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

I think we're going to get started here. Good to see everyone. Thanks so much for joining us for the next fireside. My name is Derek Archila. I'm one of the Wells Fargo biotech analysts. So next company here, we have Roivant. From the company, we have Matthew Gline, CEO. Matt, thanks for joining us today on a great day for some new data, not great times to always have the data that's right around the conference.

That's right. So thanks for having us. It's great. We put out some data in P-LD this morning that was pretty extraordinary. So it's exciting to be here.

Well, let's start there, very topical. So maybe walk us through kind of the FOCUS trial and ultimately, what we're putting into context some of the data that we saw today.

Yes. Taking just like a 2-second step back first, just in case anyone is not familiar. So Roivant now just under $30 billion market cap company. At this point, I like with 3 stools such as it were, brepocitinib is our "lead product" just got approved a couple of weeks ago in dermatomyositis under my name LS -- we have an FcRn that Derek knows extremely well and I'm sure we'll spend some time talking about today at Immunovant. And then the third of them, which had been third in line until this morning is mostly Sigilat. [indiscernible] is an inhaled sGC activator. So this is a mechanism. It's effectively a potent vasodilator, among other things. And it's a mechanism -- SGC-targeted therapies have been studied. And in fact, in one case, there's a systemically administered SGC called Adempus that was a Merck Bayer collaborative project in PAH that was about a $2 billion drug at peak. Anyway, PH-ILD, for those who are unfamiliar with it, is pulmonary hypertension that comes from having lung disease. And it's been a tough indication because systemic vasodilation for these patients is dangerous. You wind up all of the benefit you get from vasodilating the healthy lung tissue, you give up by vasodilating the unhealthy lung tissue. And so it's been a tough indication to study. And in the last few years, inhaled treprostinil, most notably Tyvaso from United Therapeutics, but also YUTREPIA from Liquidia and coming TPIP from Insmed, all different formulations of treprostinil have been successful at treating these patients. And so we took mostly SigAat, this inhaled SGC activator into PH-ILD with replicating that idea. Focus was a large 100-some-odd 120-ish patient Phase IIb study in PH-ILD that was designed to demonstrate that we could treat these patients. And boy, How, it was a really nice outcome. So we got the deepest ever observed PVR, pulmonary vascular resistance measured by right heart cath I think in any pulmonary hypertension study ever, we had about a 56% placebo-adjusted improvement in PVR. We were not powered for a p-value on the functional 1.6-minute walk, but we delivered a p-value the functional 1.6-minute walk. So just a really, really good set of data all around. And I don't know how familiar people are PH-ILD. This is a terrible disease. These patients are dying. And so it's phenomenal to be able to deliver this kind of outcome.

So what's kind of next steps here now that you have got the data in hand?

Yes. So we -- a few months ago or earlier this year, we're kind of looking at each other and realized that we had pretty good conviction and that we wanted to move fast. And so we actually have already -- we started the Phase III earlier this year. And so the Phase III is enrolling patients now. And so I think the next step is to finish that study, which should then be sufficient for approval. So that's what's ongoing now.

Is there any difference between Phase II, Phase III in terms of population or study design? Or we should think it's pretty replicable?

Basically, no, with one key exception, which is in the Phase IIb study, we did not allow for concurrent use of treprostinil Tyvaso. And in Phase III, we are allowing for some measure of concurrent Tyvaso. We have an open-label study that's a combo study that we haven't read out yet, but we will allow for some concurrent Tyvaso use. We'll probably -- it will be stratified, we'll probably cap it at some level. But that way, we won't have any label restrictions, which is pulmonary hypertension for those that follow it is a polypharmacy market, where these patients go on every available drug. Actually, in PH-ILD specifically because these data of lung disease, treprostinil is an irritant and it causes cough in these patients, which is lousy for a patient with an already like a coughing disease. And so we had less cough on drug than in placebo or inhalation of a DPI once a day. I think we should have a pretty compelling value proposition. But ultimately, these patients are very sick, and I expect they will also wind up on a combination of these drugs over time.

So where do you kind of see like the opportunity here? And ultimately, I guess I don't put in the context of frame out the overall kind of peak sales opportunity potentially?

We don't have peak sales guidance -- the most conservative estimates for PH-ILD as a sort of number of patients in the -- we think there's probably about 200,000 PH-ILD patients in the world. United Therapeutics gives a conservative estimate of 30,000 in the United States. Other companies have bigger estimates. I think there's tens to maybe low hundreds of thousands of PH-ILD patients potentially in the U.S. These patients are really sick. I think with our quality of data and with the fact that we don't have cough and have simple administration, there's no reason to think we couldn't have frontline use or first line of major new therapy use in PH-ILD. We'll also, I suspect, be used after treprostinil in some cases, and they'll be used after us in some cases. And I think the real opportunity here is this is -- you don't have to run the Bart situation. It's just these patients are sick and you got to get after them.

Got you. So we should be feeling very good about the Phase III. When would we get data there?

We haven't said that either. We're just getting enrollment up and running now. We're just right the Phase IIb today. We'll meet with FDA and confirm things like size and maybe able to repower, et cetera, now that we know the Phase IIb data pretty cleanly. But I think it should enroll nice and quickly given the quality of the data that we've got here and the Phase IIb enrolled pretty quickly as well. So fingers crossed for a nice time line. But I don't have a time line to share right now.

Got you. I mean anything else to highlight there? Any other thoughts on the data today?

I'm not very practic talking about this data in, so I don't have like super prepared talking points. Look, this was phenomenal data across PVR and hemodynamics, across 6-minute walk and functional endpoints. Again, the lack of cough is really nice and the one inhalation once a day. The only other thing I'll say is I think this opens the door to not just PH-ILD, but to, first of all, any form of pulmonary hypertension is for sure on the table. PAH is an indication that we got asked about a lot before this data set, and my answer at the time was PAH is very competitive. There's a lot of other drugs there. This data is good enough that I suspect it opens the door for even competitive indications. So I think you better believe we're evaluating that. We've been looking at IPF following up on United Therapeutics has had some success there with Tyvaso. So I think lots of places to go. And I think this really does become a proper third leg to the Rant stool at this point.

Got it. Okay. So maybe shift gears to LSRYA and dermatomyositis. So your recent approval -- so maybe talk about how you think of this opportunity. And ultimately, this is an area where there's really been a dearth of options for patients. So yes, just kind of thinking about ramp and uptake.

Yes. So it's hard to believe that this was just last week, the week before last week. It was very recently that we announced the approval of brepo and DM. And it felt like we've been working on it for so long. It feels like -- I said on the approval call, it's the rare marathon that ends with the right to begin another marathon immediately. And so now we're out there with this dry on the market. Look, dermatomyositis, again, for those that aren't familiar with it, it's severe inflammatory disease. terrible skin rash. In fact, many DM patients say the worst thing about it is this like very painful disfiguring rash. And then on top of that, it's got these muscle wasting effects that lead to things like can't climb stairs, can't lift objects, can't dress yourself, can't eat. So a really bad disease. There are basically no modern options approved other than LSR at this point. People are on high-dose steroids, immunosuppressants. IVIg is approved and the label dosing paradigm involves basically 4 or 5 consecutive days, full days in the infusion clinic. So -- and a lot of patients are on it, which gives you a sense of how bad the disease is. Brehless data was really, really strong, and we were able to show not just very good clinical benefit, but steroid-sparing conjunction clinical benefit, which we got on label. So I think we have a really nice a really nice story to tell a great value proposition to patients. I think the patient community and the physician community are really excited. Obviously, tremendously excited now that it's approved. Drug has launched, prescriptions written and all that. So really looking forward to just getting out there. We get asked all the time about ramp, and our answer has been consistent. I was talking to an investor this morning who wondered why we hadn't gotten slow and steady printed on head bands yet, which I don't look good in head bands, but otherwise, I think it's a good idea. Look, I think it's a new indication. It's not like there's a lot of patterns to point to. There's a lot of physician and patient enthusiasm. And the most important thing is we're out there, and I'm excited for what we're going to do. It's obviously just like day 6 or something. So...

Well, I guess maybe talk about like rheumatologists are generally pretty familiar with JAKs and brepo kind of fits right into the bag of tricks for them. So I guess, do you think there's going to be much education and learning around like the actual mechanism or safety, things like that? Maybe just walk us through how you guys are kind of educating the field force is educating the docs here.

In general, 2 things. One is I completely agree that rheumatologists and even rheumatologists are familiar with the mechanism or at least part of mechanism JAKib' also familiar with TYK2s for that matter, BreA1hibitor JAK1 and TYK2. And I think there has been so little actual successful drug development in myositis, but there's like a ton of physician enthusiasm even apart from that. And one of the things -- you asked about safety, we have a black box warning like JAK inhibitors do. The truth is dermatomyositis as a disease causes things like JAK inhibitor side effects, malignancies, cardiovascular events, high-dose steroids and methrexate and immunosuppressants cause the same treating these patients effectively is worth it and in fact, may even reduce the risk of those things depending on sort of how you look at it. Certainly, in our data in the study, we did not -- if anything, we saw lower events of these kinds of drugs than on placebo because I think you're treating these states effectively getting them off immunosuppressants and steroids and so on. So I think it is -- there's not going to be a heavy lift on education. And in fact, one of the other things about myositis, it's treated in a pretty concentrated way. About half of the U.S. patients are treated with about 200 specialty myositis referral clinics. most docs are familiar with our study and were investigators in our study, excited about the drug. We've been talking to them from a medical education perspective over the course of the past year since the data. So I don't think there's a lot of education to do. In fact, one of the reasons I feel obligated every time I go out in public to say the phrase slow and steady because if you call these physicians, the physicians are incredibly enthusiastic. In fact, one of the ways a lot of investors have come to us in the last year or so is, you know well, argenx has recently read out data in the myositis program. argenx obviously has an impassioned and enthusiastic group of investors who were calling docs asking about argenx. And in many cases, what the docs wanted to talk about because it was more proximate was brepocitinib. So we got a lot of argenx investors coming in the office saying, I keep asking you about efgartigimod, and I keep being told, first, you should look at brepo sooner. so that I think there's just a lot of doc enthusiasm for the drug.

I mean we've heard the same and upwards of maybe 60% utilization for the patients that are candidates for the drug.

Those are large numbers. There are tens of thousands of patients. We certainly do not need 60% penetration in order to have a big and exciting drug.

Yes. Well, that's good to know. So I guess when you think about the field force that you guys are going to put out there, and you just kind of alluded to it in terms of the concentration of where these patients are, what kind of gets you confident in terms of your ability to launch Drepo?

Oh gosh. Biotech is not a field that rewards confidence. So you asked me what my confidence is. Look, I think we have a great team. I think we have great relations with the doc community. I think the level of doc feedback and the early enthusiasm from the prescriber community is certainly encouraging. And one of the things I really like about orphan disease launches I often talk about how -- like we previously launched a drug in psoriasis. These bigger market indications are like a fluid dynamics problem where you can't approach the patients with individuals. You have to think about the shape of the surface and branding and marketing and DTC advertising are all like the sort of tools that you have for manipulating and accessing those patient population, manipulating is right, we're accessing those patient populations. Dermatomyositis, it's an orphan disease, and you can approach these patients where they are, one back at a time, one patient at a time. And in many ways, treating these patients in the market is like treating them in a clinical trial. You find them, you get to them, you sort of communicate about the benefit of the drug. And I think that's like the way that you build a roster such as it is. I feel confident that our relationship with dermatomyositis physicians are extraordinary. I feel confident that the Priovant team has done a great job building confidence within that community. And I think that's ultimately what's going to translate to uptake. And then the other thing that really matters in these fields are access -- and we have a great patient support team that's out there making sure that to the extent possible, these patients have no co-pay and are able to get on drug quickly and seamlessly.

Got you. So in the quarters, how should we be thinking about the KPIs that you guys will share in terms of the launch? Net sales.

Net sales to product. Look, the truth of the matter is in the long run, that's what matters is getting out there, getting reimbursed, getting patients on drug. And I think there's like a lot of desire to find measures early in launches to sort of tell what's going to happen. Look, I think we'll see how the launch goes, but my gut feeling is net sales is going to tell the story.

Got you. Anything else that we should be kind of thinking about pushes and pulls for the launch? I mean, obviously, there's reimbursement and things like that, that will come on. But anything else that we should be considering?

Yes. Look, we're obviously paying attention to how quickly we can get coverage for these patients. That's an important indicator. we're sort of alone in the field right now. As I said, there's not a lot of other novel drugs. And so I think that's -- most of it is just getting out there and getting behavior change in these practices. One of the questions I get a lot is like which patients are going to be on drug first. I think the interesting thing is it's pretty -- different docs are approaching that question differently. And so there are some docs who use JAK inhibitors off-label and are enthusiastic to switch their off-label patients over to brepo. There are some docs who are heavier users of IVIg and to switch those patients. There are some docs who just have a lot of steroids and immunosuppressant patients who have resisted IVIg or off-label therapy, and they want to put those patients on. I think it's very much a meet the docs where they are kind of a launch. And so I think we're trying to figure out what the early patients look like in different settings.

Can you talk to like the amount of steroid usage in myositis? And obviously, the doctors this is a huge benefit to get down to 5 milligrams or less, ideally 0.

Yes. steroid sparing is a huge benefit here. It's funnily enough, when we designed the study, we had a steroid taper in the study, which you do in these trials in part, to basically protect the drug effect, right? You want to get patients off steroids, so you're not getting like placebo patients up titrating on steroids and getting treated actively anyway. So you got a steroid taper. And in some sense, we failed the steroid taper that is what happened is we were able to get brepo patients to a much lower level of steroid use than we were able to get placebo patients because placebo were just sick enough, it was harder for them to titrate. And that wound up being ironically one of the best features of our data was that discrepancy, which docs look at as a huge benefit to brepo. You can get patients on lower dose steroids. Many, many DM patients on high dose steroids. You're talking about like average steroid burdens of 10 or 20 milligrams for 6 months out of the year. I don't know if you've been on oral prednisone before, but being on 20 milligrams of prednisone for 6 months is a miserable way to live. And so the docs are incredibly excited about the ability to get these patients to lower steroid doses.

Got you. So maybe shift gears to Immunovant 1402 and kind of the FcRn pipeline. So I guess one of the questions that is always surfaces around kind of increased IgG reduction and conferring better efficacy. So I guess just kind of broadly speaking, but MG, CIDP, all these other indications, what gets you confident that you guys have maybe the best reduction and could lead to the best efficacy?

Well, I used to think data would answer that question. And now I think we've generated the data that answers that question in like 4 or 5 indications and still mostly people seem to want to ask it. So I don't know what's going to answer that exclusively for everybody else. We feel like in every indication where we've tested it, first of all, at the individual patient level, every patient for whom we have -- not every patient, patients who have deeper IgG suppression get better clinical benefit than patients who have lesser IgG suppression. That's been true in our MG data, in our CIDP data, in our RA data, in our Graves data, obviously, sort of across the board, every disease where we have been able to measure this effect, we have shown that deeper IgG suppression yields better clinical benefit. And I think that's going to translate over time across indications to an attractive clinical profile for our drug. Obviously, in indications like MG, where efgartigimod is a very well-established therapy, whether this better by enough to win that market is something we'll have to see when we get our Phase III data. But I think in indications like Graves, where we're first in indications like RA, where we're ahead of the field, I think that better clinical profile in our view, is going to translate to a real leadership position.

Yes. Maybe let's talk about difficult- RA. So the data, very impressive and maybe surprisingly so for period 1. As we look to period 2, I guess one of the questions is really that withdrawal period being long enough. And I think you set the right expectations in terms of what we should see, but maybe just rehash that and ultimately, how does this inform kind of a Phase III or the next development in this indication?