Earnings Call Transcript - ROIV Q4 2022

Operator, Operator

Good day and thank you for joining us. Welcome to the Roivant Sciences Fourth Quarter and Fiscal Year 2022 Earnings Call. All participants are currently in listen-only mode. Following the presentations, there will be a question-and-answer session. Please note that today’s conference is being recorded. I will now turn the call over to your speaker today, Stephanie Lee with Roivant. Your line is open.

Stephanie Lee Griffin, Speaker, Roivant Sciences

Good morning, and thank you for joining today's call to review Roivant's financial results from the company's fourth quarter and fiscal year ended March 31, 2023. I'm Stephanie Lee with Roivant Sciences. 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 updated 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'll be making certain forward-looking statements during today's presentation. We strongly encourage you to review the information that we filed with the SEC for more information regarding these forward-looking statements and related risks and uncertainties. And with that, I'll turn it over to Matt.

Matt Gline, CEO

Thank you, Steph, and thank you, everybody, for listening this morning. It's great to be back. I was talking to the team this morning saying it feels like a slightly disconnected call because we were obviously just together last week to talk about the really exciting data from the chronic period of our RVT3101 study. But actually, an enormous amount has happened for us, both in this fiscal year generally as well as specifically in recent quarters. So I'm looking forward to providing updates on those topics. We'll talk a little bit about where we are through the course of our year. We'll give some great updates on the progress that we're making with the ongoing launch of VTAMA, as well as a reminder of our atopic dermatitis results. We'll do a quick refresh of the data we put out last week on RG311, a quick update on our FcRn program, a financial update, and then we'll turn the line over to Q&A. Starting on Slide 5, just as a reminder or for level setting, we're really proud of the continued progress that we've made here. We celebrated this quarter with a milestone, the 10th consecutive positive Phase III study that we have run. That's the most recent 10 studies that we've run that have been successful. We now have six products that we've gotten approved by the FDA out of our model. We reported $1.7 billion in cash as of March 31, which supports our cash runway to the second half of 2025, before which we'll have a tremendous amount of data to share. We're incredibly proud of what we now believe is an industry-leading pipeline, especially in late-stage immunology with over $15 billion of sales potential supported by the ongoing launch of VTAMA and a number of potential best or first-in-class programs. We've said all along on Slide 6 that 2023 was going to be our biggest year. We are right at the midway point, both in terms of the year and in terms of the data that we've been looking forward to sharing. We've continued to provide updates on VTAMA as we will do today, and this has been another great quarter of progress for that launch. We've now shared data for both of our Phase III studies in atopic dermatitis for VTAMA, data that we think is really exciting and will support an important product in that class pending potential FDA approval next year. We've now supported data from both the induction and chronic periods of our study of RVT3101, our TL1A antibody in ulcerative colitis, which again is phenomenal data. We think we have really top-end efficacy that has the potential to matter for patients and to be an important new option. We'll continue to provide updates on that program. Still coming and obviously closely watched are a number of updates from our anti-FcRn franchise, including the healthy volunteer study for IMVT-1402, which we hope and believe will establish that program as a best-in-class anti-FcRn antibody, as well as a number of ongoing trials in bitoklimab to show continued efficacy of that agent and the class in multiple indications. On Slide 7, just as a reminder, we are just very proud of our portfolio overall here with a number of late-stage agents that we think matter in some of the biggest classes, certainly in immunology. We will continue to add to this pipeline as opportunities present themselves. Obviously, we made some really important additions within the last 12 months with IPT4102 and RVT3101, and I hope we can find more just like those two to bring on in the coming year. I'll start in the next section here with an update on the commercial launch of VTAMA. On Slide 9, we are very excited about the way that demand continues to evolve for VTAMA. We believe we are the best launching novel topical in psoriasis history. We are obviously the best-selling branded topical in psoriasis and have been since very shortly after our launch. First of all, we did $13.7 million in net product revenue for the March 31 quarter, which is a significant increase from $9 million or $9.2 million in the prior quarter. So obviously happy with the sales number. Maybe frankly, even happier with the progress that we made during the quarter in gross-net yield, up from 18% to 25%, which reflects the breadth of coverage that we added, frankly, faster than expected in the first quarter of this year, and we've continued to add coverage since. From a coverage perspective, on Slide 11, we're now up to 76% of commercial lives covered within a year of launch. This is better by a meaningful margin than our expectations at the time we launched the product. This includes the addition of two major national PBM formularies and important regional PV and formulary approval with 18 ABS plans. So just really great coverage. And as a reminder, most of that coverage is single step through steroids, which is exactly where we wanted to be when we launched the product and gives us access to the patient population that matters most to us. As a reminder, there are almost 400,000 topical corticosteroid scripts every week between psoriasis and atopic dermatitis, and we're currently doing about 4,000 or a little bit more than 4,000 scripts a week. We have a ton of room to grow into that opportunity. Speaking of atopic dermatitis, on Slide 12, we've talked a lot about this data. We got together to discuss the Dorint data on the call in March. We put out the DR1 data as well, which is extremely consistent. This data is really terrific on IGA response rates, really, really good E75. I'm very happy with the quality of the data here. The reported data was in adults that looked very good in children as well and about equivalent. We feel like NAD, which is really a disease marked by itch; these data are going to make a significant difference for patients. And as a reminder, this study went all the way down to pediatric patients in H2, which is key because the pediatric patient population is large, and the unmet need there is significant. Across all patients and especially in pediatric patients on Slide 13, one thing that you really care about with a topical agent is safety. It's clear from our data that the tolerability of this agent in atopic dermatitis is exceptional, frankly, even a little bit better than we saw in psoriasis with very low rates of contact dermatitis and very low rates of follicular events. Just a clean profile that gives us exactly the profile of a product we think will matter to physicians and patients. So we are really excited about the data from a safety perspective as well. I won't spend too much time on the comparative analysis on Slide 14, but this is data in a moderate to severe patient population that looks competitive with or even better than a number of systemic agents, certainly in the same ballpark or better than anything else that is topical in atopic dermatitis. So we have more updates to share on Dermavant over the course of the year. Looking forward to continued coverage, looking forward to progress in the franchise. Looking forward to providing updates on the sNDA filing for Vitamin D, which we expect to be at the very beginning of the next calendar year. Looking forward to sharing those in quarters to come. I will pivot now and give a brief reminder. This is data that we put out just last week. So I won't spend a lot of time on it with RVT3101. On Slide 16, we really believe this program is in a class of its own. Anti-T antibodies at this point between our program and one of our competitors that also reported data earlier this year. This is a remarkable class of drugs that has shown incredible efficacy, and we are proud to be the first agent to show real and proper-blinded 52-week data last week. And it's great data. We showed substantial improvements between week 4 and week 56 across almost all of the endpoints in our go-forward dose. We are the only anti-TL1A antibody at this point with valid long-term efficacy data, and we have over 200 patients worth of data. We have a biomarker that we've talked a bit about that is relevant to 60% of the UC population with meaningful improvement in efficacy relative to the all-comers population. And then safety has been very good for the agent in the study so far. We've seen no impact of immunogenicity on the program, which we know was a concern that people were hoping to get addressed in this trial. We are now full speed ahead with a plan to run a simple Phase III program with a single subcutaneous dose in the near future, and we'll provide updates on that just after our discussion with the FDA, which is coming this summer. As a reminder of the data, and I'll speed through this on Slide 17. We saw modified clinical remission in our KNR Phase III dose go from 29% at 14 weeks to 36% at 56 weeks, a remarkable 50% improvement at week 56 in endoscopic improvement. Endoscopic remission, something that very few agents have achieved, is a notable metric we are really excited with what we saw there with 21% of patients in the all-comers population on the Phase III dose achieving clear endoscopy. Once you overlay the biomarker on Slide 18, that data looks even better, achieving 43% clinical remission in the Phase III dose at week 56, and 64% of patients met the endoscopic improvement criteria. We are very excited about the potential for efficacy in the biologic-experienced population. We have been very encouraged with our data across the board, and we feel very confident that this is going to be a great agent in later lines of therapy. All that has to be backed up by a good safety profile. A very exciting aspect about the TL1A class, as you can see in our safety data on Slide 20, shows that due to the mechanism is present primarily in diseased tissue, we do not experience some of the infection and other issues that are common with other anti-inflammatory classes. We had no severe infections observed and no infections at a rate greater than or equal to 5% in the chronic period. We generally show a very clean safety profile that we think will enhance the utility of the drug going forward. Finally, on Slide 21, one of the questions that we frequently received coming into the maintenance period was whether ADA presence would matter. We were reasonably confident that it would not. What you can see in this slide is across all data pooled from all nine arms of the study, patients with ADAs had somewhat better clinical remission than those without, and it was uncorrelated with the quartile of ADA titer. We don't think this is a real effect; we just think this is noise. We expect the rising antibody rate to be flat to down, maybe with a target of 0 at week 56 in the expected Phase III dose. Without belaboring the point too much, we feel fantastic about the amount of data that we have here, quite differentiated relative to the field. We have over 400 subjects dosed, including 250 patients dosed across an IV and three subcutaneous doses, 200 patients dosed across three years of continuous dosing; just hundreds of robust dose profiles. We are the only agent here with subcutaneous data available as well as a significant amount of long-term data. Our biomarker, specified prospectively, has obviously been tested in many patients, and we expect a commercial form factor that is a once-monthly subcutaneous auto-injector. We believe we have a strong positioning versus other agents in this class. Finally, I want to highlight that we have initiated a Phase II study in Crohn's disease with just over 100 patients. It is two doses subcutaneously monthly, similar in that sense to the Phase IIb studies we just ran in UC. There will be 12 weeks of dosing followed by a 40-week chronic period, again with a similar set of endpoints. We wanted to start this study very quickly because we felt like we could run a proper dose-ranging study in Crohn's patients without losing ground on the opportunity to be first-in-class in Crohn's, and that would allow us to run a straightforward, simple single-dose Phase III study that will be optimal for patients. Just as a reminder on Slide 24, we are really excited about this program. I think it is a major anchor in our late-stage pipeline. We believe it will be the first-in-class anti-TL1A antibody with an efficient, well-validated path moving forward. We think we are uniquely positioned to overcome limitations of IBD therapies, including efficacy in later-line therapy with sustained clinical remission and endoscopic improvements among the highest ever reported. We think our biomarker further differentiates this class and our agent versus other treatment options for IBD patients and provides an opportunity to select for patients with an even higher clinical remission rate, while we believe our data supports an all-comers population for approval. Finally, we see many opportunities for additional growth, including the Crohn’s study I just mentioned, as well as dual targeting of both inflammatory and fibrotic pathways, opening a range of large markets and high unmet need indications that go well beyond IBD. We look forward to sharing more on these as soon as we're underway with additional studies. Finally, I want to spend a few minutes on IMG-1402 and our anti-FcRn franchise. Obviously, Immunovant has spoken about this program, and there are no new updates in this section, but I wanted to remind everyone of what was coming, given our excitement about this program. On Slide 26, we have a significant franchise in anti-sera antibodies with our first-generation batoclimab currently in multiple pivotal studies across Major Depressive Disorder and Chronic Inflammatory Demyelinating Polyneuropathy, with data coming over the next couple of years in those studies as well as others. We have our next interaction antibody, IMVT-1402, which we believe will have the same best-in-class suppression of IgG as batoclimab, while showing minimal impact on albumin and LDL, thus being useful for chronic dosing in diseases with a larger patient population. We have data coming from that program in August and September for single-dose data, in October and November for multiple-dose data. We think it has the potential to establish that agent as best in class. Our ongoing Phase I study for IMVT-1402 includes single ascending and multiple ascending dose cohorts. We are looking forward to sharing that data later this year, as mentioned. Based on our data from batoclimab, both on albumin and on IgG, we think the single ascending dose data, which we will be putting out at the end of the summer, may be predictively useful for the multiple ascending dose data. I have received some inquiries regarding expectations there. We believe, based on the current data, we anticipate being clean on albumin and LDL. It's important to remember that the LDL assay has about a 10% variability, and the albumin assay is slightly more specific but also has some variability. Although we don't have any data to share at this time, we expect positive results. Now I'll provide a brief financial update on Slide 21 before we open it up for Q&A. We showed net revenue of $27 million, including net product revenue of $14 million for the quarter ending March 31. Our net revenue for the fiscal year was about $60 million, with net product revenue of about $28 million. For the quarter, we had R&D expenses of $130 million, or adjusted R&D expenses of about $126 million, and SG&A was $126 million, or adjusted about $100 million. This is consistent with prior quarters from a spending and burn perspective. Notably, we ended the fiscal year with $1.7 billion in cash equivalents, which gives us confidence in our cash runway into the second half of 2025, providing us ample opportunity to deliver valuable data. I won’t go through all of the catalysts on Slide 33, but we’ve talked about some of them here, and the long list of significant developments is on the horizon, including programs we haven't discussed much. We look forward to sharing more insights and reconnecting soon. It has been a tremendous fiscal year for us, and I want to thank all of our patients and the team at Roivant as well as those listening on this call for being with us. With that, I will pause and turn the line over to Q&A. Thank you, everybody.

Operator, Operator

Our first question comes from Robyn Karnauskas from Truist Securities.

Robyn Karnauskas, Analyst

Just going back, Matt, on your comments around the bar for 1402, do you think, given the properties of the molecule, that we should look at the graphs you've shown for the SAD and IgG data, and they will look similar? Is the properties of the molecule sufficiently similar to expect the curves to be similar? That's my first question, then I have a follow-up.

Matt Gline, CEO

I'll also invite Frank if he has any comments there. Overall, in terms of the broad properties, I think the answer is we would expect them to look generally similar. Obviously, with the notable difference that 1402 has been engineered to avoid the albumin binding, and so the albumin interference is minimized. Hence, I would not expect to see an impact on albumin. Frank, anything you’d add to that?

Frank Torti, Chief Scientific Officer

I think that's well said. The only thing I’d add is, they are not identical antibodies, obviously, so they have slightly different properties, but they are similar. I would encourage the investment community to regard the albumin data as probably the most robust and reproducible assay among the assays we're going to be presenting in the future, but I do think that the curves should generally relate.

Robyn Karnauskas, Analyst

And regarding VTAMA. Congratulations on a great quarter in selling this new drug. I was just curious; can you provide trends on what you’re seeing regarding the remittance effect? At what point might you expect to see patients not taking the drug or pausing and waiting for the disease to return a bit? I know it’s early in the launch.

Matt Gline, CEO

Thanks, Robyn. It’s a great question. Broadly, first of all, physician and patient feedback on the remitted benefit is excellent. Patients typically experience the benefits quickly after starting the drug, and we get a lot of positive feedback from doctors and patients about the benefits they've observed. I suspect that the renewal rate for the product reflects these experiences already. It's probably a bit too early to predict how that will ultimately impact overall demand, but in general, I wouldn't expect to see a significant change in the future due to that effect. It’s a selling point for the drug, and physicians are happy to tell patients they can stop taking the drug and still experience its benefits.

David Risinger, Analyst

Congrats to you, Matt, and your team for all the updates and the corporate progress. I'd like to start with VTAMA. The trends are clearly moving in the right direction, but on Slide 9, it does show the TRx peaked, and while there are sometimes data anomalies, could you discuss the trajectory ahead and the drivers for continued ramp-up of the product? Additionally, regarding the approval timeline for AD, after you file in the first quarter of '24, how many months after filing might we expect approval?

Matt Gline, CEO

Thanks for listening, David. Those are all great questions. Regarding the script trends, it's important to note the week-on-week variability in prescriptions; this has been true for all topical launches, not just ours. Some of the fluctuations you're noticing are likely just noise in the week-on-week data. That specific peak you pointed out was influenced by the recent atopic dermatitis data. My hope and expectation is that this serves as a preview of what's to come with the AD approval, demonstrating enthusiasm around that data. Concerning timelines, we expect a 10-month approval clock after the sNDA filing in the first quarter of '24. Regarding transactions in the second half of the year, our history shows we're not great at sitting still, and the market is currently thriving with potential opportunities. The assets we're interested in are monitored closely by larger pharmaceutical companies, indicating that we're careful in our decision-making process.

Neena Bitritto-Garg, Analyst

Sorry, can you hear me? I wanted to ask a follow-up about what you're looking to see with 1402 concerning albumin reduction. Could you provide a benchmark for acceptable albumin reduction? I believe with the lower dose of batoclimab, you saw about a 30% reduction, which corresponded to about a 40% increase in LDL.

Matt Gline, CEO

Thanks, Neena. I’ll ask Frank for any further comments. The short answer is lower is better, and we expect it will be significantly different from what we saw with batoclimab, meaning much lower in our case. The assays we use can detect sensitivity in the mid-single-digit range. Thus, anything close to that should be regarded as noise and would ideally lead to very low LDL in typical patient profiles.

Frank Torti, Chief Scientific Officer

No, I think that's covered well.

Corinne Jenkins, Analyst

I have a couple of questions. First, what can you share about fill rate and the time from prescription to fill for VTAMA? Given it's early, any additional information on refill rates would be great.

Matt Gline, CEO

Thanks, Corinne, I appreciate the question. Generally, patients getting prescriptions filled has not presented a significant challenge at this stage. Early in our launch of specialty, we saw fills primarily through specialty retail dermatological pharmacies, a direct channel that dermatologists frequently engage with. It’s been encouraging that many patients can directly fill their scripts at pharmacies like Walgreens or CVS. We are observing a solid number of refills, which suggests that patients enjoying the drug are continuing their use of it. Given that we lack any duration limits, I think it’s evident that our refill rates will surpass those of steroids. Regarding balancing our direct-to-consumer campaigns and coverage yield rates, it’s a relevant question, especially when earlier in our launch, we lacked the payer coverage we do now. Demand generation through DTC can create volume, but it might not always yield a commercially beneficial spike if coverage isn't adequate. Now with 76% commercial coverage, we believe demand generation will prove beneficial and have therefore scaled up our DTC efforts. The Derm team created an excellent campaign that’s currently progressing, as we continue refining our targeting plans while gathering real-time feedback. We expect that it may take some time for the effects to influence script trajectories. Still, we’re optimistic about its potential.

Yuchen Ding, Analyst

I have two questions regarding TL1A. For your Crohn's program, can you comment on whether you will use similar doses as you did in UC, or could you explore higher doses? Additionally, could you talk about the biomarkers? Is this the same biomarker used in UC?

Matt Gline, CEO

Yes, thanks. We are using a similar range of doses in the Crohn’s study as we did in UC. In terms of biomarkers, we are using the same biomarker algorithm in Crohn's as UC. We believe the patient populations should be similar as well. Based on our biomarker algorithm understanding, we expect it to be equally relevant.

Yuchen Ding, Analyst

I noticed in your 10-K that for TL1A, 20% of patients who are biomarker-positive did not give consent. Can you confirm this and offer insights as to why?

Matt Gline, CEO

Yes, that was accurate. Biomarker samples were collected from all patients in the study, but the analysis of those samples required separate consent, and the sponsor did not gather consent for 20% of the patients in the study for those samples due to local IRB and site policies. All of our biomarker data, both positive and negative, basically reflects 80% of the study population while all comers include the 20% for which biomarker data was not obtained. We have no reason to believe there is a correlation between those consents and the severity or anything else. The data are robust, so we’re confident.

Lut Ming Cheng, Analyst

Just one on TL1A related to your ongoing Phase II trial design for Crohn's. I'm curious if you could provide more details regarding the dosing planned for the chronic period. I understand you will only evaluate one specific maintenance dose based on Slide 23.

Matt Gline, CEO

Yes, we’ve gathered a good deal of information from the dose-ranging studies in our UC study, which is aiding our confidence in deciding on dosages. While we know what we believe will be our chronic period dose, we prefer not to disclose specificity until we are ready to share dosing information from the ongoing trials next year. For the immunovant studies, we see similar logic in planning. As we move into the earlier line patients, we hope to find something that can be competitive with or superior to existing treatments.

Matthew Gline, CEO

Thank you all for your insightful questions and for joining us for today's call. It's always a pleasure to discuss developments at Roivant Sciences. We will provide more details in the coming months about the accomplishments and the exciting opportunities ahead. Thank you.

Operator, Operator

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