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

Good afternoon. Thanks for joining us for another session at our 41st Annual JPMorgan Healthcare Conference. I'm Brian Cheng. I'm one of the senior biotech analysts covering Roivant Sciences at the firm. Presenting next is the management team for Roivant. [Operator Instructions] Pass the stage to Roivant's CEO, Mat Gline for the presentation. Matt, welcome, and the stage is yours.

Thank you, Brian. Good afternoon, everybody. Thank you for coming. Excited to present and then take some questions, and yes, looking forward to it. So we're going to make some forward-looking statements for more information. You can consult our forward-looking statements and disclaimers. So I'm going to start on Page 3 for those following along online. I'm not going to spend a ton of time on the past, but I just want to reflect, 2022 has actually been a very busy year for us. We launched our first wholly owned product in VTAMA, which got approved in May and became the #1 most prescribed branded topical in 8 weeks, and there's been a number of updates there. We've made some major change to our pipeline, including -- 2 major collaborations with Pfizer that we announced 1 on brepocitinib earlier in the year and 1 which we'll spend time on, and I'm sure, again, in the Q&A, RVT-3101, our new NTL1 antibody. We unveiled IMVT-1402, a next-generation anti-FcRn and we've done some significant work in the pipeline to extend runway. And then we've just made a lot of clinical progress. We initiated a Phase III study in brepocitinib DM. We completed enrollment in our SLE study and a number of other updates beyond those. So it's been a really busy year. But this is actually on Slide 4, probably what I'm proudest of, which is, if you would ask me about our 2023 catalyst calendar, at JPMorgan a year ago, It basically had 1 thing on it. We were going to produce Phase III data in atopic dermatitis, which I'm very excited about. But it was a relatively sparse year 2023 for us. And we've done a lot of work in the last 12 months, and we've added a lot of really important catalysts to 2023, such that 2023 in my opinion is shaping up to be probably the single most exciting year from a clinical data perspective in Roivant's history. We have data that we already produced last week, which we think is incredible data sort of move forward a foot in the game of inches kind of data in RVT-3101, our anti-TL1A antibody. We will produce that Phase III data in atopic dermatitis in the first half with VTAMA. We will produce additional data from anti-TL1A antibody, chronic maintenance data from our 52-week portion of the study in the first half. We'll generate first-in-human data in our next-generation anti-FcRn antibody in the middle of this year and will generate potentially registrational data from our Phase IIb study in SLE in the back half of this year. And I'm proud of this both because this is an incredibly rich set of clinical data, but also because I think it speaks to what the Roivant model is about, which is finding opportunities and making them work for us as a business and finding uniquely shaped opportunities that we can execute on. And I think we've done a lot of that in 2022, and it is what has set us up for a pretty incredible 2023 ahead. So I'm going to spend most of today on our pipeline and on some of the recent and upcoming clinical data. I'll just pause and I'll say, I think one of the things that's interesting to me, we never set out to be an I&I company. But actually, I think we have one of the most interesting late-stage I&I portfolios of any biotech company certainly of our size and scale. And so I'm excited to share some of the content of that. We have potential category layers in 5 out of the 7, I'm on Slide 6, 5 out of the 7 leading I&I markets. We have VTAMA and psoriasis and AD. We have RVT-3101 in Crohn's and UC. We have brepocitinib in SLE, and we have a number of programs in growth markets that aren't yet in the top 7 list, but which could very well be soon. So again, a really broad, deep I&I franchise that's come out of the work that we've been doing as a business. So I'm going to start with a review of the data that we put out last week for RVT-3101 our anti-TL1A antibodies. So on page 8 , just as a recap, so this is a drug that we in-licensed from Pfizer. We announced it just last month, we completed it just last month. And it's an anti-TL1A antibody. It's a unique mechanism for ulcerative colitis, crohn's and other potentially inflammatory and fibrotic diseases. I'll start by saying we've produced some great data here. So just to the significant clinically meaningful data, it's clinically meaningful, that take every dose we tested. And it's data that in our view really advances the field that you see with a great safety and tolerability profile and with enriched response rates in a prospectively defined biomarker subset with about 60% of our UC patients. This is obviously a well-validated market. You see in Crohn's are some of the largest I&I markets there are. And we think we have potential outside of IVD given the novelty of the mechanism. This is one of the largest Phase IIb studies ever run in UC. We now have over 300 patients studied in 4 different doses, including in our Phase IIb study with a subcu, and we have an efficient Phase III program plan that we're excited to share more about in the months to come. We have an additional major catalyst coming this year, a final set of maintenance data, 52-week data coming at the first half by close to the middle of the year. And then this is a drug with a long franchise attached to it. Obviously, the biologics exclusivity, but also IP protection until 2039 plus. So this is the clinical data for our pooled data across all of our doses. These are, again, extraordinary data, 32% gross efficacy and a 21% delta clinical remission according to modified Mayo in an all-comers population or 37% with a 27% [indiscernible] in a biomarker adjusted population or biomarker positive population and a similar set of data in endoscopic improvement. I'm going to spend most of our time talking about this data in particular in our expected Phase III dose. So we have identified the dose that we will likely carry forward into our Phase III trial. We haven't identified what the dose is because our competitor does not have dose-ranging data. And so we'd like to use that as a competitive advantage in trial design. But suffice to say, again, just extraordinary data, I'll point to the 40% gross efficacy with a 30% placebo-adjusted delta according to clinical remission in the go-forward Phase III dose in the biomarker positive population. This class in general, and I know many of you follow Prometheus, just 1 of our competitors has recently put out a lot of extraordinary data in UC and you can see how we stack up here. And I think this is the kind of data set, in my opinion, that encourages blue sky thinking. It gives you the idea that you can go beyond just UC into other diseases. -- with inflammatory and fibrotic components, and that's a function in part of the unique mechanism for TL1A. This is, again, sort of moving a foot in the game of inches. And maybe the last piece of TL1A data that I'll share here for some of this will come up again in some of the Q&A. One piece of data we were particularly proud of is we looked at our biomarker-positive population of patients who are biologically experienced, second-line patients in UC, these are some of the hardest UC patients to treat. And basically, every other therapy stumbles when you go into this line of treatment, you can see that across the board here. And we almost perfectly preserved our efficacy, still a 41% top line. And notably, placebo patients tend not to respond once these sort of second-line biologic refractory patients. So the placebo response rate goes away, and we have a 41% delta in clinical remission between that gross efficacy and placebo in this patient population. So this is the kind of thing, again, that changes the field in terms of how UC is treated, and we're excited to have an option potentially for the second-line refractory patients. Although notably, we think the drug is good enough to also work in all-comers in the first-line setting. Obviously, that has to get mixed with a favorable safety profile. And we're also really happy with how this looks from a safety perspective. I'd say if you just look at this table, don't you just take a step back for a second, rather than going through specific rows. Everything on this table is basically placebo like here, almost every row on this table is lower for the drug arm than for the placebo arm. So a very clean safety profile, sort of despite the extraordinary efficacy. The only other class of drugs that's sort of coming close from an efficacy perspective like RINVOQ is putting out pretty good data in UC. But obviously, that's a JAK and JAK inhibitors have a significant different safety profile. We have a very, very clean drug from a safety perspective. I'll call out one thing here, which is that we have gotten some questions. This program, as of the early Pfizer data, the Phase IIa study has had some immunogenicity with about -- in our study here in Phase II, we have 46% rate of antidrug antibodies and an 8% rate of neutralizing antibodies. We said this on our data call last week. But first of all. This is in line with a number of approved biologics, right? HUMIRA has shown 88 rates in the 30s and 40s and even higher neutralizing antibody rates. And SKYRIZI is in a similar bucket as well. But the other thing I'll say that's important to me is we see no evidence of any relationship immunogenicity and safety and efficacy in our Phase IIb efficacy or safety data. And we have had an early look at the currently ongoing maintenance phase, the 52-week pace of the study. We've seen a decent number of patients out to 40 weeks and some patients out to 52 weeks. In that data, our neutralizing antibody rate is flat to down, and we continue to see no relationship between immunogenicity and safety and efficacy. So overall, feeling confident about our immunogenicity profile, but it's obviously something that we know that people are watching closely. So look, overall, again, an incredibly exciting program. This was an addition to our pipeline just a month ago. It's something that investors have focused on quite a bit. And we are excited to share the maintenance data later this year to be a part of this new class of drugs in the anti-TL1A antibodies that we think are going to matter a lot, both in using Crohn's and potentially beyond. So I'm going to go from there to VTAMA. So this was another drug that had some major developments over the last 12 months. Drug got approved in May and launched it. And so we'll talk a little bit about those properties. I'll say, one of the thing I'm proud of here is this was the first novel mechanism drug approved in psoriasis in 25 years. The previous novel mechanism was vitamin D. So even that it was a little achieving. And so look, it's just exciting to bring a new option to psoriasis. And this is an indication that's close to me. I'm a psoriasis patient, so I know this space well. So we are very happy with how this launch has gone. It is the best branded topical launch certainly in modern history. We became the #1 prescribed branded topical in psoriasis, 8 weeks into our launch and have continued to build since then. Patient and physician feedback has been really good. We feel great overall with the reception to the product and we're sort of how we're stacking up in the market. Notably, we're keeping pace on a script volume basis with OPZELURA which is notable because OPZELURA atopic dermatitis, which is a market with 4x as many patients. We announced a few months ago that we've now signed our first major PBM contract. This is a great contract. It gives us exactly the kind of access that we want. It's unrestricted and requires only a step-through steroid that's either an automatic look back on recent history or a physician yet the station of prior steroid use. So a really straightforward clean profile, and we're really focused on sort of supplanting steroids as the mainstay of therapy. So only needing preceptor steroid is pretty -- is a pretty useful thing for us. We continue to do other contracting work and continue to sign contracts with payers, and we'll announce major PBM contracts as they come. But I think any question you might have had on approval is what is access going to look like for a novel topical. And the answer seems to be that we're going to get all the access we need and a reasonable commercial P&L back coming. This is an important program for us also because we have a major Phase III program reading out in the first half of this year. Our atopic dermatitis study will read out. AD is a very large market. And again, we have some really, really strong Phase IIb data from this drug in atopic dermatitis. At week 8, we showed a 49% IGA response rate versus 13% for our vehicles. So really, really good data in AD, sets us up well, we think, for the field, especially if we come close to replicating this in our Phase III studies that we'll read out this year. And we also had -- we have a Japanese partner who hasn't reported the specific data, but who reported positive top line IGA and the EASI75 results in a Phase III study as well. That was a smaller study than ours. It was a 275 patient study versus 400 in each of our AD studies. So a good deal of comfort that we should have a successful clinical program here when we read out later this spring. And I think the last point I'll make here is we are really just getting started for these indications. We're doing about 4,000 scripts a week as you saw in the launch curve. The numbers here are unfathomably large. There are 90,000 topical prescriptions written every week in psoriasis and 320,000 topical prescriptions written every week in atopic dermatitis. The vast majority of those prescriptions are for topical corticosteroids. And I'll remind our topical corticosteroids are tough drugs. They're somewhat efficacious, but they are not safe. You can't use them for a long time. They have short duration use limits, and they cause -- topical corticosteroids, they cause withdrawal injury and they cost in thinning and they are fundamentally difficult drugs. And that's particularly relevant to the atopic dermatitis market, where most patients are young pediatric patients. Our Phase III study goes down to 82. So you think about providing a new option with significantly improved efficacy and tolerability for that patient population. It really makes a big difference. A lot of investor in pharma attention in recent years has been on systemic therapy and biologic therapy, but you can see, just look at the markets, these are really topical markets, and it is a huge opportunity, and we are just at the very first innings of what we think we can do here with this program. So, needless to say, it's something I'm excited about and something that indeed is going to be an important part of our story over the course of this year. I think a couple of other things in the pipeline quickly as I kind of wrap up here. The first is I'll talk a little bit about our anti-FcRn antibody franchise. So this is Immunovant, a public company that we own 60% other than obviously, you'll hear about this from them as well. And now we have what I believe to be the potentially category-leading franchise in anti-FcRn antibodies. We have 2 drugs in this franchise. We have batoclimab, our original anti-FcRn antibody, which has shown best-in-class maximal IgG suppression, and we intend to use it in chronic settings. It has a property that it reduces blood albumin levels and therefore causes an increase in LDL cholesterol. So we're most focused on using it in indications where we can win on efficacy and where we think that will not be a major liability. What we announced earlier this year is we now have a next-generation anti-FcRn antibody as well. IMVT-1402 that addresses the albumin and LDL issue. There's no minimal impact with an LDL in our monkey data while maintaining that maximal IgG suppression. These are both, by the way, deliverable by a simple subcutaneous injection, a very straightforward injection. And what we think is that we can use IMVT-1402 for chronic dosing in indications where an LDL increase might be more of an issue, and this gives us an incredible franchise opportunity to go after. On the one hand, bigger indications with chronic dosing with IMT-1402. On the other hand, rare indications where efficacy is what's going to matter most with batoclimab. But we're currently studying batoclimab in multiple pivotal trials in MG, TED and CIDP among others. And we are generating first-in-human data in IMVT-1402 in the middle of this year, which we think will translate to a direct pivotal path about 6 months after we generate that data. Now a question that we get is how does IMVT-1402 deliver the same benefit? And you can see it here in the crystal structures for these 2 binding confirmations. Batoclimab binds to a similar part of the Fc receptor, I'm on Slide 23. Similar part of FcRn, but it binds in a way that interferes with or comes close to adjacent to where albumin binds to FcRn and so it impacts albumin binding and therefore causes this reduction in albumin. I think 2 binds to a similar part of FcRn that same bottom right corner. But the mining confirmation assess that sort of hangs off to the side and stain is further clear of where albumin mines. And so that's how it avoids an impact in albumin. And you can see the monkey data at the bottom here. The chart at the far left shows that it's supersaturated doses, we very comfortably hit the same level of IgG suppression of the same supersaturated dose batoclimab does. And then you can see at normal doses, we have minimal impact of 1402 on albumin's very placebo-like with basically no impact on LDL at those doses. So pretty comfortable with the profile. And you can see that in contrast to the blue line there, which is batoclimab, which we know does impact albumin and LDL. So I'm going to spend just a minute on brepocitinib. This is a dual inhibitor of TYK2 in JAK1. We added to our pipeline in the last year. This is a pretty unique mechanism. It's a dual inhibitor of these 2 targets. Obviously, TYK2 has been a pretty popular target to pay attention to the last year, especially with TYK2 having been approved by BMS and with Ventyx and then is also working on the target. This is a drug that we got from Pfizer. And basically, our view is the dual inhibition of these 2 targets. JAK kinase is [ pair Y ] signal cytokines and so there's a collection of cytokines that are signaled by both TYK2 and JAK1. And we focused here on diseases because JAK Class has some take liabilities, we focused on diseases with high unmet need where there wouldn't be an issue and where the dual signaling of TYK2 and JAK1, we thought would provide a particular benefit. That means we're most focused right now on SLE lupus on dermatomyositis, both of those we have ongoing registrational studies in and then some other indications to be announced. And notably, that lupus study has enrollment complete as of the sort of late summer of last year. And so we know for sure that we will have data from that 52-week study in the second half of this year. And based on the clinical data that we have for the class, we know that the TYK2s like deucravacitinib have done well in SLE. We know that baricitinib a JAK1 has produced good data in SLE. And we know that we have in cross-trial comparisons against each of those 2 drugs. Quite a lot of data to suggest that we are a bigger gun that we're able to deliver pretty significant efficacy. And so there's an opportunity here to deliver some pretty extraordinary data in SLE that could matter quite a bit to patients. So I'll wrap up here and make sure we have some time for Q&A, but I'll just say again, 2023 is going to be a big year for us. We have a ton of really important catalysts and data coming. We've got expanded reach of VTAMA with continued coverage as well as continuing to grow commercial volume, and we think that will matter. It will be something that will sort of show the world what a capital can do. We have our Phase III readout in AD which I talked about earlier. And I think if positive, it would pave the way to a very large additional market, much larger than psoriasis for VTAMA. We have the 52-week maintenance data for RVT-3101. That will be the first 52-week data ever generated from an anti-TL1A antibody. We are the only anti-TL1A antibody currently working to generate data like that. And we know the world will be watching that data very closely, and we're excited to share it. We have, I just mentioned the first in human data for IMVT-1402, our next-gen anti-FcRn antibody in the middle of the year which we think if it validates the best-in-class IgG suppression in the clean albumin LDL profile has an opportunity to sort of establish ourselves with the best anti-FcRn antibody in the field. and we have the potentially pivotal brepocitinib, the dual TYK2 and JAK1 that I mentioned before, which again could serve as 1 or 2 registrational trials in a large market with high un-met needs. So I'm excited to deliver those catalysts and many more in the years to come. excited to continue to engage with investors and continue to build the business, and we're really pleased with the progress we've made in 2023 -- 2022. So thank you very much. And I'll sit down now and then Brian and I can do some Q&A.

[Operator Instructions] So I'll kick off with a more high-level questions. You've got a lot going on. Recently, you have the TL1A Vant that was just announced with Pfizer. How should we think about just your overall strategy based on the portfolio that you have today? And is there a specific focus or theme that you would like to see as we look beyond, let's say, next year into the next 2 to 3 years or so?

Yes, thanks, Brian. Look, I think It's been an interesting environment in the last 12 months in the sense that on the 1 hand, we are quite capital rich, and it's been a very fertile environment for finding new opportunities. I think the Pfizer TL1A deal is a great example of that. And we are really pleased with that sort of opportunity space. On the other hand, the capital markets, candidly, have been extremely tough. And so we've been focused on preserving our capital and on a very, very high bar for new opportunities. I think all of that remains true as a backdrop matter for what we're trying to achieve. As I said at the beginning, we didn't set out to build an I&I franchise, but I think we are incredibly proud of the late-stage I&I franchise because we think -- it's one of the best and one of the most catalyst-rich in companies of our size and scale. I think we continue to like those targets in those indications. But I think we continue also to feel like the best thing for us as a business is to be opportunistic. And I think we have a ton of great data, including a number of different pivotal studies reading out over the next couple of years, and I hope that coming back in the next few years VTAMA will not be our only commercial product.

Maybe as far as focus on TL1A. We've gotten a lot of questions about TL1A recently. I think it was especially on the back of the deal announcement Prometheus data came out and [ Andor ] data came out as well. So it was sort of back-to-back news flow. One question that I've been getting is that why does Pfizer give that away with no upfront cost, no milestone attached especially when they had already seen the data, right? So what drew your team to work with your team -- with their team on TL1A? And is there any -- is there a competitive process to get this TL1A asset?

Yes. So the first thing I'll say is they didn't give it away. They're a great partner of ours. They own 25% of the JV. They own Europe and rest of world. We have U.S. and Japan. And I think that's consistent with our view, which is that Pfizer and part of this is a question for them. Pfizer has got some real P&L constraints with LOEs coming in a number of major, major products in the next couple of years. And they have to make difficult decisions around R&D prioritization. But this is a program they really believed in and they wanted to preserve as much value as they could while finding a partner. And so they needed to find a partner who is going to be willing to share an upside and allow for an interesting and unusual deal construct, which is something Roivant prides ourselves in being able to do. While also a partner who they were confident was going to be able to execute on the program, which is something that Pfizer based on all of their past collaborations with us, knows that we can do. And so I think once you start thinking how many companies are in that sort of unique intersection of willing to do something flexible that solves Pfizer's problem while also being able to execute on the program successfully. I think there are not too many companies at that intersection. And so truth told, we don't think it was much of a competitive process. We think the relationship that we had ultimately caried the day there, and we're really thrilled to be working on it.

I think lastly, during the call, you talked about how you already have seen some of the data from the maintenance portion from the -- from this study. How should we think about the potential effect of the ADA in the chronic period? Since 3101 only targets the trimeric form of TL1A. Can you talk about the potential differentiation from competitors?

Yes. Look, the first thing I'll say is, I suspect that a big part of the reason why we are getting these questions. So we did the deal with Pfizer and the immediate reaction from the Street was, well, obviously, this means the class SoCs because otherwise, why would Pfizer do this deal. And then Prometheus put out their data and it was very good. And the answer was, well, obviously, this means that Roivant's drug sucks because otherwise, why would Pfizer do this deal. And then we put on our own induction data, and I think it was very good data, and the immediate reaction was well, then there must be something hiding in the maintenance data because otherwise, Pfizer will do the sale. So I do hope once we report the maintenance data that we get to the bottom of the stack of hurdles, and there's nothing beneath it because I think it's a great drug, and I don't think there's anything in the data to suggest a problem. From an immunogenicity perspective, and I said it before, we've gotten to look at a decent amount of maintenance data, not all of it by any stretch. And that data sort of confirms our view that or affirms, I should say, our view that there is no relationship apparent between immunogenicity and NAVs or ADAs or whatever and safety and tolerability. And that it looks like the NAV rate is flat to declining over time, which is obviously all encouraging. So that's what I hope to report out when we report the final data. I don't think there's a huge difference between the fact that we bind to the trimer and they also bind to the monomer. That's something that could have mattered in either direction in theory, right? The monomer could have been an antibody sink. It could have been helpful. The active form of TL1A is the trimer, so you think that's what matters. Truth told, in my opinion, it just -- it seems like it's fine either way, their data are also pretty compelling.

I guess from the data perspective, it seems like you -- it works in both the all-comer population and the biomarker positive population. What's the latest thoughts on just how you would move forward in the Phase III? And would you only focus on market positive? What could be the next factional set for you?

It's a great question. Look, I think there was a version of this data where the gross -- with the placebo-adjusted deltas for the class, were in like the low teens and the biomarker was necessary to have a compelling drug, right? You get a 10-point delta, you'd be in the 20s, you'd be like, okay, we've got a drug. That's not the world we live in. The world living is the TL1A is clearly an important target in an all-comer's population and the 20% deltas that we have are, in our opinion, sort of strongly justify that this drug should be developable as a first-line all-comer's drug, not specific to the biomarker population. So that's definitely how we see it. That said, the biomarker is interesting. Our biomarker in particular, covers a pretty broad range of the patient population that covers 60% of eligible UC patients, which is quite a number. And so we look at it and we see opportunities in both settings. I think you can bet that our Phase III program will not focus just on the biomarker. It will focus on an all-comer's population, but that we will study the biomarker prospectively and that we think it provides an opportunity for competitive commercial differentiation, especially because our biomarker covers, let's say, a larger portion of the patient population and still delivers a pretty impressive delta relative to our sort of all-comers patient data.

Great. Maybe switching gear to VTAMA. You're now over 7 months away into your VTAMA launch in plaque psoriasis. What are the key dynamics that you're seeing and with the first PBM contract secure? Can you shed some light on how that's opened the access to VTAMA?

Yes. Look, we're super happy with that contract. I think it was always a question when we first launched the drug. We felt the profile of the drug was good enough that we were going to get covered. I'm going to get covered with easy access, but obviously, that's something that I think the street kind of wanted to see from us. And I'm now very confident based on the quality of that contract and sort of context of other payer PBM conversations that are going on that we're going to have. It may vary a little bit by contract. There'll be spectrum, but we're going to have good access across the board and that patients are going to be able to get VTAMA. And that's an important milestone, obviously. That's something that we sort of crossed over sometime this fall, sort of our internal confidence in that fact. And I think that, that means that from here on out, it's an execution story on the payer side and a volume story in terms of getting out to as many patients as we possibly can. And yes, it's a great position to begin, we're very fortunate.

And previously, you talked about DTC is also a part of your push to a bit -- for VTAMA to push into plaque psoriasis. Where the staff fit in? I think at least from my point, I think I saw some commercial for VTAMA. Are you still ramping it up? And how does that fit into your -- as you secure more PBM contracts in 2023?

Yes, sure. It's a great question. So DTC is a part of the dermatology landscape, and many -- if you watch TV, especially if you watch like network TV or cable or whatever, many dermatology products are heavily advertised. The Roivant team is extremely experienced and has a lot of creative thoughts on how to sort of produce targeted DTC opportunities that will hit the specific patient populations we care about. Obviously, the business model for VTAMA is a little bit different than the business model for like a SKYRIZI. It's a different price. It's a different sort of patient population. And so I think you can imagine that Roivant team is focused on tailoring the strategy to the nature of the product. The other thing I'll say is we've done a little bit of DTC. I think enough to have a sense that it works pretty well and that sort of patient demand is responsive to it. Obviously, DTC drives demand, but you want to make sure you're driving demand for let's say, commercially important scripts. And so we do sort of think a little bit about tailoring the DTC strategy to keep pace with the payer conversations so that you're not necessarily driving script volume to patients who don't yet have insurance coverage.

How has atopic derm fit into your strategy?