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

All right. Good morning, everyone. Welcome to Guggenheim Healthcare Innovation Conference. My name is Yatin Suneja, one of the biotech analysts here at Guggenheim. It is my pleasure to welcome Roivant Sciences here with me. From the company, we have the Chief Financial Officer, Richard Pulik. Richard, why don't you make some opening comments. You did the earnings call yesterday. There were some incremental updates. Why don't you just make some comments, and then we'll go into the Q&A.

Great. First of all, it's great to see everybody here, especially surprised to see people from the audience given some of the travel issues. So nice to see that there's actually some bodies here. Look, we've had incredible momentum since we read out the brepo dermatomyositis data and also the Graves' data. I think people are finally starting to see brepo as an asset that will be a large commercial asset that we plan to file next year and launch in '27. So I think there's been a lot of excitement around that from the KOL community, from patients. And I think the data speaks to itself that this is an incredibly devastating disease that impacts both skin and muscle, and we have data now with an oral solution that showed very strong efficacy across 10 endpoints that were statistically significant. It's probably in my 25-year career in health care, one of the cleanest trials I've seen. And so I think that's brought a lot of excitement into the brepo story or JAK1/TYK2 inhibitor. And then, of course, we have some POCs reading out next year around CS, CLE. We're going to see the difficult-to-treat RA data. We have also the TED data readout. So lots of very interesting POCs to go in 2026 and then, of course, getting ready for the brepo launch. And then, of course, mosli, right? So that's also reading out in 2026. There, we had some very exciting data in PAH, and we're developing that for PH-ILD, where there's a large unmet need and very little competition right now.

Very good. I think there was some incredible momentum both for Roivant and Immunovant perspective this year, but I think next year is going to be even more catalyst-rich. So I want to spend some time on the Immunovant story first. I think yesterday, you sort of provided a little bit of an incremental update on the TED strategy in terms of when you'll disclose the data. Can you just talk about what is the strategy now? Will you disclose the data? How much of a disclosure would you do? And then is there a particular bar in TED that you are looking for if you were to sort of move ahead as a stand-alone indication for 1401?

So maybe just to step back a little bit, we had data with batoclimab in TED, where we saw roughly doubling of response rates, proptosis response rates between the high dose and the low dose. So the high dose ends up lowering IgG at the sort of 80% mark. We're pretty much alone in the field to be able to do that. Then -- and this is before we actually had our second asset, 1402, then we quickly moved into a Phase III study with TED. 2 Phase III studies. The first study will be reading out sometime at the end of this year and then the second study in the first half of 2026. Look, when we talked about that study and the data, a competitor quickly sort of follow up a year later to move into a pivotal there. That same competitor moved to announce a pivotal in Graves', where we also had a pretty incredible data where we showed disease-modifying benefit. Frankly, I found it a little bit of a head scratcher given that we're the only ones who can get IgG at 80%. And if you look at the cutoffs of the data points across even 70% and greater, there's very meaningful efficacy deltas. So I think that's going to be just a hard space for competitors to compete in, given the much better efficacy data we've seen. And look, I think we learned our lesson there a little bit to keep some of the stuff closer to the chest. And then we'll talk about it when we see the data in the first half of next year.

Got it. Yes, I think that makes sense. But would you have -- is there a path forward for batoclimab in TED in the sense that I understand we are -- you are all prioritizing 1402, which I think is a superior molecule. But if the data in TED meets the internal bar, could you go ahead and file and get that asset commercialized?

Look, it's hard to say without seeing the data, but I think -- look, if I just think about it holistically, we're very focused on what makes most sense for the patient. 1402, we have a clean molecule that didn't have any impact on albumin or LDL. We are obviously bringing that forward with 2 Graves' studies. If I think about Graves', that usually -- there's roughly 40% of patients who have TED in the Graves' population. We know that when we looked at the batoclimab data, we saw an impact on proptosis reduction by looking at the VALOR data in our Graves' study. We're actually measuring proptosis also in the 2 Phase III studies. So I think we're approaching this pretty holistically to look at the disease sort of to look at this earlier in the disease across a much larger patient pool. And I think, look, as we see the Phase III TED data, then I think that will be insightful in terms of how we approach the entire treatment paradigm much earlier. And certainly, we'll make a call there based on the risk benefit that we see.

Got it. So I think -- you have put more data, more Graves' data out in public. How has that helped from an enrollment perspective in the ongoing Phase III study? When exactly are we going to see the data? And any -- it's maybe probably a little bit early to set the expectation, but in general, like what are you looking for in that data set?

So look, we showed data that essentially had a -- we kept patients on a 680 mg dose of batoclimab for 12 weeks, and we reduced them to the lower dose, the 340 mg dose for another 12 weeks, and then we took patients off drug and then we follow them. When you look at many of these patients are on high ATDs and we had complete disease control on very low ATD, so 2.5 mg or lower. And then some patients were entirely off ATDs, which is pretty unheard of. I mean, when you think about the population that we went after, these were patients that were not controlled on ATDs. That's roughly a prevalent population of 330,000 patients. If I think about the incident population, that's roughly 30,000. And these are usually working age women who are motivated. It's a large commercial segment, but there really has been no innovation for these patients for the past 20 years. So I think that was really eye-opening to many KOLs and patients to finally provide a treatment option. Look, this is a disease that causes very increased risk factors across basically thyroid cancer and other diseases that have high mortality benefits trying to control these patients on ATDs causes weight gain, weight loss, then mood swings. It is a really difficult disease. And so I think it was eye-opening to see the disease-modifying data we saw really without ATD support. And it's been a very exciting as we go to KOLs and enroll the study, we didn't update anything. We said we're going to see that in 2027.

Okay. All right. So from the POC standpoint, what are some indications that could be unlocked with this -- with anti-FcRn next year from the study that you're running?

So we had done a sort of quietly in the background, did -- saw a couple of patients in CLE that had good response rates with anti-FcRn. I think that data reads out next year. That could be another area where we'll be first. Look, if you looked at the skin resolution there, it looked very good. And I think some of the investigators were excited. So we're essentially running a smallpox study that readouts next year. I think another one that sort of -- look, people were not crazily excited about the J&J RA data. And obviously, they killed their combo study. I would -- look, we're still -- we still think it's a very interesting place to go because you actually saw direct correlation between IgG reduction and efficacy. We decided to go and explore this in a much later population, so fourth-line population and where there's really not much for these patients. And we have the period 1 of that data, which is a potentially registrational study reading out next year. So that will be another interesting place to go where really nobody is going right now and nobody can follow given the IgG suppression we have. And then look, the following year in 2027, you're going to have the MG, Graves' and CIDP potential registrational studies. And then you have Sjogren's the following year. So I think a lot of readouts. We have 6 different trials ongoing in 1402.

Got it. Got it. Let's move to brepo. Obviously, the data are now out in the public. What has been the physicians' feedback on the data? And then what is needed or what are the gating factor to the NDA filing?

So on the filing, it's easy, just pulling it together in writing, which obviously takes a little bit of time, but that's underway. So we should have that ready for the first half of next year. And then look, if you think about the population here and you just look at the script data, there's roughly 40,000 patients and most of them are being treated with high-dose steroids. So they're actually -- this is, again, largely commercial age patients who end up exhibiting a full body rash or muscle weakness usually in the periphery sort of around the shoulders and legs. So pretty severe and scary symptoms. And then usually, they'll get treated with high-dose steroids, small percent -- maybe 10%, 12% get treated with IVIg. And when we were thinking about the patient population and the study design, look, being on high-dose steroids for a long time is very difficult. And so we wanted to make sure that we saw a significant benefit here with on very -- with meaningful steroid reduction, right? So we had, by the end of the study, very low steroid dose with, I think, 40% of patients completely off steroids. And still, we had some of the best data we've seen across muscle skin, quality of life endpoints. And I think we have a really exciting package to bring to physicians here, right? The primary is sort of this composite endpoint. So we wanted to make sure that as we were designing the study and delivering this solution for patients, we had an arsenal of data points to show the benefit of this once-a-day oral drug. Also on the safety side, look, when we got this drug from Pfizer, we had it in 1,500 patients. They were exploring this in much more prevalent diseases. And so we feel very good about the data set we have from a safety perspective and also the safety that we saw in the study.

What would be the infrastructure needed to launch this given that it's more of a niche indication?

So perfect question. Look, we didn't provide exact guidance yet in terms of the dollar amount or the numbers of sales reps. But again, very concentrated launch where the prescriber base is concentrated and these patients are treated in fairly niche centers.

Yes. And then so you have a follow-up indication, right, NIU, where you had generated Phase II data first, the pivotals are going to read out relatively soon. How are you thinking about the NIU, noninfectious uveitis market? I think the feedback that we are getting is a little bit mixed, much more positive on the DM side, but love to hear from you the opportunity there. And also, I think from a price point, both indications are a little bit different. So how are you thinking about the price in DM and NIU.

So personally, I thought the DM study was scarier, right, because we were relying on investigator studies for hypothesis. When we did the NIU study, I was actually -- look, there's one drug right now that's used and approved in NIU, which is innovative HUMIRA. We showed essentially -- it was a placebo-controlled study. But if you just look on a cross-trial comparison basis, you see data that is really not comparable there. I mean you have no edema, you have edema resolving. This is actually a disease that is one of the leading causes of blindness in the U.S. We know that the eye [ bleeds ]. Again, uveitis is treated in specialty centers. You usually have to do 1-year fellowship after your off the residency to treat these patients. So it's very specialized. And we showed essentially data that was twice as good in terms of treatment-free remission, actually more than twice as good than HUMIRA. And all of the important ophthalmic endpoints were also incredibly positive. So actually, that was one where I felt very comfortable to move that quickly to Phase III. That's reading out in 2027, and we've had very strong KOL feedback and excitement around that given this devastating disease that causes potentially blindness in quite a lot of patients. If you think about the dose in that study, it's 45 mg versus 30 mg in the DM. So certainly, I think there's some flexibility to think about from a commercial perspective. But these are sort of similarly sized rare disease patient segments. So obviously, we will be priced appropriately.

Got it. Other areas that you are considering with brepo, I think that is a cutaneous sarcoidosis study happening or going on, expectations there?

Yes. So that's -- I would kind of thought about that very much like the CS, the NIU study where we essentially did a smallpox study. That's reading out next year. Look, I think there's a lot of rationale there given the data we've seen an impact on skin and inflammation now with DM and 6 other positive studies that we received from Pfizer. So 7 positive studies now with the JAK1/TYK2. So I think -- look, let's see what that looks like. I think there would be another interesting indication. And then, of course, we have a pretty high bar in terms of what we bring forward. So if that makes sense from a commercial perspective, we'll flip that into a Phase III.

Got it. Very good. So then we'll quickly touch on mosliciguat. What are the expectations there? I think you have a readout coming up next year in PAH-ILD.

So look, we had seen data here in a Phase I study in PAH, where we had PBR reductions of 38%. So those are the -- this is a once-daily DPI. And so that proved out to us that, look, when we were doing the deal with Bayer, we had seen that this mechanism had a very long half-life. It had -- look, the data we saw was in the Group 1 setting versus PH-ILD is in Group III. So there's certainly a little bit of a risk in terms of having that data read out positive in the Group II setting. But because we saw such high PVRs, we were still confident to do a Phase II here. It's over 100 patients that's reading out next year. There's obviously one competitor, United Therapeutics. And I think there's -- this is, again, a disease where people have a lot of trouble even just walking from here to across the room. It's pretty devastating. There's not a lot of options. And that will be -- given the data we saw in PAH, I think it will be interesting to see how this develops in PH-ILD and there's, again, a very large unmet need, and we're excited to see that data for potentially third leg of a commercial franchise.

Got it. Very good. So yesterday on the call, I think you provided some incremental color on the LNP litigation that is ongoing with Moderna and Pfizer. Could you maybe review for us what are some of the key milestones there? What happens in March? Anything before March?

Yes. So I want to be a little bit careful to comment on ongoing litigation. But if you just look at what's on the docket, we're going to -- the U.S. portion of the Moderna trial is going to a jury trial in March. So pretty soon, we'll see there'll be a jury decision, and we'll see how that plays out. I think, look, we have -- if you look at some of the documents, we have a very strong case, and we're excited to see the outcome there. I think, look, in our damages asked in that was $5 billion. That's excluding willful infringement. So it could potentially be an event that means we -- our cash balance increases even more than we have, which we're at $4.4 billion as of yesterday. And then the Pfizer trial is roughly a year behind. We just had the Markman decision there, which was very favorable. Obviously, that drug did a little -- their COVID drug did a little bit better in terms of sales. So that's even a bigger pie. And look, if you just sort of think about Genevant, I mean, we have spent about 20 years developing IP around LNP and how to -- I think if you step back and think about the challenge here was how do you get these large mRNAs into the body without them just to put it simply falling apart and getting to the target. And so there was a lot of science that went behind the thinking there and encompassing that mRNA. From that, you can see we have multiple partnerships in the -- from the mid-single digit to low teens royalties, and those were with no clinical data. So I think we have -- there's a lot of precedent here across many different partnerships and with people who used and needed our technology to actually make mRNA functional in the body and be of therapeutic.

Got it. What about the OUS piece from a litigation standpoint?

The OUS Moderna trials are expected to start next year. Again, that's -- I think if you think about the OUS sales, they're more than 50%. So I think that's -- we'll see some progress there. And then obviously, Pfizer is -- we don't have a time line yet on the jury trial or the court dates yet.

Got it. Then final question on the deployment of cash that you have, $4.5 billion close to. I think in the past, maybe a couple of years ago, you used to put in 3 buckets: internal R&D, BD and sort of buyback. Where are we on that? How are you thinking about BD and deploying some of the cash that you have on the balance sheet?

So when we did the Telavant deal, we had roughly $6 billion. We said 1/3, 1/3, 1/3. So $2 billion for BD, $2 billion for buybacks and $2 billion for internal pipeline. So we're funded through profitability. And we have a lot of cash. Look, if you look at our 10-year history, the upfront we usually did were [ $14 ] million. So that's -- you can do a lot of deals there because you usually do a fairly modest upfront and then you're really just paying for the Phase II study to validate the hypothesis, just like we had done in NIU, just like we are doing with CS, CLE. So that just gives us lots of capacity to do additional deals. And then, look, given the readouts we expect in the POCs, I have plenty of cash to fund those additional development areas. And we're proud of reducing our share count by over 14% and $10, roughly $10 a share, and I have another 500 million share buyback authorization remaining.

Got it. So very good, Richard. Thank you so much.

Thank you.

Thank you.