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

Got it. And so I guess, how big do you think brepo could be in DM? I know you're not going to put out guidance or anything or peak sales numbers, but Street estimates are anywhere from like $2 billion to $4 billion. Do you think they're at a reasonable ballpark compared to how you're thinking about it internally?

Yes. Look, my first comment on this is -- in terms of what I think needs to happen for brepo as a drug to be a big and important franchise, I think there are plenty of numbers even below the lower end of that range, which when you think about the size of the wall and the number of bricks we're trying to put in it, even just like already underway pivotal programs, we have DM, we have the NIU program that's going to read out shortly. We have CS, we have LP, I want to add a bunch of indications beyond that. And whatever, if we wind up in 7 or 8 indications, and all of them are only $1.5 billion, that's a really big drug. So I think like it's not like -- and it's much more important to my mind that we set up the drug well for the long run. We get all these other indications up and running that we get the patient support piece rice that we don't mess up access that we get the pricing dynamics right, so that we can build the bigger thing as opposed to like over-indexing on DM. I think DM has the potential to be a very large indication. I think people's enthusiasm is well founded. There are at least tens of thousands and potentially many tens of thousands of DM patients. The unmet need is high. There's been a graveyard of therapeutic development. And even sort of on the come, we're a little ways away from the next entrant at all. So I think there's like a lot of reasons to believe that DM some of the other great opportunities that have come to biotech, where you can make a big difference for patients. And generate a lot of value doing it. I think the upper end of the range that you described above the upper end of the range you described, all like plausible outcomes. The truth sitting where we are right now is the error bars are wide because you're talking like 2 weeks into launch, not a single whatever, like really early. And so it's hard to know. And you could tell me brepo is going to be a $2 billion drug and you're going to be -- the and you're going to be thrilled you could tell me it's going to be a $6 billion drug and you're going be thrilled to tiles going to be billion. our drug, but it's going to be a giant drug in LPP, and I'm going to be thrilled. So I think there's like a lot of different good ways for it to go. But I think the upper end of the range and beyond are certainly on the table given the quality of the data and the quality of the opportunity. And you have the need.

Great. That's a bit segue to the other indication for brepo, and I you have data coming hopefully soon. That's a big catalyst for Roivant as well. So -- what are you hoping to see there in terms of is it just stating enough in NIU? And -- yes, maybe we can start there.

I'm knocking on a metal table, which is the wrong thing to act on. But the truth is that that's probably what -- there we go. The data is that is coming. Hopefully, it will be good. I -- NIU is another indication. First of all, today has been fun in part because we put out this great PH-ILD data yesterday. And yesterday, it was a different investor conference and most of the questions were about PH-ILD. And then I walked in today and I sat down and like in my first meeting, there were like 12 people in the room and all of them were just grilling me about NIU because it turns out like that's just the way this works, what have you done for me lately. And so that was interesting. I think NIU is a market where, first of all, the commercial potential is likely underappreciated at this point. There are a lot of NIU patients. They are at a high risk of blindness and long-term complications. And the stuff that's out there by and large, doesn't work very well. HUMIRA is the only really sort of approved modern agent, and it has very high treatment failure rates. In fact, like the time to treatment failure on HUMIRA in the study on average was like 5.6 or 5.6 months, I think, like less than 6 months, and these patients are failing off therapy. So there's a huge amount of need and bluntly, in order for us to succeed in a post HUMIRA setting, I think all we need is simply to be successful. If we get a label for NIU in the post 2 mirror setting, where your choices are like risk blindness or tri brepocitinib, even pretty middling data would result in a commercial success. The better the data is, the faster patients will want to get off other drugs and on to our agent. And if our data is blow it out of the water good, I have no doubt that docs will try and push for earlier line use. So there's like a range of goodness in the outcome. But I think in order to be a commercially interesting drug, we just need to hit a P value.

Okay. Got it. The third leg of this stool in the interest of time, Immunovant and the IMVT-1402. Two catalysts that are very important. I'll turn the first one, the difficult to treat RA Part 2. I feel like this readout has been talked about and debated a lot, maybe because in hindsight, part 1 was so good. So most scenarios, in my view, tend to be a positive outcome in part 2. Like what would be a disappointing result in your view in the part 2 of this difficult to treat RA?

I'll say what I've said before, which is bluntly, I don't think we're going to learn very much from part 2 of this study at this point. Because the Part 1 data was quite good in a way that, to me, suggests we have an effective medicine that's doing something in these patients and we're going to run another study. And that study is probably going to have a more conventional placebo-controlled design. And we're going to see what it does in that setting and try to get it approved. And we would do that almost regardless of what we see in period 2 of this data. So I'm not exactly sure how we will change the design of our next study, anything about the future of the program based on what happens in the randomized withdrawal period, given the quality of the data in period 1 of the study. The only thing I can think of that would be like a truly disappointing outcome is if placebo and drug patient degradation of response looked identical in period 2, and you're like, okay, how do I know the drug is actually working, and this wasn't all some weird placebo fever dream. I think that's extremely unlikely because the truth is ACR70s just don't like spontaneously happen. So the depth of responses we saw in period 1, which is what makes it potentially harder to hit that taken period, too. is also the kind of thing that makes you feel like, okay, this is like a "real data set." But I think if we saw just like parallel degradation with no separation of those curves, I would okay, that's like a little bit nerve-racking for the next study. Other than that, if you see some separation, if the inflammatory markers confirm it, if the drug is clearly doing something relative to placebo, then I think like you're going to run the next study. And actually, the major interesting question isn't what happens in period 2 of the study. it's what can we agree on with FDA in terms of the right treatment paradigm in a population for which a registrational study has never been conducted before, which is to say a population specifically restricted to multimechanism failure, where you'd want to run a smaller study potentially with a more stringent endpoint and where the unmet need is high. And so FDA might be comfortable with those sort of things -- we have to have that conversation. There's a pretty wide range of regulatory outcomes. That, to me, in some ways, is like the more "interesting question than what happens mechanically in period 2 of the study.

Right. And on that regulatory pathway forward, 1 study versus 2 study, does that make a lot of difference, except maybe some capital and some...

Yes. I mean I think the short answer is, all else all equal. We'd rather run 1 study than 2 probably, and we'd rather run a medium to smallest study in a very large study. And there's -- look, there's some if we had like blow it out of the water stats on every endpoint in the randomized withdrawal trial, we'd probably think for 15 minutes about whether to ask FDA, if we could just run another randomized withdrawal trial, give first not the FDA dislikes randomized build trial, so I think they probably just say, no, that's like a question that someone could ask. But other than that, I think 1 study versus 2, big study versus small is mostly a question of time and cost. And I think barring something truly extraordinary in those interactions, we'll probably choose to run a study of some kind, regardless with more or less sponsor risk depending on what FDA thinks we should be doing. So we'll see. But I think multimechanism failure RA has the potential to be among the largest CRM indications. I don't know. I'm not going to -- I'm not going to say you're choose between that engraves or whatever. But look, I think it's certainly one of the most exciting things we are working on. And I think the opportunity to be there first in a big way for a population, it's probably 75,000 to 100,000 patients with high need and high willingness to try pharmacotherapy is great.

Yes. Yes, I mean we have rate some big market as well. And you talked about Graves. The readout is coming next year, probably one of the bigger catalysts in the biotech well next year in a new category with this indication. Maybe one -- first question on the competition. Lilly bought Merida recently seems like there's farmer interest in grades as well. I think the one thing that we have talked about TSHR as a mechanism as we think about FcRns as well, it's more selective, but probably makes you - but the argument that the TSR companies would make is, all right, you can take Synthroid. And it's probably one of the most widely prescribed medications out there. It's not a big deal. We are way more selective. So what's your take on that?

First of all, I don't want to pitch for a competitor too hard. Merida is not a TSHR-directed therapy. Merida is a TSHR autoantibody directed therapies. So it's effectively an antibody to greater for TSHR mabs. And I say that because I think the TSHR the ones you're referring to, like the Crinetics all molecule or there's a couple of other companies that have like THSR directed mAbs. Look, I think those are going to work, obviously. And to your point, I think the way -- my prediction is the way most of those drugs will be developed as they will be dosed to saturation, they will send people hypo on purpose and then they will replenish with Synthroid. And I think the answer is like, does that have a role to play? Look, if there is a patient who comes into an FcRn study with 100x the upper limit of normal on TRAB and then we degrade their Tabby 80% they will have 20x the upper limit of normal on TRABs. They will still be sick with grave disease, and we will not be able to cure them. It is possible that a TSHRmab could shut down their thyroid allow it to reregulate and actually like with Synthroid enough dosing, they could potentially get reregulated and maybe even off track. So I think like for certain patients, the ability to go after it with the TSHR mab could be helpful. I think right now, we know, most patients would prefer not to be -- they would prefer to be hypothyroid and on Synthroid relative to having the worst forms of hyperthyroidism engraved disease. But mostly, they would prefer not to be hyperthyroid and noncynthroid, which is why they choose to suffer through the side effects and methimazole and all these other things to avoid having a thyroidectomy and stuff like that. So I think in general, the TSHRmabs will find a place but it's just like the direct targeting of TSH receptor is like a less elegant mechanism than targeting the auto antibodies because it consent the patient typo. On the auto antibody directed like degraders, like Marita or some of the other approaches, that is also an elegant mechanism. And in theory, if you could selectively degrade 100% of the anti-TSHR antibodies, you would be better than us. But I think there's a whole bunch of scientific questions that nobody has answered it around the heterogeneity of those antibodies the side effect profile the so look, I think it's like an interesting potential competitor. It's in the pretty distant future. Lilly must have seen something constructive in the data they were allowed to look at to do it. But it's like just hard to know until we've actually seen what these drugs can do.

Right. And maybe coming to the Phase III for Graves. I mean the mechanism makes a ton of sense. Ultimately, you're doing what reducing the autoantibodies that are causing the disease. So should work. But maybe some of the pushbacks on the prior data from investors could be that small sample few sites, some of the sustained reduction in the thyroid receptor antibodies, even after battle was discontinued, but your IgG level comes up. So what's your take on some of these pushbacks?

Yes. Look, First of all I'm trying to think of the following statement is true. In Roivant's history, I think we have never run a study that is less biologically complicated than what we're trying to do in Graves' disease. Mechanistically, this is like -- it's like down the fairway. We're reducing autoantibodies in or disease that is like every disease is more complicated these guys service, we're like pretty well understood to be caused by antitherapy antibody. So great. So I think like the biology is actually pretty straightforward. I think there are reasons to be nervous about Graves -- in the same way, there's reasons to be nervous of anything. And I think idiosyncratically engraved disease or whatever, as is so often the case, our greatest strength is also our greatest weakness. Simply the fact that we are first in this indication, which is an indication that's managed heterogeneously with sort of varying levels of background with and other things. And like we don't have a lot of data with which to characterize these endpoints, I think like that sort of dearth of information makes grave scary. And in fact, like if we fail in grades, I suspect the reason will be I mean, I hate to say this, but like it's going to be a study design point. It's going to be just like there was something we missed in the characterization and study of these patients, but the many people behind us as well as maybe we nail study would then get right again. We just had to take some bets based on our Phase II data. I think our studies are going to work for the reason that the biology is very clear, and I think we're running good studies, but that's the scary thing about I think the fact that we are the first to run a late-stage placebo-controlled study ever engraved creates a measure of irreducible risk, no matter how well we think we've designed the study.

But you're on two studies. So will there be ways to modify one if something goes...

Sure. Yes, look, we're going to watch both, and we can make changes potentially, and we can always run more studies. And the first one, the short study will almost certainly read out meaningfully before the second one, like, yes, absolutely, we've got choices. I think this is a real risk. I've gotten myself in trouble previously for pointing out the biotechs a risky business. But like I think mostly, I feel pretty good about this study. We have a good track record of successful clinical development. And I think that track record is mostly that we're not cowboys, and we don't take a lot of risk. It's not that -- so I think like for us, the grave study is a risky study, but I think it's like against the backdrop of most of our studies are in relatively well categorized territory.

Got it. Got it. And the time when is till 2027 should investors expect that you narrowed on the time lines at some point in the...

One these studies are fully enrolled, and we're ready to announce that. We'll announce they're fully enrolled. And I think at that point, the time lines will become clearer.

Okay. Got it. And -- Go ahead.

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Maybe I can repeat the question for the audience. So as Immunovant continues to mature, how do you think about stand-alone versus maybe consolidating some of that.

You ask Sanofi that question about Regeneron? Regeneron is a big company. They're successful. They have a partnership with Sanofi. They've made it work. They've built a big business. I think the answer is like if the drug works is commercially successful, lots of strange arrangements have persisted in biopharma for a long time on the basis of good medicine. So I think like one answer to your question is like, if this stuff works and it produces a successful outcome, then I think like a lot will be forgiven at is what it is. If I had a time machine, and could go back and tell 2018 Matt to not take Immunovant public and instead to own the whole thing, I'd also tell them about the complicated roller coast of our journey we have along the way, but I'd probably make that decision. And if there were a way for us to own all of Immunovant efficiently tomorrow in a way that made sense, look, we love the story, so that's something we would always be thinking about at some level. But practically, the status quo is working well for us right now. And most importantly, I think it's working well for the drug right now that is like 1402 is being well developed. It is properly capitalized. We have the ability to capitalize it together with outside market participants. And I think the most important thing right now is to maximize the value of 1402 by running the right studies, running them well and generating the best possible data.

Maybe if I can ask a follow-up on that. What would be the, I guess, obvious attributes to consolidate? I mean there are synergies in terms of the markets that you both are competing in with even like DM and IM where FCI have values?

I think those are all mechanically solvable problems if we need to solve them mechanically. And the truth is like from Roivant's perspective, you talk about myositis. We own 75% of private and Pfizer owns the other 25%. We own like 60% of Immunovant the public markets on the other 40%. These things are different, but they're not so different that from the trading as between them is like a big economic delta that drives our incentives. Our incentive is to make the pie bigger, to make both of these programs as important as we can. And that is, I think, how we will act in every instance. . Look, I Hindsight's 2020, we should have bought a immune vent when it was a $5 stock. And if you Munivant whatever a $5 stock while it was a $42 stack, I think we like a pretty easy decision from a concentration perspective. the Goshen problem is the Immunovant and now also a $40 stock, and so the values are sort of moving up in parallel, and that means that everyone we just have to keep making that decision in a value-oriented way.

It's a good problem to have.

It is a good problem to have. And by the way, they're both cheap.

All right. That's all the time we have today.

To all of the appropriate securities disclaimers. I'm supposed to make when I say that.

Thanks, Matt, as always. Really appreciate the time. We couldn't get through all of these, all the different pipeline indications as well, but there's a lot going on at driven right now. So maybe in the future.

Thank you so much.