Hello, thank you for standing by. Welcome to Roivant Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I will now like to hand the conference over to Stephanie Lee. You may begin..

Good morning, and thanks for joining today's call to review Roivant’s financial results for the third quarter ended December 31, 2023, along with a 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 ww.investor.roivant.com. We'll also be providing the current side 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 have 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..

Thank you, Steph, and thank you everybody for joining today. I appreciate it. It's nice to be able to talk about our third quarter results here. On Slide 4, just a brief overview of the agenda.

So we'll talk a little bit about a recap of last calendar year and then we'll spend some time on the recent data coming out of Univant during the quarter, some time talking about the upcoming proof-of-concept readout at brepocitinib in NIU.

We'll do a review of performance of VTAMA, highlight some upcoming catalysts and financial update and then turn it over to Q&A. It should be a relatively short presentation today. So we've talked a fair amount about last year, and this will be the last time that we take a victory lap forward.

But on Slide 5, I just want to remind everybody of the year we're coming off of, during which we continue to both commercialize and maybe even more importantly, develop VTAMA with positive Phase 3 data in both of our studies, setting us up for an atopic dermatitis approval that we hope will come later this year following an NDA filing, that we hope we’ll go and sNDA filing we hope will go in very shortly.

We have the sort of full round trip of our anti-TL1A antibody, which you're all quite familiar with at this point, culminating in the Sale to Roche that closed during this quarter.

We generated both at this point proof-of-concept data, or not, I should say, initial human data from IMVT-1402, showing that our next-generation anti-FcRn antibody suppresses IgG. We believe as deep as any other and without any impact on albumin and LDL and in a convenient subcu format.

And also, we've shown data from our Phase 2 study in Graves’ disease that meaningfully exceeded our expectations. We'll talk more about that on this call. And finally, we readout brepocitinib, our TYK2, JAK1 data in SLE this quarter as well. Unfortunately, it did not meet our bar, or the primary endpoint.

And so, we've discontinued development in that indication and are looking forward to multiple additional readouts and programs from brepocitinib to come.

I talked about this a little bit in my JPMorgan presentation earlier this year, but on Slide 6, one thing I think we're really proud of looking back is, our model is built to develop data for important clinical programs that matters to patients in as efficient a manner as possible.

And I think if you look at our track record here, this is a list of the largest global pharma companies, including the number of late stage readouts they had last year, and the R&D expense sort of over the period, although obviously that's not perfect comparison.

We are very proud of the extent to which we stand out for being included on this list at all, given the amount of data we generated, and at a -- obviously, significantly lower generally order of magnitude, lower cost, which just gets to the model of capital efficiency with which we bring programs in and which we develop them.

And we're excited to continue to do that in our strong capital position. 2024 for us on Slide 7, is really about growth and expansion. It's about maybe first and foremost, delivering clinical data and strategic updates for our anti-FcRn franchise.

We are already making progress in laying out an aggressive expansive development program for that franchise, Univant providing some updates yesterday. In short, we're looking at 10 indications over the next couple of years with four to five potentially registrational programs starting in the next fiscal year.

Something that we think will help us to fully realize the value of that, we think potentially best-in-class anti-FcRn antibody. We expect to advance clinical development for a range of underappreciated pipeline opportunities, including in brepocitinib in the namilumab in a program that's underappreciated, because we haven't talked about it at all.

A program that we unlicensed in the second half of 2023. We expect to shortly ahead file our sNDA for VTAMA atopic dermatitis. We hope to continue to accelerate revenue growth in psoriasis. And we are really looking forward to the launch in atopic dermatitis. I think as the potential to continue to change the trajectory of the program.

We know there's a lot of focus on this next point. This is one of the, probably the best environment we have ever seen for business development. We are actively looking at some pipeline expansion opportunities that I'll just call transformative in sort of mid-to-late stage development stage areas.

We don't have an update on specific programs to share today. I can't say exactly when we will, but I am enormously excited at some of the things that we have our eyes and potentially hands on.

And then, we expect in the relatively near-term here to finalize our capital allocation strategy across our various opportunities and to be able to provide significant updates.

To that end on Slide 8, when we did the deal with Roche, we asked all of you to be a little patient with us, as we sorted through our best options for allocating what is now a $6.7 billion consolidated cash balance.

And we expect to use it for three things as a reminder, ensuring that Roivant is capitalized to profitability, expanding our pipeline, as I mentioned on the previous slide, and then, to return capital to shareholders in an amount in form that makes maximal sense. And in short, we think that the time for patients here is coming to an end.

We think we'll be able to provide meaningful updates on this in the near future, and I expect this will be the last earnings call, on which we're calling for patients as we work things through. And we're looking forward to continuing to crystallize that plan. On Slide 9, as a reminder, we are very excited about our late-stage program.

It includes a number of drugs and potential drugs that we will talk about today, including VTAMA, including the FcRn franchise with batoclimab and IMVT-1402, including brepocitinib and namilumab.

It also includes that undisclosed Phase 2 program that I've mentioned a few times here that we will definitely be providing more detail on, a little bit later this year.

I want to highlight up front, we had told the world that we were going to develop or generate some data in RVT-2001, our SF3B1 modulator in transfusion dependent anemia for low-risk MDS patients. I want to report that unfortunately, the data generated in that Phase 1/2 study did not meet our bar for progressing.

And so, we've decided to discontinue development of RVT-2001 after an interim analysis of that data. Happy to share some more color on it. We spent a reasonable modest low double-digit million dollar sum on the program.

And I think just sometimes these things don't work out the way you want scientifically, and so, we're trying to be efficient in making those decisions.

So I want to turn now to Immunovant, I mentioned before, we are very focused on an exciting broad development strategy there that sets up the program for maximum value across the range of strategic options.

As a reminder, we are very excited about the next-generation antibody there, IMVT-1402, which we think offers deep IgG lowering, similar to batoclimab, we think as deep as any anti-FcRn antibody that we are aware of, with a clean analyte profile, with no and minimal effect on albumin and LDL, formulated for a simple subcutaneous injection, designed to hopefully enable self-administration, with an auto-injector and with patent life that goes out on a competition of matter basis, not excluding PTEs until 2043.

So, a tremendously exciting drug. That's against a backdrop on Slide 12 of continued and growing evidence that deeper IgG suppression in general yields better clinical benefit across a variety of indications.

As a reminder, that includes the data at the patient level in myasthenia gravis, showing that in individual patients, those with greater IgG declines had better MG-ADL improvements.

That includes data from both our TED study, which we've made fully available and our graves’ study, which we have not, in both of those studies, we were able to see significantly better efficacy at our higher dose, 680 milligrams of batoclimab, equivalent to 600 milligrams of IMVT-1402.

In the ITP data generated by UCB, we saw greater IgG reduction, yielding greater platelet responses, and in Janssen's, RA data put out earlier this year, J&J's RA data, they showed that greater IgG reduction correlated with greater auto antibody reduction, which in turn correlated with greater clinical responses.

So we feel very privileged that our drug has the clinical profile that it appears to. As a reminder on Slide 13, and although it feels like a long time ago, this data was indeed generated in the third fiscal quarter for us at 600 milligrams.

We show our data showing again that clean, clean deep IgG suppression coming from both the 300 milligram and 600 milligram subcutaneous dosing over four doses with effectively no impact, as you can see on the right hand, two charts on albumin or LDL.

And we believe, based on this data that we will suppress IgG to 80 plus percent with sort of full length dosing. That came together on Slide 14 as a reminder with a clean safety profile with limited and not particularly dose dependent adverse events. And nothing that stands out a as particularly problematic.

So a clean profile, no severe TASS, reported across any arm to date. So we're pleased with that. And then I want to just spend a minute on Graves disease. We've said we're not talking a lot about this data because as we've pointed out, anybody's Phase 2 data is everybody's Phase 2 data, in FcRn. But we are excited about the Graves opportunity.

You can see on Slide 15, the design of that trial involves 12 weeks of dosing at 680 milligrams, the high dose, and then 12 weeks of doting at dosing at 340 milligrams, the lower dose.

And these are all patients with active Graves diseases reminder, who are on stable ATD prior to the stable dose of anti-thyroid drugs prior to the screening visit and who had uncontrolled thyroid hormone levels were hyperthyroid despite being on ATDs.

And the primary endpoint was patients who achieved normalization of thyroid hormones every 12 and 24. The primary was 24, with ideally, with lower ATD dose versus their baseline ATD dose. And, you can remember the bar that we set for that was that we wanted 50% of patients to respond.

And what we've said publicly about the study on Slide 16 is that we meaningfully exceeded that response rate and that we had numerically higher responses for dose tapering and ATD discontinuation in patients on the higher doses compared with the lower dose, which we think sets us up really well to be not only we believe sort of first in class in Graves disease, but potentially best in class in Graves disease given our unique profile.

We continued to demonstrate significant deep IgG suppressions up to approaching 90% with a mean of 81%. And that was meaningfully greater at 680 than it was at the 340 milligram dose as expected.

And, we've said we intend to pivot development here from batoclimab where we were really running this study as a proof-of-concept to IMVT-1402, with plans that we will announce this year, along with the overall development strategy for 1402.

So more to come on that opportunity, as we continue to build-out our analysis and frankly, as we continue to set ourselves up to be first. As a reminder on Slide 17, there are now 22 indications announced during development across the anti-FcRn class.

You know, we get some questions about competitive intensity in various specific places from other mechanisms.

And a thing that is remarkable to me is the breadth of these indications is such that relative to almost any other class, the competitive intensity for FcRn is surprisingly low, where, in any individual indication, there might be a couple of mechanisms, but basically no other mechanism currently cuts across the full set here.

And we see tremendous opportunity for a broad development strategy maximizing that unique set of competitive positioning across disease states. So as I said, more to come on 1402 this year, we expect some continued big unveils on both the potentially on the strategic side and definitely on the development side.

Stay tuned, and looking forward to continuing to provide those updates over the course of the coming months. Lastly on the late-stage clinical pipeline, I just want to remind everybody on oral brepocitinib that we are really pushing forward our development strategy in orphan rheumatology.

We are focused today on our -- what we hope will be a single registrational study in dermatomyositis that we'll read out next year. That is enrolling nicely, as well as proof-of-concept data coming.

I'll talk more about this in a second, in non-infectious uveitis, we continue to evaluate other possible indications including HS, which has obviously got to a lot of intention -- attention as an indication this year. As a reminder of this drug also has quite long IP protection going out to at least 2039 inclusive of patent term extensions.

I want to just remind everybody on the eve of the proof-of-concept data that we expect to generate quite soon here on non-infectious uveitis on Slide 20. This is one of these orphan inflammatory diseases that is debilitating.

There are 30,000 new cases of legal blindness attributed to NIU each year with 75,000 or more patients living with non-anterior NIU in the U.S., most common symptoms are sensitivity, pain, redness, and floaters in the vision. There's really -- there's only one approved therapy.

It's only Humira, and we see and important unmet need given the number of patients who are progressing. Our trial design on Slide 21, it's not placebo controlled, but it is a blinded two dose study between 45 and 15 milligrams randomized in favor of the 45 milligram dose.

What we expect based on evidence that we have, and we have evidence from including from a study of filgotinib that demonstrated the relevance of JAK1 inhibition. And then IL-12 and 23, which are specifically mediated by TYK2, are also clearly involved in the pathobiology. We're optimistic about the mechanism here.

The success criteria we've sat is basically a sort of -- we think about it as a virtual placebo, a 45 milligram arm treatment failure rate of no greater than 70%, which is sort of what we think the sort of placebo bar would be in an ongoing study.

Obviously, given the small number of patients, we'll be looking at this data on an individual patient level, and I expect we'll be sharing it, as we've said in the first calendar quarter of 2024. The enrollment of this data is complete. So we're looking forward to getting that data in the near future.

I want to turn quickly over to another at this point, underappreciated part of our story, which is VTAMA, we continue to see reasonable script growth in psoriasis. You can see it on Slide 23. We remain the bestselling branded topical in psoriasis as we have been since the very beginning of our launch.

And we are excited to continue to see that growth develop. We've now had over 300,000 prescriptions written by over 14,000 doctors. Our revenue continues to grow reasonably nicely. We're up to $20.7 million in net product revenue for the quarter.

Our growth net yield has been accreting slowly, and we expect, roughly speaking, that trend will continue over the next year. We're now at very good payer coverage with 137 million commercial lives covered over 83%, sort of the coverage that we were hoping for. Turning to the next big opportunity here in atopic dermatitis on Slide 25.

As you may have seen, we readout recently, data from our long-term extension study, the ADORING 3 study, which is a 48 week study in atopic dermatitis. And we showed pretty remarkable data over a 50%, IGA, score of clear, and 80% EASI75 improvement.

Just some great data overall here that puts us frankly not only at the head of the pack in our view from a topical perspective, but in line frankly, with the efficacy of some systemic therapies in these populations.

So a really tremendous set of data here that continues to support what we think is a really big opportunity in AD and notably, continue to have a clean safety profile with mild to moderate AEs, nothing sort of remarkable and a very low discontinuation rate due to adverse events.

We expect to, as I said, file the sNDA in atopic dermatitis shortly, and that'll set us up for a potential approval later this year. It needs to be said again, atopic dermatitis is a large and growing market with close to 350,000 topical prescriptions written every week, the vast majority of them corticosteroids.

And with a real opportunity, we think, for VTAMA to shape that field as a drug with, as an efficacy, at the head of the pack from an atopic dermatitis or overall perspective. And with a safety and tolerability profile that we think further differentiates from some of our competitors.

So, a really exciting opportunity, and notably, our next fiscal year, we will have a quarter of sales and hopefully some data on script volume in atopic dermatitis. Really looking forward to getting out there in that sort of full breadth of the patient population.

Rounding out the year on Slide 28, we've talked about some of the opportunities here, but we have a lot of interesting clinical data coming.

Obviously NIU we've talked about, we've talked about some of the upcoming FcRn data, but notably this year we're going to develop Phase 2b data and CIDP in batoclimab that should help to start establishing deep IgG suppression, potentially as mattering in more diseases.

Same thing with our Phase 3 program in myasthenia gravis, where we expect to begin getting data at the end of this year. Again, setting us up for some real potential in including the first simple subcu or readout Phase 3 data and that indication.

And then we're also going to get data this year from namilumab, our anti GM-CSF antibody and sarcoidosis, a program that we think gets no value attributed to it today, but which we think has the potential to be very important to the event of successful data.

On the financials, on Slide 30, net revenues for the quarter of $37.1 million, including VTAMA product revenue of $20.7 million, R&D expense of $120 million, about million dollars adjusted non-GAAP of about $115 million, SG&A of about $200 million, or adjusted EBITDA $150 million.

And something I don't know that I'll be able to report in the near future again, net income of $5.1 billion, which is a number obviously related to the closing of the Roche deal, leaving us with cash and cash equivalence of $6.7 billion as of the end of the year, a position we're very excited about.

So with that, I'll close just by asking you to flash up Slide 32 and note that, we have quite a rich set of catalysts coming and more to come as we continue to build-out, and talk more about parts of our pipeline that we're excited about but haven't unveiled publicly yet.

So, with that, I will wrap up the presentation here, and we thank you to everybody for listening. I will turn it over to the operator for Q&A..

[Operator Instructions] Our first question comes from the line of Allison Bratzel with Piper Sandler..

Matt, I think, I heard your characterization of the current setup as very conducive to BD, and your, and how you see pipeline expansion opportunities that are transformative.

I guess could you may be set some guardrails on your current thinking on BD transformative makes it sound like you're looking at a single versus multiple opportunities, but not from interpreting that correctly. And then I think also I heard you say we should have an update on the capital allocation strategy before the next earnings report.

Could you just help us understand kind of what's getting to that disclosure and how you expect to communicate that to the street?.

Yes. Yes. So on the first question, I'm glad you asked it, and I'll ask Mayukh to chime in as well because I think it's important. When I -- the general sort of scope of things we're looking at, I'd say match the kinds of deals that we've done before.

So partnerships or acquisitions of late stage programs generally more likely, I would say to be programs than M&A. I'd say potentially multiple over the next year, including some of the ones we've already done.

And when I say transformative, what I mean by that is I think these will be programs, at least some of them going into large, late-stage studies of a kind that will change the shape of our pipeline and add meaningful heft to what we think is already a pretty great late stage effort.

Mayukh, anything you you'd add to that?.

Okay. If not, I'll go to the other question, but, so thanks for asking that question.

It's a good question and it's important that we be clear on what we're looking at there because I think it's less likely to be either, frankly, it's less likely to be sort of M&A per se, never say never, but less likely and potentially not going to be a single program, maybe multiple. And then on the capital allocation point.

So look, I think certainly by the time of our next earnings call, I expect to have made some meaningful progress here. So I say this is not just about analysis and this is a combination of frankly, advancing some of these late-stage business development conversations so that we have a sense of the exact breadth of the sort of BD piece of this.

Although I think it's hard to imagine that that combination of things is going to sort of meaningfully change the total picture. And then also look, I think part of what we've talked about from a capital return perspective is the concentration of our shareholder base.

And, Sumitomo, for example, has indicated, a desire to exit their position, given their own financial considerations. We -- as you can imagine, have ongoing discussions with all of our shareholders and I think we're trying to sort of progress those in the optimal way for setting us up for success. So I think all of that is what is ongoing.

And once that resolves, we should be able to provide more clarity..

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

So could you please discuss both the Moderna LNP litigation event path ahead and also Pfizer, LNP litigation developments to watch? I know that you're limited with respect to what you can say, but whatever you can provide on the call would be helpful. And then, Richard, could you discuss the spend 2024, specifically, SG&A and R&D..

Thanks, Dave. Appreciate the questions as always, and appreciate that you put the caveat out there for me about my limited ability to comment here. I think on the Moderna litigation, one thing I can say, because it's obviously public information, is -- so we had our Markman, our claim construction hearing last week.

I think, overall I'll say, we were pleased with our ability to make the arguments that we thought were important to us. It's an important hearing. We think that the judge is going to do a good job of considering everything everyone brought to the table. We will know more about the outcome for that.

I think, the judge has said previously, sort of 60-ish days, there's no set timeline for that response. We're looking for it in about that timeframe, but it's a complicated set of issues and we want to make sure, everything gets properly evaluated. That's the next sort of significant event on the Moderna side. On the Pfizer side, that case is ongoing.

There's no set date for a Markman hearing, but we would expect it to take place sometime later this year. That's all ongoing and appreciate, we know that a number of people are following along there. On the cash side, I'll turn it over to Richard, as you suggested, but I'll just say, I think there's sort of puts and takes here.

Obviously TL1A is out of the spend, VTAMA continues to ramp, which is mostly helpful from a cash burn perspective. But some of it also depends on programs that we either have or we'll bring in.

But Richard, any comments that you want to make on spend for the next year?.

Yes, I would anticipate that spend would be relatively flat over the next few quarters. Obviously, one’s AD approval comes through on VTAMA towards the end of the year, we would ramp up the sales efforts there, so you'd see an uptick as we approach that towards the end of the year.

And then also as the 1402, R&D spent ramps up with the additional trials that we talked about that will also start coming through, but relatively flat over the next few quarters and then see a ramp up as more trials come through.

Also, we will see some data on NIU, so we'll have to make a decision there to see if we do additional spending depending on how that data reads out. And then start a dose at the end of the year as well..

Our next question comes from the line of Brian Cheng with JPMorgan..

Matt, in the last earnings call, we didn't touch on the asset that you acquired, and it was reflected as the 14 million items in the in process R&D line and 10-Q.

Can you give us more color here on the stage of the asset and indication? How much data was there behind this program, and when could we see the mixed data updates here? I have a quick follow-up..

On the unnamed asset, we've now provided a little bit more color. We've indicated that the program should be entering Phase 2, so that should give you a sense on stage. I won't say too much more. It's in a space where we feel like we have a reasonably decent handle on what's going on, but it is a development stage program.

And the reason we're not talking very much about it right now, is it's broadly a competitive space and we think we have an opportunity to be ahead. So we'll talk more about it later this year as the clinical program gets up and running. I think, that was your main question there, right? And I think you had another one..

Yes. Related Immunovant plan here. It's quite a robust development plan for the next one to two fiscal year.

With the speed that you're shooting for, do you see the need for Immunovant to partner off, or do you think that they can lean on Roivant for additional financial resources?.

It's a very good question. Look, I think, as we think about sort of the combination of Roivant and Immunovant, there was certainly no financial need for a partner per se, and I think the plan that we've laid out here, while it's aggressive and while it's broad, we've chosen it in part because we believe we are capable of the clinical execution.

So, with a program of this breadth of opportunity, I think we are certainly able between Roivant and Immunovant and with the full use of resources that either, that are needed to do something big and important here. And I think, there are few things going on at Roivant that are more important than the successful development of 1402.

So if Immunovant event would benefit from resources, either people or financial, you can bet that we'll be having those conversations.

That said, it’s -- although I said the competitive intensity is comparatively low, it's obviously a competitive space and we have some well-funded and strong operationally competitors, we think we can keep pace with any of them on clinical development.

But certainly, as we've said before, we're going to be ruthlessly economic in maximizing the value of the program, including thinking about partnership and other strategic opportunities for Immunovant to make sure we aren't missing a beat..

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

This is Joyce on for your own.

Now that the lupus study is readout, what's your latest thinking on which indications to prioritize for brepocitinib and when might we hear more about that broader indication list?.

Thanks for listening and thanks for the good question, and we're very excited about brepocitinib. I will potentially ask Mayukh to comment a little bit on this too. I guess this is the, maybe the first earnings call we've had since the rep brepocitinib lupus data. I don't think we read much of anything into the program at all from the lupus readout.

We had always sort of indicated we thought it was going to be a high risk readout because of lupus disease dynamics. And frankly, the drug effect in the study was reasonable or in fact quite good. The problem was we saw, as we've indicated, the largest placebo response rate, I think ever observed in an SLE study.

And so, I don't think that gets particularly to the opportunity for the drug. And then the safety profile remained consistent with what we've observed historically. So I think the short answer is we are full speed ahead on our original plan that centers around dermatomyositis where the study continues to enroll.

Well, that includes potentially NIU and obviously as Richard said, and as I said earlier, we'll have to make a decision on what to do in NIU after observing that proof-of-concept data coming in the near future.

And then other indications, we continue to evaluate a reasonable breadth of indications that sort of fit in that we call it orphan rheumatology bucket. But I'd say, one that we are sort of making a decision on in the relatively near future, potentially depending on what we see in NIU, et cetera, is HS. Where we have quite good Phase 2 data.

So I think things that fit nicely with that are still on the list for us, but we're first and foremost focused on DM and then NIU..

Our next question comes from the line of Dennis Ding with Jefferies..

Two for me. So, regarding BD, can you please clarify your previous comments? You said not a single program, but multiple programs.

Will this all come from a single announcement, or is this more like a string of pearls type of BD path over the next year? And then question number two around Immunovant, has the company engaged with the FDA yet on a registrational path for Graves and the level of confidence that 1402 can go directly to Phase 3 and skip a Phase 2?.

I think then I'll take the second question first, and then I'll briefly comment on the first. Then I'll, I'll see if Mayukh, this time around has comments on the BD question as well. On, Immunovant, I think the main answer to that question is, we're going to leave it to Immunovant to make the exact announcements of the clinical plan for 1402.

But I think we're working through, with FDA and otherwise all the important regulatory questions. And I think we are, Immunovant’s guidance that they're able to go into a four to five, potentially registrational programs this year is certainly an informed view of what they're going to be able to accomplish.

So I think we're feeling good there, but we'll provide specific updates on any given indication, as in when we've got them. On the BD side, again, thanks for the question. It's a great question. It's important clarification. This is not like we're working on a single large package deal of multiple things.

This is just, we see quite a lot out there that we're excited about. So we've already got the one in-house and we've got a couple of other things that we're -- on our racket, I'd say. So I think it's more of a, I think you called it a string of pearls.

I think it's more of a -- we see multiple programs and we'll bring potentially several things in over the next year and frankly beyond, right? It's sort of just how we've always run our business.

But, Mayukh, any comments on it?.

That's right. I think you hit the, the main point right at the end there. I mean, look, this is sort of regular course for us. We're always looking for promising assets where we think we can make a difference and we're as focused on that as we've ever been. We're not resting, we're working hard towards it.

The exact timing and sort of contours of that are still sort of unknown, but expect that, expect to hear more from us..

And if I can just squeeze one last question here around NIU given basic data that's coming up soon, maybe, if you can comment on what's the bar for success here, given it's a small study and there's no placebo, I know there's some numbers in your slides around expecting less than 30% treatment failure rate and you're estimating 80% to 90% stimulated placebo.

But just wondering if you may actually need to see a lower failure rates since placebo if you look at Humira and filgotinib, placebo can be highly variable..

Actually I'll hand it over to Mayukh, do you have sort of thoughts on that question?.

No, I don't have too much, too much there. I mean, I think, look, I think you both pointed out that there is some variability there, but I think the -- look, I think we're looking at this in the same way that, that we look at all of our trials. We want to see for ourselves a pretty sort of clear signal of efficacy.

I think even accounting for some potential variability in sort of notional placebo rate. And we'll be excited to move forward if it's clear..

The only other thing I'd add is, remember this is a, it's a 24 patient study. It's randomized in favor of the 45 milligram.

My experience -- our experience looking at Phase 2 data is you sort of expect it to be a, like you hit F9 on the computer and you get a green thumbs up or red thumbs down, and usually what you get is, like a greenish triangle or something like that, and you're like, what does that mean? And so I think you can imagine it's hard to reduce the extra data that we're going to get from the study into a single number.

We did set that bar of a 70% treatment failure rate, but I also think you can be clear, we're going to be looking at every patient and trying to make sure we understand what the drug is doing. And these are quite sick patients, again, 30,000 new cases of blindness every year.

It's something where we feel like we have an opportunity to make a big difference with the right clinical picture..

There are two other points to add there, I think, look, we are sort of hoping to see a bit of a dose response here and that like, while there's not a placebo, there is a relatively low dose of repo that ought to give a little bit of a, let's just call it, maybe not placebo, but something kind of closer to placebo on efficacy and the 15 milligram dose.

That's thing one. And thing two is I think at least in conceptualizing the Humira, sort of comp that you cited. We've got a more aggressive steroid taper in our study than in the Humira study. And so, you'd expect to see a higher placebo failure rate as a result..

Our next question comes from the line of Louise Chen with Cantor..

I wanted to ask you first on how you plan to address the concentration in the shareholder base.

Will that kind of all be done together with some of the announcements that you plan to make before the next earnings call? And then the second thing I wanted to ask you was on expansion of your pipeline, what therapeutic areas are you most interested in? And if you can't say what therapeutic areas you're most interested in, how competitive do you want a get with some of the most topical areas that people are investing in right now?.

On the shareholder based side, I think the first answer is that is not a decision that we can make unilaterally.

It depends on our desires, but also the desires of some of our concentrated shareholders who in many cases are happy holders and frankly, believe what we believe, which is that our stock is meaningfully undervalued given the sort of overall position of the company. So I think, that's a discussion we have to have sort of bilaterally with each of them.

We'll take it in turn you, I think, what we expect to do is to be ruthlessly economic and thoughtful about how we use our cash for that purpose. Whether that means we clean them up at once, whether it means we clean some of them up, I think that depends a little bit on their needs and their appetite and on making the right economic decisions.

Stay tuned is the short answer. On the BD question, and again, I'll ask Mayukh comments as well, but I think the short answer is we are sort of necessarily agnostic to therapeutic area, because so much of our opportunity comes from strategic shifts and focus at our partners and that leading them to need to rethink their portfolio.

So if someone is doubling down on immunology, maybe something else is falling out as a consequence. So we're pretty flexible in general because we're in that sort of string of pearls one program from here, one program from there dynamic. What that tends to mean is, we are more excited about areas where a single program can kind of stand on its own.

So, think of the immunology programs that we've developed, for example, and maybe a little bit less excited about areas where you need a concentration, either because it's like oncology where you're developing multiple drugs in combination in order to have a coherent plan or maybe because it's something like cell and gene therapy, where you have a sort of a need for manufacturing expertise that provides an economy of scale.

So it's not that we would not go into either of those areas, but they're probably like modestly less likely for that reason.

Mayukh, anything you'd add to that?.

I think, as we look, and this is really typical of the history of the company, I think as I kind of look at the list of things that I would say that we're excited about and prosecuting pursuing, right now it's about an eclectic a list as, as one could kind of imagine in terms of therapeutic areas.

So as Matt said, we're going to continue to be therapeutic area agnostic. I think, we have tended, as for the reasons that Matt stated, we have tended to be in areas that probably at first glance tend to be a little bit off the run or a little bit of contrarian.

And sometimes, I think we've shown that sometimes those areas tend to heat up as we have sort of seen with FcRn and then with TL1A in the past. And so that could well happen again, but probably again just a mix..

The bar for us is not, is it competitive, the bar for us is can we get something that makes sense for us given the development plan, the economic terms, et cetera.

And so, there are occasionally programs in very competitive spaces where idiosyncratic factors makes them competitive from a sort of, like many people care about it perspective that are nonetheless easy for us to get. And then there are sometimes programs in less competitive areas where nonetheless they're harder to pry loose.

And so I think it's not about sort of how many other people are doing it, it's about what we can get our hands on..

Our next question comes from the line of Corinne Jenkins with Goldman Sachs..

Maybe as a follow on to Louise's question, how do you think about Roivant's ability to add value to the assets that you're considering in those deals? And what do you view as the company's core competencies in that context? And then I was also wondering, you say that the environment is sort of in really good shape, it's the best it's ever been, but what metrics are you seeing that inform that comment and as the biotech market kind of has and hopefully will continue to improve, how do you expect the environment to go from here?.

On the first I think it is unquestionably the case, but the thing we have done most in our history and best in our history is creative, thoughtful, aggressive clinical development. We've run 10 positive Phase 3 studies. We've run many, many Phase 2 studies. We've changed indication plans for programs where we thought that made sense.

We've done -- we think quite good job at late stage development for programs that we were happy with the choice of indication.

So I think, first and foremost, I think value we add when we look at a new program, I think the ability to be efficient, thoughtful and creative on development strategy, selection of indication and then just strong at execution, the ability to move fast, I think is also something we are really proud of.

In terms of the environment, I guess first of all -- Yeah, we're watching the sort of change in the biotech market unfold. I'd say like there are certain kinds of opportunities like, people used to ask us all the time about the number of biotech companies trading under cash.

Some of those dislocations are probably changing a little bit as people feel like they've got better access to capital. Some aren't. There are still plenty of companies out there that because they don't fit the exact current moment in time are still not sort of obviously in vogue. And so we're looking broadly and I think that's all sort of positive.

That's the main driving factor of our opportunity set right now isn't biotech capital markets. It's what's going on in big pharma. And I'd say that is not changing. That is the level of EPS pressure, is significant. There are patent expirations coming a across a number of different pharma companies, frankly, most of the industry.

And the IRA is forcing our partners to rethink their development plans in various ways. And I think that combination of factors means that R&D portfolio prioritization has to happen at these companies.

And if you are a big pharma company and if you're reprioritizing your portfolio, what we think you want in a partner is the capital to run a good program, the execution to do a good job with it, and a willingness to be creative and thoughtful on structure to provide mutual benefit.

And I think there is basically nobody else, at least in sort of biotech that has the track record at those things that we do. So we think that sets us up as a partner of choice for a set of partners that have real need..

Our next question comes from the line of Neena Bitritto-Garg with Deutsche Bank..

So just a question about the non-infectious uveitis study. Can you just remind us what the definition of failure is that you're using the study? I know in some of the other studies that's a kind of multifactorial definition.

And then on CIDP data for batoclimab, just wondering what you would consider to be kind of a meaningful difference, from a dose ranging perspective between 340 milligram and 680 milligram?.

On NIU, Mayukh or Frank feel free to chime in. I think our definition is kind of in line with the other definitions and I don't -- sorry, I don't have the exact definition right in front of me so I can sort of make sure it gets out there after the fact. But Mayukh or Frank, do you have the exact definition handy? No worries if not.

And then on CIDP, again, I think this is a little bit of a balance of factors kind of a question. But look, I think what we've seen so far in CIDP is, like IVIg like response rates if I had to characterize them.

And I think what we would hope to see in the higher dose is evidence that we can clear that bar something that looks sort of better to a patient's and provider and physician's eyes that than IVIg from an efficacy perspective. I think that's kind of where our general head is at on what we could be able to deliver there.

The definition -- the primary definition is discontinuation or an inter-current event at week 24..

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

Question maybe on VTAMA, could you talk about what you are seeing from a competitive dynamic, your efforts on the marketing front? You continue to invest similar dollar and what -- like how should we think about inflection with atopic dermatitis? What is the timeline around it and how much of the infrastructure bill you would have to build around AD? And also, could you also comment on the net yield? How should we think about calendar 2024 from net yield perspective?.

I appreciate the question and they're sort of exactly the right ones. From a competitive dynamics perspective, I think we still look narrowly versus the other novel topical agents in psoriasis. I think we still see patient -- physicians choosing us, preferentially. The truth is as we've said, we've never been that focused on novel topical agents.

We've always been focused on capturing share from topical corticosteroids. We've said historically is that continues to be work. The sort of high prescribing docs write the product all the time and are really excited about it.

And then there's a long tail who write it 4x a month and think that's a lot and I think haven't sort of come around to our view yet that they can write it 50x a month. So we're working through those dynamics and I'm optimistic that behavior is changing over time. Yes, there's a couple other competitive events.

Obviously one of our competitors recently launched a foam that doesn't directly impact utilization of our product. We're not being used a lot on the scalp anyway. I think that should be a good indication for them, but not something we're focused on.

We've obviously done some work ourselves on a foam and we'll continue to think about expansion opportunities in that direction. As far as AD is concerned, it's just -- it's a huge market. And we are excited for our product profile, which we think bluntly is even more differentiated in AD even in psoriasis.

AD is also in many ways the less developed and potentially faster growing market. And it's also a market that is more primed for novel topicals than psoriasis was because there have been a few more on the market ahead of us.

And so we can also look to take share not just from steroids there, but from maybe some competitors that have established themselves. I think what we will wind up focused most on for the sort of quarter of that launch that will happen during our next fiscal year. Again, we'll get the approval kind of late this calendar year.

And then we'll be looking at sort of that next fiscal quarter. I think we'll be looking at script volume uptake there and looking to see some real growth. We have said previously we expect to increase the number of reps from about a 100 to about 125.

I don't think there's like a massive change to our commercial infrastructure, but we're still thinking through in real-time as we learn from the psoriasis side what to do for DTC concurrent with that launch, et cetera. That's all sort of ongoing. The prescriber base is also a little bit different. It's a little bit more dispersed.

We're given some thought to ways to reach docs beyond just the dermatologists. But stay tuned for potential ideas there. And then, sorry, you might've had all of GTN yeah, look, I think, it's been sort of slow and steady-ish for us.

There's still a little bit of lumpy contracting stuff to get through just as some of the contracts have kind of turned over or changed, but in general, I'd say like slow and steady accretion over the course of the year, we may dip a little in the first quarter or be flat-ish in the first quarter for sort of normal reasons related to plan resets, et cetera.

And then, my guess is the AD launch won't like halt our progression, but it may momentarily slow it as we just need to make sure formulary sort of gets set up there quickly. So I think, probably slow and steady is the right way to think about GTN through 2024..

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

Matt, you indicated that you were sort of still sort of agnostic I guess in terms of therapeutic area after you did announce the Telavant transaction with Roche. You sort of said that having a much greater cash balance potentially positioned you to sort of take on big opportunities further into development.

Does that influence where, or sort of certain therapeutic areas that you might favor? Because obviously you have could the outlines of such a strong I&I portfolio right now..

I appreciate the question and thoughtful as always. I think first of all, we continue to appreciate the pleasing coherence we have in I&I, we think, but FcRn fits nicely with brepocitinib that namilumab and sarcoidosis is sort of hewing in the same directions.

So look, I think to the extent that we see things in I&I that work for us, there's something nice to that.

I think in many ways what our capital base and frankly our history of development in, remember some of our first Phase 3 programs we're in endometriosis and uterine fibroids and overactive bladder, which are not necessarily indications that we're jumping up and down about literally right now for new programs.

But they're big studies and big indications and I think, we have a lot of history in that kind of disease state. One of the things that I think frankly differentiates us from many biotech companies is that our capital base allows us to do larger studies for broader populations.

And so I think we will potentially take advantage of that both because those can be big opportunities and because there are opportunities that will sort of necessarily get passed over by smaller folks who don't have the capital position of the development experience take them on.

So I think that is a competitive opportunity for us that we will be taking advantage of..

And Matt, I guess as a follow-up, to the extent that you perhaps do pursue opportunities outside of I&I would you think about sort of new areas as ones in which you would want to start to build some scale? Meaning if you executed a new one single transaction as potential therapeutic area, would you be what likely looking to add to that?.

It's a discussion that we have internally as we look at our pipeline. And again, there are things that we see where we see a program and it makes more sense as a part of our portfolio, then it does sort of on a standalone basis. So I think, it's certainly possible as we build-out additional programs that they will become nexuses of scale.

I think it's important to know, though, we evaluate every program on its own merits. We evaluate every program based on the data we've got, and I think we're going to pursue sort of value and risk over sort of therapeutic concentration per se. But, Mayukh, I'll hand it over to you..

Yeah, I think, look, I think as you've, seen from us, typically when we bring in a new program, I mean, it's sort of like by definition it's got to have enough heft to kind of stand on its own.

I think that's the lens through which we look at it, that's the lens through which we sort of hire a team to sort of prosecute around it, we typically call it a new vent, but that's kind of how we think about it.

And last night it's, I guess like I would say, I can't underscore the comment Matt made enough about capital being a major competitive advantage for us. Both in terms of I think like what that brings as a solution to a perspective pharma partner and that we have the sort of scale of capital that is meaningful to them. And that is unique to us.

And so I think we view that as precious..

Our next question comes from the line of Robyn Karnauskas with Truist Securities..

This is Nishant. I'm on for Robyn. Maybe on VTAMA GTN. You mentioned you see a steady -- slow and steady over a period of next year.

You mentioned that last call, you see overall, you reach -- to reach 50% at steady state, do you still believe that to be the number for GTN long-term to this 50% steady state? And in terms of big picture for the company, how many assets would you retain over the long-term?.

On the GTN question. Look, I think I have no real change for like the long-term steady-state guidance. I think it's going to take time and scale, especially because remember, a meaningful portion of the remaining yield accretion comes from volume, which is really just going to take some time to build up to.

So -- but I think our guidance of 50% is sort of the same as let's say, every other biotech launch program. And I think the trends that buffet us will be largely the same as the trends that buffet other programs. So no change to sort of long-term steady-state guidance per se.

And then assets that we retain for the long term, I think the short answer is we bring in programs that we are excited to invest in, that we believe will be important commercially, that we believe we will generate important clinical data on. And basically, everything we bring in, our plan is to retain it and develop it.

And I think the thing that throws us off that trajectory is just the information we learn along the way, both in terms of the quality of the data that we generate and in terms of what other people think of the program and what their plans might be.

But I think if you gave me a crystal ball, and it showed that we kept all of the programs in our pipeline, and they were sort of commercial opportunities for us down the line, I'd be pretty excited about that. I just -- I think we will continue to be ruthlessly economic along the way.

And some of the targets we're working in a really attractive target, not just to us but to prospective partners. So I think that could -- that's the kind of thing that takes us off that path..

Ladies and gentlemen, at this time, I would like to turn the call back over to Matt for closing remarks..

Thank you, everybody. Thanks for listening. Thank you, operator, for moderating. Thanks to all our analysts and obviously, to the -- to all of our investors and to the entire team at Roivant. We appreciate another quarter with a lot for us to be proud of and a lot to look forward to in building year for 2024.

So yes, looking forward to getting back on the phone. I'm sure we'll do it multiple times to come, and I will speak to you all soon..

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..