Roivant Sciences Ltd (ROIV) 2021 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Roivant second-quarter earnings conference call. (Operator Instructions). As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Mr. Paul Davis. You may begin.

Good morning and thank you for joining today's call to discuss Roivant's second-quarter results and business update. I am Paul Davis, the head of communications at Roivant. On the call today we have Matt Gline, our Chief Executive Officer, who will be presenting.

We also have Richard Pulik, our Chief Financial Officer; Frank Torti, our Vant Chair; Eric Venker, President and Chief Operating Officer; Mayukh Sukhatme, President and Chief Investment Officer; and Todd Zavodnick, the CEO of Dermavant.

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

I would like to remind you 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 will begin with Matt Gline who will review key business updates across Roivant and the Vants, including updates from Dermavant, Immunovant and Aruvant and will provide a financial update. We will end the call with a Q&A session. And with that I will turn it over to Matt.

Thank you, Paul, and good morning, everybody, and thank you for joining our first earnings call ever in Roivant's history. It is a pleasure to be talking to you today and to be sharing some updates about the business.

Before I talk about the quarter, I want to start on page 4 with just a reminder of who Roivant is and why we are excited about the business that we are building.

What we've said since the beginning of Roivant's history is that we're here to redefine what a big pharma company can be from end to end, focusing in particular on a novel talent model in which we're organized as a family of small, nimble, entrepreneurial biotech companies that we call Vants, as well as focusing on using computational tools and data in a differentiated way to improve the discovery, development and commercialization of new medicines.

On page 4 I highlight some of the key highlights of our business. Starting with we have a number of Vants with quite a broad pipeline and a number of different technologies that we think enable us to do better at our business. We are well funded with a $2.5 billion cash balance at the end of the September quarter.

We have and will spend some more time later today talking about it -- a full chip-to-clinic discovery platform with, we believe, best-in-class computational capabilities for simulations -- molecular dynamics simulations which enable us to do a better job at discovering in particular in the field of novel protein degraders.

We have a collection of public equity stakes in Vants and other businesses that we've built over time of $940 million value, plus additional private holdings, including an approximately 12% stake in Datavant, which is a business we built to solve an important healthcare data problem, the siloing of healthcare data that we needed in order to improve our own clinical development.

And as you may know, earlier this year we merged Datavant into a company called Ciox Health. And in that transaction we received $320 million in cash proceeds, as well as this approximately 12% ownership stake, assuming a $7 billion value for Datavant, which was the value implied by the investments made by Goldman Sachs and Sixth Street in that transaction.

And Datavant is now a business with $700 million in top-line revenue that we expect to grow over time. So, that is an ownership stake that, in addition to providing strategic value to Roivant, we are excited to have and to continue to optimize.

And finally, most importantly for us, is we're planning to build a pharma company. We have what we believe is a strong clinical development track record. Having run nine registrational Phase 3 studies in total, eight of which have read out positively, and that our Vant model has now resulted in four FDA approved products, all of which by Vants launched by Roivant and now owned by our partner Sumitomo Dainippon via Sumitovant.

On page 5 is a little bit of an outline for the topics we're going to cover today, starting with an update on our commercial plans with some further information about our expected launch of tapinarof in psoriasis with further opportunity in atopic dermatitis. And I'll talk a little bit about progress in our clinical development pipeline, including initiation of at least four Phase 2 or 3 trials in 2022 with seven trials expected to be ongoing by the end of that year.

I'll provide a brief overview of our small molecule drug discovery platform with our computational capabilities and integrated wet lab, again focused on the field of targeted protein degradation. I'll give an update on our financial performance for the quarter, including our cash balance of $2.5 billion, as well as some other key metrics.

And I'll end by providing just a couple of highlights for things that we expect to be important drivers of growth and opportunity for the business in the future. So, thank you very much and, as Paul indicated, there will be an opportunity for Q&A at the end of the call.

So, with that I'm going to start on page 7 with a discussion of tapinarof, Dermavant's topical therapy for the treatment of psoriasis, where we filed our NDA and where we expect a PDUFA action in the second quarter of 2022. So, this is a medicine that obviously we are extremely excited about and we view it as an incredibly promising therapy for psoriasis patients.

We feel that it differentiates along five key attributes. The first is treatment effect. We showed strong data in our Phase 3 program, which read out in the summer of 2020, including statistically significant performance in all of the key endpoints, including endpoints typically used to measure performance of systemic therapy.

And then perhaps even more exciting, we demonstrated continued improvement and a high degree of disease clearance, over -- about 41% of patients achieving complete disease clearance, a PGA score of zero, in our long-term extension study, PSOARING 3.

That gets to the second important attribute of tapinarof, which is durability -- the continued performance on therapy with no evidence of tachyphylaxis during our long-term extension study.

The third important differentiating attribute of tapinarof is its remittive effect. And so, in our long-term extension study, and we'll talk a little bit more about this data which was presented this quarter. When patients in our long-term extension study cleared their psoriasis when they achieved a PGA score of zero, we took them off therapy and monitored them. And we saw a mean duration of remittance, that is they stayed clear or mostly clear for 130 days or over four months, which is something that, in our opinion, is effectively unheard of in topical therapy.

And then finally, on safety and tolerability, this is a therapy that avoids many of the safety and tolerability issues associated with the current mainline therapy for psoriasis treatment, namely topical corticosteroids, with no treatment-related serious adverse events in any of our studies or across 2,200 patients enrolled in 18 clinical trials, with an AE profile consistent with all of our previous studies, and with, critically, no duration of use or skin location limitations, which, again, is different from the current approved category of topical corticosteroids. So, these are five attributes that we think are important for tapinarof's differentiation.

On page 8 I provide a reminder which I think most people are familiar with, which is that tapinarof is really a two in one program targeting the two largest markets in immuno-dermatology, psoriasis where I mentioned we expected approval decision in the first half of 2022, as well as atopic dermatitis where we currently have a registrational clinical program underway that I'll talk about a little bit later. And these are markets that are expected to reach over $30 billion in the US and over $40 billion globally by 2026.

I want to remind everybody that topical treatments serve as the bedrock of dermatologic treatment in America today and represent 83% of all US prescriptions written by dermatologists in 2020. So, this is a type of therapy that we expect will be incredibly impactful to the psoriasis community.

I don't think I need to provide much of a reminder on page 9 given the common nature of all of these diseases, but these are a brief overview of what both psoriasis and atopic dermatitis look like. And I'll say briefly that I personally am a psoriasis patient, and so I experience many of these symptoms myself and have for most of my adult life.

On page 10 I want to highlight briefly some data that includes both data we put out some time ago as well as new data we presented at the ADD this quarter, which is the result of our PSOARING 3 long-term extension study. So, this was a study that monitored patients on therapy up to a total of 52 weeks.

And in particular I want to highlight one of the effects of tapinarof that I am most excited about, which is that 41% of patients treated with tapinarof in the program achieved a PGA score of zero, that is completely cleared their psoriasis. And this effect was consistently observed both for patients who entered the LTE trial clear or became clear during the LTE study. So, this is a significant and repeatable effect that we saw in our Phase 3 study -- in our [tension] study that was exciting to us.

Now equally important, on page 11, is some additional data that, again, we presented at the EADV -- the Dermavant team presented at the EADV, which is that once we took patients off therapy, and I mentioned this at the beginning of the call, but I'll describe it again. When patients in the long-term extension study achieved a PGA score of zero, we took them off therapy and monitored them without treatment to see what happened, and we observed a significant remittive of benefit.

These patients stayed clear or almost clear for a mean of 130 days, that's across 312 subjects who entered with or a achieved a PGA of zero during the extension study. The mean duration of that remittive benefit was 130 days. So, these are patients that are going on tapinarof, are clearing their psoriasis disease burden, and then are remaining well for a long time, which is significantly different than, for example, what you observe with corticosteroids which have a rebound effect when you cease treatment. And we'll talk more in a moment about the overall profile of corticosteroids and how we differ.

So, on page 12, and this is something that I personally am very familiar with. As you may know, the current mainline therapy for psoriasis patients is topical corticosteroids. So, my medicine cabinet is filled with tubes of partially used topical corticosteroids. This is really standard therapy for all patients and corticosteroids have some significant limitations. You can't use them for a long time because they cause thinning of the skin.

They don't have a durable effect, they're sort of a tapering off benefit. When you go off therapy you tend to rebound quickly with psoriasis flareups and there are safety and tolerability issues which are the reason that they have duration and location of use restrictions where you can't use, for example, the most potent steroids on parts of the skin that are already thin or sensitive.

So, tapinarof effectively addresses basically all of these limitations. We have efficacy that is as good or better than what has ever been observed in studies of topical corticosteroids. We have true on-therapy durability where the drug continues to work better the longer the patients stay on it in our extension study. We have a remittive effect, so when patients go off, unlike the rebounds that you observe with topical corticosteroids, our patients stay clear for a long time.

And then we have safety and tolerability profiles that are, frankly in our view, more benign by a significant amount than what you see with topical corticosteroids without the skin thinning effects and other issues. And that means not only can you stay on therapy chronically, you can stay on tapinarof for a long time and we observed that, as I said, in our 52-week study. But you can use it anywhere you want on the skin.

And so, for example, my most severe psoriasis is in my outer ear canal. You can't use a potent corticosteroid there, but tapinarof has no location of use limitations.

Now all of that is to speak to tapinarof's possibility as a mainline therapy for the treatment of psoriasis. Obviously systemic medicines for psoriasis have received a lot of attention from the dermatologist and investor communities over the past decade or so. So, the other thing that we observe is, even when patients ultimately with severe psoriasis or moderate to severe psoriasis get put on a systemic therapy, two-thirds typically receive a new topical prescription as well.

And in addition to tapinarof's possibility as a mainline therapy for these diseases, we also see it as a good partner along with biologics and systemic therapies in that setting.

So, I was speaking mostly here to tapinarof in psoriasis where we expect a first approval decision. I'll highlight on page 13 that we are also currently running a Phase 3 program in atopic dermatitis. The study design is shown here on Phase 3. We began this study earlier this year and we said we expect to see data from the study in the first half of 2023. So, a significant expansion to the [classic] population.

And as a reminder, this study includes a number of patients all the way down to age two. So, we think it is potentially an important expansion of the patient population once that data comes out.

On page 14, as a reminder, we have already conducted several Phase 2 studies in tapinarof in atopic dermatitis. We show the results of our Phase 2 data on page 14, which achieved statistical significance at a week eight endpoint. So, we are excited about the prospects for that drug in atopic dermatitis studies.

The thing I'll end with on Dermavant on page 15, and you will have a chance to hear from Todd in the Q&A, is in this area, and this is indicative of the Vant model as a whole, one of the keys to the success of the Vant model is our ability to recruit extraordinary leadership teams with deep therapeutic areas of specific expertise.

And I could not choose a better example from our portfolio than Dermavant where Todd and his team have extraordinarily deep experience in the field of dermatology. They have overseen multiple blockbuster product launches across a number of companies and they are working hard every day to prepare for tapinarof's launch pending our approval decision. So, you'll have a chance to hear from Todd during the Q&A today, but I think we are incredibly optimistic about the prospects for this program given the quality of the team that is leading it.

So, from here I'm going to go on to the next topic for today, which is I'm going to talk about progress at our development stage pipeline, including reminding people of the breadth in some of the major programs that are in late stage clinical development.

So, on page 17, as a reminder, you can see our development stage pipeline, which includes a number of therapies and, per the flexibility afforded by the Vant model, you can see that these span different therapeutic areas, they span different modalities. We have biologics, we have topical agents, we have oral small molecules, we have antibodies -- a number of different kinds of agents across therapeutic categories and that's the flexibility that we feel is afforded to us by the Vant model.

So, I'll start on page 18 with a reminder on the progress of Batoclimab, which is also known as IMVT-1401, our anti-FcRn antibody we studied at Immunovant. So, Immunovant, as you know, is also a public company and has provided their own updates recently. We are excited for this market. we think anti-FcRn is an important fundamental biological target affecting very large patient populations in diseases mediated by pathogenic autoantibodies.

And we think Batoclimab in particular has some key differentiating attributes including a true simple subcutaneous route of administration with a simple straightforward injection. And it was designed for that route of administration from the very beginning. And it was one of the theses on which we in-licensed it and then flexible dosing potential with the possibility to obtain deep rapid IgG suppression in the short term, and with the ability to adjust that IgG suppression with flexibility in the long term.

And that's the sort of thing that winds up being quite important in the treatment of these patients with these diseases, as people often think about induction and they think about rescue therapy and they think about other flexible attributes of dosing that we think are going to matter in the indications that are relevant here.

So, what we've said, what Immunovant has said remains true, is that we are finalizing our plans to initiate a number of clinical trials in Batoclimab next year. And the final piece of that is we are awaiting feedback from the FDA, which we expect this quarter, on our proposed trial designs. And so, Immunovant will provide an update before the end of this year on that feedback from the FDA and on our plans. And we look forward to providing that update and to continuing this program in development importance.

I will next, starting on page 19, talk a little bit about Aruvant, which is our Vant developing gene therapies for rare diseases. And in particular we have two therapies there. One is ARU-1801, a lentiviral gene therapy for sickle-cell disease, which we think has unique potency driven by a modified -- by delivery of the gene for a modified form of fetal hemoglobin that -- we'll talk more about the efficacy that we observed.

But in particular it allows us to get even better anti-cycling properties and, therefore, even better clinical outcomes than fetal hemoglobin alone. And it allows us to do so with less expression of the gene and therefore critically -- and we'll spend a few minutes on this -- with reduced intensity conditioning rather than the full myeloablation required by other programs in development. So, we'll talk a bit more about that program.

And then the other program in Aruvant, ARU-2801, is an adenoviral gene therapy for hypophosphatasia, which has shown in pre-clinical data durable increases in tissue non-specific alkaline phosphatase through 18 months. And it has the possibility to be a one-time prescription or a one-time therapy to replace chronic enzyme replacement therapy as standard of care with IND enabling studies currently ongoing.

So, I want to talk a little bit, on pages 20 and 21, about the efficacy that we've observed in our first four patients in our Phase 1/2 study in ARU-1801. And as a reminder, we began process development and improvement work between patient two and patient three when we in-licensed this therapy from Cincinnati Children's Hospital.

As you can see on page 20, these were patients that were quite sick at baseline with a significant number of pretreatment vaso-occlusive events over the two-year period before. And these are patients that had failed a number of different pretreatments including hydroxyurea -- many different kinds of supportive care, transfusions and so on. So, these are sick severe sickle-cell patients.

And what you can see on page 21 is we observed a dramatic improvement in the condition of these patients. Even the first two patients on the original academic manufacturing process observed a near complete elimination of vaso-occlusive evidence.

And to date, and we provided this update at our R&D event in September, we've observed no vaso-occlusive events in these patients through 18 months in the case of patient three and through 12 months in the case of patient four. So, effectively a complete clinical cure of the symptoms of sickle-cell disease. So, something that we are extremely excited about.

Now on page 22, what you may know from following the field is there are a number of other people developing promising genetic medicines for the treatment of sickle-cell disease. And there are exciting gene therapies and there are exciting gene editing approaches out there.

The key difference for our therapy is, and this is something I highlighted a moment ago, is that it was originally designed with the idea that this modified form of fetal hemoglobin would allow us to use a reduced intensity preconditioning regimen.

And so, all of the other therapies that we are aware of with clinical data have demonstrated that data using an intensive myeloablative regimen using busulfan as a myeloablative preconditioning agent. Whereas our therapy, because of this modified form of fetal hemoglobin, we have been able to dose using a reduced intensity conditioning using a melphalan-based regimen.

And why does this matter? In short, the patient experience on this melphalan-based conditioning, most of the tolerability issues associated with any of these therapies actually relate directly to the preconditioning. And in the case of busulfan, these patients are spending dramatically longer in the hospital. So, that's 44 days on median versus somewhere between zero and five days for melphalan with the possibility that that this will be an outpatient procedure by the time our product is approved.

We are seeing a significantly reduced risk of ovarian failure. Remember, these are young sickle-cell patient, 30% to 40% instead of 70% to 80%. And one of the major risks associated with busulfan is it's enormously immunosuppressive.

And so, these patients are at significant risk of secondary infections and a much, much, much faster recovery time from for melphalan-based preconditioning significantly reduces that period risk. And then busulfan has also, in studies, been associated with secondary malignancies over time and that is also a significant issue associated with busulfan-based preconditioning.

So, our prediction is that these differences will matter enormously to the sickle-cell patient community and make for a very differentiated profile, even amongst the curative genetic medicines in development for sickle-cell disease.

So, as we've mentioned, this is in our Phase 1/2 study right now. We continue to enroll patients in that study. We expect to continue to enroll patients into next year. We will provide updates on this program as we get new data, including that investigator Punam Malik is making a presentation with some additional data on our patients at the ASH conference in the coming weeks and we are excited to continue to provide those updates and we expect to put ARU-1801 into a pivotal study in the beginning of 2023.

So, across our portfolio we expect to initiate at least four Phase 2 or 3 studies in 2022, including, as Immunovant has guided, multiple pivotal studies in Batoclimab across multiple indications, as well as -- and we have not spent a lot of time talking about this program, but we will start doing so more in the new year -- we remain on track to initiate our Phase 2 trial with Namilumab, our anti-GM-CSF monoclonal antibody in sarcoidosis at Kinevant in the first half of 2022. And that's an important disease with four current treatment options and, comparatively, many patients. And so, it's something that we are, again, looking forward to speaking more about, as well as a Phase 2 trial in LSVT-1701, which is our novel endolysin for the potential treatment of Staph aureus bacteremia that, again, could address significant unmet need and we're excited to begin that trial next year as well.

So, moving on from our development stage programs, and we look forward to continuing providing updates as we have, I want to provide a reminder about our approach to drug discovery, which is also an important pillar of our strategy on a going forward basis. And as a reminder, first of all, much of our clinical pipeline historically in many of the programs we talked about today has been assembled by in-licensing.

So, we take a targeted opportunity-based thesis approach to figuring out which programs to add to our pipeline. And we have teams at Roivant that are responsible for boiling the ocean looking for new therapies that match the issues we've identified.

And as we've said, over the past several years we've repeatedly gotten excited about targets and opportunities where, when we looked for programs to in-license, nothing quite fit the bill. And so, we started to invest, a number of years ago, in a discovery platform that could complement our in-licensing efforts and allow us to work on a broader set of programs that we have identified.

And so on page 25 is just a schematic of what that platform looks like. And critically it includes both, we believe, a leading computational drug discovery platform combining molecular dynamics and AI and machine learning that allows us to do free energy calculations and simulate biological motions, including agonism, including searching for novel allosteric binding sites, all kinds of biased signaling.

And as well, and I'll talk about this in a moment, as what we believe is the most precise simulation of ternary complexes, which is the combination of a protein and E3 ligase necessary to achieve protein degradation. So, to make predictions of the important ingredients in successfully degrading a protein, which is one of the reasons we are focused on the area of targeted protein degradation.

Now in addition to the computational platform itself, we believe we have world-class teams focused on this area. From the computational side, folks like Woody Sherman, our Chief Computational Scientist, who comes to us via the acquisition of Silicon Therapeutics, and who has been responsible for -- worked at Schrödinger for a long time -- building many of the most important tools out there in this area, and has now built a next generation version of our molecular dynamics engine with his team [ever] in discovery.

And then an extraordinary team of wet lab chemists and wet lab biologists and bio physicists working to complement that engine across a number of different facilities that enable us to generate novel biology, chemistry and biophysics data, which critically our computational platform has been specifically designed to ingest and incorporate.

In that feedback loop, the combination of world-class wet lab biophysical data with world-class computational tools we think provides real differentiation: A, vis-à-vis other computational companies that don't necessarily have the ability to integrate that wet lab data; as well as vis-à-vis any of the other degrader companies for example that haven't made this kind of investment in computational tools. So, it gives us a unique position in the degrader landscape.

So, on page 26, I highlight one of the important features there, which is our ability to stimulate, and I mentioned this before, binding and stability of ternary complex formation, which we think has the potential to be very important in structure-based design of novel protein degraders.

So, this is, we think, the most accurate simulation ever made of the position and confirmation of the combination of an E3 ligase with a protein with a degrader so that we can start to make predictions about which degrader designs we'll most effectively recruit and stabilize ternary complex formation, and which of those in turn will maximize the probability and magnitude of degradation.

So, we are already actively using these tools in a number of our degrader programs. And we show on page 27 our discovery stage pipeline. So, we spoke previously about our development stage pipeline.

We have a number of programs between Proteovant and Roivant discovery across principally degrader, but also occasional other small molecules inhibited modalities, across targets ranging from highly clinically validating targets like our androgen receptor degrader program, which we expect will be the first of our degrader programs in the clinic in 2022, to other programs across the pipeline in a combination of biologically validated and novel targets where we think we have an opportunity to be either first or best-in-class. So, excited to continue to provide updates on our discovery efforts as we advance these and other programs through preclinical discovery.

So, I want to say a word, on page 29, about our financial results for the quarter. So, first of all, our consolidated cash and cash equivalents increased this quarter from $2 billion as of June 30 to $2.5 billion as of September 30, and that increase was really driven by three things. It was driven by the closing of our SPAC transaction. It was driven by the funding of the second $100 million investment in Proteovant by SK Holdings. And it was driven by the $320 million in cash proceeds that we received at the time of the closing of Datavant's merger with CIOX Health that I talked about earlier.

As far as our expenses for the quarter, so our adjusted non-GAAP R&D expense for the quarter was $104 million. Our adjusted non-GAAP G&A expense for the quarter was $69 million, and that led to a net non-GAAP adjusted loss for the quarter of $169 million.

And I'll highlight that probably the most significant adjustment we made this quarter is that we had a relatively significant $370 million one-time share-based compensation expense charge that was related to the closing of the SPAC transaction. And so, that was one of the adjustments that we provided, and you can see a full GAAP to non-GAAP reconciliation in the appendix of this presentation.

And then finally, as I said, we had cash and cash equivalents of approximately $2.5 billion at the end of the quarter with debt of approximately $200 million, almost entirely related to commercial milestone obligations at Dermavant for tapinarof. And then we had 684 million, approximately, common shares issued and outstanding as of November 10, 2021.

So, before we turn to Q&A, I just want to remind everyone of a couple of opportunities for relatively near-term growth that we expect to speak more about in the coming weeks and months. And so, on page 31 we see a schematic of Roivant today. There are many Vants in our portfolio and we've only had a chance to talk about a few of them today, so we look forward to opportunities, including conference presentations and other forums, to speaking about more of our development activities and more of our Vants generally.

One Vant that I am particularly excited about is Genevant, which has been called out on this slide, where we have an LNP platform that is working on novel next-generation LNPs to deliver nucleic acid therapeutics. And we are working in a number of important scientific collaborations to advance that field. And we have an extraordinary team there dating back to some of the earliest chemists involved in describing and manufacturing lipid nanoparticles, as well as some really exciting scientific collaborations and a broad IP estate.

And then the other area that I would flag that we have not talked about today, but we expect to do so in the near future, is the launch of a number of potential new Vants around in-licensing activities around programs we've identified that we think are interesting. In fact, we mentioned today that we've in-licensed one such program that we're going to talk more about in the near future, but there will be others as well. So, I'm excited about those updates to come and excited to share them.

As a final reminder, on page 32, I just want to highlight the rich series of catalysts that we have upcoming in the next year, and that includes, as mentioned, the FDA approval decision on tapinarof for psoriasis, as well as upcoming top-line Phase 3 data in our tapinarof trial in atopic dermatitis. It includes a complete set of updates on Batoclimab, IMVT-1401 at Immunovant, including the re-initiation of multiple clinical programs, as well as announcing new indications and beginning those clinical programs as well.

And then continued updates from our ongoing Phase 1/2 trial at Aruvant and more detail about our initiation of our Phase 3 program there, multiple other trial initiations and multiple different opportunities to provide data coming out of our preclinical discovery activities.

So, we are excited about the quarter and the year ahead. We think we will continue to have a number of important updates and we look forward to taking every opportunity that we can to communicate them. And at this point, I want to thank everyone for taking the time to listen today. I want to wrap up the presentation portion of this and hand the call back over to the operator for Q&A. So, thank you and I look forward to taking your questions.

Robyn Karnauskas, Truist Securities.

Great, thanks for taking my question and congrats on the first earnings call to you. So, number one, for tapinarof, you noted that a lot of patients -- and maybe you could restate the percent of patients, when they go on their biologic they also maintain them on the topical. When you're thinking about pricing, I know you said you haven't decided yet, how much does that factor into that decision? And what's your latest thoughts on pricing given insights pricing strategy?

And the second question is on the IT lawsuit with Moderna. Could you give an update on the case? Maybe give us a sense, just legally, what kind of news flow we'll hear over the next six months. Thanks.

So, I will start with the tapinarof question. Thanks, Robyn, thank you for joining the call. I'll start with the tapinarof question and then I'll come back to the Genevant question.

So, I'll give Todd a chance to answer most of this question, but I'll just say, first of all, for all the reasons we've mentioned, I'm really excited about what tapinarof can do even in main or first-line therapy in psoriasis patients, so not just in that concurrent setting.

And as you said, we haven't given guidance on price, but there's a pretty wide envelope from the lower prices of generic corticosteroids today to Otezla at $3,500 a month I think and some of the other therapies at higher prices. So, we have a wide range to look at. I'll hand it over to Todd to give his thoughts on the two questions that you asked.

I think the first response you had asked us to repeat. I guess Matt shared, pretty much known in dermatology, two-thirds -- of biologic therapy two-thirds are receiving a topical medication concurrently. So, in all of our advisory boards it's very well shared that this is just a normal practice within dermatology. Keeping in mind that for tapinarof our label is obviously in mild, moderate to severe plaque psoriasis.

And again, in our study, we took a look at mild at 10%, 80% of the patients moderate and 10% severe, where really the majority of patients reside in mild to moderate. So, for us it's just, when we talk to physicians it's a wide open opportunity of where tapinarof will be used across the spectrum for patients.

I think your second question on pricing, yes, we have time and it is exciting, to go back to Matt's first point, which is we're bringing not only a novel mechanism of action to the space, but we're bringing a target product profile with that novel mechanism that is unmatched. So, when you look at efficacy, you look at the durability Matt talked about, and then really the remittance, that's really where physicians will share this is a topical with biologic-like properties and then safety and tolerability.

So, for us, really we need to take a look at that. When we look at recent medications that were brought to market with black boxes and you're seeing prices in the $1,900 range, we're just going to take a look and do the work that we need to do and price it accordingly. Because the other key point to take away is it's not only the five attributes that differentiates tapinarof, it is really the two-in-one transformational asset that it is. So, it's this crossover mechanistically between psoriasis and AD. So, we have some work in front of us.

Thanks, Todd. And maybe to take the Genevant question. So, as I think you know, Robyn, the pending legal process is around these appeals in the IPR process. So, back in 2018 Moderna filed IPRs against a number of Arbutus Genevant patents. And after a number of those IPRs were decided in Genevant's favor, there was an appeal hearing in October on patents numbered 069 and 435.

I will say Abrutus and Genevant scientists have been leaders in this field for two decades and we have strong conviction in the strength of the patent portfolio. There's a number of different outcomes that could come from that appeal decision. I think we would expect it on sort of standard timeline to be measured in a small number of months.

But I think it would be difficult, and potentially inappropriate, to speculate on what the outcome of those appeals could be. And we're looking forward to providing an update once we've got it on what that looks like and the process from there. (multiple speakers).

Have you [happened to do] a combo study? For combo use when you go on your biologic do you have to do any study? I know with steroids it seems like that seems easy to do. Just, do you have to do additional work to get that use once you launch (inaudible)?

Yes, Todd, please.

No, Robyn, I think at the end of the day, like I shared, our study was versus placebo with the indication for mild, moderate, severe, so all of plaque psoriasis. I think the dermatologists will just get there. And I think it's just natural treatment regimen of what we've been shared with in our advisory boards. I think it's been shared with all companies that are innovating in the nonsteroidal space, which is where this whole market is shifting as we look to the future.

So, I'm sure that within the Phase 4 of the investigated initiated programs they'll be looked at, but it's not something we need to do. We are not going to be promoting it. I think the dermatologists have just educated us that this will naturally happen because it's been happening well before us even coming to market.

Douglas Tsao, H.C. Wainwright.

Just first maybe on tapinarof, I'm just curious, how do you see the product? Or do you see the product being used differently in psoriasis versus tapinarof? Meaning do you see it being used in combination with biologics more in one versus the other or frontline therapy in one versus the other? And does that affect or sort of influence how you think about pricing? Thank you.

I think your question is do we see tapinarof as being used differently in psoriasis versus atopic dermatitis? And I think it's a good question for Todd.

Thanks, Doug, for the question. No, look, I think we see tapinarof being used first-line I think for patients with psoriasis. And that's what we're going to be promoting it for in the mild to moderate category where the majority of prescriptions start.

I think the beauty when you launch a product like tapinarof with, again, these five attributes and a novel mechanism of action that make it totally different is we're not asking the market to change, we're not asking physicians to change anything they're doing because the majority of patients have already failed on steroids.

They've been looking for a product that's nonsteroidal, that has efficacy of a Class I steroid that is also being able to be used anywhere on the body for any length of time. And when you stop medication you're able to provide a benefit where patients are staying clear for a median timeline of up to 130 days.

So, for us I think, Doug, you're not asking people to change what they've been doing; you're asking them to increase the level of standard of care to the new future and that's what tapinarof is bringing. I think you are going to see that across psoriasis and you're going to see the same thing across atopic dermatitis.

Okay great, that's really helpful. And then just -- and Matt, just as one follow-up just as you think about the pipeline and the development of the business, how do you feel about sort of scaling? And just given how broad your pipeline already is, and between the discovery engine as well as further business development, at what point do you think you need to maybe pump the brakes a little just to make sure that as a business you don't get ahead of yourselves. Thank you.

Yes, thanks, Doug. Before I jump to that, just one more question on the tapinarof question you had asked. I think an important point about that tapinarof AD study is it does go down to patients all the way to the age of two. And I think the point there is to provide the kind of flexibility to dermatologists, and as exactly the point Todd was making, the kind of flexibility they are used to with the existing drugs.

So, to answer your question about expanding the pipeline, I think the short answer to that question is when you think about our history, and I think this is not unique to Roivant, at any given moment it feels like you are always constrained by something relative to what you want to do. And it feels like you flip-flop between being constrained by talent, and I think that's sort of to the scale question, being restrained by capital and being constrained by the number of available opportunities that are exciting.

I think we've always felt one of those constraints over time. I feel that we are in a very fortunate capital position right now. And recently we've seen some really exciting opportunities come across our desk that we're excited to pursue and excited to share. So, I think the main constraining factor to us is to make sure that we can assemble Vant solution teams fast enough in order to take advantage of the opportunities we see.

And I think what you'll see as we bring in new programs is making sure that we are doing so, schooling up leadership teams including internal and external talent quickly. And I think as long as we can keep those three things kind of in lockstep with one another we see significant opportunity to further grow from this point.

Now part of that is the Vant model. And the one thing I would say is we are a company approaching a major commercial launch with tapinarof. And the reason that I feel comfortable focusing on other things is because we have such an extraordinary team at Dermavant able to launch that product, and we have high conviction in their capability. I think that just gets to our proven track record in recruiting people like Todd and the team around. That's kind of how I feel about that. Thanks for the questions. Good questions.

Yaron Werber, Cowen.

thanks very much for taking the questions. Congrats to the team. This is Brendan on for Yaron. Another one -- just another quick one, sorry, on tapinarof from us. Obviously a lot of interest here in the asset across the board. But just really wanted to poke a little bit and see what else you can maybe tell us about your interactions with FDA since the filing.

Obviously the agency seems a little overwhelmed lately with just everything that's going on there. So, really any color you can give us on your discussions and meetings with them throughout the process, maybe sight inspection progress, etc. Any of that would be really great.

Yes, I think in short our interactions have been positive and uneventful as you would want. Todd, I don't know if there's anything specific you would add to that.

No, no. Uneventful. I think the feedback has been back and forth positive and we are wholly on track for everything we need to do for a mid-2022 review.

Okay great. And then if I could just squeeze one more in just actually about Immunovant also. I know a lot of this is a little bit up in the air here, but just trying to get some of your thoughts on -- I guess first where you are at in discussions with FDA on Batoclimab, really what are the final pieces of feedback you are looking to receive to get these studies up and running again?

And then really just maybe your strategy for the expansion opportunities here. Obviously there's some clear efficacy, but some other players going on. So, really just trying to see where you see the best opportunity for the drug.

It's a good question and something we're paying a lot of attention to. Obviously Immunovant has commented a fair amount on this publicly as well. We are excited for the breadth of the possibility for the program, the flexibility there is an incredibly strong attribute, the ability to dose relatively higher and get deep fast IgG suppression, or dose relatively lower and maintain a stable level of IgG suppression.

I think there's a lot going for us in that and that combines well with the other truly differentiated attribute of our program, which is none of the other programs really have the same level of a simple subcutaneous injection that we do. So, we think the program is well-positioned. We think there are indications in which our ability, our potency, our ability to dose higher and get to steep IgG suppression quickly will matter.

We think there's indications where the flexibility -- most indications the flexibility is going to matter. So, I think you -- will see when Immunovant is prepared to disclose its trial designs, you'll see I think optimizing for all of those features and it's something that we feel strongly is necessary to do in order to maximize the potential for the program.

In that context obviously we wouldn't want to announce a strategy for a specific clinical program until we've gotten signoff from FDA for what that looked like. And so, FDA is expected to provide feedback to us this quarter. It's been, I would say, a sort of a normal course interaction with them so far. It's not like we've received any particular information one way or the other.

But we expect to receive that feedback and provide it in due course this quarter. And I would say once we've gotten that feedback we should be able to provide just a more fulsome update on our strategy across indications because it will give us a pretty clear sense for what our trial designs might look like.

Geoffrey Porges, SVB Leerink.

Congratulations from us also on the IPO and the new quarterly call. Three questions if I may. First, on tapinarof, the FDA certainly surprised us recently with the quotient they've shown with respect to labeling even for topical agents, most obviously with Opzelura. Should we expect there to be any form of warning language in the tapinarof label associated with exposure or even very high levels of exposure to the active?

And then secondly, a couple of financial questions. Do you have any intention to change the current ownership structure with respect to Immunovant or Aruvant? And then lastly, Richard, is your $175 million or so expense rate for Q3 the right basis for Q4 and for us to be modeling for next year on a quarterly basis? Or are there some trends that we should be aware of? Thank you.

Thanks, Geoff. Those are all great questions. I appreciate them. I will take them in turn and I'll give Todd a chance to comment on the tapinarof questions as well. From my perspective -- and again, Todd, chime in if you feel differently -- I think it's hard to comment on the specific content of a label without having had that discussion with FDA. But I think there's certainly nothing that we've seen in our data that would suggest anything like what you see with Opzelura or otherwise.

And I will say, it's very hard to detect -- meaning we have very sensitive assays for systemic absorption of tapinarof. And we see basically no systemic absorptions. It's very hard to detect, even on picomolar assays, any level of systemic absorption of the therapy. So, that's kind of where we are with data. Todd, anything you would add to that?

No, sounds great.

So, that was the first question. The second question was, do we expect to change anything with respect to our ownership structures of Immunovant or Aruvant. So, I would say we made a significant investment in Immunovant during this fiscal quarter. That investment was designed to do two things. One is, as you might imagine, a signal that we think it's an attractively priced opportunity and we wanted to own more of it.

And the other is, as I mentioned, it's important that those studies be run to maximize the opportunity for flexibility and to maximize the number of indications that we can pursue in a competitive field. And so, we wanted to make sure Immunovant was well-capitalized to do that. We are enthusiastic about the prospects for that program and would like to continue to be a major owner of it.

And then, you know Aruvant, it's obviously wholly owned by Roivant with the exception of the piece owned by Cincinnati Children's Hospital. I don't, at the moment, see any near-term need to change that. We are optimistic and we'll keep an eye on the possibilities as that journey continues to develop.

And then the last question was for Richard about the cash and I will hand it over to him and a second to see if he has any further comments. The one thing I'd just note is remember that that $175 million includes our fully consolidated expense. So, that includes Immunovant's trial expenses as well.

And my only other comment on this is just remember that, because we are in the business of running large Phase 3 studies, some quarters it will be higher, some quarters it will be a little bit lower depending on which studies are ongoing. But in general I think you can watch our financials as they develop. Richard, I don't know if you'd say anything else.

We haven't provided any guidance at this point. I think I would point out on slide 23 that we expect initially at least four Phase 2/3 studies in 2022. So, I think depending on how the feedback plays out from the FDA and how those studies end up -- when they end up running that will certainly drive a lot of the impact going forward.

And Geoff, I think we'll be able -- as we initiate clinical programs we'll be able to give you a sense for what we expect it to cost and how long we expect it to take.

Dennis Ding, Jefferies.

I guess I have two questions. Number one, can you please help frame for investors how to think about or even value some of your past BDs in non-therapeutics, particularly like Silicon Therapeutics, Lokavant? Can you just provide some clarity on how does exposure in these areas contribute to Roivant's overall story, particularly over the long term?

And then as a follow-up, can you just comment on the internal bar or criteria that you guys use when considering building out additional Vants? And are there any interesting areas or technologies that you guys are seeing right now? Thank you very much.

Thanks, Dennis. Appreciate the questions, they are both really good questions. So, on the first one, on the non-therapeutic investment, I would say there's probably two different categories there. You mentioned Lokavant and I put Datavant in the category -- tools that we have built to make us better at developing new drugs and to help us design development strategies better or help us run trials better, and that we have made commercially available to other partners.

So, I think both of those tools get directly at our ability to be faster and more effective at drug development than we would be without them. And so, there's a direct strategic benefit from them. But I would also just highlight that the outcome with Datavant is, I think, a pretty good indication of our ability to also generate financial value from those opportunities.

So, we had put about I think $42 million of cash into Datavant. In the merger with CIOX we took $320 million of cash out and we still own at the assumed $7 billion value 12% of the company. And I sit on that Board and we are focused on maximizing the value of that, continuing to get the strategic benefit from it. I think it's a pretty good example of what we are shooting for in the tools area where we can build tools that make us better and also generate financial value.

On the Silicon Therapeutics side, I think it's a little bit different in the sense that that got to be one of the core pillars of our drug discovery efforts. And we think it gets to our ability to discover and design, really as engineering, new small molecule-like drugs in a differentiating way. And there I'd say from a value perspective I just think about some of our comps who are doing similar work like a Relay or like a Schrödinger or using those platforms for their own drug discovery activity.

And then, we are one of the relatively few -- first of all, that combine both ML-based and molecular dynamics-based approaches. And then also that combine those tools with specific wet lab expertise including in chemo proteomics in the field of targeted protein degradation. And I think the combination of those data will be differentially powerful for us.

You mentioned internal criteria. I think we have a pretty long track record of investment at this point, so you can see generally the kind and the breadth and the scale of opportunities that we like to look at. I will say the longer that we've been around the better our opportunity set has been.

So, we are repeat partners with a number of our both big pharma and academic partners. They view us at this point as a partner of choice. We get access to some of the most important programs in their pipelines that they want to continue to develop and with a high-quality partner. So, I think the bar has gone up over time only in the sense that our opportunity set has improved.

We remain flexible as respect to indication, we remain flexible as respect to therapeutic modality. And it's one of our business principles that we've talked about publicly. We remain contrarian and so I think you will continue see us going into exciting programs in areas that are important to our partners and that may be on one side of the boat if everyone is on the other. So, thank you. It's a good question.

[Nina Vetrico].

Hi, this is Dina on for Neena. Thanks for taking my question. I just had a quick question about Aruvant and what is the current manufacturing turnaround time and if there's any additional optimization ongoing on that front? Thank you.

Yes, so we are continuously optimizing our process there and it's an important part of any gene therapy development. We are in the process of tech transfer over to Lonza as a commercial CDMO and are looking to do our best to incorporate that into our pivotal program. So, it's an incredibly important area for us. Frank, I don't know if there's anything you would add to that.

I think it's well said, Matt. We do it as a place for continued iteration and improvement up to a point. And then obviously we want to lock it before we launch the pivotal program. And I do think that COGS has been an issue for some gene therapies in the past and we're focused on not just the clinical performance but the overall product profile that we can deliver there, including the cost of that product, to deliver what we think will be potentially curative efficacy for a broad array of patients with a much-improved side effect profile. So, that's where we are headed at present.

There are no further questions at this time. You may continue.

Great. Well, thank you, everybody, for joining this morning. As I said, it's exciting to do our first earnings call as a public company. I've enjoyed it. I'm looking forward to doing more of these and continuing to provide updates on our business at conferences and other forums. So, thank you again, appreciate all the good questions and looking forward to speaking to everyone soon.

This concludes today's conference call. Thank you all for joining. You may now disconnect. Presenters, please stay on the line.