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

Good afternoon. Welcome to the Jefferies Healthcare Conference in London. My name is Dennis Ding, biotech analyst here at Jefferies. I have the wonderful pleasure of having the CEO of Roivant here with us. Matt, welcome.

Thanks. Thanks for having me. I feel like I am everything that is standing between these people and a drink.

That's true. I guess, look, 2025 has been quite a transformational year for the company. A lot of pieces that you guys have set up over the last several years have played out this year positively for the company. But maybe just highlight some of the progress and some of the data that you guys have reported this year that have generated so much excitement.

Yes. Thank you. Yes. Look, it's -- it's always fun. Look, the stressful thing about biotech is you plant seeds and then it takes a long time to see what's going to come out of them, and it's always fun to kind of see it actualize. So Roivant is a transformed company relative to earlier this year. So we are -- for those who don't know us very well, we're about a $14.5 billion market cap now, public biopharma company, mostly focused on developing late-stage drugs that we think should matter for underserved patient populations. That's probably what half the companies on the stage have said today. And this year, in particular, our portfolio has moved forward in a really meaningful way, probably across 2 programs. The first earlier this year is we generated some data in our FcRn franchise that we think helped underscore that we have a potential best-in-class drug with deep IgG suppressions leading to better clinical benefit in myasthenia gravis and CIDP. And then more recently in that franchise as well, showing that we can drive clinical remission in Graves' disease, which we think sets that program up for enormous success. Now that's probably nonetheless, not the main event of the year at this point because after that, in September, we just put out some Phase III data for brepocitinib, our dual inhibitor of TYK2 and JAK1 in dermatomyositis, which is just one of these great horrible orphan indications where there's enormous unmet need from these patients are very sick. It's an inflammatory disease marked by a terrible skin rash and a bad muscle inflammation that leads to wasting. These patients can't climb stairs. They can't lift things. They can't live their daily lives. The rash is itself debilitating. And we demonstrate -- this is like basically other than IVIg, which has been approved in use for a long time. This is really the first novel drug to succeed in a dermatomyositis study, and we generated data showing extraordinary benefit, hit every primary and every secondary endpoint across muscle and skin and different parts of the disease and showed that all while on a background of reducing steroid burden, which something docs really hear about. So just a transformative moment for us in terms of being able to bring a drug like that to patients, which now we're on a path to registration for. So we're really looking forward to that.

Sure. And what has the feedback from doctors been like around brepo?

Yes, one of the great things about this program is there's so much unmet need. We had docs literally in tears the day the study came out because these docs have all been trialists across multiple failed programs in dermatomyositis. And for them, it's such a remarkable moment to see a study finally succeed, to see clinical benefit coming for these patients. So just unbelievable feedback. To be honest, it's one of the things where investors tell me they've done doc calls and I immediately know it's going to be a good meeting because the docs are just like the doc community is so far behind this drug.

Okay. So you guys will file the NDA in the first half...?

Yes, that's what we've said. But really drafting the clinical section is really what's involved at this point, and the team is hard at work at doing just that.

Okay. And then how should we think about the launch trajectory once you guys get approved? And like are there any good analogs or that are relevant to brepo that you should point us to?

I'm looking out across the room for my Head of IR and CFO, whom I know are sitting in the room because the answer I'm supposed to give is slow and steady. The launch is going to be slow and steady, gradual. Look, If think the nice thing about this launch is it pattern matches to a lot of the great recent launches in biotech. It's an orphan disease. It's got 40,000 currently treated patients. Some of our competitors say 70,000 from an epidemiological perspective. It's a good-sized market. It's going to have a sort of orphan rare disease price point. We haven't obviously decided on price yet, but the other therapies in the category are sort of orphan price point. And so we feel like we have an opportunity to learn from Verona and Madrigal and Horizon and Bridge and Argenx and Insmed and so many others and to try and learn from all of those examples. And so I think we're doing the best we can to understand what happens in new markets like MG where patients -- where companies bring drugs to market in an area of high unmet need without a lot of other drugs. I think that's sort of how we're thinking about trajectory. Obviously, for a new-to-market category and a new-to-market indication, we're going to need to educate the doc base. That part's been going well. We're going to need to sort out market access and payer dynamics. There's a lot of work to do. So I think I don't have specific guidance to point to, but I think there's a huge opportunity here at peak penetration. And I think it work for us to do in front of us to build to that. The only other thing I'll say is in the best possible sense, and this analogy is not a guarantee of anything. But look, I think there's nothing you could have said about myasthenia gravis in 2019 before the FcRn showed up that you couldn't now say about DM in terms of size, in terms of opportunity, in terms of unmet need, in terms of severity. And so I feel like there's just like some really good analogs in the world for situations where -- launches like this have gone well.

Okay. And where do you see the most amount of adoption happening once you get launched? Do you see yourself being like a post-IVIg sort of option or pre-IVIg? And just give us some color there.

Yes. So IVIg. For context for those who aren't super familiar with dermatomyositis is the only -- the only recent trial that has been successful in DM has been an IVIg study, and there are approved IVIgs for use in DM. Among the standard treatment paradigms in -- for IVIg and DM, the probably most common is 40 hours a month of infusion, sometimes spread out over 5 consecutive days. So these are patients who are giving a work week a month to going into infusion clinic. IVIg is a tough therapy for these patients. It is only used in about 13% of the DM market now, in part for the reasons I just said, it's just a tough drug to use for that patient population. And then there's another, call it, 11% who are using off-label stuff, including a lot of things that have failed clinical trials, Remicade, rituximab, et cetera. I think the short answer is, if you ask docs, they talk about writing brepo very broadly. They talk about using it in 30%, 40%, 50-plus percent of their treated patients, which obviously is a stretch to believe on day 0. But I think there's a huge opportunity across the patient population is, I guess, like the first answer to that question. There's obviously the low-hanging fruit, the severe patients, the refractory patients, the patients who are otherwise considering a course of IVIg or who are on IVIg and don't like it, the patients who are on very high-dose steroids or very high-dose methotrexate. So I think like those are all kind of low-hanging fruit patients. But the honest answer is we're an oral therapy for a disease where the majority of patients are on oral steroids and immunosuppressants. I think almost every patient is conceivably eligible. And the question is really just where are docs going to start in terms of trying the drug out.

Right. And I think it does help that there is some usage of JAK inhibitors currently in DM just off label.

Yes, I totally agree with that. I think the docs are familiar with them. Look, the DM is treated -- in the U.S., there's about half the patients, a little bit more than half are treated at specialty myositis referral centers. At those centers, the docs are split about 50-50 between dermatologists and rheumatologists. Obviously, those are both subspecialties, rheumatologists especially, but both subspecialties that are intensely familiar with JAK inhibition as a mechanism. And some of these docs are pretty heavy users of like off-label tofacitinib because, for example, some investigators have run studies of tofa that have shown like reasonably decent clinical benefit. And so I think we get to benefit from that tailwind. But even the docs using off-label JAK inhibitors. First of all, our drug is not pure JAK. It's a combination of JAK1 and TYK2, and there are good reasons to believe that TYK2 is contributing meaningfully to clinical benefit. And these docs are just like desperate for an on-label option where they can get coverage, where they can get support from a sponsor, where they can do all these things that allow them to use the drug more reliably and more effectively. And so I think that absolutely, there will be a tailwind from docs converting like off-label tofa patients to brepo as well. And I think that's driven a lot of the doc familiarity with the mechanism and the doc enthusiasm here.

Yes. Okay. And I feel like DM is just a start. There's also NIU. You guys also started Phase II in cutaneous sarcoid. Should we be expecting additional indications over the next 1 to 2 years just...?

Yes. I think the short answer to that question for brepo is absolutely yes. Look, this is a great drug. I think like take a tiny step back from a historical perspective. We in-licensed this drug from Pfizer in 2021. And at the time, JAK inhibitors were on their back foot as a mechanism, right? The sort of the study had just come out that showed that they could cause elevated either cardiometabolic risk or other things. And it sort of wasn't clear where the market was headed. And we were like, okay, but everyone's throwing the baby out with the bathwater here. We know these are incredibly effective anti-inflammatory drugs. And so we looked at this sort of orphan disease swim lane as ours. Now you fast forward to 2025, look, Rinvoq is now -- 2021, Rinvoq was a $3 billion drug, and I think everyone kind of thought it was going to flat line. In 2025, Rinvoq is a $8 billion drug that's probably on a path to being a $15 billion drug. The market has spoken and physicians are obviously, in certain categories, very comfortable using these agents. And really, the orphan swim lane for JAK inhibitors is wide open. It's ours to inhabit. And so it just feels like a really big opportunity. Obviously, we have the program in DM that's now in registration effectively or will be filed soon. We have NIU, which reads out next year -- or sorry, reads out in 2027, I should say. And then we have a Phase II study in cutaneous sarcoid that reads out next year. But absolutely, I mean, at some level, any orphan inflammatory disease with 20,000 to 100,000 patients for which there's high unmet need, not a lot of other approved options should be viewed as an eligible place for us to go. And you can imagine that we've pretty aggressively canvassed that landscape, especially for places where both JAK1 and TYK2 should play a role, and it feels like a really big opportunity.

Yes. Kind of sounds like Rinvoq for rare disease.

Yes, I'll take that as an analog. Rinvoq is a good drug.

Okay. So then if I can ask on NIU. Just remind us of some of the Phase II data you guys have shown and just what's standard of care there and what's the incremental benefit that brepo has?

So NIU is it's an eye -- it stands for noninfectious uveitis. It's an eye inflammatory disease and it is what it sounds like. It's for noninfectious inflammation of the eye. And it's got -- there's about 400,000 NIU patients in the U.S., of which the majority are front of eye inflammatory patients who are treated with steroid eye drops. So about 70,000 of those patients have inflammation in the back of the eye, and you just can't get there with topical therapy. And so those patients are treated on systemic immunosuppressants and systemic anti-inflammatories. And what you should be thinking is. So ophthalmologists have very low tolerance for eye inflammation, and we'll do anything they can to get it under control. So these patients are on very, very high dose systemic prednisone, for example, like super high-dose bursts of systemic immunosuppressants. And the idea there is to get the eye inflammation under control. And even then, it doesn't always work and also for those who have been on like a pred pack or whatever, like imagine doing that, but harder and longer. It's like a miserable experience for these patients. And if it doesn't work, these patients can go blind, which is one of the reasons why eye inflammation is so poorly tolerated by physicians. So standard of care is high-dose immunosuppressants and steroids. HUMIRA is approved. It works okay, not great, and it's not very widely used for that reason because there's just not a lot of risk-taking among these docs. If something doesn't work, they don't want to use it. And so I think in general, the sort of field is open for a new entrant. And so you asked about our Phase II data. So last year, we generated Phase II data in a study. It was a blinded study, but there was no placebo. It was 2 different doses of brepocitinib. And so as we calculated HUMIRA's treatment failure rate, for example, is about 2/3, a little bit less than 2/3. Our treatment failure rate was sub-30%. So it was about twice as many patients are succeeding on therapy on our drug as in the HUMIRA studies. And that just feels like a remarkable sea change for these patients and something we're really excited to see through. So that's now in 2 registrational studies that will read out, as I said, in 2027.

Perfect. And as we think about 2026, can you just outline some of the catalysts that you see through the year?

Yes, 2026 is a busy year. So we've got the cutaneous sarcoid study that I mentioned that proof-of-concept study for brepo. We have in FcRn land multiple studies reading out. We have a proof-of-concept study in CLE, and we have the first period of our rheumatoid arthritis study. We have a large Phase IIb study in PH-ILD for mosliciguat, which is our inhaled vasodilator for PH-ILD, which has really promising Phase I data in PAH patients, and that's another really large market where we get to be the first -- probably the first non-treprostinil mechanism, which feels really exciting. So that data will come next year as well. And those are all the sort of major clinical catalysts. And then on top of that, in the Moderna litigation, we have the actual jury trial with Moderna that should play out in March. So just a lot going on in 2026.

Perfect. So which one of those do you think is the most underappreciated from investors?

I think investors are still only really valuing the most sort of first front and center indications for each of our programs. So I think for Immunovant, it's Graves; I think for brepo, it's DM. And even then, I think the DM opportunity is probably underappreciated today. But I think like NIU, which granted is not a 2026 event right now, I think is significantly underappreciated. I think very few people have done real work on it at this stage. I think cutaneous sarcoid is a flyer as far as the world is concerned. And then, look, I look at some of our competitors in pulmonary hypertension. And for Insmed, which is a company we very much aspire to copy in life, has gotten an enormous amount of credit and value out of their PH-ILD, their treprostinil program. I hope a year from now, we're sitting on Phase IIb data that puts us in that league. And I think that could be a huge opportunity. People are starting to ask questions about mosli, but it's really just starting to scratch the surface. In many ways, both mosli and NIU right now feel to me like DM felt, I don't know, a year or 18 months ago. So just a huge opportunity for people to come up on the curve on both of those.

Yes. So I guess maybe we can double-click on mosli a little bit for PH-ILD. I feel like that is quite an important catalyst that's not really in the stock at all. And it's a sizable market opportunity, too, where you already have pretty promising PVR data in Phase II. So just talk about that readout. What is -- what does good data look like and then maybe next steps after that?

So one of the great things about pulmonary hypertension is, look, in Graves' disease, for example, I think there is a very much a growing appreciation for how big Graves' disease is as an opportunity. But we took education. It's a new indication for people. There's not like an established investor community of Graves disease investors. Pulmonary hypertension, if you've worked in the buy side for more than 10 years, you've made money on pulmonary hypertension companies. You've been following this space. You know it well. PAH is a well-developed market with many different categories working successfully in tandem. Several companies have been built and grown. Merck today [indiscernible] up meaningfully on data in a related field. This is like a well-understood area. And PH-ILD as a subset of that area was a difficult to invest in new frontier up until a couple of years ago when United Therapeutics, one of the real pioneers of PAH, demonstrated efficacy with Tyvaso -- what is now Tyvaso, with treprostinil in a way that has created the category. And we owe a huge debt of gratitude to those companies. That's an enormous step forward. But I think at this point, it's, I think, clear PH-ILD is a market that looks a little bit like the PAH market, to be honest. It's a large patient population. These are -- pulmonary hypertension is what it sounds like. It's hypertension in the lung, and it's devastating. I mean these patients die ultimately, it's a really, really bad disease. And these are patients who have pulmonary hypertension by dint of interstitial lung disease. So things like idiopathic pulmonary fibrosis. And for the first time, we can treat that pulmonary hypertension with Tyvaso. And now our view is it's time for that market to go the way of PAH that is to have other therapeutic categories, other opportunities to treat these patients, which will be used on top of Tyvaso, earlier line, later line, like across the board, just a huge opportunity for new kinds of therapies in PH-ILD. And we think we have a great shot. Now the way these studies are usually run in Phase II is that you study PVRs like right-hearted blood pressure, which is our primary endpoint is measured in these patients, you can tell how sick they are because they're doing this for clinical trial, under general anesthesia through a heart catheter. And you measure that and you show that you are improving blood pressure in the relevant vessels. But ultimately, the clinical endpoint in a registrational study will be either 6-minute walk or time to clinical worsening. It's a measure of like clinical benefit for the patient. And so in this study, the primary endpoint is PVR. And based on what we've seen in PAH in group 1 patients, I expect we will hopefully see meaningful reductions in PVR in this Phase IIb study. What we're really looking for is how that translates into 6-minute walk or time to clinical worsening in terms of seeing clinical benefit for these patients. And I think stat sig is obviously nice, but just like seeing a real benefit for these patients will matter a lot.

Okay. In terms of PVR, I believe the Phase II data in PAH had around 37%, 38% PVR...

That's exactly right. Some of the deepest -- I think the deepest PVR reductions ever observed in a clinical program.

Yes. And then in terms of placebo, there's really sort of minimal improvement in placebo.

You wouldn't see a lot of -- again, this is -- 6-minute walk is a difficult endpoint. It's a measure of how far people can walk in 6 minutes. Obviously, there's a lot of things that drive that. When you are anesthetized on an operating room with a catheter in, there's not that much that's going to drive a placebo response on blood pressure. And so you don't see that much placebo response on PVR.

Okay. So [ 38% ] is pretty much 38%. That's a good number. But then I guess, talk about the translatability...

That's really -- the whole question is the 38% is in patients with pulmonary arterial hypertension, those are different etiology of patients than the PH-ILD patient population. And so you just don't know for sure exactly how that will translate. And the truth is only treprostinils have really been studied in both. And so what do we know? We know that treprostinil showed good PVR reductions in PAH and also good PVR reductions in PH-ILD and that translated to clinical benefit when they were inhaled. We know that systemic vasodilators, both treprostinils and actually our drug, I don't think I've even said this is an SGC activator. It's a different mechanism. There in the past has been a similar drug to ours, an SGC stimulator studied systemically in PH-ILD. And like systemic treprostinil, it's not very good in PH-ILD. It turns out in pulmonary hypertension patients with lung disease, systemic vasodilators have an issue, which is that while you treat the healthy lung tissue well, you wind up vasodilating the diseased lung tissue as well, and you wind up basically giving back all or sometimes even more than all of the benefit at the same time. And so what you really need is an inhaled, targeted vasodilator that only gets into the healthy lung tissue and drives better like cGMP production and oxygenation in the healthy tissue. And so I think that translatability, we know that inhaled vasodilators work in PH-ILD in general, and we've seen that mostly with inhaled treprostinil. So not a huge end, but that's what gives us confidence to try.

Yes. Okay. In PAH, I believe anything north of 20% PVR is considered pretty positive. Do you think that's also a similar, I guess, I don't want to call it bar but for PH-ILD?

As a biotech CEO, I've come to hate the word bar. Look, I think the answer is, if anything, in PH-ILD, it's a little bit of a lower number because these patients have lower baseline PVRs generally, like whatever in PAH studies, the baseline are like whatever, maybe 9 or 10 Wood units, whereas in PH-ILD, it's maybe more like 7. And so I think even somewhat lower number than 20% would be good. But again, 38% is much higher than 20%. And so my hope is that we're not coming close to here either.

Okay. Got it. That's super helpful. And then another 2026 catalyst is the Immunovant RA data. So talk a little bit about that. I believe it's an open-label readout in '26.

That's right.

Just help us understand the interpretability of that data and what do you consider to be positive?

Yes, perfect. Look, RA was always a stretch indication for an FcRn, right? RA is clearly not a vanilla autoantibody-driven disease, multifactorial. There's a bunch of different reasons that people get RA. What we know is that in some RA patients, there are significant IgG autoantibodies. We know that in early line patients that J&J with nipocalimab was able to show clinical benefit, modest but meaningful clinical benefit that, that clinical benefit was higher and more interesting if they looked only at the autoantibody positive, ACPA-positive patient population. They then ran a different study. They ran a study combining an FcRn with a TNF which was a tough study for them. It didn't pan out the way they wanted it to. We've decided to go a different direction, which is to study ours in a late-line RA patient population, a fourth-line difficult-to-treat RA, where the bar for clinical meaningfulness is lower. These patients don't have a lot of options and where we're focused specifically on the ACPA positive, the autoantibody positive patient population with the hope that we can make a difference. The study is a randomized withdrawal design. It's a Phase IIb 1 of 2 pivotal programs, if successful. The readout next year is the sort of run-in period, if you will. So all of the patients are on drug and then responders will be randomly taken off, hence randomized withdrawal. So look, what we're going to get is an open-label response rate, which means the bar for us being excited in starting that second Phase III is high. If whatever, [indiscernible] 20s are low, it's not going to be that exciting. But if we see like a really meaningful response rate where docs are excited and patients are excited, I think that's the kind of thing that gets us moving forward. I don't have like a numerical number, but I think the answer is because it's open label, because it's RA, the bar is high. And this is really -- although it is structured as 1 of 2 pivotals, it's really a signal finding study.

Got it. Got it. And I guess that kind of answers my next question, which was just the rationale behind designing a trial that way. But I guess it to get a signal before committing...

Yes, exactly. And I think the idea is that there's a very patient-friendly design, right? Like you get -- everyone is on drug at the beginning. So this has been among the easiest studies that we are running to enroll.

Perfect. And I think we have 2 more minutes, but would love to pick your brain about BD. Just thoughts on the landscape and what you're seeing. I feel like it's been a little bit over a year or 2 just since your latest announcement. So what are you seeing out there? What are you most interested in?

Yes. Look, I think one of the most interesting things about the moment that we're in as a company is we don't -- I don't mean that we don't need BD, right? I think like the thing that carries us from here to a $30 billion or $40 billion or even $50 billion market cap is our existing pipeline. It's launching well in DM. It's launching well in NIU. It's stacking these things together. I think brepo could be a large, large drug. I think FcRn could be a large, large drug -- a large, large category for us. Like these are big opportunities and the don't mess it up bar or imperative is high. So I think, therefore, correspondingly, the opportunity -- look, we are historically a transactional company. We have, at this very conference, people running around meeting with pharma companies, talking through ideas. There's lots of things we'd like. But I think the bar for actually transacting is high because we don't want anything is going to distract from the sort of core job of making these existing programs successful. And bluntly, we want things that if we become a $30 billion or $40 billion or $50 billion company are going to be needle moving, are going to be sufficiently important that they add a real leg to the stool. That said, we absolutely 100% see things that meet that description within the portfolio of big pharma companies. Some of those things we have been excited about at this point for 2 years, and we've been doing the slow, steady, important work of bringing our would-be partners along and helping them get excited about us as a partner, helping them get excited about the opportunity, seeing their own businesses evolve, seeing the need on their end evolve. And I think look, a big part of our business is sitting around outside big pharma companies like a puppy, waiting for just the right moment to transact. And I think we're -- we continue to focus on that kind of activity because we see a lot of opportunity to be a good effective partner to our -- to big pharma companies.

Got it. Well, I think that's all the time that we have. Thank you so much for hanging out with us. Excited for 2026 and hope you get that drink.

Thank you. Yes. I hope you all get that drink.