TG Therapeutics, Inc. (TGTX) Earnings Call Transcript & Summary

Greetings, and welcome to the TG Therapeutics First Quarter 2023 Earnings Call. [Operator Instructions] 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 Jenna Bosco, 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 sir; and Sean Power, our Chief Financial Officer. Following our safe harbor statement, Mike will provide an overview of our recent corporate development. Adam will provide an update on our commercialization efforts and Sean 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 meaning 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 marketed 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 website, www.tgtherapeutics.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.

Thanks, Jenna, and good morning, everyone, and thanks for joining us on today's call. 2023 is off to an excellent start for us at TG, with the U.S. approval and commercial launch of BRIUMVI. And we are excited to be able to offer patients the first and only anti-CD20 monoclonal antibody approved for relapsing forms of MS that can be administered in a one-hour fusion, twice a year following the starting dose. We believe that BRIUMVI's 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 2 months of BRIUMVI commercial availability. Our Chief Commercialization Officer, Adam Waldman, 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 and touch 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 BRIUMVI 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 have seen HCPs prescribing BRIUMVI, and we have seen nice adoption within our target accounts. In terms of patients, we are also seeing a nice distribution of those that are new to MS treatment, new to CD20 treatment and also switches from other CD20, which we believe further underscores the attractiveness of the BRIUMVI profile. Overall, I believe our commercial teams and medical teams are doing a fantastic job introducing BRIUMVI to and educating health care providers on the attributes of BRIUMVI as well as building payer access. And I'm very pleased with the launch thus far. With that, I'll move on, and I want to briefly talk about our European marketing authorization application and our ex U.S. launch plans. At the end of March, about a month ago, we announced that the committee from Medicinal Products for Human Use of the European Medicines Agency [indiscernible] EMA, issued a positive opinion recommending the approval of BRIUMVI 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 to alone or partner, and 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 BRIUMVI 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 that $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 the 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 amount 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 in nondilutive or minimally dilutive ways. With that, let me turn the call over to Adam Waldman, 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 Mike noted, BRIUMVI was approved at the end of 2022, and drug first became available at the end of January 2023. We are pleased with the initial adoption of BRIUMVI by the MS community, highlighted by net sales of $7.8 million in just the first 2 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 BRIUMVI's product profile, proper infusion techniques and helping activate accounts to be ready to prescribe. 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 to navigate the access and insurance process and the hurdles that are common in the first stages of the 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 TG as a committed partner in the MS community. Based on the feedback from customers, we continue to believe that the BRIUMVI profile is attractive. Many of our health care providers have let us know that the one-hour infusion, combined with the lowest ARR seen in the Phase III trial are important and relevant differentiators in the competitive space. We believe an important indicator of early success is measured by both breadth and depth of use. Accordingly, we were pleased to see that over 165 physicians or more than 125 centers in the U.S. prescribed BRIUMVI in the first partial quarter of our launch. Additionally, we believe prescriptions leading to registration in our patient support hub are a strong leading indicator of demand for BRIUMVI. Accordingly, we were pleased to see that in our first partial quarter, more than 400 patients were prescribed BRIUMVI and enrolled in our hub, which we believe captures approximately 80% to 90% of total prescriptions in the quarter as not 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 the acceleration of prescriptions in April. Overall, we believe this represents strong demand for BRIUMVI in the early stages of launch which we believe is being driven by BRIUMVI's highly attractive therapeutic profile. In terms of patient access, our pricing strategy was aimed at providing broad and fast access to BRIUMVI, and we believe that strategy is working as we 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 midyear goal and in good position to be able to hit our corporate goal of achieving broad access to BRIUMVI with greater than 80% coverage by the end of 2023. We also recently announced that the U.S. Centers for Medicare and Medicaid Services, or CMS, has issued a permanent J-Code for BRIUMVI, which will become effective on July 1, 2023. This is great news and in addition to streamlining the reimbursement process, we believe this will facilitate additional patient access as there are many accounts that await to use BRIUMVI until the J-Code becomes effective on July 1. Additionally, some of our largest academic institutions in the country are not yet prescribing BRIUMVI, as they have formulary processes that can take up to 6 months or more. Accordingly, we see BRIUMVI 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 are off to a solid start on the BRIUMVI launch. We believe we have 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 BRIUMVI from the top volume MS Centers and top-tier physicians across the 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 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 & 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 of BRIUMVI net product revenue in the first quarter. As for our broader financial results, our net loss for the first quarter of 2023, 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 is 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 $0.28 per share compared to a GAAP net loss of $69 million or $0.51 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 BRIUMVI 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.

[Operator Instructions] Our first questions come from the line of Eric Joseph with JPMorgan.

Nice trends on the quarter. Maybe, Adam, can you elaborate a little bit more on sort of the mix you're seeing between sort of new to CD20 versus switches? Is it sort of more or less than you anticipated? And then I'm also curious about any, I guess, feedback you're getting on infusion times in the commercial setting beyond that initial dose, right, I guess, is -- 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 in fusion?

Adam, go ahead.

Yes, yes, thanks, Eric, for the question. Yes, as Mike noted, we're seeing a mix of both naive and switch patients. And we're seeing -- with the switch patients, we're seeing a distribution of patients coming from a broad set of disease modifying therapies, including CD20s TYSABRI in the orals and injectables. 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 far as the infusion experience, all as expected, I think we're -- we don't -- we have good feedback on what we're seeing right now is as expected. We're not seeing any unexpected adverse events and the feedback on the infusion so far has been largely positive.

I'll just add -- I'll just end on top of that. I've obviously been out in the field myself and everything I've heard is that the infusion time is on target.

Okay. Great. And just -- and Mike, can you unpack print a little bit. Is there an inventory 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?

Yes, Adam, go ahead. Adam, can you reach in?

Yes, I'm here, sorry. We did not see a lot of stocking at the distributors in the first quarter, Eric. Inventory is what you would expect in a launch and the vast majority of sales was demand-driven.

Our next questions come from the line of Ed White with H.C. Wainwright.

Congratulations on the sales number. Perhaps you can give us a few comments on percentage of free drug. What percentage of patients you're seeing take advantage of the patient access programs?

Sure. Adam?

Yes. We saw -- thanks for the question. We saw about 10% to 15% of free goods on top of 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.

Great. And just a question on expenses. R&D was dramatically lower in the first quarter versus the fourth quarter of last year and the SG&A was much higher as you're proceeding with the launch. I'm just wondering if there's any guidance you can give us on what those expenses are going to look like quarter-over-quarter throughout the year and how to ramp?

Sure. Sean, do you want to tackle that one?

Yes. Sure. One thing to note on the R&D front is prior to approval the manufacturing of BRIUMVI could have 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 broader R&D programs. So I would say I'd expect R&D to remain pretty consistent with what you saw in the first quarter over the remainder of '23. And I would express the same sentiment for SG&A as well.

Our next questions come from the line of Prakhar Agrawal with Cantor Fitzgerald.

Congrats on the great quarter. So firstly, maybe a clarification. Out of the greater than 400 prescriptions, how many patients were infused in the first quarter and had a follow-up.

Yes, sure. I'll take a crack and then Adam may want to talk. So we don't know exactly how many patients get infused. We don't have access to that information. So 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 anecdotal from the field on what actually gets infused and when it gets infused. So -- and I think the 400 plus up to maybe another 50 to 100 perhaps, we don't know exactly -- prescriptions were written during the quarter. Most or some of those will be fulfilled in the quarter, we don't know. Some will be fulfilled in the next quarter, perhaps, but -- and perhaps someone won't get filled at all, to be honest. So I think the demand, as Adam mentioned in his prepared remarks, was quite strong, and we'll see those conversions into final infusions over time. And we'll get some of them. We will, I think, over time, be able to capture 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 the information. And so at this point, 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. And -- my second question, consensus for the full year is around $65 million to $70 million, which, based on my math would imply 2,000 to 2,500 patients on BRIUMVI depending on how gross to net discounts pan 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 you are seeing right now?

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 to give you guidance on that.