Roivant Sciences Ltd (ROIV) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Roivant 2Q 2022 Earnings Conference Call. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Jeffrey Kalmus, Head of Strategic Finance. Please go ahead.

Good morning, and thank you for joining today's call to discuss Roivant's financial results for the quarter ended September 30, 2022. Presenting today, we have Matt Gline, our Chief Executive Officer. 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 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 entities of our products and product candidates. We strongly encourage you to review the information that we filed with the SEC, including the earnings release and Form 10-Q filed this morning for more information regarding such these forward-looking statements and related risks and uncertainties.

We will begin with Matt Gline, who will review key business updates across Roivant and events and provide a financial update. We will end the call with Q&A questions. And with that, I'll turn it over to Matt.

Thank you, Jeff, and thank you, everybody, for joining this morning. It's been a really impactful quarter for us, and I'm excited to share some updates both from the quarter and more recent. Some of these updates we already shared last week is the [content] of the financing that we did and some of them are new. And as I said, I look forward to sharing everything. So we're going to cover a few topics. Notably, I'm going to start with a discussion on the launch of VTAMA, and then we'll go through some clinical updates and so other updates more on the business as well as the financial update at the end.

So I'm going to start on Slide 6 with just an update on the VTAMA launch and really a reminder, we are really, really pleased with how this launch is going. So you can see the script data here, including for the quarter itself as well as for the more recent periods, and we continue to see great growth in trips, and we're very pleased with it. We'll talk a little bit more about the revenue, but also to announce that we did $5 million in net product revenue for the quarter ending September 30, which is a 12% net yield, which given that all occurred prior to the signing of our PBM contract, again, a testament to the quality of our scripts into a number of facts who are willing to go through the buyer acquisition process.

So on Slide 7, one of the most important updates here is we have our first major PBM payer contract signed. We indicated that would be coming before the end of the year, and we're very pleased that it was effective as of October 1. We haven't said which payer it's win, but most importantly, it gives us exactly the kind of coverage and access that we want requiring only an automatic look back for steroid on the patient's chart or if the physician reverts an e-attestation of prior steroid use, which is a really easy bar to clear.

So this is better than what we had initially hoped for in terms of quality of coverage and the ventures because close to 90% of psoriasis use (inaudible) steroid as first-line therapy. This gives us really access to all of the patients that we are focused on. And notably, as we said, we're so focused on becoming the mainstay of therapy and ultimately supplanting steroids, which means, of course, the simplicity of access is straightforward.

And as a reminder, as a company in this contract and our sort of Copay card, any covered claim to pharmacy, you should have a $0 copay for the patients and this should create a really positive experience for the patients covered here as well.

So on Slide 8, I'll also just remind everybody, we're obviously pleased with how the launch are going in absolute terms. We also -- we're pleased with how this looks relative to other psoriasis launches that we've observed. We became the #1 most branded topical and we control launch and we've comfortably stayed there since. And we continue to keep pace with the launch of Opzelura which is notable because Opzelura is atopic dermatitis and has about 4x as many (inaudible).We're now up meaningfully over 54,000 prescription written and with over 6400 prescribers since launch. So broad prescriber base and volumes that we're really happy with at this stage.

I want to talk a little bit on Slide 9 about the P&L. So we're not getting close on from gross guidance. We said since our Investor Day that we are confident we're going to get to gross sales in P&L. And I think you can see in terms of the metrics on Slide 9, sort of why we had that confidence even before we knew what the sort of PBM contract look like.

We had $5 million in net product revenue, which for the stage of the launch, we feel really good about and a 12% net yield. Again, this is a clear increase in prescriber and the revenue work required before that (inaudible) during formal review. So we're very pleased with these metrics. And again, we expect to give steady state gross to net guidance payer contracts, but we expect to see us seeing yield improvement from here as we execute on more of these contracts, we'll provide those updates as they come.

On Slide 10, I think this is just an important point to hit. We're really pleased with how the launch has gone and certainly the sort of real-script numbers. But I want to point out, we are really just getting started here. There are over 90,000 topical prescriptions in psoriasis alone, the vast majority of which are topical steroids, and there are over 320,000 topical prescriptions in atopic dermatitis, which will be a market accessible to us after we get our data and approval there and data company in the first half of next year.

And so no matter how long things are going at this age. There's just a huge market to draw from as we work to replace steroids – topical steroids or the mainstay of care for these diseases. And notably, to get to a blockbuster product, we need a 5% to 10% share here -- so really modest relative to the quality of the product. So we'll talk a little about sort of how the launch shows from here. And the one thing I'll say is, we have a lot of useful tools and levers to continue to drive adoption, and we're excited now that payer coverage is coming online to continue to build this volume and to grow into what we believe should be an important multi-blockbuster product opportunities. So exciting (inaudible) as we progress.

As you pointed to the stages, the quantitate metrics on it. But we've gotten just tremendous high-quality back from early prescribers. We held on our Investor Day in September a panel of KOLs, which I recommend listening to if you haven't. And we got, I think, great to representative indications from prescribers on that panel, including great feedback on onset of action. We're seeing docs saying that their patients are telling them they're clearing as early as a couple of weeks into therapy, docs understanding that this is really potentially a first-line monotherapy topical treatment that cleans up the sort of use of steroids and use (inaudible) steroids. And it's a real significant paradigm shift in hos psoriasis patients can be managed.

We've had great feedback on the field of the cream itself and certainly have not heard any meaningful reports availability issues that a prescriber behavior. And yes, just a huge amount of tremendous support for time from prescribers, a really fantastic base to build from.

I want to highlight on Slide 12, an update that is relevant for our upcoming atopic dermatitis as well as just a good reminder on sort of the quality of the safety profile for VTAMA. We reported earlier last week, the results of our pediatric Maximal use study in atopic dermatitis. And notably, this included subjects -- pediatric patients with a big surface area of atopic dermatitis up to 90% with a mean body service area 43%. Can you just picture what that literally means on a person. That's a remarkable body surface area we treated with VTAMA.

So we were using quite a lot of VTAMA on these patients. And we saw a really favorable safety profile with a very low incidence adverse event, no SAEs, a PK profile consistent with what we saw in the psoriasis population and really minimal to no systemic exposure even under these Maximal use conditions. So we feel really good about the quality of the data and what it's going to mean for safety and tolerability.

And I know that it has a real commercial benefit as well because it gives us something that is differentiated, which is a single dose form. So in peds, in adult patients, in psoriasis and atopic dermatitis, there's only one script for anyone to remember. It's a single dose of the product a single sort of 1% spinner off the cream VTAMA, where some of our competitor products have multiple doses depending on whether you're in psoriasis, whether you're un AD, whether you have a pediatric patients or not. And so really pleased with that simplicity and is a direct function of the safety profile of the compound. So very pleased with that data and think it will be a useful factor as we get towards the AD data.

And then as a final reminder on VTAMA on Slide 13, that AD data is coming. Our Phase III program. Enrollment is on track. We expect data in the first half of next year. There's a ton of patients and investigator enthusiasm for the study. And that's built, obviously, including on the safety data that I just described, but also on conventional Phase IIb data that we've already sort of made public as well as the positive outcome from our Japanese partners, ACAP dermatitis study, which they reported over the summer.

So overall, again, incredibly pleased with the quality of the launch for VTAMA. Looking forward to continue to provide those updates and looking forward to the improvement in dates to (inaudible). So (inaudible) come back to in the Q&A. So I want to turn now and talk about a couple of other clinical updates in rest of our pipelines.

So Slide 15, again, you can see a review of our late-stage pipeline with a number of really important therapies, many of them in insulation and immunology, but also in some other areas as well, a truly broad late-stage pipeline with some opportunities that we won't talk about as much today like brepocitinib where we've talked a fair amount in the past about that upcoming data set in SLE and [internetisitis] as well as batoclimab and others.

So as of right now, on Slide 16, we have 7 ongoing major studies, including at least 4 of the pivotal. And we expect 3 more to initiate in the near future as well. So we'll be at sort of 10 pivotal headwinds studies, which is a great breadth of R&D from our perspective across the portfolio.

I want to spend a few minutes, and this was an update during the September 30 quarter, reminding everybody about an important development at immunovant our Anti-FcRn franchise starting on Slide 17.

What we announced is that we've got a new next-generation anti-FcRn antibody to complement Batoclimab they’ re IMVT402, which was developed in-house, which we've shown in animal studies deliver what we think should be deep potentially best-in-class IgG lowering, similar to what we get from our first antibody batoclimab. Notably, however, also, and we'll talk more about this in the data, minimal impact in albumin and LDL.

So we think this could be the only anti-FcRn antibody to have both minimal or no impact on albumin and LDL as well as that deep potentially best in class IgG and all of that in a simple subdued administration that is also differentiated versus our competitors. And one of the great things we'll hit this again at the end of the section about anti-FcRn antibodies is that IgG lowering has been a really great biomarker across a range of indications. And so we feel like we have a real potential for accelerated development here where we can use proprietary data from our own studies and one IgG as well as data from industry-wide trials in anti-FcRn antibodies back to design our own pivotal programs. And so we think immediately after getting our first-in-human data for IMVT-1402, which will come in the middle of next year, we'll be able to go sort of on an accelerated path straight into pivotal studies thereafter -- which is something that's unique to the class and sets us up to be really the right impact with all of our competitors with a best-in-class run.

So you can see the data as a reminder on Slide 18, and I love data because it shows so clearly, we get the same IgG suppression as batoclimab, -- we've got here the sort of supersaturated 50 mg dose. And you can see right on top of each other in terms of the level of IgG suppression, which is important because we think it's necessary to be able to get to that in humans just remind we're talking about I guess the 80-plus percent expression of IgG, which is more than some of our competitors are able to achieve and what we think will be relevant across disease populations across patient population in the disease.

And then you can see on Slide 19, as a reminder again, that we're sort of right on top of placebo at therapeutic doses as far as albumin and LDL impact are concerned. And so we get kind of everything we need here in terms of in these monkey studies -- minimal impact or no impact on albumin in LDL and the level of IgG (inaudible) that we think will continue to keep us differentiated as best-in-class.

So again, as a reminder, data coming in humans in sort of the middle of next year. I get fairly often the question of sort of how did we achieve this? And so on Slide 20, just as a reminder, we put the slide up before, you can see the crystal structures -- batoclimab as with many of the whole antibody FcRn binds FcRn in the configure and it's very good for expressing IgG, but also you can see sort of interferes with steroids of albumin binding and FcRn as well. And so that sort of causes the impact on albumin.

IMVT-1042,on the right-hand side, similarly high-quality binding from an IgG expression perspective, but does not sort of interfere with albumin binding and so it doesn't affect the admin level there for LDL -- as a reminder, there's another question that we've got a little bit on Slide 21, I want to summarize all of this in one place.

Across all of the known anti-FcRn program, generally, including batoclimab, our own program as well as many of the other antibodies that has public data, -- the translation from monkey data to clinical data has been very strong on albumin. So the impact on albumin observed in NHPs has generally been translated to humans. And so I want to just to summarize this data in one place where people had a good reference for it, and we've got all the publications at the bottom there that demonstrated over and over again that monkeys are a good predictor of human data for impact and albumin there we think impact on LDL.

And again, we'll get the data from IMVT-1402 on this in mid-2023. So last thing I'll say on our anti-FcRn franchise before moving on to other updates on Slide 22. Just as a reminder, this is a very broad disease biology. There are many different diseases ranging from sort of rare diseases to more common diseases. And we have a pretty unique ability because we have both batoclimab and IMVT-1402 in our pipeline, to tailor the development strategy for each drug, 2 different disease populations and to be able to sort of compete in ways that I think our competitors will struggle sort of differentially in, let's say, rare disease settings versus in more common settings, where we can take the profile of our drug, and we take the commercial strategy around each of these different compounds and optimize the choice of compound and the development strategy and the commercial strategy to the selection of indication.

So looking forward to providing more updates on our development strategy for both IMVT-1402 and batoclimab in the quarters to come. You should expect continuous updates on those as we get programs up and running. And as we sort of learn from our own data and from industry-wide data, and I think it's going to be an incredibly exciting opportunity. We are truly the best in class anti-FcRn franchise at this moment with sort of IMVT-1402 being clear best-in-class potential antibody and batoclimab in our portfolio, allowing us to do some really interesting and differentiated things.

So I'm not going to cover any of the other sort of clinical updates at this point. We continue to make progress in a number of other programs, including brepocitinib, which is marching towards SLE data as well as namilumab sarcoidosis and so on. But I wanted to stay focused today on some of the new things.

So I'm going to give just a couple of additional updates on other parts of the business now, including on slide 24 something that we have not presented before. So we've not spent a lot of time talking about our discovery organization or greater discovery efforts. Those continue to chug along. We're doing some interesting things there. It remains a small fraction of our overall burn and obviously a lesser focus.

But given some of the high-quality data that we've seen recently in ER degraders, I just want to highlight that we have an ER degrader program -- and this is some new data about that program demonstrating either equal or better tumor volume reduction compared to the most advanced degrader known in ER. And you can see on the left-hand side, you can see the in vitro data on degradation. And on the right-hand side, you can see that our compound has either equal or better tumor reduction in tumor reduction mouse models.

So exciting opportunity. It's early days there. We'll provide more updates on that program when we have them, but I just want to highlight that we continue to believe we're going to be able using our unique combination platforms to develop some interesting investment class degraders. And this is not a bet on the next couple of years. This is a bet on the future beyond, but excited what we're going to be able to do with our pipeline as these programs mature.

The other update I'll give briefly because we get questions about it often on Slide 25 is an update on Genevant’s IP litigation. So this is a relatively recent development as long as you may have seen, on November 2, the Federal District Court in Delaware denied Moderna's partial motion to the dismiss, which as we've talked about before, they have filed on the basis of this U.S. contract in the 1498, which is an attempt by Moderna to shift to liability for its alleged infringement or at least a portion of it to U.S. government and taxpayers. And we were pleased to see the court denied that motion. And most importantly, for the case, that means that we'll now move to this pre-trial discovery phase, where we'll be able to learn more about the state place, and we should be able to bid more updates on that as that phase progresses.

So to round out the overall discussion on the sort of heart of the business here on Slide 26, I'll just say I could not be more excited for 2023. It's an incredibly impactful year for us. First of all, it will be our first full year of VTAMA on the market, and we look forward to continued prescription and meaningful revenue growth as well as sort of looking early PBM and payer wins translate into sort of approaching a steady state GPN and a commercially attractive P&L that we've signaled over and over again at this point. We are confident we're going to obtain. So looking forward to be able to provide more guidance there, looking forward to watching that mature. And we think we're going to do some impressive things there.

On top of that, we'll continue to build on the VTAMA sort of franchise, if you will, with Phase III data in AD coming in the first half, which opens up an even larger market for VTAMA that we're excited to get into. And we think the high quality of our safety data, the simplicity of our dosing is all going to be important in continuing to sort of grow into that market.

Then as I mentioned just a moment ago, we're going to get human data in IMVT-1402, which is expected to be in the clinic starting in the first quarter with the initial Phase I data expected midyear. That will come together with -- in the second half of next year initial Phase II data in Graves disease with over to take 1402 straight to pivotal thereafter. And that great data is batoclimab be inform development strategy for 1402, which is a great example of how we think we can move fast to 1402.

And then finally, not a focus for today's call, but as a reminder, the sort of pivotal readout from our global Phase IIb study now fully enrolled initially in one of our registrational studies, if that data is successful in the second year and reasons that we believe we have a possibility of being some of the best SLE data, (inaudible), we that data as well.

I'm a round up the call with a financial update. I'd use like (inaudible) guidance here. Some of these updates, including some of the updates have already given on this call, we gave beginning of last week because today (inaudible) $150 million follow-on offering was in guidance with the investors that we're really excited about is catalyzed by a reverse inquiry that we extend to take advantage of, especially in this market.

Even before that offering, we've taken some important steps in our business to make sure that we could -- we extended our runway -- we extended runway guidance. So our runway is now comfortably extended in the second half calendar year 2025. And I will talk in a moment about what we sort of achieved there, what that extended runway buys us in terms of (inaudible) actually really important data sets. We see that in a variety of ways. We achieved it with the cost reduction efficiency you may see an article we can about an impactful relatively modest around layoffs that we've done, we don't in are going to have any meaningful business impact in terms of slowing us down or changing catalysts. But together with the other (inaudible), we're going to be bit to really sort of drive length of runway we think it’s important where the market is and (inaudible) continue to be.

Overall for the quarter, just [defense] of $123 million adjusted G&A of $102 million. And notably, the majority of that G&A expense relates to the retina commercial and become at this point. So we think that's an important and then ended the quarter with $1.6 billion of cash flow or $1.9 billion effect after our follow-on offering, an offering and anticipate putting from the sale of Myovant minority to Sumitomo pharma. So a really strong financial position.

I continue to be pleased with our ability to generate cash from a variety of sources of one business, many of which not dilutive, and looking forward to taking advantage of this position in the number of ways, including licensing opportunities that we see that could bring new programs into our portfolio. So stay tuned for updates on that well.

So I'll take my prepared remarks on Slide 29, I would just remember, I said 2024 --2023 as a really impactful year from a catalyst perspective. As we sort of thought about the pending runway and the wet catalyzing to 2025, there's really a tremendous amount now with not only the data from our (inaudible) data so on.

But as additional important data from batoclimab and multiple indications including CMP, including [MG], including [disease], the representative data in dermatomes, I guess in addition to the provision so that here as well as continued data from early 2001 (inaudible) plastic syndrome and a number of other important catalysts as well as what would be multiple years of sales of VTAMA (inaudible) that point -- so really, really excited for next year, we're really, really excited for what our current capital (inaudible) to achieve in the choppy market and looking forward to continuing to provide updates at each quarter and more frequently the event.

So I'm going to wrap up my comments there, and (inaudible) I'm going hand it back to (inaudible). So thank you, everybody.

(Operator Instructions) Our first question comes from David Risinger with SVB Securities.

Congrats, Matt, to you and your team and all the progress. So I wanted to focus on the good news on VTAMA and just better understand the contracting. So could you provide more color on what percentage of lives are actually covered immediately with your PBM contract? And what percentage required downstream contracting with employers to achieve paid for drug?

And to follow on, what would the timing be for that secondary contracting? And then separately, could you also discuss your pursuit of health plan coverage in addition to PBM coverage and how you're thinking about opportunities there?

Yes. Thanks, Dave. I appreciate the question, and I appreciate your listening in that look this is top of mind for us in terms of our overall strategy at this point on the VTAMA launch. So first of all, I think what most companies would say in PBM contract is that the PBM covers about 30% of commercial lives and (inaudible) about this, we've been a little bit more nuanced in how we describe this process. The PBMs have natural formularies and many lives are covered to the national formulary and so we get access to a number, we haven't had exactly with (inaudible) a little more about what PBM we signed contract with but a decent number of live times immediately back to the contract. But also this kind of gives us attempt for all the downstream customers that PBM even for the ones that have their own custom formularies, they now to (inaudible), they understand the merit.

They understand the value judgment but the PBM placed on the product. And we're constantly looking forward to continuing sort of building to that. This is for all ones once you get the PBM contract you can kind of work your way through customers with PBM, which had probably 3 to 6 months to hit the tail of what that looks like, but I think you can expect lives are covered under this PBM sort of turning on for coverage over the period as we continue to work away through those customers.

Notably, I'd say you mentioned employers specifically. And I say employers are probably less likely than some other payers to have custom formularies of their own -- so it's just going to vary by sort of which specific type of plant it is. And we're sort of -- every bit is focused on every top line that we can get in on so in terms of PBMs obviously the overall fees for the process and then the health plan or the employers, I think we're certainly focused on all these things. We probably will not provide specific updates as we get contracted with downstream customers of the PBM, we may comment on a little bit. But it's just sort of at this point to us kind of routine from here as far as -- as far as continuing to build into these downstream plans.

Our next question comes from Brian Cheng with JPMorgan.

My first question is on VTAMA. With your first PBM contract in place, can you walk us through the process perhaps from getting the script of the doctor's office to getting the VTAMA in hand? And how much read-through is there from the PA step that we see here from for only prior steroid use from the firmer PBM contract to other PBM discussions are ongoing? And then I have a follow-up.

Yes. Thanks, Brian. Thank you, listening, thank you for joining and excited to have you on the call, so welcome to the group here. I think it's a great question. So first of all, I think it's an important point the pain experience from having a PBM contracts in terms of like time line and process actually isn't that different thanks to the copay program that we haven't played originally. So think you get a prescription from the doctor.

Many of these docs work with infant retail pharmacies and so backstream, the pharmacy works with the patients to get the filled prior to the contract, patients who weren't covered would then take $75 copay because of the (inaudible) copay card. And now those same patients, if they're covered by this PBM contract or by end of the car that we can, would pay a $0 copay because that's sort of the do our copay card, but again, we would then get coverage from the payers’ insurance company. So that's kind of the sort of process for a patient to get a script filled, and we think it's a good straightforward, I guess, straightforward process.

I think in terms of the template here, I think this was a perfect outcome from a coverage perspective from my perspective. It just is everything we need, it gives us access to all the patients we're really seeking, which are the patients who are on steroids now. And it's what to what we said in the beginning that's 90% of psoriasis patients. So we feel really good about the template there. I will say, as far as health plans are concerned, as far as you're sort of duplicating this model across other PBMs across health plans. Given the script volume, as you can imagine, we have a ton of inbound interest from health plans and from -- an active discussion with all major PBMs on getting the product covered and that discussion is very constructive given where we are on a volume perspective. I think you said you had a follow-up question.

And then maybe just one on SLE since we're going to get top line data from the Phase II trial for SLE in the second half next year. Can you remind us what you want to see in terms of the primary endpoint, which is (inaudible) that you need to see in the Phase II to be (inaudible) in the trial? And maybe just if I can squeeze in one more. We noticed that you -- there was a workforce reduction that was announced over the weekend. Just curious if you can provide a little bit more color how -- whether that has any impact on this program?

Yes. Thanks. So on the SLE question, we haven't given the numerical bar. We'll continue to talk more about what we (inaudible) become closer. I'll say we have a high bar for what we want to see there. We think the agent is a powerful agent. And we think the biology of the dual inhibition should be relevant typically the SLE disease biology. So we feel really good -- we see the excellent data in SLE forward, we want to see meaningful improvement on the secondaries and we'll sort of talk a little bit or about how we think about those sales as we get closer.

I guess we have evidence from other JAK1s and evidence from other TAK2s on what they've done in SLE, and we think we have a possibility of being more impactful than either of those agents on their own because of the biology here. So we kind of looking out for that.

On the question of the risks, Look, these are always tough decisions and they impact people's lives. I want to be a little bit careful. But I think in general, the answer is we don't expect any meaningful impact on any of our sort of major programs or any of our key projects. Nothing that we've talked about on this call should be affected at all by this. We focus on G&A efficiency. We focus on sort of taking the most benefit we could from the model. Let me focus on making sure that our early-stage programs were really focused on the most important impact of that work. And so I'd say that's kind of where we went there. And as you saw, the endpoint at was about 12% of overall staff. So not something that we expect to have a meaningful business impact.

Our next question comes from Corinne Jenkins with Goldman Sachs.

So I guess it looks like the effective date for this payer contract went into effect in early October. So I'm just curious what portion of scripts written today are being written for patients that are under that recently disclosed coverage agreement? And can you just give us a little bit of color on what the process looks for that patient population?

We haven't given a specific sort of guidance for what percentage of our scripts are covered by this specific contract. I refer you to the answer to Dave's question earlier in terms of the way these generally work. This PBM coverage about 30% of covered lives all together, and we expect to kind of percolate from those covered lives starting with the bulk of the -- the big content that we have now for porting down through over, call it, a 3 to 6 month period. So, I expect to see continued sort of development. And as we get more payer contracts, they'll accelerate, but I think you can expect to see a result of improvement in PBM starting in the current quarter, starting in the quarter that we'll announce the December 31 quarter because the contract was effective October 31. But it will take some time for all disparate through when we sort of reach steady state.

Great. And then you mentioned interest in additional in-licensing opportunities. How should we think about the appropriate cadence for in-licensing deals for you all? And then what do you think about as your priorities for the kind of assets you'd be excited to bring in house?

I think one of the reasons that we're focused on making sure our runway is long is because this is a great market to be in a strong capital position. There are some really amazing opportunities available to companies like us. We're really focused on high-quality programs that can be all in the near and medium term. I think we said before, kind of 2 of those a year, we asked reps earlier this year, I wouldn't expect any sort of major change their other than that in the current capital environment, the borders are behind we want to do things that we can be very capital efficient and executing.

And in terms of what we're looking for, we remain pretty open from a therapeutic area perspective, we're looking to things where we think we're going to be able to do an important job developing drugs or a differentially good job developing the drug. And we're looking at things that are at the moment, kind of mostly later-stage things we can add to the sort of bulk of our late-stage portfolio while sort of fitting within our financial goals.

Our next question comes from Robyn Karnauskas with Truist.

Congrats on the quarter. This is Alex for Robin. We wanted to know as you continue discussions with physicians and payers have the a lot of [proper] feedback looks great, the launch looks very positive. Have you received any pushback or any details of the discussions that might change how you view or approach the long strategy? And also for 1402, this is a very sizable opportunity there (inaudible) excited. How do you think about prioritizing which indications to pursue initially and then the cadence of going to different indications thereafter?

On the VTAMA question, I think we are constantly taking feedback from docs and from our payer conversations and so on and make sure that we're tailoring all of our messaging until we run the last line back to push back. Honestly, I think the answer we have not gotten very much here. I think the drug has been extremely well received. You heard it (inaudible) panel. I think you hear it in your own backhaul. I think payers backed to have a new (inaudible) that really candidly works and works without any liabilities that started providing that. I'd say no meaningful pushback.

But obviously, we're constantly adjusting and reacting and even think about this PBM contract, obviously, we had a bar that we had at for what we hope the quality of cover look like. I think this PBM contract represents extremely high-quality coverage, that's going to work for patients and docs, and I think we're running every day as we sort of see the patient in back to grind as we see the quality of what payers are willing to do given the meaningful impact of the project.

On 1402, I think, look, our plan for 1402, which we said a few times, is to focus on indications where look like deep and sustained IgG suppression (inaudible). So chronic administration and in diseases where we think the LDL or the albumin impact might be more material to patients. So the broader market diseases and chronic diseases. So I think that's kind of the sort of general framework. We'll get more specific with it as we progress.

And we think 1402, batoclimab fit really nicely together because both can achieve sort of deepest possible best-in-class suppressions of IgGs. And so we can kind of go after any indication with either and expect to be able to deliver comparable or better efficacy to any of our competitors, and so we can really sort of tailor dosing strategy and indication selection by program in a comfortable way. So feeling really good about that. about that portfolio as well.

Our next question comes from Yaron Werber with Cowen.

This is Brendan on for Yaron. Congrats on updates. Just a couple of quick from us. First on VTAMA, obviously, more PBM impaired detection is a big focus here as you guys have all kind of outlined. But maybe I also want to ask the broader commercial competitive dynamic standpoint. I mean what are the next steps you're all focusing on for the launch, maybe beyond payer coverage just in terms of binging in patient physician hands a little bit earlier, maybe relative to competitors. And then just a quick one for the CRM franchise. Can you just remind us if you need to or plan to run kind of a more traditional big Phase I study, Phase II with 1402 before moving into pivotal studies? Or would you be able to move more or less directly into some of the large registrational study?

I'll take the second question first because it's easier, which is we believe that our plan Phase I that from middle of next year, will be sufficient together with the data that we have IgG suppression to go right into pivotal trial. So we think there's a clear path to go straight from sort of the planned Phase I in eval studies. And I think what we said is the sort of 6 months after that data, we should be able to be in a pivotal study, which is really, again, sort of unique and interesting about the FcRn class given the quality of IgG as a clinical biomarker.

So I'd like to put question a lot because to be honest, to me, given the quality of the early payer contracts, we feel really, really good about where we are from a coverage perspective. And if you just think about that slide that I had earlier about the fact that we're just getting started in sort of the depth of these markets, I think the next question is 4,000 scripts a week is great, and we feel really happy about it. How do we get 40,000 trips a week. And that obviously requires continuing to work on changing prescriber behavior, continuing to educate patients on what VTAMA has to offer that is completely different than what they've been able to historically with topical steroids.

So we have a lot of different plans for that. Obviously, DTC is a component of that, that we started to deploy in a very targeted way, and we'll continue to ramp that up as sort of payer coverage sort of matches it. But again, sort of very precise focus on sort of that process.

And then look, we have a large and highly capable sale force that's out there sort of doing physics medication and scientific communication that we think an important year because again, this really is a paradigm shift in the treatment of psoriasis. Obviously, we think our dermatitis data is going to be impactful during the simplicity of the product in the (inaudible) the fact we have such a young -- a cohort pediatric study with the same drug, on the same dose, same product -- in all of those things are going to individually matter. And we're focused on taking maximum advantage of each of those opportunities to get our assets out there and to help people understand what the VTAMA can do.

And again, the nice thing is the product really does deliver so much differentiation from topical corticosteroids in terms of ease of administration, no duration limits, no body surface area limits one of the really severe tolerability issues. We have a particularly clean label in terms of safety and tolerability relative to other novel topicals, no conceited notices, nothing like that. So just a really straightforward set up and we want (inaudible) to think of that as a reach for the drug. So a lot of strategy to deploy and excited to keep working on that sort of bigger hold there, and I feel I feel like we're really well set up for it.

Our next question comes from Louise Chen with Cantor.

Congrats on all the progress (inaudible). First one I wanted to ask you about was how do you think about pricing for your first and second generation anti-FcRn, Will this be a competitive advantage for you? And then secondly, the opportunity for [Pryovant] in SLE and also DM and how the economics work with Pfizer. And then last question I had for you is, how are you thinking about or framing the data readout in 2023, especially in light of what we saw with Japan Tobacco and then say, versus [Eucrisa] in prior Phase II data you've shown.

Yes. Thanks, Louise. Thank you for listening, and thanks for the great questions, all 3 of them. So starting on FcRn, it's probably premature to comment either ocular 1402 specifically. But I'll just say, it sort of has to be a competitive manage to have both drugs available in terms of being able to think about price point to be able to think about other commercial levers to sort of deploy a franchise strategy across the 2 programs. So I'd say, premature to have a specific comment on price for one or the other, but definitely has to be an advantage to have the franchise for that and all the other reasons that I've shared.

On DM and SLE for (inaudible), we've given a little bit of guidance on the size of the DM population. I think we've given a little bit of information on the size of the SLE population, although obviously, a very well-understood population at this point. These are huge commercial markets. We're success in either of them on its own would be sort of a comfortable blockbuster product in our view. And obviously, across the 2 of them, just a huge opportunity, and there's obviously room to go beyond those we've (inaudible) indications as well. So a very large commercial opportunity. From an economic perspective with Pfizer, we have effectively U.S. and Japan as our focus. We pay Pfizer sell modest royalties. I think what we've said publicly is it's sort of high single digit, low double-digit tiered royalties. And we pay them that on our territories. They pay us that on their territories. I mean Pfizer owns 25% of Roivant well.

And then you asked about how we were thinking about the aging data and sort of positioning. First of all, as you mentioned, I think we have great comfort in part because of the quality study run a tobacco that was successful in part because of the (inaudible) study in (inaudible) patients that we just announced last week. And so we feel really good about kind of where that program is headed. We think it should be a bigger event for the -- to have data.

Obviously, AD is also a really important mentioned I think it's a market that has had a little bit more in the way of novel topical. But none of those drugs either from an efficacy perspective or from a tolerability perspective or from a label perspective, afford the kind of clean steroid replacement potential that VTAMA affords given the safety and what we believe in the potential efficacy profile of the drug. So we think it should really fit in a similar place prices as a potential estate therapy.

We like the fact that some of the other topicals, especially some of the more recently launched ones, the more recent launch one has some high demand for a novel Topical in atopic dermatitis. And it's clearly a popular drug is still doing well in spite of some pretty meaningful limitations on its label. So that -- and they've done a great job with commercial coverage now and there courseware progressing. So we feel really good about what that means for our potential in AD where we think we'll have worn differentiated products.

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

My last question on atopic dermatitis. I'm just curious what you're hearing from dermatologists and physicians that are prescribing VTAMA currently about their desire to prescribe it for atopic dermatitis or whether or not they have actually tried that? And then also regarding the LNP patent update. Just wondering if there's any potential next steps that Moderna could take to actually try and push the motion to the part motion to dismiss again? Or if you are confident that there really is no other recourse that they can take at this point.

Yes. Thanks, Neena. Thanks for the questions, and thanks for listening. On the AD study, in terms of physician feedback, we don't get specific evidence of off-label prescriptions and things like that. So we don't sort of have a specific view on sort of how it's being used. But we got a ton of prescriber enthusiasm for the drug, and we hear a lot of enthusiasm for it, not just in psoriasis, but in AD in other settings.

For starters, we have a time enthusiasm from the investigators in our AD study who are using the drug actively as a part in trial process and who are clearly sort of super enthusiastic for what comes next. So I think from that perspective, enrollment on schedule, we have the sort of promise there. A reminder, we have 49% sort of clear almost were in a [indiscernible] green we get compared to 13% on vehicles. So a really meaningful opportunity there in our Phase II side.

Great feedback from our Phase IIb investigator on that study as well. So on the LP question, the judge ordered Moderna to file an answer by November 16, a complaint, and we expect that they will file an answer. They've asked for a modest extension, which was granted. So we feel pretty confident that we'll hear back from them, and then we'll be able to move on, as I said, to the discovery phase in the process.

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

Congrats on the progress and the PBM contract, at what point do you think operationally we should see that reflected in terms of the script volume trend, presumably as it gets easier for patients for doctoring to do so? Or do you think one contract isn't enough and that we need to wait a little bit before that becomes a real driver of volume?

So I think -- look, there's a lot of different things sort of conspiring towards the quality of script volume trajectory in VTAMA. I'd say as payer coverage is one of those things. I think the copay card has helped in simplifying that process even before we had the contract in place. I think contract will help too. And I think as docs have confidence that their patients will have a good covered experience ship build the hyperstores have a lot of that conviction just because of the way we handled the early [oral] launch. So I think certainly help continue to build that out. I think you will continue to see scripts building over the coming months and quarters, and that's important.

I think we expect to see some stair step of prescriptions over time for a variety of reasons covered is one of them in the holidays, obviously, if a prescriber behavior, there's some seasonality there some of these populations. So I think it may not be kind of literally linear from pro perspective, but I do think all of the things going to add up to consistently growing demand. once you take sort of one step back and we weak numbers. And again, we feel really good about what that contract, lets us do there and what the market is sort of in at this point from a (inaudible) perspective.

Okay. Great. And then as a follow-up, I'm just curious, have you given thought about how the IRA might affect your development of certain assets because that's certainly something that we've started the year from companies and certainly sort of rationalizing some of the opportunities that they were planning to pursue just given the potential impact.

Yes. It's a great question. I sort of obviously, look, we like the rest of the industry are watching really closely as this evolves, and it's already factored into how we think about allocation of capital across the portfolio. So you can see we think differently about [molecules] that we used think -- we sort of think differently in general about specific programs. We are obviously compared to some of our of your peers, less impacted in the near term than some of them might be. And so we've got a little more time to kind of watch and learn. And it's a pretty rapidly evolving situation but absolutely affects our capital position today.

(Operator Instructions) Our next question comes from Dennis Ding with Jefferies.

This is Yi Song for Jefferies. I have 2 questions on our end. The first on EU launch effort, could you just tell us where you are and when you would expect any updates on the EU process and what commercial preparations you have made in advance of the approval? And on the second question, on the mRNA patent litigation. It's nice to hear the Judge deny Moderna on the motion to dismiss. But factually, what are the next steps here and what specific dates do you need to know? And when do you expect it to move to (inaudible)?

So on EU for VTAMA, we don't have a new update to provide right now. We continue to work towards that opportunity and to think about different approaches for commercializing in Europe. It's obviously a big commercial market, especially given a number of patients. So we'll provide an update when we have one with more specific, but I don't have a specific time line to provide today.

And then on -- and just as a reminder, by the way, the Japanese program is now on a path to approval after the positive study there. So -- and we'll get some commercial economics from the launch in Japan. As far as the Moderna question is concerned, I said in November, we expect Moderna’s overall response. And again, we expect to move into this every kind of just after. So I think you can expect there'll be a calendar set for discovery that will be the subject of some discussion with the judge. And perhaps once the calendar set will be up a little bit more of an update whether that's sort of end of this year or early next year, something like that, on timing, but I'd expect the discovery process will take some time and perhaps more updates kind of over the course of next year as that progresses.

And our next question comes from Dennis Ding with Jefferies.

I think that was our prior question.

I am showing no further questions. I would now like to turn the conference back to Matthew Gline for closing remarks.

Thank you very much. Thank you to the operator. Thank you to everyone who worked to get us through a pretty impactful quarter, and thank you, everyone for listening this morning. Look forward to continuing to provide updates at upcoming investor conferences and with our next quarter. And everyone, have a great day. Thank you so much.

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