal of assets.
Outlook, developments, and risks
- The FDA accepted the fostamatinib ITP NDA in June 2017 and set an April 17, 2018 action date. In October, the FDA indicated it was not currently planning an ODAC meeting and that its review was proceeding on the standard timeline. Approval was not assured: one of the two pivotal FIT trials missed its primary endpoint, and the FDA could request additional analyses or trials.
- Rigel intended to commercialize fostamatinib in U.S. ITP itself in 2018, subject to approval, and pursue partners for Europe and Asia. Management expected launch preparation to increase G&A in Q4 2017 and 2018; Q4 R&D was expected to remain relatively consistent with prior quarters.
- Management said September 30 resources were sufficient for current and projected needs, including a potential U.S. launch, for at least 12 months. This estimate was subject to uncertainty; the company expected to need significant additional funding over time, with possible equity dilution, debt covenants, or licensing of rights.
- After quarter-end, Rigel completed an October underwritten offering of 20.815 million shares at $3.35 per share, yielding approximately $65.3 million net, and terminated its Cantor sales agreement. The October proceeds were not included in September 30 balances.
- Other pipeline updates: enrollment in the second cohort of the fostamatinib IgAN Phase 2 study was completed, with results expected in the first half of 2018. Preliminary AIHA Stage 1 results reported a 35% response rate (6 of 17); the company said the data required further verification and planned Stage 2 enrollment. Rigel also expected to initiate clinical trials for an IRAK program in the first half of 2018.
- Key risks include regulatory uncertainty, clinical-trial failure or delay, commercialization and reimbursement challenges, competition, reliance on third-party manufacturers and collaborators, and continuing cash burn. Potential collaboration milestone receipts are contingent on partners’ future achievements and may never occur. The filing reported no legal proceedings under Item 1.
Important facts for investors to verify
- FDA review progress, the April 17, 2018 action date, and any additional information or trial requirements for the fostamatinib NDA.
- Commercial launch spending, uptake and reimbursement prospects, and the resulting cash-burn rate if fostamatinib is approved.
- Post-quarter offering proceeds, updated cash runway, share count, and potential dilution from equity awards or future financing.
- Subsequent results and verification of the IgAN and AIHA programs, plus progress toward the IRAK clinical program.
- Timing and likelihood of collaboration milestones and royalties, which management cautioned were uncertain and outside Rigel’s control.