Roivant Sciences Ltd (ROIV) 2022 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Roivant Third Quarter Earnings Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Paul Davis, Head of Communications. You may begin.

Thank you, and good morning. Thanks for joining today's call to discuss Roivant's third quarter results and business updates. I'm Paul Davis, the Head of Communications at Roivant. On the call today, we have Matt Gline, our Chief Executive Officer; Richard Pulik, our Chief Financial Officer; Frank Torti, our Vant Chair; Eric Venker, President and Chief Operating Officer; and finally Mayukh Sukhatme, President and Chief Investment Officer.

For those dialing in via phone, you can find the slides being presented today as well as the press release announcing these updates on our IR website at www.investor.roivant.com. We'll also be providing the current slide numbers as we present to help you follow along.

I would like to remind you that we will be making certain forward-looking statements during today's presentation that reflect our current views and expectations, including those related to our financial performance and the potential attributes of our product candidates. We strongly encourage you to review the information that we have filed with the SEC, including the earnings release and Form 10-Q filed this morning for more information regarding these forward-looking statements and related risks and uncertainties.

We'll begin with Matt Gline, who will review key business updates across Roivant in advance, and provide a financial update. We will end the call with a Q&A session. Without further ado, I'll turn it over to Matt.

Thank you, Paul. Good morning, everybody, and thank you for joining our third quarter earnings call. It's been an eventful quarter for us with a number of key updates, including Immunovant, putting batoclimab back into the clinic in Myasthenia Gravis, including a favorable appeals court decision on Genevant in December, including the introduction of a new program on -- at a new Vant, Hemavant in myelodysplastic Syndrome. So I'm excited to share those and other updates over the course of today's presentation.

I'll begin on Slide 4 just by giving an overview of some of the key features of our business as well as some of the key updates, and then I'll go through a number of them in more detail. So I want to start by saying that both the prior quarter and the coming year are incredibly exciting for Roivant as a company, with a number of important projects coming to fruition over the coming months and year.

The first of those is our near-term commercial launch of tapinarof, a potential blockbuster in psoriasis, a topical treatment of psoriasis with an expected PDUFA date in the second quarter of 2022, and a launch thereafter. We'll talk more about that in a moment. But that's backed by a number of updates in our broad clinical stage pipeline. We will have at least 8 pivotal proof-of-concept trials running by the end of this year. And that includes progress at our newest Vant Hemavant with RVT-2001, recently added to our pipeline of first-in-class -- or potential first-in-class oral SF3B1 modulator for transfusion-dependent anemia in patients with low-risk MDS. That includes updates at Immunovant and batoclimab, as I mentioned, and that includes other updates and a number of other programs, including our sickle cell disease program as well as [milamab], our anti-GM-CSF antibody with improved IND in sarcoidosis.

We'll be talking today a little bit more about strategy in our discovery platform, where we've made some significant progress in crystallizing our plans, and adding capabilities that we think will give us a differentiated strength at designing new small molecules as well as a number of other areas of asymmetric potential upside, including Genevant with both our intellectual property and scientific capabilities, delivering novel and important lipid nanoparticles for nucleic acid delivery, as well as continuing updates on our early-stage clinical pipeline. And all of that backed by a strong capital position with $2.2 billion in cash as of December 31, plus a significant amount, about $870 million, in public equity stakes, and some private holdings, including of Datavant.

So I'm going to start today's presentation by giving everyone an update on tapinarof at Dermavant, which is a program that we're obviously very excited about, starting on Page 6. So as a reminder, tapinarof is a topical agent for the treatment of psoriasis. It's a therapeutic aryl hydrocarbon modulator. It's the only such -- it's the only drug of that mechanism that we're aware of. And we are -- we have our data in psoriasis, and have an ongoing study in atopic dermatitis with data expected in the first half of 2023. And I want to remind people as it comes to tapinarof, some of the attributes that make us excited about the program, including a remarkable treatment effect with significant efficacy, efficacy that we think is as good or better than anything that is observed in a topical before, with up to 40% of patients over the course of our clinical program completely clearing their psoriasis with significant durability.

So our drug continued to perform better in our long-term extension study, the longer the patients stay on it, including beyond 12 weeks. With what we believe to be a completely unique to topicals remittive benefit, where I mentioned 40% of the drug -- or 40% of the patients who go on drug completely clear their psoriasis in our study. They stay clear of drug off therapy, or mostly clear for about 4 months on median, which is something that's attractive to payers, obviously, attractive to patients and attractive to physicians.

And all that is coupled with a very favorable safety and tolerability profile, with no treatment-related serious adverse events in any of our pivotal studies, the late-stage studies and the -- with significant tolerability. So with no questions of tolerability for long-duration therapy or duration across -- or therapy across all different locations on the skin. So a profile that we think compares favorably certainly to the standard of care of topical corticosteroids without any of the -- at least in our study without any limitations on duration that you see with the topical corticosteroids without any limitations on where you can use it on your body as observed with some of the topical corticosteroids.

On Page 7, I want to remind people of one piece of relatively recently disclosed data that we think is exciting about the drug, which is the data we've shown previously, but to highlight the rapid onset of action is one of the things that we think will be important to this as we launch tapinarof later this year. With our drug having achieved statistically significant improvement in PASI from baseline as early as week 2 in our study. And in fact, a 20% reduction in disease activity in week 2 relative to vehicles. So we think there's a significant benefit here early on in treatment, and we think that will matter to patients.

In fact, on Slide 8, and this is a new piece of information that we've put out this quarter relatively recently. Dermavant as part of our long-term extension study included patient satisfaction data. And you can see on this chart, both on the left-hand side, patient satisfaction vis-a-vis other topical treatments. And on the right-hand side, you can see patient satisfaction versus systemic drugs. And so one of the things interesting is 80-plus percent of the patients strongly agreed or agreed that tapinarof was more effective than other topical drugs they'd used in the past and preferred tapinarof to other topical drugs they've used in the past. And given the attributes that I described on the earlier slide here, both from a treatment effect perspective and a safety and tolerability perspective, we would have expected that.

One of the things that's remarkable is over 2/3 of patients, 67.8% of patients, also preferred tapinarof to systemic drugs they've used in the past, which given the high level of efficacy associated with systemic therapy, and the fact that often severe patients are on systemic therapy. It was exciting to us to see just how many patients preferred tapinarof to systemic drugs. So these are the kinds of data that matter to prescribers, and they're kind of data that matter to patients, obviously. And we think the dermatologists are looking at this and are getting excited for our potential launch later this year.

On Slide 9, a little bit about that launch. So we are fully preparing for a launch in the second quarter, including getting ready to deploy a specialty sales force capable of calling on dermatologists to write more than 80% of all commercial prescriptions in the psoriasis market. To do that, we're going to hire 75 to 100 reps which will allow us to reach the 6,000 highest-valued dermatology healthcare providers. And we think that will be supported by a key commercial leadership team, many of the members of which have already been hired, and we're conducting a number of more of those hires over the course of the coming quarter. So really excited about the execution at Dermavant from a very high quality team that we're pleased to support.

On Page 10, just a reminder of some of the recent progress at Dermavant including that our NDA submission remains on track with no expectation of the advisory committee for PDUFA in the second quarter, including manufacturing and commercial production readiness, I'm sure -- on track to ensure a high-quality predictable supply of drug. As I mentioned, the commercial organization is being built out as we speak. We did in the quarter have data from our PSOARING 1 and PSOARING 2 trials published through England Journal of Medicine. So that was an exciting sort of scientific closure to those trials.

And then we continue to have strong enrollment in our ADORING 1 and ADORING 2 Phase III trials evaluating tapinarof in atopic dermatitis, and we continue to expect top line data from that program in the first half of 2023. So look forward to providing more updates on tapinarof in atopic dermatitis over the course of this year. And we think that will be an important part of the story for us as well.

So with that, I'm going to move on from tapinarof to some other parts of our business. And on Slide 12, just as a reminder, we have a broad clinical development stage pipeline. So this is our clinical and close to the clinic development stage pipeline with many programs. Tapinarof, that we talked about, batoclimab, Immunovant that we'll talk about a little bit later and a number of other programs. Too many to talk about on a call like this one, but we look forward to sharing updates on many of these programs over the course of calls like this one and in the conference presentations over the course of this year.

On Page 13, just to highlight, 2022 is actually a really important year for us from a clinical development execution perspective. And even just among the things we've already talked about, 3 pivotal study initiations expected for batoclimab and Immunovant this year. We remain on track to initiate a Phase II trial with namilumab for sarcoidosis. That's our anti-GM-CSF antibody. And during this past quarter, the IND for that program in sarcoidosis has been approved. We remain on track to initiate a multiple setting dose trial for our program at lysovant, with the IND accepted in January '22.

And we'll talk a little bit more about this program on this call. We're looking forward to conducting a robust open-label expansion of the ongoing Phase I/II trial in RVT-2001 at our newly formed Hemavant in lower-risk MDS. So many important clinical programs ongoing this year with an expectation of near-term data supporting what we think is going to be a unique and interesting pipeline.

I'm going to start, first, on the development side by talking about Hemavant, which is the newest Vant in the Vant family. It was just built around a program that we in-licensed just late last year. And so I'll start on Page 15. So the program here is called RVT-2001. It is a potential first-in-class small molecule SF3B1 modulator for the treatment of transfusion-dependent anemia in patients with lower-risk MDS. So SF3B1, if you're not familiar with it, is a target in the spliceosome. And this program came from Eisai, where Eisai had been focused on developing it for higher-risk progressive MDS patients as well as patients with AML and CMML. And it wasn't totally clear from their data, whether it was exactly an appropriate therapy for that population.

But as we looked at the data, and we're going to share some of it on today's call, we got excited about RVT-2001 for a different patient population, namely the population of transfusion-dependent anemia -- or the treatment of transfusion-dependent anemia in lower-risk Myelodysplastic syndrome. And this is a market, as you may know, that has been recently validated by Luspatercept, Reblozyl, a BMS drug, that launched last year and is now annualizing at over $500 million a year, 5 quarters into launch. And BMS is forecasting that to be an over $4 billion peak sales drug, much of which coming from this lower-risk MDS population.

And our interest in that population is driven, as I said, by some encouraging proof-of-concept data in the 80-plus patient Phase I/II study that's been conducted in our drug, and we'll talk some more about that data. And we have a multipronged development strategy to optimize the drug's impact in that patient population before getting to...

So on Page 16, a, is a little bit of a reminder of what this patient population looks like, and b, is a little bit of a discussion about how we expect our drug to play. So we're focused here, as I said, on the group of lower-risk MDS patients. So they're about 17,000 new MDS cases each year and about 115,000 MDS patients total, and low-risk patients are both significant traction about 2/3 of new patients as well as an even higher fraction of the prevalent population.

So -- and these are quite sick patients. Low-risk MDS is a chronic condition with therapy focused on management of symptoms. And first-line therapy is mostly Erythropoiesis Stimulating Agents, ESAs. But they're not very effective. And so there are a number of drugs approved for later-line therapy, just a couple, Luspatercept and Lenalidomide, each approved for subsets of patients. Luspatercept is approved currently in second-line therapy, although BMS has said, they're continuing to develop it in earlier-line therapy. Lenalidomide, which has significant toxicities is really only approved for a mutant subset, the (inaudible) subset of MDS patients. And both of those drugs also leave room for improvement, Luspatercept is effective in less than 50% of patients.

And so RVT-2001 is a potential oral therapy, first of all, which is different from Luspatercept, in a genetically validated target that's mutated in up to 80% of certain subsets of the MDS patient population, which is thought to be an important target in driving MDS, mutations in SF3B1 are (inaudible) to be important.

Our initial plan is to target second-line, principally in SF3B1-mutated patients with the potential to expand across other spliceosome mutations as well as to expand to patient populations who are refractory to Luspatercept, where as I said, there's still a significant -- then to lead and to go earlier in therapy over time.

So I want to talk on Page 17, a little bit about our early clinical data and why we're excited about the program. And I'll highlight, this is a relatively high-risk program in part because a lot of this data comes from relatively smaller ends and from cross-trial comparisons, but we think it paints an interesting picture. So in the existing Phase I/II study that I referred to 84 patients across MDS, AML and CMML, only a relatively small subset of those patients because it wasn't Eisai's main treatment interest or in our patient population of interest. Only 19 of the patients had lower-risk transfusion-dependent MDS. And in that patient population, we saw a red blood cell transfusion independence rate of a little over 30%.

Now that in and of itself is not necessarily a particularly compelling result only in the sense that Luspatercept, for example, has responder rates in the 40s. But what was interesting upon further investigation is the subset of patients that we were focused on is -- it turned out to have been a highly sort of pretreated patient population with 15 of the 19 patients having been pretreated either with Lenalidomide or with prior HMA therapy. And what's interesting about that is both Luspatercept and Lenalidomide in prior trials have struggled significantly in those pretreated patient populations.

So Luspatercept, for example, had only achieved a 13% red blood cell transfusion independence rate among Lenalidomide pre-treated patients in Luspatercept's Phase II trial. And in fact, that result was so challenging that Luspatercept's Phase III study actually excluded Lenalidomide pretreated patients. And Lenalidomide in an investigator-sponsored trial, saw a 12% what's called an [HIE]. That's a different endpoint. So sort of a transfusion reduction endpoint in HMA-pretreated patients. So that alone and first of all, is interesting, right?

We saw a significantly higher response rate. In fact, over double the response rate for infusion independence relative to Luspatercept or Lenalidomide in a similarly pretreated population. Now further, and on top of that, one of the things that's been interesting to us as we've studied the field is that both Luspatercept and Lenalidomide saw significant improvements as they move to earlier-line in less pretreated patients. So Luspatercept, for example, in that same study where they had only a 13% transfusion independence rate, saw 44% red blood cell transfusion independence for patients without Lenalidomide pretreatment. And as I mentioned, that led them to actually exclude Lenalidomide pretreated patients from their Phase II.

And in that same study that I mentioned for Lenalidomide on HMA-pretreated patients. 38% response rate -- or 38% on this HIE , 4 patients who have not been HMA-pretreated versus 12% post HMAs. So again, significant improvement as those drugs moved from earlier-line setting. And so not only does our data suggest that we may have a significantly different effect or differently greater effects in heavily pretreated patients, but there's a chance if we see a similar improvement as we move to earlier-line patients that we could have an overall best-in-category therapy for these transfusion-dependent MDS patients.

So that data got us excited. Obviously, this is a relatively risky program for the reasons I mentioned. But if we're successful, we think we've got a couple of different paths to an important program.

So on Page 18, in terms of what we're doing from here. So we're taking the existing ongoing Phase I/II trial, and we're expanding it by 50 to 60 patients. We expect to be able to do that over the course of next year with the data coming in 2023. We are going to focus on lower-risk MDS patients with SF3B1 mutations. That's about 30% of MDS patients overall, and a significantly higher portion of MDS patients in some of the more important subsets for this purpose. And we're going to specifically look for certain biomarkers, including biomarker called aberrant TMEM14C transcripts, where in a small and subset of our patients, 5 out of 7 responded. So a very high response rate. And those aberrant TMEM14C transcripts are associated with certain SF3B1 mutations in a way that gives us some biological understanding of why that might be. So we see a couple of different paths to patient impact here.

Obviously, there's the possibility for a biomarker-driven sort of very specific precision approach to treating certain patients. There's the possibility for a therapy that can deliver for pretreated patients, greater efficacy than the other existing therapies on the market. And there's a possibility if we see a continued improvement as we move to earlier-line patients that we could have an overall best-in-category treatment effect, in a market that's important and in a patient population that is significant, but that continues to have significant unmet need.

And that couples with certain other attributes, including a relatively benign tolerability profile as well as oral dosing, which is something that the other therapies don't currently have. And one other note, which is, this drug because Eisai was testing it for higher-risk MDS patients was dosed in a more acute setting. And we've improved our dosing to a more chronic-dosing paradigm, which we also think will help us deliver an appropriate amount of drug to these patients.

But the last thing I'll say on this is, although this is a relatively higher risk study, relatively minimal data decay has been observed in past MDS trials from Phase II to Phase III. And so our hope is that after we get data next year, we can be reasonably confident if that data are compelling, that we have a therapy that matters. And so that's a little bit about our program in MDS. The last thing I'll say about this is, I think it's a pretty good example of how we think about dealmaking and programs at Roivant. So this was about an $8 million upfront cash and $7 million upfront equity payment for this therapy, which has, we think, attractive commercial terms.

And overall, for around $50 million, and we'll get the answer to the question in this Phase I/II study, which should set us up for interesting therapy if data are compelling. And otherwise, it will have been a relatively modest investment relative to where our overall portfolio is. So an exciting program, something we're glad to have added to the pipeline, and something we're excited to share more about through this year and especially next year as we get data in 2023.

Next, I'll just briefly review progress at Immunovant. So Immunovant has shared all of this at the end of last year or the beginning of this year. And so I won't go into great detail here, but we are very excited for the fact that batoclimab now has a clear path back into the clinic in Myasthenia Gravis and other indications. So I just wanted to remind people a little bit about that situation, starting on Page 20, which -- Page 20 really is just a reminder that anti-FcRn antibodies have potential in a very large population of patients.

There are over 1 million U.S. patients and over 1 million European patients -- like over 1.5 million European patients with autoantibody-mediated autoimmune disease just in this list of indications alone, and there are others. We've announced 3 indications, Myasthenia Gravis, WAIHA, and [candid] Immunovant. And we said we expect to announce 2 more through the middle of this year. So we'll talk a little bit more about that later. But a patient population we're excited about, and we think the FcRn class is going to matter a lot with the potential for sort of double-digit billion dollars in overall market size.

So on Slide 21, as a reminder, we announced at the beginning of this year, a little bit more information about our plan for the Phase III trial design in Myasthenia Gravis. And I want to highlight, and this is a little bit of a schematic on this slide, but just the way the autoimmune diseases are treated generally is often through a combination of induction and maintenance therapy with the possibility to rescue. Immunologists are used to treating diseases flexibly. They're used to using higher doses of therapy to get patients controlled. They're used to being able to maintain patients chronically on drug, and they're used to being able to up-titrate or down-titrate depending on severity of symptoms and reflare. And batoclimab and Immunovant is really the only anti-FcRn antibody that is really being tested in that kind of treatment paradigm that matches the way Myasthenia Gravis patients experience their disease and the way that immunologists are used to treating it.

So our trial has an induction phase where we test higher doses, including a 680 milligram dose for 12 weeks, a maintenance phase where we test lower doses going down to including a 340-milligram every other week dose. And on a long-term extension, where we're able to optimize control of the patients, including both up- and down-titration as needed for each individual patient. And we think this will allow us to achieve a few things. It will allow us to achieve fast treatment of disease symptoms, it will allow us to maintain on an individualized basis, that treatment, including managing side effects such as cholesterol in a comfortable way for patients while their disease is controlled, and we think it will allow patients to titrate as they have disease flare ups in order to manage their experience of symptoms.

On Slide 22, we show a little bit about how that stacks up versus some of our competitors, EFGARTIGIMOD and NIPOCALIMAB. And in short, we believe we are the only program that is designed to match -- that is designed to match that treatment paradigm in the sort of optimal way. And so EFGARTIGIMOD, for example, was approved in more of a cyclical paradigm with 4 weeks of treatment on, and then additional cycles after a pause based on loss of response. And remember, the approved EFGARTIGIMOD is an IV-administered therapy, although there's also a bridge to Halozyme formulation.

NIPOCALIMAB has a loading dose, so a little bit of induction therapy, but only one single loading dose before going to a lower dose treatment paradigm. So not necessarily designed to maximize early treatment effect. And NIPOCALIMAB in the long-term extension study only allows for down-titration while we allow for both down-titration and rescue therapy. And NIPOCALIMAB began today as an IV therapy, although they've discussed a bridge to subcutaneous. And as a reminder, batoclimab addresses all 3 of these things. We have continuous dosing with induction and maintenance. We have down-titration, and rescue therapy allowed. And as you may know, batoclimab rather was developed from the beginning as a routine simple subcutaneous administered injection, which we think will make this easiest for patients and physicians to manage.

On Page 23, just as a reminder, the market for batoclimab is certainly not limited to Myasthenia Gravis, and we're excited to initiate pivotal trials in 3 indications total, including Myasthenia Gravis, and we're going to announce those 2 additional indications before August of this year. And so we're excited to share those indications as well as additional plans for those trials, and we will be back in touch to do so in the near future. So those are some updates on our development stage pipeline. There's obviously a number of other programs that we haven't had time to talk about today, and we'll do in the future. But I want to move now to our discovery organization where we've been doing a fair amount of work over the past months to really crystallize our strategy and to focus on what we think are unique and differentiating capabilities.

So I'm not going to talk much about specific programs or targets today, but I want to give you a sense for how we're thinking about the composition of this program in general. And really what I'll say is we've built Roivant Discovery with the idea that through our computational platform, we can target the 80% of targets that have been very difficult to drug historically, using a variety of different techniques that are all bolstered by our unique computational capability. And the areas on which we're focused, the first of which we've talked about a bit, is Heterobifunctionals, mostly targeted protein degraders, which is an area that we think our computational platform and wet lab capabilities really set us apart from the field.

We're focused on covalency, which is an important emerging area, obviously, a focus for a number of biotech companies, where we think a combination of proteomics and computational tools will give us a unique ability to identify opportunities to drug historically difficult-to-drug proteins. And then finally, we have an area that we call deficiency to best-in-class which is we think the atom-by-atom understanding that we have of different proteins really gives us the ability to look at existing small molecules, whether they're development candidates or even in some cases, approved therapies that have established potential, either biologically or commercially, but have well-understood limitations like an affinity or binding limitation or an off-target tox effect, and to be able to understand the geometries of those proteins and those affinity relationships and to optimize to resolve some of those deficiencies.

So I'm going to talk about each of these briefly in turn, starting on Page 26, with Heterobifunctionals. So we've talked about this a little bit before. And this is an area that we're excited to be participating in the area, especially, of targeted protein degradation. In short we think this is going to be a sort of killer app for computational tools in drug discovery. And we've combined a really best-in-class wet lab chemistry team that has deep experience in discovery of new degraders with the computational platform that gives us, we believe, the most accurate prediction of ternary complex formation, the most accurate prediction of ubiquitination, of any that we're aware of.

And in a way that lets us really get to the heart of the degrader discovery problem to understand how both the affinity of a small molecule ligand of the warhead as well as the linker geometry and the E3 ligase ligand can come together to achieve an optimal ternary complex and to achieve ubiquitination at the highest possible rate. We think this will let us design degraders against targets that other people have struggled where we can really optimize repertory complex formation.

And we feel like we're at a relatively unique corner of the degrader space in the sense that we have wet lab chemistry expertise and tools specific to Heterobifunctionals, specific to degraders that goes beyond what we believe is any of the other computational companies. And on the other side, we have expertise in modeling degraders and computational tools for modeling ternary complexes that we think go beyond the computational tools by a significant margin of any of our peers on the degrader side. And so we feel like we are in a unique corner having both the best computational capabilities of any degrader company and the best wet lab chemistry degrader capabilities of any computational company, and we feel like that sets us up for a differentiated opportunity.

The first of Roivant's degrader programs will enter the clinic, we believe this year, and there's a number of others behind it, and we're excited to share pre-clinical data over the course of the year on a number of programs as we move forward.

So on Page 27, I'll move to the next pillar here, which is on covalency. So again, this is an area that's got increasing interest in biotech lately, and we've built a team here of chemo proteomics experts as well as computational experts that we think are going to set us aside here as well. So what we've begun by doing here, and this is a combination of chemo proteomics and computational tools, is by mapping what we call the Reactome, which is to understand the residues on the surface of a protein and how they map to different -- how different immuno acids map to that residue so that we can start to understand using a combination of chemo proteomic approaches and a deep computational understanding for the area around various covalent binding opportunities whether it is possible to drug some otherwise difficult-to-find drugs.

So we use sort of chemo proteomics-based hit finding to screen proteins in their biological state and to find opportunities for binding. And then because our computational tools give us a very accurate understanding of protein geometry, including around the covalent-binding sites, we can figure out how to design selective drugs against those chemo proteomic-based hits. So we think this is going to matter for a variety of protein categories that have been difficult to drug, including things like transcription factors. And again, we're excited to share some more information of our programs coming out of this capability in the near future.

And then finally, on Slide 28, I talked a little bit about this in the intro here, but the other sort of pillar we've added here, something we're excited about and [part of what we think] is going to give us the ability to move very quickly is to work on programs where there is starting chemical matter, where there's an understanding of affinity and understanding of a relationship between a small molecule and protein, but where there's some well-understood deficiency there where there's an off-target tox effect that is understood, and so we know where the off-target tox binding is taking place or where there's a selectivity issue or maybe there's multiple isoforms of target.

And it's really important to hit certain isoforms, but not others or certain mutant variants, but not others. And what we feel like our computational tools are allowing us to do is to start from that starting chemical matter to really understand the limitations of that affinity or property relationship to the protein and to be able to work backwards and redesign or reengineer those small molecules to improve that deficiency, and ultimately result in a best-in-class therapeutic.

And among the things that are exciting about this in addition to being able to deliver meaningful patient impact is being able to do it fast, to be able to go from start to a drug in the clinic quickly because we're starting from a well-understood problem iterating rapidly from a computational perspective in a way that we think is going to matter.

So on Slide 29, just to wrap up the discussion on the discovery side, really, we feel like our discovery strengths lie at the intersection between the computational platform looks -- been a fair amount of time talking about our molecular dynamics toolkit, our machine learning capabilities, our large GPU-based supercomputer with force field engine that allows us to simulate all kinds of things we could incur complex structures with a high level of precision.

There are relatively few other companies in the world that can do that kind of thing. With unique experimental wet lab capabilities that have been hand-chosen to pair with our computational tools, so chemo proteomics and biophysics and wet lab chemistry with degrader expertise with specific tools and capabilities designed to pair with the modeling that we're doing. And then all of that sits together with Roivant's clinical expertise and with our history of clinical development.

And we haven't talked about it today, but remember that the Vant model has resulted in 8 positive Phase III trials of 9 that we've run with now 4 FDA-approved medicines currently at Sumitovant and a partner. And so a long history of clinical development, including creative clinical development and all of the programs coming out of our discovery engine across the pillars I just described, get the benefit of moving through that ecosystem, and we believe that will allow us to rapidly and successfully develop exciting drug candidates coming out of Roivant Discovery. So I wanted to share that update. It's a little bit more precision than we've given in the past on what our discovery organization looks like and how we've divided it up from a capabilities and tools perspective.

So I'm going to move on from here to talk about a couple of other items, including one source of some asymmetric potential upside that people have been paying attention to. So on Slide 31, just as a reminder, I'm going to talk a little bit about Genevant. So Genevant is a leading company in the field of nucleic acid delivery, focused in particular, not exclusively, but largely on the design of novel lipid nanoparticles. There's deep history of Genevant in the area of lipid nanoparticles dating back really to almost the very beginning of LNPs, certainly in their use in biotech. And as you may know, what's exciting about LNPs is they are a tool for getting fragile nucleic acids into the body and into target cells. Otherwise, nucleic acids degrade quickly and don't get to the sort of part of the cell where it's needed in order for them to have the therapeutic effect. And LNPs allow nucleic acids like RNAi, like mRNA to get into cells so they can deliver a therapeutic benefit.

LNPs have emerged as the primary means for delivering mRNA therapy. So almost all of the mRNA therapies in development are delivered via LNPs. It's worth noting that LNPs are also occasionally used in the delivery of RNAi, for example, based therapy. And in fact, Genevant's LNP therapy is used in the delivery of Alnylam’s Onpattro under LNP license from Arbutus.

So on Slide 32, just to quickly note, we've had continued progress at Genevant this quarter, including our recently announced collaboration with 2seventy bio providing access to LNP-developed gene editing therapies for hemophilia A. So gene editing is another area where LNP has been highly relevant, and we're excited to use our technology in collaboration to make some progress in that important field.

And then on the intellectual property side, as many of you may know, in December, the Federal Circuit Court of Appeals rejected Moderna's appeal of a PTAB decision. So Moderna had attempted to invalidate a number of our important LNP patents dating back 2018. And in early December, the Federal Appeals Court affirmed the validity of our patents in a way that was important to us, and obviously, something we were pleased to see. So we expect to provide further updates on Genevant in the near future, and look forward to doing so.

So to wrap up today's -- the presentation portion of today on Slide 34, just by highlighting some of our key financial items from the quarter. So for the 3 months ended December 31, 2021, we had R&D expense of $153 million with adjusted R&D expense of $119 million. We had G&A expense of $116 million with adjusted non-GAAP G&A expense of $61 million for a total net loss of $306 million or an adjusted non-GAAP net loss of $157 million for the quarter. We ended the quarter with cash and cash equivalents of approximately $2.2 billion, and limited debt. Our balance sheet debt is about $204 million with the principal credit facility making up $32 million of that, and the remainder being the fair value of milestone payments related to the tapinarof, and we have about 690 million common shares issued and outstanding as of February 9.

So on Slide 35, as I wrap up my presentation, thank you again for listening. I just want to highlight that 2022 was an incredibly exciting year for us, again, with the FDA approval decision for tapinarof expected in the second quarter, with top line data coming in the first half of next year, with batoclimab getting into multiple new programs in the clinic, with data expected -- and what we shared is we have it on additional patients in our sickle cell gene therapy with Aruvant, we didn't spend any time today talking about it, but we continue to enroll patients in our Phase I/II trial in sickle cell disease and look forward to sharing more updates on that program over the course of this year.

Also look forward to discussing the initiation of our Phase II trial in sarcoidosis at Kinevant. We're going to continue to expand and enroll patients into our Phase I/II trial in lower-risk MDS that we talked about earlier and a number of other updates coming from around the pipeline, including multiple programs generating data in our preclinical discovery pipeline that we look forward to describing further.

So I want to thank you again for listening. I obviously covered a fair amount of ground, and looking forward to continue to provide these updates. And at this point, I'll wrap up and go back to the operator for Q&A.

(Operator Instructions)

Our first question comes from Robyn Karnauskas with Truist Securities.

So I actually had a question on RVT-2001. You spent a lot of time going through it today, which is very helpful. So just a little confused on when we'll get the next updated data set. So you said you plan to amend ongoing Phase I/II. Can you just go into a little bit more granularity on like when you talk to the FDA? What your options are? It sounded like if you look at biomarkers, is there a quick path to market? I think you said 2023, we might get Phase III data. Just can you go into a little bit more detail? Because I think it's important to figure out like what the timelines are for readouts.

Yes. Thanks, Robyn. I appreciate the question, and thanks very much for listening. And sorry if I caused confusion, so I'll try and clear that up. So we are -- the Phase I/II study is ongoing. And so the fastest path for us to continue to enroll -- the patients we're focused on was to expand that Phase I/II study. We will provide an update on the enrollment in that study, on the trial expansion in the middle of this year. And we expect to have data from that 50 to 60 patient cohort in 2023. So that will be data from the Phase I/II trial, giving us responder rate information for a larger subset of SF3B1-mutated low-risk MDS patients. That data will be in 2023.

If that data are positive, if it shows a compelling [effect] on that patient population, we will then initiate a pivotal program. So there will be a pivotal study before the drug is approvable in the indication. But we'll have the data next year. And the thing that I said when I was talking about the program is one of the things we like about MDS is the Phase III trials tend to be pretty good at replicating the results of Phase II studies. So we're hoping that once we have data next year, if it's compelling, we have a relatively straightforward lower-risk path at that point to a therapeutic, but we're still going to have to go through a pivotal trial.

The other thing I'd remind you about the Phase I/II, is it's an open-label study. And so there's a possibility that we at least will have some additional information over the course of the trial, but I would guide toward 2023 for when I would expect to really know the answer there.

Got it. And one other follow-up on tapinarof, the Amgen guided double-digit growth they're obviously in different indications. But an impressive sort of analysis that patients like topical -- your topical over their systemic. Can you give more color on like what systemic they were on and what type of patients that you were looking at in that analysis?

So this was all of the patients in our -- in our Phase III style -- in our Phase III extension study went through this survey. There was no limitation on which prior therapies patients in the tapinarof program could be on. So we don't necessarily know specifically. They were just general psoriasis patient populations. And so you assume they have been on the kinds of things that psoriasis patients are on, whether it's orals or injectable systemics. And so it really is a mixture.

And the other thing I'll remind you is the patient population in our program overall was 10% mild, 80% moderate, 10% severe psoriasis patients. So you would expect a sort of grab bag of patients who have been on a variety of different systemic therapy. The only requirement was that patients be willing to wash out of whatever therapy they were on. So none of these patients were on systemic therapy at the time of the tapinarof trial.

Our next question comes from Yaron Werber with Cowen.

So Matt, I got a couple. The first one is on 2001. When we look at the earlier Phase I, essentially, the 2 different doses, you sort of alluded to it. You did a 5-day on, 9 day off, and then there's total a 21-day on, 7 days off. When you're thinking about your dose to really get to the right therapeutic window, what are you thinking for the next 50 to 60 patients? And then secondly, can you comment whether Moderna requested an [unbunk] meeting from -- as the next step. I think they were supposed to do that within a month or so of the Fc appeal.

So I'll start with the 2001 question, and I'll give a brief answer, and then just in case maybe Mayukh wants to add anything I'll hand it over to him. In short, I don't think we've given the exact specifics on our intended dose, but we're moving to -- we're moving away from that sort of episodic dosing to chronic administration of therapy at a lower daily dose, but where we think the pharmacokinetic effect result in a potentially higher dose delivered over time. I don't know, Mayukh, if you have anything to add to that?

Yes. I think -- Yaron, nice to hear from you. One of the things that I think we have learned from the data set so far is you can actually track sort of perturbation in transcription over time on dose. And I think what we find is that actually, if you discontinue dose, you actually lose the pharmacodynamic effect pretty quickly. And so as Matt said, I think we're looking to really kind of mimic the dosing that really places the drug's strength, and will have an effect on splicosome inhibition sort of continuously.

Great. Thanks, Mayukh. And then on your other question -- so on Genevant, and thanks for the question. I guess the short answer is Moderna has not requested an [unbunked] hearing in that process. And so -- go ahead, Yaron.

Yes. Maybe as a quick follow-up. And I know you can't say a lot, so maybe just share what you can -- what do you see as the various scenarios of what might happen next from your vantage point, especially as these drugs are moving away from EUA to getting official approvals. I'm talking about the COVID (inaudible) obviously.

Yes. Thanks, Yaron. And again, I appreciate the question. We saw the Moderna approval earlier this quarter, obviously, an important step for their programs. So it's hard to comment on anything specific in terms of what next steps look like. But I'd say nothing has changed from any of the prior discussions we've had on this in terms of how we're thinking about it. And what I will say is, again, we're looking forward to providing more updates on Genevant in the near future.

Our next question comes from Dennis Ding with Jefferies.

Two questions for me. Number one is on tapinarof. Can you please give us a sense of your confidence level launching a psoriasis drug during COVID. And perhaps internally, what may constitute a good launch. And perhaps while you're at it, comment on what consensus numbers are for calendar year 2022. And then my second question is regarding the Moderna litigation. So the press release and your presentation, and Mike's comments on the strength of Genevant's (inaudible) but didn't really give next steps.

And interestingly, the 10-Q mentioned specifically, Genevant may commence litigation at any time to enforce this patent rights against infringers. And I believe that is a new disclosure that wasn't in prior 10-Q. So can you just please make some comments as to what you're perhaps waiting for? Or if I can reframe the question, what are some gating factors preventing Genevant from moving forward with litigation.

Thanks, Dennis. Thanks for listening, and thank you very much for the questions. They're both good questions. So I'll start on tapinarof. So in terms of our level of confidence about the launch, our level of confidence about the launch during the pandemic. So first of all, I think you heard it in the patient satisfaction data. I think you've heard it from Todd, on the sort of last quarter of this call, and other circumstances. We are very confident about this drug. The treatment effect is significant. The durability and remittive benefit is significant. So we see a ton of opportunity. I think, as I've said before, the drug is both optically [in cholesterol] comparison is more effective than, and we think more tolerable than the current sort of first-line topical standards of care, especially both corticosteroids.

So we see just a big opportunity for patients. And so it's hard not to feel confident about the launch. Obviously, there's a lot that goes into a launch of a product like this, including getting pricing and access right, getting out to the docs. These docs have been writing corticosteroids prescriptions for a very long time. And so making sure that doctors understand what tapinarof can do, understand how to use it with their patients. I think but those things will take time, that education is important that sort of work with that physician community is important. I'm highly confident that we will be able to do all of that.

And obviously, at medical conferences and similar, we've already been able to talk about the data that we've generated, and we're looking forward to continuing to engage with the dermatology community. So I think we feel good about the launch, and we feel good about the timing of the launch. I think it's an important year in psoriasis, generally. Obviously, we're not the only product launching. There's another topical launching. There's a new systemic therapy launching. So there's a number of other programs. I think there's going to be a lot of focus and interest in psoriasis. And we feel good about getting out in the second quarter of this year, and we feel good about what we think we're going to be able to deliver.

We haven't given specific revenue guidance, and I'm not going to do that right now. But looking forward to showing you what the drug can do over the course of this year and next. So that's what I'll say on tapinarof.

On your Genevant question, and I apologize, I can't comment too much on the specifics here. Our 10-Q disclosures, and you highlighted one of them are accurate, and we don't have a ton to add in terms of -- beyond what it says in those disclosures. But it's obviously something we're paying a lot of attention to and looking forward to sharing more as soon as we can.

Our next question comes from Corinne Jenkins with Goldman Sachs.

So maybe as we think about the tapinarof launch, can you just help us understand kind of the market access and your strategy there? What percentage of [target lives] should we expect to see? And how can you get -- like how quickly should we expect to see that market access kind of [to place on the] approval?

Yes. So thanks, Corinne. That's a great question. And again, appreciate I appreciate you're asking it. In any -- obviously, in any therapeutic area, honestly, it's not just dermatology, but I'll say especially in dermatology, market access is an incredibly important dimension. The patient experience at the pharmacy is an incredibly important dimension, making sure that patients and providers and pharmacies all know how to get patients on drug is important. There's a lot out there for us to learn in the market around what this looks like, including from the ongoing launch of Opzelura at Incyte where they've obviously been paving the way in terms of a novel topical in the market.

In general, we're focused on a pretty balanced market access approach. We'll have an industry-leading -- we'll have a co-pay program. We'll contract with national and region health plans. We'll contract with third-party payers. We're hoping for unrestricted formulary reimbursement. And we just think with the efficacy and the durability of the drug, as well, frankly, as with the overall current treatment landscape and with the fact that for the first time novel topicals are really offering an opportunity to keep patients on topical therapy and off systemic therapy in a durable lasting way, we think we should be able to have an attractive profile for payers.

And so we expect to be able to deliver good coverage to the patient population. In terms of how quickly we're going to sort of get exactly that coverage or what we're ramping up towards. I think we're looking for broad coverage, but it's important launches like this in our view to be relatively patient and focused around it. So we'll provide some more information about our exact expectations as the launch gets closer. But suffice it to say, we're focused on making the right decisions for patients and the product on pricing and on access. And I think we're going to be able to achieve a good mix.

And then maybe separately, obviously, you're going after more of a genetically identified strategy in MDS. But I'm curious how frequently these patients are getting the (inaudible) genetic screening and how that could factor into both the clinical and commercial strategy you have here for RVT-2001.

Yes. So as recently as a few years ago, not that many people were checking for SF3B1 mutation, but it's actually become one of the main diagnostic criteria for RS-positive and RS-negative patients with lower-risk MDS. So it's actually -- it's a very commonly screened-for mutation at this point. So we should be able to see it in most -- we should be able to see the status of an SF3B1 mutation in most MDS patients. So it should be a good test. And then the other biomarker, the (inaudible) transcripts is a little bit of a newer and less common biomarker, but it still checked relatively often. And so we should be able to screen forward and selectively enroll forward in a useful way.

Our next question comes from Neena Bitritto-Garg with Citi.

Just following up on some of the questions on tapinarof. I was just wondering if you could give us a little bit of a sense of how we should expect kind of the general pace of the launch to kind of proceed through the year? If you can kind of talk a little bit about also what metrics do you expect to provide on earnings calls in the future once the drug gets launched, that would be great.

Yes. Thanks very much. Thanks for the question. And I appreciate the focus here on tapinarof, it's obviously exciting for us. So we're looking forward to it. So in terms of the sort of shape or pace of the launch, I guess I'd go back to what I said a couple of comments ago, which is we are looking for a meaningful change in prescriber behavior here. So I think you got to start with that. These docs are very used to writing topical therapy, so that's good. But they're very used to writing corticosteroids, and that's going to require some reeducation.

And so I think this is going to be a build. I think it's going to take some time and energy to really sort of change the behavior. And I think the exciting thing is we're building to a really interesting level because we get to look out, and change the paradigm, which is not something we get to do very often. So I think it will take a little bit of time to build that market. And I think we're sort of committed to doing that in the right way and starting from bottoms up and educating the physicians and working on the access piece that we talked about before, so that we reach the maximum number of patients with the product over time, and we get sort of the right kind of sustained use of the product.

In terms of metrics, I would expect we're going to share the kinds of things that people share with similar launches. So we'll talk about our engagement. We'll talk about, obviously, script rates, although you won't need us for that. And we'll be keeping an eye on payer coverage on gross to net, things of that sort as the product gets launched. But in general, we're really looking forward to just getting out there and getting out to patients.

Our next question comes from Doug Tsao with H.C. Wainwright.

Just, Matt, maybe stepping back as you referenced at the beginning of the call, you have $2 billion in cash. Obviously, the equity markets have been fairly challenged for healthcare for the last several months. I'm just curious, has that affected how you're thinking about business development and potentially your sort of use of capital or capital allocation strategy?

Yes. So thanks for the question, Doug. I really appreciate it. And it's front and center on my mind. This is the answer. I think it's got -- for any biotech company right now, it's got to be front and center on your mind to make sure that you're doing the maximum amount possible with the resources that you've got. And we are extremely privileged in our capital position, and we know that, and that privilege is particularly acute in markets like this one. So we're doing everything that you would expect in terms of making sure that we're allocating our capital extremely carefully and focusing on the areas where we have maximum possible impact for patients. And frankly, we're also doing everything you would expect in terms of looking out across the marketplace for opportunities to take advantage of our relative capital strength.

Obviously, it's not a position that everybody is fortunate enough to be in, and that creates opportunity for us. I think you see it in our past in-licensing activity, you'll see it in our future in-licensing activity, I think we're really focused on value. The MDS program obviously came from Eisai, who have plenty of capital. And so it wasn't exactly the same situation. But a program where we were able to acquire it very efficiently because we saw a different possible application for it. I think you'll see things like that.

We have another new Vant that we've mentioned by name but I haven't described in detail Priovant, which has another new program that, again, was a modest upfront (inaudible) relative to the size and opportunity of that program. So I think you will continue to see us be opportunistic. I think you'll continue to see us deploy capital in focused, targeted ways where we think we can differentially bring something in efficiently. And in the meantime, I think you'll see us be very disciplined in how we use our cash so that we can maximize the application of our resources to opportunities that matter.

And I guess as a follow-up, I mean, asked a different way. Matt, historically, the company has been very active from a business development standpoint from an in-licensing standpoint and partnerships. Just curious, do you think just sort of going back to my comment about sort of the broader market, does that change your thinking? And perhaps just outright M&A become more attractive just given current market valuations and dislocation in the marketplace?

Yes. So first of all, we haven't necessarily shied away from M&A even in the past. So our degrader platform was acquired as Oncopia. We acquired Silicon Therapeutics last year. So where we see good value, we've always been happy to do that. And I guess -- same as everybody else, I think it's been harder for us to find good value on the M&A side in the last couple of years because of the way the market has evolved. I think that's changed significantly. And so I think there's absolutely an opportunity for us to take advantage of that. Being a public company, obviously helps, although those are all relative value considerations, and we look at our own valuation as well. But absolutely, yes, we see opportunities for M&A -- and increasingly attractive opportunities for M&A after the sort of macro change in valuation that we've seen over the past couple of months.

And I'm showing no further questions at this time. I'd like to turn it back to Matt for closing remarks.

Great. Well, look, thank you again, everybody, for listening. Thank you for all of your questions. It was great to hear everybody's focus. And obviously, we also are incredibly focused on tapinarof, and incredibly focused on that launch coming up in the second quarter. So looking forward to getting back on the phone in the near future to talk more about that, to talk more about updates elsewhere across the business.

And in the meantime, thank you, everybody, for listening, and excited to have shared this -- our second quarterly earnings update as a public company. So everyone, hope you had a good weekend and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.