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

Okay. Good afternoon, everyone. Yatin Suneja from Guggenheim. Welcome to our 6th Annual Biotechnology Conference. Our next presenting company is Roivant. From the company, we have Chief Financial Officer, Richard Pulik. Richard, why don't you give maybe a 5-minute overview of the company, maybe talk about some of the upcoming milestones, and then we'll go into the Q&A.

Great. Thanks so much for having us, Yatin, and for your great coverage. Look, I think it's a super exciting year for us. We have, post the Telavant deal, roughly $7 billion in cash, which makes us one of the best capitalized biotech companies out there. I think that drives a lot of optionality to do more deals. We're -- obviously, in our 10-year history, have done some pretty spectacular deals and are continuing to remain very active there. I would say, on the back of JPMorgan, it was probably one of the most exciting years I've seen. Lots of engagement across big pharma and lots of opportunity and purchase still to maximize EPS for these companies, which provides opportunity for us as they think about their portfolios. We are probably one of the only partners here that has the capital availability, that has the track record of now 10 positive late-stage trials and 6 FDA approvals, to make these companies comfortable to execute on important programs. And we have a lot of very interesting upcoming readouts as early as this quarter. So NIU for our JAK1/TYK2 inhibitor is reading out. That's a POC study. We have the CIDP study for anti-FcRn reading out in the first half. We have, at the end of the year, for MG reading out and then sarcoidosis also at the end of the year. So it's a, even on just our pipeline, very catalyst-rich year. On VTAMA, we're planning to file the AD indication this quarter, so that would drive an approval by the end of the year. That would expand the market by fourfold to about 400,000 topical scripts a week in the U.S. A pretty incredible opportunity, and -- with lots of breadth to the age of 2. We've had 2 positive studies last year, 2 positive Phase III studies last year on that data. And again, that's a very exciting opportunity for us.

Got it. So let's maybe talk first about the cash deployment strategy. Are there areas where you will not go? Like what are those areas? And what are the areas where you think there is more value that you can create?

Yes. Look, I think some of this is just like -- it's more -- 20 years in the industry so far. Cell and gene therapy, just some of my experience, continues to be difficult to manufacture. And look, there's a long path here still, in my mind, particularly in like non-oncology indications. And we had tried our way in sickle cell and had some issues. So I think that's -- I don't know, maybe there's an opportunity here that shows up, but that's certainly, I think, I have a bit of a hangover from that, just given my past experience and also the company's experience. I would also say other things that have a difficult path would be some of the -- anything that like you have a very complex matrix, where you're trying to target a gene, and fairly complex manufacturing, limited data, just as we had an SMA. I think it's again like one of those areas that probably hasn't played out the way people expected with a cure. And I just want to be cognizant of some of those experiences. And then oncology, look, that was my old role at my old company. There, I think you usually need a combination partner. You have a comparator arm, which is usually very expensive. And there's a lot of exposure to older patients where you have some of the Inflation Reduction Act issues that would keep me up at night. So I think anything in commercial, patients that are motivated, things at I&I. But we're looking very broadly, and I think that's also the beauty of the company is that we're not -- watch us announce an oncology deal at some point, but like we look pretty broadly. I think we're open-minded, and we have experience across many different areas. So it creates a lot of opportunity. And -- but just because we have roughly $7 billion cash, we're still being incredibly careful to deploy that and are really looking at doing deals mainly with big pharma or things like we did for anti-FcRn, where we got this through a [indiscernible] company.

Okay. Staying in I&I, but open to others. What about the stage? I mean I assume for the deal to be meaningful or have meaningful value creation impact on the company, has to be a little bit late stage.

So look, we've doubled in earlier-stage things. I think, look, there, you get very little credit for that in the stock, obviously. I'd say there's a lot available here where there is real human clinical data or if the data isn't super robust and it's really a different study that's run by another company, you can at least lean on that to help validate a hypothesis. And so those are the typical things we do. And then a lot of these things are -- there was this validated data. There's a small data set that came through, and big pharma just doesn't have the capital to deploy against it as too many things hit that were positive and they need to manage EPS. And so we provide a solution for them. But it's pretty broad, but usually there's some data validated from that mechanism, and we can be creative about maybe moving into a different indication.

Got it. So seems a little bit later stage, not very early stage. But what about like an outright acquisition of like some of these biotech companies?

So I -- look, my -- the first part of career was doing M&A for 10 years as a health care banker. I would say the reality of where the market is today, you probably still need to pay a significant premium, no matter where that company is. And I don't have that much interest to play that game, I think, especially given what's available from other companies. And if you look at the deals we did, I mean, these are all very minimal upfronts and stage gated with milestones.

Yes. What about some of these spaces that are very fast moving, for example, obesity, that requires a lot of capital, but you have these 2 dominant players? Is that type of an area an interest to you?

Yes. I mean I think, look, it's probably an interest to all of us. So I can't imagine a company where that's not interesting. I think, obviously, just having had experience in cardiovascular diseases, these are all very large trials. Typically, a lot of -- they require lots of time and a lot of complex payer dynamics and commercial dynamics. That doesn't mean that we wouldn't take those on, but I think you have to be humble to realize how difficult some of these may be.

Okay. Very good. Maybe then moving on to the program in itself, Immunovant, right? We're going to get these data for CIDP, myasthenia gravis this year, and Graves' also is moving forward. Maybe help us understand how you see the value of that asset or of the franchise fitting as it is with Roivant. Is there a point where you bring the asset indoor or in-house? Just state that dynamic.

Yes. I would say -- look, we really like the setup that we have today. It's fully consolidated income statement. So if you look at our financials, it looks as though it's -- we own the company. The full R&D spend is on our income statement. When a company launches, you'll see the full sales. And then look, given the great data that J&J talked about in Sjogren's, there may be other indications that this works. I mean I think there's 22 different indications that people are exploring. That's a lot of spend, and I like having the setup where I don't have to pay for all that myself. We have public equity investors who can help us [ take and set ] the price and have the ability to participate in that with my 55% per rata share.

Got it. How should we think about the indication that's going to read out? So obviously, on the Graves' side, I think it's a decent market, but you really haven't disclosed much, so I don't know if Street is willing to give you credit. Are we going to get more disclosure? Are you willing to disclose more at certain time points? So that's one. And then also the myasthenia gravis and CIDP, obviously, it's the data from an older compound, but what would you have to -- what would you ideally like to show there?

So the Graves' and the CIDP data, those studies are with batoclimab. So that's IMVT-1401, so that's the first anti-FcRn. The data we released in December was very exciting because I think it really validated the hypothesis that the 680-milligram dose versus the 340-milligram dose had significant efficacy differential. So that shows us that IgG suppression at the 80% point, which is where we see the 680 dose and where we also will see the 600-milligram dose for 1402 that that difference matters. The response rates were in excess of the 50% bar that we expected, and again, I think this proves another indication that -- where nobody is going. We have a strong hypothesis, and we're the only company that has the ability to hit IgG at these 80% levels. And so I think that's another very exciting area for us. The CIDP study that's reading out is also batoclimab. That's again a very similar design with the 680 versus 340. Let's see how that data plays out, and it would be great to see some differential between the doses, given the IgG suppression at the 80%. So that will be another exciting data set to help with the hypothesis that IgG repression matters in efficacy. And we had also our own data from TED before batoclimab where we again saw response rates almost doubling at the 680 dose. For MG, there -- that's a Phase III study that's at the end of the year -- we have, again, 680/340 doses there. If there's curve separation, perhaps that then shows the best in class anti-FcRn in terms of efficacy and also convenience. So all very exciting data coming through this year on the anti-FcRn class. And then I think people are also excited to hear where we take 1402 further. So stay tuned to that.

1402 or 1?

1402. So the second generation molecule.

Sorry, yes. You're right. What is the earliest it can, based on your estimate, it can come to the market? And like -- and then how much of the resources are you going to put behind 1401, because myasthenia gravis is going to get approved, hopefully. The data are good, so they will be on the market first.

Yes. So 1401 or batoclimab, so that's a Phase III study that's reading out at the end of the year. Assuming that data looks good, then that should be a registrational study, and we should be able to go to the agency with that. Then we have the TED study ongoing for batoclimab that's reading out in 2025. Again, assuming that's strong data, we should be able to file then and go to the agency with that. And then for 1402, we're obviously -- look, we said, given the data we've seen in Graves', that will most likely be an indication for 1402. So it really just depends on having the discussion with the agency and making sure we know we can go ahead and proceed. And then in terms of other indications, I think we're being careful to -- look, we talked a lot about TED. We saw that argenx quickly moved into that at JPMorgan the previous year. And so it is obviously a competitive class, and we will update accordingly. But I think it's -- stay tuned.

Stay tuned. Okay. Very good. Then moving on to VTAMA. Just talk about what's going on with the launch or how the scripts are tracking. It seems like ZORYVE is making inroad as well. So I'm just curious from you to understand, are you pulling back on the spend there? Or is the foam formulation that is really being appealing from -- to physician, and how that dynamic shakes out until you get AD on the label?

Yes. So look, I think VTAMA has been the best launched topical that we've seen. It has -- if I think about sort of the share of the psoriasis market, it's roughly 6%. Assuming I can hold on to a similar share in AD, and so that would be like over 400,000 scripts, 6% on a weekly basis, assuming our per tube cost of roughly $1,400 at 50% discount, I mean, that's roughly $1 billion in sales. And so just keeping the same share we have in AD -- in psoriasis in AD provides a really compelling commercial opportunity. That, I would say, data is what always informs how these things go, and the data that we showed last year on the Phase III studies was pretty incredible at almost 46% clear or almost clear skin at week 8 and a very favorable safety profile, and this was from kids down to the age of 2. So I don't think there's -- that's -- and that was in the moderate to severe patient population versus, I would say, the other innovative topicals that are in the mild to moderate. As you recall, we also showed remittive effect in the psoriasis data, so that means when patients actually are happy to have the skin clearing that they need, they then have the opportunity to stop treatment, and then we measured for how long the treatment remained efficacious and skin remained clear, it was for an average of 4 months. And then when they restarted the treatment, it had the same level of efficacy as before, which is sort of unheard of. I mean, that sort of -- I think if you look at the publication that was in JAAD, speaks to that there is some impact on the T cells, and this is a mechanism, it's a novel mechanism. No one has seen anything like that before, and it's a mechanism that we know also works with the same strength and formulation and AD. So having one tube to address so many different patients with such strong data, I think, is very exciting. And the intention is to -- we have about 100 person sales force right now that when we launch AD, we'll probably increase by around 25 people, and we anticipate approval there sort of towards the end of the year.

Got it. What about like the presentation? The cream versus the foam?

So look, ZORYVE, I think, launched a foam maybe it was last week or a couple of weeks ago. It seems to like have an awesome launch. I think I saw [ 800 ] TRx. They're -- I love having them out there as a partner to help change -- ZORYVE, I see as a friend, actually, to try to drive patients away from steroids. I mean the main competition here is steroids. People should not be writing steroids for these patients. I love the fact that there's another salesperson showing up these derms to help me fight the fight, and I think it's very exciting that they have a foam. We obviously don't have a foam here, but it's not -- it's another presentation that's helpful for...

But it's not what -- getting maybe more appealing? Is it easier to apply, or are you not hearing sort of any negative feedback of having a cream versus a foam?

I think -- the cream is really for the skin, I think. Foam is frequently for scalp. So it's an awesome -- an option for patients and super exciting.

Okay. Any particular dynamic to watch for from the quarter perspective, 4Q and Q1?

So I think -- look, I want to be careful there, obviously, since we have our quarter end next week. So maybe we can talk about that on the quarterly call.

That's fair enough. Fair enough. Okay. On brepo. So obviously the SLE study didn't plan -- didn't work out the way it was. What are your considerations for NIU study, non-infectious uveitis study?

So look, it's a POC study. There are, what, I think in the U.S. alone, 30,000 patients go blind because of NIU. I mean it's a pretty incredible number. It's one of the leading causes of blindness. There is one approved product, HUMIRA. If I -- I think once we -- the data is coming out this quarter, so let's see where this lands. But I think if we have a 70% failure rate, roughly, I think HUMIRA had something in the 80s, then we can have a very compelling drug. It's obviously an oral, and there's a big unmet need. So very interesting indication. We'll look at it closely when that data comes through and make a capital allocation decision to see if we invest and move this forward as another rare disease indication similar to what we had done with the Phase III in dermatomyositis.

Got it. Got it. Maybe last question on the ongoing litigation, the Moderna litigation. That -- what is an update there? What are some of the considerations? And maybe the financial clawback to you?

So the Markman hearing is tomorrow, which I think a lot of people are paying attention to. It's a claim construction. It will be -- I think people are kind of -- look at the body language on the questions of that judge, and there'll be a decision usually 60 days following that. Look, I think, obviously, there was an attempt here by Moderna to [indiscernible] their patents with the IPR that didn't work, and we believe that we have strong patents here and should get paid for them. So I think it's another thing in the stock that's an asymmetric upside for -- I mean, if you just look at sales of these vaccines, historic sales are just a huge number. And if you think about some of the royalties that we had done with other companies in this space, they're very meaningful. Many of these are in -- on preclinical data -- are in the low teens, so that will be very big number, obviously, and it's an exciting thing to watch.

And then it's just you or -- there's another party, right, that joined you?

So Arbutus -- we would get roughly 2/3 of the economics and Arbutus would get roughly 1/3.

[ 2/3 of ] the economics. Okay. So 60 days, we should get some sense. Okay. In terms of the operational cost, where is the burn now?

So burn has been roughly in the $200 million range, a little bit north of that. Look, if I -- if we spend more on -- depending on what the NIU data looks like, depending on where we go with 1402 and some spend there, like that may obviously move up. So -- but it's been in that range.

In that range. Okay. All right. That's all I had for you. Thank you so much.

Thank you so much.

Thank you.