All right, we're going to go ahead and get started. I'm Stephen Willey, one of the senior biotech analysts here at Stifel. Glad to have with us as part of the next session, Geron. Michelle Robertson, who's the Chief Financial Officer and the.
Yeah, whatever.
CEO of the company, Chip Scarlett, who's filling in for Jim Ziegler.
Yeah.
Chip, Michelle, before we jump into Q&A, any kind of opening comments you guys would like to make?
Yeah, well, first of all, I have to apologize. Jim was here this morning, fell ill, and is just not able to be up on stage, which means that you have to put up with me pretending like I'm a commercial person, which I definitely am not. So be kind. Second of all, I would like to say that obviously we're going to make a bunch of forward-looking statements. Please refer to all the risk factors in our latest SEC filings that would be relevant. And third, thank you very much. As always, we've done this a bunch of times. I'll just simply say very quickly, I'm pleased to be here with Michelle Robertson on stage, and she'll speak to some of the financial stuff and other issues as appropriate. Look, we feel really blessed.
We had a knockout quarter last quarter as our first quarter of launch of RYTELO and imetelstat and low-risk MDS. We strengthened our position, our financial position, which Michelle can speak to, with a $125 million synthetic royalty deal with Royalty Pharma and also a $250 million debt deal with Pharmakon. That certainly allows us to invest in the future. I think that would include, hopefully, E.U. approval and subsequent commercialization in the coming years in the EU. Maybe I'll just say I think we look forward to a really exciting couple of years and happy to take the questions, Steve.
All right. And again, if anyone has any questions at any point in the room, just let me know and I'll get your question answered. So you mentioned the quarter, $28 million, I think came in well ahead of both our estimates, street estimates. I know Jim had kind of stepped into his role kind of mid-launch. So I guess as you think about where you ended the quarter, was there anything specific, I guess, metric or otherwise, that exceeded your expectations? And was there anything, and perhaps you're less likely to say this, but was there anything that didn't meet your expectation and kind of needs to become a point of emphasis going forward?
I mean, a couple of things. First of all, I would say that what we saw was exactly what you'd hope to see. We saw demand increasing month over month. It's been spread across about 45% of our targeted accounts. And so obviously that leaves plenty of room to continue to reach many additional HCPs going forward. You wouldn't be surprised at that. I'd also tell you that we've made a few key hires since Jim came. Jim's done a wonderful job of really assessing where we were both structurally, organizationally, et cetera, as well as in the launch. I think overall he would tell you if he were here that he's very pleased with the progress of the launch to date. I think obviously what we need to do is to drive new patients across all the eligible segments.
For those of you who don't know the lingo of low-risk MDS, we are indicated in and do share about 10% of the front-line patients that are so-called ESA ineligible. We also have a broad remit across all of the second-line and a particularly strong remit in the second-line RS-negative population, which heretofore hasn't had any real drugs indicated for that. And obviously we want to reemphasize those segments with HCPs that we address commercially. We want to reinforce the value of the appropriate treatment duration. And we want to educate our healthcare providers on appropriate cytopenia management, which by and large they generally could teach us about because they do it all day long. That's a real high-level sort of view about where we are today.
Okay. So one of the segments that is really impactful, at least from a prescribing perspective in low-risk MDS, is the group of community-based physicians. So can you maybe just speak to how your outreach efforts are focused here? What is the early data you're seeing tell you about the return on those efforts? And then I think going into this launch, right, there was a lot of, I don't know if you want to call it consternation, but some concern about just the willingness and the ability of these community docs to manage these patients kind of through these cytopenias that's typically caused by this drug during the first few cycles of therapy. Have you seen any of that? Have you seen any of that hesitancy playing out in the commercial setting?
Do you have to do more handholding with these guys than you would an academic doc?
I'll make the broad brush comment, which I'm sure Jim would make if he were here, which is a quarter does not a launch make. That said, I think we've been very gratified by what we've seen so far. First of all, if you look across the landscape in the United States, about 65% of the prescribing physicians in low-risk MDS are in the community setting and about 35% are academic in one form or another. That's exactly what we've seen within our ability to tell, right? That's exactly what we've seen so far. We've been seeing about two-thirds of the patients appear to be coming from community settings and about a third come from academic settings. The question about the ability and willingness of, in particular, the community physicians to manage cytopenias, I have to say that's been more of an external point of view.
We've always had confidence that the community physicians that we have interacted with pre-launch had tremendous reserves of insight and knowledge about how to deal with patients with cytopenias. If you think about it, the class of drugs that these hematologists generally use, whether it's in low-risk MDS or other myeloid heme malignancies, they're often associated with significant cytopenias, some even, well, I'll just say very significant. And we were very confident that they had the basic knowledge and insight how to take care of these patients. I think that's what we've seen to date. We also have a lot of support for them, right? So we have oncology nurse support. We have our medical scientist support, the MSLs, and as well as, of course, our sales reps and all of the apparatus that we can bring to bear on it.
So I think overall, it's a little early in the launch to really declare victory, but I think we're feeling very good about management of cytopenias and really management of the safety profile of the product overall, and certainly feel very comfortable with the community docs taking care of that.
Okay. I know a lot of the data that you're seeing post-launch is still very early, but are you seeing anything that kind of provides some information on the types of patients who are being prescribed therapy? And is there anything that you can say about the split between RS negative, RS positive, ESA ineligibles, and just what these patients have been previously treated with?
I think for the audience, maybe just a quick explanation of the mechanics of this. Michelle's welcome. You're welcome to jump in at any point. This is a buy-and-bill product. What that really means is that we actually sell product to the specialty distributor, and then the specialty distributors receive the demand, and if you will, the scripts or the demand from the individual practices, clinics, hospitals, et cetera, and then they pull through the demand. Inevitably, we don't see the same level of information that we would, of course, love to see, which would identify patients by segment, by demographics, and so forth. What you have to do if you want to understand this better is you have to do essentially market research. It can take the form of chart reviews. It can take the form of literal market research where you interview individuals.
Now, how that market research is done is obviously you try to get a good sample size across all of these. Here's what we can say to date from what we've been able to glean from that kind of work, although it's still in its infancy. It looks like we're getting patients across all of the key segments that we would have expected. Frontline ESA ineligible patients, RS positive patients, and of course, RS negative patients in the second line, RS positive in the second line, RS negative patients. In particular, I'd say the RS negative just because they make up more of the second line and because other products are not necessarily approved there, we're certainly seeing our fair share. And then we do get third line patients as well. But beyond that and more specifics, I'm not sure we can really say a whole lot more.
No, it's a little bit too early.
Yeah.
Okay. So within these patient segments specifically, RS positive, RS negative, how do you think that potential share gains are going to be influenced by the luspatercept as gaining in the frontline setting as an alternative to an ESA, right? So I think per our feedback, that drug seems to be widely adopted in RS positive patients. I would personally agree with that trend. It also looks to be pretty limited in RS negative patients. And I think most of the feedback that we've received on that side would suggest that's the case as well. So how is your ability to penetrate each of those segments impacted, if at all, by the use of luspatercept in the frontline setting?
Frontline is frontline. And aside from that 10% that we can compete effectively in, I think that it is a competition between luspatercept and ESAs. I'll not speak for our colleagues at BMS. I'll just simply say that when patients come down to the second line after frontline usage, I think we expect to be very, very, very strongly competitive in all elements of that. And in particular, I think we would expect to have very strong representation in the second line RS negative patient population. As you know, other products are not necessarily indicated there and can't promote there. And I think that we've seen a real scarcity of product opportunity just because there hasn't been very much activity except for luspatercept in the last 10 years.
So now that we're on the marketplace, I think we expect to see very strong uptake across all of the second line, but in particular in the RS negative.
Okay. How do you think about RYTELO utilization as a function of the baseline transfusion burden that is specified on the product label?
Yeah.
So what proportion of the low-risk MDS population kind of falls into this four plus bucket? And would you expect that requirement to remain pretty stringent on both the prescribing and reimbursement fronts?
Well, you just said the magic words, prescribing and reimbursement as opposed to promotion. I think it's part of our label, but I also think that we expect physicians will choose RYTELO based on physician discretion, medical justification. Everything has to be obviously consistent with the label, but while we're certainly early in the launch, I think reimbursement considerations based on transfusion burden haven't really been a very big part of the dialogue or an issue. Now, obviously, we do estimate that roughly 60% of low-risk MDS patients have a low transfusion burden and 40% have a high transfusion burden. You know we're particularly strong in the high transfusion burden case versus other products. But the NCCN guidelines don't really address this, and I think we're probably going to see reimbursement is not going to be very deeply affected by specifics of transfusion burden.
I think patients need to be transfusion dependent, but beyond that, I'm not so sure about the individual activities there.
Okay. On the reimbursement side, again, how big of an inflection point do you think the issuance of a product-specific J- code on January 1 next year will be?
I'll let Michelle take that because she's run a lot of commercial ops in the past.
Yeah. So we were granted our permanent J- code in October. It'll be effective January 2025. We believe there definitely are some centers that might not order because of the temporary J- code. However, we haven't really received any kind of feedback that it's been a barrier. There's still a manual approval process even with a temporary J- code. So there are accounts that will probably target in the new year once the permanent J- code is effective, but we haven't really seen it as an issue getting reimbursement and moving the order forward.
Okay, so when I go back and I look at commentary from Bristol, specifically the comments that they made during the first three to four quarters of the initial luspatercept launch in low-risk MDS, there was a lot said about how growth was being driven by this bolus of patient demand, right? So this kind of large bolus of patients who didn't really have any treatment options. What are you seeing out there, and do you think that there's kind of a similar bolus phenomenon at play here and that should be a tailwind for early uptake?
Yeah, it's a great question, and of course, you only know bolus for real when you look in retrospect. We've never modeled a bolus and really have never expected it. I mean, we've always expected strong spreading growth. I think there were some reasons in that luspatercept launch beyond what you mentioned. One of them, which I believe BMS actually commented on in one of their conference calls, was that they launched during COVID. Just remember, everybody, nobody wanted to go to a hospital or to any kind of treatment center and nobody wanted to give blood. So there was concern. I don't know whether concern over whether or not there would be adequate transfusion material available, blood available. I don't know if that ever really transpired to be a real problem, but I know there were concerns about it.
In any event, I think, again, we've seen demand coming from over 45% of our key targeted accounts. I think strong spreading growth is what we expect and what we've modeled.
Okay. So how do you think about that initial luspatercept launch curve as a proxy for what RYTELO uptake should look like here over the next 12 months? And I guess, do you think that that's kind of a fair benchmark against which investors should measure your success?
It's a tough question for us to answer, to be honest with you, because they're different drugs. They're different times, as I just commented on in terms of, and I think while there were fewer competitors leading to rapid uptake, obviously in the second line. I think on the other hand, we have a really compelling value proposition. We have a drug that is very effective in high transfusion burden patients. It's very effective across the entire spectrum of RS positive, RS negative in the second line. So I think we're going to compete very effectively, but the actual launch dynamics are a little bit hard to know right now. And as I said to you at the beginning, somewhat making a little bit of a joke of it, you will only know really in retrospect. So we've got one whole quarter behind us now.
I don't know. Michelle's launched a lot of drugs in her time. I don't know if you have any other comments about how to think about this.
I mean, it's definitely sort of a precedent that we look at, but I agree with Chip. I mean, it is a different drug. I think that we are going to focus on our label, our NCCN guidelines, and executing, and then I think the result will be the steady growth that we're looking for.
Okay. Maybe kind of last nuanced question here, but how do you think duration of therapy will trend in the real world? And do you think that there's going to be upside to that number relative to the duration numbers that we got out of the IMerge trial? And I guess I asked the question, right? Because I know so an IMerge treatment duration was defined by transfusion independence, right? And so if you didn't achieve a TI, you came off drug. I would imagine in the real world setting, whereas where one, you already have a label that calls for a minimum of six months, right? But there's also a scenario where perhaps you're not putting a patient into a TI, but you're taking a patient who is getting transfused once a week and then maybe turning that burden into once a month, once every other month.
And so when you just think about how that duration plays out commercially, how could that differ from what we've seen clinically? And I think it's an important point, right? Because I think a lot of us are just looking at those duration estimates from the clinical trial, using that to drive all of our models, and there could be a meaningful delta on that.
Well, first of all, it's going to be a while before we know the real answer, right? I mean, if you think about the median duration in IMerge was 7.8 months. So we're a long way away from 7.8 months even for the earliest patients who were put on the drug. I think what I would say, Steve, is that most clinical trials have very well-defined and frankly restrictive expectations for how to manage patients on those trials so that you can have consistency across the trial, consistency across both treatment arms, etc. And so you end up with some pretty strong execution against, for example, AEs, right? And so in general, I think it would be fair to say that you often see longer duration of therapy in sort of more indolent or chronic disease like this than you would see in a clinical trial.
It kind of depends on what the patient's status is, what they've seen before. Obviously, if we're in second line, certainly if we're in third line, I would expect for patients to stay on any drug if you don't have any really great alternatives at that point. We see that, for example, in the JAK market, right? We know that JAK inhibitors had a certain length of time in clinical trials, and they go a lot longer now because there's just a dearth of other opportunities. So I think if anything, we would expect a little bit longer. I think that BMS has talked about longer duration of therapy than was seen in their clinical trials with luspatercept. I think we would expect similar dynamics at play, but of course, we don't really know yet.
Okay. Maybe for Michelle, what's your general philosophy around issuing sales guidance? So I believe Jim, when he was at Iovance, gave forward year guidance after one single quarter. I'm guessing that won't be the case here.
Might have had a different chairman. I don't know. I don't know.
But should we expect to maybe hear something about a guidance issuance at some point in 2025, or is this going to be more like a 2026?
I mean, what we have said is that we'd like to have three, four full quarters under our belt. So that does take you to the end of next year. So whether we decide to give out guidance at the end of next year or the beginning of the following year, we'll make that decision. But we'd like to have about three quarters, at least three, four quarters under our belt so that we can really understand the trajectory.
Okay. And then Chip, you mentioned the financing at the outset. There did seem to be some consternation with that financing that you announced, I think, in conjunction with earnings. So I think less so on the debt side, right? That seemed pretty obvious you were retiring kind of a similarly sized tranche of debt with less favorable terms, but I think it was very focused on the royalty financing side. So can you just talk about the rationale for monetizing the royalty, kind of why you settled on those terms specifically? And then what, if anything, you would say to an investor who believes that there's something negative implied about either the slope of the launch and/or the peak opportunity?
Sure. Well, first of all, this financing was part of our strategy that we talked about earlier in the year after we did the $150 million equity raise in March. That if we got approval, we would have the opportunity to assess non-equity financings, which we did, as you mentioned, both on the debt side and on the royalty financing side. It was a really competitive process. We had double-digit proposals of various sizes as well as structures, terms. And when we assessed all of those proposals, we really felt that a couple of things that were important to us that we did get out of this financing on the royalty side was that we wanted a cap. We didn't want it to be royalty out to infinity. We wanted enough time to meet that 1.65 before it flipped into a two times the cap.
We feel like that we can achieve that based on the December 31st, 2031 sort of deadline to get to that 1.65. So I mean, that tells you something about the sales trajectory and the confidence I think that Royalty Pharma saw in the diligence that they did. And we felt that the size and dividing it up between the two, the debt and the royalty, the $125 million each, was reasonable. We didn't want to do an all debt financing for $200 million-plus. As you mentioned, we retired our Hercules debt, which we were very happy about. And I think that when folks asked us questions at the earnings, it was about the royalty rate. And I think that if you're looking at other deals, you might have said, "Oh, the 7.75 was high." You have to look at it from a blended perspective.
It's 7.75 up to 500 million, and then it drops significantly to 3% and then down to 1%. So we retain the upside of RYTELO. We retain 97% over the $500 million of sales. So I mean, that was also important to us. And so if you blend that, it's not that high of a rate, and it's very competitive with other deals that we've seen out there. So we feel very good about both financings. And I think that, again, you can compare it to other ones, but for us, these were the terms that we were looking for. And there are no sort of financial covenants on the debt side. Again, the royalty side, we really wanted it capped, and that was one of our bigger sort of negotiation points. So we feel pretty good about it.
So you're likely to have an EMA approval in hand sometime first half next year. I think you guys have talked about trying to independently commercialize this beginning in 2026. How are you thinking about the addressable market opportunity in Europe? And what is the size of the additional infrastructure that you're going to need to have in place to gain traction in those markets?
I think first of all, it's probably about the same size addressable market as the U.S. Might even be a touch bigger just because of the population differences, but it's a good size addressable market. Second of all, obviously, pricing is different in the E.U. We don't have to educate about that. Everybody understands that. But nevertheless, it remains a very important and obvious financial opportunity for us. I think it'll be a sequential launch, and it would be that way no matter who did it. I think we're doing the groundwork right now, preparing for it. If we were to get an approval in the E.U. for the first half of 2025, we would expect to launch in early 2026, early to mid 2026.
And I think that we're in the process of thinking through ways to minimize the infrastructure build, but to be able to really access the larger markets. And everybody starts in Germany for a reason. That's where a very substantive amount of the financial opportunity is. That's where we would start as well. And then we would go to other large markets.
Okay. I know you also just hired a head of R&D, which I think represents a newly created function at the company. So can you maybe just kind of speak to what the focus of his near and longer-term efforts will be? Is this label indication expansion? Is this pipeline expansion? Is it some combination of both?
It's kind of all of the above. So Joe Eid is an extremely experienced executive. He cut his teeth on this little drug called Keytruda and then went on and really did a lot of the foundational work in setting up medical affairs as we think about it in a very large context. He brings to us an integrated cross-functional approach to medical, clinical development, and drug safety in the same organization and will eventually certainly lead us towards a consideration of other ways to fill the pipeline. Faye will remain as our Chief Medical Officer. She's done a fantastic job and looks forward to working with him. And I think right now he's spending most of his time on the med affairs function, really getting that in shape. And that's where a big part of his expertise has been in the past.
I think he'll do a fantastic job there. But eventually, we need to consider other opportunities for continuing to grow our own pipeline. And I think he'll lead the efforts there in a very substantive way.
Okay. I know that there was some comment around MedChem efforts you had in place to identify next-gen telomerase inhibitors. Is there anything to update on that front in terms of how close you could be to a DC?
I think that we remain hopeful, but we don't have anything to report yet. When we do, we'll look forward to sharing with everybody.
Okay. Maybe last question, which I know is your favorite topic, IP.
Sure.
So I mean, look, I think we still get some questions here, right? This is going to be kind of a philosophical debate that presumably doesn't go away.
Probably not.
But I know you have and kind of others have base case estimates in kind of the 2037, 2038 timeframe. But can you just speak as to whether or not IP has kind of ever proven to be a rate-limiting topic in any of the discussions that you have, strategic or otherwise?
We have strategic discussions, huh? Okay. I think that we'll demure on discussing regulatory or conversations with regulators, with potential strategic partners, partnering partners, whatever. I think we'll just simply say we have a lot of conviction around the IP. We've done a ton of work. And I think that you nailed it. We believe that we will have strong intellectual property protection through sort of the 2037-ish to 2038-ish timeframe. And that for a company to say that and to say that we have that with conviction means we've done a lot of work around that. So I think I'll leave it at that.
Very good. Michelle, Chip, thank you very much for your contribution.
Thank you very much. I'm sorry you didn't get to see Jim, but another time.
Another time.
Thank you very much. I really appreciate it. Thanks.