Thank you so much for joining us this morning.
Great to be here.
Thanks a lot, John.
All right. Well, let's jump right into it.
Sure.
Let's talk about the launch. First quarter obviously went very well. The market and the label is a little split here. So I would love to start by diving into the different populations. You've got the first line ESA ineligible, second line is split between the RS positive and RS negative, different options for patients, different competitive landscape in these different places. So first things first, I know it's early in the launch, but what are you observing on the ground in terms of the populations where you're getting the best traction? What's the feedback from docs on which settings they're most enthusiastic about?
Happy to take that, and we'll deconstruct it as we go along a little bit. So first of all, thanks a lot for inviting us to be here. Michelle's our Chief Financial Officer. I'm the CEO. We've had a lot of investor interest, to say the least, so we're excited to be able to be at this stage of the company's development. You're right, we had a bang-up first quarter, John. We had a good solid beat on the initial consensus numbers. And as we look ahead, we see strong continued growth. I think we should also mention, and we can come back and talk about it later if you'd like, but we also strengthened our cash position with a $125 million synthetic royalty deal with Royalty Pharma, which was announced at the same time as a $250 million debt deal with Pharmakon, of which we've taken down $125 million.
So, top line, we expect to reach profitability based on that without assuming we meet our revenue and OpEx forecast. We would expect to reach profitability without having to go back for more equity. And obviously, we have two other big moments coming. We're in the process of getting the drug approved in Europe. And we also have a very long-time ongoing, very big, very exciting study in myelofibrosis, overall survival study. And we're looking ahead to the first half of 2026 when we could have an interim analysis, potentially. So that's kind of the big picture.
Sure.
I'll try to take your questions about marketplace and how that all works out, and then maybe we can pivot to some of the financings and financials, et cetera. For those of you who are not familiar with the low-risk MDS market or who are not as familiar with the competitive landscape there, I'll just maybe do a quick big overview. First and foremost, I always say lower risk MDS is a misnomer. There's not too much lower risk about it. These are pretty sick patients. They have a hematologic malignancy that causes them to eventually succumb to the disease. We offer the ability clearly to have excellent effects on red blood cell transfusion. We're able to make many patients transfusion-free, which is actually a very big deal for them.
And if anybody wants to understand the nuances of that, I would encourage them to go back and look at our ODAC, in which we had a number of patients who really spoke very eloquently about what a change in their life it's made to be transfusion independent. We have long durability of that. In terms of the types of patients in the market, we kind of think of them in the following buckets. There's a group of patients who are frontline patients, but when they appear and they're ready to start treatment, they have very high endogenous erythropoietin levels. Those patients historically have not responded to the use of ESAs, EPO, if you're aware.
For obvious reasons.
Yeah, because they've already been making plenty of it, and it's not working. And those patients we have had in our clinical trials, and we've shown very nice results in that patient set. So that is one of the, it's a small group for us. It's about 10% of the frontline, but we're able to get a toehold there for sure. We've always been very strong across the entire second line setting. So Reblozyl, our major competitor, luspatercept, was developed for a relatively modest part of the second line market. So that's the so-called RS positive second line market. They never studied the RS negative second line patients, and that's not in their label.
Although it is on guidelines.
It is on guidelines, for sure. Yes. And you get in as a commercial company, you get into what can you promote and what do patients actually do, and that's a correct way to look at it. So in any event, we feel very strongly that we should be able to make great inroads, particularly in the second-line RS negative space. And we do very well in the RS positive space, although that's where luspatercept has really gotten most of their sales. And then there's always the third-plus line that any drug will get.
I guess guidelines seem to be putting you, currently anyway, behind luspatercept, even in the RS negative population. Does that jive with what you're seeing in the commercial reality, or are docs enthusiastic to move you in front?
I don't think they're really placing us behind. I mean, I know there's been some recent juggling of stuff. I think we still see ourselves as being part of the standard of care in second line in both RS negative and RS positive and in that front line patient. So we don't see any real change with that. And I think we'll do very, very well.
Do you have a sense right now in commercial patients whether the folks that you're dosing in the second line are luspatercept exposed or not?
We know that some of them are, almost surely, because there have been plenty of patients treated in the front line now with luspatercept, so we're quite confident. We know from, and we have an abstract at ASH that shows this, we know that patients who have been previously treated with luspatercept still respond very well to this drug. They're very different mechanisms of action. That's what you would expect. So I don't see that as a major determinant of how the drug gets the uptake and how it gets actually utilized.
Well, the label here is a great label for you. I think you and others have talked about this extensively. No boxed warning, REMS, no contraindications.
Right.
So have you observed any lingering hesitance in the commercial setting, maybe in the community, groups of docs that haven't fully digested the positive label or the profile here and are still worried?
So that's two questions. There's the question of, are there people who have not yet digested it? The answer to that is absolutely. Busy physicians, and I agree with your characterization to some degree, but it's probably true in the academic world too. There are plenty of people who have never used the drug, and therefore our job is to introduce them to the drug, explain to them the pros, the cons, the side effect profile, et cetera. And then hopefully they have a very good first, second, and third experience on the drug. That's typical commercial sort of 101. I think on the other side, I don't think we're seeing hesitancy. If anything, we always engage providers with the commentary around the cytopenias.
We want to make sure that everybody understands the nature of them, that they are self-limiting to some degree, that certainly there are ways to adjust the dosing, hold doses, et cetera, and that that's to make sure that people can stay on the drug and get the benefit of it. And their usual response to whether it's an MSL or whether it's a sales rep or a nurse that we employ as an educator, all of those people are coming back with the same answer. These hematologists say, you don't understand. Every drug that we use does this. We are like, we are.
We don't care about anything.
We don't care. We manage it all day, every day. And I think there's a certain amount of truth to that. So we're not seeing, I haven't really heard any resistance from that. I think that was so well described and talked through. And the information out there is really quite extensive. So I don't think it's going to be the big limiting factor. At least it doesn't seem that way right now.
Now, the other thing on the label that sort of jumped out at me is the impact of the transfusion language, which doesn't seem out of place, I guess, given the studies that got run. But does that create a bottleneck from a reimbursement perspective, from a reauthorization perspective? Does that have an impact on what you expect from duration of therapy in a commercial setting? Can you explore some of that for us?
Sure. I don't think we've seen it at all so far. A little bit of, again, for the audience who may not be as familiar, a little bit of historical background here. So traditionally, when the community started looking at transfusion independence as the primary outcome measure for lower risk MDS patients, and that was about 10 + years ago. And when they started doing that, it became very evident. And I think the Reblozyl, luspatercept work in second line patients really showed this beautifully. If you're going to do a clinical study, you have to make sure that you have a sufficient transfusion level to be able to show a difference, even between placebo. And they actually enrolled a number of patients at some point, even at two units for eight weeks of transfusion burden. And those patients barely separated from placebo.
There's just not enough delta.
There's not enough delta. And there's enough variability in how individual investigators adjudicate when somebody needs a transfusion. So the standard kind of became for most of us in the field, we used four units for eight weeks of transfusion burden to make sure that we had plenty of delta. And we had that. And that worked out very well for us. So that got incorporated in the label, as you would expect, right? Because that's what the clinical trial was. But it is, generally speaking, for most of our patients, I'm sure there must be some insurance provider or third-party payer somewhere that must require you to actually adjudicate that it's four units, at least four units. But we haven't seen that very often. And usually, it's just a tick box for most of these patients. Is the patient transfusion dependent?
We would certainly want them to be transfusion dependent. I don't think we're not seeing that as a big issue for us.
Maybe let's move on to some questions for Michelle since we've got you. The royalty deal that you mentioned just a moment ago was not well received when you announced it, likely because of the headline rate.
Sure.
7.75 seemed a little high to some folks who were observing. But I know that you've been active in talking about the structure of that deal and trying to push back against that initial observation. How has investor feedback developed since the announcement? And is there a good understanding of the upside potential for you as aggregate sales numbers go up? Yeah, let's start with that.
Sure. Yeah, definitely, there was some feedback at earnings about the announcement. However, we have done a lot of investor meetings. And I think we've clarified what our goal was. It was a competitive process. We reviewed terms and structures from many different debt and royalty groups. We thought about how much sales we wanted to retain early in the Rytelo launch. And we thought that what we ended with gives us that balance of capped. It's a cap deal, which we think is great. We gave ourselves a good amount of time to meet the cap of 1.65. And we do expect, if the current forecast is achieved, that we will be able to pay the cap, the 1.65, by the deadline. It's a good balance between royalty and debt. So we feel really good about it. I think what folks looked at was the 7.75.
But what you have to realize is that there's a blended rate here. The 7.75 is only on the first $500 million. On the sales from $500 million to $1 billion, it drops down to 3%. So we're really retaining sort of the upside to Rytelo that we're pretty confident in. And then over $1 billion, it's 1%. So if you look at that from a blended rate, it's really more in the fours than it is 7.75.
Obviously, your expectations for the drug reach those levels pretty easily. But can you talk a little bit about what needs to happen and when you would expect to get to those $500 million + more attractive regimes?
Sure. I mean, what we've guided on, because we're not giving out revenue guidance and forecast guidance, is that the date for the 1.65 cap is that we have to meet that by 12/31/2031. And we're confident that we can reach it before then.
Okay. You've guided to runway into the next year. At least you just said you expect profitability if all of your assumptions are met. How much wiggle room do you have on that profitability guidance given the launch that's developing?
Yeah, sure. So again, as Chip said, if we meet both our revenue and our OpEx numbers, we can get to profitability without going back to the equity markets. We do have access. Remember, we took down $250 million, $125 million debt, $125 million equity, I mean, royalty. But we have access to an additional $125 million from Pharmakon. So that gives us flexibility that if the curve is not what we think it is or it's a little slower and we needed to access it, but we feel pretty confident. Remember, both deals, our forecast was assessed quite closely. There was a lot of diligence on this launch and on the potential of Rytelo for these parties to come up with the terms. So we feel really great about the access of the additional $125 million.
How much commercial spend in the EU are you assuming currently before that?
So I mean, right now, we've got all of our prep activities accounted for in 2025. So as I think we've mentioned, we would expect to launch in certain EU countries in 2026. But again, there's a lot of time and a lot of prep that goes into that.
Obviously, reimbursement in Europe is an extended process.
Right. So right now, we're talking with external vendors about all the critical path items. That's included in our current runway. We will then look at internal versus external sales forces, medical affairs, and field. And so that's incorporated into our long-range plans.
Excellent. So with the EU approval expected relatively soon, how are you thinking about cadence of EU launch and getting through that extended reimbursement process?
Yeah. I mean, first and foremost, obviously, we want to optimize revenues in the EU. And we want to ensure that we have patient access first and foremost. So with that, and I think everyone knows that launching in Europe is different from launching in the U.S. And that's why I mentioned that we'll launch in certain EU countries. But we have to do the prep work around reimbursement.
Reasonable to expect that it'll be the usual, like Germany and France.
Exactly.
That's right.
Exactly.
That's rapidly.
Exactly. Yeah. And it won't be instantaneous. It'll be a sequential process. And that's why, just to reinforce what Michelle said, I think we see this as a single product company. The last thing you want to do is invest heavily in infrastructure in Europe. We all know that the contribution margins there are different because of the pricing that's quite different. So we're trying to adjudicate all of that internally. But at the same time, it's not a very attractive market to give all of that away to somebody else. It takes away some of your strategic optionality, et cetera. So I think back to Michelle's point, say it over and over again, we want to optimize value accretion, but we also want to make sure we offer patient access. We need to do both of those.
And that can be done today a variety of different ways, which can include different vendors who kind of specialize in these smaller markets with single product companies.
Makes sense. Beyond the MDS launch, I want to make sure we spare a moment to discuss myelofibrosis, which you mentioned in your opening remarks, Chip. Obviously, those trials look attractive, but are going to take quite a while to read out. AML is still very early. So what are you really excited to start showing for the next leg here? And where should we be focused for growth opportunities beyond the launch in Europe and launch in the U.S. that we've just been discussing?
I think MF is the right way to look at it. But they're kind of a shot and a half on goal. So the shot on goal, the big shot on goal is the one that we, the bet that we made years ago now in starting the largest and the only overall survival study in myelofibrosis. So the stakes are very high. We believe that it will be positive or we wouldn't have made it and continued to make that investment. We have excellent phase two data that really supports that. And we think that's a game changer in MF and would be a game changer. So that, unfortunately, you can't hurry that. It's just, it's a clinical trial. And it's actually the enrollment continues to do very well right now because once the drug got approved, you usually get a little bump from all of that.
And then the other side is on the front line. We will have an abstract at ASH that will give some very, very early data on the front line side. The safety stuff we've already said is very good. And I think that'll work very well, being able to combine nicely, in this case, with ruxolitinib. But stay tuned for the efficacy side that will evolve over this coming year.
Excellent. Well, we're out of time. But thank you so much, Chip, for your help.
Thanks very much. Really appreciate it. Thanks.