Earnings Call Transcript - ROIV Q1 2025

Operator, Operator

Good morning, and thanks for joining today's call to review Roivant's financial results for the first quarter ended June 30, 2025. I'm Stephanie Lee with Roivant presenting today. We have Matt Gline, CEO of Roivant. 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. We strongly encourage you to review the information that we have filed with the SEC for more information regarding these forward-looking statements and related risks and uncertainties. Now with that, I'll turn it over to Matt.

Matthew Gline, CEO

Thank you, Stephanie, and everyone for joining this morning. I appreciate your time. This quarter is relatively quiet, but we anticipate a busy fall. I look forward to sharing updates and addressing your questions. I will begin on Page 5 with a reminder of our position for this year. We have three main themes for calendar year 2025. The first is the ongoing progress with IMVT-1402 and Immunovant, where we aim to develop a top-tier anti-FcRn antibody. Earlier this year, we released data on etokimab, our first-generation drug for MG and CIDP. Our focus now is on enrolling the grade study and advancing other announced indications. The second key development is the forthcoming registrational data from brepocitinib, which we expect to pave the way for its commercial launch. The pivotal trial reached its last patient visit last month, and we expect to share that data in the second half of this year. Lastly, our attention remains on the LNP litigation with Moderna, which is nearing trial scheduled for March 2026, along with ongoing processes involving Pfizer and biotech. We will provide a brief update on this call. On Slide 6, I want to highlight our proud pipeline, particularly with brepocitinib. We anticipate the registrational data soon, along with progress in multiple clinical trials, including five ongoing registrational trials for 1402. We are also focusing on our hypertension program, which is set for the second half of next year. On Slide 7, while I'm not superstitious, I won’t dwell too much on the future beyond brepocitinib data. However, the next few years look promising with multiple potential registrational datasets and launches, starting with brepocitinib and extending to our SARM portfolio. In time, we could be discussing a very different company with an expanded commercial presence. We are eager to get started. Finally, on Slide 8, I will provide a brief update on our share repurchase program. As you know, we completed the $1.5 billion authorized share repurchase program from last year by June 2025, repurchasing just under 150 million shares at an average price over $10. This reduced our share count by more than 15%. During the same period, we significantly grew our pipeline, enhancing shareholder exposure to upcoming catalysts over the next 36 months. After completing the program, the Board authorized an additional $500 million for opportunistic repurchases, especially as market conditions fluctuate. On Slide 9, we have made substantial progress across our entire pipeline. We continue to advance brepocitinib in various indications and have completed the last patient visit for Valor and DM. We are also actively enrolling patients for registrational trials in noninfectious uveitis and our approved consensus for acidosis at a strong pace. We are intensely focused on clinical execution for IMVT-1402, particularly our Grave's disease study, where enrollment is increasing. We expect to present additional data from our Phase II trial in Grave's disease at ATA next month. Our potential registrational program in inflammatory disease is now underway, alongside progress in our LNP litigation, which we will discuss in a few slides. I’ll briefly touch on brepocitinib on Slide 11. We are proud of brepocitinib's advancement in various orphan immunological conditions, backed by a well-established safety profile across over 1,500 patients. We licensed this program in the summer of 2021 amidst uncertainty about JAK inhibitors, but the favorable evolution of the field, with some competitors bringing in significant revenue, has been promising. We have advanced brepocitinib into two pivotal programs from its conceptual stages. On Slide 12, we believe brepocitinib could redefine care standards for patients with dermatomyositis (DM). DM is a crippling disease with significant unmet medical needs, affecting approximately 40,000 adults in the U.S. Current treatments rely heavily on high-dose chronic steroids and other immunosuppressants, which may not be effective overall. Brepocitinib is the only oral therapy in late-stage development and represents a groundbreaking option for these patients. The VALOR study is designed to truly establish its profile with strong pharmacological rationale for TYK2 and JAK1 inhibition. This interventional trial represents the largest trial for DM conducted to date, employing various endpoints to demonstrate its benefits to patients' quality of life. As we announced in June, we've had promising outcomes related to our steroid study, which should strengthen our position against other programs. On Slide 13, we have a schematic showing two doses of brepocitinib—30 mg and 15 mg—administered over a 52-week period alongside a mandatory steroid taper for patients who exhibit active skin and muscle disease. The primary endpoint is the mean change from placebo at 52 weeks. Slide 14 presents the baseline characteristics of the study, which we shared during our brepocitinib-specific call in June. We're satisfied with how these baseline characteristics align with those from successful late-stage studies, including the IVIG proteom study. On Slide 15, we've been focusing on the steroid taper, designed to manage inherent variability in endpoint testing. We've achieved considerable success, with 98% of patients meeting the mandatory taper requirement, over 40% completely eliminating oral steroids, and over 60% demonstrating a significant reduction from baseline. This positions brepocitinib well in the trial. On Slide 16, since we began the DM program, DM has increasingly been recognized as a commercial opportunity with substantial unmet needs. While multiple studies are currently in progress, we remain the only oral therapy, with our readouts expected soon. Our timeline includes getting proof-of-concept data next year along with top-line data in cutaneous sarcoidosis and noninfectious uveitis, followed by regulatory filings in 2027. We're looking at a busy schedule ahead. The last major update I'll share today is regarding the L&P litigation on Slide 19. We are currently in a pivotal phase regarding our LNP litigation. In the Moderna cases, we are working through pretrial processes to streamline claims and defenses, currently in the summary judgment phase that I will discuss shortly. The U.S. jury trial is set for March 2026, and we have major international hearings expected in the first half of next year. The Pfizer case is also active, with a market hearing conducted similarly to last year, and a ruling could arrive this year. Recent developments include the summary judgment motions filed in the U.S. Moderna case. We're asserting four patents—three relating to lipid composition and one on mRNA LNP compositions covering mRNA encapsulation in LNPs. We've filed three motions related to obviousness arguments resolved in the IPR process, aiming to prevent Moderna from making certain invalidity claims. Moderna has also filed three motions for summary judgment, including an attempt to reduce liability to the U.S. government, concerns around our use of doctoral equivalents based on patent prosecution history, and challenges to the indefiniteness claim of the 651 patent. We anticipate resolutions to these issues this fall during the summary judgment process. Additionally, the case has been assigned to a new judge with the trial scheduled for March 2026. Upcoming opposition motions for summary judgments are due August 22, followed by replies in September before the judge makes decisions. In closing, I’ll provide a quick financial overview. It’s been a straightforward quarter with an adjusted net loss of $170 million and cash utilization of about $200 million outside of our share repurchase program. Our balance sheet remains robust, with $4.5 billion in cash as of June 30, no debt, and a considerably reduced share count due to our repurchase efforts. We hope to discuss the upcoming years more once we have brepocitinib data in hand. I am excited about the potential of this commercial franchise and its significance for patients, along with everything else on the horizon. Thank you for listening to the prepared portion of this call. I look forward to your questions.

Operator, Operator

Our first question comes from Brian Chan with JPMorgan.

Lut Ming Cheng, Analyst

Matt, just on VM. Can you talk about just how much data we could get at the time of your top line, assuming the data is positive? How far are you from filing for approval? And what are some of the remaining gating factors from filings? I have a follow-up.

Matthew Gline, CEO

Yes. Perfect. Thank you. Great questions. Look, I think obviously, we haven't seen the data yet, but my expectation is we'll have top line, all the key secondary reasons, the major safety data shared approximately contemporaneously with the data. Beyond that, we'll see. But I think all of that obviously gets analyzed roughly at the same time. Assuming that, I think what we've guided to in terms of filing is maybe the very beginning of next year. And I think there's nothing sort of specific and unusual gating other than all of the normal NDA prep activities, which are significant. Obviously, we've been doing as much of that in parallel as we can and we'll be looking to hit the gas on that as much as we possibly can get that filing as early as we can once we've got the data in hand.

Lut Ming Cheng, Analyst

And then just on the Grave's trial, the second trial, can you talk about the trial design that we saw posted here in your latest deck? We noticed that there is 300 mg that you're testing. What's the rationale of testing a lower dose in that second Grave's trial?

Matthew Gline, CEO

Yes. Thanks. It's a great question. And I appreciate your pointing out actually that we have posted that great trial design. The short answer among other things is, as Grave's may be the first trial renewed in the first registration files or neck and neck with some of the others. We wanted to make sure we had a trial that would ensure FDA approval, and they make sure to tell us that we work for them without issue with the lower dose. It's really about ensuring that we can advocate for minimally efficacious dose with FDA in that process.

Operator, Operator

Our next question comes from the line of David Risinger with Leerink Partners.

Dennis Ding, Analyst

I have two questions. The first is about how a flare is defined in the trial and how it is treated. Can you provide more details on how patients who need steroid rescue will be handled? My second question is regarding the 40% of patients who eliminated steroids. Is that a blinded or pooled estimate? Additionally, can you speculate on the potential impact that any imbalance could have on the primary endpoint of TIF between the two arms, specifically if more patients in the brepo arm can eliminate steroids compared to the placebo arm? Could this affect the observable improvements on a placebo-adjusted basis?

Matthew Gline, CEO

Yes. Thanks, Dennis. These are obviously good questions that get at what we've discussed is obviously a risk in the trial, which is ensuring correct management of placebo patients. We haven't shared all of that detail, and I'm not sure we're going to do it all now. But Look, I think, obviously, there's an active protocol for managing these patients as they progress in the trial. These patients worsen, they get better and there are sort of allowances for the doctors to treat them as they come and go. There are sort of different definitions for rescue depending on whether the investigator calls it a rescue or whether they're simply treating the patient. Again, I think all of it is designed to make sure that we're really identifying patients who are flaring and worsening versus those who aren't. In terms of the potential impact of an imbalance, look, I think this is the first DM study ever run with a steroid taper. A number of previous trials have been successful without a steroid taper. So it's not necessary that steroid taper do anything bluntly in order to have a positive study. Again, you're correct that that is a blinded pool number and that we've only seen any of this data on a blinded pool basis. Obviously, if it turned out that steroid doses were much higher in the placebo arm than the drug arm, that could result in better kits for the placebo arm. But as I said, I think all of this is this is call it belt and suspenders to try and maximize the opportunity for the trial. I think it goes sort of hand in hand with your first question on rescue therapy. But I think in general, we're managing these patients carefully to try and get the most benefit we can out of the steroid taper. These are great questions. Thank you.

Operator, Operator

Our next question comes from the line of Karen Johnson with Goldman Sachs.

Corinne Johnson, Analyst

Maybe could you provide some context around the upcoming Grave's remission data? What does clinically meaningful outcomes look like there? And how does that fit into the broader clinical strategy in Grave's and then maybe one on just business development. You obviously have quite the balance sheet at your disposal. So how should we think about kind of the outlook for BD from here and the type size or structure of deals you're most interested in.

Matthew Gline, CEO

Yes. Thanks for both really good questions. On Grave's, look, I think the short answer to that question is Grave's patients and their doctors tell us that really any amount of meaningful remission would be practice-changing for them. I mean literally, we have doctors telling us if even 10% of these patients were able to go on remission. Remember, these are patients who couldn't adequately be controlled on therapy. So remission of these patients is a truly extraordinary outcome. These are patients who would have been likely potentially on lifelong therapy. Instead, you're putting them here on a new drug and not only getting them off previous therapy, but getting them off therapy altogether. So I think any amount of remission would be appealing to doctors. I think that's the answer in terms of the bar. I'm not actually sure how closely the Street is following this data, I don't know. I think I say people care about it. But I think if you talk to Grave's doctors, I think they are very interested in this data, and I think good data here would be helpful for patient enthusiasm, doctor enthusiasm for enrollment in the trial. So I think it's a pretty important readout for us. On the BD question, and thanks for asking you. Look, I think this remains an attractive market for an asset hunter. The market is choppy. There’s a lot of uncertainty big pharma companies are obviously going through it in terms of P&L and restructuring. And that creates a good opportunity for us. We have been opportunistic. We will continue to be opportunistic and the things we see on our radar are really exciting sort of potentially transformational late-stage opportunities in some cases. And we're looking forward to connecting those ranked.

Operator, Operator

Our next question comes from the line of Prakhar Agarwal with Cantor.

Prakhar Agrawal, Analyst

I had two, first a follow up on the DM question or on the flare up. So when the patient gets a flare up, what typical steroid dose that these patients get? Is it close to their baseline or something even higher and is the steroid dose on a disease flare defined in the protocol or is it up to investigator discretion? And secondly, a follow up on BD. We've seen so many assets in autoimmune as well coming out of China, whether it's in licensing by pharma or formation of NewCo. Is the market an interest for your BD strategy? And what's your latest take on the China market as it relates to competition, the quality of assets and the valuation these assets are commanding now?

Matthew Gline, CEO

Yes, those are great questions. Regarding the flare-up, I want to clarify that the term flare has been mentioned a few times during this call. The trial design in terms of stackings is less about defining a flare and more about what constitutes rescue therapy. Physicians will treat patients in various ways based on their experiences and practices. Our goal is to ensure consistent treatment of rescue therapy across different doctors. There's no specific number that indicates if a patient looks a certain way, they receive a particular steroid dosage. Some patients get treated with high doses, while others may only have a slight increase. What we're focusing on with these definitions is making sure we capture patients who are flaring and deteriorating and receiving steroids because of their worsening condition. As for the BD question, we are open to exploring opportunities everywhere. We've spent considerable time looking in China over the past 18 months and expect to continue that exploration. There are attractive aspects and opportunities there. The market is interesting in autoimmune and other areas as well. Notably, the timeline for lead programs has significantly decreased because China is producing high-quality drugs and candidates quickly for certain targets. We are considering various mechanisms, such as the FcRn or JAK1 and 2 pathways, where creative clinical development can lead to significant advancements. We believe this will be a crucial area of competition for the future in both big pharma and biotech. Thank you for the question.

Operator, Operator

Our next question comes from the line of Sam Slutsky with LifeSci Capital.

Samuel Evan Slutsky, Analyst

I have two questions. First, regarding Brepo and DM, do you feel that physicians are generally confident in the effectiveness of JAK inhibitors for the disease? Are you sensing from doctors that they are using the treatment this year, so it's available for them to utilize as needed? Or do they have specific criteria they evaluate based on the primary endpoint? The second question is about batoklimab in TED. If the data is positive, how do you plan to utilize that information? Would it assist in positioning FcRns for Graves disease, or are you considering a future program in the relapsing trial?

Matthew Gline, CEO

Thanks, Sam. I appreciate both questions. Look, on DM, we've said this before, but it's a great reminder. We think and we think doctors think that a statistically significant trial on TIS is the bar for efficacy. And part of that is as you said, doctors are generally pretty exposed to the mechanism. But I think part of it also is the test is an artifact of clinical trials as an endpoint. I think doctors just focus on good options for these patients that overall improve the way the patients feel and their quality of life. I think we've got, frankly, a variety of endpoints in the study that will underscore that. So I think the answer is the bar is pretty clearly a statistical trial and not any specific number. For batoklimab in TED, obviously, we will learn a lot in that TED study that informs our Graves' disease development. There will be patients in the study that upgrade patients. We'll learn a lot that informs Graves. As far as TED itself is concerned, we're going to be informed by the data as we see it, and we'll make decisions on that together with our partner once we have that data at hand.

Operator, Operator

Our next question comes from the line of Douglas Tsao with H.C. Wainwright.

Douglas Dylan Tsao, Analyst

Just Matt, on the DM study, I'm just curious in terms of the steroid taper, what's the goal for patients to get off steroids?

Matthew Gline, CEO

The question is about the steroid taper; specifically, what the goal is for patients to discontinue steroids and the timing of the taper. The process starts at week 12, and the mandatory taper wraps up at week 36. At week 36, 98% of patients were below a dose of 5. The general goal when tapering from week 12 is to reduce patients' steroid use as much as possible by week 36. It's important to ensure that the medication has sufficient time to be effective.

Douglas Dylan Tsao, Analyst

I'm curious about the positive data for brepocitinib at the 30-milligram dose. What are your expectations for the 15-milligram dose?

Matthew Gline, CEO

Yes. So on the 1 hand, thanks to your question. 15 has been an active dose of brepocitinib in other programs and other indications. On the other hand, and we've said before, I think the main reason for the inclusion of 15 here was regulatory in nature. I don't think we're particularly focused on what 15 looks like, and I think it's not sort of 100% obvious whether it's we expect to hit on 15 or not. The primary is on 30. I think we're really focused on generating the best possible data that we can at the 30-milligram dose.

Operator, Operator

Our next question comes from the line of Yatin Suneja with Guggenheim.

Yatin Suneja, Analyst

Two for me. One 1401, I mean, all these registration studies that you're running, would you please give us an update on how the enrollment is shaping up for all these studies, whether it's CIDP, myasthenia gravis over the Grave's? And also, if you can comment on the spend rate, particularly as it relates to the end piece. I saw a little bit of a bump up in R&D. Just curious how it's going to shape up for both R&D and G&A as we go into later this year and next year.

Matthew Gline, CEO

Yes. Thanks. Great question. I assume you mean for the enrollment. But obviously, the 401 trials are all rolled at this point. For 1402, look, I think we feel good about enrollment across all of the trials. Obviously, Eric has now been on the ground since April. I think that team is really humming. Obviously, there's a lot of enthusiasm across most of these indications for FcRn. I think we see that in the site activation and the speed of enrollment. So I think we feel good. We're on track to hit all of our publicly stated timelines. So we're feeling good about it normal altogether. On spend, our guidance remains that we're comfortably set up here to hit Grave's data on the current balance sheet. Obviously, we will see an uptick in our new year because we now have so many ongoing registrational studies for 1402 but feeling good. Spending should be pretty stable, a little bit of an adverse working capital this quarter and some one-time secreted stuff that obviously doesn't get to firms. So overall, feeling good about those timelines and about our cash guidance.

Operator, Operator

Our next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Dominic, Analyst

So we just had a question on 402. We are excited to see the additional data and 6-month remission data from the Grave's disease program will be presented at ATA in September. So what do you hope to report at ATA? And could you walk us through how, I guess, you're thinking more about the importance of this? I know you talked a little bit about the perspectives.

Matthew Gline, CEO

Yes, thanks for the question. We are eagerly anticipating that data. Our goal is to emphasize that this represents a significant opportunity for patients with Graves' disease. This will help healthcare providers understand that this is not just an incremental advancement, but rather a transformative option that could allow patients who would typically require lifelong medication to achieve remission. While milder cases may respond to anti-thyroid drugs, this has been unprecedented for more severe, resistant patients. This development may help us avoid surgeries and radioactive treatments by providing timely care. Ultimately, even modest levels of remission can dramatically change patients' lives, and I believe this will be very meaningful to physicians as well. The significance of this data is threefold: it highlights the commercial potential and the enthusiasm from both doctors and patients regarding potential approval of FcRns for Graves' disease. It also relates to patient enrollment in the study and the excitement surrounding it, which will undoubtedly be beneficial. Furthermore, it showcases the clinical profile of the drug, comparing our results to other treatment options and the current standard of care, ultimately aiming to enhance patient benefits. We are truly looking forward to this meaningful update. Thank you.

Operator, Operator

Our next question comes from the line of David Risinger with Leerink Partners.

David Reed Risinger, Analyst

Congrats on all the progress. My questions have been asked. So I'm curious just about REPO and IU. If you could give us a roadmap for the pivotal development and the potential filing year.

Matthew Gline, CEO

Perfect. Thanks. We are super excited about brepocitinib and NIU. It's obviously an indication where we developed our help; we generated our own Phase II data last year, and it was quite good data that we were very proud of. So the enrollment of that trial is going extremely well. Our guidance remains data first half of 2027. We're certainly on track to hit those timelines, and we're hoping we can file relatively shortly after we get that data, and this would be an SNDA. So it's a shorter review time line than the original NDA. We are really looking forward to that. And I think the hope there, again, in the first half of 2027, we would be getting data in NIU right around the time that we were launching in, and we get to kind of stack those indications in a way that should be additive overall and give us an opportunity to get our feet set and DM and then relatively quickly to pivot into or add the NIU patient population and doc population. One of the nice things about both of these commercial opportunities is they're quite tractable. The patients are treated to concentrate set of sites. We have a pretty good sense of who we need to talk to from that perspective. So we feel really good about both of those commercial opportunities. Thanks, Dave. I appreciate the question.

Operator, Operator

Our next question comes from the line of Yaron Werber with TD Cowen.

Sara, Analyst

Quick question on peficitinib in the prior data with JAK1. They have shown really impressive efficacy in the exploratory open-label studies. How informative is that prior data for brepocitinib?

Matthew Gline, CEO

Thank you for the question. We hope the answer is indeed highly informative. You can gain some insights from open-label studies, and the consistency we see at this stage is reassuring. There are numerous case reports as well. We used to receive more questions about this, but the volume of case reports and studies demonstrating benefits for both muscle and skin has been substantial, which is comforting. However, these studies are not placebo-controlled, and there is considerable variability in KIS. I will remain anxious and sleepless until we have the placebo-controlled data. We also hope to observe benefits from both JAK1 and TIK2, which might provide us with an additional advantage compared to those studies. Nevertheless, the reassurance among physicians and the solid open-label data from current studies are insufficient for drug approval. Until we have the Phase III data, we will remain anxious, and you may share that anxiety with us.

Operator, Operator

Our next question comes from the line of Emma Gutten with Wolf Research.

Emma Gutten, Analyst

Just looking at Slide 16, many companies are targeting this area. Can you explain your strategy for navigating this highly competitive market? Additionally, in the press release, you mentioned preparations for a potential launch in DM. What specific preparations or key milestones do you have planned for the next 6 to 12 months?

Matthew Gline, CEO

Thank you for the question. In a highly competitive commercial market, being first is advantageous. I'm pleased to say we are leading this pack, which is beneficial. JAK inhibitors have demonstrated impressive efficacy in other settings and are likely to offer significant clinical benefits for these patients. This plays a crucial role in our strategy, and with their high level of comfort, I believe it will be advantageous for us. We provide an oral therapy, setting us apart from other mechanisms. Patients are generally managed on oral steroids if they aren't on IVIg and are accustomed to taking regular medications. This, along with being first, gives us a strong profile. Regarding preparations for launch, there’s limited action that can be taken before receiving the Phase III data; however, we have a roadmap informed by other successful biotech launches. Engaging with the physician community is essential, and our team has been proactively connecting with them. We have built a strong reputation within that community, reflecting the expectations around what our drug can achieve and the quality of our marketing team. These doctors are incredibly important to us, and we will keep engaging with them. Once we have the data, we will be able to do even more. Yes. Thank you again, everybody, for listening this morning. Again, a relatively quiet quarter, but a really exciting few months ahead for the business. So looking forward to getting back on the phone and talking about a number of updates as they come. I hope to speak again soon. I want to say thank you again to obviously, the Roivant and all the teams who are working hard to get these studies enrolled and working hard to generate clinical data. I want to thank, obviously, our shareholders, and I want to thank all the investigators and patients who trust us with their care, and we're looking forward to sharing some of that patient data as soon as we get it. So thank you, everybody, and have a great Monday.

Operator, Operator

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