Roivant Sciences Ltd. Q2 FY2021 Earnings Call

Good day ladies and gentlemen, and welcome to the Roivant Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference call. Mr. Paul Davis, you may begin.

Good morning and thank you for joining today’s call to discuss Roivant’s second quarter results and business updates. I’m Paul Davis, the Head of Communications at Roivant. On the call today, we have Matt Gline, our Chief Executive Officer, who will be presenting. We also have Richard Pulik, our Chief Financial Officer; Frank Torti, our Vant Chair; Eric Venker, President and Chief Operating Officer; Mayukh Sukhatme, President and Chief Investment Officer; and Todd Zavodnick, the CEO of Dermavant. For those dialing in via conference call, you can find the slides being presented today, as well as the press release announcing these updates on our IR website at www.investor.roivant.com. We’ll also be providing the current slide numbers as we present to help you follow along. I’d like to remind you that we will be making certain forward-looking statements during today’s presentation that reflect our current views and expectations, including those related to our financial performance and the potential attributes of our product candidates. We strongly encourage you to review the information that we have filed with the SEC, including the earnings release in Form 10-Q filed this morning for more information regarding these forward-looking statements and related risks and uncertainties. We will begin with Matt Gline, who will review key business updates across Roivant and Vants including updates from Dermavant, Immunovant, and Aruvant, as well as a financial update. We will end the call with a Q&A session. And with that, I’ll turn it over to Matt.

Thank you, Paul and good morning, everybody, and thank you for joining our first earnings call ever in Roivant’s history. It’s a pleasure to be talking to you today and sharing some updates about the business. Before I talk about the quarter, I want to start on Page 4 with a reminder of who Roivant is and why we’re excited about the business we’re building. What we’ve said since the beginning of Roivant’s history is that we’re here to redefine what a big pharma company can be from end-to-end, focusing particularly on a novel talent model, in which we’re organized as a family of small nimble entrepreneurial biotech companies that we call Vants, as well as focusing on using computational tools and data in a differentiated way to improve the discovery, development, and commercialization of new medicines. On Page 4, I highlight some key aspects of our business. Starting with, we have a number of Vants with a broad pipeline and a range of technologies that we think enable us to do better at our business. We are well funded with a $2.5 billion cash balance at the end of the September quarter. We have a full chip-to-clinic discovery platform with what we believe are best-in-class computational capabilities, for simulations, molecular dynamic simulations, which enable us to discover new drugs, particularly in the field of novel protein degraders. We also have a collection of public equity stakes in Vants and other businesses that we built over time, worth approximately $940 million, plus additional private holdings, including about a 12% stake in Datavant, which is a company we developed to solve critical healthcare data problems caused by the siloing of healthcare data. Earlier this year, we merged Datavant into a company called Ciox Health, and in that transaction, we received $320 million in cash proceeds, as well as this approximately 12% ownership stake, assuming a $7 billion valuation for Datavant. Datavant is now a business with $700 million in top line revenue, which we expect to grow over time. We’re excited to have this ownership stake, which provides both strategic value and revenue. Most importantly for us, we’re planning to build a pharmaceutical company. We believe we have a strong clinical development track record, having conducted nine registrational phase three studies in total, eight of which have read out positively, and our Vant model has now resulted in four FDA-approved products, all of which were launched by Roivant and are now owned by our partner Sumitovant. I'll provide a brief overview of our small molecule drug discovery platform, including our computational capabilities and integrated wet lab, again, focused on targeted protein degradation. I’ll give an update on our financial performance for the quarter, including our cash balance of $2.5 billion, as well as some key metrics. Lastly, I’ll share glimpses of what we expect to be important drivers of growth for the business in the future. Thank you very much, and as Paul indicated, there’ll be an opportunity for Q&A at the end of the call. So, with that, I’m going to start on Page 7 with a discussion of tapinarof, Datavant’s topical therapy for treating psoriasis. We filed our NDA and expect a PDUFA action in the second quarter of 2022. This is a medicine that we are extremely excited about and we believe it’s an incredibly promising new therapy for psoriasis patients. We feel that it differentiates along five key attributes. The first is treatment effects. We showed strong data in our Phase 3 program, which read out in the summer of 2020, including statistically significant performance in all the key endpoints, including endpoints typically used to measure the performance of systemic therapy. Furthermore, we demonstrated continued improvement, with a significant number of patients achieving complete disease clearance. We also observed a high degree of durability for the treatment. Our long-term extension study showed that when patients cleared their psoriasis and were taken off therapy, they remained clear or mostly clear for an average of 130 days, which we believe is a remarkable effect in topical therapy treatment. Importantly, there were no serious adverse events related to treatment during our studies involving about 2,200 patients in 18 clinical trials. Tapinarof’s safety profile has proven consistent with our previous studies, without any limitations on duration of use or skin location, which is different from currently approved topical corticosteroids. These are five attributes that we think are pivotal for tapinarof’s market differentiation. Additionally, we are currently running a Phase 3 program in atopic dermatitis, and preliminary data is expected in the first half of 2023. We’re excited about the prospects for this drug in the atopic dermatitis study. Thank you for your time, and we look forward to continuing this discussion.

Hey, thanks, Matt. Good morning. Thanks for the questions. To repeat, a significant aspect worth sharing is that about two-thirds of patients undergoing biologic therapy maintain concurrent topical medications. Our study included patients classified as mild-to-moderate, which are where the majority of prescriptions lie. As for pricing, we will take an analytical approach. Recent medications in the market with black box warnings have set prices up to $1,900, and we aim to position tapinarof accordingly, considering both its groundbreaking attributes and market potential. This drug differentiates itself through its dual-action mechanism, presenting vast opportunities in the dermatological field. So we have significant work ahead to establish pricing that reflects its value.

Thanks Todd. As for the legal standing with the IP lawsuit involving Moderna, the issues around that involve different outcomes that could emerge, and we expect to provide updates soon. Overall, our discussions with the FDA over the tapinarof filing have been positive, and we are on track for our mid-2022 review.

Thanks for taking my question and congrats on the first earnings call. How much do you factor in concurrent usage of topical medications when considering the pricing for tapinarof? Also, could you provide an update on the IP lawsuit with Moderna?

Thank you. Your first question comes from Robyn Karnauskas from Truist Securities. Your line is open.

Hi, good morning. I’m curious how you see the product being used differently in psoriasis versus atopic dermatitis. Also, how does that affect your pricing strategy?

We haven’t provided any guidance at this point, and we expect to initiate at least four Phase 2/3 studies in 2022 depending on FDA feedback.

Thank you. There’s no further question at this time. You may continue.

Thanks everyone for joining us today. I look forward to our next opportunities to provide updates on our business and future plans. Thank you.