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

Good day, I'm Louise Chen, the large-cap pharma, Biopharma and Biotech Analyst here at Cantor. We're very pleased to have with us today, Matthew Gline, who is the CEO of Roivant Pharmaceuticals. So to start, Matthew for people that are newer to the story, if you could give a brief overview of the company and what your strategic vision is for the next 3 to 5 years for Roivant.

Sure. And first of all, just thank so much for having us. It's great to be here. It's been a good conference already. We're looking forward to it. So really appreciate your hosting. Yes, who are we? So we are a $9.5-ish billion market cap biotech company. We are trying to do what everybody is trying to do, which is to develop medicines that matter. We do that in some unusual ways. We're not set up as a monolithic kind of a command and control organization. We're up as a family of independent biotech companies that we call Vants. Most of them are wholly or majority owned by us privately. One of them Immunovant is a publically traded company that I bet, we'll talk a little bit about today. We've been doing this since 2014 and at the moment, we have a concentrated pipeline in late-stage I&I. We have one commercial program in psoriasis and a couple of programs in -- some really exciting targets in Inflammation and Immunology, and that's probably about where we're at.

Okay. Great. So at a high level, and we'll get into more detail within the conversation. What are some of your key catalysts remaining for the end of the year that you're really excited about?

Yes. So probably the biggest data event for us in the second half of the year was yesterday, when Immunovant put out its healthy volunteers data in 1402 that was pretty important data. Through the balance of the year, what we've got coming is, we've got a Phase IIb study in lupus at Priovant in a drug called brepocitinib, it's a dual inhibitor TYK2 and JAK1. And we have data in Graves' disease in our FcRn program in batoclimab, which is the first-generation anti-FcRn antibody. Those are probably the two biggest data events though the rest of the year for us, couple of other smaller things, but those are the ones that matter most.

Okay. Since we're on Immunovant, why don't we talk about it? I know everybody probably has a lot of questions and want to hear what you have to say. So maybe just a quick review of what that data look like, what does it mean for you? And how does that shape your next steps forward for the company?

Yes, perfect. So I assume at least some of you have been sort of following this story. But basically, Immunovant has a portfolio of anti-FcRn antibodies, which are involved in the reuptake of IgG. And so they are useful as it turns out across a variety of different programs at this point at treating autoantibody-mediated autoimmune disease. And we have a first-generation program called batoclimab, that we have been really excited about, we are still pretty excited about that has roughly best-in-class suppression of IgG, which means we think it can deliver some of the best therapeutic benefit. But also like some of our competitor programs like NIPOCALIMAB, for example, suppresses blood serum albumin levels. And therefore, we learned the hard way a couple of years ago, impacts LDL-cholesterol. So that program is exciting from an efficacy perspective, but it has trade-offs. You have to sort of decide between maximum efficacy and whether you're willing to accept this LDL impact. So we then subsequently over the last 2.5 years, have developed IMVT-1402, which is our next-generation anti-FcRn antibody. It's been chosen and engineered to avoid an albumin impact in the way that it binds to FcRn, and the data that we put out yesterday was data that was designed to confirm that we can suppress IgG as deeply as our first-generation compound, while not impacting albumin and LDL. And look, I think the short answer, the data was basically perfect. It was pristine. It showed in a single ascending dose that we match sort of dose for dose with bato on IgG suppression and don't have an impact on albumin. And then I think an open question in the world was like, okay, we're going to put out the single ascending dose data, but we were going to confirm it, with sort of multiple ascending dose study with 4 weekly doses, and we had originally thought that data might not come until October, November, we managed to take the first of those cohorts at 300 milligrams and get that data out yesterday as well. And it showed no compounding effect, just like a very clean profile with deep IgG suppression that matched the 600 sorry, 340-milligram dose of batoclimab and yet no impact on serum albumin or LDL -- albumin which the bad direction is for albumin to go down. In this case, it was like up a tiny bit at the end of the MAD Study. And the bad direction for LDL obviously, is to go up and it was down a little bit at the end of the MAD Study. So we felt very good about that 300-milligram dose.

Okay, great. One of the questions I got yesterday was if the 600-milligram is going to be 2 injections? Or is it just one injection?

Yes. So it's 150 mgs per ml. So each 300-milligram is effectively 1, 2 mill shot. So it will be 2 shots at 600 and one site of 300. And that's exactly the same as bato at 340 and 680. So the "low dose is one shot and the high dose is 2 shots."

Okay. And there won't be any reformulation that will be what it is?

No, it will be 150 migs per ml, yes.

And do you think there will be any sort of compliance issue with that? Or is that just standard practice?

No. I mean like, so first of all, it's worth noting the IgG suppression at our 300 dose is basically the same as what EFGARTIGIMOD delivers in the sort of the mid-60s. And so my, we have a -- even if we took away the 600 dose completely, we have a drug that is equivalent to Efgart on IgG suppression, equivalent to Efgart on safety. And Efgart, [ Hytrulo ] I think is the name of their subcu was this sort of Halozyme administer in 5cc. It's like a 30-second to 90-second push. So compared with that, our 300 dose is roughly the same clinically, but with a simple subcu injection that will eventually be an auto in fact, 1402 will be an auto-injector at launch basically. And then the 2-shot version of that is to achieve a greater clinical benefit than Argenx is capable of achieving. So the answer is, I don't think there's going to be an issue. And in fact, if you think about like HUMIRA or whatever, that's approved like a whole stack of doses. The way these immunologists like to treat drug actually is like induction therapy to get a patient control, you put them on maintenance therapy, then you have the ability to like send them home with an extra shot 1 week if they have a flare-up or something like that. So the flexibility of 1 shot or 2 is actually something we think doctors are going to be pretty happy to have.

Okay. Great. And can your product be administered at home? Is that the goal?

That's certainly the goal. I mean, obviously, we won't know that until the label, but look, I was a little bit surprised bluntly that the Argenx Halozyme is administered via health care provider. But yes, our goal is a home administered product.

Okay. And then I do want to ask you about potential opportunity in RA now that you have the IMVT-1402 data, and this is a very large patient population. We do know that J&J has positive data, it's in-house. So what do you need to see in that data before the end of the year to make you convinced that this is a good opportunity for you potentially?

Yes. So we were looking for that data as well. We've been living with it for all 4 to 8 hours now. So it's relatively fresh. I think, and all we've seen so far, unless you know something I don't, always in so far as the abstracts from ACR. So look, I think, first of all, separate from RA specifically, the best news for us in those abstracts was actually on the PD poster that they put out. Which showed that they had been planning and they've done some PD modeling and another poster that had suggested that with an IV loading dose and then going to whatever it is, 15 mg per kg every other week. But they expected or hope to be able to get 70% IgG suppression. And in this, I don't think they have the IV-loading dose, but they dosed 15 mg per kg for either 10 or 12 weeks, and they did not, they only got to about 58% IgG suppression. So one piece of good news for us is it looks like Nipo was not going to be able to get to quite as deep IgG suppression at this low dose as they had hoped. And again, they're dosing low presumably to avoid an albumin and LDL impact. So I think that's actually quite promising for us in terms of the likely long-term profile for Nipo. Now setting that aside for a second on the RA data itself. Look, I think, so obviously, it wasn't stat side. It was hard for me to imagine the 50-patient study was going to be. It was small end. So I think everything's got to be filtered through that. I thought it was like interesting data. First of all, I think you can get excited about the fact that it's really one of the first proof points we have for an anti-FcRn antibody and immune complex diseases, where it's not about like suppressing a single IgG auto antibody and delivering clinical benefit. And the fact that it showed signal even if RA is not the place like you ultimately wind up going, it's clear that, that's like a great proof point to think about others Sjogren's or lupus nephritis or whatever, like other immune complex diseases that are not as straightforward, IgG autoantibody-mediated disease. That's the first thing. The second thing is, and this is where there's going to be just a lot of room for interpreting because it's small end data. When I squint and look at that data, it looks, I would say, HUMIRA like, like the ACR70s are kind of in the same van as the HUMIRA doses. You're talking about like 3,4 responders. It's like a very small number of patients. But like it's a pretty TNF refractory population. There were a number of TNF failures in the study. I think if that drug, Nipo, can deliver that kind of data with statistical significance in that patient population, I think there's probably room for like an orthogonal mechanism HUMIRA like drug in RA that works in TNF failures. That said, that's a lot of ifs in a small end data in a notoriously difficult population study. So they're now running this combo study with [indiscernible]. I think that will be interesting. Looking at their development path and their data, because they're not like about to sprint into a 1,500-patient Phase III study. I doubt that we are about to sprint into, of the studies that we're going to run next for 1402. A 1,500-patient RA study is probably not the next one on the list. But I think it's pretty interesting data, and I think we're going to watch that study for them closely and do some sort of biology work on our own around where, if anywhere, we'd like to go quickly in RA with 1402. But that data is new, and we'll learn more of the presentation for sure, and then we'll see what else J&J says about it.

Right. So now that you have the 1402 data in hand, I know the WAIHA indication was on hold. So you figure out how this data would look, you have the RA. What other key opportunities? Are there any that you're studying batoclimab that might be better for 1402?

So we've said clearly that Graves' disease, which is reading out later this year, will be a 1402 indication, if successful. So that's kind of first on our list is, we're going to look at that data and if it looks good, we will run, hopefully straight to a pivotal program sometime next year in Graves' disease, and that may be the first pivotal started with 1402. Other than that, I think Pete made some comments yesterday on the public call that we're going to look closely at the top line CIDP data at the induction period and get a sense there of whether we're supposed to try and make a pivot to 1402 or leave it with bato. I think that's interesting. And then just more generally, with the quality of the data that we put out yesterday, you can imagine we are looking at every ongoing Phase II and Phase III study between Nipo and Efgart and thinking about which ones we want to be neck and neck with because profile of our drug now looks to us better than those.

Okay. And are you the only company still looking at Graves' disease with an anti-FcRn? Or are there others?

I am not aware of anybody else who has a Graves program. That will be first, that's right. That will be first for the field.

Okay. So maybe before we move on to the other assets, I do want to ask you, I think you're a very potentially commercial portfolio with batoclimab, IMVT-1402, chronic versus more acute conditions and pricing strategy? How do you pull all those together?

Yes. Again, we're 24 hours into our data here. But look, I think the answer is, so there are certain indications like, TED, where we are in a late-stage program with bato. And I think they're just like perfect for bato, right? It's a quite rare disease. The commercial alternative is to -- that has now sort of widely understood potential permanent hearing loss safety issue. And so I think there's an opportunity for a drug like bato, even despite the LDL with acute dosing where you're not talking about like elevating someone's LDL whatever, you're talking about elevating it for 6 months, they can treat it with a statin potentially and then like get to an interesting place. I think that's like a perfect bato indication. In our view, there is likely a portfolio of similar opportunities, rare diseases with few treatment options that can maybe support a different sort of commercial model, a different kind of price point where acute dosing is going to minimize the sort of fallout from the LDL where it makes sense to develop bato in a way that it might not make sense but only develop either 1402 or NIPOCALIMAB or whatever. So I think that's like probably where we see the bato portfolio. And then for everything else that's 1402 for chronic dosing for more prevalent markets, for places where the LDL is going to be a bigger issue for patients and for treating physicians. That's where we think 1402 plays.

Okay. Great. Before we move on to another asset, does anybody have any questions on yesterday's data? Okay. All right. So we can move on. Okay. We can move on to TL1A then. But before I move on to that, you do have a very unique business model, where you're strategic about things, you monetize things when there's opportunities. And one of the big questions that we get is, is it Telavant? Is it Immunovant, is it both? When you consider things that you, other strategic alternatives that you might have?

Also neither is also an -- like our portfolio. Look, I think, we, I spoke before we had this data in hand about how privileged our position would be if we got good data on Immunovant. I feel very fortunate. We like the portfolio. It is extremely rare in our experience to see a drug of the sort of size and scale of the TL1A or an FcRn, and we have 2. And I think there is a real advantage to having 2 actually. And so I think that's a pretty unusual position. So the first thing is, I think we're thinking pretty critically about that portfolio, about the benefit of keeping it together about the capital required to keep it together, whether that's in our hands or somebody else's hands. And I think that's certainly a set of options that's on the table. I think in the scenario where we would monetize one or the other, Look, I think it's hard to choose among your children. They're both great programs. What I'll say is, actually, we're going to have full flexibility just based on the quality of the data. And it's going to come down to some strategic considerations around where we think we can play best and then also, it's going to come down to value. It's going to come down to how the outside world sees these programs as time evolves.

Okay. Great. So you did show some very positive, potentially best-in-class data for your TL1A recently, and there's 2 other assets on the market. So can you broadly speaking, compare and contrast what your data showed, how do you think it compares to other potential products out there? And what you think your advantages are when you develop and move this forward?

Yes. So it probably hard for me to argue that the Immunovant data from yesterday is not the best thing that happened to us this week. But there's a clear second best thing that happened to us this week, which is that Merck published the trial design for their anti-TL1A program in Phase III in UC. And what we have been saying all along is, one of the big benefits that we have from a product profile perspective, is that Pfizer ran a phenomenal Phase IIb study. It was fully dose ranging. It was fully subcu. It studied all of the different permutations of induction and maintenance therapy. And we learned a lot from that process. And that's going to allow us to run a very concentrated, very focused Phase III program for exactly the product profile we want, which is straightforward. We've said that's going to be a single likely, a single dose of 3101 for the entire 52-week period of dosing, subcu the whole time, et cetera. And we're set up to do that by the data we have from Pfizer. Merck study has 3 dose arms plus placebo, all of those dose arms have, as best we can tell from reading that [indiscernible], have a 12-week IV period followed by subcu. So the product profile is going to be at least a 12-week IV lead-in period before they go to subcu. It's 3 doses plus placebo, it's over 1,000 patients. It's going to be a complicated study. And in my view, a product profile that is subcu the entire time is going to be more attractive for patients than a product profile that involves 3 months of IV dosing first for induction, especially because we know what their IV data looks like. That's the only data they've put out so far. So it's not like there's some efficacy benefit that comes from this IV dosing. It's -- in my opinion. It's just they had to make a tough risk decision, which is -- they've never seen a subcu patient before, so they had to decide on how they were going to run the program. So look, I think that's a very promising setup for us to have a best-in-class program. I think the actual biological activity of their antibody looks compelling, honestly. I think when you look at the previous data, it's hard to say, ours is like totally qualitatively different than theirs. You could quibble and say, we've got slightly higher gross efficacy, whatever. But like I think it's probably they're antibodies biologically active. But I think they are on their back foot from a trial design and therefore, from a product profile perspective. Then there's sort of differences in biomarker that we've talked about a fair amount before. And again, we like our biomarker, we like the breadth of it. We like the clinical benefit that we've seen as compared with there. So I think that's all sort of supportive. But their trial design was very helpful in establishing the competitive field. You mentioned 3 programs. I assume with the program we're referring to is the Telavant program. I would say, I think that's a different program. It's several years behind. We don't know as much about it. It looks like it's probably going to be biologically active against TL1A, but I think there's questions about form factor, how much drug they need to administer, how they're going to administer it. So I think there's a lot of unknowns about that program. And I think it's several years earlier. So I think it's harder to compare. I don't, there has been a lot of discussion in this field around various potential axis of preclinical differentiation, for a while, Prometheus talked about binding to the monomer versus not binding to the monomer. Teva talks about DcR3 binding. Our view mostly is that in the clinic, that stuff has all proven to be largely relevant for this target.

Okay. All right. So 3101 in Crohn's disease, a newer program for you. Any read-through from UC to Crohn's? And how are you moving forward with this one?

Yes. So, in terms of read through from UC or Crohn's, I'd say it's generally quite translatable. Most drugs that work in UC work in Crohn's and also Prometheus, but open-label data so hard to like really have something to read into it, but like pretty compelling data from an open-label perspective in their Crohn's study. I think it would be surprising if TL1A did not work to some degree in Crohn's. We are currently running a Phase II study in Crohn's that is an open -- it's a blinded dose ranging study without a placebo is the way to put it. So everybody is on drug. They don't know what dose. And basically, our goal there is, we just like played out all of the possible timelines between us and our competitors and realized that we could, as we did in Phase II, and you see we could get dose ranging out of the way, at least some degree before Phase III and go into Phase III with a high conviction on what our dosing profile is going to look like, what our biomarker profile is going to look like and so on. So that's the goal of that Crohn's study. It reads out late next year, and we're looking forward to that data.

Okay. Maybe we can move on to brepocitinib. But before I do that, I forgot to ask anybody. Do you guys have any questions from the audience on TL1A before we move on. Okay. So, move on to brepocitinib. So this one, you still have data coming this year? And I wanted to ask you this data set is not necessarily going to be your most interesting indication. So what is your sort of strategic goal here? And showing this data and what do you want to do with it? And you've already showed, I think, 6 studies that came about top of my head, that are positive?

So brepocitinib has now shown really compelling data in UC, Crohn's, Psoriatic arthritis, psoriasis, alopecia and HS. So it's an active molecule. And the data looks really good. It looks as good or better as with any of the other JAKs or TYK2 have shown in all of those indications basically. So it's a very active drug. It's JAK inhibitor. We'll have JAK class -- and so we, as we bought it from Pfizer sort of midstream there, and we are unlikely to develop it in most of the larger indications where, AbbVie like is going after some of those indications with RINVOQ, but we don't have the commercial muscle that AbbVie does bluntly. And so look, I think for us, this is a drug that we were excited about kind of orphan and specialty rheumatology, as kind of how we think of that. Now that said, the data that's coming later this year is an SLE. You say it's not our most exciting indication. And I guess SLE is a tough thing. Many studies have underperformed for lots of different reasons. And so I think it's like hard to have a high, even with a well-designed study with an active agent. It's hard to sit here today and like have super high convictions because the stuff happens. I think we've got a study that does most of the important things. We have started taper in the study design. We have entry criteria and [indiscernible] the endpoints and sort of inclusion criteria are pretty carefully set. But like we'll have to kind of see. If that data is good, and for us, good means in our view, likely better than deucravacitinib, I think SLE is a tremendously exciting indication for brepocitinib actually and we will run. We only will need one more pivotal after the study, and we will run that pivotal quickly and get to the market in what could be a multi-blockbuster indication. I think it's hard to handicap at this point how that data will look. Other than that, the sort of main thesis, as I mentioned, for us in bringing the drug in, was this sort of orphan and specialty room. So the single pivotal study that we're running, that should be a single registrational trial is in dermatomyositis. That reads out in 2025. That's a great example of one of the like orphan and rheumatological conditions that has no great options, really the only sort of unique approved therapy for this IVIG and IVIG is a challenging therapy with lots of complicated tolerability issues. And we know that JAKs are, to some degree, efficacious in DM. We know that from case reports, we know that from an open-label investigator sponsored study in Tofacitinib. We know that the cytokines that mediate DM are signaled by both JAK1 and TYK2, and we know that we have good activity against those cytokines. And so, yes, I think there's a lot of reasons to be excited about that DM data. Unfortunately, it's not until 2025. And then we also have a small proof-of-concept study coming early next year in NIU, noninfectious uveitis, which is another one of these orphan room conditions, about 24-patient study, so it should be interesting data that could inform the program there. And then the other indication that we talk about that I think we're still thinking through what we want to do with HS. Where we have a quite complete a decent, very good data in Phase II with Pfizer ran. I was a part of the study with their [indiscernible] and so I think we could run a pivotal program there. And I think with HS, the question for us is like, we'll see the lupus data, we're going to try to figure out kind of how payers with the other things we're doing with brepo. And then HS is a commercial market where I feel like every time I look away and then turn back the HUMIRA sales estimate gets larger. And so it's just interesting to try and understand the commercial opportunity there or wrap my head around how big it could be.

Okay. Any questions from the audience on brepo. All right. So no conversation is complete about Roivant without talking VTAMA. So, and a quick update on psoriasis, how that launch is going and then high anticipation for atopic dermatitis, you really show biologic-like efficacy in your product? And how do you expect that to pick up relative to what you saw in psoriasis?

First, I'll say, when you see no conversation about Roivant is complete without talking about, and then you started a word that started with a V. I thought maybe you were going somewhere else. We've got one, sorry. Yes, look, I'm really excited about VTAMA. I have been since launch. I'm a patient. I use the product, I have psoriasis. So I remain a true believer. The data is amazing. The data is very good for psoriasis. I'd say the data in AD is like truly exceptional. And physician patient feedback is very good. Look, I think the truth of topical launches, which many people expected is that they are challenging. Getting physicians who are very used to prescribing steroids to change their behavior, takes time and effort. I think when we have done so in the VTAMA launch, we've been rewarded. We have sticky docs who like writing it, who write hundreds of scripts a month and are really excited about the product. And so the exercise right now is going to docs who write 2 scripts a month and getting them to write 20 or 30, and look, I think our scripts continue to build in a way that we're not fully satisfied with, but feeling pretty good about the directionality of it. I think that sets us up well for the AD launch. And I think it's a product that has an enormous amount of potential. So I don't think it's the main focus of the Street right now. But I think there's some real opportunity to show important results there commercially, and I'm excited to watch that play out.

Okay. Great. And then I do want to ask you, in 2024 and beyond, how do you think about adding more Vants to your portfolio? What's the goal here?

Well, if we were sitting here today is September 27. So we announced 1402 a year ago tomorrow. So, and we did the TL1A deal in November of last year. So if we've been sitting here today a year ago, we would have had a very different conversation that wouldn't have included either 1402 or TL1A. So we're active on adding programs to our portfolio. And it's an important piece of how we've built the business recently and it will continue to be. And the one thing I'll say is, this is one of the greatest environments we have ever countered for finding opportunities. First of all, the public biotech markets are maybe showing some green shoots, but are challenged. And so there's some great programs out there that are stuck in some hard places. And then the big pharma to a name, every big pharma company is in the middle of the rationalization of their portfolio. They've got LOEs, they're changing strategic direction and those are the opportunity. Those are the moments in company's lives where we can play a role where we can be a home for something that gets lost in the shuffle or isn't able to be a sort of focus item as TL1A wasn't at Pfizer. And so I would be very surprised if we don't add meaningful new programs to our portfolio next year. And not a lot of constraints on that other than making sure that we're properly capitalized.

Okay. And then without giving away too many of your secrets, on a broad level or a higher level, can you talk about what kind of assets you're really interested in?

We've won historically, either with late-stage clinical programs with a lot of clinical validation, where we saw something interesting to do in late-stage development, either from an indication or trial design perspective or in sort of mid-stage development in mechanisms where there were early biological pieces of evidence feel like we can be the ones who like run a proof of concept of some kind. So that's probably mid- to late-stage clinical assets is where a lot of our focus lies. I like the pleasing coherence of our portfolio in I&I, but I&I is probably the most challenging competitive environment for assets right now. And conversely, there's a lot of therapeutic areas that are interesting that we, that are less competitive. So I think we're sort of watching a bunch of different things. I like Pulmonology, I like certain parts of CNS, I like -- we've not really ever to hold an oncology and I'm not like totally sure we would. But this is definitely a moment where oncology is a little bit sort of cast aside, so there could be opportunities. The challenge for us there has always been to be a player in oncology requires a commitment of multiple programs at once since hard to make the stars aligned for that, but I think those are areas that we could be looking at.

So we're almost out of time here. So just give the audience one more chance to ask. Matt, any questions you might have.

[indiscernible] of your ownership of whether [indiscernible] what the purchase value of [indiscernible] or even be seeing over the next couple of years away actually is that [indiscernible]?

It seems like you should ask that question of everybody else in the room. I don't have a lot of control over that particular dynamic. Look, I think we've been happy with our ability to find programs, happy with our ability to develop things we care about. And so look, I think that's sort of the best we can do. I do think, it's possible that if we monetize the program along the way that people would find it harder to ignore the monetizable value of others. But I think it's also possible that we get some value for the coherence of the portfolio. So I don't have a super clear answer to that other than to keep my head down and find great programs and execute on them, but we'll see if it changes.

Okay. Anything else? Well, Matthew, thank you so much for your time. It's been a wonderful discussion.

Thank you. Really appreciate it.