Q1 2023 TG Therapeutics Inc Earnings Call
[music].
Greetings and welcome to the TG Therapeutics first quarter 2023 earnings call.
This time, all participants are in a listen only mode.
<unk> and answer session will follow the formal presentation.
And what you require operator assistance during the complex. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the call over to Jenna Bosco. Thank you you may begin.
Thank you welcome everyone and thanks for joining us this morning, I'm, Jennifer Moscow and with me today to discuss the first quarter 2023 financial results and provide a business update are Michael Weiss, our chairman and Chief Executive Officer.
Adam Waldman, our chief commercialization officer, and Sean power, our Chief Financial Officer.
Following our safe Harbor statement, Mike will provide an overview of our recent corporate developments Adam will provide an update on our commercialization efforts and Shawn will provide a brief overview of our financial results before turning the call over to the operator to begin the Q&A session.
Before we begin I'd like to remind everyone that we will be making forward looking statements within the meetings of the private Securities Litigation Reform Act of 1995. These forward looking statements include statements about our anticipated future operating and financial performance, including sales performance projected regulatory milestones and expectations for our markets.
And pipeline products TG cautions that these forward looking statements are subject to risks that may cause our actual results to differ materially from those indicated.
Factors that may affect TG therapeutics operations include various risk factors that can be found in our SEC filings. In addition, any forward looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.
We specifically disclaim any obligation to update or revise any forward looking statements.
This conference call is being recorded for audio rebroadcast on Tg's web site Www Dot TG therapeutics Dot com, where it will be available for the next 30 days.
With that I would like to turn the call over to Mike Weiss our CEO .
Yes.
Thanks, Jennifer and good morning, everyone and thanks for joining us on today's call.
2023 is off to an excellent start for us at T. G with the U S approval and commercial launch of <unk>.
And we are excited to be able to offer patients the first and only after that.
CD 20 monoclonal antibody approved for relapsing forms of M. S that can be administered in a one hour infusion twice a year following the starting dose.
We believe that three M. B its clinical profile has best in class potential in the treatment of multiple sclerosis, and offers an exciting value proposition for all key constituents, including patients providers and payers.
Today, we are pleased to share the results of our first partial quarter of sales commencing on January 26 2023.
As such we are essentially reporting on the first two months of free on the commercial availability.
Our chief commercialization officer, Adam Wallman will join us shortly to provide some detailed metrics surrounding the first quarter results.
Accordingly, I will keep my comments regarding the launch at a high level I've touched on a few other topics that may be of interest to investors.
With respect to the launch we have said for some time that the profile of <unk> has been well received by health care providers and we are pleased to see such enthusiasm carrying through to the launch phase.
Early adoption has come from both major academic centers and community practices.
Geographically all of our territories has seen.
Hcp's prescribing pretty upbeat and we have seen nice adoption within our target accounts.
In terms of patients. We are also seeing a nice distribution and those that are neutral M. S treatment new to see the 20 treatment and also switches from other CD Twenty's, which we believe further underscores the attractiveness of the profile.
Overall, I believe our commercial teams and medical teams are doing a fantastic job introducing agree on V. Two and educating healthcare providers on the attributes of beyond meat as well as well as building payer access.
And I'm very pleased with the launch thus far.
With that.
Move on I want to briefly.
Talk about our European marketing authorization application.
Our ex U S launch plans.
At the end of March about a month ago, we announced that the committee for medicinal products for human use.
Of the European Medicines Agency churches, the E. M E issued a positive opinion recommending the approval of <unk> for the treatment of adult Rms patients.
With active disease defined by clinical or imaging features.
With this opinion, we expect to hear a final decision from the EMA by early June .
We continue to evaluate the best commercial pathway for us in Europe , either go it alone or partner, we will seek to answer that question in the coming months to enable a European launch later this year if approved.
Whatever pathway, we select we see Europe as another opportunity to create additional shareholder value by making bring them be available internationally.
Finally, let me discuss tg's cash position.
As reported we ended the quarter with approximately 160 million in cash. When you include the 20 million of additional capacity available to us under our Hercules facility.
We continue to believe our current cash and associated incremental Hercules capacity, along with modest assumptions of revenue will be sufficient to take us into mid 2024.
Of course, if revenues continue to exceed those in our cash model.
Our current cash should last even longer.
With our growing revenues and relatively stable burn it is not clear how much if any amounts we would need to raise prior to cash flow breakeven.
Accordingly, we are quite comfortable with our current cash position and with our many options for adding to the balance sheet and non dilutive or minimally dilutive ways.
With that let me turn the call over to out of Mormon our chief commercialization officer to share some additional color on our first quarter of launch Adam.
Yes, Thank you, Mike and good morning, everybody I'm excited to provide an update on our first quarter commercial performance as well.
Mike noted <unk> was approved at the end of 2022 and drugs first became available at the end of January 2023.
We are pleased with the initial adoption of <unk> by the Ms community.
Let it by net sales of $7 8 million in just the first two months of commercial launch exceeding our internal expectations.
We believe our commercial teams executed exceptionally well in the first quarter successfully engaging with nearly 100% of our initial targeted accounts educating on biamby's product profile proper infusion techniques and helping to activate a college to be ready to prescribe <unk>.
We invested heavily to build on what we believe is a best in class patient support program and the team is operating effectively to support our accounts and help patients navigate the access and insurance process.
And the hurdles that are common in the first stages of a launch.
The feedback from our customers on the responsiveness of our team has been positive and I believe we've made a lot of progress in a short period of time, establishing T. G. As a committed partner in the M. S community.
Based on the feedback from customers, we continue to believe that the <unk> profile is attractive.
Many of our health care providers have let us know that the one hour infusion combined with the lowest they are seen in our phase III trial are important and relevant differentiators in a competitive space.
We believe an important indicator of early success as measured by both breadth and depth of abuse.
Accordingly, we were pleased to see that over 165 positions for more than 125 centers in the U S prescribing them being the first partial quarter of our launch.
Additionally, we believe prescriptions leading to registrations on our patient support hub are strong leading indicator of demand for reality.
Accordingly, we were pleased to see that our first partial quarter more than 400 patients were prescribed <unk> and enrolled in our hub.
Which we believe captures approximately 80% to 90% of total prescriptions in the quarter.
All prescriptions will lead to registration at the hub.
It was also nice to see that there was significant acceleration of prescriptions in March over February .
And we continue to see acceleration of prescriptions in April .
Overall, we believe this represents strong demand for me I'll be in the early stages of launch, which we believe is being driven by brown these highly attractive therapeutic profile.
In terms of patient access our pricing strategy was aimed at providing broad and fast access to reality and we believe that strategy is working as we can.
Continue to track ahead of our internal estimates on payer coverage I'm pleased to share that we now have coverage policies in place for over 50% of covered lives across the U S, which puts US well ahead of our mid year goal and a good and a good position to be able to hit our corporate goal of achieving broad access to brandy with greater than 80% coverage by the.
And in 2023.
We also recently announced that the U S centers for Medicare and Medicaid services or CMS has issued a permanent J code for <unk>.
Which will become effective on July one 2023.
This is great news and in and in addition to streamlining the reimbursement process. We believe this will facilitate additional patient access as there are many accounts that will wait to use Bradley until the J code becomes effective on July one.
Additionally, some of our largest academic institutions in the country are not yet prescribing Brown me as they have formulary processes that can take up to six months or more.
Accordingly, we see brown be accelerating in the second half of the year once the permanent J code is effective and as these larger centers gain formulary approval and we continue to expand our payer coverage.
So to conclude we feel as though we're off to a solid start on the Breo launch. We believe we have the right team focused in the right places with the drug that we believe provides an attractive profile for physicians patients and payers. We are seeing strong early demand and willingness to try bring them from the top volume Ms centers and top tier physicians across the <unk>.
Country in both the academic and private practice settings.
Payer coverage is ahead of schedule.
And we believe operational hurdles such as the J code and institutional formulary access we will continue to improve throughout the year.
With that let me turn the call over to Sean power, our CFO to discuss the quarterly financial results.
Thanks, Adam and thanks, everyone for joining us.
Earlier. This morning, we reported our detailed first quarter 2023 financial results, which can be viewed on the investors and media section of our website.
I'd like to begin today's call by again, highlighting that we are pleased to report $7 8 million a three M. B net product revenue in the first quarter.
As for our broader financial results, our net loss for the first quarter of 'twenty to 'twenty three.
Excluding noncash items was approximately $32 6 million.
Down more than 50% from the first quarter of 2022 where we saw a net loss excluding noncash items of approximately $67 million.
The year over year decrease was primarily the result of our disciplined and focused approach to spending and the streamlining of our R&D programs.
Our GAAP net loss for the first quarter of 2023 was $39 4 million or 28 cents per share.
Paired to a GAAP net loss of 69 million or 51 cents per share in the first quarter of 2022.
And finally on our cash position, we ended the first quarter with approximately $140 million in cash cash equivalents and investment securities.
Which includes $25 million of capital drawn in the first quarter under our existing Hercules facility.
Additionally, we recently amended our Hercules facility and now have the ability to draw $20 million at our discretion into September of this year.
Leaving us with available capital of approximately $160 million.
We believe our available capital when coupled with modest free M. D revenue assumptions will take us out into mid 2024.
With that I will now turn the call back over to the conference operator to begin the Q&A.
Thank you we will now be conducting a question and answer session I would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Our first question will come from the line of Eric Joseph with JP Morgan. Please proceed with your questions.
Hi, good morning, Thanks for taking the questions nice trends on the quarter.
Maybe Adam can you elaborate a little bit more on sort of the the mix you're seeing between.
It's sort of new 2020 versus switches is it sort of more or less than you anticipated and then I'm also curious about any feedback you are getting on.
Infusion times in the commercial setting beyond.
That initial dose right I guess it is.
Or are you seeing any at all any deviation I guess from the anticipated one hour infusion time for folks getting their follow up treatment follow up infusion. Thank you.
Yeah.
Adam go ahead.
Yep Yep, Thanks, Eric for the question.
As Mike noted, we were seeing a mix of both naive and switch patients.
And we're seeing.
With the switch patients where it has seen a distribution of patients coming from a broad set of disease modifying therapies, including <unk> <unk> tysabri and the oral <unk> and.
An injectable so we're seeing a nice mix across all of that.
It's a little too early to give more specifics here, we'll wait a little bit on that as.
As far as the infusion experience all as expected.
I think were you know we don't we.
We haven't.
Good feedback on what we're seeing right now is as expected, we're not seeing any unexpected adverse events and the the.
The feedback on the infusion so far has been largely positive.
Great now I will just add.
Go ahead, I'll just add on top of that I've, obviously been out in the field myself and everything I've heard and saw the thing.
Time is on target.
Okay great.
And just and then probably.
And I'm talking to print a little bit is there.
Victorian component here or a channel component, we should be thinking about and to the extent. There is I guess, how should we be thinking about that sort of building or not going forward.
Yeah.
Yeah, Adam on overhead.
Oh.
And religion.
Yeah, I'm here, sorry, we did not see a lot of stocking at the distributors on the in the first quarter, Eric inventories, what you would expect in a launch and the vast majority of sales was demand driven.
Okay, great. Thanks for taking the questions.
Sure.
Yeah.
Thank you. Our next question is coming from the line of Ed White with H C. Wainwright. Please proceed with your questions.
Good morning, Thanks for taking my questions and congratulations on the sales number.
Uh huh.
You're welcome Mike.
Perhaps you can give us a few comments on our percentage of free drug what percentage of patients you're seeing take advantage of the patient access programs.
Sure Adam.
Yeah, we saw and we thanks for the question, we saw about 10% to 15% of free goods on top of the Ah Ah the sales that we saw so 10% to 15%. The majority of that was through our quick start program. We do expect that those patients will convert to commercial drug in the second half of the year.
Okay.
Great Thanks and.
Just a question on.
<unk> expenses.
R&D was dramatically lower than the first quarter versus the fourth quarter of last year and the SG&A was was much higher as you are proceeding with the launch I'm just wondering if theres any.
Our guidance you can give us on what those expenses are going to look like quarter over quarter throughout the year and how the ramp.
Sure Sean you want to tackle that one.
Yep sure.
Thank God.
One thing to note on on the R&D front as prior to your approval the manufacturing of a breather on the sort of run through R&D.
That will now run through inventory. So that is of course part of the decrease there as well as sort of the streamlining of our a broader R&D programs.
I would say I'd I'd expect R&D.
That's remained pretty consistent.
With what you saw in the first quarter for the remainder of 'twenty three.
And I would I would express the same sentiment for SG&A as well.
Okay.
Okay, great. Thanks for taking my questions.
Thanks, Ed.
Thank you. Our next question is coming from the line of car admirable with Cantor Fitzgerald. Please proceed with your questions.
Hi, good morning, Thanks for taking my questions and congrats on the great quarter.
So firstly, maybe a clarification out of the greater than 400 prescriptions, how many patients were infused into first quarter.
And I had a follow up.
Yeah sure I'll take a crack and then I don't want to say on the top so.
We don't know exactly how many patients get infused we don't have access to that information. So we only know.
We only actually know when the script is written.
And only the scripts that go through the hub.
Right. So we don't have perfect information on total scripts.
And we don't have very much information other than anecdotally from the field.
On what actually gets infused and when it gets infused.
And I think the 400, plus you know up to maybe another.
50 to 100, perhaps we don't know exactly prescriptions were written during the quarter.
Uh huh.
Most are some of those will be fulfilled in the quarter, we don't know someone be fulfilled in the next quarter.
Perhaps but and perhaps some of them get filled at all to be honest. So.
The demand is as Adam mentioned in his prepared remarks.
It was quite strong and we will see those conversions into a into final.
Fusions over time, and we'll get some of them. We will we will I think over time be able to capture.
Sure the the infusions that occur for people, who went to the hub.
But that's and that's basically just our reps going to the sites and actually collecting information and so at this point that's a it's way too early for us to have a good number on that Adam any thoughts there.
No you're right I mean, we just don't have the accurate.
Information at this point.
Got it.
No.
My second question to consensus for the full year is around $65 million to $70 million, which based on my math would imply 2000 to 2500 patients on <unk>, depending on how gross to net discount span out. So I know you guys are not giving guidance right now, but if you can comment on your comfort level on where the street is at.
Based on the trends Youre seeing right now thank.
Thank you.
Yeah.
Adam would you like to say to that.
Yes, I think it's still too early we're still early in this launch I think we'd like another quarter of time just to give you guidance on that.
I guess, if we can if I can have one more question.
How do you expect the gross to net discounts to track over the course of the year.
And what was the gross to net for this quarter.
Thank you.
Yes.
Yeah, Yeah yeah.
Gross to net in the quarter was 77%.
We do expect that to fluctuate quarter to quarter.
The business will change.
There will be some fluctuation so first quarter was 70, 70% a week.
Not going to give any guidance yet the full year.
As we get more information, we'll continue to update you.
Thank you.
Thank you. Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your questions.
Hi, good morning, guys and congrats on the quarter.
I guess, yes.
It's starting off a little bit can you can you elaborate a little bit more on your ex U S plans, how and how youre thinking about partnering versus going it alone.
Yeah.
So and then again, we were just continuing to do the analysis of Oh.
What the ex U S market looks like and then we've kind of narrowed it down and then if we go alone we would probably focus primarily in.
In Germany, where we think the vast majority of the ex U S market resides there honestly.
More global opportunities in that but again, if it's gonna be a go it alone strategy will probably be more focused and let's.
Let me start there and obviously theres other European countries, we could add I'm pretty easily.
On the partnership side look we continue to evaluate potential partners. Obviously one of the biggest concerns. We have is doing a partnership wherein we are recognizing the value. We can achieve for our partnership is going to be less than we'd probably get for for the ex U S rights in it and a strategic relationship.
So it's important to us to manage that and make sure we have flexibility.
With the ex U S territories. So I think you know again, we were we're looking into and.
And we're evaluating the opportunities available to us both alone and with partners and we're getting close hopefully we're going to make that decision in the coming months and again like we said in the prepared remarks, hopefully to be prepare to.
To launch later this year.
Okay.
And then.
In terms of maybe a question for Adam how your messaging and specifically I guess, the infusion times and and the current label. The product is initially resonating with prescribers.
Out there in the field, what what type of feedback are you getting.
Yeah. Thanks, Matt.
I think where we're focused on the feedback that we've gotten from our customers is that it's really the efficacy combined with the efficiency.
So you know the efficacy of the drug is important to all of you know.
Physicians that are taking care of patients, but what what <unk> just the efficiency of a faster infusion.
Overall infusion experience.
So that's what's resonating with customers of course.
The overall experience that they they are they have with the opinion itself, we'll will certainly be tracking and watching as we noted before and we think the consistency of being able to in our trial. If you remember 95% of the infusions were delivered and without interruption.
And that's an important thing for us to continue to watch in the real world and make sure that that's that's consistent with the trial results, but if that does play out.
It will also be a very important thing to two physicians in infusion centers going forward.
Okay. That's helpful. And then last question in terms of.
IMS and Symphony.
Databases.
How should we think about the capture rate they are kind of now and going forward.
And usefulness of those other sources.
Yeah, I'll I'll I'll jump in for a quick commentary and then provide some more Oh you know I think in the early days people should use those resources.
Resources with severe caution I don't think they track very well early on.
I assume at some point.
Later on in the launch probably closer to you know the third fourth quarter into next year.
Being an established pattern and we can get a sense of where you know what what theyre actually capturing versus what's actually happening, but I think you know personally I would I would use those numbers with extreme caution Adam and thoughts.
Yeah, I mean, the only thing I would add is that you know we do have a direct distribution program that is not captured in the symphony data, which makes it even more difficult to interpret those numbers. So I.
I agree with Mike's comments.
Thanks, and congrats again.
Thanks, Matt.
Thank you. Our next question is coming from the lineup by anchor Montana with B Riley. Please proceed with your questions.
Good morning team. Thanks for taking my questions and congrats also on the process. So maybe just.
At a higher level.
Could you kind of talk about the distribution networking and maybe specifically the prescription trends.
You may have visibility from the institutional buyer versus the <unk>.
<unk> and what sort of revenue recognition mix.
Existing patient support programs may apply more to one channel versus the other and if you could comment on how that Fannie Mae was whether it goes through the year.
Then I have a follow up.
Go ahead Adam.
Yeah, Mike if I understood. The question we have.
You know a dish.
We set this up with to make sure that we're meeting customers, where they want to be.
We have a district, where we are selling them at all the major distributors for breo and be well.
We also have our own direct distribution program.
I'm not going to get into the percentages at each at this point, but that's that's the general way out of our distribution program.
Okay and how.
How do you expect to see this evolve through the course of the year are there.
With academic centers coming on board.
Also the impact on vehicle at an end.
Hum.
With the comment on how this makes name was some grant 'twenty three and beyond.
Yeah, I think I think we've been consistent.
Saying that we do believe this launch will gradually accelerate as some of these you know these operational challenges alleviate throughout the year. The J code is one very good news that we got the J code that will become effective on July 1st as I mentioned in the prepared remarks, we'll continue to see formulary wins at <unk>.
Major academic centers, so that will continue to increase our academic prescribing.
So we do expect an acceleration in the second half of the year as these operational hurdles continue to alleviate.
And.
Yeah, that's that's I hope that answers your question yeah. Thanks.
Yeah.
I could add if you want all animal health for that a little bit I mean, I think you know as I think Adam mentioned in his prepared remarks, I mean, we've had a really nice distribution between community and academic.
It's slightly skewed toward the community side, which again getting back to the cautionary notes on IMS or symphony.
The community is more likely to use the the direct channel, which does not get captured. So that's one portion of the distribution I think to Adam's point, you know as we knock down these hurdles each side will open up a little bit more Reits or community side and the J code is probably more.
More of a problem than formulary access because there are smaller and they do their own formulary and they don't have a big bureaucracy.
On the academic side.
It's gonna be the formulary, which will open up more access to a lot more academic centers Oh.
My guess is if I hadn't guess.
My guess is the blend later in the year how are you.
It goes back towards the academic side, but again, it's hard to really know at this point, we're seeing great demand from from both sides are and we know that there's a lot of pent up potential from both sides.
I'm looking forward to seeing how that all plays out myself actually.
Got it yeah, I think thanks for that color from both of you and then one more just quickly I know that not only are you not in the market yet, but we know that they see the blended penetration may not have been that so let's say that you've seen in the U S. So.
I was just curious to hear your thoughts on.
Whether.
What your understanding is you know the reasons for that and if you expect that you know you could by the state in that increase.
Penetration of embassy brings about glass in the EU.
If there's any incremental color there and then lastly, no cash burn estimate.
Are you incorporating any new avenues and and also on.
On the cost side doing additional clinical trials.
So you know the subsequent study is something Mike you talked about in the prior call is that theres been any progress on.
Making.
Making a decision on that and if you are just waiting for the phase III readout in third quarter.
Yeah. So on the EU revenue from I don't think we have anything incremental other than we do see a nice growth ex U S for for CD 20, and I think as you noted there's a lot of.
Uh huh.
Potential to grow the CD 20 class a and again, we think you know Graham these.
Best in class profiles potential and we think that you know it's a nice offering we've had really good discussions with some kols and in Germany. So we do feel very good about the potential opportunity and we agree with you that there's plenty of room for growth a CD twenties are outside the U S. So I don't have much more for you on that but I do take your point.
In terms of Oh.
Cost of good.
The clinical trials so the in terms of kind of the trial expenses.
Yeah, I don't see a major increase during the course of this year.
In terms of the sub acute element right now it's a it's a CMC.
Project, So we need to understand exactly what the properties.
Physical chemical properties of that sub Q will look like.
So that's that's not going to really hit probably from a clinical trial perspective significantly this year.
We have some other clinical trials that we're working on that are.
I'm not going to be cost them that much and we continue to lowered the burn from the legacy trials. So there's still there's still room to save money on clinical trials that we've had to carry on and carry it forward.
Some for ethical reasons, but we're one of those things down at this point, so I think as those come down some of the new clinical stuff that were doing well will come in but as Shawn mentioned I. Thank God our.
Our R&D line should be pretty stable throughout the year.
I cover all traditional question yeah.
Yeah of course.
Thank you. Our next question is coming from the line of Josh Shanker with Evercore. Please proceed with your questions.
Thanks for taking the question and apologies if I if I missed this but the cost of goods line is is relatively low considering that you do own a royalty was capitalized.
Cost of goods that you're working through and if so how much and what do you expect the normalized cost of goods.
As a percentage of sales to be going forward. Thanks.
Yeah. So that's a great point I'm going to let Sean handle that but yes, we did capitalize from the inventory that we built up prior to launch but go ahead Sean.
More detail there.
Yeah, that's exactly right, Mike any any goods that we produced prior to approval where expense through R&D.
So the early part of the launch.
Work through.
That.
That staff the goods, if you will I don't want to call. It inventory because not that are in the first quarter, we did capitalize some inventory on balance sheet.
That amounted to about $25 million mm.
And that will likely.
Be the sole campaign.
In 2023.
And then we'll see some again in 'twenty four.
Got it thanks very much.
Thank you that is all the time, we have for questions today I would now like to turn the call back over to Mike Weiss for any closing comments.
Great. Thank you.
So again as I believe you've heard today, we are quite pleased with the launch to date, we remain confident that bring them. The offers patients a differentiated PD 'twenty option and a growing class. We believe the brumby profile along with a convenient one hour infusion administered twice a year at the lowest price of any brand in emmis treat.
And then together affirm our belief that surround me has the best in class potential.
I want to thank everyone at T. G for a fabulous effort. In addition to the commercial and medical teams that are on the front lines, our clinical regulatory safety manufacturing supply chain quality legal and compliance and finance teams have all performed at the highest levels to make this early launch possible.
Everyone at T. G remains committed to serving the M. S community and everything we do we do with the focus on improving the lives of those living with M. S.
Thanks, again for joining us today and have a great day.
Thank you that does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
The rest of your day.