Roivant Sciences Ltd. (NASDAQ:ROIV) Q2 2023 Earnings Call Transcript

Roivant Sciences Ltd. (NASDAQ:ROIV) Q2 2023 Earnings Call Transcript November 13, 2023

Roivant Sciences Ltd. misses on earnings expectations. Reported EPS is $-0.4 EPS, expectations were $-0.25.

Operator: Good day, and thank you for standing by. Welcome to the Roivant Q2 2023 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. [Operator Instructions] Please be advised that today’s conference is being recorded. And I would now like to hand the conference over to your speaker today, Ms. Stephanie Lee. Please go ahead.

Stephanie Lee: Good morning, and thanks for joining today’s call to review Roivant’s financial results for the second quarter ended September 30th, 2023, along with the business update. 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’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: Thank you, Stephanie, and good morning, everybody. Thank you for joining us on this call this morning. It has been a highly eventful quarter, but comparatively an uneventful call given that most of the major updates, including the Immunovant data from September and the sale of Telavant to Roche have already been discussed, but I’m looking forward to giving everyone our normal business update and taking the questions-and-answers. The plan here is, I’ll talk a little bit about where we are as a business. I’m going to remind everybody of the parameters of the sale of Telavant, we are going to give a brief overview of the data that Immunovant presented back in September, a little bit about the VTAMA launch, a brief reminder of the upcoming brepocitinib data, and then we’ll wrap up with financials and Q&A.

So, I’m going to start on slide six in the presentation, which is a slide — which is fun to put up. So we are sitting here in November of 2023, and I keep saying on these calls but it’s true, it’s been a pretty wild year. We said this was going to be our biggest year yet, and at this point, it has surpassed certainly my expectations. We’ve delivered some really great Phase 3 data for VTAMA in atopic dermatitis, as well as strategic progress on that commercial launch. We’ll talk more about that a little later on this call, but those believe it or not were the first clinical datasets this year. We delivered some extraordinary clinical data for RVT-3101, our anti-TL1A antibody in ulcerative colitis both at the beginning of the year, in the induction phase and in June in the maintenance phase.

And obviously, we announced the culmination of that journey a couple of weeks ago with the planned sale of that program to Roche. We announced the first cut of the IMVT-1402 healthy volunteers SAD and MAD data in September, and showed a profile that we believe sets us up to have a potentially best-in-class anti-FcRn antibody with Batoclimab-like IgG suppression, and at least in the cohorts, so and so far no impact on LDL or albumin. And that’s all sort of up until now, and believe it or not, there are still more data coming through the rest of this year, including the final 600 milligram multiple ascending dose cohort from Immunovant, the SLE data for the Phase 2b study of brepocitinib, we will talk a little more about and the Graves’ data of Immunovant also coming this year.

So, just a year really chock-full of clinical data, and I could not be more proud of how it has gone so far, and of the Roivant teams for delivering on it. So, on the next slide, just want to talk a little bit about the acquisition here that we’ve already messaged which is the plan here is for us to sell Telavant our anti-TL1A antibody program to Roche, we previously discussed that a couple of weeks ago. The sale was for $7.1 billion upfront with $150 million milestone. As a reminder, Roivant owns about 75% of that business, so our cash proceeds will be about $5.2 billion on close on as well as $110 million from that milestone, which we expect next year. At the close of this transaction, pro forma for including the proceeds from that transaction as well as the Immunovant follow-on offering, we expect cash and cash equivalents consolidated for Roivant of $7 billion which is an extraordinary capital position.

We will talk a little bit more on this call and a lot more in the future about what we plan to do with that capital. And, you know, Pfizer will keep commercial rights of the program outside of the U.S. and Japan, and will continue to partner with Roche on the program. As a little reminder of the why on slide seven. You know, first of all, we think for the program, Roche will continue to do great things. Obviously, we were proud of the work that we had done and would have been excited to continue developing the program, but Roche certainly adds the resources and expertise of a large global pharma company to maximize access for patients across indications. For us, this is tremendous near-term value generation, with that — with, sort of, proper value to a large opportunity, and with a lot of capital efficiency relative to the modest amount that we have so far invested in the program.

And this is a transformational capital opportunity for us. We, as we’ve said on previous call are going be patient and thoughtful. I know, and I heard it from a lot of investors, people are looking for a sense of what we are going to do with the capital. I’ll just remind people we have a phenomenal pipeline already between Immunovant and our FcRn program and a number of others. We are excited to put some of the capital to work there. We see transaction opportunities in the relatively near-term that are as large and exciting as anything we’ve ever done before, TL1A included. We expect to continue to be capital efficient in those business development transactions, and while I’d never rule anything out, that can give us more likelihood that the deals that we do will continue to look like the ones we’ve done before with relatively smaller upfront components.

But again, we are taking stock of the whole opportunity set, and there is a great opportunity and we have the potential to return capital to shareholders, above and beyond that, given the significant sum. So, we’ll talk more about all three of those things in the near future and overtime. As a reminder on slide eight, you know, one of the questions I’ve gotten frequently from investors is, what does the catalyst roadmap look like, now that this deal has happened. And my answer is, well, it looks much the same as it did before, and in fact, the TL1A program will be adjusting to the Crohn’s data at the end of that year, didn’t have any near-term catalysts. Our pipeline is tremendously rich today with VTAMA obviously a commercial program with a significant amount of data coming at both Brepocitinib and especially in our anti-FcRn franchise in the next 12-months.

And we look forward to continuing to generate important clinical data from those and other programs in the months to come. So with that, I’m going to do a brief review of where we are at Immunovant and some of the other programs. And I’ll just start on slide 10. With a reminder, we are very proud of the anti-FcRn franchise that we have. We believe we have two great programs, both of which are capable as best we can tell from the data we have available expressing IgG as deeply or deeper than anybody else. And, you know, one of them, Batoclimab, we’ve generated a lot of data and are continuing to generate mid-stage clinical data in indications that matter where we think we are going be able to prove out that deeper is better IgG hypothesis. And the other one IMVT-1402 coming close behind, now looking like it delivers that same IgG suppression, but without an impact in LDL and albumin.

So, really exciting opportunity for a franchise of these programs. As a reminder on slide 11, 1402 is in the late innings of this Single-Ascending and Multiple-Ascending Dose healthy volunteer study that was designed to reveal the clinical profile of that program. It had both multiple Single-Ascending Dose cohorts that were IV from a 100 milligrams all the way up to 1,200 milligrams IV. It had subcutaneous Single-Ascending Dose cohorts at 300 and 600, and then multiple-ascending dose cohorts at 300 and 600 subcu. And at this point, we’ve delivered all other than that higher dose 600 milligram multiple-ascending dose subcu cohort, which as a reminder Immunovant has signaled they expect this month, and that is fully on track. I’m not going to share all of the data here.

Obviously, everything we believe that we shared in September was fully consistent and painted a foreseeing picture as far as we were concerned of what this drug could do. On slides 12 and beyond, I just have the multiple-ascending dose data which as a reminder, shows on slide 12, very much batoclimab-like IgG suppression with 300 of 1402 suppressing IgG by a very similar amounts to 340 milligrams of Batoclimab, sorry, 1402 similar to Batoclimab 340. And then on slide 13, you can see that that’s achieved with really no time course impact on albumin at all. Albumin wound up at the end slightly above baseline and slightly above placebo number down is the direction to be concerned about. Unlike Batoclimab which in multiple ascending dose data showed a clear dose-dependent time course dependent impact on albumin and then you can see in the LDL data, which unfortunately we don’t have in the same study from Batoclimab but you can see, again, really no time course impact of note on LDL with LDL in this case went up slightly below baseline.

As a reminder, there was variability in these data with you know we said we expected variability in LDL to the plus or minus 10% tune, but we believe the consistency of it across all of this suggests that we have a strong profile and we are looking forward to sharing the 600-milligram MAD data once we have it. And then as a sort of final reminder on slide 15, just to note. This is an incredibly broad target even since September when we shared our data, we’ve continued to see developments in the field, including the full J&J nipocalimab RA data. We continue to make progress on our own studies, gravis data coming later this year. Gravis is an indication that I think he is significantly under-appreciated for the commercial potential and the number of patients that we can help and it’s just a really broad target, at this point great clinical validation across multiple indications that FcRn is active and it matters clinically in a number of diseases as well.

So really excited about what’s to come there a very, very data-rich, instead of months and really a full year ahead. Excited to generate that data and to continue to evaluate strategic options that I believe will present themselves and to continue to communicate about where we are, as that plays forward. So next up, I’m going to provide a brief update on the VTAMA launch starting on slide 17. So I’d say, overall, we continue to be fully used with how this launch is going. It continues to — you know, it continues to clip line it continues to grow at a steady clip, probably not quite as fast as we would like at this stage, but we are overall pleased with the reaction from physicians and the reactions from patients. And we are seeing continued uptake of the products, so we are hopeful that we are going to be able to continue to bend the curve and generate more volume in psoriasis.

This remains the best launching topical in history. And we are in particular were excited for atopic dermatitis launch in the second half of next year where we have terrific data and with a significantly larger patient population. On slide 18, we just kept the financials here. Revenues continuing to build, we did about $18.4 million for the quarter. GTN yield accreted, I’d say modestly up to 27.6%, we are sort of through the contracting process at this point, so, I would expect GTM yield to continue to improve you know modestly at a steady clip over time, as we approach the steady state, which we think long term, we’ll get to the 50% that we’ve talked about and will take some time to build up to there as we’ve communicated. You know finally, just a couple of notes about where we are from a data perspective.

There is actually been some additional data generated or published in this program in the last month or two including. On slide 19 one of these that each one of our competitors has talked aggressively about is efficacy in intertriginous psoriasis. This is psoriasis inside the skin fold, inside the elbow, in the groin, et cetera, where psoriasis is pernicious where some of the other, especially the most potent steroids are not committed and you can see, we have really phenomenal data in intertriginous psoriasis we think as good in our view on a cross-hawke comparison as anybody else. So we feel very good about what we deliver in intertriginous psoriasis. We also put out some additional data, which is super important in atopic dermatitis area, which is the speed of onset for itch which you can see on slide 20 we had a statistically significant separation from placebo as early as week one and just a clear visible separation really within 24 hours and a meaningful reduction in itch within 24 hours.

So we feel very good about the speed of onset and that’s something that matter quite a lot to atopic dermatitis patients. So it’s data we are excited to continue to and getting to put out there as we get closer to that NDA filing and eventual launch. And then as a reminder, on slide 21, we just couldn’t be more excited for the clinical profile of this agent in AD with some really phenomenal data when you look across mechanisms. This is we just picked one endpoint EASI-75 we published before, but across mechanisms some of the best data that’s ever been shown with safety profile that is about as good as in fact an efficacy profile, it looks numerically differentiated from even some of the systemic therapies, really exciting and look forward to that.

Progression is a reminder expected sNDA to go in early next year and expect to launch later next year. Finally, on the program side. I just want to give a reminder of the upcoming data in brepocitinib. So, brepocitinib is a really exciting drug to me. In some ways, it had been sort of sitting in the shadow of, I’d say the TL1A and FcRn programs, but it’s an incredibly effective agent. We have now six positive Phase 2 studies with some of the best data that’s been showing across the JAK or TYK2 classes. I think we have the single best numerical remission rate in Crohn’s disease, for example, that we talked about on the last call. So just a very potent kind of agent for inflammatory disease. We are really excited about what our plans are for the program, which included the sort of main program for which we set up here, which was the registrational study that we are running in for Dermatomyositis for 2025 but more importantly, near-term, we also have the Phase 2b study with one of two pivotals in SLE.

Reading out this quarter you know we’ve talked a lot about some of the channels in SLE and that’s not the sort of main or at least the sole focus of the program, but if it works and if it generates, what we think it should be capable of as an agent that’s an indication there is a need of highly effective therapies and we think if we can beat the deucravacitinib equivalent bar that we’ve set for ourselves. We will have a really big opportunity to benefit patients. So looking forward to it. There’s obviously potential beyond that. Including another dataset we have approved concept study in Non-infectious uveitis, reading out in the first quarter of next year as well as the possibility to run a study in Hidradenitis Suppurativa, which is an area that’s attracted a lot of attention recently.

So really excited for brepocitinib. On slide 24 and 25, we just have a reminder of the study designs in each of SLE and in the NIU study, reading out the beginning of next year. Both of which we are really looking forward to seeing that data and sharing it with the world. So I will wrap up here. It’s a relatively quick update. Just a reminder of the financials on slide 27. Well, I won’t read all the numbers on here, but you know relatively straightforward quarter, and excited again for that $7 billion consolidated cash balance giving effect to the closing of the deal that should put us in a very strong position to do lots of great things in this next phase of our life. So I won’t go through the four catalysts roadmap again, on slide 29, other than to say, 2023 was a huge year for us.

It will be hard to top in 2024, but we are definitely going to try and we are excited for quite a lot of data that’s coming our way to help us out. So with that. I will say thank you to everybody. Thank you to the entire team at Roivant to our investors to everybody who helped make this quarter possible in this year’s dates. And I will hand it back over to the operator for Q&A.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question will come from David Risinger of Leerink Partners. Your line is open.

David Risinger: Yes. Thanks very much. Good morning, Matt and team. So, I have a few questions. First, obviously, VTAMA scripts have flattened for many months now. Could you talk about prospects ahead and whether we should really assume flattish scripts into calendar ’24, or do you think there might be drivers for prescriptions to grow ahead of the addition of AD to the label at the end of calendar ’24? And then second, clearly, management has shown an exceptional ability to acquire highly compelling assets and create tremendous shareholder value. But now, the company will have a huge amount of money to work with and probably faces undue pressure to you know put that money to work quickly? So could you just talk a little bit about, I guess, you know how the company can, you know, effectively time putting money to work in exceptional business deal-making in short order, i.e., you know, it’s really not up to Roivant when great assets are up for sale, and when Roivant can acquire them.

And so, how are you balancing considering transactions with what may be, you know, pressure to put cash to work? Thanks so much.

Matt Gline: Yes. Thanks, Dave. Those are both great questions and appreciate your listening this morning. You know, on VTAMA, and this is in truth in all of my conversations with investors, we have not been a significant investor focus of late, but yes, obviously we agree that scripts have been growing, as I said earlier, slower than we would have hoped. We continue to see growth in demand. I think if you look quarter-over-quarter, it’s growing every quarter. I would expect that to be at sort of at least steady over the coming quarters we have some ideas about how to create some inflection. One of the main pieces of feedback that we continue to get from prescribers is concerns about coverage and the patient experience, especially at some of the larger pharmacies, like the Walgreens where there is a middle of the distribution docs, who are writing fewer scripts tend to send patients, in fact, our coverage position is very good now.

It is at least as good as really any other topical, and we think patients who show up at the pharmacy are very likely to have a good experience. So I think there’s a little bit of a perception gap there that we are working to close and we’ll continue to experiment with other demand-generation tools, including DTC. So, I’d expect, you know, as a base case I would expect, sort of, continued progression about the space until the AD launch, but there’s certainly the possibility for better, and we are working on it. I’d say two other things. One is the AD launch is a really big opportunity, obviously, the patient size is much larger. You know, I think the program is on a path to being a source of non-dilutive financing, if that’s what we’d like for it, and that’s true either as it ramps to profitability, which we think it will continue to do or through other means, partnership, et cetera.

And the only other thing I’d say is, I think in the spirit of your second question, I think one of the reasons we say we are going to be patient here is, we don’t want to make the mistake of having a lot of capital and therefore spending it, kind of, by default or by [fiat] (ph) and so we are evaluating every dollar that goes into every one of our programs, including VTAMA critically, and making sure that we are spending those dollars into places they are going to be most valuable. That said, again, I think as VTAMA ramps profitability, it will be quite as useful — a useful baseline for the business. So, you know, that’s on the first question. On the second question, I expect I’m going to say this a few times today. But we really believe that patience is an asset.

We believe the ability to be patient is important. We think that is what’s going to get us the best opportunities. We think it’s what’s going to put us in the strongest position to take advantage of as you said, we don’t control exactly when the great assets become available, and we don’t want to be in a position where we miss something because we do something else that’s not quite as good. So as, you know, we are being very thoughtful about what we see. The truth is that we see some really great opportunities, as I’ve said which is opportunities that are in my opinion, every bit is exciting as the TL1A or a number of our other programs. So, there’s certainly the possibility for near-term deployment of capital on something like that, but I think you will see us be patient, because we think it is a huge advantage, especially in the current market with so much available to being patient.

So, you know, I think that’s as many times I can say the word patient in one sentence, but we feel good about that. That’s it. We are not going to go into dark period, we are going to continue to update the Street regularly on where we’re at. We’ll continue to talk about our plans, we’ll continue to talk about capital deployment, as we see the SLE data, as we see some more of the FcRn data, as we get some transactions done. So I would expect continued updates. We are not asking people to trust us in silence. We’re just asking to come along with us, and — on our capital deployment process.

David Risinger: Great. Thank you.

Matt Gline: Thanks, Dave.

Operator: Thank you. And one moment please for our next question. Our next question will come from Brian Cheng of JPMorgan. Your line is open.

Brian Cheng: Good morning, guys. Thanks for taking my questions. First on Brepocitinib’s upcoming Phase 2 data in SLE. Matt, you talked about the difference of steroid-tapering between the study compared to Deucra’s Phase 2. Can you talk about just how might that impact the readout and given SLE is a heterogeneous indication, are there other variables that we should also consider that could impact the outcome ahead of the readout? And then I have a follow-up. Thank you.

Matt Gline: Yes, thanks Brian. We are obviously tremendously excited about brepo, and those are some of the right questions. You know, SLE is an important disease, it’s a tough indication historically for a variety of reasons, and lot of, as you say, heterogeneity in a patient population, there’s a lot of variability and things like placebo response rates. You know, we are generally happy with the study design. It was designed to finally put in place that’s been only slightly modified since we took the program on and Pfizer has been executing the study. We think it is a good design. As you noted, there are some modest differences in the mandatory steroid taper between our studies and the deucravacitinib study. But people have mandatory steroid tapers, so in many ways than more similar than different.

That said, there is a lot of variability in general both in placebo response rates and in lupus studies across the board. And so for that reason, I think we are just being appropriately measured in what we signal here. But, you know, in short, I’d say, the agent looks to us as good biologically as any agents in SLE could at this moment, at least as a small molecule, and the study design is a solid study design. So, sort of — in the hands of [SLEH] (ph) at the present moment. Mayukh, anything you’d add?

Mayukh Sukhatme: Yes, sure. I mean, I think you hit most of it, Matt. I think what Brian said was well appreciated, it is a — it’s a heterogeneous disease and there’s a lot of different several different subtleties and nuances to really, every trial and, you know, you asked about the steroid taper, I think a couple of other factors might be for example, just to give you a sense of things that are different or slightly different in any trial and each of these contribute in their own different ways. But severity of disease at baseline, so baseline CDAI or things like baseline steroids all sort of contribute to the max.

Brian Cheng: And also just on Graves readout later this quarter. Can you help us set the expectations there? How does success look like to you? And you know, given it’s a single-arm trial and the first FcRn program in Graves, how do you think of the success rate? You know, how do you think of the read-through coming from efficacy of FcRn showing in other indications?

Matt Gline: Yes, thanks. It’s a great question. We are tremendously excited about what Graves could be. I’ll take it and then frank or 100 of what you’ve gotten any there. The Immunovant team has spoken about this. You know, Graves is pretty straightforward biologically here, and that it’s relatively well understood to be auto antibody-mediated and there’s a clear biomarker, entire hormone levels that you’re looking to normalize. So, I think the data will tell us what we’ve got. I think we’ll have a clear sense of what we’ve got. I think what we are looking for is relatively high rates of normalization of thyroid hormone levels, and we are also tracking people’s ability to get off oral anti-thyroid drugs, and I think we will have a pretty clear answer to that question from this data. Frank, anything you’d add to that?

Frank Torti: I would say as a bar as we talked to KOLs, they’ve said, look, if you can get patients you know, about 50% of the patients to normalize thyroid levels that would be very clinically meaningful to them. And so, that’s the bar we look to as, you know, a level of importance.

Brian Cheng: Great. Thank you so much. Thanks.

Matt Gline: Thanks, Brian.

Operator: Thank you. And one moment for our next question. Our next question will come from Yaron Werber of TD Cowen. Your line is open.

Yaron Werber: Great. Thanks for taking my question. So, I also have a couple, one on brepo and then another on just on immunovant. So, for brepocitinib, maybe just to follow up for lupus and SLEs for non-infectious uveitis, definitely more, little bit less competitive. Where is the bar for you in lupus? Is it — we sort of have a good sense already what the safety profile of brepo is? So, is it mostly on the efficacy side as you are looking to differentiate and for non-infectious uveitis what do you want to see to continue forward? And then I have a quick follow-up.

Matt Gline: Yes, I’ll take the SLE question. Mayuk, maybe I’ll hand it over to you for the NIU question. Maybe on SLE, I think we’ve said this before, we think the safety profile of brepo is as you said well-understood. We’ve been in well over a 1,000 patients. We have a lot of data. It is, you know, effectively JAK-like from a safety profile perspective and we expect the FDA to treat it like a JAK inhibitor, so we will have the appropriate labels and so on. So, you know, I think that’s pretty well-characterized. I think for us it’s about efficacy. I think we feel the bar has been set by the Deucra studies, which are the current sort of best oral data in a large late-stage program that we’ve seen. Our view of the bar that Deucra adjusting for some pretty significant imbalances in their dosing arms.

It’s like a mid-teens SRI 4 placebo-adjusted delta and so we’d like to do kind of better than that in order to feel confident about progressing the program, but it will be a balance of the factors we’ll look at multiple endpoints and so on. You know on NIU, I hand it for Mayukh, I think we should lay this out on the last call, but Mayukh. Please go ahead.

Mayukh Sukhatme: Sure. So, I think we’ll make an overall assessment. This is you know kind of signal finding study here really. We are looking for treatment failure rate of no greater than 70%, the treatment failure rate is quite high in not on treatment. And so that’s a good bar. And overall. I think really the bet here across these indications, fundamentally is on efficacy. And so, that’s the thing that we are really looking to hit robustly.

Yaron Werber: And that’s just to clarify the NIU study you running or it’s not Pfizer?

Matt Gline: That’s right. That’s right. That’s our study.

Yaron Werber: Okay. And we’ve got a lot of questions and then you as well when you guys announced the TL1A deal with Roche, the words you use was ruthlessly monetized the immunovant stake. Can you just help us understand kind of philosophically or conceptually how you’re thinking about that? Thank you.

Matt Gline: Sorry, I apologize you cut out, literally, as you said, what word we used, something monetize?

Yaron Werber: I think it was ruthlessly monetized immunovant stake.

Matt Gline: I think we said we’d be ruthlessly economic about immunovant stake. I think I said, although we can go back and look at the transcript, but I think that’s true. The way that we’ve always thought about this is, we are going to do what maximizes value. We think the FcRn program is as good a program as biotech has to offer at this point. It has true best-in-class potential. Numerically has an investment class potential in an area where IgG has been a phenomenal biomarker for clinical efficacy and where we have really exciting IgG suppression. We have been safety picture as what we can tell so far. So I think that program, our hands without monetizing it. Could be the basis for? Yes, one of the great I&I biotech companies of the next generation and we are excited and fully resourced to progress that program that way.

But along the way as we’ve shown historically, we are going to evaluate options and we are going to make sure we understand the competitive landscape and understand the strategic options available to us and we are going to be ruthlessly economic in assessing that position and that’s just who we are, well then.

Yaron Werber: Thank you.

Operator: Thank you. One moment please for our next question. Our next question will come from Corinne Jenkins of Goldman Sachs. Your line is open.

Corinne Jenkins: Yes, good morning. Maybe a couple from us. First, you mentioned the commercial potential you see Graves’ disease. Could you just step us through how you’re thinking about the market opportunity there? And in particular which patients within Graves’ disease do you think are candidates for new therapeutic agents?

Matt Gline: Yes, perfect. Thanks. And I’ll add Frank in and if he’s got anything after I give a first cut here, but look, this is a large indication and it has hundreds of thousands of patients in that and our study is on patients who are uncontrolled by ATDs that’s the existing study. There’s a pretty significant percentage of patients, especially accounts 14%, 15% of patients on ATDs do not wind up fully controlled. So, there’s hundreds of thousands of uncontrolled patients. You know surgery and radiation are effective but surgery and radiation are complicated and not everyone wants to sign up for that. So, uncontrolled patients currently don’t have a great therapeutic option. There has not been real novel drug development in Graves for a long time.

So did this is a — it’s one of these indications where there’s just a very large patient population that has unmet need. And if you talk to these patients they are clear about that. Frankly, some of the patients who our controlled on ATDs feel like they have symptoms, although obviously going to start with the uncontrolled patients. So we think this has the potential to be really, really large market, but people are not appreciating because it’s been a while since development. The only thing I’ll add to that, before handing over to Frank is you know this sort of interesting dynamic here where immunovant gathering this data and in some ways, the better the data is the more closely, we mainly to keep some of it to the vast because we said before anyone Phase 2 studies, everyone Phase 2 study, and that worked in our favor in many other indications, which is something we need to be thoughtful about here.

But in short, we think the commercial potential is really, really large. Frank, anything you’d add there?

Frank Torti: I think you covered most of the important part. I mean, just to restate it. You know there is a substantial opportunity in patients who are anti-thyroid medicine factory. And there is going to you know very large both incident and prevalent partnering population of patients who were just not getting enough benefit. This is a category of medicines that hasn’t seen meaningful innovation in this disease state in decades. And so there’s a ripe opportunity to come in, something that really matters and disrupt that and we’ll look forward to talking about it more detail soon.

Corinne Jenkins: Great. Thanks. And then you mentioned anyone’s Phase 2 means everyone’s Phase 2 for various inhibitors. That’s a good segue to the data over the weekend in rheumatoid arthritis. From J&J. I guess, what were your takeaways from those results? And how are you thinking about the read-across your own program and plan in rheumatic disease?

Matt Gline: Yes perfect. So immunovant will obviously speak more to this consistently over-time, as we as we lay out our study plans and get everything geared up. Yes, yes. I continue to feel that the J&J RA data in the way that I felt when we are first seen the abstract, which is it’s tremendously exciting to see an FcRn show signs of activity in an immune complex disease and it opens a large envelope of what of what could be possible, you know and say like, this data in and of itself need some work to better understand and characterize and J&J is doing some of that work. You know I think encouraging signs, include that you know the response rates look pretty solid specifically in patients who have the autoantibody measured in these sort of efficacy is well correlated with oral antibody suppression.

And as we’ve talked about before, you know I think one of the things that’s interesting about nipocalimab and the studies, it was it seemed to us somewhat under dosed. And so they really only got to, I think was about a 58% suppression of IgG, I think lower than that on the autoantibody. And so I think it’s sort of possible understand that there is room for better efficacy at higher IgG suppression. You know I think it is not very likely, although this is for immunovant ultimately announced that we are going to immediately begin a large Phase 3 program in RA, but I think it’s certainly really informative data for how we see the FcRn class developing and it suggests activity in an even broader set of indications one might have originally imagined.

So I think that’s kind of how we think about it.

Corinne Jenkins: Great. Thank you.

Matt Gline: Thank you.

Operator: Our next question will come from the line of Robyn Karnauskas of Truist Securities. Your line is open.

Robyn Karnauskas: Hi guys, thanks for taking my question and I love the word ruthless economic. I think that’s a great, great terms for company to you. So, I have three. So first, you just mentioned graves may have to keep some of that data close to how much data would you release or would you just say the results were positive and you’re moving forward? The second question is really about the other comment you made about VTAMA may shape up to be an opportunity for diluted financing. And given that you’ve sold assets before how do you think about running the company and thinking about where you can need to serve like a breeding ground where you get drugs and develop and then you sell them? And then you have some that you keep and how do you figure that out?

And then the last question is on VTAMA. You mentioned gross margins of 28%, the relatively flat hoping — over time. How — what’s influencing the gross margin are you still sampling? Is that still influencing that how do we model those, how do you help us model gross margins over the next say 18 months? Thanks.

Matt Gline: Yes, thanks, Robyn. I appreciate all of the great question. The first question, I’ll say having not yet seen the Graves data it’s hard to say exactly what we would disclose. And it probably depends a little bit on the data and exactly what we seeing in the controllers of the outcome, but you know I think the full range is on the table in terms of when and how we share that data other than we expect to get the main thrust of it in the relatively near future. And so we will be able to say something. I’m confident. That would be helpful. On the other two questions. I guess, I will take the bigger strategic one first and I’ll come back to sort of the VTAMA GTN progression. We are here to build a great durable long-lasting important biopharma company that delivers medicines to patients.

As we did with the VTAMA that will mean that we commercialized products as we did with the TL1A that will mean, sometimes we can partner or monetize them. And you used the phrase again, you know we are going to be ruthlessly economic in deciding which of those again, just to be clear, we went non-dilutive financing in terms of the VTAMA, and I think the nice thing about VTAMA is you know in the event that we monetize that or partner geographies or whatever, that’s one source of non-dilutive financing in the event that we don’t and build it into profitability that’s a steady stream of free cash flow out into the late 2030s is a different source of non-dilutive financing. And on top of that, we’ve learned a tremendous amount of our commercialization.

We’ve built some infrastructure. We’ve got distribution agreements and things like that, that should be leverageable as we add additional products and you know so you know I think overall, the launch of VTAMA has been an important formative experience for us. We are excited to continue to see it play out. We are excited to get the AD launch up and running and I am confident we will commercialize many products in our long life from here. You know on sort of GTN trajectories I think we are largely through contracting. And so the things that are going to drive GTM from here it’s not sampling for say we’ve never had sampling program that meaningfully affected our yields. It’s getting patients onto the right side of the copay card. And it’s getting more patients into a covered position at pharmacies like Walgreens and CVS and so on which is all its on ground work at some level.

It’s just getting out there talking to docs and working through key issues and make sure that patients are getting on drug. So I would model you know steady improvement in GTN yield overtime you know maybe at around or a slightly faster clip than the one that we’ve had in recent quarters. And I would expect that sort of continuing to build up to you know kind of 40-plus and getting to 50 eventually sort of steady state that product seem to get to. You know I think some of the dynamics of the past couple of quarters with new contract signed, that create a little bit of volatility in the progression, but I expect it to be pretty steady from here.

Robyn Karnauskas: And one follow-up is just on 1402 using the word ruthless it seems like with so many different indications, you can go after and how aggressive your competitors are spending money toward all these indications. How do you compete with them like how do you compete, you just go into indications where they’re not going. It seems like it’s just such a competitive state, even though you have a best-in-class we can argue your best-in-class drug. You know had you expect to run like 20 trials, I mean, how do we think about your plans for two given the plans for 1402 given the clinical landscape?

Matt Gline: Perfect. I mean, I think the first thing we do to compete is monetize an entity, antibody and generate quite a lot of capital, which puts us in a strong position if we ultimately need to run 20 trials to be able to do that so. I think we’re in a really good spot from that perspective. You know I think we are going to be capital efficient as we always try to be. I think we are going to be thoughtful about where we go. You know in terms of exactly which indications and how we compete, I think we have to be aggressive, and I think we are positioned to be aggressive, and I think it’s a huge opportunity if we are aggressive. I think you know, first and foremost, we have some clear white space in front of us with Graves disease and some others like it.

That will carve-out as ours and I think that will give us a real foothold and then I think the second thing is really line up all of the other Phase 2 studies that anybody who is doing and decide which of those we wanted to use as guidance for our own pivotal programs. So that we stay — approach to the front-line everywhere that matters. So I think that’s sort of how we’re thinking about it more generally, but there’s multiple first-in-class opportunities and we have the capital to deliver on it.

Robyn Karnauskas: Great. Congrats and thanks for the question.

Matt Gline: Thank you.

Operator: Thank you. One moment please for our next question. Our next question will come from Louise Chen of Cantor. Your line is open.

Louise Chen: Hi, thanks for taking my questions. So I wanted to ask you, as you look to grow the company what therapeutic areas do you see the most unmet need in? And then, what areas you think might be a little bit too crowded? And then secondly on the HS indication for c, have you decided if you’re going to move forward with it? And if you have, when do you think will start those studies? And then just lastly on 1402, just curious how you’re thinking about the first indication, you’re going to go after? Thank you.

Matt Gline: Yes, so I’ll go in reverse order there. So you know the indication that we’ve disclosed as a 1402 indication has been Graves. So our plan if that data is successful is to progress in Graves, although, we are working on lots of other things that we just haven’t talked about yet. I’ll leave it to Immunovant to give specific updates at their cadence. On Brepo rates, yes I think we have not made a final decision yet and so there’s no there’s no specific plans or timeline. We are in a pretty close to ready position in terms of the basics, but we need to actually start study, if we’re going to start study. I think the SLE data will be informative in terms of thinking about what payers with what with what and just how to develop the franchise, so I think we’ll try to come back with more of an update on that after either the SOE or the SLE and NIU data.

And then in terms of therapeutic areas where we see the most unmet needs we’ve always been therapeutic area agnostic. We continue to be therapeutic area agnostic. There is unmet need for patients in every therapeutic area. That’s clear. Some areas are more competitive than others as this has been a year with a lot of activity in I&I although it’s also proven to be as you aware some mechanisms have had an easier goal with than others in I&I. So we are looking across therapeutic area landscape and are really open to anything.

Louise Chen: Thank you.

Operator: Thank you. And one moment please for our next question. Our next question will come from Douglas Tsao of H.C. Wainwright. Your line is open.

Douglas Tsao: Hi, good morning. Thanks for taking the questions. Just maybe as a starting point, Matt, if you could provide some color on the time, I know you sort of indicated physicians are having some questions or sort of misperceptions around the coverage. I’m just curious what feedback you’ve gotten from a clinical standpoint both deposit as a negative and what sort of things you might need to correct within the physician community to perhaps sort of jumpstart growth within psoriasis? Thank you.

Matt Gline: Yes, perfect. So on the payer side, you covered it well. On the clinical side, we really have a little bit of a tale of two cities where we have talked to use it quite a lot in the practice and love the report constantly positive both patient feedback and their own feedback in terms of how that helps them to have a real steroid alternative at this level of safety and efficacy. And then, we have adapt to a writing you know I’d say like six or fewer scripts a months. We bucket them in a couple different ways. And you know I think those doctors still sort of experimenting. And so, we get different feedback. I’d say like we are not getting a lot of like specific negative perception is that we need to counteract. I’d say the main thing is these are docs who because they have only used the product a little bit have not sort of figured out how they want to think about it, vis-a-vis steroids.

And so if anything, the feedback is yes this is a great product but steroids are pretty good too. And so I think that’s what we are sort of most actively working on is how to help those docs to see the benefits we are starting to see the remitted benefit, see the tolerability benefit, you know the intertriginous data that we just put out here is potentially helpful to support our position we’ve always had day to day are. So you know I think those are the kinds of messages that matter. And it’s really about working on continuing strategies to convert those docs to the kinds, who write it more. So you know as I said we are hopeful about work that we are doing there, but I want to be measured, given what we’ve seen over the past call it five to six months.

Douglas Tsao: And that may be as a follow-up, and I know you touched on it a little bit on the Telavant call, but just given you know your sort of what your capital position will be does that change the sort of opportunities that you look at and sort of the commitment that those would take, be it either from a development standpoint as well as ultimately a commercial standpoint in terms of the infrastructure needed to support them. Thank you.

Matt Gline: Yes. I think the short answer is, it just puts us in an incredibly strong position to do anything. And so I mean in commercialized drugs to develop drugs we feel like we have the capital to pursue the biggest opportunities aggressively. You know I think we are still approval by nature and so I think it’s still hard for us to stomach large upfront capital commitments, generally. And so I think that’s probably the one thing where if we do it, it will be some really special. But other than that I’d say the main way I think about the capital, is it just let’s just do more and I think I’ve said this a couple of places, now going, in hindsight, it doesn’t seem like it should have been, but the decision to pursue the TL1A program a year ago was not totally easy decision, at least not for our entire team, because those would have been extensive Phase 3 studies and we are doing at a time where everyone’s access to capital and our own access to capital were somewhat limited and I think I don’t want to be in a position next time of tiptoeing around an opportunity that is that good.

So, you know I think having this capital base and being able to put it to work really gives us strength in those kinds of discussions.

Douglas Tsao: And then maybe just one follow-up. Final follow-up for me. Over the last couple years, we’ve seen sort of a progressive de-emphasis on some of the internal drug discovery efforts by the company. Does that — do some of those come back into focus a little bit more just given your cash needs or cash position is so much stronger? Thank you.

Matt Gline: Yes. I think the evolution of that exercise in general for us has been a positive one. You know it’s been challenging at times, but I think we’ve got some best on right now at the VantAI, Covant, Psivant that we are excited about and one of the things we like about it is I think we found very capital-efficient ways for that work to be funded through partnership or by outside capital. It’s just that we have a lot of optionality on success, but it’s always been pretty small piece of our burn and I’d say it’s gotten significantly smaller over the best of all years as our late stage pipeline has come into sharper relief. I don’t candidly, expect that to change significantly, in the near term just because, I think we are pretty well set on how those businesses are running and we like to…

Douglas Tsao: Okay. Great. Thank you.

Matt Gline: Thanks, Doug.

Operator: And one moment please for our next question. Our next question will come from the line of Yatin Suneja of Guggenheim Securities. Your line is open.

Unidentified Analyst: Hey team good morning. This is Evin [Indiscernible] on for Yatin, and thanks for taking the questions. Two for us. The first is on brepo and then I have another one kind of on broader strategy. On brepo how would your POS changed for Dermatomyositis, if you didn’t need the bar, the [Ducros] (ph) bar in SLE? And then from a strategic standpoint, when you’re thinking about the potential progression of Roivant to $20 billion to $30 billion company what proportion of the growth comes from the existing pipeline that you already have versus an external you know BD opportunity? So in other words, do you have to bring in an asset or two to reach that future valuation?

Matt Gline: Yes. So, I’ll start with the first one of that which is, I don’t think our view of the POS and DM would change at all depending on the outcome in SLE. The biology of brepo is very clear. We have six positive large well run Phase 2 studies and SLEs is known to be ethical place, so. I think overall there will be no change in our view of likelihood of success in DM as a function of any kind of outcome in SLE, honestly in either direction. If Brepo works great necessarily I’m not sure it will materially affect our view of probability in DM. At this point brepo has presented itself as an agent and it’s just a question of finding the right therapeutic applications for its profile. So that’s on that question. On the general strategy, and I can see this clearly enough.

If we never do another BD deal, and that is not we are definitely going to do more VD deals. But if we never do other BD deal we are sitting on — We think today the most exciting late-stage I&I portfolio between FcRn and brepo and became on others and there is no question in my mind that frankly, I mean we knew this from our competitors FcRn alone can support that kind of value-creation right alone the drug-like brepocitinib which certainly again pursuing a different strategy but Rinvoq is on-track to do fantastically well and. I think we have an agent that has some real competitive advantages versus Rinvoq with particularly activities. So, you know I think there is no question to me that we don’t need to do BD for the next major leg of growth for us.

That’s it. Practically speaking, if you’re asking me what I expect, I expect to see significant value creation, outside of our late-stage pipeline as well. New opportunities just because we’ve always been active because the opportunity set is literally as rich now as it has ever been in terms of the quality of things that we see and we expect to take full advantage of that given our current capital position.

Unidentified Analyst: Thank you very much. Appreciate it.

Matt Gline: My pleasure.

Operator: Thank you. And this will end the Q&A portion of the conference. I would now like to turn the conference back to Matt Gline for closing remarks.

Matt Gline: Yes, thank you. I just want to say thank you again to everybody to the Roivant teams to all of our investors to the patients and investigators, our studies to our partners. It’s been a phenomenal year. This is probably not the last time we get on the phone together given the amount of data coming. But just want to thank everybody for following along and what has felt like I really exciting moment for us. So, if we don’t talk before Thanksgiving, and I guess again it’s possible that we will, but if we don’t talk before Thanksgiving have a great holiday for those who celebrate it, and I’m looking forward to getting on the phone again soon. Thank you very much.

Operator: This concludes today’s conference call. Thank you all for participating you may now disconnect and have a pleasant day.