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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM        TO        

Commission File Number 0-29889

Rigel Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware

94-3248524

(State or other jurisdiction of incorporation or

(I.R.S. Employer Identification No.)

organization)

1180 Veterans Blvd.

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

(650) 624-1100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, par value $0.001 per share

RIGL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

As of October 28, 2022, there were 172,836,336 shares of the registrant’s Common Stock outstanding.

RIGEL PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

INDEX

Page

PART I

FINANCIAL INFORMATION

3

Item 1.

Financial Statements

3

Condensed Balance Sheets (Unaudited) — September 30, 2022 and December 31, 2021

3

Condensed Statements of Operations (Unaudited) — three and nine months ended September 30, 2022 and 2021

4

Condensed Statements of Comprehensive Income (Loss) (Unaudited) — three and nine months ended September 30, 2022 and 2021

5

Condensed Statements of Stockholders’ Equity (Deficit) (Unaudited) — three and nine months ended September 30, 2022 and 2021

6

Condensed Statements of Cash Flows (Unaudited) — nine months ended September 30, 2022 and 2021

7

Notes to Condensed Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

48

PART II

OTHER INFORMATION

49

Item 1.

Legal Proceedings

49

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

97

Item 3.

Defaults Upon Senior Securities

97

Item 4.

Mine Safety Disclosures

97

Item 5.

Other Information

97

Item 6.

Exhibits

98

Signatures

100

2

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

RIGEL PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

(In thousands)

September 30, 

December 31,

2022

    

2021(1)

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

29,866

$

18,890

Short-term investments

 

51,776

 

106,077

Accounts receivable, net

 

15,525

 

15,472

Inventories

7,116

 

6,616

Prepaid and other current assets

 

6,157

 

7,412

Total current assets

 

110,440

 

154,467

Property and equipment, net

 

1,694

 

2,184

Operating lease right-of-use asset

2,991

9,703

Other assets

 

484

 

974

$

115,609

$

167,328

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

2,721

$

3,795

Accrued compensation

 

8,773

 

10,690

Accrued research and development

 

7,574

 

10,384

Other accrued liabilities

 

17,602

 

12,691

Lease liabilities, current portion

3,314

9,892

Deferred revenue

1,369

2,596

Other long-term liabilities, current portion

5,912

13,506

Total current liabilities

 

47,265

 

63,554

Long-term portion of lease liabilities

 

 

759

Loans payable, net of discount

39,468

19,914

Other long-term liabilities

 

48,710

 

52,727

Commitments

Stockholders’ equity (deficit):

Preferred stock

 

 

Common stock

 

173

 

172

Additional paid-in capital

 

1,364,139

 

1,354,190

Accumulated other comprehensive loss

 

(286)

 

(102)

Accumulated deficit

 

(1,383,860)

 

(1,323,886)

Total stockholders’ equity (deficit)

 

(19,834)

 

30,374

$

115,609

$

167,328

(1)The balance sheet as of December 31, 2021 has been derived from the audited financial statements included in Rigel’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (SEC) on March 1, 2022.

See Accompanying Notes to Condensed Financial Statements

3

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2022

    

2021

    

2022

    

2021

Revenues:

Product sales, net

$

19,188

$

16,012

$

53,935

$

45,441

Contract revenues from collaborations

722

4,531

12,529

73,886

Government contract

2,500

1,000

2,500

9,500

Total revenues

22,410

21,543

68,964

128,827

Costs and expenses:

Cost of product sales

250

151

1,407

596

Research and development

 

14,666

 

18,300

44,907

 

51,933

Selling, general and administrative

 

25,897

 

22,877

80,279

 

67,376

Total costs and expenses

 

40,813

 

41,328

 

126,593

 

119,905

Income (loss) from operations

 

(18,403)

 

(19,785)

 

(57,629)

 

8,922

Interest income

 

192

 

14

 

255

 

31

Interest expense

(826)

(1,317)

(2,600)

(3,561)

Income (loss) before income taxes

(19,037)

(21,088)

(59,974)

5,392

Provision for (benefit from) income taxes

(136)

665

Net income (loss)

$

(19,037)

$

(20,952)

$

(59,974)

$

4,727

Net income (loss) per share

Basic

$

(0.11)

$

(0.12)

$

(0.35)

$

0.03

Diluted

$

(0.11)

$

(0.12)

$

(0.35)

$

0.03

Weighted average shares used in computing net income (loss) per share

Basic

172,836

170,886

172,256

170,297

Diluted

172,836

170,886

172,256

176,452

See Accompanying Notes to Condensed Financial Statements

4

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2022

    

2021

    

2022

    

2021

Net income (loss)

$

(19,037)

$

(20,952)

$

(59,974)

$

4,727

Other comprehensive income (loss):

Net unrealized gain (loss) on short-term investments

 

152

 

1

 

(184)

 

12

Comprehensive income (loss)

$

(18,885)

$

(20,951)

$

(60,158)

$

4,739

See Accompanying Notes to Condensed Financial Statements

5

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Equity (Deficit)

Balance as of January 1, 2022

 

171,602,226

$

172

$

1,354,190

$

(102)

$

(1,323,886)

$

30,374

Net loss

 

(27,445)

 

(27,445)

Net unrealized loss on short-term investments

 

(314)

 

(314)

Issuance of common stock upon exercise of options

 

420,521

940

 

940

Issuance of common stock upon vesting of restricted stock units

22,500

Stock-based compensation expense

 

3,243

 

3,243

Balance as of March 31, 2022

 

172,045,247

$

172

$

1,358,373

$

(416)

$

(1,351,331)

$

6,798

Net loss

 

(13,492)

(13,492)

Net unrealized loss on short-term investments

 

(22)

(22)

Issuance of common stock upon exercise of options and participation in Purchase Plan

 

609,839

1

598

599

Issuance of common stock upon vesting of restricted stock units

181,250

Stock-based compensation expense

 

2,440

2,440

Balance as of June 30, 2022

172,836,336

$

173

$

1,361,411

$

(438)

$

(1,364,823)

$

(3,677)

Net loss

 

(19,037)

(19,037)

Net unrealized gain on short-term investments

 

152

152

Stock-based compensation expense

 

2,728

2,728

Balance as of September 30, 2022

 

172,836,336

$

173

$

1,364,139

$

(286)

$

(1,383,860)

$

(19,834)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Deficit

    

Equity

Balance as of January 1, 2021

    

169,316,782

$

169

$

1,339,833

$

(4)

$

(1,305,972)

$

34,026

Net income

 

39,500

 

39,500

Net unrealized gain on short-term investments

 

3

 

3

Issuance of common stock upon exercise of options

 

813,854

1

2,096

 

2,097

Stock-based compensation expense

 

2,672

 

2,672

Balance as of March 31, 2021

 

170,130,636

$

170

$

1,344,601

$

(1)

$

(1,266,472)

$

78,298

Net loss

 

(13,821)

(13,821)

Net unrealized gain on short-term investments

 

8

8

Issuance of common stock upon exercise of options and participation in Purchase Plan

 

711,847

1

1,318

1,319

Stock-based compensation expense

 

2,306

2,306

Balance as of June 30, 2021

170,842,483

$

171

$

1,348,225

$

7

$

(1,280,293)

$

68,110

Net loss

 

(20,952)

(20,952)

Net unrealized gain on short-term investments

 

1

1

Issuance of common stock upon exercise of options

 

127,265

274

274

Stock-based compensation expense

 

2,237

2,237

Balance as of September 30, 2021

 

170,969,748

$

171

$

1,350,736

$

8

$

(1,301,245)

$

49,670

See Accompanying Notes to Condensed Financial Statements

6

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

Nine Months Ended September 30, 

2022

    

2021

Operating activities

Net income (loss)

$

(59,974)

4,727

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation expense

 

8,305

7,147

Gain on disposal of assets

(465)

Depreciation and amortization

 

714

758

Non-cash interest expense

682

2,314

Net amortization and accretion of discount on short-term investments and term loan

116

171

Changes in assets and liabilities:

Accounts receivable, net

 

(53)

982

Inventories

(394)

(5,325)

Prepaid and other current assets

 

1,255

8,113

Other assets

 

490

(111)

Right-of-use assets

 

6,712

6,071

Accounts payable

 

(999)

(656)

Accrued compensation

 

(1,917)

(131)

Accrued research and development

 

(2,810)

4,586

Other accrued liabilities

 

4,911

2,563

Lease liability

(7,337)

(6,384)

Deferred revenue

(1,227)

139

Other current and long-term liabilities

 

142

 

Net cash provided by (used in) operating activities

 

(51,849)

 

24,964

Investing activities

Purchases of short-term investments

 

(26,049)

(117,076)

Maturities of short-term investments

 

80,062

31,200

Proceeds from disposal of assets

543

Capital expenditures

 

(377)

(648)

Net cash provided by (used in) investing activities

 

54,179

 

(86,524)

Financing activities

Cost share advance from collaboration partner

57,900

Cost share payments to a collaboration partner

(12,435)

Net proceeds from issuances of common stock upon exercise of options and participation in Purchase Plan

 

1,539

3,690

Net proceeds from term loan financing

19,542

Net cash provided by financing activities

 

8,646

 

61,590

Net increase in cash and cash equivalents

 

10,976

 

30

Cash and cash equivalents at beginning of period

 

18,890

30,373

Cash and cash equivalents at end of period

$

29,866

$

30,403

Supplemental disclosure of cash flow information

Interest paid

$

1,549

$

1,094

See Accompanying Notes to Condensed Financial Statements

7

Rigel Pharmaceuticals, Inc.

Notes to Condensed Financial Statements

(unaudited)

In this report, “Rigel,” “we,” “us” and “our” refer to Rigel Pharmaceuticals, Inc.

1.

Organization and Summary of Significant Accounting Policies

Description of Business

We are a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with hematologic disorders, cancer and rare immune diseases. Our pioneering research focuses on signaling pathways that are critical to disease mechanisms. Our first product approved by the US Food and Drug Administration (FDA) is TAVALISSE® (fostamatinib disodium hexahydrate) tablets, the only approved oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment. The product is also commercially available in Europe, United Kingdom (UK) (TAVLESSE) and Canada (TAVALISSE) for the treatment of chronic ITP in adult patients.

Our portfolio also includes olutasidenib, an oral, small molecule inhibitor of mutated isocitrate dehydrogenase-1 (mIDH1) being investigated for the treatment of acute myeloid leukemia (AML) and other malignancies. We in-licensed olutasidenib from Forma Therapeutics, Inc. (Forma) with exclusive, worldwide rights to develop, manufacture, and commercialize the investigational drug.

We conducted a Phase 3 clinical trial evaluating fostamatinib for the treatment of warm autoimmune hemolytic anemia (wAIHA), and recently announced that we do not expect to file a supplemental New Drug Application (sNDA) for this indication at this time considering the top-line data results and the guidance received from the FDA. We recently announced the completion of the FOCUS Phase 3 clinical trial of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19. Fostamatinib is also currently being studied in a National Institute of Health (NIH)/National Heart, Lung, and Blood Institute (NHLBI) sponsored Accelerating COVID-19 Therapeutic Inventions and Vaccines (ACTIV-4) Phase 3 trial (ACTIV-4 Host Tissue Trial) for the treatment of COVID-19 in hospitalized patients.

Our other clinical programs include our interleukin receptor-associated kinase (IRAK) inhibitor program and a receptor-interacting serine/threonine-protein kinase (RIPK1) inhibitor program in clinical development with partner Eli Lilly and Company (Lilly). In addition, we have product candidates in clinical development with partners BerGenBio ASA (BerGenBio) and Daiichi Sankyo (Daiichi).

Basis of Presentation

Our accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (US GAAP), for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933, as amended (Securities Act). Accordingly, they do not include all the information and notes required by US GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that we believe are necessary to fairly state our financial position and the results of our operations and cash flows. Interim-period results are not necessarily indicative of results of operations or cash flows for a full-year or any subsequent interim period. The balance sheet as of December 31, 2021 has been derived from audited financial statements at that date but does not include all disclosures required by US GAAP for complete financial statements. Because certain disclosures required by US GAAP for complete financial statements are not included herein, these interim unaudited condensed financial statements and the notes accompanying them should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our

8

estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates.

Significant Accounting Policies

Our significant accounting policies are described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” to our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to these accounting policies, except for our accounting associated with our in-license agreement with Forma as discussed in detail in “Note 4 – Sponsored Research and License Agreements”.

Liquidity

As of September 30, 2022, we had approximately $81.6 million in cash, cash equivalents and short-term investments. Since inception, we have financed our operations primarily through sales of equity securities, debt financing, contract payments under our collaboration agreements and from product sales.

Based on our current operating plan, we believe that our existing cash, cash equivalents, and short-term investments will be sufficient to fund our expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of this Form 10-Q.

Recently Issued Accounting Standards

No new accounting guidance adopted during the period. Recently issued accounting guidance is not applicable or did not have, or is not expected to have, a material impact to us.

2.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period and the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive securities include stock options, restricted stock units and shares issuable under our Employee Stock Purchase Plan (Purchase Plan). The dilutive effect of these potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.

The following table sets forth the computation of basic and diluted earnings per share (in thousands except per share amounts):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2022

    

2021

    

2022

    

2021

EPS Numerator:

Net income (loss)

$

(19,037)

$

(20,952)

$

(59,974)

$

4,727

EPS Denominator—Basic and Diluted:

Weighted-average common shares outstanding

 

172,836

 

170,886

 

172,256

 

170,297

EPS Denominator—Diluted:

Weighted-average common shares outstanding

 

172,836

170,886

172,256

170,297

Dilutive effect of stock options, restricted stock units and shares under Purchase Plan

 

6,155

Weighted-average shares outstanding and common stock equivalents

 

172,836

 

170,886

 

172,256

 

176,452

Net income (loss) per share

Basic

$

(0.11)

$

(0.12)

$

(0.35)

$

0.03

Diluted

$

(0.11)

$

(0.12)

$

(0.35)

$

0.03

9

The potential shares of common stock that were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been antidilutive are as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2022

    

2021

2022

    

2021

Outstanding stock options

32,687

30,490

32,687

9,450

Restricted stock units

1,174

234

1,174

4

Purchase Plan

398

313

398

Total

34,259

31,037

34,259

9,454

3.

Revenues

Revenues disaggregated by category were as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

2022

    

2021

2022

    

2021

Product sales:

Gross product sales

$

26,977

$

20,546

$

76,022

58,692

Discounts and allowances

(7,789)

(4,534)

(22,087)

(13,251)

Total product sales, net

19,188

16,012

53,935

45,441

Revenues from collaborations:

License revenues

2,431

2,545

70,354

Development milestones

1,875

5,000

1,875

Research and development services and others

722

225

4,984

1,657

Total revenues from collaborations

722

4,531

12,529

73,886

Government contract

2,500

1,000

2,500

9,500

Total revenues

$

22,410

$

21,543

$

68,964

$

128,827

Our net product sales include sales of TAVALISSE in the US, net of chargebacks, discounts and fees, government and other rebates and returns. The following tables summarize the activities in chargebacks, discounts and fees, government and other rebates and returns that were accounted for within other accrued liabilities, for each of the periods presented (in thousands):

Chargebacks,

Government

Discounts and

and Other

Fees

Rebates

Returns

Total

Balance as of January 1, 2022

    

$

3,404

$

2,494

$

2,017

$

7,915

Provision related to current period sales

14,475

4,130

1,045

19,650

Credit or payments made during the period

(11,920)

(4,257)