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

Great. Well, thanks to the team from Roivant that's here today. Richard Pulik, CFO; Mayukh Sukhatme, Chief Investment Officer.

And maybe just to start, we can talk about kind of a brief overview of the business and what you view as key programs that will shape the story over the next 12 to 24 months?

Sure. Yes. So for those of you who may be less familiar with Roivant as a company or a public company, a little over $7 billion in market cap, a little less than $2 billion in cash. We have a marketed product in VTAMA and a series of late stage, mid late-stage clinical programs, including a first-in-class TL1A antibody, an FcRn portfolio via Immunovant, a TYK2 JAK1, and many, many other things.

Absolutely. Maybe we'll start with the commercial product, VTAMA. How would you characterize the launch to date? And what should we look for, for the rest of the year in terms of gross to net and the trajectory of adoption?

Yes. So we actually, I think it was right after -- right before this conference last year that we launched VTAMA in its first indication, which is psoriasis. So we're just a year into the launch there. I think that's going really well out of the gate. Obviously, this is a -- there's a long-term launch for us. We have just reported out 2 positive Phase III studies in atopic dermatitis. So that will be the sort of second indication to stack on. And I think things are going well overall. I think we've gotten good early adoption, I think, particularly among the sort of early wave, early adopters. And I think the sort of name of the game in the coming quarters will be to sort of have that continue to sort of percolate through to sort of broader deciles of prescribers.

Great. I think you've said that you expect gross to net to normalize around 50%. I guess, where do we stand versus that today? And how long do you think it will take to get there?

Yes. So I think that generally speaking, we're expecting that this the sort of trajectory. So we think about this in terms of like yield to gross net yield. And it will just grow over time to like what you said, the long term of 50%. I think over the course of this year, as we get more and more sort of payer coverage and that sort of flows through to the downstream plans, we'll sort of get sort of sequential improvements each quarter, hopefully, kind of settling in probably on that sort of front in the 40s over the next kind of year or so? And then the last kind of 10% to get to the sort of normalized 50%, that's really a function of bringing down wholesaler distribution costs and associated costs, which are something that any company that has its first product kind of faces and that will just sort of work its way out over time. So that last 10% will take a little bit longer. But ultimately, we view the sort of gross to net yield picture and just the sort of commercial picture of this drug overall as being just like any other broad market drug, whether it's a topical or an oral, everyone seems to kind of settle at around 50%, and we expect the same.

Helpful. What, if anything, can you share about refill rates and compliance now that you've got about a year under your belt?

Yes. I think it's too early for us to comment on some of that stuff, I'd say the underlying trends are positive.

Great. You mentioned the atopic derm study is, I guess, could you just provide a brief review of what that showed and how it compares to the other options in the market today?

Yes. Absolutely. So we reported out the data for our first AD study in March and then our second AD study in May. And it was great to see that they were basically any overlapping, really, really strong data. So we saw -- the primary endpoint was in this IGA responder 0 or 1. We saw roughly in the mid-40s response rate on that. And then I think another sort of key metric is the so-called the EASI-75. And there, we got between 55% and I think 59% in each of the 2 studies, response rate, which I think stacks up just incredibly well. I think pretty clearly separates from certainly the class of drugs that are the PDE4 inhibitors. And I think it just looks really strong. We've sort of put in our public materials, sort of across study comparisons on that metric.

Absolutely. And then I guess, when do you anticipate the drug will be available? And how do you expect that launch trajectory to go compared to the psoriasis launch we've seen so far?

Yes. So again, just to kind of level set everyone, atopic dermatitis is a market that's at least 4x the size of the psoriasis market. So it's just a much, much bigger market, candidly, with fewer treatment options available. So in terms of the timing, I think we've said that we're planning to file with the FDA very early next year, and then that should be a 10-month review for that. So think about that as kind of kicking in the back half of next year. And I guess I would say our hope certainly is that with sort of a lot of the kind of -- obviously, the contracting work needs to be extended there. But in general, people will -- many docs will have had a good amount of experience with VTAMA just in psoriasis overall. And so we're expecting the sort of the steepness of that curve to be really strong and commensurate with the market opportunity.

Yes. Makes sense. So I guess several quarters of launch underway. You've got the atopic derm data in hand. What's your level of conviction still that this will be a blockbuster drug? And I guess, what are some of the risks you see or puts and takes to achieving that?

Yes. I think -- look, I think it's a drug that has done well out of the gate. For sure, we became, I think, the #1 most prescribed topical or topical of any kind in psoriasis like within week 8, and we sort of continue to retain that position. I'd say overall, we're getting -- just getting started. I think we've got a lot of conviction in those kinds of peak forecasts. I think really, ultimately, again, this is sort of the kind of profile of drug because there hasn't been a lot of innovation in the space that will just take time, right? I think we saw that sort of quick adoption by the early adopter group, and I think that, that will just -- we have to sort of continue to sort of change practice behavior. At the end of the day, I think VTAMA is just simply better medicine than steroids, and we expect that, that will be reflected commercially as well.

Great. Maybe shifting gears here to RVT-3101, very topical these days. You recently disclosed data from the Phase II induction study. Again, can you just provide a brief review of what that showed and how it compares to other agents in the class?

Absolutely. So we reported in January our induction data, which was just incredibly strong data kind of no matter how you look at it. This is the second study that has been run for this drug, building on an earlier study that was a 50-patient single-arm study dosed IV, the study that we reported out in January, all of it was dosed subcutaneously. It was a true dose ranging study, which I think kind of really informs a simple Phase III with a single dose kind of carrying forward from this study going forward. It was the first study. So it was the first study to show efficacy data subcu. It was the first study for this mechanism to do dose ranging. It's going to be the first study in this mechanism to be maintenance. We have a biomarker as well, which was prospectively identified in this study, building off of the earlier study where we were still working out, the Pfizer was still working out kind of what the biomarker might be. So it's a really, really rich data set with really strong data. So we showed a 31% clinical remission rate in the expected Phase III dose. And then that response rate was further enhanced roughly by 10% in the so-called biomarker positive population that comprises roughly 60% of UC patients, which is a really, I think, a really just powerful package overall. I think just kind of level set everyone here. There's a huge market, 2 million patients in the U.S. alone with either ulcerative colitis or Crohn's. It's a $12 billion commercial market. And in spite of it being such an enormous commercial market, really nothing works really well and patients tend not to stay on a given drug for very long. So the average time on a given therapy is between 6 and 12 months. And so into that, if we're able to sort of deliver really kind of top-end efficacy with a benign safety profile, just a winning combination.

Yes. Well, that's a good segue into the maintenance data, which is coming up here soon. I guess, how would you -- like what should we think about in terms of success scenarios for that readout? And what are you expecting to see?

Yes. Right. So this -- look, again, this is the first long-term data that's going to be generated in the field with this class of agent. And so we're looking forward to sharing that with the Street in the near term here. Look, this was a study that everyone from day 1 was sort of assigned one of their arms and then you're staying on that given arm all the way through, through week 52 with the end point at week 56. That is in contrast -- so that's what's called the so-called treat-through design, where everyone, regardless of whether you're a responder or not in the induction portion, you stay on no matter what. That's in contrast to the way ulcerative colitis studies were historically done generally, where only -- again, I sort of said earlier about how many patients don't respond well. And so traditionally or historically, most programs use a so-called rerandomization design, where they only took forward responders in the first 14 -- 12 weeks on, so it's hard to do sort of an apples-to-oranges comparison. But more recently, as we've gotten more effective agents, this treat-through design has been used a couple of times. So there's a program from Etrasimod that was a treat-through design that will be similar to kind of the data here.

Okay. And I guess, in terms of success, like do you see that as like data that as good as what we saw in the induction phase better than? And what's within the realm of possible...

Yes. Look, I would say that kind of the full aperture basically is within the realm of possible at this point in front of the data. But I would say, look, I think we're starting from a very high bar. I think good, but maybe a little disappointing would be data that decays a little bit from, again, starting from a really high bar. I think that is still a very commercially attractive and important drug. I think if we're able to see data that really maintains what we've seen so far, again, starting from that very high bar, that's kind of a home run for us. And then look, a grand slam would be anything that looks any better than that.

Like the baseball analogies. Okay. And then post the maintenance data, you'll obviously be moving into Phase III. How are you thinking strategically about the design of that study? Anything to add there?

Yes. One of the benefits, again, the study that we're -- that we've been talking about is a study that was conducted by Pfizer, our partner in this program. And look, it's one of the benefits of kind of having this CADILLAC Phase IIb study, which I think kind of answers a lot of questions at once, is it makes the Phase III design really simple. And so we're expecting to have a very streamlined design, taking a single dose forward into Phase III without the need for any kind of dose ranging or anything like that. Yes, so I would say expect something very simple for Phase III.

Okay. I think previously, you were still optimizing on the subcutaneous formulation. Is there any more work to be done on that front? Or are you ready to move into Phase III once you have the data in hand?

We're ready to move into Phase III.

Okay. So I think you mentioned earlier the biomarker enriched population. I guess how do you think about the role for precision approach in I&I versus doing this as more of an all-comer approach?

Yes. In a certain sense, I think it's a little bit of an embarrassment of riches for us and that I think that there -- with the version of a world where the biomarker positive data looks just as it looked, but the all-comers data didn't look that good, which would have, I think, steered us kind of more squarely into just thinking about this or conceiving of this as sort of really only for the biomarker positive population. As it turns out, that's not what we got in the induction period as we discussed, right? So we're seeing really strong efficacy in the all-comers population and then a further enhancement in the biomarker positive population. I would love if that data were sort of corroborated in this -- in the chronic phase of the study and then corroborated again in the Phase III because that really, again, kind of leaves all avenues open for the drug, where I think we don't -- I think the data in the all-comers is so strong that we don't want to seed any portion of the market to any other drug either in this class or any other class, right? And so we do intend to develop this drug in all-comers, but then having that biomarker data there as a sort of a potential enhancement that could be kind of a commercial hook once this drug is launched. So really kind of help differentiate it as sort of being -- if you've already failed a, any advanced therapy had this drug be the sort of the next one you reach to.

Absolutely. There's an emerging view among the physicians we've spoken with at least the combination approaches might be necessary to achieve better efficacy in ulcerative colitis as you mentioned, it's not very good. What do you think about that hypothesis? And is that something you'd consider exploring?

Yes. So look, again, I think that we're starting from a pretty privileged position in that so far, I think our data, again, it looks really strong. And so -- first, the safety profile, I think, looks really benign. So I think it would lend itself to an easy combination with other mechanisms that that's a direction that the field wants to go. I think that is possible. And I think it is easier for us to do that than certain other mechanisms where there clearly is sort of a trade-off between efficacy and safety. So that's kind of great, if things kind of evolve that down that road. I think the second thing is just kind of mechanistically based on the biology. Again, we're acting, I think, pretty uniquely at the site of disease tissue. And so we're seeing actually impact on multiple sort of inflammatory cytokines and sort of profibrotic signals as well and cell types which is any different than many of the sort of other drugs used in IBD, which tend to be more broadly immunosuppressive. And so as a result, I think we could just end up being sort of a monotherapy that take -- that kind of stacks up well even against its combination therapies from other molecules.

Understood. In terms of like expansion of the indications you're pursuing, how are you thinking about that today? And prioritizing that versus the spend on the Phase III program?

Yes. Well, look, I think job #1 for us really is to maximize the aggregate value of this program. I think we're sitting here with a really strong data set that's been generated to date in UC and then there's been validation, obviously, with other molecules and another molecule in Crohn's. So I think IBD is a high probability, sort of high success and high commercial opportunity. And I think in a certain sense, that is got to be job one is to get that right from an execution and a capital allocation perspective. Nonetheless, I think -- look, I think that data that has been generated so far does encourage a lot of blue sky thinking for the class overall. And so we plan to kind of fully exploit that. I think that there are a range of both broader market and sort of rare diseases and both that sort of play into the inflammatory sort of pathway, the antifibrotic pathway or both. And so stay tuned.

Okay. Great. Maybe last question on this point.

We're thinking big.

Okay. So you are thinking big, you also have the option through Pfizer on their other TL1A asset, I guess, what should we expect in terms of next disclosures on that? And what would you like to see before opting in or not?

Yes. So that's a program that, as you said, is a next-generation molecule that is a bispecific program with TL1A and P40 as sort of the other prong. In essence, because of that sort of construct of the molecule, we see it as sort of in essence, fundamentally a different construct that is -- could be useful in a range of different indications, some of which may overlap with 3101, some of which may be unique. Ultimately, Pfizer, that's Pfizer's molecule, they control that. They're running an extensive Phase I with an expected completion date in 2025. We'll get a look at that sort of full package before deciding whether to proceed. And opting in, if we opt in that is a zero upfront opt-in and then it becomes a 50-50 co-development co-commercialization globally.

Great. Maybe shifting gears again to brepocitinib. I guess if Pfizer has already evaluated that agent across multiple indications. What have we learned from that -- those data sets that would apply to the current development priorities like lupus and dermatomyositis?

Yes. So this is a program that we, again, are partnering with Pfizer on when we brought that in. So this is a molecule that what do we know. It's a highly effective drug. It's really given really strong data in every indication it's been tested in, psoriasis, psoriatic arthritis, alopecia, ulcerative colitis and HS, all studied, all positive studies. So we think it's kind of the -- in a certain sense, the biggest gun out there in terms of orals that go after this and uniquely goes after both TYK2 and JAK1, which is really, really exciting for us. I think the thing that's even more remarkable in a certain sense is that really, I'd say none of those indications actually play to the strengths of going after both prongs at once, right? Those are not indications for which sort of the interferon kind of [indiscernible] suppression is key. And so we think that, that is what is kind of exciting about lupus 2-degree and then certainly dermatomyositis and some of the other indications that we're going after. So rather than going after broad market sort of the -- the broad market indications that we know that either the JAKs are generally going after or Deucrav and other TYK2s are going after, and sort of getting into that nice sight, we thought we could kind of occupy a different niche, which is just the highly, highly effective specialty rheumatology indications, and that's what you see in our indication strategy.

Right. So we anticipate the clinical results from the Phase IIb in lupus later this year. Can you just help us understand what you view as a success scenario for that? And what you're expecting to see?

Yes. Well, look, I think lupus is a difficult indication.

That's my next question.

Yes. Lupus is a difficult indication and so you have to kind of -- biotech as a space, it tends to kind of keep you humble, and I think we have to approach lupus in particular, with some humility. But I think we've got a winning hand here, certainly with respect to the underlying biology and what we're targeting and how that is relevant to lupus. And we think that if you just look at clinical data that's been generated across the space, I think there's pretty clear evidence that there is benefit to either hitting a JAK1. So there have been signs of efficacy, I'd say, modest efficacy with a number of different JAK1 specific inhibitors. And then there's been signs of efficacy with the TYK2 inhibitor from Deucrava, which had showed some interesting data in lupus as well. And again, I think the hope is that by hitting both, and I think the biology would back this up is that we ought to see more in hitting both than you can achieve with either one alone. And I think that, that is kind of the profile that we're hoping for and what we expect to get.

Okay. So as you think about kind of next steps following that data, it would be potentially 1 of 2 registrational studies. How do you think about the Phase III design pending positive results? And is there any go/no-go scenarios relative to just statistical significance? Do you need to see a certain magnitude of benefit?

Yes. I think that we would want to -- I think we want to feel really strong about and quite confident about the odds and success of the next study. And I think that's what we're really looking at this study to provide. So this is sort of a look sideways as an act to convince ourselves, like the drug is efficacious, like probably we would not proceed. I don't want to give kind of specific guidance on what our sort of own internal bar is going to be. But I would say, ultimately, you should view our own sort of sense of what this data set is really as evidenced by like, do we say that we're going to go into Phase III -- into a Phase III after this or not?

Okay. You also are evaluating a dermatomyositis, but you guys picked that indication. So could you walk through the decision there? And how you think about any other indications that you could look at this sort of?

Yes. Look, I think dermatomyositis is really interesting indication. It's kind of one of the sneaky big rare specialty room indications for which there really aren't many options at present. I think it is one that plays to the strengths of the data -- of the biology of the mechanism and hitting both TYK2 and JAK1 at once, I think. Another thing that's just interesting is certainly kind of under the surface, it is clear that there's a good amount of, I'd say, like generally at the case report level of literature of efficacy seen with sort of pure JAK1 in the syndication, not so much that it is by any means the standard of care but enough to sort of feel like there's good sort of clinical validation of the mechanism in the syndication or part of the mechanism in the syndication. So we're really excited about that. And I think that, that is extensible to a number of different other indications as well. We've talked a little bit about starting a study in noninfectious uveitis. These all kind of again fit into the constellation of specialty rheumatology indications. So not infectious uveitis another we've already reported out now positive Phase II data in HS. That is an indication that has gotten, I think, increasing appreciation from investors. I think Humira is now -- actually, I heard recently is annualizing now at $3 billion in that indication alone. So that's a really large indication for which we already have positive Phase II in hand and our Phase III ready. So there are a lot of different directions we could go.

Understood. Maybe switching gears yet again to 1402 and batoclimab. We're looking for the Phase I results in healthy volunteers later this year from IMVT-1402. I guess what are you looking for in terms of the safety profile? And what do you expect to see based on what we've seen to date in the preclinical models?

Yes. So look, I think this will end up being the -- obviously, our human data, which we expect and hope will be a translation of what we saw in nonhuman species in both nonhuman primates and other species, which is that we see every bit of the IgG reductions, which is best-in-class for batoclimab, our first-generation compound, but without the liabilities that the batoclimab has or the impact it has on albumin and as a consequence of impact on albumin, and increase in LDL. And so we've presented data that was a head-to-head experiment, candidly, not originally intended sort of for investor purposes, but candidly, to sort of build our own conviction that 1402 really was different than batoclimab, and that's what we saw in this study where we saw even at sort of super therapeutic doses where we're really kind of stressing the system, we saw every bit the IgG reductions but without -- it seemed much of a change in albumin or LDL or cholesterol.

Right. In terms of the Phase I data, I guess, how should we think about changes that would be within kind of the range of normal or not causing that liability? And what did we see with batoclimab in a similar stage?

Yes. So in terms of like what would be acceptable, look, I think it's all probably a sliding scale, to be honest, right? I think the less of a change we see the better. I think that there's a case to be made for even into the sort of teens, changes in LDL and so forth that, that is still pretty attractive. There are a number of agents out there. I think some of the JAKs, IL-6, et cetera, that have the sort of teens, changes in LDL and are still obviously really big drugs. Our hope is that we do meaningfully better than that, and the nonhuman primate data suggests that we ought to get less of a change than that, but we'll have to see how the data shakes out.

Great. And then next steps pending that everything looks good in the Phase I. How do you think the next steps for that program?

Yes. So I think the next steps or plan, and this again is run by our public subsidiary Immunovant. But the next intended steps are to go to registration studies thereafter. I think one of the things that's just really beautiful about this class of agents overall and this mechanism is that there's beautiful, really simple, easily measured biomarkers, the ultimate biomarker. [ Interferon, IgG ] and you kind of can see where, in essence, we're getting data both from our own patient-level data and a number of indications with batoclimab as well as other data generated by the field, kind of where we want to be in terms of reduction in IgG, and we're going to kind of have a pretty tight understanding of what we need to do to get to those ranges.

How do you think about strategic indication selection with 2 assets in hand and a different profile for the two?

Yes. Look, I think it's a pretty privileged position to have the 1402 data kind of translates through and we're sitting here at -- with 2 programs. I think that's a pretty unique and privileged position that allows us to do something that really no other company can do, which is to do sort of indication selection, thinking about things as a franchise, right? So we can have batoclimab may be focused on indications for which there near to market for which the sort of the -- that AE profile, maybe it's less sort of chronic dosing, less broad market indications, that kind of profile, and it can live at potentially a different price point than 1402. And again, we'll have to see how the field evolves, how our data evolves. But I think right now, we're feeling good about sort of that optionality.

Understood. Maybe bringing you in, Richard, here. You tired of talking. So how do you think strategically about funding the myriad of programs he just discussed? And maybe within that, how do you think about the in-house discovery efforts versus asset acquisition?

So look, we have $1.9 billion in cash as of our last disclosure. That brings us into the second half of 2025. And that includes paying for all of the various programs that Mayukh talked about. So that are currently in place. So you were paying for the Immunovant 1401 pivotal studies for the 1402 Phase I development, obviously, we'll get that data soon. The TL1A data as well, right? We said with the last financing we did, that fund the Phase III and also the Phase IIb for Crohn's, both of those Phase III studies. And so we're actually in a really good place to fund the full portfolio into the second half of 2025. And I think also given the setup here, we have a lot of different strategic options. So like all leading biotech companies with great data, there's an opportunity here to work with partners. And think about that versus doing sort of equity financing or other nondilutive options. So I think we have a really great opportunity here to maximize those assets as the data emerges and work from there.

Okay. I mean you've done a couple of equity raises in the past 12 months. How do you think about those on the forward? Is that something we should continue to expect from you on good data or something that you'll maybe be a little more selective around?

I think we're in a good place right now with the amount of cash we have on hand.

Okay. As you look at the landscape in terms of asset acquisition, is that something you're still actively pursuing? And how should we think about the cadence of potentially like new Vants over the next year or 2?

Yes. Look, I think it's looking for highly valuable programs really kind of in any form is what we do. I think that's kind of what we view as a core strength of ours as a company. And hopefully, we've continued to get credibility from investors and our ability to sort of pick well. And so it's something that we'll continue to do. I mean I can't sit here and promise something that looks like a TL1A sort of every year, those don't happen that often, but they have happened before in our past. I would expect to hear more from us on additional assets that we're bringing in. I think one of the things that we have begun to occupy, I think, pretty uniquely is sort of this the track record of execution that we've had, right? We've talked about our one marketed product now, but we are a 9-year-old company with 6 drugs approved in our history, that's been with different therapeutic areas, different modalities, different teams, et cetera. And so I think that is a track record that pharma has really taken note of. And really, I think many companies have come to view us as a really good place to do a partnership with because they know that we're going to be able to execute really well and really maximize the value of any program that we work on.

The past couple there's been a lot of focus within I&I. So as you look forward, is that an area you would prioritize in terms of therapeutic area? Or do you remain agnostic? And maybe same question on like modalities that you're interested in.

Yes. So I would say that -- no, we're not going to prioritize I&I any more than others. I think we've always kind of had a view that we are a therapeutic area agnostic and modality agnostic, and we're really kind of just value driven and that sort of comes down to the asset itself. I think you're right that I&I has been -- become a hot area. I think we didn't set out to sort of build the I&I portfolio [indiscernible] it's like a place that's just -- again, we were sort of led on an asset basis. But you now look at our portfolio, and I think you'd be hard-pressed to find an immunology portfolio at any biotech company that is as good, rich and broad and late stages ours with the series of programs we've been talking about and a bunch that we didn't even hit on today.

Yes. speaking of in our last 35 seconds here. Anything in the portfolio you want to highlight, but what you expect to kind of emerge in the next year or so?

Well, I'm glad that you talked a little bit about brepocitinib because I think that, that is certainly one where we have not candidly gotten a lot of attention to yet and yet we're sitting here with a pivotal study readout later this year, which I think just again goes to the breadth of what we've got. And I think that, that is just the beginning for that molecule. There's a lot of different directions that we've got that we touched on. I see the timer, so I'm not going to get to talk about 2001, that's another, I think, key clinical stage program for us.

Great. Well, thank you very much.

Thank you so much.

Thanks, Corinne.