Rigel Pharmaceuticals, Inc. ($ARVN)

Greetings. Welcome to Rigel Pharmaceuticals Vethu Licensing Agreement Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce our first speaker, Ray Furey, Rigel's Executive Vice President, General Counsel and Corporate Secretary. Thank you, Mr. Furey. You may begin.

Welcome to our conference call to discuss Rigel's in-licensing of Veppanu or Vepdegestrant. The press release announcing the transaction was issued earlier this morning and can be viewed along with the slides for this presentation in the News and Events section of Investor Relations site on rigel.com. As a reminder, during today's call, we may make forward-looking statements regarding our plans and timing for the regulatory review of the transaction and development and commercialization of Veppanu. In addition, as noted in the press release issued this morning and here in the presentation, this transaction is subject to customary closing conditions, including review under the Hart-Scott-Rodino Antitrust Improvements Act. The statements made today are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks are identified in the slides and in our most recent annual report on Form 10-K for the year ended December 31, 2025, on file with the SEC and subsequent filings with the SEC, including our Q1 quarterly report on Form 10-Q with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. At this time, I would like to turn the call over to our President and Chief Executive Officer, Raul Rodriguez. Raul?

Thank you, Ray, and thank you all for joining us today. It's an exciting morning. Also with me today are Dave Santos, our Chief Commercial Officer; and Lisa Rojkjaer, our Chief Medical Officer. Thomas Lager, our Chief Business Officer; and Dean Schorno, our Chief Financial Officer, are also here today, and they will be available during our Q&A portion of the call. On today's call, we are excited to provide an overview of today's announcement that we are in-licensing Veppanu for the treatment of advanced or metastatic breast cancer. Before I get to that, I am also very pleased that we have Dr. Erika Hamilton as our guest, KOL and vepdegestrant Phase III VERITAC clinical trial principal investigator on our call. Dr. Hamilton is Chief Development Officer, late phase and Director of Breast Cancer Research at the Sarah Cannon Research Institute. Thank you for being with us today, Dr. Hamilton. Now beginning on Slide 5. I want to remind you of Rigel's transformational growth strategy in hematology and oncology. Our strategy is built upon four core strategic objectives: grow our commercial business, expand our portfolio through in-licensing or acquisition, advancing our clinical development pipeline and maintaining financial discipline. These 4 pillars are interlocking and collectively drive Rigel's long-term growth. Today, we have made a significant advance on the first two of these. Moving on to Slide 6. We have executed on this strategy since 2020, building Rigel into the profitable company we are now. And today's transaction will help drive continued growth into the next decade. In 2020, Rigel was a single product company. Our development pipeline was limited, and we're operating in a cash deficit. Fast forward to 2025, and Rigel is a fundamentally different company. We now have three commercial products approved in four different indications. Tavalisse was developed internally. We in-licensed [ REMsLlinea ] in 2022 and acquired Gavreto in 2024. Our development pipeline is led by R289, our Rigel-discovered dual IRAK1 and 4 inhibitor, R289, is currently being evaluated in patients with lower-risk MDS. We are also in a very strong financial position, which facilitates our in-licensing strategy. Looking ahead to 2030, we are building on the momentum of our three existing commercial products, and we are continuing to advance R289 in lower-risk MDS and potentially other indications. These indications will be areas of significant unmet need and our large commercial opportunities that, again, would be transformational for Rigel. In addition, a core focus of our growth strategy is selectively pursuing late-stage in-licensing or acquisition opportunities to further expand our commercial portfolio to enhance our growth between now and the 2030s and beyond. And I am thrilled to discuss our exclusive global licensing agreement to develop, manufacture and commercialize vepdegestrant, which has the brand name Veppanu. Vepdegestrant or VE for short, is a novel oral proteolysis targeting Kymera or PROTAC and on May 1 was approved by the FDA for patients with an ER-positive HER2-negative advanced or metastatic cancer with an ESR1 mutation. There is a critical unmet need in this patient population, and we believe that Veppanu is an important new treatment option in this setting. We are looking forward to bringing this drug to these patients. On Slide 7, we believe that growing our commercial products, adding new in-licensed products and the advancement of our development pipeline will lead to significant revenue growth. We believe that Veppanu will be a key contributor to our growth in the commercial portfolio and advancement of our transformational growth strategy. It has the potential to become Rigel's largest commercial product and drive long-term revenue growth, supported by an intellectual property estate, including issued patents and potential patent extensions, which, if granted, would may extend protection through 2040 and beyond. Now let's turn to the agreement of Veppanu. On Slide 9, metastatic breast cancer is a major oncology market with approximately 70% of breast cancer cases being ER-positive HER2 negative, driven in part by the estrogen receptor pathway. Current standard of care in these cases is endocrine therapies. However, up to 50% of patients acquire resistance due to an ESR1 mutation following exposure to endocrine therapy, resulting in a very sizable patient population. There are about -- approximately 20,000 patients with second-line or third-line ER-positive HER2-negative ESR1 mutated metastatic breast cancer who need new treatment options to treat their disease. This population equates to a $1 billion-plus total market opportunity in the U.S., and we believe this market will continue to grow. Before I hand the call over to Lisa to talk about Veppanu's mechanism and differentiation, I want to share why we think this is such a compelling opportunity for Rigel. I'm now on Slide 10. Veppanu is the first and only approved proteoialysis targeting Kymera or PROTAC, a new class of targeted agent. It has a novel mechanism of action and potential to be an important new treatment option for the second and third-line ER-positive HER2-negative ESR1 mutated metastatic breast cancer. Our proven commercial and medical expertise and organization will enable us to successfully launch Veppanu upon closing. We have successfully integrated both Rezlidhia and Gavreto into our portfolio, and that experience will serve us well as we integrate this new product. And we believe Veppanu has potential to become our largest revenue producer. On Slide 11, you will see the details of the transaction. Here are the major terms. Upon close of the transaction, Rigel will pay an upfront of $70 million to Arvinas and Pfizer. There are $15 million in near-term milestones that will be owed to Arvinas and Pfizer, which are related to the successful completion of transition activities. Additional, regulatory and commercial payments total up to $320 million, consisting of $60 million in regulatory milestones and $260 million in commercial milestones. The tiered royalties on cumulative net sales owed to Arvinas and Pfizer will range from mid-teens to mid-20s. And finally, after the close of the transaction, Pfizer will remain responsible for current ongoing development activities for vepdeg, and Rigel will contribute $40 million over the next 4 years in support. On Slide 39, you see the various vepdeg clinical trials that are currently active. With the exception of the hepatic study, these trials are no longer enrolling. It's important to note the breadth of the studies that are being conducted. The VERITAC-2 study continues as the OS overall survival follow-up period is still ongoing. Additionally, the various combination studies may provide key insights into additional development opportunities for vepdeg. With that, I will turn the call over to Lisa to talk about vepdeg's mechanism and differentiation. Lisa?

Thanks, Raul. On Slide 14, I will take you through the unique biology of proteolysis targeting chimeras or PROTACs, which are bifunctional small molecules that destroy specific disease-causing proteins rather than just inhibiting them. PROTAC molecule consists of three parts: a ligand that binds to the target protein, a ligand that binds to an E3 ubiquitin ligase, which tags the target protein for breakdown and the linker connecting them. The cell's natural waste disposal system known as the ubiquitin proteasome system recognizes the ubiquitin tag and degrades the target protein. This target tag degrade mechanism of action also freezes or releases the PROTAC to act again. Moving to Slide 15. Vepdegestrant is the first and only FDA-approved PROTAC. It simultaneously binds the estrogen receptor or ER and an E3 ubiquitin ligase forming a complex that tags the estrogen receptor for destruction. This proteasome degrades the estrogen receptor and vepdegestrant can be reused to degrade additional estrogen receptors. As you can see on Slide 16, the mechanism of action of PROTACs for vepdegestrant is clearly differentiated from selective estrogen receptor degraders or SERDs, such as fulvestrant. SERDs bind to the estrogen receptor, affecting the stability of or destabilizing the estrogen receptor, which makes it more prone to degradation. In contrast, PROTAC's specifically target the estrogen receptor, marking it for selective destruction by the cell. This efficient and targeted ER degradation by the cell also facilitates the release of the PROTAC for further ER targeting. So conceptually, one SERD molecule binds estrogen receptor, while PROTAC molecule can destroy many receptors, so has catalytic activity. Now I'd like to welcome Dr. Erika Hamilton. Dr. Hamilton is the Chief Development Officer, Late Phase and Director of Breast Cancer and Gynecologic Cancer Research at the Sarah Cannon Research Institute. Dr. Hamilton was the principal investigator of the Phase III VERITAC-2 clinical trial. And today, she will review the data for you. Dr. Hamilton?

Thanks so much. Appreciate you inviting me. Let's advance to Slide 18. So I'm going to walk you through the data that was presented last year at the ASCO 2025 conference, and we'll go through these slides that was the registrational trial, the VERITAC-2 study. This was looking at vepdegestrant, our PROTAC ER degrader versus fulvestrant among patients with advanced breast cancer that was ER-positive and HER2 negative. This was a global randomized study. Next slide. So our key takeaways really were that vepdegestrant was the first PROTAC to be evaluated in a Phase III study. It was well tolerated and demonstrated statistically significant as well as clinically meaningful improvement in progression-free survival versus fulvestrant among patients with ESR1 mutations. And the results of this Phase III VERITAC-2 study supported vepdegestrant as a potential treatment option for previously treated ESR1 mutation, ER-positive advanced breast cancer. Let's advance to Slide 20. So I think you've already heard some background, but essentially, there's no established consensus for treatment of ER-positive advanced breast cancer after progression on first-line endocrine therapy. Fulvestrant is a SERD that's administered intramuscularly due to poor solubility, and it has really shown that it has very limited progression-free survival benefit following progression on endocrine therapy and CDK4/6 inhibitor for our patients with PFS really in the 2-month or less range. Vepdegestrant is a selective oral PROTAC ER degrader that targets wild-type as well as mutant estrogen receptor. In the first-in-human Phase I/II study, vepdegestrant was well tolerated, and it demonstrated encouraging clinical activity in patients with heavily pretreated ER-positive HER2-negative advanced breast cancer. We've already gone through this unique mechanism of action, but essentially directly harnessing the ubiquitin proteasome system to degrade the estrogen receptor. Next slide for 21. This was the design of the VERITAC-2 study. Again, it was a global Phase III trial of vepdegestrant. These were patients that were at least 18 years old, had ER-positive, HER2-negative advanced or metastatic breast cancer, and all of these patients had already received endocrine therapy in combination with a CDK4/6 inhibitor. They were permitted to receive up to one additional line of endocrine therapy and their most recent line of endocrine therapy, they needed to be on for at least 6 months. They were not allowed to have a prior SERD, whether that was fulvestrant or elacestrant, and they could not have had prior chemotherapy for metastatic disease. These patients were randomized in a one-to-one fashion to either receive fulvestrant given at approved dosing, which is loading dose given intramuscularly on day 1 and day 15 and then subsequently every 28 days on day 1 of each cycle or vepdegestrant, which is 200 milligrams orally once daily. As you can see, over 600 patients were enrolled to the study. Our primary endpoint was progression-free survival by blinded independent central review. Initially, in those patients that had ESR1 mutations, if this was positive, then we would go on to test progression-free survival among all patients. Secondary endpoints included overall survival, clinical benefit rate, objective response rate as well as adverse events and tolerability. Next slide. This summarizes the statistical hypothesis testing strategy and explains how the alpha was spent. So essentially, this was a graphical gatekeeping hierarchical testing. First, we would test progression-free survival among those patients with ESR1 mutations and 3/4 of the alpha was spent here. If this was positive, then you can see we would go on to test progression-free survival in the intention-to-treat population or all patients. If this was positive, we would go on here to overall survival among patients with ESR1 mutations and then overall survival in the intention-to-treat population. Next slide. So 624 patients were randomized, again, in a 1:1 fashion. You can see patient disposition here. The majority of patients that came off treatment, it did so due to progressive disease. And at the time of this data disclosure, about 20% to 30% of patients had ongoing treatment at that time. In terms of treatment duration, this was around 4 months for all patients. And you can see for the patients in the vepdegestrant arm, the treatment duration for those patients with ESR1 mutations was longer at 5.1 months and shorter at 2.8 months for those patients receiving fulvestrant. Next slide, 24. This shows the baseline characteristics. Almost all of the patients that were treated on this study were female, about 80% of them were postmenopausal and about 50% were Caucasian, small single digits were African-American. We did have quite a few patients that were from Asian heritage and some patients that had an unknown or not reported race. 100% of the patients in the ESR1 mutation obviously had ESR1 mutations, but among all patients, 43% of the patients had an ESR1 mutation. This was a patient population with aggressive disease with over 60% of patients having visceral disease at baseline and about 40% of patients having liver metastases at baseline. Bone-only disease was rare in less than 20% of our patient population. The majority of the patients enrolled on VERITAC-2 had seen one prior line of therapy in the metastatic setting at around 80%, while about 20% had seen two prior lines of therapy in the metastatic setting. And again, highlighted in the orange box, you can see that universally, everyone had already seen a CDK4/6 inhibitor. And actually, this was pretty well represented across CDK4/6 inhibitors. About half of patients had seen palbociclib, about 1/3 of patients had seen ribociclib and about 20% of patients had seen abemaciclib. Next slide. This shows the primary endpoint, which was progression-free survival by blinded independent central review among the patients with ESR1 mutations. Median progression-free survival was 5.0 months for those patients receiving vepdegestrant, where it was only 2.1 months for those patients receiving fulvestrant. This was very in line with what we expected of how fulvestrant would perform in this population. The hazard ratio was 0.57 for a statistically significant p-value of less than 0.001. You can see it's a landmark analysis of 6 months progression-free survival that more than double the percent of patients remained progression-free at 6 months that were receiving vepdegestrant compared to those patients receiving fulvestrant. Next slide. Progression-free survival by blinded independent central review in all patients was also tested. This was 3.7 versus 3.6 months and did not meet the primary endpoint in the intention to treat patient population regardless of ESR1 mutation status. Next slide for Slide 27. This was investigator-assessed progression-free survival. And you can see on the left, among those patients with ESR1 mutations that, in fact, this even appeared a little bit longer with progression-free survival being 5.4 months in the vepdegestrant arm and fulvestrant 2.8 months, again, for a hazard ratio of 0.52 that was statistically significant, still with an over doubling of the number of patients that were progression-free at 6 months. Next slide. When we look at subgroup analyses on Slide 28, we can see that the benefit of vepdegestrant extended across all populations, regardless of geographic region, whether patients were pre or postmenopausal, younger or older, whether they had presence or absence of visceral disease, liver disease or lines of prior therapy. Next slide. For the key secondary endpoint of overall survival, this data was quite immature at the cutoff with death having only occurred in approximately 20% of our patients and was not able to be reported at this time. Slide 30 shows the secondary endpoints, clinical benefit rate as well as objective response rate by Blinded Independent Central Review. On the left, you can see patients again that had ESR1 mutations with a clinical benefit rate of more than doubling with vepdegestrant of 42% compared to 20% with fulvestrant alone. In terms of objective response rate, this was more than a quadrupling. Only 4% of patients receiving single-agent fulvestrant had an objective response, whereas 18.6% of patients receiving vepdegestrant had an objective response. Next slide. In terms of safety and tolerability on VERITAC-2, in Slide 31, we highlight some key findings. Grade 3 adverse events were seen in 23% of the patients receiving vepdegestrant and 18% of the patients receiving pulvestrant, which was pretty comparable. I think what really stood out to me was the AEs leading to either treatment discontinuation or dose reduction. For an investigator and somebody that's treating patients in the clinic daily, I think this is a very helpful statistic that gets at how well patients are really doing on a drug, whether they have to stop the drug, whether they have to dose reduce the drug. We saw only 3% of patients needing to discontinue vepdegestrant and only 2% of patients having to reduce the amount of vepdegestrant they were taking, leading us to conclude that this was a very well-tolerated drug among the vast majority of our patients. On the right side of the slide, you can see the treatment-emergent adverse events that were present in at least 10% of patients in either group. Fatigue was the most common side effect, but you'll see that fatigue was still relatively infrequent. Among any grade fatigue, only 1/4 of patients receiving vepdegestrant reported any fatigue. So said in a different way, 3/4 of patients reported no fatigue. We also saw some increased AST-ALT in about 14% of the patients. But again, these were low grade and only 1% Grade 3, Grade 4. And notably, what you'll see on this table, 13% any grade nausea with no cases of Grade 3/4 nausea, and you do not see diarrhea on this slide because it did not meet the at least 10% threshold to be included in this table. Any grade diarrhea was only 6% for those patients receiving vepdegestrant. We also did do a QT interval substudy with 88 patients confirming a very mild increase of 11 milliseconds from a baseline in mean QTCF indicating that there was no large QT prolonging effect with vepdegestrant. Next slide. So in conclusion, at ASCO last year in 2025, we concluded that vepdegestrant was the first PROTAC to be evaluated in a Phase III study that it demonstrated statistically significant and clinically meaningful improvement in progression-free survival versus fulvestrant among patients with an ESR1 mutation in ER-positive HER2-negative advanced breast cancer. Overall survival analyses remained immature and vepdegestrant demonstrated a very favorable safety profile, evidenced by few adverse events less than 5%, leading to either dose reduction or discontinuation among patients taking vepdegestrant. I will now change my last bullet on this slide. As of May 1, vepdegestrant has now been FDA approved. And this certainly is an option for our patients with ESR1 mutated ER-positive HER2-negative advanced breast cancer moving forward. Thank you very much.

Thanks, Dr. Hamilton. We really appreciate you taking the time to walk us through the data and for all of your efforts to evaluate vepdegestrant in patients with advanced breast cancer. I'm on Slide 34. In summary, an unmet medical need exists for effective, well-tolerated therapies for patients with ER-positive, HER2-negative advanced breast cancer who acquire ESR1 mutations following first-line endocrine therapy. Vepdegestrant is an oral PROTAC that is differentiated from other ER-targeting therapies by its mechanism of action. Vepdegestrant contains an ER ligand covalently linked to an E3 ligase, which selectively promotes proteasomal degradation of estrogen receptors. In the pivotal Phase III VERITAC-2 trial in the population of patients whose tumors had an ESR1 mutation, a statistically significant difference in BICR-assessed PFS for vepdegestrant compared to fulvestrant was observed. Median PFS was 5 months in the vepdegestrant arm and 2.1 months in the fulvestrant arm. In addition, the incidence of treatment-emergent adverse events was low and the tolerability profile was favorable. Vepdegestrant thus has the potential to be an important treatment option in this setting. And with that, I'll hand the call over to Dave to discuss the significant unmet need. Dave?

Thank you, Lisa, and thank you, Dr. Hamilton, for the overview of Veppanu's novel PROTAC mechanism of action and impressive clinical data from VERITAC-2. On to Slide 36. To begin, let me reiterate how excited we are with the potential of adding Veppanu to our commercial portfolio. The slide shown here outlines the U.S. patient opportunity for ER-positive, HER2-negative ESR1 mutated advanced or metastatic breast cancer. As you can see, there are an estimated 170,000 patients in the U.S. living with metastatic breast cancer. And as Raul said, it is estimated that around 70% of those patients or 119,000 are ER-positive HER2-negative. As we've outlined, the standard of care for these patients is to be treated with endocrine therapy and a CDK4/6 inhibitor and exposure to these therapies over time may lead to an ESR1 mutation in up to 50% of patients. In VERITAC-2, 100% of patients had endocrine therapy and a CDK4/6 inhibitor and 43% of those patients were ESR1 mutated. So using 40% as a benchmark, more than 47,000 estrogen receptor positive HER2-negative patients could be ESR1 mutated. Based on our internal market research, we believe about 60% of these patients are diagnosed and treated in a year. And since ESR1 mutations are acquired as exposure to endocrine therapy and CDK4/6 inhibitor treatment lengthens, the overwhelming majority of these ESR1 mutated patients are in the second line and later setting. That's how we arrive at approximately 20,000 patients diagnosed and treated each year in the second line and later setting with estrogen receptor positive, HER2-negative ESR1 mutated metastatic breast cancer in the U.S. Breaking this down further, we believe that about 2/3 of those patients or 13,000 are in the second-line setting and 1/3 of them are approximately 7,000 are in the third line and later settings. Overall, we believe this market represents more than $1 billion in market opportunity in the U.S. Moving to Slide 37. I wanted to provide some background on current treatments for this population of second line and later ER-positive, HER2-negative ESR1 mutated metastatic breast cancer. First and importantly, in the blue portions of the bar, you can see how oral SERDs have rapidly become the treatment of choice in the second-line setting, garnering nearly 60% share since they've been introduced. Even in the third-line setting, oral SERDs make up nearly 30% of treatment. This demonstrates how eager clinicians have been to find new options versus older treatments like fulvestrant, chemotherapy or other options. And that said, those options still make up more than 40% of treatment in the second-line setting and most of the treatment in the third-line setting. The other thing you'll notice about this slide is that the use of newer oral SERDs in the second-line setting is significantly higher in the academic setting, where patients are routinely tested for ESR1 mutations and awareness of new options to treat ESR1 mutated patients is high. It is important to note that while share of new agents is high in the academic setting, the overall share is much closer to that seen in the community because that is where the overwhelming majority of metastatic breast cancer is treated in the U.S. We estimate that approximately 80% of patients are treated at community oncology practices, where there is still a significant opportunity to raise awareness of new treatments for second and third-line patients with ER-positive, HER2-negative ESR1 mutated metastatic breast cancer. Overall, we see significant potential for Veppanu as a valuable new option in the treatment armamentarium for both academic and community physicians as they treat second line and later ER-positive, HER2-negative ESR1 mutated metastatic breast cancer. Moving to Slide 38. We believe that Veppanu has the potential to become a market-leading treatment in second-line and later estrogen receptor positive ESR1 mutated metastatic breast cancer. In addition to Veppanu being the first and only approved PROTAC with a novel mechanism of action, there are three reasons we believe this. First of all, and most importantly, as you heard from Dr. Hamilton, Veppanu demonstrated impressive efficacy in the Phase III VERITAC-2 study with a significant improvement in median progression-free survival. A 2.4-fold improvement or 5 months with Veppanu versus 2.1 months with fulvestrant. Secondly, Veppanu demonstrated tolerability in the Phase III VERITAC-2 study with a manageable safety profile and low rates and severity of GI-related events, namely vomiting and diarrhea, which can be challenging for patients on other metastatic breast cancer treatments. Indeed, as a marker of being well tolerated, just 3% of patients discontinued Veppanu treatment and only 2% required dose reductions. These will become important differentiators in this market. And lastly, we believe that the real-world applicability of the patient population in VERITAC-2 will be meaningful to clinicians. The standard of care for ER-positive HER2-negative metastatic breast cancer patients is use of endocrine therapy and a CDK4/6 inhibitor. Veppanu demonstrated efficacy, safety and tolerability in exactly this setting in VERITAC-2, where 100% of patients received a CDK4/6 inhibitor and endocrine therapy as previous treatment for their disease. Overall, we believe this combination of proven efficacy, demonstrated tolerability and real-world applicability of the data will be compelling to clinicians as they choose treatments for second-line and later ER-positive, HER2-negative ESR1 mutated metastatic breast cancer. And finally, moving to Slide 39. Veppanu represents a strategic addition as the fourth FDA-approved product in our portfolio. Not only does this transaction represent an opportunity to provide benefit to patients and physicians as well as a compelling commercial opportunity, but it also complements our existing commercial infrastructure and capabilities extremely well. Because we've developed significant expertise over the last 4 years, acquiring new products, smoothly transitioning them to Rigel and rapidly having Rigel labeled product ready for patients and clinics as soon as possible after transition, we are uniquely poised to take on Veppanu, a newly approved product that already has an NCCN listing and make it available to patients and clinics in just a few months from now. We have an established and highly experienced manufacturing and supply team, which will work closely with our counterparts at Pfizer and Arvinas to have product available in August or September. This team got Rezlidhia into the channel in just 3 weeks after FDA approval and ensured Gavreto had a seamless transition to Rigel with no interruptions in supply after the transitions. We have exactly the right expertise to bring Veppanu to patients as soon as possible. Our commercial and medical affairs teams are already in place and experienced in focused oncology areas. We are already calling on both academic and community oncology practices. With our existing footprint in these accounts, we will be even more efficient to ensure we are able to devote our time, energy and resources to a successful launch of Veppanu. Further, we have developed comprehensive patient access capabilities with a track record of ensuring strong coverage and reimbursement for targeted therapies and an efficient distribution network, which can be leveraged to support commercial launch. We will also leverage our Rigel ONECARE team with its reputation for being highly responsive to patients and providers to support a successful Veppanu launch. Against the backdrop of our commercial and medical affairs expertise is our track record of successfully taking newly acquired assets to market quickly and efficiently, and we already have plans underway to soon begin engagement with health care providers for this important launch. We feel well positioned to launch and rapidly grow Veppanu into the largest brand in our portfolio. Assuming the transaction closes in mid-June, we anticipate being well prepared to also commercially launch Veppanu in August or September. We are tremendously excited and fully committed to bringing Veppanu to clinicians and patients as soon as possible. Now I'll pass the call back over to Raul for closing remarks. Raul?

Thank you, Dave. The in-license of Veppanu allows us to bring an important new therapy to patients in the U.S. with an ER-positive HER2-negative advanced or metastatic breast cancer with an ESR1 mutation, a population with significant need. Veppanu is the first and only approved PROTAC and brings a novel unique mechanism of action, which differentiates it from other agents. Before we go, I'd like to thank our new partners, Arvinas and Pfizer for their dedication to bring this important new therapy to these breast cancer patients. We will take the baton from here and make sure that becomes a reality. Slide 41. For Rigel, this is a major step forward in our transformational growth strategy. In-licensing a late-stage differentiated drug that leverages our [ Hchemon ] capability is exactly what we have been working towards. Upon deal closing, Veppanu has the potential to be Rigel's largest commercial drug, and we anticipate this deal to be accretive. This will allow Rigel to generate additional cash in future years, allowing us to invest more in our pipeline to create additional and larger transformational opportunities in the near future. With that, operator, we are ready to take questions.

[Operator Instructions] Our first question is from Joe Pantginis with H.C. Wainwright.

Very exciting transaction. So two questions, please. So first for Dr. Hamilton. So just curious now with this newly approved drug, what do you consider the important next steps? Of course, education is number one with regard to the readiness of physicians to include revenue into the Rx pipeline physicians.

Yes, I think that's a great question. I think physicians are used to having options in the second line. And luckily, we are also used to having to test for ESR1. That's not a new paradigm for us having 2 other therapeutics that are linked to an ESR1 mutation. So I think there is the advantage that, that is already becoming quite routine in clinical practice. I think the selling point of vepdegestrant is really going to be the adverse event profile. I think SERDs in general are a pretty well-tolerated compound group. But if we had to pick something that we don't love about them, it's probably GI toxicity. And that varies from compound to compound, but pretty much all of them in the class have a little bit of problems with nausea, diarrhea, that type of GI toxicity. And I think that's really where vepdegestrant in the clinical trial and obviously, through the AE table appears really clean. And I think that's going to be a differentiator for clinicians and patients.

I appreciate that. And then for the company, if I can fast forward a little bit, obviously, you're taking on the global rights as well. And can you discuss whether Arvinas and Pfizer have been in any ex U.S. discussions? And will you be taking over those discussions if they have been in progress?

Thank you, Joe. I can answer that. This is Raul. We do have global rights for this product, and there are opportunities for this product given its unique mechanism and the data supporting its approval, both A and certainly from a GI, as Dr. Hamilton just said. And so I think there's opportunities outside of the U.S. as well. And much like we did with our Rezlidhia product, we will look for partners outside the U.S. and evaluate those and in sequence, put them in place. Our colleagues at Pfizer were really looking for a global deal. And so they really haven't looked into separating this out as yet. So we will begin that process at the right moment and hopefully be successful in putting partnerships in place. We have with all our prior products where we had ex U.S. rights. So I have no doubt we'll succeed in that as well.

Our next question is from Kristen Kluska with Cantor Fitzgerald.

Congrats on this deal. So you made -- you mentioned a couple of times that this product has the potential to be your highest selling product. I'm curious if that includes commentary based on where the approval is today or if that factors in potential indications. And I know that your partners have some studies ongoing right now, which they're responsible for. But does Rigel intend to launch any potential studies in other indications -- settings, excuse me?

Yes. I could answer that, and Lisa would contribute that to degree. We think this has potential to be our largest product with the current label. I think it's an exciting opportunity for us. It's the basis why we were excited to enter discussions about acquiring this product. It's a really great fit, as Dave just said, with what we are capable of doing. So our ability to effect -- commercialize this product effectively communicate to the doctor community is, I think, quite good, and we're able to make this product a successful launch in a market that's quite sizable, over $1 billion market. So we're -- we think that it has tremendous opportunity here. Also some opportunities outside beyond this, but those are still a bit early, and we will return out to you and say, here's other things we might be able to do with it. Lisa, any commentary?

Yes. I think -- thanks, Raul. I think that as you saw on the table with some of the trials that are wrapping up, there is still some data coming that we think will be useful to clinicians and specifically regarding combinations. And I think we're going to wait and see the final results of those studies and make some future decisions.

And can you comment a little bit about the internal work you're going to do to prepare for launch, what a sales for this might look like? It seems like with the oral SERDs that the interest in uptake was quite rapid out of the gate. So I'm wondering how much of that really needs to be driven by the Rigel team really getting their foot in the door and pounding the table versus the market just frankly, being aware of everything going on in the space as well.

Thank you, Kris. Dave, maybe you could comment on that.

Kristen, first of all, thanks for the question. We have been doing diligence on this for quite a while. A number of my commercial and medical affairs colleagues have been really looking at this, and we view this as an outstanding opportunity. So we do believe it will become our largest product in our portfolio with the current indication, just to reiterate what Raul said. And yes, there is a tremendous enthusiasm among clinicians to find new options for treating their metastatic breast cancer patients, and it is evidenced by the fact that adoption of the oral SERDs has been quite rapid. And so we think that's great because I think they'll be open to a drug that has a proven efficacy profile as well as an outstanding tolerability profile. And as Dr. Hamilton has reiterated, that 3% discontinuation rate and 2% of dose reduction rate makes it pretty clear to clinicians that this is a drug that patients will take. And we will really message that efficacy that you have, but without any trade-offs in terms of your patients being able to take this. And that's a key, not to mention that we have the first and only PROTAC as well -- that's approved, which is, I think, a new wave of heterobifunctional protein degraders that are coming as well as that novel mechanism of action. And so these are the differentiators that we can have. And we think we can do that with pretty much our current team. Realize that we are calling on most community practices here in the U.S. with Tavalisse. Tavalisse is widely used across most oncology practices. And with Rezlidhia, we have outstanding experience in institutions with our institutional team. We do anticipate small increases to make sure we can cover both Rezlidhia and Veppanu in the institutions, but we really don't see a major increase in our sales force size. And our team, I can tell you, I have tremendous confidence in our team. They are terrific at getting the word out there, and I know they're going to be tremendously excited about this opportunity. So we've got a great product. And we have a terrific team, and I think we're going to execute just like we've always done to grow our products. And I think we can continue to do what we've been doing with our current product line, but this becomes the focus. This becomes the energizer for our entire team. And I'm telling you, I really do think we can accelerate uptake and have this become our largest product in our portfolio.

Our next question is from Yigal Nochomovitz with Citi.

On this transaction. You sort of answered it a little bit already, but Raul, I'm wondering if you could expand a little bit on the strategy. Obviously, you've had a strong confidence in heme with the existing portfolio. Could you just talk a little bit about more about how you become comfortable moving into solid tumors with this transaction? And then for the doctor, if you could speak a little bit more about the competitive landscape with some of the other agents that are going to develop Phase III data, I believe, later in the year, palazestrant being one of them. Just curious if you could comment on how you see vepdeg fitting into that landscape?

Thanks, Yigal. Let me answer the first one, and then I'll ask Dr. Hamilton to answer the question on competitive agents in the area. We -- we initiated our entry into the solid tumor market with the acquisition of Gavreto. So that was our first solid tumor product. And part of the rationale for that is that we looked at our sales force, and they had substantial solid tumor experience and relationships with doctors in a variety of different areas. So this solid tumors are not an area that's new to our sales capability at all. And we built some very good relationships based on Gavreto. And in many ways, this allowed us to take on this opportunity. It's an opportunity that's substantially larger and one where I think we have a drug here that could be really a great addition to the armamentarium in the second and third-line breast cancer market. And I think we're well prepared to do it. As Dave said, our team has evaluated this product for many months as we did diligence, primary market research, began studying what doctors we need to address and this in preparation for a potential launch. So I think we're in great shape for launching this product in the near future, and I think making it a success and really proud to have been selected by Arvinas and Pfizer. They did a great job in taking the product to this point. And now I think we're the ideal commercial partner for them because of what we know about the solid tumor area. And with really fairly small number of ads, we'll be able to commercialize quite effectively. Dr. Hamilton, the question on other competitive agents in this space, maybe you can comment on those.

Yes. I mean I think I kind of already alluded to the fact that second, third-line ER-positive breast cancer is tricky because it's a complicated space. We used to just have fulvestrant and now we're profiling. We're looking for [ PI3AKTP1N ] alterations. We're looking for ESR1 mutations. And then we're also trying to find something to do with patients that don't have a mutation. So really, the competitive landscape for patients that have an ESR1 mutation right now. We have two other FDA-approved agents, elacestrant and imlunestrant. Elacestrant was kind of first to the party. It's not -- it's called the SERD. It's not technically it's SERD activity isn't quite as high as its SERM activity for a lot of us that really understand that compound. I think its benefit has really been when we select for patients that have really benefited on prior endocrine therapy for a very long time. Imlunestrant, it's a little bit hard to compare the imlunestrant data to elacestrant or vepdegestrant because unlike those two trials, in the imlunestrant trial, the patients had not all seen CDK4/6 inhibitor. So when you kind of do the dreaded cross-trial comparison, you'll note that progression-free survival is longer in the imlunestrant trial. But in fact, the control arm did doubly as well in the imlunestrant trial. So really not comparing apples-to-apples. Again, I mean, I think the oral SERDs have a little bit more GI toxicity, in my opinion, than vepdegestrant does. Ultimately, I think that gets back to patient tolerability and how they feel day-to-day on an oral therapy that they're taking at home and also in the future to combinability with other agents. The other option patients have is to do something that isn't a single agent, combining fulvestrant with an abemaciclib or other combinations like an everolimus. Although those regimens can be efficacious, whenever we do combinations, we add toxicity. And so really, we kind of discussed that with our patients, but a lot of patients really wanting to pick what they're going to feel well on and have the best quality of life on. And I think that's really where single agent shine.

Okay. And just one quick one for the company. You mentioned $60 million in additional regulatory milestones. I gather that's for other territories outside of the United States. Can you just clarify, please?

Yes, other indications.

Our next question is from Farzin Haque with Jefferies.

Congrats on the deal. Maybe one question for Dr. Hamilton following up on the last response. Like from an uptake perspective in the real world use, like use the chemo and then the increasing use of SERDs that you mentioned. So in what patient setting would you prescribe to Japan, like primarily in new second-line patients? Or will you use it also for patients progressing on the [indiscernible] and [indiscernible]? And also the SERD chemo, for example, these patients were not part of the clinical design that you mentioned?

Yes, I'll try to answer that. I think whether we're talking about chemotherapy or antibody drug conjugates, those drugs should really be reserved for patients when they're no longer appropriate for endocrine therapy. We really should be exhausting our endocrine agents before we move on to those agents. So that's somebody that didn't get benefit from their last line of endocrine therapy and is no longer appropriate to receive our endocrine therapy. We're typically not going to give chemotherapy and come back to an endocrine therapy, again, if we've been systematic and used our endocrine therapies appropriately before we've moved on to chemotherapy. Does that answer your question there?

Yes. And then for the management team, like following the -- there was a term loan for $45 million that you retired and then you had that. So how are you going to fund the $70 million? Is it through the existing cash reserve or through the drawdown of the new $40 million revolving credit?

Thanks for that. I'll ask Dean to address that.

Let me address that. We ended the quarter with about $146 million in cash. So it's a very good cash position. We're planning on using that cash to fund this to be a comfortable number for us. And in addition to that, beyond that, if we choose to, we do have a credit facility that we could tap into with Mid-cap as we announced a week ago. We restructured that facility to an AR credit line and drew down $8 million for that. So we still have ample capacity there as well. So the combination of the two puts us in a very strong position to do this license.

Our final question is from Allison Bratzel with Piper Sandler.

This is Ashleigh on for Alli. Congrats on the transaction. Just one question from us. I was just curious to get your thoughts and also hear Dr. Hamilton chime in. With the label requiring an FDA-authorized test for ESR1 mutations, what's the strategy for ensuring broad access to diagnostic testing to facilitate rapid patient identification and uptake? And maybe Dr. Hamilton, you can expand more on the docs experience with this. I know there's information in the label itself on FDA-authorized detection test, but any color around this would be helpful.

Dr. Hamilton?

Yes. So this is -- the label saying an FDA-authorized test is really just alluding to the fact that patients need to have an ESR1 mutation. So they're not specifying that you have to have that in a certain brand of test, but this is really any commercially available test. And so we have a variety of those available, whether we're talking about tissue-based testing or whether we're also talking about blood-based or liquid biopsies. So there's multiple vendors that supply those.

This is Dave. I'll also comment that as I said, we've done a lot of market research in this area. And as I said on my prepared remarks, testing in the academic institutions is very, very high and nearly universal. In the community, it's still pretty high in breast cancer, particularly because this is a ctDNA test that's commercially available, and they also have a team that goes out and talks to them about this test. So it is being done in a majority of community practices. So we don't see testing as necessarily an area that we will focus on and increase the testing rate. We think that's going to grow organically in the community practices. We'll continue to talk about revenue there, but we do expect that testing, especially for ESR1 in metastatic breast cancer will become more prevalent in the community as time moves on.

There are no further questions at this time. I would like to turn the floor back over to Mr. Raul Rodriguez for closing comments.

Thank you very much, operator, and thank you for your questions. And thank you very much, Dr. Hamilton. We appreciate your insight and your contributions to this drug. It's really an incredible advance in terms of providing this drug to breast cancer patients. We look forward to taking that step and executing on that in the near future. It's an exciting moment for the company as well as we take the next step in adding to our portfolio, utilizing leveraging our commercial organization and increasing the sales base of the company nicely with this transaction. So with that, I'd like to thank you for your interest and your participation on this call. Have a good day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.