Rigel Pharmaceuticals, Inc.

RIGL

US7665597024

Pharmaceuticals

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Sep. 05	Rigel Announces First Patient Enrolled in Phase 1b/2 Triplet Therapy Trial of REZLIDHIA® (olutasidenib) in mIDH1 AML	CI
Sep. 05	Kissei Acquires Rights to AML Drug Olutasidenib from Rigel	MT

RIGEL PHARMACEUTICALS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

August 04, 2020 at 04:31 pm EDT

This discussion and analysis should be read in conjunction with our financial
statements and the accompanying notes included in this report and the audited
financial statements and accompanying notes included in our Annual Report on
Form 10-K for the year ended December 31, 2019. Our financial results for the
three and six months ended June 30, 2020 are not necessarily indicative of
results that may occur in future interim periods or for the full fiscal year.



This Quarterly Report on Form 10-Q contains statements indicating expectations
about future performance and other forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act, that
involve risks and uncertainties. We usually use words such as "may," "will,"
"would," "should," "could," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "intend," or the negative of these terms or similar
expressions to identify these forward-looking statements. These statements
appear throughout this Quarterly Report on Form 10-Q and are statements
regarding our current expectation, belief or intent, primarily with respect to
our operations and related industry developments. Examples of these statements
include, but are not limited to, statements regarding the following: our
expectations regarding the impact of the global COVID-19 pandemic; our business
and scientific strategies; risks and uncertainties associated with the
commercialization and marketing of TAVALISSE; in the U.S. and in Europe; risks
that the FDA, EMA or other regulatory authorities may make adverse decisions
regarding fostamatinib; the progress of our and our collaborators' product
development programs, including clinical testing, and the timing of results
thereof; our corporate collaborations and revenues that may be received from our
collaborations and the timing of those potential payments; our expectations with
respect to regulatory submissions and approvals; our drug discovery
technologies; our research and development expenses; protection of our
intellectual property; sufficiency of our cash and capital resources and the
need for additional capital; and our operations and legal risks. You should not
place undue reliance on these forward-looking statements. Our actual results
could differ materially from those anticipated in these forward-looking
statements for many reasons, including as a result of the risks and
uncertainties discussed under the heading "Risk Factors" in Item 1A of Part II
of this Quarterly Report on Form 10-Q. Any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict which factors will arise. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.



Overview



We are a biotechnology company dedicated to discovering, developing and
providing novel small molecule drugs that significantly improve the lives of
patients with immune and hematologic disorders, cancer and rare diseases. Our
pioneering research focuses on signaling pathways that are critical to disease
mechanisms. Our first U.S. Food and Drug Administration (FDA) approved product
is TAVALISSE® (fostamatinib disodium hexahydrate), the only 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 has also been approved by the European Commission (EC)
for the treatment of chronic ITP in adult patients who are refractory to other
treatments and is marketed in Europe under the name TAVLESSE® (fostamatinib).
Fostamatinib is currently being studied in an investigator-sponsored trial (IST)
conducted by Imperial College London for the treatment of COVID-19 pneumonia.
Our clinical programs include a Phase 3 study of fostamatinib in warm autoimmune
hemolytic anemia (AIHA); a

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completed Phase 1 study of R835, a proprietary molecule from our interleukin
receptor associated kinase (IRAK 1/4) inhibitor program; and an ongoing Phase 1
study of R552, a proprietary molecule from our receptor-interacting protein
kinase (RIP1) inhibitor program. In addition, we have product candidates in
clinical development with partners BerGenBio ASA (BerGenBio), Daiichi Sankyo
(Daiichi), Aclaris Therapeutics (Aclaris), and AstraZeneca AB (AZ).



Business Update


In the first half of 2020, net product sales of TAVALISSE increased by 52% year
over year to $27.7 million. During the first six months, we experienced typical
first quarter reimbursement issues such as the resetting of co-pays and the
Medicare donut hole, and sales were also impacted negatively by the COVID-19
pandemic as further discussed below.



Due to the evolving effect of the COVID-19 global pandemic, resources have
been deployed to enable our field-based employees to continue to engage remotely
with health care providers.  These virtual engagements have enabled our field
team to support existing prescribers as well as partner with new prescribers to
identify appropriate patients for TAVALISSE.



In July 2020, we announced a Phase 2 IST with Imperial College London in order
to evaluate the efficacy of fostamatinib for the treatment of COVID-19
pneumonia. The IST is a two-stage, open label, controlled clinical trial with
patients randomized (1:1:1) to fostamatinib, ruxolitinib, or standard of care.
Treatment will be administered twice daily for 14 days and patients will receive
a follow-up assessment at day 14 and day 28 after the first dose. The primary
objective will be to determine the efficacy of fostamatinib and the efficacy of
ruxolitinib compared to standard of care to reduce the proportion of
hospitalized patients progressing from mild or moderate to severe COVID-19
pneumonia.



Recent in vitro studies led by the Amsterdam University Medical Center at the
University of Amsterdam, showed that R406, the active metabolite of
fostamatinib, blocked macrophage hyper-inflammatory responses to a combination
of immune complexes formed by anti-Spike IgG in serum from severe COVID-19
patients. Anti-Spike IgG levels are known to correlate with the severity of
COVID-19. These results suggest that by inhibiting anti-Spike IgG-mediated
hyperinflammation, R406 could potentially play a role in the prevention of
cytokine storms as well as pulmonary edema and thrombosis associated with severe
COVID-19.


Post-hoc data analysis from our Phase 3 clinical program, which highlights the
potential benefit of using TAVALISSE in earlier lines of therapy in adult
patients with chronic ITP was published in the British Journal of Haematology.
Inclusion in one of the leading peer-reviewed journals in the field of
hematology underscores the significance of the 78% (25/32) response rate defined
as at least one platelet count of at least 50,000/µL when TAVALISSE was used as
a second-line therapy in our Phase 3 clinical program. Adverse events were
manageable and consistent with those previously reported with fostamatinib. Our
sales force is now sharing this analysis with physicians.



Our FORWARD study, a pivotal Phase 3 clinical trial in warm AIHA has
enrolled 44 of the 90 patients targeted for enrollment. Currently, the FORWARD
study has over 90 active clinical trial sites established across 22 countries
and clinical trial sites have resumed screening patients after a temporary pause
due to the ongoing COVID-19 pandemic. We continue to evaluate enrollment timing
in light of COVID-19 impacts, and at this time, we are unable to provide an
update on anticipated enrollment completion.



In June 2020, at the European League Against Rheumatism (EULAR) 2020 E-Congress,
we presented two oral and two poster presentations highlighting its
investigational compound R835, a potent and selective inhibitor of both IRAK1
and IRAK4. In multiple pre-clinical rodent models of acute and chronic
inflammation, R835 administration resulted in reduced inflammation, and in Phase
1 trials, it showed encouraging pharmacokinetic (PK) properties.



In February 2020, we received a $20.0 million payment from Grifols. The payment
was received upon the EC approval of the MAA for fostamatinib for the treatment
of chronic ITP in adult patients who are refractory to other treatments. In
addition, as a result of the EC approval, the $25.0 million of the $30.0 million
upfront fee that we previously received from Grifols will no longer be repayable
by us to Grifols. Fostamatinib is marketed in Europe under

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the brand name TAVLESSE™ (fostamatinib). Grifols launched TAVLESSE™ in the UK
and Germany in July 2020, and expects to launch in Italy, Spain and France


in
2021.



We currently anticipate no disruption related to the COVID-19 pandemic in the
supply of TAVALISSE tablets and drug substance to meet the needs for our U.S.
ITP sales, as well as for our collaborative partners and clinical trials
worldwide.



With our cash and cash equivalents and short term investments as of June 30,
2020 of approximately $92.5 million and expected cash flow from operations, we
believe our sources of liquidity and capital will be sufficient to finance our
continued operations and growth strategy for at least the next twelve months. In
May 2020, we accessed the second $10.0 million tranche from our $60.0
million credit facility with MidCap. The facility provides us with access to an
additional $40.0 million which is subject to the achievement of certain
conditions. Additionally, on August 4, 2020, we entered into an Open Market Sale
AgreementSM (Sales Agreement) with Jefferies LLC (Jefferies), as our sole sales
agent, pursuant to which we may sell, from time to time, through Jefferies,
shares of our common stock having an aggregate offering price of up to $65.0
million. See "Other Information" in Item 5 of Part II of this Quarterly Report
on Form 10-Q for more information.



Management Update


On August 4, 2020, we announced the appointment of David Santos as our new
executive vice president and chief commercial officer. Mr. Santos is expected to
join us on August 10, 2020, and brings over 30 years of commercial experience in
the biopharmaceutical industry with companies such as Bristol-Meyers Squibb,
Lilly, Genentech, and most recently Jazz Pharmaceuticals, where he led the
Hematology/Oncology Business Unit. He has a robust track record of success in
sales and marketing leadership roles, building and commercial capabilities, and
growing brands in the hematology-oncology area, where he has spent most of


his
career.

Update on Current and Potential Future Impact of COVID-19 on our Business



The global COVID-19 pandemic has resulted, and is expected to continue to
result, in significant economic disruption, and has adversely affected and will
likely continue to adversely affect our business. As of the date of this filing,
significant uncertainty exists concerning the duration and severity of the
COVID-19 pandemic. We have undertaken, and plan to continue to undertake, safety
measures to keep our staff, patients, investigators and stockholderssafe and to
help the communities where we live and work reduce the number of people exposed
to the virus. We have previously implemented work-from-home policies for certain
employees and closed our office in South San Francisco requiring most of our
personnel, including our administrative employees to work remotely,
restricted on-site staff to only those personnel performing essential
activities. In March 2020, through our existing Crisis Management Team (CMT), we
also activated our business continuity plans to prevent or minimize business
disruption and ensure the safety and well-being of our personnel. Our CMT meets
regularly to assess the effectiveness of our business continuity plans and make
adjustments accordingly as COVID-19 continues to evolve. The ultimate impact of
the COVID-19 pandemic on our business and financial condition is highly
uncertain and subject to change, and as such, we cannot ascertain the full
extent of the impacts on our sales of our product, our ability to continue to
secure new collaborations and support existing collaboration efforts with our
partners and our clinical and regulatory activities.

Since the COVID-19 pandemic was declared, we have observed reduced
patient-doctor interactions and our representatives are having fewer visits with
health care providers, which negatively affected our product sales and may
continue to negatively affect our product sales in the future. Resources have
been deployed to enable our field team to have virtual engagements to support
existing prescribers as well as partner with new prescribers to identify
appropriate patients for TAVALISSE. As such, our field- based employees are
continuing to engage remotely with health care providers. Other commercial
related activities, such as our marketing programs, speaker bureaus, and market
access initiatives that were in live forums have been conducted virtually,
delayed or cancelled as a result of the COVID-19 pandemic.

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With respect to our supply chain, we currently do not anticipate significant
disruption in the supply chain for our commercial product, TAVALISSE. However,
we do not know the full extent of the impact on our supply chain if the COVID-19
pandemic continues and persists for an extended period of time. We currently
rely on third parties to, among other things, manufacture and ship our
commercial product, raw materials and product supply for our clinical trials,
perform quality testing and supply other goods and services to help manage our
commercial activities, our clinical trials and our operations in the ordinary
course of business. We have engaged actively with various elements of our supply
chain and distribution channel, including our customers, contract manufacturers,
and logistics and transportation provider, to meet demand for TAVALISSE and to
remain informed of any challenges within our supply chain. We continue to
monitor demand, and intend to adapt our plans as needed to continue to drive our
business and meet our obligations during the evolving COVID-19 pandemic.



With respect to clinical development, we have taken, and continue to take,
measures to implement remote and virtual approaches, including remote patient
monitoring where possible per recent FDA guidance and working with our
investigators for appropriate care of these patients in a safe manner consistent
with agency guidelines. We have a number of ongoing clinical trials, one of
which is a global Phase 3 clinical study in warm AIHA. A number of our clinical
trial investigators have paused, postponed or delayed new patient enrollment and
restricted site visits of existing patients enrolled, but since May 2020, some
have resumed patient screening. We are making decisions country-by-country to
minimize risk to the patients and clinical trial sites. We also rely heavily on
our clinical trial investigators to inform us of the best course of action with
respect to resuming of enrollment/screening considering the ability of sites to
ensure patient safety or data integrity. Patients already enrolled in our
studies continue to receive study drug, and we remain focused on supporting our
sites in providing care for these patients and providing continued
investigational drug supply. At this time, however, we cannot currently fully
forecast the scope of impacts that the COVID-19 pandemic may have on our ability
to continue to treat patients enrolled in our trials, enroll and assess new
patients, supply study drug, obtain complete data points in accordance with
study protocol and overall impact on clinical study results including the timing
thereof. In addition, our partner, Kissei, is currently conducting a Phase 3
clinical trial for fostamatinib in ITP in Japan the timing and completion of
which could be delayed due to the COVID-19 pandemic. The delays may potentially
delay future royalties on sales, as well as, receipt of future potential
milestones. At this time, however, we cannot fully forecast the scope of impacts
that the COVID-19 pandemic may have under our partnership with Kissei.



The COVID-19 pandemic has similarly affected our collaboration and licensing
partners for the commercialization of fostamatinib globally, as well as in
advancing our various clinical stage programs. We do not yet know the full
impact of such disruptions in our partners' ability to advance commercialization
of fostamatinib in the market and the timing of enrollment and completion of
various clinical trials being conducted by our collaboration partners.

See also the section titled "Risk Factors" in Item 1A of Part II of this Quarterly Report on Form 10-Q for additional information on risks and uncertainties related to the ongoing COVID-19 pandemic.





Our Product Portfolio

The following table summarizes our portfolio:





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                           [[Image Removed: Graphic]]



Commercial Product



TAVALISSE in ITP


Disease background. Chronic ITP affects an estimated 83,000 adult patients in
the U.S. In patients with ITP, the immune system attacks and destroys the body's
own platelets, which play an active role in blood clotting and healing. ITP
patients can suffer extraordinary bruising, bleeding and fatigue as a result of
low platelet counts. Current therapies for ITP include steroids, platelet
production boosters that imitate thrombopoietin (TPOs) and splenectomy.



Orally available fostamatinib program. Taken in tablet form, fostamatinib blocks
the activation of SYK inside immune cells. ITP is typically characterized by the
body producing antibodies that attach to healthy platelets in the blood stream.
Immune cells recognize these antibodies and affix to them, which activates the
SYK enzyme inside the immune cell, and triggers the destruction of the antibody
and the attached platelet. When SYK is inhibited by fostamatinib, it interrupts
this immune cell function and allows the platelets to escape destruction. The
results of our Phase 2 clinical trial, in which fostamatinib was orally
administered to 16 adults with chronic ITP, published in Blood, showed that
fostamatinib significantly increased the platelet counts of certain ITP
patients, including those who had failed other currently available agents.



Our fostamatinib for immune thrombocytopenia (FIT) Phase 3 clinical program had
a total of 150 ITP patients that were randomized into two identical
multi-center, double-blind, placebo-controlled clinical trials. The patients
were diagnosed with persistent or chronic ITP, and had blood platelet counts
consistently below 30,000 per microliter of blood. Two-thirds of the subjects
received fostamatinib orally at 100 mg twice daily (bid) and the other third
received placebo on the same schedule. Subjects were expected to remain on
treatment for up to 24 weeks. At week four of treatment, subjects who failed to
meet certain platelet counts and met certain tolerability thresholds could have
their dosage of fostamatinib (or corresponding placebo) increased to 150 mg bid.
The primary efficacy endpoint of this program was a stable platelet response by
week 24 with platelet counts at or above 50,000 per microliter of blood for at
least four of the final six qualifying blood draws. In August 2015, the FDA
granted our request for Orphan Drug designation for fostamatinib for the
treatment of ITP. In February 2020, Kissei was granted orphan drug designation
from the Japanese Ministry of Health, Labour and Welfare for R788 (fostamatinib)
in chronic ITP.



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In August 2016, we announced the results of the first FIT study, reporting that
fostamatinib met the study's primary efficacy endpoint. The study showed that
18% of patients receiving fostamatinib achieved a stable platelet response
compared to none receiving a placebo control (p=0.0261). In October 2016, we
announced the results of the second FIT study, reporting that the response rate
was 18%, consistent with the first study. However, one patient in the placebo
group (4%) achieved a stable platelet response, therefore the difference between
those on treatment and those on placebo did not reach statistical significance
(p=0.152) and the study did not meet its primary endpoint. Using the most
conservative sensitivity analysis, rather than the protocol's prespecified
analysis, one more patient in the second study is considered a non-responder,
resulting in 8 of 50 (16%) responders on fostamatinib (p = 0.256 vs. placebo).
When the data from both studies are combined, however, this difference is
statistically significant (p=0.007).



Patients from the FIT studies were given the option to enroll in a long-term
open-label extension study and receive treatment with fostamatinib, also a Phase
3 trial. A total of 123 patients enrolled in this study. All the patients who
responded to fostamatinib in the FIT studies and enrolled in the long-term
open-label extension study maintained a median platelet count of 106,500/uL at a
median of 16 months. In addition, there were 44 placebo non-responders that
enrolled in the long-term open-label extension study, 41 of which patients had
at least 12 weeks of follow-up. Of those, 9 patients (22%) have achieved a
prospectively defined stable platelet response, which is statistically
significant (p=0.0078) and similar to the response rate fostamatinib achieved in
the parent studies.



A stable response was defined as a patient achieving platelet counts of greater
than 50,000/uL on more than 4 of the 6 visits between weeks 14 and 24, without
rescue medication. In the post-study analysis we performed, a
clinically-relevant platelet response was defined to include patients achieving
one platelet count over 50,000/uL during the first 12 weeks of treatment, in
absence of rescue medication, but who did not otherwise meet the stable response
criteria. Once the platelet count of greater than 50,000/uL is achieved, a loss
of response was defined as two consecutive platelet counts of less than
30,000/uL in any subsequent visits. In the combined dataset of both stable and
clinically-relevant platelet responders for the FIT studies, the response rate
was 43% (43/101), compared to 14% (7/49) for placebo (p=0.0006).



In December 2019, we presented data at the 61st ASH Annual Meeting & Exposition
held in Orlando, Florida, which included the post-hoc data analysis we conducted
from a Phase 3 clinical program of TAVALISSE in adult patients with ITP. In this
analysis, 32 patients received fostamatinib as a second-line therapy, and 78%
(25/32) achieved ?1 platelet count of ?50,000/µL (without rescue therapy).



The most frequent adverse events were gastrointestinal-related, and the safety
profile of the product was consistent with prior clinical experience, with no
new or unusual safety issues uncovered.



TAVALISSE was approved by the FDA in April 2018 for the treatment of chronic ITP
in adult patients who have had an insufficient response to a previous treatment,
and successfully launched in the U.S. in May 2018. In January 2020, the EC
granted our MAA in Europe for fostamatinib for the treatment of chronic ITP in
adult patients who are refractory to other treatments. Grifols launched
TAVLESSETM in the UK and Germany in July 2020 and expects to launch in Italy,
Spain and France in 2021.

Commercial launch activities, including sales and marketing





A significant portion of our business operations were related to our commercial
launch activities for TAVALISSE. Specifically, our marketing and sales efforts
are focused on targeting hematologists and hematologist-oncologists in the
United States, who manage chronic adult ITP patients.



We have a fully integrated commercial team consisting of sales, marketing,
market access, and commercial operations functions. Our sales team promotes
TAVALISSE in the U.S. wherein, in the ordinary course of the business, we use
customary pharmaceutical company practices to market our products in the U.S.
and concentrate our efforts on hematologists and hematologists-oncologists.
TAVALISSE is sold initially through third-party wholesale distribution and
specialty pharmacy channels and group purchasing organizations before being
ultimately prescribed to patients. To facilitate our commercial activities in
the U.S., we also enter into arrangements with various third-parties, including
advertising agencies, market research firms and other sales-support-related
services as needed. We believe that our

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commercial team and distribution practices are adequate to ensure that our
marketing efforts reach our target customers and deliver our products to
patients in a timely and compliant fashion. Also, to help ensure that all
eligible patients in the U.S. have appropriate access to TAVALISSE, we have
established a comprehensive reimbursement and patient support program called
Rigel One Care (ROC). Through ROC, we provide co-pay assistance to qualified,
commercially insured patients to help minimize out-of-pocket costs and provide
free drug to uninsured or under-insured patients who meet certain clinical and
financial criteria. In addition, ROC is designed to provide comprehensive
reimbursement support services, such as prior authorization support, benefits
investigation and appeals support.

Competitive landscape for TAVALISSE


Our industry is intensely competitive and subject to rapid and significant
technological change. TAVALISSE is competing with other existing therapies. In
addition, a number of companies are pursuing the development of pharmaceuticals
that target the same diseases and conditions that we are targeting. For example,
there are existing therapies and drug candidates in development for the
treatment of ITP that may be alternative therapies to TAVALISSE.



Currently, corticosteroids remain the most common first line therapy for ITP,
occasionally in conjunction with intravenous immuglobulin (IVIg) or anti-Rh(D)
to help further augment platelet count recovery, particularly in emergency
situations. However, it has been estimated that frontline agents lead to durable
remissions in only a small percentage of newly-diagnosed adults with ITP.
Moreover, concerns with steroid-related side effects often restrict therapy to
approximately four weeks. As such, many patients progress to persistent or
chronic ITP, requiring other forms of therapeutic intervention. In long-term
treatment of chronic ITP, patients are often cycled through several therapies
over time in order to maintain a sufficient response to the disease.



Other approaches to treat ITP are varied in their mechanism of action, and there
is no consensus about the sequence of their use. Options include splenectomy,
thrombopoietin receptor agonists (TPO-RAs) and various immunosuppressants (such
as rituximab). The response rate criteria of the above-mentioned options vary,
precluding a comparison of response rates for individual therapies.



Even with the above treatment options, a significant number of patients remain
severely thrombocytopenic for long durations and are subject to risk of
spontaneous or trauma-induced hemorrhage. The addition of fostamatinib to the
treatment options could be beneficial since it has a different mechanism of
action than any of the therapies that are currently available. Fostamatinib is a
potent and relatively selective SYK inhibitor, and its inhibition of Fc
receptors and B-cell receptors of signaling pathways make it a potentially


broad
immunomodulatory agent.



Other products in the U.S. that are approved by the FDA to increase platelet
production through binding and TPO receptors on megakaryocyte precursors include
PROMACTA® (Novartis International AG (Novartis)), Nplate® (Amgen, Inc.) and
DOPTELET® (Swedish Orphan Biovitrum AB).

Fostamatinib in Global Markets

Fostamatinib in Europe/Turkey





In January 2019, we entered into an exclusive commercialization license
agreement with Grifols to commercialize fostamatinib for the treatment,
palliation, or prevention of human diseases, including chronic or persistent ITP
and AIHA, in Europe and Turkey. Pursuant to the terms of the license agreement,
Grifols has exclusive rights to commercialize, and non-exclusive rights to
develop, fostamatinib in Europe and Turkey. Grifols also received an exclusive
option to expand the territory under its exclusive and non-exclusive licenses to
include the Middle East, North Africa and Russia (including Commonwealth of
Independent States).



We are responsible for performing and funding certain development activities for
fostamatinib for ITP and AIHA and Grifols is responsible for all other
development activities for fostamatinib in such territories. We remain
responsible for the manufacture and supply of fostamatinib for all development
and commercialization activities under

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the agreement. In December 2019, we entered into a Drug Product Purchase
Agreement with Grifols wherein we agreed to supply and sell to Grifols the drug
product requested under an executed first and only purchase order until Grifols
enters into a supply agreement directly with a third-party drug product
manufacturer.



Under the terms of the agreement, we received an upfront cash payment of $30.0
million and will be eligible to receive regulatory and commercial milestones of
up to $297.5 million, which included a $20.0 million non-refundable payment
received in the first quarter of 2020, comprised of a $17.5 million payment for
EMA approval of fostamatinib for the first indication and a $2.5 million
creditable advance royalty payment due upon EMA approval of fostamatinib in the
first indication. We will also receive tiered royalty payments ranging from the
mid-teens to 30% of net sales of fostamatinib in Europe and Turkey. We retain
the global rights to fostamatinib outside the Kissei, Grifols and
Medison territories.

In January 2020, we received approval of our MAA for fostamatinib for the treatment of chronic ITP in adult patients who are refractory to other treatments. With this approval, we received a $20.0 million payment as described above. Grifols launched TAVLESSETM in the UK and Germany in July 2020 and expects to launch in Italy, Spain and France in 2021.





Fostamatinib in Japan/Asia

In October 2018, we entered into an exclusive license and supply agreement with
Kissei to develop and commercialize fostamatinib in all current and potential
indications in Japan, China, Taiwan and the Republic of Korea. Kissei is
a Japan-based pharmaceutical company addressing patients' unmet medical needs
through its research, development and commercialization efforts, as well as
through collaborations with partners.



Under the terms of the agreement, we received an upfront cash payment of $33.0
million, with the potential for an additional $147.0 million in development and
commercial milestone payments, and will receive product transfer price payments
in the mid to upper twenty percent range based on tiered net sales for the
exclusive supply of fostamatinib. Kissei receives exclusive rights to
fostamatinib in ITP and all future indications in Japan, China, Taiwan, and
the Republic of Korea. Rigel retains the global rights to fostamatinib outside
the Kissei, Grifols and Medison territories.



In September 2019, our collaboration partner, Kissei, initiated a Phase 3 trial
in Japan of fostamatinib in adult patients with chronic ITP. The efficacy and
safety of orally administered fostamatinib will be assessed by comparing it with
placebo in a randomized, double-blind study. Japan has the third highest
prevalence of chronic ITP in the world behind the U.S. and EU. In February 2020,
Kissei was granted orphan drug designation from the Japanese Ministry of Health,
Labour and Welfare for R788 (fostamatinib) in chronic ITP.



Fostamatinib in Canada/Israel



In October 2019, we entered into an exclusive commercialization license
agreements with Medison to commercialize fostamatinib in all potential
indications in Canada and Israel. Under the terms of the agreements, we will
receive an upfront payment of $5.0 million with the potential for approximately
$35.0 million in regulatory and commercial milestones. In addition, we will
receive royalty payments beginning at 30% of net sales. Under our agreement with
Medison for the Canada territory, we have the option to buy back all rights to
the product upon regulatory approval in Canada for the indication of AIHA. The
buyback provision if exercised would require both parties to mutually agree on
commercially reasonable terms for us to purchase back the rights, taking into
account Medison's investment and the value of the rights, among others.



Clinical Stage Programs



Fostamatinib-AIHA

Disease background. AIHA is a rare, serious blood disorder where the immune system produces antibodies that result in the destruction of the body's own red blood cells. Symptoms can include fatigue, shortness of breath, rapid



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heartbeat, jaundice or enlarged spleen. While no medical treatments are
currently approved for AIHA, physicians generally treat acute and chronic cases
of the disorder with corticosteroids, other immuno-suppressants, or splenectomy.
Research has shown that inhibiting SYK with fostamatinib may reduce the
destruction of red blood cells. This disorder affects an estimated 45,000
Americans annually, for whom no approved treatment options currently exist.



Orally available fostamatinib program. We completed our Phase 2 clinical trial,
also known as the SOAR study in patients with warm AIHA. This trial was an
open-label, multi-center, two-stage study that evaluated the efficacy and safety
of fostamatinib in patients with warm AIHA who had previously received treatment
for the disorder but have relapsed. The primary efficacy endpoint of this study
was to achieve increased hemoglobin levels by week 12 of greater than 10 g/dL,
and greater than or equal to 2 g/dL higher than baseline. In November 2019, we
announced updated data that in a Phase 2 open-label study of fostamatinib in
patients with warm AIHA, data showed that 44% (11/25) of evaluable patients met
the primary efficacy endpoint of a Hgb level >10 g/dL with an increase of ?2
g/dL from baseline by week 24. Including one late responder at week 30, the
overall response rate was 48% (12/25). Adverse events were manageable and
consistent with those previously reported with fostamatinib.



In March 2019, we initiated our warm AIHA pivotal Phase 3 clinical study of
fostamatinib, known as FORWARD study. The clinical trial protocol calls for a
placebo-controlled study of approximately 90 patients with primary or secondary
warm AIHA who have failed at least one prior treatment. The primary endpoint
will be a durable Hgb response, defined as Hgb > 10 g/dL and > 2 g/dL increase
from baseline and durability measure, with the response not being attributed to
rescue therapy.



In May 2019, we enrolled the first patient in the FORWARD study. We have
enrolled 44 patients of the 90 patients targeted for enrollment. Currently, the
FORWARD study has over 90 active clinical trial sites established across 22
countries and a number of clinical trial sites have resumed screening patients
after a temporary pause due to the ongoing COVID-19 pandemic. Given the
uncertainty of the COVID-19 pandemic, we are unable to provide an update on
anticipated enrollment completion.

In January 2018, the FDA granted our request for Orphan Drug designation for fostamatinib for the treatment of AIHA.

R835, an IRAK1/4 Inhibitor for Autoimmune and Inflammatory Diseases





Orally Available IRAK 1/4 Inhibitor Program. During the second quarter of 2018,
we selected R835, a proprietary molecule from our IRAK 1/4 preclinical
development program, for human clinical trials. This investigational candidate
was an orally administered, potent and selective inhibitor of IRAK1 and IRAK4
that blocks inflammatory cytokine production in response to toll-like receptor
(TLR) and the interleukin-1 (IL-1R) family receptor signaling. TLRs and IL-1Rs
play a critical role in the innate immune response and dysregulation of these
pathways can lead to a variety of inflammatory conditions including psoriasis,
rheumatoid arthritis, inflammatory bowel disease and gout (among others). R835
prevents cytokine release in response to TLR and IL-1R activation in vitro. R835
is active in multiple rodent models of inflammatory disease including psoriasis,
arthritis, lupus, multiple sclerosis and gout. Preclinical studies show that
R835 inhibits both the IRAK1 and IRAK4 signaling pathways, which play a key role
in inflammation and immune responses to tissue damage. Dual inhibition of IRAK1
and IRAK4 allows for more complete suppression of pro-inflammatory cytokine
release.



In October 2019, we announced results from a Phase 1 clinical trial of R835 in
healthy subjects to assess safety, tolerability, PK and pharmacodynamics. The
Phase 1 study was a randomized, placebo-controlled, double-blind trial in 91
healthy subjects, ages 18 to 55. The Phase 1 trial showed positive tolerability
and PK data as well as established proof-of-mechanism by demonstrating the
inhibition of inflammatory cytokine production in response to a
lipopolysaccharide (LPS) challenge.

R552, a RIP1 Inhibitor for Autoimmune and Inflammatory Diseases





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Orally Available RIP1 Inhibitor Program. R552, is a potent and selective
inhibitor of RIP1. RIP1 is believed to play a critical role in induction of
necroptosis. Necroptosis is a form of regulated cell death where the rupturing
of cells leads to the dispersion of their inner contents, which activates immune
responses and enhances inflammation.



Initial data from our ongoing Phase 1 in healthy volunteers suggests that R552
has an attractive PK and safety profile with a half-life of approximately 14
hours which may allow for once a day dosing. In preclinical studies, R552
prevented joint and skin inflammation in a RIP1-mediated murine model of
inflammation and tissue damage. In addition, we intend to search for a central
nervous system molecule to potentially advance into the clinic.

Investigator-Sponsored Clinical Program

Fostamatinib-COVID-19 Pneumonia

In July 2020, we announced a Phase 2 IST with Imperial College London to evaluate the efficacy of fostamatinib, our oral SYK inhibitor, for the treatment of COVID-19 pneumonia.


SYK is a key mediator of immunoreceptor signaling in a host of inflammatory
cells. Studies of severe acute respiratory syndrome (SARS) and other acute viral
respiratory infections suggest that the pathogenesis relies on a series of
SYK-dependent events involving activation of C-type lectin receptors (CLR) and
immunoglobulin Fcg receptors (FcgR) in multiple cell types. Such SYK-mediated
processes result in excessive cytokine and chemokine release, neutrophil
activation associated with extensive NETosis (a highly inflammatory and
thrombogenic type of cell death), and endothelial cell stimulation leading to
vascular endothelium leakage and edema in the lungs. Together, these events can
contribute to acute respiratory distress syndrome (ARDS), micro-thrombosis and
associated systemic complications.



A hallmark of severe COVID-19 are hypoxemia and a radiological pattern of acute
lung injury (ALI) that share features with ARDS. By inhibiting SYK, fostamatinib
may specifically inhibit the infiltration and activation of monocytes and
neutrophils in the lungs that are prominent in COVID-19.



Recent in vitro studies led by the Amsterdam University Medical Center at the
University of Amsterdam, showed that R406, the active metabolite of
fostamatinib, blocked macrophage hyper-inflammatory responses to a combination
of immune complexes formed by anti-Spike IgG in serum from severe COVID-19
patients. Anti-Spike IgG levels are known to correlate with the severity of
COVID-19. These results suggest that by inhibiting anti-Spike IgG-mediated
hyperinflammation, R406 could potentially play a role in the prevention of
cytokine storms, as well as pulmonary edema and thrombosis associated with
severe COVID-19.



In addition, researchers at The Broad Institute of the Massachusetts Institute
of Technology (MIT) and Harvard led a recent screen to identify FDA-approved
compounds that reduce mucin-1 (MUC1) protein abundance. MUC1 is a biomarker used
to predict the development of ALI and ARDS and correlates with poor clinical
outcomes. Of the 3,713 compounds that were screened, fostamatinib was the only
compound identified which both decreased expression of MUC1 and is FDA approved,
and so allows for rapid repurposing for patients with COVID-19 lung injury.
Fostamatinib demonstrated preferential depletion of MUC1 from epithelial cells
without affecting cell viability. The research was focused on drug repurposing
for the much lower risk of toxicity and the ability of FDA-approved treatments
to be delivered on a shortened timescale, which is critical for patients
afflicted with lung disease resulting from COVID-19.



The IST will be a two-stage open label, controlled clinical trial with patients
randomized (1:1:1) to fostamatinib, ruxolitinib, or standard of care. Treatment
will be administered twice daily for 14 days and patients will receive a
follow-up assessment at day 14 and day 28 after the first dose. The primary
objective will be to determine the efficacy of fostamatinib and the efficacy of
ruxolitinib compared to standard of care to reduce the proportion of
hospitalized patients progressing from mild or moderate to severe COVID-19
pneumonia. We will provide support for this trial along with Novartis.



Partnered Clinical Programs



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R548 (ATI-501 and ATI-502) - Aclaris

Aclaris is developing ATI-501 and ATI-502, an oral and topical janus kinase (JAK) 1/3 inhibitor discovered in Rigel's laboratories. ATI- 501 is being developed as an oral treatment for patients with alopecia areata (AA), including the more severe forms of AA that result in total scalp hair loss, known as alopecia totalis (AT), and total hair loss on the scalp and body, known as alopecia universalis (AU).

In December 2018, Aclaris also reported on the enrollment and/or results for a number of Phase 2 studies with ATI-502 for the topical treatment of AA and Vitiligo, including results from its AUATB-201 study.





In June 2019, Aclaris reported positive results from its Phase 2 clinical trial
of ATI-502 topical (AGA-201) in patients with androgenetic alopecia (AGA), a
condition commonly known as male/female-pattern baldness. There were no
treatment-related serious adverse events. Later in June 2019, Aclaris reported
that its Phase 2 clinical trial of ATI-502 topical (AA-201) in patients with AA
did not meet its endpoints. ATI-502 was observed to be generally well-tolerated.
Adverse events were primarily mild or moderate in severity. No treatment-related
serious adverse events were reported.

In July 2019, Aclaris announced that ATI-501 achieved statistically significant improvement over placebo in several measures of hair growth, including the primary endpoint and certain secondary endpoints of this trial. ATI-501 was observed to be generally well-tolerated at all doses. There were no serious adverse events reported. All adverse events (AEs) were mild or moderate in severity and rates of AEs were similar across all groups. No thromboembolic events were observed in the trial.

Aclaris is currently seeking a development and commercialization partner for ATI-501 and ATI-502 as potential treatments for alopecia.





BGB324 - BerGenBio



BerGenBio is conducting Phase 1/2 studies with BGB324 (bemcentinib), a
first-in-class selective AXL kinase inhibitor, as a single agent in relapsed
acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS); and in
combination with erlotinib (Tarceva®) in advanced (EGFR-positive) non-small-cell
lung carcinoma. BerGenBio is also conducting Phase 2 studies with BGB324 in
combination with KEYTRUDA® (pembrolizumab) in non-small cell adenocarcinoma of
the lung and triple negative breast cancer in collaboration with another
company.



In November 2019, BerGenBio showed that the primary endpoint of Overall Response
Rate had been met in Cohort A of its Phase 2 clinical trial evaluating
bemcentinib in combination with KEYTRUDA as a potential new treatment regimen
for previously treated advanced non-small cell lung cancer (NSCLC). The primary
efficacy endpoint requires that at least 25% evaluable patients achieve a
clinical response when treated with the novel drug combination, defined as
either complete or partial response, as measured by Response Evaluation Criteria
in Solid Tumor. A secondary endpoint of median Progression Free Survival (PFS)
reported significant 3-fold improvement in AXL positive versus negative
patients, as defined by BerGenBio's composite AXL tumor-immune score.



In December 2019, BerGenBio reported results in combination with low-dose
cytarabine (LDAC) in elderly AML patients. The bemcentinib-LDAC combination was
safe and well tolerated in elderly AML patients. The overall response rate and
duration surpass historical benchmarks and compare favorably to other LDAC
combinations.



In April 2020, BerGenBio announced that bemcentinib has been selected as the
first potential treatment to be fast-tracked in a new UK national multi-center
randomized Phase 2 clinical trial initiative to potentially receive an early
indication of bemcentinib's effectiveness in treating the most vulnerable
patients with COVID-19.



In June 2020, BerGenBio confirmed dosing the first COVID-19 patient with
bemcentinib at the University Hospital Southampton NHS Foundation Trust. The
Phase 2 trial has commenced in seven more sites across the UK, with the plan to
recruit approximately 120 subjects to assess safety and efficacy of bemcentinib
as an add-on therapy to standard of care in approximately 60 hospitalized
COVID-19 patients with the other approximately 60 control group

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patients receiving standard of care. Bemcentinib has exhibited potent anti-viral
activity in preclinical models against several enveloped viruses, including
Ebola and Zika virus and as of recently, to the COVID-19 virus. Bemcentinib is a
small molecule inhibitor that targets a cell-surface protein called AXL, which
is one of several cell surface receptors used by enveloped viruses to enter
cells. Bemcentinib inhibits virus entry into cells and also prevents inhibition
of Type I Interferon, the cell's anti-viral defense mechanism, suggesting
potential use in the treatment of COVID-19 infection.



In June 2020, BerGenBio announced positive interim clinical and translational
data from Cohort B, stage 1 of the Phase 2 trial (BGBC008) evaluating
bemcentinib in combination with Merck & Co.'s KeytrudaTM in previously treated
NSCLC patients with confirmed progression on prior immune checkpoint therapy.
The trial is recruiting patients in the second stage of the cohort.



In July 2020, BerGenBio announced first patient dosed in a trial assessing
bemcentinib in recurrent glioblastoma (GBM). The trial is sponsored by Ichiro
Nakano, MD, Professor in the Department of Neurosurgery and co-leader of the
Neuro-Oncology Program at University of Alabama at Birmingham, and is funded by
the National Cancer Institute. This is an open label, multi-center,
intra-tumoral tissue PK study of bemcentinib in patients with recurrent GBM for
whom a surgical resection is medically indicated. The trial intends to enroll up
to 20 recurrent GBM patients, at up to 15 sites in the U.S. The end points of
the study include an evaluation of bemcentinib's ability to cross the blood
brain barrier, AXL expression, PK, safety and tolerability, as well as efficacy
assessments including PFS and Overall Survival.



DS-3032 - Daiichi


DS-3032 is an investigational oral selective inhibitor of the murine double
minute 2 (MDM2) protein currently being investigated by Daiichi in three Phase 1
clinical trials for solid and hematological malignancies including AML, acute
lymphocytic leukemia, chronic myeloid leukemia in blast phase, lymphoma and MDS.



Preliminary safety and efficacy data from a Phase 1 study of DS-3032 suggests
that DS-3032 may be a promising treatment for hematological malignancies
including relapsed/refractory AML and high-risk MDS. Evaluation of additional
dosing schedules of DS-3032 is underway and combination studies with
fostamatinib are currently being conducted by Daiichi.



AZ-D0449 - AZ



AZ is currently conducting a Phase 1 study in healthy volunteers and patients
with mild asthma to investigate the safety, anti-inflammatory effect of inhaled
AZ-D0449. The study, which follows the single and multiple ascending doses, is
currently recruiting patients.

Research/Preclinical Programs

We are conducting proprietary research in the broad disease areas of inflammation/immunology, immuno-oncology and cancers. Within these disease areas, our researchers are investigating mechanisms of action as well as screening compounds against potential novel targets and optimizing those leads that appear to have the greatest potential.

Commercialization and Sponsored Research and License Agreements





We conduct research and development programs independently and in connection
with our corporate collaborators. As of June 30, 2020, we are a party to
collaboration agreements with ongoing performance obligations with Kissei for
the development and commercialization of fostamatinib in Japan, China, Taiwan
and the Republic of Korea and with Grifols to commercialize fostamatinib in all
indications, including chronic ITP and AIHA, in Europe and Turkey and with
Medison Pharma Ltd. (Medison) to commercialize fostamatinib in all indications,
including chronic ITP and AIHA in Canada and Israel. As of June 30, 2020, we are
also a party to collaboration agreements, but do not have ongoing performance
obligations, with Aclaris for the development and commercialization of JAK
inhibitors for the treatment of alopecia areata and other dermatological
conditions, AZ for the development and commercialization of

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R256, an inhaled JAK inhibitor, BerGenBio for the development and commercialization of AXL inhibitors in oncology, and Daiichi to pursue research related to MDM2 inhibitors, a novel class of drug targets called ligases.





Under these agreements, which 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. Total future contingent payments to us under all of these agreements
could exceed $610.7 million if all potential product candidates achieved all of
the payment triggering events under all of our current agreements (based on a
single product candidate under each agreement). Of this amount, up to
$70.5 million relates to the achievement of development events, up to $164.2
million relates to the achievement of regulatory events and up to $376.0 million
relates to the achievement of certain commercial or launch events. This
estimated future contingent amount does not include any estimated royalties that
could be due to us if the partners successfully commercialize any of the
licensed products. Future events that may trigger payments to us under the
agreements are based solely on our partners' future efforts and achievements of
specified development, regulatory and/or commercial events.



In July 2020, Grifols launched TAVLESSE® in Germany and the UK. Due to the
COVID-19 pandemic, the commercial launch of fostamatinib in Europe by our
partner, Grifols, was delayed and undertaken in a virtual manner. Grifols
expects to launch in Italy, Spain and France in 2021. In addition, our partner,
Kissei is currently conducting a Phase 3 clinical trial for fostamatinib in ITP
in Japan the timing and completion of which could be delayed due to the COVID-19
pandemic. At this time, we cannot fully forecast the scope of impacts that the
COVID-19 pandemic may have on these partnerships.

Grifols License Agreement





In January 2019, we entered into an exclusive license agreement with Grifols to
commercialize fostamatinib in all indications, including chronic ITP and AIHA,
in Europe and Turkey. Under the agreement, we received an upfront payment of
$30.0 million, with the potential for $297.5 million in total regulatory and
commercial milestones, which included a $20.0 million payment upon approval from
the EMA for fostamatinib in chronic ITP as discussed below. We will also receive
stepped double-digit royalty payments based on tiered net sales which may reach
30% of net sales. In return, Grifols will receive exclusive rights to
fostamatinib in human diseases, including chronic ITP and AIHA, in Europe and
Turkey. The agreement also requires us to conduct the Phase 3 trial in AIHA.



In January 2020, we received European Commission's approval of our MAA for
fostamatinib for the treatment of chronic immune thrombocytopenia in adult
patients who are refractory to other treatments. With this approval, we received
in February 2020 a $20.0 million non-refundable payment, which is comprised of a
$17.5 million payment for EMA approval of fostamatinib for the first indication
and a $2.5 million creditable advance royalty payment, based on the terms of our
collaboration agreement with Grifols. The above milestone payment will be
allocated to the distinct performance obligation in the collaboration agreement
with Grifols.


We accounted for this agreement under ASC 606 and identified the following
distinct performance obligations at inception of the agreement: (a) granting of
the license, (b) performance of research and regulatory services related to our
ongoing long-term open-label extension study on patients with ITP, and (c)
performance of research services related to our Phase 3 study in AIHA. In
addition, we will enter into a commercial supply agreement for the licensed
territories. We concluded each of these performance obligations is distinct. We
based our assessment on the following: (i) our assessment that Grifols can
benefit from the license on its own by developing and commercializing the
underlying product using its own resources, and (ii) the fact that the
manufacturing services are not highly specialized in nature and can be performed
by other vendors. Upon execution of our agreement with Grifols, we determined
that the upfront fee of $5.0 million, which is the non-refundable portion of the
$30.0 million upfront fee, represented the transaction price. In the first
quarter of 2020, we revised the transaction price to include the $25.0 million
of the upfront payment that is no longer refundable under our agreement and the
$20.0 million payment received that is no longer constrained. We allocated the
updated transaction price to the distinct performance obligations in our
collaboration agreement based on our best estimate of the relative standalone
selling price as follows: (a) for the license, we estimated the standalone
selling price using the adjusted market assessment approach to estimate its
standalone selling price in the licensed

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territories; (b) for the research and regulatory services, we estimated the standalone selling price using the cost plus expected margin approach. As a result of the adjusted transaction price, adjustments are recorded on a cumulative catch-up basis, and recorded as part of contract revenues from collaborations in the first quarter of 2020.





The remaining future variable consideration of $277.5 million related to future
regulatory and commercial milestones were fully constrained due to the fact that
it was probable that a significant reversal of cumulative revenue would occur,
given the inherent uncertainty of success with these future milestones. We will
recognize revenues related the research and regulatory services throughout the
term of the respective clinical programs using the input method. For sales-based
milestones and royalties, we determined that the license is the predominant item
to which the royalties or sales-based milestones relate. Accordingly, we will
recognize revenue at the later of (i) when the related sales occur, or (ii) when
the performance obligation to which some or all of the royalty has been
allocated has been satisfied (or partially satisfied). We will re-evaluate the
transaction price in each reporting period and as uncertain events are resolved
or other changes in circumstances occur.



During the three ended June 30, 2020, we recognized no revenues related to the
licensed rights in intellectual property and $396,000 in revenues related to the
research services performed. During the six months ended June 30, 2020, we
recognized $39.9 million in revenues related to the licensed rights in
intellectual property and $3.6 million in revenues related to the research
services performed. Deferred revenues as of June 30, 2020 was $1.8 million.

During the three and six months ended June 30, 2020, we also recognized $651,000 in revenues for a one-time delivery of drug supply to Grifols for commercialization.





Kissei License Agreement



In October 2018, we entered into an exclusive license and supply agreement with
Kissei to develop and commercialize fostamatinib in all current and potential
indications in Japan, China, Taiwan and the Republic of Korea. Kissei is
responsible for performing and funding all development activities for
fostamatinib in the above-mentioned territories. We received an upfront cash
payment of $33.0 million, with the potential for up to an additional
$147.0 million in development, regulatory and commercial milestone payments, and
will receive mid to upper twenty percent, tiered, escalated net sales-based
payments for the supply of fostamatinib. Under the agreement, we granted Kissei
the license rights to fostamatinib in the territories above and are obligated to
supply Kissei with drug product for use in clinical trials and
pre-commercialization activities. We are also responsible for the manufacture
and supply of fostamatinib for all future development and commercialization
activities under the agreement.



We accounted for this agreement under ASC 606 and identified the following
distinct performance obligations at inception of the agreement: (a) granting of
the license, (b) supply of fostamatinib for clinical use and (c) material right
associated with discounted fostamatinib that are supplied for use other than
clinical or commercial. In addition, we will provide commercial product supply
if the product is approved in the licensed territory. We concluded that each of
these performance obligations is distinct. We based our assessment on the
following: (i) our assessment that Kissei can benefit from the license on its
own by developing and commercializing the underlying product using its own
resources and (ii) the fact that the manufacturing services are not highly
specialized in nature and can be performed by other vendors. Moreover, we
determined that the upfront fee of $33.0 million represented the transaction
price and was allocated to the performance obligations based on our best
estimate of the relative standalone selling price as follows: (a) for the
license, we estimated the standalone selling price using the adjusted market
assessment approach to estimate its standalone selling price in the licensed
territories; (b) for the supply of fostamatinib and the material right
associated with discounted fostamatinib, we estimated the standalone selling
price using the cost plus expected margin approach. Variable consideration of
$147.0 million related to future development and regulatory milestones was fully
constrained due to the fact that it was probable that a significant reversal of
cumulative revenue would occur, given the inherent uncertainty of success with
these future milestones. We will recognize revenues related to the supply of
fostamatinib and material right upon delivery of fostamatinib to Kissei. For
sales-based milestones and royalties, we determined that the license is the
predominant item to which the royalties or sales-based milestones relate to.
Accordingly, we will recognize revenue at the later of (i) when the related
sales occur, or (ii) when the performance obligation to which some or all of

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the royalty has been allocated has been satisfied (or partially satisfied). We
will re-evaluate the transaction price in each reporting period and as uncertain
events are resolved or other changes in circumstances occur.



We did not recognize any revenues during the three and six months ended June 30,
2020. At June 30, 2020, deferred revenues related to the unsatisfied performance
obligations related to the supply of fostamatinib and material right associated
with discounted fostamatinib supply was $1.4 million.



Other license agreements



As of June 30, 2020, we have accounts receivable of $500,000 relative to the
first amendment to the license and collaboration agreement with Aclaris executed
in the fourth quarter of 2019.



In October 2019, we entered into two exclusive commercial and license agreements
with Medison for the commercialization of fostamatinib for chronic ITP in Israel
and in Canada pursuant to which we received a $5.0 million upfront payment under
our agreement in Canada. We accounted for the agreement made with an upfront
payment under ASC 606 and identified the following combined performance
obligations at inception of the agreement: (a) granting of the license and (b)
obtaining regulatory approval in Canada of fostamatinib in ITP. We determined
that the non-refundable upfront fee of $5.0 million represented the transaction
price. However, under the agreement, we have the option to buy back all rights
to the product in Canada within six months that we obtain regulatory approval in
Canada of the product for the indication of AIHA. The buyback option precludes
us from transferring control of the license to Medison under ASC 606. We believe
that the buyback provision, if exercised, will require us to repurchase the
license at an amount equal to or more than the upfront $5.0 million. As such
this arrangement is accounted for as a financing arrangement. Accrued interest
related to this financing arrangement as of June 30, 2020 is immaterial.



Results of Operations

Three and Six Months Ended June 30, 2020 and 2019





Revenues




                                        Three Months Ended                                Six Months Ended
                                             June 30,                 Aggregate               June 30,                Aggregate
                                      2020             2019            Change          2020            2019            Change
                                                  (in thousands)                                  (in thousands)


Product sales, net                 $    14,974    $        10,173    $     4,801    $   27,654    $        18,227    $     9,427
Contract revenues from
collaborations                           1,047                234            813        44,128              4,804         39,324
Total revenues                     $    16,021    $        10,407    $     5,614    $   71,782    $        23,031    $    48,751

The following table summarizes revenues from each of our customers and collaboration partners who individually accounted for 10% or more of our total revenues for the three and six months ended June 30, 2020 and 2019 (as a percentage of total revenues):






                                                     Three Months Ended         Six Months Ended
                                                          June 30,                  June 30,
                                                     2020           2019        2020          2019


ASD Healthcare and Oncology Supply                       47%            48%         20%         40%
McKesson Specialty Care Distribution Corporation         41%            40%


        16%         31%
Cardinal Healthcare                                       5%            10%          2%           -
Grifols                                                   7%              -         61%         20%


Product sales during the three and six months ended June 30, 2020 and 2019
related to sales of TAVALISSE in the U.S. and represent increasing sales volume
since we launched in May 2018. For the three and six months ended June 30, 2020,
the increase in product sales was mainly due to TAVALISSE sales volume increases
of 28% and 32%, respectively, compared to the same periods in 2019, as well as
increases in the selling price of TAVALISSE.

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TAVALISSE has been prescribed across all lines of therapy in steroid refractory
patients in ITP. It has been utilized by an increasing broad base of prescribers
and community physicians, with growing early line use and continued strong
refill rates.



We recognize product sales, net of discounts and allowances, as described in
"Note 3" to our "Notes to Condensed Financial Statements" contained in Part I,
Item 1 of this Quarterly Report on Form 10-Q.



Contract revenues from collaborations of $1.0 million and $44.1 million,
respectively, in the three and six months ended June 30, 2020 relate to revenue
from the upfront fee we previously received from Grifols in the first quarter of
2019, as well as the milestone payment received from Grifols in the first
quarter of 2020 upon EC approval of the MAA for fostamatinib in Europe. For the
same periods in 2019, we recognized contract revenues of $234,000 and $4.8
million primarily related to the portion of the upfront fees from our
collaboration agreements with Grifols and Kissei, respectively, recognized as
revenue upon our performance of certain research and development services.



Our potential future revenues may include product sales from TAVALISSE, payments
from our current partners and from new partners with whom we enter into
agreements in the future, if any, the timing and amount of which is unknown at
this time. We cannot currently fully forecast the extent of the impacts that the
COVID-19 pandemic may have on our product sales. As of June 30, 2020, we had
deferred revenues of $3.2 million which we will recognize as revenue upon
satisfaction of our remaining performance obligations under our collaboration
agreements with Grifols and Kissei.



Cost of Product Sales




                                        Three Months Ended                                 Six Months Ended
                                             June 30,                 Aggregate                June 30,                Aggregate
                                    2020               2019            Change         2020               2019            Change
                                                  (in thousands)                                    (in thousands)


Cost of product sales             $     279      $            311    $      (32)    $     434      $            418    $       16

We recognized $279,000 and $434,000, respectively, in cost of product sales
during the three and six months ended June 30, 2020 related to our product,
TAVALISSE. Prior to the FDA approval, manufacturing and related costs were
charged to research and development expense. Therefore, these costs were not
capitalized and as a result, are not fully reflected in the costs of product
sales during the three and six months ended June 30, 2020 and 2019. We will
continue to have a lower cost of product sales that excludes the cost of the
active pharmaceutical ingredient (API) that was produced prior to FDA approval
until we sell TAVALISSE that includes newly manufactured API. We expect that
this will be the case for the near-term and as a result, our cost of product
sales will be less than we anticipate it will be in future periods. As we
produce TAVALISSE in the future, our inventory cost in the Balance Sheet and
Cost of Product Sales will increase reflecting the full cost of manufacturing.

Research and Development Expense






                                           Three Months Ended                               Six Months Ended
                                                June 30,                 Aggregate              June 30,                Aggregate
                                         2020             2019            Change         2020            2019            Change
                                                     (in thousands)                                 (in thousands)


Research and development expense      $    14,214    $        13,226    $       988    $  30,363    $        24,175    $     6,188
Stock-based compensation expense
included in research and
development expense                   $       458    $           911    $     (453)    $   1,152    $         1,698    $     (546)

The increase in research and development expense for the three months ended June
30, 2020, compared to the same period in 2019, was primarily due to an increase
of $2.1 million in research and development costs mainly for our on-going Phase
3 study in warm AIHA, Phase 1 trial of our RIP1 inhibitor program and Phase


1
trial in our IRAK 1/4

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inhibitor program partially offset by the decreases of $453,000 in stock-based
compensation expense, $365,000 in research and laboratory supplies, $164,000 in
personnel-related expenses and $130,000 in various third party costs.



The increase in research and development expense for the six months ended June
30, 2020, compared to the same period in 2019, was primarily due to an increase
of $7.1 million in research and development cost for our on-going Phase 3 trial
in warm AIHA, Phase 1 trial of our RIP1 inhibitor program and Phase 1 trial in
our IRAK 1/4 inhibitor program partially offset by the decreases of $546,000 in
stock-based compensation expense and $366,000 in research and laboratory
supplies.



We expect our research and development expense for the remainder of 2020 to
increase as we continue our activities in our Phase 3 warm AIHA studies, RIP1
and IRAK 1/4 programs and other fostamatinib programs. We have resumed new
patient enrollment in the majority of the clinical trial sites for our FORWARD
study for warm AIHA and we expect to continue to incur expenses in managing the
study and expenses related to measures to implement remote and virtual
approaches, including remote patient monitoring and other alternative course of
actions to maintain our study in warm AIHA. We cannot currently fully forecast
the scope the evolving effects of COVID-19 pandemic may have on our ability to
continue to treat patients enrolled in our trials, enroll and assess new
patients, supply study drug, obtain complete data points in accordance with the
study protocol, and overall impact on, and timing of, clinical study results.



Our research and development expenditures include costs related to preclinical
and clinical trials, scientific personnel, supplies, equipment, consultants,
sponsored research, stock-based compensation, and allocated facility costs.



We do not track fully burdened research and development costs separately for
each of our drug candidates. We review our research and development expenses by
focusing on three categories: research, development, and other. Our research
team is focused on creating a portfolio of product candidates that can be
developed into small molecule therapeutics in our own proprietary programs or
with potential collaborative partners and utilizes our robust discovery engine
to rapidly discover and validate new product candidates in our focused range of
therapeutic indications. "Research" expenses relate primarily to personnel
expenses, lab supplies, fees to third party research consultants and compounds.
Our development group leads the implementation of our clinical and regulatory
strategies and prioritizes disease indications in which our compounds may be
studied in clinical trials. "Development" expenses relate primarily to clinical
trials, personnel expenses, costs related to the submission and management of
our NDA, lab supplies and fees to third party research consultants. "Other"
expenses primarily consist of allocated facilities costs and allocated
stock-based compensation expense relating to personnel in research and
development groups.



In addition to reviewing the three categories of research and development
expenses described in the preceding paragraph, we principally consider
qualitative factors in making decisions regarding our research and development
programs, which include enrollment in clinical trials and the results thereof,
the clinical and commercial potential for our drug candidates and competitive
dynamics. We also make our research and development decisions in the context of
our overall business strategy, which includes the evaluation of potential
collaborations for the development of our drug candidates.



We do not have reliable estimates regarding the timing of our clinical trials.
Preclinical testing and clinical development are long, expensive and uncertain
processes. In general, biopharmaceutical development involves a series of steps,
beginning with identification of a potential target and including, among others,
proof of concept in animals and Phase 1, 2 and 3 clinical trials in humans.
Significant delays in clinical testing could materially impact our product
development costs and timing of completion of the clinical trials. We do not
know whether planned clinical trials will begin on time, will need to be halted
or revamped or will be completed on schedule, or at all. Clinical trials can be
delayed for a variety of reasons, including delays in obtaining regulatory
approval to commence a trial, delays from scale up, delays in reaching agreement
on acceptable clinical trial agreement terms with prospective clinical sites,
delays in obtaining institutional review board approval to conduct a clinical
trial at a prospective clinical site or delays in recruiting subjects to
participate in a clinical trial.



We currently do not have reliable estimates of total costs for a particular drug
candidate to reach the market. Our potential products are subject to a lengthy
and uncertain regulatory process that may involve unanticipated

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additional clinical trials and may not result in receipt of the necessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. In addition, clinical trials of our potential products may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval.

The following table presents our total research and development expense by category (in thousands).






                 Three Months Ended         Six Months Ended
                      June 30,                  June 30,            From

January 1, 2007*
                  2020          2019        2020         2019         to June 30, 2020

Categories:
Research       $     2,156    $  2,586    $   4,831    $  5,245    $               246,730
Development         10,119       8,256       21,360      14,163                    405,004
Other                1,939       2,384        4,172       4,767                    246,915
               $    14,214    $ 13,226    $  30,363    $ 24,175    $               898,649

*We started tracking research and development expense by category on January 1, 2007.





"Other" expenses mainly represent allocated facilities costs of approximately
$1.5 million each for the three months ended June 30, 2020 and 2019 and
allocated stock-based compensation expense of approximately $458,000 and
$911,000 for the three months ended June 30, 2020 and 2019, respectively. For
the six months ended June 30, 2020 and 2019, allocated facilities costs were
approximately $3.0 million and $3.1 million, respectively, and allocated
stock-based compensation expense were approximately $1.2 million and $1.7
million, respectively.



For the three and six months ended June 30, 2020 and 2019, a major portion of
our total research and development expense was associated with our AIHA, RIP1,
and IRAK programs, salaries of our research and development personnel and
allocated facilities costs.

Selling, General and Administrative Expense






                                           Three Months Ended                               Six Months Ended
                                                June 30,                 Aggregate              June 30,               Aggregate
                                         2020             2019            Change         2020            2019            Change
                                                     (in thousands)                                 (in thousands)
Selling, general and
administrative expense                $    18,920    $        18,209    $       711    $  37,350    $        38,155    $    (805)
Stock-based compensation expense
included in selling, general and
administrative expense                $     1,299    $         1,742    $     (443)    $   2,629    $         3,908    $  (1,279)




The increase in selling, general and administrative expense for the three months
ended June 30, 2020 compared to the same period in 2019 was primarily due to the
increases of $1.8 million in costs of consultants and third party services and
$690,000 of personnel-related costs partially offset by the decreases of $1.1
million in travel-related commercial activities, $443,000 in stock-based
compensation expense and $236,000 in various expense items.



The decrease in selling, general and administrative expense for the six months
ended June 30, 2020 compared to the same period in 2019 was primarily due to the
decreases of $1.4 million in travel-related commercial activities and $1.3
million in stock-based compensation expense offset by the increases of $1.4
million in personnel-related costs, $200,000 in rent and $295,000 in various
expense items.


We expect our selling, general and administrative expense to increase as we
continue to expand our commercial activities for TAVALISSE. As discussed above,
resources have been deployed to enable our field-based employees to continue to
engage remotely with healthcare providers during the ongoing COVID-19 pandemic.
These virtual

                                       43



  Table of Contents


engagements have enabled our field team to support existing prescribers as well
as partner with new prescribers to identify appropriate patients for TAVALISSE.
However, we are not currently able to fully forecast the scope of impacts that
the COVID-19 pandemic may have on our commercial activities and sales of
TAVALISSE.



Interest Income




                                       Three Months Ended                                Six Months Ended
                                            June 30,                 Aggregate               June 30,                Aggregate
                                   2020               2019            Change         2020             2019            Change
                                                 (in thousands)                                  (in thousands)
Interest income                  $     169      $            733    $     (564)    $     527     $         1,513    $     (986)




Interest income results from our interest-bearing cash and investment balances.
The decreases in interest income for the three and six months ended June 30,
2020 as compared to the same period in 2019 were primarily due to decrease in
yield on our investments.



Interest Expense




                                              Three Months Ended                                      Six Months Ended
                                                   June 30,                     Aggregate                 June 30,                   Aggregate
                                        2020                   2019              Change           2020                2019            Change
                                                          (in thousands)                                         (in thousands)
Interest expense                    $       (353)      $                  -    $     (353)    $      (495)      $              -    $     (495)




Interest expense for the three and six months ended June 30, 2020 was related to
the outstanding balance on our term loan from Midcap. In May 2020, we received
funding for the second tranche of $10.0 million.

Critical Accounting Policies and the Use of Estimates





Our discussion and analysis of our financial condition and results of operations
is based upon our financial statements, which have been prepared in accordance
with U.S. generally accepted accounting principles (U.S. GAAP). The preparation
of these financial statements requires us to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
On an ongoing basis, we evaluate our estimates, including any potential impact
of the COVID-19 pandemic to the carrying values of our assets and liabilities,
those related to revenue recognition on product sales and collaboration
agreements, recoverability of our assets, including accounts receivables and
inventories, stock-based compensation, the probability of achievement of
corporate performance-based milestone for our performance-based stock option
awards, impairment issues, the estimated useful life of assets, estimated
accruals, particularly research and development accruals, and estimates related
our valuation of the operating lease right-of-use asset and lease liability,
including the incremental borrowing rate used. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe that there have
been no significant changes in our critical accounting policies and estimates
disclosed in our Annual Report on Form 10-K for the year ended December 31,
2019, as filed with the SEC.

Recent Accounting Pronouncements





For a discussion of new accounting pronouncements, see "Note 3" to our "Notes to
Condensed Financial Statements" contained in Part I, Item 1 of this Quarterly
Report on Form 10-Q.



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Liquidity and Capital Resources





Cash Requirements


From inception, we have financed our operations primarily through sales of
equity securities, contract payments under our collaboration agreements and from
sales of TAVALISSE beginning in May 2018. We have consumed substantial amounts
of capital to date as we continue our research and development activities,
including preclinical studies and clinical trials and our ongoing commercial
launch of TAVALISSE.



As of June 30, 2020, we had approximately $92.5 million in cash, cash
equivalents and short-term investments, as compared to approximately
$98.1 million as of December 31, 2019, a decrease of approximately $5.6 million.
The decrease was primarily attributable to payments associated with funding our
operating expenses during the six months ended June 30, 2020.



In September 2019, we entered into a $60.0 million term loan credit facility
with MidCap. At closing, $10.0 million was funded to us in an initial tranche.
We accessed the second $10.0 million tranche from our term loan credit facility
with MidCap which we received in May 2020. The facility provides the company
with access to an additional $40.0 million which is subject to the achievement
of certain customary conditions. In August 2020, we entered into a Sales
Agreement with Jefferies, pursuant to which we may sell, through Jefferies, up
to an aggregate of $65.0 million in shares of our common stock.



In October 2018, we entered into an exclusive license and supply agreement with
Kissei to develop and commercialize fostamatinib in all current and potential
indications in Japan, China, Taiwan and the Republic of Korea, in which we
received an upfront payment of $33.0 million. In January 2019, we entered into
an exclusive commercialization license agreement with Grifols to commercialize
fostamatinib for the treatment, palliation, or prevention of human diseases,
including chronic or persistent ITP, AIHA, and IgAN in Europe and Turkey, in
which we received an upfront payment of $30.0 million, with the potential
for $297.5 million in payments related to regulatory and commercial milestones,
which includes a $20.0 million payment received in February 2020, comprised of a
$17.5 million for EMA approval of fostamatinib for the first indication and a
$2.5 million creditable advance royalty payment due upon EMA approval of
fostamatinib in the first indication in chronic ITP. We will also receive
stepped double-digit royalty payments based on tiered net sales which may reach
30% of net sales of fostamatinib. In return, Grifols receives exclusive rights
to fostamatinib in human diseases, including chronic ITP and AIHA in Europe and
Turkey. We retain the global rights to fostamatinib outside the Kissei, Grifols
and Medison territories.



In December 2014, we entered into a sublease agreement with an unrelated third
party to occupy a portion of our research and office space. This sublease
agreement was amended in February 2017 to sublease additional research and
office space. Effective July 2017, the sublease agreement was amended primarily
to extend the term of the sublease through January 2023. During the six months
ended June 30, 2020, we received approximately $2.7 million of sublease income
and reimbursements. We expect to receive approximately $11.8 million in future
sublease income (excluding our subtenant's share of facility's operating
expenses) through January 2023.



We believe that our existing capital resources will be sufficient to support our
current and projected funding requirements, including the ongoing commercial
launch of TAVALISSE in the U.S., through at least the next 12 months from the
filing date of this report. We have based this estimate on assumptions that may
prove to be wrong, and we could utilize our available capital resources sooner
than we currently expect. Because of the numerous risks and uncertainties
associated with commercial launch, the development of our product candidates and
other research and development activities, we are unable to estimate with
certainty our future product revenues, our revenues from our current and future
collaborative partners, the amounts of increased capital outlays and operating
expenditures associated with our current and anticipated clinical trials and
other research and development activities.



Our operations will require significant additional funding for the foreseeable
future. Unless and until we are able to generate a sufficient amount of product,
royalty or milestone revenue, we expect to finance future cash needs through
public and/or private offerings of equity securities, debt financings and/or
collaboration and licensing

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  Table of Contents

arrangements, and to a much lesser extent through the proceeds from exercise of
stock options and interest income earned on the investment of our excess cash
balances and short-term investments. However, the COVID-19 pandemic continues to
rapidly evolve and has already resulted in a significant disruption of global
financial markets. Our ability to raise additional capital may be adversely
impacted by potential worsening of global economic conditions and the recent
disruptions to, and volatility in, the credit and financial markets in the U.S.
and worldwide resulting from the pandemic. If the disruption persists and
deepens, we could experience an inability to access additional capital, which
could in the future negatively affect our capacity for certain corporate
development transactions or our ability to make important, opportunistic
investments. In addition, any additional capital we raise by issuing equity
securities, our stockholders could at that time experience substantial dilution.
Our current credit facility with MidCap and any debt financing that we are able
to obtain in the future may involve operating covenants that may restrict our
business. To the extent that we raise additional funds through collaboration and
licensing arrangements, we may be required to relinquish some of our rights to
our technologies or product candidates or grant licenses on terms that are


not
favorable to us.

Our future funding requirements will depend upon many factors, including, but not limited to:

the ongoing costs to commercialize TAVALISSE for the treatment of ITP in the

? U.S., or any other future product candidates, if any such candidate receives


   regulatory approval for commercial sale;

the progress and success of our clinical trials and preclinical activities

? (including studies and manufacture of materials) of our product candidates


   conducted by us;

? our ability to meet operating covenants under our current and future credit


   facilities, if any;

? our ability to enter into partnering opportunities across our pipeline within


   and outside the U.S.;

? the costs and timing of regulatory filings and approvals by us and our


   collaborators;

? the progress of research and development programs carried out by us and our

collaborative partners;

? any changes in the breadth of our research and development programs;

? the ability to achieve the events identified in our collaborative agreements

that may trigger payments to us from our collaboration partners;

? our ability to acquire or license other technologies or compounds that we may


   seek to pursue;

? our ability to manage our growth;

? competing technological and market developments;

? the costs and timing of obtaining, enforcing and defending our patent and other

intellectual property rights; and

? expenses associated with any unforeseen litigation, including any arbitration


   and securities class action lawsuits.


Insufficient funds may require us to delay, scale back or eliminate some or all
of our commercial efforts and/or research or development programs, to lose
rights under existing licenses or to relinquish greater or all rights to product
candidates at an earlier stage of development or on less favorable terms than we
would otherwise choose or may adversely affect our ability to operate as a


going
concern.



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For the three and six months ended June 30, 2020 and 2019, we maintained an
investment portfolio primarily in money market funds, U.S. treasury bills,
government-sponsored enterprise securities, and corporate bonds and commercial
paper. Cash in excess of immediate requirements is invested with regard to
liquidity and capital preservation. Wherever possible, we seek to minimize the
potential effects of concentration and degrees of risk. We will continue to
monitor the impact of the changes in the conditions of the credit and financial
markets to our investment portfolio and assess if future changes in our
investment strategy are necessary.

Cash Flows from Operating, Investing and Financing Activities






                                                            Six Months Ended June 30,
                                                             2020               2019

                                                                  (in thousands)
Net cash provided by (used in):
Operating activities                                    $     (17,131)     $      (17,220)
Investing activities                                            19,227            (15,745)
Financing activities                                            11,852                 872

Net (decrease) increase in cash and cash equivalents $ 13,948 $ (32,093)






Net cash used in operating activities was approximately $17.1 million for the
six months ended June 30, 2020, compared to approximately $17.2 million for the
six months ended June 30, 2019. Net cash used in operating activities for the
six months ended June 30, 2020 was related to our research and development
programs and our ongoing commercialization of TAVALISSE, partially offset by the
$20.0 million payment received from Grifols and proceeds from sale of TAVALISSE.
Net cash used in operating activities for the six months ended June 30, 2019 was
related to our research and development programs and our commercialization of
TAVALISSE partially offset by the $30.0 million upfront fee received from
Grifols. The timing of cash requirements may vary from period to period
depending on our ongoing commercial activities related to TAVALISSE, timing of
collaboration revenues, our ability to access additional funds from our credit
facility with MidCap, our research and development activities, including our
planned preclinical and clinical trials, and future requirements to establish
commercial capabilities for any products that we may develop.



Net cash provided by investing activities was approximately $19.2 million for
the six months ended June 30, 2020, compared to net cash used in investing
activities of approximately $15.7 million for the six months ended June 30,
2019. Net cash provided by investing activities during the six months ended June
30, 2020 related to net maturities of short-term investments, partially offset
by capital expenditures. Net cash used in investing activities during the six
months ended June 30, 2019 related to net purchases of short-term investments
and capital expenditures. Capital expenditures were approximately $563,000 for
the six months ended June 30, 2020, compared to approximately $492,000 for


the
same period in 2019.



Net cash provided by financing activities was approximately $11.9 million for
the six months ended June 30, 2020, compared to approximately $872,000 for the
six months ended June 30, 2019. Net cash provided by financing activities for
the six months ended June 30, 2020 related to the proceeds from funding of the
second $10.0 million tranche from our term loan credit facility with MidCap and
exercise of stock options and participation in the Purchase Plan. Net cash
provided by financing activities for the six months ended June 30, 2019 related
to the proceeds from exercise of stock options and participation in the Purchase
Plan.

Off-Balance Sheet Arrangements

As of June 30, 2020, we had no off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K under the Exchange Act).





Contractual Obligations

We conduct our commercial activities and research and development programs internally and through third parties that include, among others, arrangements with collaboration partners, vendors, consultants, contract research



                                       47



  Table of Contents


organizations (CRO) and universities. We have contractual arrangements with
these parties, however our contracts with them are cancelable generally on
reasonable notice within one year and our obligations under these contracts are
primarily based on services performed. We do not have any purchase commitments
under any collaboration arrangements.



We have agreements with certain CROs to conduct our clinical trials and with
third parties relative to our commercialization of TAVALISSE. The timing of
payments for any amounts owed under the respective agreements will depend on
various factors including, but not limited to, patient enrollment and other
progress of the clinical trial and various activities related to commercial
launch. We will continue to enter into contracts in the normal course of
business with various third parties who support our clinical trials, support our
preclinical research studies, and provide other services related to our
operating purposes as well as our commercial launch of TAVALISSE. We can
terminate these agreements at any time, and if terminated, we would not be
liable for the full amount of the respective agreements. Instead, we will be
liable for services provided through the termination date plus certain
cancellation charges, if any, as defined in each of the respective agreements.
In addition, these agreements may, from time to time, be subjected to amendments
as a result of any change orders executed by the parties. As of June 30, 2020,
we do not have material contractual commitments with respect to the arrangements
discussed above, but we had the following contractual commitments related to our
facilities lease and credit facility:




                                                      Less than         Payment Due By Period          More than
                                          Total        1 Year       1 - 3 Years       3 - 5 Years       5 Years

                                                                      (in thousands)
Facilities lease (1)                     $ 26,306    $     9,887    $     16,419     $           -    $         -
Credit facility with MidCap (2)            24,108          1,430          13,342             9,336              -
Total                                    $ 50,414    $    11,317    $     29,761     $       9,336    $         -

In December 2014, we entered into a sublease agreement, which was amended in

2017, with an unrelated third party to lease up a portion of the research and (1) office space. The facilities lease obligations above do not include the

sublease income of approximately $11.8 million which we expect to receive


    over the term of the sublease through January 2023.


    In September 2019, we entered into a Credit Agreement with MidCap. We
    received funding for the first tranche of $10.0 million. In March 2020, we

accessed the second $10.0 million tranche from our term loan credit facility (2) with MidCap which we received in May 2020. Under the agreement, we are

obligated to make interest payments at an annual rate of one-month LIBOR plus

5.65% for the first 24 months and the interest plus principal amortization


    for the next 36 months. We will be obligated to pay administrative fees
    annually and a final fee upon final payment.




We are also subject to claims related to the patent protection of certain of our
technologies, as well as purported securities class action lawsuit, other
litigations, and other contractual agreements. We are required to assess the
likelihood of any adverse judgments or outcomes to these matters as well as
potential ranges of probable losses. A determination of the amount of reserves
required, if any, for these contingencies is made after careful analysis of each
individual matter.

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Company Profile

Rigel Pharmaceuticals, Inc. is a biotechnology company. The Company is engaged in developing and providing novel therapies that significantly improve the lives of patients with hematologic disorders and cancer. It is focused on products that address signaling pathways that are critical to disease mechanisms. Its first product is TAVALISSE (fostamatinib disodium hexahydrate) tablets, the approved oral spleen tyrosine kinase inhibitor for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment. Its second 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. Its GAVRETO (pralsetinib) product is a once daily, small molecule, oral, kinase inhibitor of wild type rearranged during transfection (RET) and oncogenic RET fusions.

Employees

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Sector

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Calendar

2024-09-19 - Cantor Global Healthcare Conference

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