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

Good day, and thank you for standing by. Welcome to the tapinarof FDA Approval Investor Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Paul Davis, Chief Communications Officer with Roivant Sciences. Sir, please begin.

Great. Thanks, and good morning, everyone. Welcome to the Roivant and Dermavant conference call to discuss the FDA approval of VTAMA tapinarof cream 1% for the treatment of plaque psoriasis in adults, which was announced earlier this morning. If you have not yet received a copy of today's press release, it can be found on the IR section of Roivant's website at www.roivant.com and on the news section of Dermavant's website at www.dermavant.com. For those listening to my phone, during today's call, management will refer to a slide deck that can be found on the Events and Presentations page of Roivant's Investor Relations website. Joining me on today's call are Matt Gline, Chief Executive Officer of Roivant Sciences; Todd Zavodnick, Chief Executive Officer of Dermavant; Phil Brown, Chief Medical Officer of Dermavant; and Chris Chapman, Chief Commercial Officer of Dermavant. During today's call, management will make forward-looking statements, including statements related to the clinical development of the company's product candidates, business strategy and planned operations. These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. Roivant's and Dermavant's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of those risks and uncertainties. Please see Slide 2 of the accompanying slide deck for today's call as well as Roivant's SEC filings for important risk factors. Roivant and Dermavant caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations. Without further ado, I'll now turn the call over to Matt Gline, Chief Executive Officer of Roivant Sciences. Matt?

Thank you, Paul. Good morning, everybody, and thank you for joining this call. We're obviously very excited to be here. I want to start by acknowledging everything that went into today's announcement. The approval of tapinarof was an enormous effort from a huge team across Roivant and Dermavant. You'll hear from myself and from a number of key Dermavant leadership team members about the product and our plans moving forward. Before I hand it over to Dermavant team, please turn to Slide 5 in the presentation, and I'll give a little background on Roivant and how we got to this moment. I'm proud to say that this is actually the fifth FDA approval to come out of the Roivant family of companies with several products now marketed by our partners at Sumitomo Pharma. Notably, with today's approval, tapinarof will become the first product commercially launched from within the Roivant family. While we're still in the early days of Roivant, taking this step, following our strong track record of clinical development success is an important milestone for us. The other point I'd like to make at the outset is in the current market environment, we are fortunate to be extremely well capitalized with $2.1 billion of cash on our balance sheet as of March 31. As such, we are confident we have the resources and strategy in place to ensure that spinoff can compete aggressively in the marketplace. Moving to Slide 6. We'll go into more detail about other aspects of our business on subsequent earnings calls and in other forums. Today marks Roivant's transitioned into a commercial stage company, but this is backed by a broad development pipeline, our computationally powered drug discovery engine and several other interesting opportunities for upside and exciting -- exciting developments. If you move ahead to Slide 7. I want to say a few words about tapinarof. This will, believe it or not be the first topical treatment with a novel mechanism approved for plaque psoriasis in 25 years. And tapinarof has been given a broad label supported by robust clinical efficacy, which the Dermavant team will review on this call. Not only is this exciting for our companies. It's an exciting moment for psoriasis patients who finally have access to new capital treatment option with unique and differentiated efficacy, which we believe could render it the new standard of care for psoriasis patients. Looking at Slide 8. Because of its unique mechanism, we believe tapinarof will not only benefit psoriasis patients, but it also has the potential to offer a new option for atopic dermatitis patients as well. We're currently running our Phase III program in AD, which we'll read out next year. These are the very largest indications in medical dermatology, an overall $25 billion market today with a significant piece of that in psoriasis and AD. There were 6.6 million prescriptions written for psoriasis and 15 million prescriptions written for AD in 2020. And it's important to remember that topical therapy really is the baseline standard of care in these populations, close to 90% of the scripts are for topicals. Most patients get treated with topicals, and most topicals, frankly, are corticosteroids, a decades-old class of medicines. These steroids have efficacy limitations and safety and tolerability limitations with restrictions on how long you can use them, restrictions on where on the body you can use them and significant side effects. Tapinarof addresses many of these limitations head on, as you'll hear from the team today and adds an off-therapy remittive benefits, allowing patients in many cases to get clear of psoriasis and stay off drug for prolonged periods of time. We see the opportunity for a differentiated safe and well-tolerated therapy like tapinarof to change the way psoriasis and AD are treated to become the new therapeutic mainstay. With that, I'll now turn the call over to Todd Zavodnick, Chief Executive Officer of Dermavant, who will introduce some of the key attributes of tapinarof and together with his team, will discuss the label and the commercial strategy for our launch.

Thank you, Matt. Good morning, everybody. What an exciting day for the employees at Dermavant for health care providers, patients and payers. Please turn to Slide 10. Allow me to introduce you to VTAMA tapinarof cream 1% for adults with plaque psoriasis, truly a first-in-class novel topical that has proven to be a safe and effective treatment. Key among the attributes that elicit excitement for VTAMA topical cream is its powerful efficacy. And our studies that has shown 6x the efficacy compared to the vehicle and our 12-week pivotal studies. Also, as Matt shared, VTAMA produces results that last. I'm talking about a durable on-treatment result where we saw no tachyphylaxis over 52 weeks. And additionally, a lasting remittive off-treatment effect of approximately 4 months. In addition, VTAMA was safe and well-tolerated allowing for usage anywhere on the body for any length of time with no label safety warnings or precautions. Please turn to Slide 11. If we take a deeper dive into the VTAMA tapinarof 1% label, we also see that it can be used for the treatment of any type of plaque psoriasis, mild, moderate or severe. As I shared earlier, VTAMA can be used anywhere on the body, including sensitive areas for any length of time. We observed consistent durability on treatment with VTAMA for over 52 weeks and a demonstrated remittive off-treatment effect of approximately 4 months, which is included in the label. So what does that mean? It means that when patients reached a PGA 0, a PASI 100 and they stopped therapy, they remained clear for a median of 4 months. which is an absolutely remarkable benefit for adult patients suffering with plaque psoriasis. As I mentioned, VTAMA has no label safety warnings or precautions which again is a highly differentiating factor versus existing systemic and steroidal treatments against which we believe we are very well positioned to compete. I also want to take a moment to point out that VTAMA's safety database currently extends to around 2,200 patients who have been studied with VTAMA since its inception, which provides us with a safety profile that has been proven to be consistent and predictable. Please turn to Slide 12. Hopefully, you can hear the excitement in my voice. This is a long time coming. VTAMA cream is truly a potential multibillion-dollar blockbuster drug that can transform dermatology. Moreover, it's a novel product that targets 2 of the largest markets in immunodermatology and in the overall pharmaceutical space. Now even the better news, we will be launching VTAMA this week. Typically, companies experienced a delay between the approval and its launch. There is absolutely no delay here with Dermavant and VTAMA approval equals launch. I'm excited to announce that now that we are approved our myvtama.com website, our point-of-sale experience for physicians, patients and pharmacies will be launching today. And again, we will have product in the channel this week. The speed of our launch is an absolute true testament to the commitment the dedication and the results-oriented approach of each and every Dermavant employee. And I want to take this opportunity to thank everyone on my team who has strived to make this possible. Additionally, as Matt shared in the United States and Canada, we're currently executing our atopic dermatitis Phase III program, our ADORING 1 and 2 trials, which are being executed at over 100 sites. Our current expectation is for a readout from those trials in the first half of 2023. Please turn to Slide 13. As I stated a moment ago for us at Dermavant, approval equals launch. This quick turnaround has been made possible due to the world-class alliances we have forged with our API manufacturing partner at Thermo Fisher and our drug product manufacturing at GlaxoSmithKline. To date, we have manufactured over 30 batches of clinical and commercial product. The importance of having samples ready for health care providers and patients alike cannot be minimized in dermatology, and we are ready right away to make that happen. Now with that, I'd love to turn the call over to Dr. Phil Brown, the Chief Medical Officer of Dermavant. Phil?

Thanks very much, Todd. Good morning, everybody. If you would please turn to Slide 15. As Todd and Matt both mentioned VTAMA truly is ushering in a new era for patients that suffer from plaque psoriasis, but is equally important for the entire dermatology community. VTAMA has a unique and a scientifically elegant mechanism of action. It is a new chemical entity, the first topical new chemical entity introduced for psoriasis in over 25 years. Highlighted on this slide are the mechanisms contributing to VTAMA's abilities to improve plaque psoriasis. So tapinarof interacts with the Aryl hydrocarbon receptor. This is highly expressed in barrier tissues, including the skin and, of course, keratinocytes. This interaction results in down-regulation of important inflammatory pathways, specifically as it relates to psoriasis, the Th17 pathway and the associated cytokines IL-17A and F are down-regulated. Equally important, though, VTAMA down-regulates the Th2 pathway and the associated cytokines, IL-4, 5 and 13, and which we know contribute to atopic dermatitis, and hence the reason we believe that the product has the utility in both of these disease states. VTAMA also up-regulates genes associated with the epidermal differentiation complex, Filaggrin, loricrin and involucrin. All are up-regulated in the presence of VTAMA, and this serves to restore and normalized skin barrier and function. Lastly, it also up-regulates Nrf2, a very potent antioxidant. I'd also like to mention that just last week, we presented preliminary data at the SID, the Society of Investigative Dermatology that showed tapinarof is inhibiting formation, cytokine production and persistence of resident memory T cells in vitro. This is a very important preliminary observation as we continue to develop an understanding of how tapinarof is improving plaque psoriasis. And we believe that this observation may be contributing to the remittive effect, the off-therapy effect that is being observed for the product. More to come on that as we get into the presentation. If you would please turn to Slide 16. On this slide, we are highlighting the primary efficacy outcomes that were observed in the 2 pivotal studies. I would like to point out the consistency of the data across both of the trials. And as Todd has already mentioned, you see about a sixfold improvement in the active arm versus vehicle. Again, in both of these studies very consistently observed. We see separation occurring early as early as the first clinic visit at week 2 and being maintained and continuing to improve through the course of the 12 weeks. Highly statistically significant separation is observed by the week 4 time point and continuing to improve up to that week 12 time point, which resulted in the approval of VTAMA. I would like to point out that the shape of the curve indicates that we are not at maximal effect even with this very robust observation at 12 weeks. And it's also important to note that the vast majority of patients that were exposed to VTAMA, about 80%, experienced at least 1 grade of clinical improvement over the course of the studies again, underscoring the importance of a novel mechanism of action in how patients were able to respond. Please turn to Slide 17. While we focus on large data sets and populations to understand the impact of a drug, having -- is having in a given indication, it's important to remember that individual patients are on their own journeys with plaque psoriasis and contributing to the data sets that we rely upon. This photo illustrates the impact VTAMA is having on patients. Highlighted here is an individual that was in one of our pivotal studies. You can see on the left-hand portion of the slide, the baseline photo before the patient received any study medication. You see these classic psoriatic lesions, erythematous, well-demarcated plaques with scaling. And below the photo, you'll note the overall extent of this patient's disease. We are focusing here for purposes of photography on just a single aspect, a single anatomic location. However, recognize that this patient has psoriasis over their entire body. So that's what's highlighted below. This is a PGA 3 moderate disease, but you note the PASI of 17.6, indicating a fairly significant disease burden. This would be a subject that would be a candidate for systemic therapy. The DLQI is a quality of life instrument and the score here indicates a significant psychosocial burden of disease at baseline with a score of 11. And PP-NRS, the scale on the itch shows a very high level of itch that this patient is also experiencing. You'll note by week 4 that the lesion on the arm is completely clear. And while the PGA is not at a regulatory success at this time point, we are seeing a 75% reduction in disease burden or a PASI 75, even at this early week 4 time point. You'll note on the very far right portion of the slide at week 12 that this patient achieves an incredible clinical outcome of PGA 0. This is a complete absence of disease. PASI 0 or PASI 100, however you choose to characterize it. If you would please turn to Slide 18. On this slide is a key differentiating characteristic of VTAMA. So we designed the long-term extension study to mirror real-world product use. We treated until patients achieved complete disease clearance which is a very stringent threshold in the first place and an endpoint that we are not aware of other topical products having shown. In the extension study, when they achieved complete disease clearance, just as one would in the real world, the study design was that they would stop using all therapy. There were 79 individuals who had achieved complete disease clearance during the 12-week pivotal studies. And when they elected to roll into the long-term extension study, they were withdrawn from therapy and followed to determine how long it took for them to reflare as defined by a PGA of 2 or greater. This is a Kaplan-Meier curve illustrating the data. And you'll note here that the median time to disease worsening was 115 days or approximately 4 months. What's equally important is we were able to drive complete disease clearance in an additional 233 subjects, a total of 312 subjects over the course of the studies achieved complete disease clearance. And in that population of subjects, the mean total duration of off-therapy, while they were able to manage their disease at a clear or almost clear status was 130 days or again, approximately 4 months. So it's a very consistent observation and a highly differentiating characteristic for a topical product and another reason why we believe VTAMA will fundamentally change the armamentarium dermatologists have at their disposal and establishing a new benchmark for how all topical products in psoriasis should be viewed. Slide 19, please. This is another illustration of what the previous data were highlighting. This is a different patient from the one previously shown. And on the far left-hand portion of the slide, you will note in the baseline characteristics, this patient has a severe disease of PGA equal to 4. The baseline PASI is approximating 20 again, a candidate for systemic therapy. DLQI was 6 and a very significant level of itch scoring 10 on an 11-point NRS scale. The subject was randomized to VTAMA at baseline, and you can see this very nice response that was achieved at the week 12 time point, which is highlighted in the second picture here. The PGA has gone from 4 all the way to a 1, a regulatory success. PASI 75 was achieved with a PASI of 3.8 at the week 12 time point, and you note the complete absence of itch and normalization of the DLQI. Now this patient elected to enroll into the open-label extension study and continued treatment until they achieved complete disease clearance, which occurred at month 6. In the third picture taken at month 9, here, you will note that this patient has been off of all therapy for 3 months at the time of the picture. So this patient achieved complete disease clearance, PGA 4 at baseline all the way to PGA 0 and then stopped using VTAMA and was being followed to determine how long it took before their disease worsened. This is again highlighting the remittive effect that's achievable with VTAMA and being able to maintain the patient at a PGA of 0 or 1 for an extended period of time, all while not using the product. At the far right, the photo illustrates the status at month 12, which is a full 6 months after discontinuing VTAMA. This patient's disease was under control for a total of 6 months off of therapy before their disease began to reflare. Again, a highly differentiated characteristic for, I think, any product, but it's basically unheard of with topical products that exist today. So we're very excited by this because we think this is not only ushering in a new paradigm for how patients are going to be treated, but also how clinicians are able to manage inflammatory skin diseases in their patient population. Please turn to Slide 20. This is a different analysis of the data. It's important to note that we have an extremely large population of subjects that elected to participate in the open-label extension portion of the study. 92% of patients that were eligible elected to continue with therapy. And I think this is telling us something. It's illustrating the patients were wanting continued access to therapy. The graphic here is representing the patients at a PGA 0 or 1 at each time point. Recall, this is a very unique study design. I've just shared with you and illustrated that anybody achieving a PGA 0 was withdrawn from therapy and then followed for the time to recurrence. And what is illustrated here is this very stable line that's maintained over the course of a full 40 weeks of the extension study with no diminution of efficacy. And it's really important to recognize that at any one time point, many of these patients are completely off of all therapy. So this is illustrating a very durable response to VTAMA is observed while on therapy. And even when many of these patients aren't even being exposed to therapy. Please turn to Slide 21. From a safety perspective, VTAMA has been extremely well characterized. As has been mentioned, there was a very high rollover rate into our extension study, far exceeding averages for topical products. In addition, there are no warnings or precautions in our label, which is a very important consideration. One of the unique observations with VTAMA is the minimal systemic absorption to the product. This is important because we don't have to be concerned with systemic side effects. The effects observed were mild, localized skin events resulting in a low discontinuation rate. In addition, VTAMA was extremely well-tolerated even in intertrigous areas and very sensitive various of the body, including the face, groin and growing and axilla. Please turn to Slide 22. This slide highlights a few of the differentiating characteristics that we believe VTAMA offers relative to the existing armamentarium. As we have highlighted, VTAMA has a highly differentiated product profile, and we believe is ushering in a new benchmark for topical products, on which all existing and future products should be held to. VTAMA's profile and once-daily application offers advantages to even some existing systemic products, which require BID dosing or even subcu injection. When compared to the existing most potent topical standard of care, the topical steroids and steroid combination products, VTAMA offers distinct advantages in that it is a nonsteroidal that can be used anywhere on the body for any length of time with durable responses while on therapy and an extended period, a patient can be off-therapy averaging of about 4 months before their disease were worsen or reflare. As a result, we believe that VTAMA is an extremely important addition to the existing armamentarium, and it will be transformational for dermatology and for patients suffering from conditions such as psoriasis. With that, I'll hand it over to my colleague, our Chief Commercial Officer, Chris Chapman, for the next part of the presentation.

Thank you, Phil, and good morning, everyone. Will you please turn to Slide 24? As Phil mentioned, there's been a dearth of topical innovation in the psoriasis category, and VTAMA has an unprecedented opportunity. In our PSOARING 3 trial, more than 8 out of 10 patients believe that VTAMA cream is more effective than other topicals they've used in the past, predominantly steroids, reinforcing the potential for rapid and broad adoption of VTAMA. Like patients, health care practitioners have been waiting decades for a novel, once-daily, safe and versatile nonsteroidal option with powerful efficacy. And for payers, they're no different, simply with a different motivation. Payers need an option to delay and control more complicated and costly systemic orals and biologics. The psoriasis category generates over 6.6 million annual prescriptions in the U.S., 66% of which are topical medications. While topicals are the preferred route of administration for dermatologists patients and payers, orals and biologics drive greater than 90% of the psoriasis category drug spend in an unsustainable trend. Please turn to Slide 25. With greater than 90% of eligible patients rolling over into our long-term extension trial, patients clearly experienced overwhelmingly positive results. At week 40, we administered a patient-reported outcomes questionnaire, and 8 out of 10 would recommend VTAMA cream to others if available. Eight out of 10 said they preferred VTAMA over any topical they have been on, while 68% of patients said they preferred VTAMA over any systemic that they had been on in the past. And 9 out of 10 said that VTAMA is easy to apply, nongreasy and absorb quickly. Please turn to Slide 26. And we've consistently heard the same thing in our physician research. When exposed to VTAMA's differentiated product profile, 94% of health care providers believe VTAMA can address an unmet need in psoriasis, providing a topical nonsteroidal that is safe and versatile yet has powerful efficacy, one that has a durable on-treatment effect and a remittive off-treatment effect that delivers results that last delivered in a convenient once-daily topical with no restrictions on location or duration of use. Please turn to Slide 27. Now reimbursement is one of my favorite topics, having spent the majority of my career in the payer space. What VTAMA offers payers is a completely differentiated value proposition, one that will fundamentally change the psoriasis reimbursement landscape. Contrary to popular belief, PBMs and health plans do not seek to offend their customers. Draconian restrictions in categories like psoriasis are simply a reflection of an unmet category need. Payers need a truly effective topical option to slow the cost trend of orals and biologics. VTAMA provides that natural formulary alternative, one that HCPs want to prescribe and patients want to use, topical first before progressing to more complicated and costly orals and biologics. We expect new-to-market blocks at launch, but we also expect to drive contracts rapidly with high-quality formulary access. The differentiator for VTAMA is that we have a product profile that can provide real-world evidence to show the economic utility of managing overall therapeutic class cost. Please turn to Slide 28. The differentiated attributes of VTAMA cream offer both national PBMs and full risk health plan economic value. And what I mean by that is that you can group the commercial payers roughly into 3 broad categories. First, are the rebate-sensitive plans. These are your national PBMs, the national books of business or often referred to as national formularies. They're predominantly comprised of small, medium and large employers and small to medium health plans, that carve out their formulary management to PBMs. Innovative products that are clearly differentiated can be priced at a reasonable premium to their comps and be reviewed quickly and achieve high-quality access. The next grouping is what I'd like to call WAC-Sensitive Plans. These are your national health plans in your traditional Blues plans like Blue Cross Texas, Alabama and Illinois as an example. These plans maintain full risk for medical and pharmacy benefit and are traditionally more cost sensitive. Commonly referred to as downstream clients at PBMs, they will review after the PBMs have made their formulary decisions. So balancing your WAC price relative to existing branded comps in the category allows innovators such as VTAMA cream, to competitively formulary position based upon clinical differentiation and not solely cost. And finally, demand-driven access plan. These are your traditional generic-first formularies, high utilization management with very limited branded options. For formulary access on these plans, you need to drive demand and medical exceptions first and negotiate your deal second. To achieve the high-quality reimbursement, you need this -- you must strike a balance of premium price that delivers value to both rebate-sensitive plans and WAC-Sensitive Health Plans. Failing the pricing context of the category will result in sustained new-to-market blocks, delayed reviews, higher rebates and more utilization management. Please turn to Slide 29. We have priced VTAMA at $1,325 squarely in between the psoriasis category value drivers for both the rebate-sensitive plans and the WAC-Sensitive Health Plan, allowing us to optimize both launch velocity and life cycle asset value. Now let us not forget that VTAMA is the first psoriasis novel topical chemical entity introduced in the last 25 years. You need to look back to Calcipotriene vitamin D as the last novel chemical entity to come into the class. Positioning at $1,325 allows us to establish VTAMA as a mainstay of psoriasis therapy and a new standard of care, accelerating launch velocity by driving broad access allows us to bring an accessible standard of care to physicians and patients alike. Please turn to Slide 30. Today, we launched the MYVTAMA program, which provides a predictable point-of-sale experience for physicians, patients and pharmacies. For physicians, we have a robust sampling plan enabling physicians to write confidently, bridging the time between prescription and fulfillment. And for patients, the MYVTAMA program will provide a predictable out-of-pocket experience at all licensed retail pharmacies in the U.S. Please turn to Slide 31. So VTAMA cream fundamentally changes the psoriasis treatment landscape. The differentiated product attributes clearly positioned VTAMA cream as a first-line treatment for chronic monotherapy with no warnings, precautions, drug-drug interactions and minimal systemic absorption. VTAMA cream can also serve as a preferred partner with biologics and oral agents. The ability to access the total addressable market as monotherapy in mild-to-moderate patients and as concomitant therapy in severe disease clearly differentiates VTAMA and the ability to bring physicians the versatility and utility they need to replace the current standard of care. Please turn to Slide 32. The commercial team is fully staffed and poised to launch. For those that I've spoken with in the past, I've shared there are 2 critical elements in building a best-in-class dermatology field force. First, everyone must come from the specialty dermatology. Second, you must come from your local market in which you will work. Our sales colleagues not only come from dermatology in the local markets, but they have an average tenure of 12 years in dermatology. We have built a commercial organization that is from dermatology to serve the unique needs of dermatologists and the patients they serve. We clearly have an advantage in launching VTAMA cream with rapid velocity. Slide 33, please. We are primed for a June 2022 launch. The sales force is fully hired, trained and deployed. All initial products and sample manufacturing runs have been successfully completed ahead of launch and product will be in the channel next week. The MYVTAMA program went live today and samples will be ready to distribute the second week in June. The FDA approval of VTAMA cream ushers in a new era in the topical treatment of psoriasis from this day forward. For the millions of patients who suffer from plaque psoriasis for the thousands of health care providers seeking topical innovation and for the payers looking for a way to control their specialty drug trim. VTAMA cream delivers a long-awaited solution that will transform the psoriasis treatment paradigm. With that, I'll turn it back over to Matt.

Thank you, Chris. Thank you to the Dermavant team for walking us through all of that. And obviously, thank you to everybody at Dermavant who is involved in getting this product to approval. I'm going to wrap up and leave some time for Q&A, but I just want to make a few observations in closing. We jump to Slide 35 and I want to reiterate how enormously exciting this moment is for Roivant and Dermavant. This is an incredibly important product for us, and we know that many people were watching for success. We could not be more excited for this approval. We expect the market to grow to over $40 billion globally across both psoriasis and AD. We are excited for the possible indication expansion in tandem with AD when our ADORING Phase III program reads out in the first half of next year. And we feel that our resources, the $2.1 billion in cash that we have on our balance sheet as of March 31, will position us to be able to successfully launch this product and to access all of the patients and prescribers that we need in order to have the impact on the field of medical dermatology that we believe we will be able to have. On Slide 36, a couple of concluding thoughts. One is to reiterate what we think of the product profile, which, in our view, really replaces the standard of care for the treatment of plaque psoriasis. This is a first-class drug with powerful efficacy. It is the first novel MoA for a topical in this area in 25 years, and we think the remittive benefit is extremely important in establishing a new benchmark for what a topical product can achieve. We believe this program has not just blockbuster potential, but blockbuster potential across multiple indications. We're pleased that our strategy on price establishes, we think, the value of our product and also the opportunity for broad high-quality access and franchise value in psoriasis. And we think we're set up for our blockbuster opportunity here. Our goal is to achieve high-quality access that really reflects the true value of VTAMA. For the first 12 to 18 months, we're going to be focused on building that access position and about building the right coverage landscape for the opportunity. We will have relatively high gross-to-net discounts in the initial period as we're getting that coverage established, and that's something we want to guide on clearly so that our audience can expect it. As our contracts kick in, we expect that to normalize to a more normal level. So I want to conclude there again by thanking the entire Dermavant team and the team at Roivant to have made today possible. We are incredibly excited to be delivering a new therapeutic option for psoriasis patients that we think will change the way psoriasis is treated. With that, I'd like to open the call up for questions. I'll turn it back to the operator.

[Operator Instructions] Our first question comes from Douglas Tsao with H.C. Wainwright.

Just as a start, obviously, we're looking ahead now to the launch in psoriasis. I'm just sort of curious, how do you see the interplay with the atopic dermatitis indication down the road and sort of sequencing those 2 launches? And what do you see as the differentiator in that space?

Yes. I really appreciate the question. And I think it's a great one and thanks for listening in this morning. I think we're, first and foremost, really excited today about the launch in psoriasis, and we're excited to build that market and get out to patients. And then we're excited to be able to generate our top line data on early next year. I think the AD market is a little bit less developed than the psoriasis market in terms of the more recent availability of systemic therapy, obviously, DUPIXENT and now JAK inhibitors. So there's room for us to develop alongside the AD market and to really occupy a unique position as a topical, so I think it's an exciting opportunity for us. Maybe I'll hand it over to Todd and potentially to Chris to give their thoughts from Dermavant's perspective. Todd?

Yes. Yes. Thanks, Matt. Doug, thanks for the question. I would just start maybe just enjoying today a little bit to start with an approval for plaque psoriasis with a truly novel chemical entity for the first time in 25 years is transformational for dermatology. And I think we've got to start there because I think we're setting a new trend when in the past, you always started with just efficacy and safety. And as you heard Dr. Brown allude to, now the bar is set where you have to have sort of a durable remittive effect with the results that last coupled with efficacy and safety. And then to your point, we're executing our ADORING 1 and 2 trials and when you look at the overall dermatology market, there's 2 statistics that are massive, and that is 70% of the value resides within these 2 immunodermatology states of psoriasis and atopic dermatitis. And in overall dermatology, 83% of prescriptions are topical, as Chris Chapman alluded to. So we're sitting here with something truly novel that has done clinically very well within our PSOARING trials and PSOARING programs. And again, we're extremely excited. For us, when you have a novel chemical entity with the ability to pivot mechanistically between 2 of the largest disease states, that's when transformation happens.

And Todd, maybe just following up on the psoriasis indication. Just you've obviously highlighted the remittance effect. I'm just curious the feedback you've gotten from payers in terms of the tolerability and just how they potentially appreciate sort of the ability to treat and repeatedly treat and not have a patient sort of go on steroids and then ultimately end up on a much more expensive biologic?

Absolutely. Chris, why don't you take that question with regards to the payer?

Yes, it's a very astute question, Doug, and one that is loud and clear to the payers I've been doing this a long time, and I have not seen scoring on the Likert scale, like I saw with the payers with -- when we expose them to the target product profile. They clearly appreciate the value. What's often overlooked is the switching within biologics, not necessarily the progression from topicals to biologics, orals and injectables. But it's -- when those products become less effective over time and they switch in the loading dose costs. So that is not lost on payers. It gives us a strategic advantage for the real-world evidence that will ensure broad access for VTAMA.

And maybe...

Congrats on the data -- or the approval, sorry.

Thanks, Doug. Appreciate it. Maybe just one comment following up on Chris' note because I think it's an important thing to think about. From the payers' perspective, you might imagine some nerves about a new therapy coming in that's going to come after a generic standard of care today with corticosteroids. And without a duration of use limit such that patients could be on therapy for a prolonged period of time. I guess I do feel like -- and Chris and Todd mentioned these, there's 2 attributes here that just like stand out as payer value that I think are really important. One is the categories psoriasis today and AD in the future are really upside down for payers because of the high cost of systemic therapy, and tapinarof gives people an off-ramp. It gives people the ability to stay on topical therapy for longer, which is obviously something that payers find extremely attractive. And the other piece is the remittive benefit, right? Weighing on the one hand, the fact that patients can be on therapy for much longer than they can be on a steroid safely and with efficacy. On the other hand, you are going to ultimately get many patients clear and demonstrate that those patients stay clear for a long period of time. And so those are both benefits to payers to offset some of the other considerations. So I think it's a really exciting product, both from a patient and a payer perspective.

Our next question comes from Robyn Karnauskas with Truist Securities.

Congratulations to all of you. I mean it's such a big deal, especially with the label, super happy for you and the patients. So a couple of questions. I guess, first of all, can you guys say maybe how many tubes per year? I know with the JAK, and they're not seeing a lot of tubes per year because you can't really use it consistently. And that would help us figure out like maybe the average -- what you're assuming for like the price per year? And then on sampling, you mentioned a lot of sampling and high gross-to-net early on, and then it's going to normalize over time. Can you talk a little bit about the effects of sampling on gross-to-net? And when do you think that will level off? And then I have a follow-up as well.

Those are both good questions, and I appreciate the congratulations. I appreciate the questions. On the tubes question, we haven't given tubes guidance. And I don't think we're going to do so today. I think what it comes down to is we're sort of in uncharted territory in the sense that we've just never had a product with these attributes before, right? There's never been a topical with this level of efficacy that doesn't have a legitimate duration of use limit that doesn't have a limitation on duration that's linked to real tolerability benefit. And so I think it's an opportunity for patients to stay on drug a long time. There are many, many patients here, obviously, and so even shorter duration therapy can build to a blockbuster commercial opportunity. And we're not at all concerned about that. But we think there's a chance that this will change the way that patients think about topicals and how they use them. So that's what I would say on tubes per year. Todd, I don't know if you had anything to add. I don't know if it's anything about the sampling questions as well. Maybe I'll hand it over to you that one.

No, that's great. I wouldn't add anything to the tubes per year. I just want to go back and reiterate to what you said. I think, Robyn, this is -- you've been -- you've followed the story, I think we're in a situation where this is true innovation. This is truly novel. So I think tubes per year, when you look at our target product profile, we're just not guiding to. But at the end of the day, we know we're going to be converting the mainstay of therapy, and we are going to change the standard of care when you can talk to a dermatologist and treat mild, moderate or severe psoriasis, all 3, a full gamut anywhere on the body for any length of time. That is truly unique. Chris can comment more directly on the sampling process and how we are ready immediately with our samples.

Yes. The -- I think let me look back first, I talked about the sales force and the years of experience we have 340 years of combined industry experience on my leadership team and 200 years of which in dermatology. The single most important thing that you need to do with a topical that has a very low barrier to entry for a very patient base, as you saw from the research and saw in the clinical trial that you need to have samples at launch. We're going to have samples in the second week in June at launch. The second most important thing is you need to know how to sample effectively. And that's what we're going to do. We're not guiding on the number of samples and what they'll be at launch and then petering down. The one thing I can tell you, with 200 years in dermatology, having launched multiple topicals, orals and biologics, that combined experience will lead us to an incredibly successful launch, and we'll provide more information in the quarters to come.

The sample tubes are 2 grams versus 60 grams for the commercial tubes. So ultimately, we don't think the sampling is going to have a major effect on usage or gross to net. It's just going to be about making sure that patients can get on therapy quickly.

That's helpful. And then my last follow-up question is, I take it that the oral pills in the space are not going to take it lying down. Do you expect pricing dynamics to change as you secure the contracts over the course of the year? And could there be downward pressure on price?

Yes.Thanks, Robyn. I appreciate it. I think we're mostly focused on us for today and what we're going to do to the treatment landscape and what we're going to do for patients. And I think I think the product profile that we're introducing will change the way that patients think about oral versus topical therapy or systemic versus topical therapy. And I think it's going to matter to those to those manufacturers, and I think they'll have to think about what they want to do. I think what we are most focused on is making sure that as many patients as possible have access to tapinarof and think of it as an attractive option. And to be honest, I think our business model in terms of the patient population that we can go after and the kind of high-quality access that we're able to create is going to be separate and apart from systemic therapy in terms of what we're able to do. The other thing I'd say, and we've said this before, is remember that even for patients who go on systemic therapy, something like 2/3 of them walk away with a prescription for a topical as well. And so we're not just competing with systemic therapy. We're also potentially useful in a concomitant setting also. So I do think that will have an effect on us commercially as well.

Our next question comes from Yaron Werber with Cowen. Our next question comes from Corinne Jenkins.

This is Charlie on for Corinne. Congratulations on the approval. Just a couple of quick ones from us. First, can you comment on the size of the sales force that you have in place currently? And maybe just provide some color on initial size of the target physician population that you're going for in the initial launch? And then secondly, regarding the gross-to-net dynamics over the near term. I'm assuming that we can expect normalization to maybe occur in that 12- to 18-month time range when contracts are in place. And I was just wondering if you could provide color on shape of that curve as we get into that contract placement territory, should we expect it to gradually taper until that 12- to 18-month time range? Or any noise or variability from quarter-to-quarter throughout that time?

Maybe I'll just start quickly with the gross-to-net guidance question, and I'll turn it over to Todd and others for the size of the force, yes, to Chris. On the gross-to-net question, we're not providing specific guidance today on the exact shape of that curve. But I think if you picture what's happening initially, we want patients to get on therapy. We have a lot of tools for that, including the co-pay card program, including other alternatives. Ultimately, the goal is to guide patients into commercial coverage. We need to do that both before we get contracts in place so that we get the coverage that we want. And then obviously, once we get contracts in place so that we continue to build the commercial business. So I think it will be not sort of low and then step high, not fully gradual. It will be sort of loaded towards greater demand going toward commercial payers as we get the contracts in place. And I think we'll be able to provide some more guidance as we get closer to those contracts as we see a little bit of what's happening in the script dynamics in the market. So that's what I would say about the GTN question. Maybe I'll hand it over to Chris to talk about anything I missed there and also on the size of the field force and the target population of physicians.

Yes. Thanks, Matt. So we'll deploy a specialty sales team of approximately 100 sales representatives. As I mentioned, we're fully hired, we're fully staffed, and we will be launching immediately with the average tenure of 14 years. And the psoriasis category is incredibly concentrated, which is why it's such a valuable market you've got 80% of your commercial prescriptions coming from less than 7,000 dermatologists and PPAs. So it will be a very targeted launch, the highest value prescriptions first going to market with 100 specialty sales reps.

Our next question comes from Dennis Ding with Jefferies.

I have 2 questions. So number one, can you just please talk about your confidence in the launch cadence going forward? And specifically, which population do you see as the low-hanging fruit. I think consensus is around $20 million for calendar year 2022. So can you just comment on how you're thinking about that number now that we're halfway through the year? And then my second question is around atopic dermatitis. We -- we're going to have some data coming up in the first half of next year. But can you just talk about how you view the size of the tapinarof opportunity relative to the size in psoriasis? And I guess, what do you hope to see there on efficacy to be a competitive option?

Yes, thanks, Dennis. On the first question, we're not going to give revenue guidance right now on dollars, but I appreciate the question. In terms of conviction on the launch, I would say, we are incredibly pleased with the label here, and we think it really does justice to the product profile. And I think you've heard it from a number of folks on this call today. We just think this is going to be the new mainstay of therapy for these patients. So we think the fact that we can go across the disease burden means we're going to access all patients, and we're going to really focus on getting patients on tapinarof as their main therapy for psoriasis, moving them off the sort of cyclical use of different corticosteroids and short duration of use limit. So I think that really is a big piece of the patient population that we're focused on. Obviously, there's other corners of patients like the kind commitment patients that I mentioned before, that we can access. On the AD question, I'll hand it over to Chris to see if you have anything else to add on this. I'll just say AD is a big market. There's about 4x as many AD scripts as there are psoriasis scripts. So it's an exciting market to have access to, it's obviously something that for us will be coming online a little later. And as I mentioned earlier, one of the things that excites me about that market is, it's not quite as developed as the psoriasis market in terms of the role that systemics play. So I feel like we're getting it a little bit earlier, and we're going to be able to shape that around our demand. Chris, anything you'd add either of those answers?

No. The only thing I would add, Matt, is just from the payer perspective, again, the AD market is a nascent market. If you think about the psoriasis category, since the introduction of Enbrel, this is from a payer lens. There's been a double-digit CAGR in that category, 14 branded biologics with moderate to severe indication, that's 15% of the addressable population. So when you look at AD, we have the opportunity to come in, get formulary positioning and help the payers collaboratively manage the growth of that category. So it's a unique opportunity to be exposed to psoriasis first, and then gain formulary placement and then upon FDA approval for atopic dermatitis, be able to move in that direction.

Our next question comes from Louise Chen with Cantor.

Congratulations on the approval. So first question I had for you is why do you think there haven't been any topical dermatology blockbusters yet? And how could VTAMA change this? And then secondly is what percentage of psoriasis patients have psoriasis in sensitive areas that are not currently managed by biologics and other approved treatments? And how does that support tapinarof becoming standard of care or part of standard of care?

Thanks, Louise. Maybe I'll take a crack at the first question and then I'll hand it over to Todd and maybe others on the Dermavant for the second one. In terms of why there hasn't been a topical blockbuster. I think you can probably predict my answer to that question, but it's because there have not been topical therapies that offered the potential clinical benefit, the efficacy profile, the safety and tolerability profile that we do. There hasn't really been good innovation or effective therapies in the topical landscape. Corticosteroids have short duration of use limits in our, I'll say, as a psoriasis patient, pretty unpleasant issues consistently. And so there just hasn't been an opportunity for a drug like this. But I will say, novel therapies that are effective in psoriasis work extremely well. And are good commercial success stories and many of them have launched well. And so I think once you look at our product profile, I think it's clear that we have the ability to deliver the kind of treatment efficacy that you see with many systemics and biologics. And so we see an opportunity to really break that mold and it's something we're excited about for the product. I'll hand it over to Phil, maybe to take the second question about the intertriginous regions.

Great. Thank you. So the literature suggests that about 30% of patients -- up to 30% of patients have lesions in genital regions. But I think it's important to not confine ourselves specifically to that. We had studied VTAMA in all anatomic locations on the body. And we saw a very nice tolerability profile as well as efficacy across all these areas, intertriginous areas as well as sensitive area space, axilla and then, of course, including genital lesions. So the fact that we have this very clean labeling indicating for use anywhere in the body for any length of time. And the ability to improve the patient's outcome very significantly, we're very excited by.

Our next question comes from David Risinger with SVB Securities.

Yes. And let me add my congrats as well. So I have too many questions, but I'll limit it to 3. So first, could you talk about dermatology physician group guidelines, whether they're relevant here and whether there's an opportunity for tapinarof to step up and be well-positioned in treatment guidelines? Second, could you discuss payer access as a single-product company, particularly given the massive rebate dollars that payers demand and receive from companies selling biologicals and orals that result in them being the preferred products? Just wanted to understand whether your team believes that tapinarof can be a preferred product on a large number of formularies, even though the dollar rebates can't match those of biologics and orals since the product is priced for value? That it's an extremely low-priced product. Obviously, if it were a biologic, it would be priced at like 5x its price. And then finally, could you talk about the ex-U.S. opportunity and provide more color on how you see that playing out because that seems like that would be a tremendous opportunity as well?

Maybe I'll just start with a couple of thoughts on the latter 2 questions. And I'll hand it over to Phil on the guidelines and Chris to talk in more detail about the access question. On the ex-U.S. opportunity first, I think we've said this in the past as well. We agree that it's an interesting opportunity globally. I'll point to the deal we did with Japan Tobacco or with Torii Pharmaceuticals in Japan, where we out-licensed the product to them with a significant thing was a $60-ish million, $65 million upfront payment, $60 million upfront payment and with some milestones after that. And they're continuing with that development program in Japan, which I think is the largest ex-U.S. dermatology market. And we're continuing to evaluate opportunities to get the product to patients in Europe. We're still sort of putting the final sort of [ dust ] on that strategy, and we'll share it as soon as we're ready to do so. And then on the payer question, my only thought is, look, I think we think if you think about -- payers will think of us in a basket with topicals, not in a basket with systemic therapy. And I think we have an opportunity, first of all, even just narrowly on rebating dynamics to offer an attractive rebate relative to other products in that basket. But the short answer is we absolutely think we can be an important preferred product on payers, and we think that will be driven both by payer appetite for the product and enthusiasm for what it can do. And remember, they are concerned the PBMs like the rebates from the systemic therapies, but they are absolutely concerned about the high cost of psoriasis drugs. And so it's something they will be excited to focus on. And then also driven by what we expect to be a very high level of patient prescriber demand as well, which will matter. So maybe, Chris, if you have any other comments on the access question, I'll give to you first, and then we can hand it to Phil to talk about the guidelines.

Yes. I think you framed it up nicely, Matt. Think about and it ties to the guidelines. So if you look at the AAD guidelines, it's topicals first before going to second, third, fourth line therapy, which includes your oral in your biologics or systemic agents. If you go look at any formulary in your generic tier and your preferred second tiers, you're going to see a segregation by route of administration. So having been in a very large pharmaceutical company managing significant rebates, there is an advantage to that, and there's an advantage for add-on product where you don't have the advantage is if you're trying to box out in Asia with a different route of administration and a different value prop. So I can't imagine a scenario where you're going to have a biologic first before going to a topical. It's inconsistent with the guidelines is inconsistent with the economic modeling. So I really look forward to and have been enjoying the economic modeling we've been doing with the payers from a budget impact perspective. So again, I would think in terms of topical, systemic orals and biologics, knowing that those categories are completely segregated in the formulary decision-making and will be based upon the merit of the product and the overall value. And I think that's an important thing to remember. We're not just talking about cost we're talking about value, what value does the innovation brings to the total therapeutic category cost. That's where VTAMA has the advantage.

And then just a follow-up. So I don't really know dermatology treatment guidelines. Is there an opportunity for tapinarof to step above steroids or to be clearly identified as the alternative to steroids after, I don't know, a certain period of use, given the issues with steroids in particular, the risk of skin thinning, et cetera?

I think that's a great question. Phil, why don't you take the question on the guidelines?

Yes. Yes, I think it's a great question. We clearly believe, as I said earlier, that we are ushering in a new era with VTAMA's approval for the dermatology community. So the community will then have to evaluate how we best fit in the existing armamentarium. I think as you rightly pointed out, the mainstay of therapy, topical corticosteroids, vitamin D analogs, they have very limited utility in terms of consistency of use and anatomic locations where they can be used. And there's a whole host of side effects that are associated with their utilization. So tapinarof VTAMA and the product profile that we've illustrated with our data really is ushering in a new option both patients and for the dermatology community. And I would just highlight this very durable effect while on therapy again, no evidence of tachyphylaxis. And this is a component that is associated with other topical therapies, including topical corticosteroids. This remittive effect that we have observed is a highly differentiated characteristic for any product. And I think, to my knowledge, doesn't exist with any other topical product. and then the ability to use anywhere on the body for any length of time. And I think it just underscores the unique product profile that is -- that VTAMA has and will be brought to the community. And as a result of that, I anticipate that the dermatology community will embrace it and find a way to best position it with regard to the armamentarium that's present today.

Our next question comes from Yaron Werber with Cowen.

I have a couple of questions. Maybe the first one, can you talk a little bit about what are the potential benefits here is in combination with biologics in patients who are -- have in transient lesions and can clear, let's say, 1 or 2 lesions? Do you have a sense what percentage of the patients will want to take VTAMA in that setting? And then secondly, maybe give us a little bit of a sense. We got a lot of questions on roflumilast and also Oxsoralen. KOL feedbacks have been very good on all therapies, but has been, I would say, even particularly good for you guys just given the mechanism of action of remittive effects, but give us a little bit of a sense on what are you hearing based on your discussions? And how do you think you can compete and differentiate?

Yes. Maybe I'll take a first crack at that and then I'll see if the team has anything to add. I think the first thing is about -- I think the number is 2/3 of systemic scripts of -- patients on systemic therapy are also given a script for a topical. And I think there's a lot of reasons to believe that tapinarof is an ideal concomitant topical, right? You don't know where you're going to develop an intrinsic lesion. You don't know how long it's going to last. And the idea of being able to be sent home with 1 tube, which in addition to your systemic therapy, you can use wherever the lesion occurs and use it for as long as you need to treat the lesion is something that is really different versus if you're sent home with if your elbow comes back to use this and if your scalp comes back, use this, and your face comes back, use this third product. And so I think it's a really attractive potential concomitant. I think it's about 2/3 of systemic patients leave with a topical script as well. And then in terms of the competitive environment, look at, we're excited for today. And we're excited for the approval, and we're excited to be out there ourselves. I think when you're looking at a market that has been so ossified around to corticosteroids for so long. Frankly, there's almost certainly an opportunity for multiple new therapies to come in and offer a differentiated profile. The bar that steroid set is not very high, and we've not just cleared we've cleared it by a mile. I think we also have some attributes that we don't think anybody else is going to be able to show, in particular, this remittive benefit, which we think is going to matter quite a lot to patients. And we think the fact that we can be a single product across psoriasis and AD is also an important competitive advantage for us. So I think there's a lot of room for innovation in the topical market. It's been, as I said, a very long time since we've seen any. And you see it on the systemics and biologics side, this is a category that's large enough for multiple products to exist alongside one another, but I also think we have a totally unique and differentiated profile that will set us apart. Todd, anything you'd add to those answers?

Yes, I would. Yaron, good to hear from you. A couple of things I just want to amplify just because we're celebrating today you can hear the excitement from the organization is we set a new standard with the label. And I think we set a new standard with a clinical program that Dr. Brown executed with Dr. Rubenstein and our entire organization at Dermavant. It's -- the standard of care is no longer efficacy and safety. So the other agents that you brought up we're sitting here looking at no safety warnings or precautions in our label. And really, what's remarkable, Yaron, is not only did we drive 312 patients to 0 with a topical to fully clear where we treated mild, moderate and severe patients in our trials. But then we real-world followed them once they were clear and you see this median of 4 months. When we say median of 4 months, we had a lot of patients that went out 6, 7, 8, 9 months. So to me, having been in dermatology for the last 10-plus years, when you're using -- when you're driving a topical target product profile and you're driving patients to clear -- not to almost clear, but to 0, and they're staying clear for a median of 4 months I would tell you that I understand the surveys, and I were excited for patients to have this medicine because we think. And I said this many times, I think we're going to move from the analog cassette age to the digital music age where we're going to move and leapfrog technology with sort of a new standard of care target product profile.

Our next question comes from Seamus Fernandez with Guggenheim.

And congrats to Todd and the Dermavant team for getting this one across the goal line and with the label. Just wanted to ask a couple of quick questions, more on the payer side of things. You guys have kind of astutely characterized there's a sort of rebate component group and then separately sort of cost-driven component. Can you maybe just give us a sense of how those payer groups kind of carve up and how you're seeing -- as we think about comp, what are some of the sort of product launch comp, whether it be in the topical space or otherwise, that you guys are most focused on really kind of a up to and looking at the evolution of gross to net?

Thanks, Seamus. On the guidance question, I'll just take it, and then Chris Chapman can take the question on the payer market. On the guidance, so we haven't given launch guidance, and that includes -- we haven't sort of comped ourselves to any individual launch, and we're not going to do that right now. I think we are focused on with our product profile, our belief that we can access a really broad swath of the psoriasis patient landscape. And so we're focused on the metrics that demonstrate that we're achieving that kind of uptake and the metrics that demonstrate that we're -- that we're sort of getting where we need to be on reimbursement alongside batch. So I think that's really -- when we think about benchmarking, we're really -- we think we have a unique product. Again, there hasn't really been a product like ours ever before. And so we're really focused on getting the market where we think it deserves to be given the efficacy of our profile. On the payer question, I'll hand it over to Chris.

Yes. Thanks, Matt. And Seamus, let me first give context. Again, I mentioned, spent a better part of my career with the payers embedded with them in a very large company. And I need to give you this context to explain the second part of your question directly. Yesterday, the world woke up and we had topical steroids and we had combination agents both broadly available in generic steroids and vitamin D. This morning, we woke up and we have an FDA label that is completely differentiated. So think about that. We have set a new high watermark by which all topicals will be measured that are in market and then will come to market. And so by the mere fact that we have a nonsteroidal powerful efficacy, any location, any duration, no warnings, no drug-drug interactions, mild, moderate, severe and a remittive effect. We have a very good position to drive value within the payers. So when I mentioned rebate-sensitive, and this is not some construct that's out in the world, this is how I think about the market. So rebate-sensitive to your PBMs. And the question came up earlier. So there is value in premium-priced products to PBMs because how they operate. They don't have the risk for the cost of the drugs, but they have to manage the therapeutic category cost and be competitive versus their competitors. So our price positions us perfectly to have value for the rebate guarantees to their customers. And then when you look at the WAC-sensitive plan, so if you look at my Slide 28, you'll see the live distribution. So those are your national accounts and your custom clients who are more price sensitive. So we've positioned perfectly in between those 2 to get the broadest combination of lives swiftly with quality access. Not access where you're paying for it, and you've got a high deductible health plan. We're talking about quality access that will allow us to be the workhorse, allow us to be the new standard of care. So those 2 categories at the top and then your lower cost plans, traditional generics first, will respond when we drive demand and we get that velocity. Because at the end of the day, the most expensive drug to them is the one that works; doctors write, patients want, their customers want. They need to put it on their formulary at a more reasonable rates. I hope that answers your question.

That's great. And maybe just one final question. As we think about the atopic dermatitis opportunity, can you guys talk about the importance of capturing the pediatric opportunity? I think when we saw the launch of Elidel historically, that was uniquely impressive in the pediatric setting. Just love to get your guys' thoughts on the opportunity there.

Yes. So maybe I'll hand it to Phil to take that question other than to say one of the things I'm really excited about, about our Phase III program and thanks to Chris and the Roivant team and credit to the product for this is. Our Phase III studies in AD go all the way down to the age of 2, which is not something that most products and certainly most products in development for atopic dermatitis can say. And I do think the pediatric market is incredibly important to AD. So Phil, why don't I hand that to you.

Yes, I don't know that I can add much more to that, Matt, than you just said the studies are critically important to us. We're very pleased with the labeling that we've received for psoriasis. I think it underscores the unique attributes that are off has we're exploring these attributes in our atopic dermatitis study. And I think it's going to be critically important, the readout on this study so that we can show utility in that youngest age range of patients who experience a high prevalence of disease. So more to come on that. But today, we're just very excited about where we are and this very clean label with highly differentiated characteristics of the product.

And I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. Matthew Gline for any closing comments.

Thank you very much, and thank you for everyone for listening this morning. It's an incredibly exciting day for Roivant. It's an incredibly exciting day for Dermavant. I just want to express gratitude and appreciation for the entire team that worked on this, for Todd and Dermavant team who have worked tirelessly on this for years, for everybody who brought this together for the patients who participated in our trial and for whom we hope to bring benefit now that the product is on the market. So thank you, everybody, and have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.