Roivant Sciences Ltd. Q2 FY2022 Earnings Call

Good day, and thank you for standing by. Welcome to the Roivant 2Q 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeffrey Kalmus, Head of Strategic Finance. Please go ahead.

Good morning, and thank you for joining today's call to discuss Roivant's financial results for the quarter ended September 30, 2022. Presenting today, we have Matt Gline, our Chief Executive Officer. 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 would like to remind you that we'll 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 products and product candidates. We strongly encourage you to review the information that we filed with the SEC, including the earnings release and Form 10-Q filed this morning for more information regarding these forward-looking statements and related risks and uncertainties. We'll begin with Matt Gline, who will review key business updates across Roivant's events, and provide a financial update. We'll end the call with a Q&A session. And with that, I'll turn it over to Matt.

Thank you, Jeff, and thank you, everybody, for joining this morning. It's been a really impactful quarter for us and I'm excited to share some updates both from the quarter and more recent ones. Some of these updates we already shared last week as a consequence of the financing that we did, and some of them are new. I'm going to cover a few topics. Notably, I'm going to start with a discussion on the launch of VTAMA and then we'll go through some clinical updates and some other updates around the business as well as the financial update at the end. So I'm going to start on Slide 6 with just an update on the VTAMA launch. We are really pleased with how this launch is going. You can see the script data here, including for the quarter itself as well as for the more recent periods, and we continue to see great growth in scripts and we're very pleased with it. We did $5 million in net product revenue for the quarter ending September 30, which is a 12% net yield, which is a testament to the quality of our script to the number of doctors who are willing to go through the prior authorization process. On Slide 7, we have our first major PBM/payer contract signed, effective as of October 1. This is better than what we had initially hoped for in terms of the quality of coverage, ensuring access to almost all psoriasis patients who are likely to use a topical steroid as first-line therapy. We're still focused on becoming the mainstay of therapy and ultimately supplanting steroids, which means the simplicity of access here is important. Any covered claim that the pharmacy should result in a $0 copay for the patient, creating a positive experience for them. On Slide 8, we're pleased with how our launch looks relative to other psoriasis launches we've observed. We became the number one most branded topical eight weeks into our launch and we've comfortably stayed there since, and we continue to keep pace with the launch of OPZELURA. We're now significantly over 50,000 prescriptions written, and over 6,400 unique prescribers since launch, representing a broad prescriber base and volumes that we're happy with. On Slide 9 regarding the P&L, we are confident we're going to get to a commercially attractive P&L. We had $5 million in net product revenue, and this gives us confidence even before we knew what the PBM contract would look like. We expect to give steady state gross to net guidance after we've signed additional PBM and payer contracts. So we're excited to continue to share updates as we progress. On Slide 11, we've received tremendous positive feedback from early prescribers. We held a panel of KOLs during our Investor Day, and we received great representative indications from prescribers, including anticipation of clearing as soon as two weeks into therapy. On Slide 12, we reported results of our pediatric maximal use study in atopic dermatitis, which included pediatric patients with a body surface area of atopic dermatitis up to 90%. We feel good about the quality of this data, which provides us a differentiated single dose form. On Slide 13, our Phase 3 program enrollment is on track, with data expected in the first half of next year. We have significant enthusiasm from investigators for study data. We're incredibly pleased with the VTAMA launch. We have a strong late-stage pipeline across inflammation and immunology. On Slide 17, we announced a new next-generation anti-FcRn antibody, IMVT-1402, developed in-house, showing deep IgG lowering with minimal impact on albumin and LDL. This positions us positively in the competitive landscape. We expect distinguished development paths for each of our FcRn drugs. As we look forward, the strong data from our assets enhances our ability to create customized development strategies. Thank you for your time today, and I'm looking forward to what we can achieve in 2023. Now, I would like to open up the call for questions.

Please standby for our next question. Our first question comes from David Risinger with SVB Securities. Your line is now open.

Thanks very much and congrats, Matt, to you and your team on all the progress. I wanted to focus on the good news on VTAMA and just better understand the contracting. Could you provide more color on what percentage of lives are actually covered immediately with your PBM contract and what percentage required downstream contracting with employers to achieve paid for the drug? And to follow on, what would the timing be for that secondary contracting? And then, separately, could you also discuss your pursuit of health plan coverage in addition to PBM coverage and how you're thinking about opportunities there?

Yes. Thanks, Dave. Appreciate the question and appreciate your listening. This PBM covers about 30% of commercial lives. We have a bigger picture on how lives are covered under different plans; it gives us a template for all downstream customers as they understand the value placed on the product. We expect to build access across various health plans and employers over the next three to six months. We're actively in constructive discussions with all major PBMs to ensure broader coverage for VTAMA.

Please standby for our next question. Our next question comes from Brian Cheng with JPMorgan. Your line is now open.

Hey Matt and team, thanks for taking my question and congrats on the progress. My first question is on VTAMA. With your first PBM contract in place, can you walk us through the process perhaps from getting the script at the doctor's office to getting the VTAMA in hand? And how much read-through is there from the PA step that we see here from for only prior steroid use from the first major PBM contract to other PBM discussions that are ongoing?

Yes. Thanks, Brian. Great question. Patient experience from the PBM contract will streamline access to VTAMA significantly. Patients will receive a prescription from the doctor, and pharmacies will work with patients to fulfill it. Patients can utilize the copay card, meaning they would pay a $0 co-pay if covered under this contract, simplifying their experience. The coverage template we've set gives us access to patients on steroids, which represent about 90% of the psoriasis population.

Okay. And then maybe just one on SLE since we're going to get top line data from the Phase 2 trials for SLE in the second half next year. Can you remind us what you want to see in terms of the primary endpoint with SLE for that you need to see in Phase 2 to be deemed as success in the trial? And maybe just if I can squeeze in one more, we noticed that you – that there was a workforce reduction that was announced over the weekend. Just curious if you can provide a little bit more color on how – whether that has any impact on this program.

Yes, thanks. On the SLE question, we haven't given a numerical bar, but we have a high bar for what we want to achieve. We expect meaningful improvements on key secondary endpoints. We're focusing on the efficacy of our agent, with a strong belief in its relevance to SLE disease biology. Regarding the workforce reduction, we do not expect any meaningful impact on our major programs or key projects. These decisions were focused on achieving operational efficiency without affecting our primary developmental focus.

Please standby for our next question. Our next question comes from Corinne Jenkins with Goldman Sachs. Your line is now open.

Yes, good morning. It seems the effective date for this payer contract started in early October. I'm interested in knowing what percentage of scripts written today are for patients covered under that newly announced agreement. Additionally, could you provide some insight into the process for that patient group?

Yes, thanks, Corinne. We haven't provided specific guidance on the percentage of our scripts covered by this contract yet. However, we anticipate that the impact will enhance our growth starting in the December quarter. As coverage becomes effective, we expect additional lives to be covered under this contract, gradually translating into improved gross-to-net. Regarding in-licensing opportunities, we remain committed to identifying high-quality programs that can add to our late-stage portfolio. Given our recent capital positioning, we are looking for impactful, late-stage opportunities. We believe the market can provide several promising assets, and we remain focused on maintaining our efficiency in capital allocation.

Please standby for our next question. Our next question comes from Robyn Karnauskas with Truist. Your line is now open.

Hi, congrats on the quarter. This is Alex for Robyn. We wanted to know, as you continue discussions with physicians and payers, have you received any pushback or any details to the discussions that might change how you view or approach the launch strategy? And then also for 1402, seems like this is a very sizable opportunity there. We're really excited. How do you think about prioritizing which indications we pursue initially?

Yes. Thanks, Alex. We haven't received meaningful pushback; the drug has been well-received, and we see enthusiasm from both doctors and patients. In terms of prioritizing indications for 1402, we focus on chronic diseases for which IgG suppression is essential. We can tailor our approach based on the unique profiles of each compound and the specific indications.

Please standby for our next question. Our next question comes from Yaron Werber with Cowen. Your line is now open.

Hi guys, this is Brendan on for Yaron. Thanks very much for taking the questions. Just a couple quick ones from us. First on VTAMA, obviously, more PBM impaired discussions are a big focus here as you guys have all kind of outlined. But maybe also – I also just wanted to ask from a broader commercial competitive dynamics standpoint, I mean, what are the next steps you're all focusing on to the launch, maybe beyond payer coverage?

Yes. Thanks, Brendan. It’s a great question. Beyond payer coverage, we focus on prescriber education and patient outreach to emphasize the advantages of VTAMA. We plan to ramp up direct-to-consumer initiatives tailored to drive script volume while ensuring patients and doctors understand its benefits, particularly against traditional topical corticosteroids.

Please standby for our next question. Our next question comes from Louise Chen with Cantor. Your line is now open.

Hi, congrats on all the progress this quarter and thanks for taking my questions. I had a few for you. First one I wanted to ask you about was how do you think about pricing for your first and second-generation anti-FcRn? Will this be a competitive advantage for you? And then, secondly, the opportunity for Priovant in SLE and also DM, how the economics work with Pfizer.

Yes. Thanks, Louise. Premature to discuss specific pricing for FcRn but having both options presents us with a competitive advantage in strategy. Regarding DM and SLE, both present significant commercial opportunities. We maintain tiered royalties to Pfizer on their respective territories, and we aim to drive growth in both indications.

And then, last question I had for you is how are you thinking about or framing the AD data readout in 2023, especially in light of what we saw with Japan Tobacco and then say versus OPZELURA and prior Phase 2 data you've shown.

Yes. Regarding the AD data, we're optimistic based on the results from Japan Tobacco and view this as a critical market. Our data suggests meaningful differentiation from existing therapeutics, particularly in the context of known limitations of current therapies like OPZELURA.

Please standby for our next question. Our next question comes from Neena Bitritto-Garg with Citi. Your line is now open.

Hey guys, thanks for taking my question. Just on the last question on atopic dermatitis, I'm just curious what you're hearing from dermatologists and physicians that are prescribing it currently about their desire to prescribe it for atopic dermatitis and whether or not they have actually tried that.

Yes, thanks. We hear strong enthusiasm from dermatologists regarding their interest in prescribing VTAMA for atopic dermatitis. Their feedback indicates a positive reception to its potential for efficacy and its differentiated profile compared to steroid options. Regarding the LNP patent update, Moderna is expected to file an answer soon, which could lead to the discovery phase after that. We are confident about our position in the litigation and are ready to navigate the next steps in the legal process.

Please standby for our next question. Our next question comes from Douglas Tsao with H.C. Wainwright. Your line is now open.

Hi, good morning. Thanks for taking the questions. Just Matt, in terms of – and congrats on the progress and in terms of the PBM contract, at what point do you think operationally we should see that reflected in terms of the script volume trend?

Yes. Thanks, Doug. We expect to see script growth influenced positively by the PBM contract, with continuous improvements over the next three to six months as access expands and prescribers gain confidence in patient coverage. The holiday season, however, may bring variability to the script volumes.

Okay. Great. And then Matt, as a follow-up, I'm just curious, have you given thought about how the IRA might affect your development of certain assets?

Yes, it's a relevant question. We've considered the IRA's implications on our asset development strategy. We are assessing the potential impacts on our capital allocation across our portfolio as we navigate the evolving landscape.

Please standby for our next question. Our next question comes from Dennis Ding with Jefferies. Your line is now open.

Hi, thanks. This is Yuchen with Jefferies. Two questions on our end. The first on EU launch and efforts, could you just tell us where you are and when you would expect any updates on the EU process and what commercial preparations you have made in advance of the approval?

Yes. On the EU front for VTAMA, we don't have new updates currently. We're working diligently toward that opportunity and have strategies in mind for commercializing in Europe, a significant market given its patient population. We will provide updates as they become available. On the mRNA patent litigation, we expect to see a response from Moderna in the coming weeks, guiding us towards the discovery phase. We'd anticipate further calendars being set for this process and updates will follow thereafter.

Please standby for our next question. Our next question comes from Dennis Ding with Jefferies.

Thank you for your participation. We look forward to continuing to provide updates at upcoming investor conferences, and with our next quarter. Thank you so much.

This concludes today's conference call. Thank you for participating. You may now disconnect.