Roivant Sciences Ltd. ($ROIV)

Welcome to the Jefferies Healthcare Conference. My name is Dennis Ding, Biotech Research Analyst here at Jefferies. I have the great pleasure of having Matt Gline here, CEO of Roivant. Welcome.

Thanks for having me. It's great to be here.

Before we kind of get into Q&A, and there is certainly lots to talk about, I'd love to hand it over to you to just kind of give an overview. I mean it's been incredibly -- I mean, Roivant is a $20 billion market cap company now.

It's true. It's a while -- look, it's been a really great 12 months for us. Look, I think many of you know a little bit about our story, but we are roughly out there trying to do the same thing everybody else is, which is to develop medicines that matter. And we've been very fortunate to have now 3 drugs in our late-stage pipeline and brepocitinib, IMVT-1402, our FcRn and mosliciguat, all of which appear to be drugs that matter. We have our first sort of major commercial launch, certainly our first next commercial launch in brepocitinib in dermatomyositis, which should be by the end of September, assuming everything goes along as expected with FDA, a bunch more data coming later this year and all that building on top of positive data in DM, in cutaneous sarcoidosis, in D2T RA at Immunovant, all sort of in the recent history. So just a ton going on, a ton we're excited about and a really great year for us.

Yes. I mean I think going back several years, one of the big narratives around Roivant is that you guys are really good at identifying assets going outside of the cookie cutter, right, and finding unique opportunities that you guys could capitalize on under Roivant. Has that changed at all? Or are you guys more focused right now on developing mosliciguat or 1402 and launching DM? And has that focus shifted?

I'm smiling in part because I thought you were going to end that sentence. But you guys haven't found an asset in a few years. So now you must be known for something else. Well, look, I think the other side of the finding a good asset coin is how do you know it's good? Well, you know it's good when you've successfully developed it in indications, you've generated good clinical data, like that's actually when the -- when you know the answer, right? Every new program is a question being begged. And until you've run the study, you don't know what the outcome is. And I think one of the things that I'm probably most proud of is I feel like at this point, I believe one of the things that we ought to be known for is creative aggressive clinical development. We found great indications. We've run good studies. We've generated a lot of data that has created a lot of value. And I think that's something we are excited to continue doing with each of our late-stage programs, all of which have opportunities for expansion. That said, look, we were built on DNA of thoughtful asset hunting and creative development. And I think we will continue to be who we've always been. We're excited about deals in the market, excited about things we're looking at. And despite appearances, we've been super active on the BD side and have been at the one yard line multiple times in the last couple of years. And when the right thing crosses the finish line, everyone will know about it.

Is there a sense of urgency in terms of finding the next big asset? Or are you fairly content and excited about what you have right now?

We're definitely excited about what we have now. I would say constitutionally, content isn't our thing. So we're never like fully content. I think one of the things that has served us well is restraint that is I think we've been pretty disciplined allocators of capital. We've been pretty disciplined about chasing the right opportunity. We haven't sort of built a portfolio for the sake of building a portfolio. And by the way, that's in part because we, at various times in our history, did more of that, and I think we regretted it after. And so I think as a consequence, we've been pretty choosy, and I think we'll continue to be pretty choosy. One of the things that's great about where we're at now is, obviously, thinking about the 10- and 20-year future, we replenish our pipeline, we need to keep bringing things in, we need to keep building on what we've got. But I think for the immediate term, we don't need anything else to build a big company. We have all of the ingredients in-house. We just need to nail the execution. And so that's where a lot of our immediate focus is.

Yes. So maybe let's talk about DM because that's going to be approved soon and knock on wood. And I guess, how are you thinking about that launch? What sort of commercial readiness initiatives that you guys are doing ahead of the PDUFA?

Yes, perfect. So dermatomyositis for those who are not familiar with it, is an orphan inflammatory disease. There's about 40,000 treated patients and claims data sets now. There's probably 70,000 patients on an epidemiological basis. And it's one of these diseases where that population could easily grow as more people get diagnosed as more treatments are available. The data we generated last year was really great. This is the first effectively modern targeted therapy ever to succeed in the Phase III study in dermatomyositis. There's IVIG. But other than that, there's really been nothing out there. And one of the things that I feel very privileged is the Priovant team has done a phenomenal job working closely with the doc community in DM. And I think the community of physicians and patients is excited about the fact that there's a new opportunity coming. So I think, look, one of the main things -- well, so anyway, so I think we've got all the right ingredients in front of us on the table. I think one of the great things about dermatomyositis is it rhymes in severity and scale in existing treatment landscape with a bunch of the other indications like myasthenia gravis, like TED, where commercial launches from biotech companies have been successful. And so I think the first thing we're doing is just making sure that we've learned all of those lessons as well as we possibly can. We studied those launches, Ben and the Priovant team have studied those launches. And certain patterns emerge on pricing, on rebating strategy, but also just on like how you structure the organization that you have medicalized field forces that talk to these docs where they are, that build good relationships with them on a scientific basis, that you focus on the broad community of docs, including community docs, but especially on the referral centers where a lot of these patients are treated and that you build these patient support organizations that are designed to help manage the coverage and payer process. And I think we've been both like trying to learn as much as we can from other institutions that have done this successfully and in many cases, hiring people from those institutions who have been successful because I think at this point, I hope someday we are thought of as commercial innovators. But before we get that opportunity, I'd like to be thought of as people who successfully replicated the commercial model that's working for other companies now, and that's a lot of what we're after.

What are some of the learnings on price? Because historically, you've given a fairly broad range in terms of what to sort of expect for this sort of prevalent population in DM?

One of my learnings on every sort of number is not to provide guidance because it doesn't benefit anybody else who's ever done it. So I don't have a new narrow or benchmark to give on price. Look, I think the truth is what we've said about price before without giving any guidance around price is that IVIG is about $200,000 in dermatomyositis and if efgartigimod is successful in myositis, it will be a $500,000, $600,000 plus drug. And that sets some bookends, and there's a lot of good territory between those bookends in which we can develop a commercial strategy. I think access is important. I think talking about learning from other launches, I think the work that Argenx has done in moving into earlier and earlier line therapy in myasthenia gravis has been powerful. And I think it's not an accident that Tim made a good decision that they made a good decision to price lower in that indication. So I think -- but then also, they've been very successful in indications like CIDP at higher price points. So I think there are good arguments for living anywhere in that band, and I think we will make a choice on that basis. What I've been saying lately, which I think works well for us is everyone should assume we're going to be at the low end of that range, and we're pleasantly surprised if we price higher because there's just plenty of patients here such that it's really just about the commercial model working the way we want it to.

How do you think about the phases of uptake in year 1, year 3, year 10 in terms of, I guess, the low-hanging fruit perhaps would be off-label JAKs and you switch those patients over. Do you agree with that? Or just any kind of color there?

I'll say, first of all, I think the truth is in any indication where nothing novel has launched for a good time -- for a good long time, there's like very wide error bars around the early launch. We've been saying slow and steady. I believe slow and steady is the right way to think about this. It's just like it's just really hard to know who the early patients will be, how the payer process will work, and it could take a long time to dial all that in. And so in some weird perverse way, it's easier to have confidence around the peak number and the size of that opportunity than it is to have confidence around year 1 or year 2 or year 3 or whatever. And I think there's pretty wide error bars around the early launch. And I don't think it -- in the long term, I think it may not matter that much in the sense that if we launch slow and enroll to a big opportunity, I think that could be the best outcome. I don't know that I agree that like off-label JAK use is the lowest hanging fruit. I think the truth is the DM population is littered with poorly controlled patients. And some of them are poorly controlled patients because they're on off-label therapies like an existing JAK inhibitor or rituximab or something like that, that doesn't -- or Remicade, that doesn't work very well. Some of them are poorly controlled in the sense that they're on IVIG and maybe their disease is okay, but they're spending 5 days a month, 8 hours a day in an infusion clinic and want to try something different. And then that -- together, all of the sort of "Advanced therapies," IVIG and off-label stuff accounts for about 25% of the treated patients. And 75% of these patients are just on high-dose steroids and immunosuppressants. And in many cases, like very high-dose steroids, like more than 6 months a year at over 10 or even over 20 milligrams of prednisone. I don't know if you've been on oral prednisone before. Being on 20 milligrams of oral prednisone is miserable for a weekend. Imagine doing it for 6 months. It's terrible. And so those patients are like -- and it's probably not doing a particularly good job of controlling DM in the long run. So these patients are like sick, miserable, unhappy and are ideal candidates even though they're not in any of the treated population. So I think it's going to come down to each physician is going to approach the early patients differently, and we're going to meet everybody where they are and just like find the right patients to get started with and build from there.

Yes. I think you guys are somewhat steroid sparing as well, right?

That's right. Look, we -- in what I best describe as an accident of history, we ran very intentionally in our Phase III study, a steroid taper, which was designed as with most steroid tapers to ensure or protect separation from placebo in the study by making sure that the placebo patients were not sort of just increasing steroid dose over time because they were getting worse as the disease progressed. And what happened in practice is these patients were sick enough, it was like relatively difficult to guarantee a full taper. And we wound up with a pretty significant difference between the steroid dose on drug versus steroid dose off drug, which wasn't the goal. But it turns out I wouldn't change a thing in hindsight because I think one of the things that docs are most excited about is that we've demonstrated that we can get patients with a clinical benefit also on significantly reduced steroid burden, and that's something that these patients think a lot about.

Okay. One of your competitors, Argenx is going to have Phase III data in the third quarter also in DM. So I'm curious how you're thinking about the market, assuming their data is positive. Now we obviously have to see if -- what the magnitude of this is in the clinical trial. But do you have any thoughts on that?

Yes. Look, I -- the first thing I'll say is efgart is a great drug. Argenx is a great company. They've done a phenomenal job. I think, in general, the lesson from Argenx' experience in diseases like MG is that these are markets where more new drugs actually benefit everybody. I think efgart has done better in MG because of the complement inhibitors. I think we will do better in DM if efgart is approved because there will be more awareness of novel therapies, more docs trying to figure out which drug to use for their patients. And frankly, we get to play in DM, the role that Argenx got to play in MG that is we are coming in as the [indiscernible] drug, the docs are excited about as other things enter the market, they will find new patients, they will get new docs excited, and I think that will continue to accrue to our benefit. So I genuinely believe Argenx' success will be our success. That's thing one. Thing two is, look, I think biologically, there's reason to believe that IMNM is probably a better myositis for an FcRn and DM is a better myositis for an anti-inflammatory like brepocitinib. And so I think like my hope and to some degree, expectation is that we have a better agent for this patient population. I think indeed, Argenx' body language around their trial suggests that their heads in a similar place. And so I think that's all potentially helpful. And I think if you look at the Argenx data, as of -- I think they cover some more today that I can talk more about a second, but even as of the earlier data, we had a significantly faster path to a moderate TIS response, and we saw at least a comparable TIS benefit while they didn't have a steroid taper in their induction study. And so I think all of those suggest to me that we have a good setup here from a data perspective. That's -- and I think this is both a liability and a blessing. Argenx' study is very different than ours. It's not a DM study. It's a study across 3 different myositis subtypes, IM, DM -- sorry, IMNM, DM and polymyositis. And in each myositis subtype, it's about 25 patients on drug and 25 placebo patients. So first of all, DM treating physicians are obviously aware of that and are, I think, deeply appreciative that we ran a proper sized study with lots of patients, specifically in DM. And second of all, look, it does mean they could just get lucky, right? Like if 25 patients, TIS is a noisy endpoint, we're going to have to contend with whatever that study shows. Again, I'm not that worried about it long run, but I think that's sort of the rub.

Sure. Okay. Even outside of DM, you guys have NIU data coming up. I guess like a big part of the brepocitinib thesis is way bigger than just DM, right?

I totally agree.

I call it RINVOQ for rare disease...

Yes, I think...

Multiple indications.

I appreciate that nomenclature. Anything to draft off RINVOQ.

So for NIU, I guess, characterize how that -- the size of that opportunity relative to DM.

Yes, perfect. And by the way, I think in some ways, NIU is among the more underappreciated of our commercial opportunities in that it is devilishly hard to isolate in claims data sets. So it's like hard to isolate -- even for us, and we're out there in the field with these docs all the time in the trial, like hard to isolate the size of the patient population. But I think it could be, frankly -- so first of all, NIU overall non-infectious uveitis and eye inflammatory disease. These are patients who have eye inflammation and it's the third leading cause of blindness in the U.S. So high morbidity, docs want to treat it aggressively because it can lead to blindness. Of the 400,000 NIU patients in the U.S., the vast -- significant majority of them have mostly front of eye inflammation and get treated with steroid eye drops, and those are not our patients. We are treating patients with back of the eye or whole eye inflammation. And I think like there are somewhere between 70,000 and call it, 150,000, 160,000 those patients, which is wide error bars because there's a lot of diagnostic slop. But I think it just gets to the -- the answer is probably there are more such patients than dermatomyositis patients. HUMIRA is approved in NIU. It doesn't work spectacularly well and certainly left some room in our Phase II data for what it's worth was obviously meaningfully different than what HUMIRA had seen in NIU. But if we're successful, I think there's a huge opportunity in NIU to be a big market.

Yes. How would you approach pricing, I guess, for DM? And like how much do you consider some of these pipeline opportunities?

Yes. I think we are absolutely thinking about a collection of indications that can support the same commercial model, the same price point, the same orphan setup, the same patient support structure. And I think we certainly have some levers to pull. We could decide to do different prices for different doses. DM is a 30-milligram dose, NIU is probably 45. But overall, I think the answer is like these are comparably morbid, comparably sized populations. Like I think these are both really bad disease -- they're all really bad diseases. And I think they will all support the kind of price point to commercial model that we have in mind. And the one thing I'll say is like, look, I think it's very tempting you're at this stage in the game to think of brepo as a dermatomyositis drug. To your point, that's not how I think of it at all. Like I think dermatomyositis is a base layer on which to build a really big setup across a whole bunch of different indications. And while DM is certainly large and you can underwrite, in my view, like a very big peak sales market opportunity for it. By the time it's close to peak, there will be -- we've got 3 other indications in active late-stage development and more to come. So we have a lot more work to do to build this into what it could be.

For NIU, remind me what do you view as like a clinically meaningful improvement on treatment failure?

Well, HUMIRA, as I recall, in visual had like 3.5 or 4 months placebo time to treatment failure, around 6 months of drug time to treatment failure. And in our Phase II, we were greater than 12, meaning the median patient had not failed by the end of 52 weeks when we finished the study or 48 weeks or whatever it was. So look, I think the answer is HUMIRA is viewed as not a perfect agent in NIU, but clinically meaningful. And so I think like certainly anything in the same ballpark as HUMIRA is going to matter to patients. And the more better than that, that we can do, the more people will be excited about the data. But there's room for a lot of degradation from the Phase II.

Your Phase III, does it enroll pre or post HUMIRA or it does not specify?

It doesn't specify. We have both.

Okay. Okay. Well, that's a readout, the Phase III readout in the second half.

Yes. Absolutely.

Very interesting. It could be, in our views, $2 billion to $3 billion peak sales depending on price. I mean, let's see on price. But another catalyst that's super interesting to us is PH-ILD, right? This was a small asset that you got from Bayer several years ago, very under the radar, but here we are Phase II data coming up in the second half. So maybe talk about the opportunity in PH-ILD and what gave you the conviction to go away from PAH, which is where the Phase Ib data or trial was run in and into PH-ILD?

What gives us conviction is a question that investors ask often, and I think it presumes that I sleep better than I do. Look, so this is a drug we in-licensed it from Bayer. It is an sGC activator. That's a related mechanism to sGC stimulation, which is a mechanism of a systemic drug called Adempas that was commercially quite successful in PAH and failed a clinical trial in PH-ILD in our indication. What we think we know from the field, and this is principally paths paved by prostacyclins by Tyvaso and other treprostinils is systemic vasodilation works in PAH, does not particularly work in PH-ILD. And the ostensible reason is you vasodilate a lung with diseased tissue and as much benefit as you get from vasodilating the healthy tissue and improving lung function on healthy tissue, you give up a lot of that benefit in the disease tissue. And so you get this like VQ mismatch basically. The solution for PH-ILD in prostacyclins and treprostinil world has been inhaled prostacyclin. Tyvaso is approved and doing very well in PH-ILD. YUTREPIA is on a path to doing well in PH-ILD is another formulation of treprostinil. There's clearly like a lot of enthusiasm for that idea. The thing that we've done is neither more simple nor more complicated than simply try to replicate that with sGCs. That is we know that systemic treprostinil does not particularly work in PH-ILD. We know that systemic sGC modulators did not work in PH-ILD, but we have an elegant formulation of an inhaled sGC activator. And in Group 1 patients, it demonstrated extraordinary some of the best PVR reductions ever seen. And so we believe strongly that it is an effective locally administered vasodilator, inhaled vasodilator of this mechanism. And the hope is that we replicate this idea that taking an inhaled potent vasodilator into PH-ILD can yield benefit for these patients. That's the bet. That's the risk, that's the setup.

Okay. So then on PVR in PH-ILD, right? I think PAH is fairly standard to assume that anything north of 20% will -- is clinically meaningful, and there's a good shot that 6-minute walk will be positive. But what about PH-ILD?

Look, again, the end of studies run in PH-ILD is small. So I don't have like some giant body of evidence to point to. I think we do a lot of translational thinking from PAH. And I think our general view is north of 20% on PVR is likely to -- the math or the mechanism of translation from cardiac output or PVR to 6-minute walk is pretty similar in PH-ILD. There's probably some differences related to the other causes of morbidity associated with PH-ILD. But like in general, I'd say, if we see north of 20% on PVR, I think we're going to be pretty happy with that. And I think ideally, we would see some directional signal on 6-minute walk. We're not powered for 6-minute walk. I don't expect a p-value on 6-minute walk. And to be honest, if we see a high enough PVR, we could see literally nothing on 6-minute walk and still go ahead with the Phase III because I think you'd have to -- if we saw good safety and a deep PVR reduction, you would have to really contort our current understanding of these patients to not think we could generate a 6-minute walk benefit in a properly sized study.

When you say it's not powered for 6-minute walk and there's no p-value, are you saying that's not even being tested or that is just vastly underpowered?

We will mechanically run stats on 6-minute walk, but I expect to not get a p-value on 6-minute walk.

Okay. Okay. When you think about the mechanism of action, right, and you guys have -- you guys and Bayer have done a lot of studies across Phase I and studies, right, in healthy volunteers.

170 subjects. Yes.

It seems like from what's disclosed, I believe the MOA acts specifically to improve PAP, mean PAP. But then for PVR, there's obviously that cardiac output component to it, right? So in your Phase Ib, it was interesting to me that I believe only the 4-milligram dose had an improvement -- or sorry, improvement in cardiac output, but not the others.

We ran a bunch of Phase I studies. And in general, I'd say the picture was consistent, and we measure different things in different studies. Like, for example, we see elevated cGMP production for 48 hours after a single dose of drug at different dose levels. So I'd say, in general, I'm pretty confident looking at the totality of the evidence that this drug will deliver a cardiac output benefit. And I think that's just what we've consistently observed. That said -- so the way the Phase IIb works is a dose titration paradigm where you start at a low dose and you get up to 4 milligrams pretty quickly. And one of the things that gives me comfort, especially from a safety perspective or tolerability perspective is that 95% of these patients are getting to 4 milligrams and staying there. And that's obviously a sign that people are, a, tolerating the high dose; and b, not having sort of massive safety issues.

Yes, this is a once-daily inhaler.

Once daily, puff of -- once daily, one puff of a DPI.

That's right. Okay. And one of the key reasons that's able to do that is that there's a lot of deposition in the lungs.

That's right. We really -- we do well at getting into lung and we do well at staying in the lung.

Yes. Okay. Perfect. So you guys are -- the Phase II is for PH-ILD, but I'm also curious like how you're thinking about opportunities beyond PH-ILD.

Look, PH-ILD is obviously a great market, and we're excited to be there, and we're going to learn a lot from this study, including one of the things that we're going to measure in this study is things like FVC and other measures of like underlying lung function. Obviously, one of the things we've watched closely is the TETON data around IPF. Certainly, once we've seen this data, I think IPF is a natural place for us to be thinking about. But also we think about PH-COPD, we think about PAH, we think about other indications of impaired lung function or other subgroups of pulmonary hypertension. So I think there's a lot of places to go. Obviously, first and foremost, this is a don't screw it up opportunity in PH-ILD, but it's the kind of mechanism that should work more broadly as well.

Yes. I mean, depending on the Phase II data, like how would you approach the development of mostly across many of these indications?

Well, I think we would run more studies if the -- if the Phase II data was suggested...

Like one at a time and look at PH-ILD and see how that goes? Or would you take a [indiscernible] can go broad.

Look, it's not -- we haven't like perfectly clearly articulated the regulatory path that we intend to follow from here to approval in PH-ILD. But I think insofar as that path cuts through another Phase III study that we're probably going to start relatively soon in PH-ILD, I think we would start other indications in parallel with that study. We're not going to -- at this point, after we generate this Phase II data, are going to wait to go broader.

Maybe briefly, how big do you think is PH-COPD? I'm just curious because Merck has a 5475 product that's availed, that's supposed to read out this year. So if that data were positive, like...

Yes, that would be informative. Look, the scary thing about PH-COPD for clinical development of inhaled therapy is the -- is like the lung tissue is a little bit more complicated to work with. And so I think that's on the list of like things that would give us some consideration there. But obviously, if Merck succeeded there, that would be super informative. That Merck drug, if I'm remembering the study correctly, is a once-daily study of a drug with less deposition in the lung, which is one of the issues they've had with that drug in PAH. So even if that study doesn't work there, if we see evidence of good safety and the possibility of really efficacy, I think that could be informative as well. I think PH-COPD is a big market. Look, one facile explanation for why there are a lot of theories as to why treprostinil works in IPF. I think there's like a series of religious devotees who think it has to do with this like preclinical fibrotic -- anti-fibrotic effect of treprostinil. I think there are people who are just of the opinion that you get vascular remodeling when you improve lung function in pulmonary hypertension patients with lung disease. And then I think there's like another possibility, which is just a lot of IPF patients have undiagnosed pulmonary hypertension. And when you get out there and you treat their pulmonary hypertension, they get better. And so I think like across a variety of different explanations, I think a lot of those explanations potentially hang true for us.

Yes. Okay. That is very helpful. So in the last few minutes, we'd love to talk a little bit about Immunovant.

Sure.

Just remind us, you guys did have some RA data recently. And it seems like still kind of TBD and we'll get some more updates in the second half, but just remind us of where you are?

Now I've been caution not to answer questions on Immunovant because you're hold rated on it. But I'll do it anyway just because we're here. Look, so the D2T RA data was -- it honestly better data than we expected in D2T RA, and it showed meaningful -- whatever, it's an open-label run-in to a randomized withdrawal study. And so it's like hard to interpret, especially in this patient population. But we have pretty high ACR70s and ACR50s, which are not the sorts of things that happen that often spontaneously. And so it feels like there's a real effect here, and we're excited about it. As we said when we announced the data, so this is a randomized withdrawal study, there's an open-label run-in followed by a randomized withdrawal period. And the truth is because the data was as good as it was, a lot of these patients had ACR50 and ACR70 responses, the primary endpoint of period 2 of the study is loss of ACR20. If you are an ACR70 responder, are you definitely going to lose an ACR20 in 12 weeks? I'm not sure. You've got some extended pharmacodynamic benefit from the drug and then you're trying to get a lot worse fast on placebo. So I don't know exactly what our likelihood of "Hitting in period 2 is." So what we said is we're going to look at period 2, obviously, but equally informative is like a lot of patient level work we want to do on inflammatory markers, dimensioning autoantibodies and trying to understand like which patients are responding and why and looking to make sure there's like coherent narratives that support the drug activity. So we want to do that analysis. And then bluntly, there's like a pretty important regulatory question here in that historically, basically every approved RA therapy has gone down the broad indication, like large, in some cases, thousands of patients, large study. And so we're trying to understand what a regulatory path looks like for an agent willing to restrict itself to late multi-mechanism failure D2T patients who have like, for example, failed like a JAK and a TNF, where the needs are different. And I think what that pathway looks like affects a little bit whether and how we run the second Phase II. One thing that benefits us is there's a whole class of -- between the CAR-Ts and the T-cell engagers, there's a bunch of stuff coming in late line RA where they obviously won't run 2,000 patient CAR-T studies, and so there's going to be answers to these questions but we're kind of out in front of that. Anyway, what I'm hoping is that by the end of this year, we can package period 2 with the patient level analysis I just described and with that regulatory feedback and present it as a coherent whole with a plan forward, and that's what the next update will really look like.

Got it. Perfect. Well, I will just limit it to one Immunovant question. But thank you so much, Matt, for being here. It's great to hang out with you. Have a great conference.

Thank you. Thanks, everybody.