Roivant Sciences Ltd. (ROIV) Earnings Call Transcript & Summary

Good morning, everyone, and thank you so much for coming to the 2022 UBS Global Healthcare Conference. My name is Sylvie Chen, and I'm very happy to be your host for this session. Our next presenter will be Matthew Gline, Chief Executive Officer from Roivant Sciences. A Q&A session will follow immediately after the presentation. [Operator Instructions] We now turn it over to Matt. Thank you.

Thank you very much, and thank you for having me. I'm thrilled to be here. It's my -- certainly, first New York-based in-person conference in about 2 years. So if I'm a little bit rusty, I apologize. I'm used to doing this from my desk. Sorry, there's various disclaimers here that I think we've mostly run through. Okay. You're good? Great. There we go. [ Alex ], that one looks familiar. I have my own disclaimer slide. I'll be making forward-looking statements in the course of today's presentation, and you can consult these disclaimers for more information. Great. Well, again, thanks, everybody, for coming. I'm going to start at the very high level and then zero into some of the things that are most exciting for us right now. I don't know how familiar you are with Roivant. But I think one thing to know about us is we set ourselves up from the beginning, not to be a single-product or a single-platform biotech company, but we set ourselves up to rethink the pharma model sort of end to end. And we're actually very close to our next steps in that goal. In so doing, we've planted two stakes in the ground, fundamentally, in terms of ways that we are different. One, which is very visible from the outside and people who have been following us, know pretty well, is what we call our Vant model, which is -- sorry, which is rather than build ourselves as a single-monolithic command and control pharma company. We are set up as a decentralized family of nimble entrepreneurial independent companies. We call them Vants, true to a family. Every member of our family effectively has the same last name, so all of the names end in Vant. And the idea here really is that we think innovation in pharma happens best at small, nimble, agile, entrepreneurial environment, it's why so many big drugs have come from the biotech pipelines of the world. And we wanted to recreate that at a company of scale. And then conversely, our view is that once biotech companies have achieved commercial scale, they've actually struggled from a commercial perspective. They struggled to launch products successfully, they struggled to establish themselves as commercial organizations. And we think some of the reason for that has to do with the economies of scale that bigger pharma companies have. And so by situating all of our Vants under one roof, we think we can sort of have it both ways. We can have the agile, nimble entrepreneurial environment and incentive alignment that comes from nimble biotech companies, but we can build to commercial scale as a larger enterprise. And we can sort of get some of the benefits of commercial scale from having all of the Vants under one roof. And I'll talk -- when I talk about Vant a little bit about how we see some of those benefits. So that's the first stake in the ground we planted. The second stake in the ground we planted is, we feel like our industry, broadly, and many of our peers just significantly under-invest in computational tools for all aspects of the drug development commercialization process. And that includes tools that I'd call more boring, tools advance of ours like [ Lokavant ] or Datavant, which are really about moving data, so that we have faster access to it, especially in drug development, understanding a patient population better, getting data from our CROs faster, so that we can enroll and run trials faster, nuts and bolts sort of execution things. And then on the other end of the spectrum, we'll talk a little bit more about this later today, much more sophisticated either machine learning or molecular dynamics tools to better design, especially small molecules for a next generation of drugs. So we've made investments in computational tools across the entire spectrum, and that's kind of the other stake in the ground that we've planted. Now,in terms of where we are as a company, so we've been around since 2014. We've now run -- and this, to me, is important, if you're going to build a pharma company, we've run 9 pivotal Phase III studies, 8 of them have been successful. Those 8 positive Phase III trials have now resulted in 4 FDA-approved products. Those products were in women's health and overactive bladder and prostate cancer. And they are at a collection of Vants that we have now sold to Sumitomo Dainippon, our partner with Sumitomo Dainippon. So that was a transaction that closed a couple of years ago, in which we took in $3 billion upfront. Our next FDA approval, which is the result of these PSOARING 1 and PSOARING 2 studies, we're hoping for, imminently, the PDUFA date we set is this quarter. And that's in tapinarof for psoriasis. And we'll talk more about that a little bit later on today's presentation. We expect that, as I said, to happen quite soon. We've brought over 40 medicines into clinical development at this point, and we have a pipeline behind tapinarof, again, that we'll spend a little bit of time on, of late-stage drugs -- late-stage [ drug ] candidates in a variety of different therapeutic areas. And then we have a significant financial track record, including that $3 billion transaction with Sumitomo Dainippon that I mentioned earlier, which leaves us with, as of the last quarter that we reported December 31, $2.2 billion in consolidated cash on balance sheet, a position that we feel very fortunate to have, especially in the current markets. And that has us funded 2-plus years, operationally, with a good deal of comfort. One other point that I'll make financially is, I talked on the previous slide about some of our computational tools, we don't just build those tools for our own purposes. We build them as commercial opportunities as well. And so one of those companies Datavant that I briefly mentioned, we actually effectively exited our stake in Datavant last year. We merged it into a larger PE-backed company called Ciox Health, and that resulted in $320 million of cash to us, as well as a 12% ownership stake in a $700 million and growing top line healthcare data company, which was valued at about $700 million. Our equity stake was valued at about $700 million by new investors last year when that M&A deal closed. So thinking about the business at this point, I would say there's a couple of different categories. We have upcoming, and we'll talk a fair amount about this today, the commercial launch of tapinarof. This is definitely where many investors are focused today. We have a broad clinical-stage pipeline behind that, with at least 8 pivotal proof-of-concept trials running this year. We have our discovery platform, which is a true [ chip-to-clinic ] platform with molecular dynamics and machine learning capabilities across a variety of immunological and oncological indications. We have a couple of sources of asymmetric potential upside, including the monetization of some of our computational tools as well as the IP portfolio that exists at Genevant, which is a company in our family that has been developing lipid nanoparticles for a while. And I think many of you may know, we filed a lawsuit earlier this year against Moderna, asserting that their COVID-19 vaccine infringes on several of our patents in lipid nanoparticles. And finally, as I mentioned before, all of that backed by a significant cash balance, sufficient to fund our portfolio comfortably and a significant stake in -- a significant amount of public equity stakes across some of our Vants. So I'll next just spend a few minutes on one of the most important aspects of our business right now, which is the upcoming commercial launch of tapinarof. So tapinarof is a drug that we have been developing in psoriasis for a number of years. We acquired it from GlaxoSmithKline. It is a novel topical that we are developing in psoriasis and atopic dermatitis. The PDUFA date that's upcoming is on the back of our Phase III data in psoriasis. Notably, there has not been a new topical therapy of a novel mechanism of action approved in psoriasis in 25 years. So this will be the first novel topical in a very long time. And I think it's important to understand something about the psoriasis market and I speak as a psoriasis patient, 90% of dermatologist prescriptions are written for topical therapy. So although investor appetite is heavily focused on systemic agents on biologics, actually an enormous portion of therapeutic treatment of [ boltpsoriasis], an atopic dermatitis, is achieved topically and is mainly achieved by topical corticosteroids, which is a category of drug triamcinolone, was approved in like the '50s. These are drugs that dermatologists have been writing for a really long time. So to [ winter ] off from that perspective, it is a really important drug. It has efficacy that is as good or better as anything that has ever been shown with a topical at the main 12-week end point. It has durability. So you can -- unlike with many other drugs that are topical that have the sort of tachyphylaxis effect, where patients don't -- at some point, patients peak and then start getting worse, even on drug, the drug just doesn't work as well, over time. We don't observe that in our therapy. You can stay on it for, we studied out to 52 weeks, as long as you want. Unlike many steroids, you can use it anywhere you want on the body. So the most potent steroids, clobetasol, halobetasol, you can't use them on your face. You can't use them in your groin. You can't use them in sensitive skin areas. Tapinarof was studied across the entire body. And maybe most importantly, tapinarof demonstrates a true remittive benefit. So about 40% of patients on tapinarof achieved complete disease clearance. It's called the PGA score of 0. And they stayed clear for 4 months on average, which is something that's never been shown in a topical therapy before. There's really only one other topical therapy with any remittive benefit on the label at all, that's [indiscernible], and it has a 4-week remittive benefit, so significantly shorter. So from an efficacy perspective, this is, in our view, superior to any of the topical corticosteroids that are currently the mainstay of care. And from a safety and tolerability perspective, it's superior. We expect no labeled duration-of-use limits, none of the steroid overuse injuries, none of the other things that there are sort of consequences that result in short duration of use limits for steroids. We don't expect any of those things. And in fact, we saw no treatment-related SAEs on drug. So this is a therapy that's coming to market that is both safer and more efficacious than the current standard of care that is responsible for 90% of the dermatology prescriptions today. And remember, there are about 6 million psoriasis prescriptions written every year and about 15 million atopic dermatitis prescriptions written every year. So these are very large markets, mostly topical, and this is the first time that a drug that is superior to the standard of care has come to market. So you can see here our efficacy, and this highlights one feature, which is rapid onset of action. You see differentiation as early as 2 weeks on therapy. We saw statistically significant differentiation on PASI at 2 weeks. And so this is a drug that works fast. It continues to work, obviously, at 12 weeks. Here, you can see the treatment effect hasn't plateaued. And 20% reduction in disease activity versus week 2, with the continued separation versus placebo over the duration of the trial. Now this -- and I'll talk about this again because it's really important quality. You don't often see Kaplan-Meier curves in presentations about topical therapies or psoriasis therapies, generally. So this is the patients that entered our long-term extension study, having achieved a PGA of 0 on drug. We took them off drug at week 0. And this is by patient, how long they stay clear or mostly clear of psoriasis. And you can see, among this patient population, it was 115 days on medium, so about 4 months. This effect was actually replicated. This is the 79 patients who achieved a PGA of 0 during the main study. This effect is ultimately replicated in overall 312 subjects, so about 40% of the patients on trial altogether, who saw an overall mean duration of remittive effect off therapy of 130 days. So this is a topical therapy that you can use anywhere on your body that clears psoriasis in a significant percentage of cases. And once it clears psoriasis because of the mechanism of action of the drug, you stay clear for 4 months on median -- on mean. So we think this is an important new treatment option. As I mentioned before, our PDUFA is upcoming. We've said this quarter, imminent. We are fully staffed at this point with a field force. It's going to be 75 to 100 reps. It will cover the top decile of dermatologists, who write 80% of all commercial [ scrips ] in the market. That's about 6,000 providers. And we've got that team fully in place. The Dermavant leadership team is well equipped to launch a topical therapy. They've done many successful topical launches before. And this is one of the benefits of the Vant model that we've been able to hire a specialty field force and a specialty leadership team focused on dermatology -- of dermatology, which in derm, frankly, is particularly important because dermatology is one of the few areas we're detailing. It's still a pretty major part of the commercial effort. Now, I said -- and before I move on to the next piece of this, I said I was going to talk a tiny bit about some of the benefits of the Vant model. The way that I see this, there are a couple of -- this is all stuff that makes sense to have it the Vant, the expertise in the marketing, the expertise in the field force and the covering each individual dock. That's something that you want a dermatology expert field force for. The flip side to that is, for things like distribution agreements, for things like access and payer conversations, that's where you want to start replicating a bigger pharma company to have the breadth of our portfolio behind it. And that's where we feel like we can achieve an optimal balance between the specificity of the field force and the marketing team versus the general capabilities that will allow us to expand beyond dermatology across our portfolio. So I'm going to move on from tapinarof and try and cover quickly some other aspects of our pipeline. We have a broad and differentiated pipeline of late-stage therapy. In addition to tapinarof, we have batoclimab with Immunovant, which is an anti-FcRn antibody. Immunovant is a public company, and there's a fair amount of information about it available. And then we have a number of other late-stage clinical programs. And this is in addition to our discovery-stage portfolio that I'll talk about in a few minutes. I want to draw attention to one additional therapy in our portfolio that we've been talking a little bit about recently because it is a new element of our portfolio. It's something we added at the beginning of this year, which is a drug called RVT-2001, which is a small-molecule SF3B1 modulator. It's an oral therapy, which we are developing for the treatment of transfusion-dependent anemia in patients with lower-risk myelodysplastic syndrome. So this is an indication many investors are familiar with, from following Acceleron, which developed a drug called Luspatercept that has now been approved as Reblozyl by Bristol Myers Squibb. So Luspatercept has really validated that this particular market is large. So Luspatercept is doing $500 million plus in annualized sales, a little bit more than a year into launch. And BMS thinks it's going to be a $4 billion-plus opportunity. Critically, this drug and other drugs like it were historically initially developed, and this drug was originally developed by [ Eisai ] in progressive MDS in AML and CMML, and for a variety of mechanistic reasons. SF3B1 is a target on the spliceosome. It was not as effective in those indications as you might want. And those are very competitive indications. What we think [ Eisai ] missed, and we'll talk a little bit more about what we saw on the data, is that this drug appears to work well and, in fact, appears to work in some ways better than Luspatercept in this lower-risk nonprogressive MDS population, which if you're not familiar with it, this is still a very severe disease. And many of these patients are dependent on regular red blood cell transfusions, in order to live, because they develop quite severe anemia. So we think, based on our early data that I'll share in a minute, that we have an opportunity for a potentially best-in-category therapy in transfusion-dependent patients -- in transfusion-dependent anemia in these lower-risk MDS patients. So what we saw in our data, the reason we're excited about this is, this drug has been studied in 84 patients. Again, [ Eisai ] was studying it in progressive AML and CMML. And so of those 84 patients -- it was well tolerated. It's an oral medication, which is different than Luspatercept, that's an IV infusion, was well tolerated with the majority of events classified as Grade 1. Most importantly, of those 84 patients, only 19 of them -- but 19 of them were in this bucket of transfusion-dependent lower-risk MDS patients. And critically, we saw a transfusion independence rate of a little bit more than 30% in those 19 patients, which, to be frank, is nothing to write [ home ] about. Luspatercept has responder rates of 40-plus percent, sort of mid-40s percent as a drug on market. Now, the key thing though is, of those 19 patients, 15 of them had pretreatment, were later-line patients, either pretreated with Lenalidomide, Revlimid or pretreated with HMA therapy. And what's really notable is every other therapy in low-risk MDS has struggled with these second-line, later-line patients, right? Luspatercept, for example, which as I said, have a mid-40s percent responder rate, in patients in its Phase II trial who had been pretreated with Lenalidomide, had only a 13% transfusion independence response rate. And there was an investigator-sponsored trial of Lenalidomide, in which patients with prior HMA therapy had only a 12% response rate. So the first opportunity that we think is exciting is an opportunity to be a best-in-class later-line therapy for these patients, where we've shown small end in cross-trial comparisons, and that's why this is a relatively risky program, what we've shown a significantly improved benefit in those later-line patients. And if that's replicated in our larger Phase I/II study, we think it's a big opportunity. The second opportunity that we see in sort of the broader direction is, both Luspatercept and Lenalidomide did much better in earlier line therapy. So when that same Phase II study of Luspatercept where they did 13% transfusion independence in Lenalidomide pretreated patients in not-Lenalidomide pretreated patients that is in the earlier line setting, they had a 44% transfusion independence rate. And in that same trial, where Lenalidomide had a 12% responder rate on this HIE endpoint, it's transfusion reduction endpoint, it's not quite the same endpoint, they saw a 38% HIE responder rate, which again is significantly higher in an earlier line setting. So the second opportunity for us is, if we see a similar improvement as we move to earlier line patients, we think we have a chance to be an overall best-in-category drug for these patients, where Luspatercept leaves a lot of room on the table in sort of mid-40s or maybe 50%, depending on how you look at it. There's an opportunity for an improved drug, and that's setting aside the fact, as I said, that we are oral and Luspatercept has other tolerability issues like fatigue. And actually, being oral is nothing small. Remember, the thing you are doing here is achieving transfusion independence for these patients. And right now, on Luspatercept, they are going from having to get red blood cell transfusions, which is a difficult procedure. It's very tiring. It takes a long time, but they are going instead to an IV infusion center on a regular basis to receive Luspatercept. And if we are successful, we will be on oral medication, they'll be able to take it home. So it will be a significant difference. Now, there is one more opportunity that is interesting to us about this program, which is in addition to the broader population, in addition to the later-line population. So SF3B1 mutation, as you may or may not know, Luspatercept is mainly approved in [ aero blast ] positive lower-risk MDS patients. The main diagnostic criteria for RS positive at this point is actually, do you have an SF3B1 mutation? So our target is highly relevant to that diagnosis. And there are certain biomarkers of certain kinds of SF3B1 mutations, in particular, there's a biomarker called aberrant TMEM14C transcripts, which -- sorry, I don't have the slide in on here, but in that patient population, in 5 out of 7 patients, we saw a response. So a 70-plus percent response rate. So in addition to the broadest-possible population, where we might have a best-in-category program, there's an opportunity for us to have a biomarker-driven precision strategy here, focusing on those TMEM14C patients. So we're currently running a Phase I/II trial, enriching for those specific patients, so that we will have a sense for does this translate to the broader population? And what does it look like in those enriched biomarker-driven patients? And that data will be available next year. And so we'll have a pretty clear sense next year, whether this is a broader competitor to Luspatercept or whether it's a particularly interesting biomarker [ growing ] precision opportunity, higher risk because of the cross-drop comparisons in the small end but a big market and something we're pretty excited about. So I'm going to round out by moving off our development portfolio. There's many other things we could talk about. But I'm going to move over to our discovery efforts, where we have a computational platform designed for a new small molecule discovery. And this again is something we've been focusing on increasingly over the past several years. We have 3 different areas where we are using this computational platform. All of them sort of designed in principle to allow us to address the proteome that has not been druggable. So proteins that have been difficult to drug for various reasons. The 3 prongs of that approach. The first is, we're very focused on heterobifunctionals-targeted protein degraders. The reason for that, in our view, is computational tools should matter in helping us to understand the protein-protein interfaces between -- if you're familiar with degraders, these are drugs that are designed to recruit the body's natural recycling system to protein. So instead of downregulating a protein by inhibiting it, they downregulate a protein by tagging it for destruction and the body throws it out. So each molecule looks a little bit like a tow truck, with one end designed to bind to the recycling bin and one end designed to bind to the protein you want to break down. So we think this is a perfect application for computational tools. First of all, every drug now needs to be designed to bind to 2 targets. So you're doubling the nature of the problem. And then also, you need to think about the protein-protein interfaces, how these 2 sort of blobby proteins come together and form a ternary complex. And we have, in short, the most precise ternary complex modeling tools, computationally, of anybody out there. And this allows us to do structure-based drug design for heterobifunctionals in ways that other people cannot. The second area we're focused on is covalencies. So this combines certain kinds of novel proteomic biophysical assays that allow us to assess covalent binding and find hits again difficult-to-drug proteins, cytokines, transcription factors, things that are typically targeted by biologics and antibodies, where we can potentially find binding domains using covalency through the proteomic approaches. And then what we have the ability to do because of our computational tools is to take covalent hits and progress them into selective either inhibitory modulators or degraders by building out from the hit, using our understanding of protein geometry. And then the last piece of this is to go after drugs, we call it deficiency to best-in-class. Go after drugs where there is known chemical matter that has a problem, right? There's a tox issue. There's an off-target issue. There's a selectivity issue across isoforms, where, again, we can use our molecular dynamic and machine learning understanding of protein geometry to make improvements to those drugs that get away from the tolerability issue or the side effect or whatever it is and optimize for the selectivity or efficacy that we want. At this point, this effort is now validated by multiple large partnerships with a number of large pharma companies, J&J or Janssen, is partnering with our machine learning toolkit, partnering with [ VantAI ], to potentially generate novel glues and heterobifunctional degraders. It's an area that big pharma is interested in, and it's a partnership that we're really excited about. Boehringer Ingelheim is also partnered with [ VantAI ], developing, again, degraders for particularly intractable and undruggable targets. We haven't said what targets yet, but that's an important collaboration for us as well. And then finally, we've announced a collaboration with Blueprint Medicines, again, around novel protein degraders to address important areas of unmet needs. In general, we are not in need of partnerships, but we like these because our computational platform has a much bigger surface area then we can develop ourselves. And these partnerships allow us to work with really smart people on interesting problems and to use our computational toolkit to the fullest-possible extent. These are also economically interesting to us. And these have potential, including upfronts and milestones, over $1 billion of aggregate consideration as well as product royalties. So the final thing, and I'll spend just a couple of minutes on this is, I want to remind people that we have an interesting opportunity at Genevant. So Genevant is -- been our leading nucleic acid solution -- delivery solutions company. So Geneva is a company built around designing lipid nanoparticles for the delivery of oligonucleotide. So this includes RNAi, this includes mRNA. It includes gene editing. All of these different technologies require delivery for in-vivo efficacy. And Genevant is built around a team that actually goes back 20-plus years and was really among the founding teams of LNP technology. They go back to a company called Protiva, became a company called Tekmira that became Arbutus, and then we created Genevant by taking the LNP team and moving them into a JV between us and Arbutus. We are working on all kinds of interesting things at Genevant, in terms of using LNPs for next-generation purposes. Obviously -- and I'll talk more about this in a second. LNPs have become much more an area of focus with the COVID-19 vaccines because they are mRNA delivered via LNP. But we are working on tissue-specific LNPs for delivery into the CNS, for delivery into the lung. We have collaborations with folks like Sarepta and Takeda. Actually, I'll pull the next slide. We have a broad range of collaborations expanding the frontier of what LNP is capable of. So with Takeda, for example, we have multiple programs, delivering in one case, DNA, and in the other case, RNAi to hepatic stellate cells, where most LNP currently delivers to hepatocytes. We have a collaboration with Sarepta to deliver mRNA intramuscularly. We have a number of other collaborations for a variety of different modalities. We also have a number of collaborations related to novel LNP mRNA vaccines, including specifically, we focused a lot on vaccine access on vaccine development projects in parts of the world other than the United States and Europe. So we have a program in Southeast Asia. We have a program in China, a couple of other collaborations to get mRNA vaccines more broadly used. The other thing that people are focusing on here, and I won't talk a ton about it today, is we believe that our LNP portfolio is likely relevant to the mRNA COVID-19 vaccines. We have sued Moderna for infringement of our portfolio. Moderna has responded, and the next events there will include a response from us to their motion to dismiss. That will play out over the course of the summer and then ultimately, over the course of the next couple of years. And there's potential relevance beyond that to other LNP-delivered products as well. So I'll wrap up before I go to Q&A, just observing. We have a catalyst-rich period ahead. I spent some time earlier on this call. Clearly, the most significant near-term thing is the FDA approval decision and launch for our dermatology program for tapinarof. We also expect top line data from our ongoing Phase III study in tapinarof in atopic dermatitis in the first half of next year. Immunovant, which I did not talk about today, has currently initiated its pivotal trial or is in the middle of initiating its pivotal trial in MG. And we'll initiate 3 pivotal trials this year, and we'll announce multiple new indications, including trials in TED and WAIHA, two new indications. We have an ongoing program at Aruvant, lentiviral gene therapy for sickle cell disease that we've talked about in other forums, and a number of other key programs, including the Hemavant program that I mentioned earlier today, which is that lower-risk MDS program. So a catalyst-rich year ahead. And obviously, feeling good about our ability to fund this portfolio in a very difficult market without accessing the capital markets. So overall, excited about our business, excited about where we're headed and excited to be back at in-person conferences. So I will wrap up there with about 11 minutes to go and open it up to Q&A either in the room or I think on this iPad.

Thank you to the Q&A portion of the presentation. [Operator Instructions] The first question for Matt is, has strategy for drug launch changed in recent years? Has COVID had any impact on how you got to -- like how you go to -- how your go-to-market with new drug development?

Sure. Yes. So first of all, launching products has changed an enormous amount in the last few years, not just because of COVID, but because payer dynamics are evolving very rapidly. And so for example, and I think you'll see this in our launch of tapinarof, almost every drug and especially every topical in any drug in psoriasis is going to go initially with a new-to-market block. It will not be covered by payers at launch. And then it will be up to us to generate commercial demand to get the kind of coverage that we want from payers and the formulary position that we want. This is very different than it was even 3 or 4 years ago. And it's affecting all kinds of things from early-launch gross to nets, which will be deeply discounted because most drug will be paid for in the co-pay card initially, up to and including the timeline to contracts and the importance of getting the right contracts from a competitive perspective. So that's been a significant change. In terms of COVID, look, I think there's been a couple of things, and we've seen this from our partners at Sumitomo, and we've seen this in other places. First of all, the extent to which different indications rely on in-person detailing was already changing, and it's gotten even bigger during COVID. So there's a whole bunch of markets now, where detailing is a much, much, much smaller piece of the market. Frankly, we think dermatology is one of the exceptions. First of all, many derm patients are treated in person because of the nature of the disease. And second of all, dermatologists are just still very used to having sales reps call them. It's a very sampling-heavy discipline. So dermatology is probably a little bit behind in that area. But we've seen a number of other markets where, frankly, in-person detailing has slowed down significantly. And then to be honest, it has changed the experience in the clinic, right? Tapinarof clinical trial, for example, wrapped up in the middle of the COVID-19 pandemic. And so we had a significant number of patients who transitioned to virtual visits in the middle of the pandemic or were having trouble getting to the office. These are just things that drug companies have to deal with now. And it's sort of changed the backdrop. Everybody has to deal with it, but it's definitely a disadvantage to new therapies versus on-market therapies, wrapping up clinical trials during that period. It's mostly corrected now as best we can tell. Most patients at this point are getting into trial sites. But again, it's idiosyncratic indifferent by indication and disease severity.

Yes, that makes a lot of sense. Next question. Please remind us about the tapinarof dose in AD versus psoriasis.

Yes. So tapinarof is a topical therapy, the commercial formulation is going to be 60-milligram tubes. And because it's a topical dose, it's a little bit of a funny concept, right? Patients use it where they have lesions, patients with high disease burdens, high body surface area, will use more drug. Patients who have low disease burdens, low body surface area coverage will use less drug. One thing that I will say about the atopic dermatitis market that is relevant to this question is, psoriasis tends to be an adult disease. So patients are diagnosed with psoriasis when they're in their teens or 20s and stay with it. Atopic dermatitis is very much a pediatric disease. These patients are diagnosed quite young. And so one thing about dosing is, pediatric patients will use less drug than adult patients because they have smaller bodies. So I would expect potentially slightly fewer tubes in AD than I would expect to psoriasis.

Got it. The next question is, to the extent possible, can you speak to any inorganic or organic growth opportunities you see over the next few months?

Yes. It's a great question. So organic growth, I feel like I've talked a bunch about some of the programs in our portfolio and how they might progress. I would say, although we, as a public company, certainly suffer from the current public market dynamic, we as a well-capitalized company benefit from the current public market dynamic. And so we've always been drug hunters. Many of our portfolio programs, including all the clinical programs I mentioned today have been acquired in-licensed. And I think there's no question this is a -- this is probably the single most attractive in-licensing market that we will have seen in a long time. To be frank, I think you see this in terms of big pharma M&A, I think there's a general sense that it's going to get better for us as acquirers, worse for us as companies before it gets worse for us as acquires, better for us as companies. And so there's an opportunity to continue to watch the market and to be selective and also bringing in programs that increases our burn is, obviously, a difficult decision right now because we are focused on making sure that we have the 2-plus years of capital to weather this relatively difficult market storm. But you can imagine, we are looking at every M&A and in-licensing opportunity. And we're looking at portfolio rationalization as a way to make sure that we can continue to pursue those opportunities as we see them.

Yes. The next question is also on the tapinarof candidate. So how do you plan to launch tapinarof outside of U.S., especially in major EU markets, including Israel, Australia, New Zealand, et cetera?

Yes. So we have global rights ex-China, to tapinarof. We have out-licensed Japan to Torii Pharma, the arm of Japan Tobacco, and they're continuing to develop the drug there. And so that will be our launch strategy in Japan. We have European rights. The European payer and reimbursement landscape for psoriasis is different than the U.S. payer and reimbursement landscape. And so it's important to get the sort of exact label and differentiation strategy correct there. We have not announced a launch strategy in Europe. We've talked a little bit about the possibility of finding a partner there, and there are a number of established dermatology companies that are quite used to that landscape. So I would think it's most likely we will launch via partnership and possibly, we'll launch ourselves after the U.S. launch.

Got it. The next question is more about the global landscape. Could you talk to any challenges or opportunities you see amidst the current operating information with rising inflation, supply chain pressures, et cetera?

Yes. So I think there's a few things. I talked a little bit about the in-licensing opportunity. The market obviously creates some opportunities. Inflation is hard. It's hard. I would tell you one thing that's interesting. I was at a non-pharma-specific conference a few weeks back, and I was sitting around a table with a bunch of CEOs in like the restaurant industry and the grocery industry and even tech. And there were a lot of comments around the table about how incredibly difficult it is to attract and retain talent, and it has been. This has been an enormously difficult environment. This has been the most competitive biotech job market in history. That's not just inflation. It's been the capital environment in biotech. It's been the fundraising environment in biotech. It's been the valuation landscape in biotech. It's been a boom. Now, I sort of felt like I was coming to that meeting from the future, in the sense that with the [ battery ] market having corrected, the talent market's clearly gotten easier, even in the last few months, from an employer perspective. There's just less opportunity to move around. That doesn't mean that it's easy. There's still really good people -- are still in super high demand and inflation is made hard and keeping up with inflation has made that hard. Also, the in-office operating environment is complicated. I'd say, 30% of my workforce wants to be working home forever, 30% of my workforce wants hybrid arrangement, and 30% of my workforce wants everybody to be in the office all of the time. And so it's not possible to make everybody happy. That's an operating challenge. I will say, from an opportunity perspective, this is an environment where execution is going to matter even more. And that's things like manufacturing and shipping and getting samples to doctors' offices on time. That's things like not having weird manufacturing hiccups because of the supply chain. It's things that are going to set us apart, we think, from our competition, in terms of our ability to execute well on programs. And I think that will provide more of an operating advantage that it might have in easier environments.

Got it. So we're running out of time, and we only have time for another question. And the final question for Matt is, we see that there are about $2 billion in cash. And can you talk a little bit about your capital allocation strategy?

Yes, sure. So I think we talked a little bit about some of our late-stage programs. Obviously, a meaningful portion of capital has to go to making the tapinarof launch successful. And a meaningful portion of our capital has to go to our late-stage development candidates. In general, first of all, we intend to operate the business with 2-plus years of runway at all times, and that requires constant adjustment in portfolio reevaluation. But I would say, in this market, we're looking to make sure that we are working on programs that are going to produce important data over the next couple of years, so that we can get answers to things before we spend big dollars on them. And the other thing I would say is, we're looking at drugs that we think will work, which obviously everybody is, and we're looking at late-stage programs that we can get to market quickly.

Got it. All right. We'd like to thank Matt from Roivant Sciences for presenting today, and thank you all for attending the 2022 UBS Global Healthcare Conference. We look forward to hosting you over the next few days. Thank you so much.

Thank you for having us. My pleasure.