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

Hello, everyone. Good afternoon. My name is Peter Crane. I'm with the Banking team here at Credit Suisse. I'm here to introduce to you, Richard Pulik. Richard Pulik is the CFO of Roivant. He's been a colleague, good friend of mine since first year at Roivant. So thank you, Richard, for coming to speak to us, and please take it away.

Thank you so much, and thank you to the Credit Suisse team for the invitation. I just wanted to take you through a few updates. I think, obviously, as you've seen, we adjusted a -- so at first, I want to just point out the disclaimer and the -- around some of the forward-looking statements on Page 2. I just wanted to level that sort of Roivant and who we are? I think the mission and vision of the company is really to redefine a big pharma from end to end. As you can see, the company has had 6 FDA approvals from Vants launched by Roivant and it's 8 year history. I think that's pretty incredible for a fairly young company. We've had 8 consecutive positive Phase III trials, and we had our first drug under Roivant commercialized and approved on May 25. As I think about the various pieces of the company, the -- we are a pharmaceutical company from end-to-end, where we have a commercially stage product now launched with potential blockbuster in psoriasis with additional blockbuster upside in atopic dermatitis, and we just had our first PBM Payer Contract executed as we announced yesterday. We have a broad clinical stage pipeline across multiple therapeutic areas with 10 or more pivotal or pivotal-enabling trials expected by the end of calendar year 2022. And we have an innovative chip-to-clinic discovery platform that's focused on protein degraders, covalency and we use computational physics platforms to look at derisked biological targets. There's also certainly, asymmetric upside potential here, you probably saw some of the positive news flow we had on the progress we're making on the Genevant IP portfolio and the litigation where we had a successful ruling in favor of us to -- as we looked at the Moderna litigation. And then we have a strong capital position with $1.9 billion if we assume the proceeds from the Immunovant follow-on offering earlier in the period and the anticipated sale of the Myovant equity rights to Sumitomo, which takes our cash runway into the second half of calendar year 2025. As I think about sort of the recent updates for the quarter, I want to really focus on the cash runway here which I think is critical, especially in this environment, we've been laser-focused on making sure that we have -- we started at the beginning of the summer, and we prioritized 6 programs. We've been laser-focused on making sure that corporate costs are looked at very closely, and we've really been able to take some cash runway by continuing to do that and then focused on developing the pipeline and driving, fully making sure that the VTAMA launch is fully resourced, which you can see in the great launch in script trends we've had thus far. We reported $5 million of VTAMA net product revenue for the quarter ended September 30, which reflects a 12% gross to net yield. If we look at the number of scripts to date, we're over 50,000 of VTAMA scripts written by more than 6,000 unique prescribers since launch. And last week, we reported 3,700 scripts. We became the #1 topical within the first 8 weeks of launch. And we reported, as you saw earlier in the fall, we announced IMVT-1402, which is on track to report Phase III data in mid-2022 I can get into that a little bit later on in the presentation. And as I mentioned, we had a favorable court ruling denying Moderna's partial motion to dismiss Genevant and Arbutus' complaint asserting patent infringement. If we look at the -- I mean, I think, look, you all have probably looked at the IQVIA data very closely. I think what's very impressive here is if you look at the curve versus Opzelura, which is in a market that we have to combine is 4x as large as VTAMA, that's obviously approved right now for atopic dermatitis. We've been really neck to neck here and at times even beating Opzelura in a smaller market, and we've outperformed all of the other topical launches to date. As I look at the sort of strong demand and conversion to net sales, you can see that translating $5 million of product sales and a 12% yield. And we're proud of the first PBM contract that we signed. This is effective as of October 1, 2022. And it is unrestricted access requiring only automatic look back for steroid or physician e-attestation of prior steroid use. And keep in mind, 87 of psoriasis patients use a topical steroid first line. So this should be a very easy process as we go through the PA for this first contract signed. You look at the potential market here, I mean we're just getting started. You can see VTAMA had 3,728 scripts last week. If I look at this on a weekly basis in psoriasis, which is the approved indication, you have 91,000, a little bit over 91,000 topicals. You have 65,000 systemics. And if I just get a portion of that topical and then think about the atopic dermatitis indication, which with the data expected to be done in the first half of 2023 I get the potential to penetrate 400,000 weekly topical scripts. This is a huge market. There is a very large unmet need here, where we haven't seen any real innovation or mechanisms in the space and patients are -- want to use topicals to treat these diseases. And we have very strong data to support that we will be well positioned against the topicals that are currently available, mainly topical steroids to treat them. We have just very quickly, the schematic of the atopic dermatitis data. We are the ADORING 1 and 2 trials. Enrollment remains on track. The data is affected in the first half of 2023. We had strong data Phase IIb, which was published in JAD that showed at week 8, we had a 49% response with tapinarof at 1% QD and with patients achieving IGA response and 51% achieved EASI75 response. Also, you probably saw earlier in the summer, we had our Japanese partner, reported a positive top line IGA and EASI75 results in their Phase III trial for tapinarof in atopic dermatitis, which they're filing the data for an approval in Japan. I think also important to note is if you look at the study design, we have a similar differentiated and unique design where we have the long-term extension study where we want to make sure that we show that for patients who have achieved clearance, you have the ability to withdraw and retreat. And we saw on the psoriasis data, we had 4 months of patients who became clear they were able to stay off treatment for formats and then quickly achieved the same level of clearance. As I look at the late-stage pipeline, you can see we have a lot of breadth across multiple disease areas and at the -- which I can go into as we sort of go through the programs. I think one of the key updates that I want to just to make sure we're highlighting is we had -- for IMVT-1402, which was announced earlier in the year, this is something that was developed in-house, and we presented recently, animal studies, which showed deep potentially best-in-class IgG lowering, similar to batoclimab; minimal impact on albumin and LDL. And we have the potential here to accelerate the development and move quickly once the clinical data reads out for the Phase I trial. So I think that's a very important innovation to keep in mind as we think about the breadth here, right? So you understand that FcRn inhibition has been studied broadly across 19 different diseases, the ones highlighted here in blue are the ones that we've announced we're studying. But there's a lot of breadth here. And I think a lot of different POC trials are reading out to help us think through where to move. And we're the only company that has 2 different molecules that we can move forward and really maximize the value. So we're the only anti-FcRn franchise here that can really take the full advantage to look at this across multiple diseases and think about how we can drive value across this broad breadth of diseases. I think importantly, if you look at this slide, you can see that batoclimab, which is the first generation of our anti-FcRn is essentially was binding here to albumin. You can see that the new molecule we designed and the schematic here is binding to anti-FcRn -- to FcRn. And we believe that is certainly why if you look at the data that we showed in the monkey studies and you look at the LDL data here, where you can see for the gray line 1402, you don't see the same LDL elevation that we had seen with batoclimab. And it is basically in line with placebo. So certainly, we're moving that forward into Phase I that's supposed to start at the beginning of next year, and we'll be excited to think about the development here of how to move this forward. As I look at batoclimab and 1402, we have the potential to have some real differentiated features as we think about the competition in the space. So you can see that we had shown -- we have a subcu formulation that delivers in seconds for both batoclimab and 1402. We have been able to show that with chronic dosing, we achieved around 65% IgG reduction in seconds. And with chronic dosing, we achieved 80% with subcu in seconds for 1402. We -- as I mentioned, we have moved into multiple indications. And I think important to point out we're the only ones developing this intent where we see a very interesting potential with a differentiated mechanism. And we have not announced the pivotals. Obviously, as the data emerges for 1402, we can see exactly where to move, how to move that forward. And of course, we'll be looking at the data that emerges from our competitors as well as we think about the patient need and where it makes sense to develop this further. As I think about the next important clinical program, brepocitinib, this is a partnership that we announced with Pfizer. We have essentially here a dual TYK2/JAK1 inhibitor, and we're developing that for specialty autoimmune diseases with high morbidity and mortality and limited treatment options. I think the first I'd like to point you to is if you look at the brepocitinib data across multiple different indications for various trials that were run by Pfizer, you can see that brepocitinib, essentially, so you can see the other drug here in red is a TYK2 and we essentially -- I mean, bearing cross-trial comparisons, et cetera, we had very strong response rates versus deucravacitinib and also baricitinib across many of these indications, which I think speaks to the fact that dual inibition of JAK1 and TYK2 suppresses multiple key cytokines implicated in SLE pathobiology, including Type I IFN, Type II IFN, IL-6, IL-12 and IL-23 and where we feel we will -- we feel confident that we will show positive data. We're expecting, obviously, for the SLE trial to read out in the second half of 2023, enrollment has been complete, and that's designed to serve as 1 of the 2 registrational studies and we have patent protections through 2039. On a safety perspective, we've had exposure to over 1,000 patients to date, and the safety profile is consistent with approved JAK inhibitors. And you can see that the studies that have read out, we have had a meaningful, statistically significant 5 placebo-controlled studies where this was oral once daily readout. As I think about -- the other important note here is if you look at the SLE data that's read out for JAK1 or TYK2 inhibition, we've seen signs of efficacy, but certainly, there's meaningful room for improvement. So this is, again, an area with high unmet need. We've seen that JAK1 and TYK2 show an established relevant therapeutic effect. And we believe that this helps sort of validate moving forward with the JAK1/TYK2 should yield positive progress. Here is the study schema on Slide 23 for the ongoing study that I mentioned, that's expected in the second half of 2023. And we expect 2023 to be Roivant's biggest year yet. I think if you think about the full year of VTAMA on the market, we expect continued growth in prescripts and revenue. Obviously, we just got one PBM contract signed. We expect additional payer wins to result in a steady improvement in gross to nets. We are excited to see the top line data from the Phase III in atopic dermatitis in the first half of next year. And certainly, I feel better about that data given the Japanese Tobacco Phase III readout, where our partners filing. We expect the human data for 1402, where we think we can go straight to pivotal trials, assuming we see a similar impact to what we've seen in the monkey studies and the brepocitinib pivotal trial readout in SLE, we expect in the second half of 2023. Again, there's a high unmet need here. We've seen that JAK1/TYK2 across multiple diseases has performed better than JAK1 or TYK2 alone. And we've seen that JAK1 and TYK2 have shown meaningful although improved efficacy still needed in SLE. So I feel very good where we are today. Just looking very quickly at some of the key catalysts. I've mentioned the VTAMA one. Certainly, I think people are going to be very focused on the additional revenue point and how the gross net improves. We are constantly looking at new or mid late-stage assets. I think there's a lot of very interesting things available in this market, and we're continuing to be very active looking at that. I would say there's a very high bar here to make sure that we're deploying that capital responsibly and with appropriate returns. We are pleased with the progress on the LNP patent litigation and expect to continue to move that forward. And are -- as we proceed to discovery, and then in some of the early programs that we have from that I mentioned, we again expect to progress that as data emerges from the preclinical front, of course, we'll look at that closely to see what would make sense to move into the clinic. Some of the other programs that we didn't go into is RVT-2001. This is a program that we announced at the beginning of January, which is Phase I/II trial in low-risk myelodysplastic syndrome. Again, this is, the unmet need here is very large. We will see a data set of a fairly small number of patients by the middle of next year, and we wanted to validate the data that we saw that EASI generated last year. And if that's in the right direction, certainly, we'll move that forward into additional trials as we develop in MDS. Namilumab is another one that we did not talk about where we expect top line data from the Phase III trial in sarcoidosis in the first half of 2024. And we expect to get the batoclimab data in myasthenia gravis in the second half of 2024. The thyroid eye disease date in the first half of 2025 and the dermatomyositis data in 2025. I would want to point out that we are -- where we are today with $1.9 billion of cash after we get the $1.9 billion of cash, we expect all of these programs to be fully funded and including the VTAMA launch. So I think we're very happy where we are today. I think you can see we have a broad pipeline. We have some exciting commercial blockbuster assets. And I think it will be a very exciting year for us in 2023. So thank you very much. I'll move to some Q&A.

Great. So let me kick it off and then we'll turn to the audience. So Richard, so congratulations on announcing your $150 million raise yesterday. As you said, as we saw in the press release, we have $1.6 billion on the books, $1.8 million pro forma for the 2 deals and now $1.9 million. How are you thinking about the incremental $150 million in the deal that you announced? What was the impetus for it? And how are you thinking about proceeds going forward?

Yes. So look, I would just want to point out $50 million of that was secondary. So this deal was something that was really driven out of -- there's a large mutual fund that was wanted to take a majority of that. And so it transpired very quickly. And obviously, given where we are, how well we are funded, I think, especially at these levels, I don't necessarily want to be driving a lot of capital raises. But what's very critical and important to me is to make sure that we have in our shareholder structure, long-term sticky money. And so that's sort of how we're thinking about the raise. And look, we essentially had a cash runway through second half of 2025 even without the race. So this gives me some optionality, certainly, as SLE data reads out and we think about doing an additional pivotal trial depending on the guidance there in the data. And as the MDS data reads out next year, thinking of any additional trials. So I like that optionality. But again, I want to be laser-focused on cost and burn and making sure that anything that moves forward has a very high bar.

So I also saw that you announced for the first time revenues on your new VTAMA product. Very exciting topical plaque psoriasis. I think this is going to be -- it's going to be a blockbuster. Talk to me about the rollout and what you think -- what are your expectations about moving forward?

So I think, look, this is a market where physicians have been using the same thing for decades. And so I think their patients are hungry for something that's unique and different, where you have a proven mechanism and a label that's differentiated from anything that's out there, where we have the remitted effect, which shows that you can essentially use this once a day, when you are clear, almost clear, you can stop using it, and you essentially have 4 months of clear skin when the lesions come back, you use it again and you have the same level of efficacy that you had before. And I think that is the game-changing piece here. The other piece here is that, look, if you just pull up the label, I mean, type in VTAMA, click on label, and you'll see a super clean label. The remitted data is there. There's no contradictions. There's no overhang from systemics that were developed before, right, because this is a new MOA topical. And so I think that's the critical component here, and that's why VTAMA is so differentiated. So I'm super excited with the potential here, obviously, in psoriasis. And I'm also very happy that we have another competitor helping us drive the market away from steroids and welcome that because I think we have a lot of work to get this done together. But I think we have -- we're a fantastic drug and to have the feedback from patients and physicians has been very strong. And also if you look at the journal publications that we've had in the New England Journal and JAD, again, I think they've noticed the differentiated mechanism of action here and the data we've had across mild, moderate and severe patients in psoriasis. And then I'm looking forward to seeing the top line data in the moderate severe atopic dermatitis study that goes down to the age of 2, which expands the market for a fold.

Great. Thank you. So what potential do you see for your anti-FcRn. And how do you think about bringing 2 molecules forward?

So again, here, I mean, you see that this has been studied in 19 different indications. And the complexity around 19 different indications is always pricing. Some of these indications are very large. Some of these are more orphan. And so you really need to think about some of those dynamics. So this gives us the potential to really think through that and make sure that we're maximizing and also developing this in the right way based on the data that emerges. I also think that there's a big high unmet need for some of these indications and some of them are more competitive. So I again want to make sure that we have a very high bar here as the clinical data emerges as we understand the need for patients. And because for batoclimab and also 1402 were developed to be subcu. We have a very different administration here that takes seconds where we have some real flexibility and where patients can do this at home. And I think that's going to be a real differentiator if you go into some of these very broad populations. And look, the animal data, I think, was spectacular on 1402. You can see the crystal structure that I talked about in the schematic and the differentiation here, where we anticipate to see similar you didn't see the LDL impact, obviously. And so we hope to see something similar in human studies as we move forward with the Phase I.

Great. So we have some time left. Can we go to the audience to see if anyone that has any questions.

I have one question. How do you feel about -- I think you spoke about it in our one-on-one as well. How do you feel about the free cash flow burn given the launch 2024, 2025, how do you -- could you say something about that?

Yes. I mean, look, I think we're -- I feel very good with where we're today, I mean, we have cash in the second half of 2025. And look, if things hit that are a lot more positive than anticipated and we can do a much broader development plan on anti-FcRn. It's fantastic. So I think there's some really exciting opportunities where we can do further development across multiple different diseases. Look, it's also hard, and so there's obviously some things may not pass the bar and so that will cause some opportunities, right? And so I do want to -- I think where we are today, we're fully resourced for a great launch, atopic dermatitis, you don't need to have a much more expansion in the sales force. And I think given the strong script trend we have and the blockbuster potential in psoriasis plus atopic derm, I feel like we are a very good runway here and some potential a lot of flexibility across the portfolio in a way that many of our peers don't.

Anything else? Okay. I had one last question. Richard, could you tell us a little bit more about the Pfizer arrangement on the JAK1/TYK2?

Yes. I mean I think this is a brilliant deal. Obviously, Pfizer has been a great partner. They had the SLE study in play. And essentially, we had a $10 million upfront, and we get the U.S. and Japan, they get the rest of the world and very much looking forward to working with them, seeing how the data develops and getting some progress in SLE where I think there's a big unmet patient need and also DM.

Great. So I see we're out of time. So Richard, thank you very much for joining us.

Thank you. Thanks so much.

Great.