Okay, thank you, everyone. Excited to have Roivant Management join us. There's a lot of directions we could go, but I'll let you kick things off and we'll jump right into it.
Oh, thanks. You'll let me kick things off. Look, thanks for having us. First of all, it's really great to be here. And yeah, it's exciting to see everybody. We are feeling great about our business right now. We have an incredibly stacked 2025. We've got data at Immunovant and a bunch of important indications. We have registrational data in our JAK1, TYK2, brepocitinib, and dermatomyositis kind of in the middle of the year. We have a litigation with Moderna that some people are focused on that plays out with the jury trial in September. So just a really busy year ahead, and we're spending a lot of our energy and effort right now getting ready for it.
Can you remind me, just because actually, I'm going to ask you now because I want to bring it back to 2023 conference.
Yeah, sure.
Remind us, Richard, what's the market cap versus the cash balance versus any of the other commitments? Because I feel like we should start there because that's kind of like how the stock's getting valued.
Yeah. Yeah. So market cap's roughly $8 billion, cash balance.
8?
Roughly five and a half.
Okay.
And then we own 55% of Immunovant, which is market cap roughly four, so.
$8 billion cap, cash is $5.5 billion. I don't know why I thought you guys had closer to $8-9 billion cap. Okay, because it's 25% was for Pfizer out of the transaction.
Yeah.
$5.5 billion cash and sorry.
55% of Immunovant.
55% ownership of Immunovant.
Which is roughly 4 billion. About 2 billion of which we own about $2 billion of Immunovant stock.
Right. So it's effectively cash plus Immunovant and fairly limited credit for the rest of the portfolio.
That's right. Yep, exactly.
Did you guys get credit for getting all that burn off? I didn't realize how much burn was on that Dermavant.
I don't think we got credit for getting it off.
The devs.
As well. I mean, we had roughly.
I was calculating it to north of $200 million worth of burn off of that.
I agree. That's absolutely right. A year probably.
Annually, exactly. Those are annual numbers.
Yeah. Yep. I totally agree. Yeah, look, commercializing a dermatology asset right now is probably.
And you got cash too, which was separate.
We got cash too, yep. But we'll wind up between sort of upfront and highly likely milestones. We'll wind up taking in probably $400 or $500 million in cash.
Okay. I guess the first question, , but I want to get to your pipeline and the program. The first question is for the pace of capital deployment, and I ask because a lot of the folks at the Roivant investment team are friends of ours from the buy side over the years. And so there's this general buzz that obviously the team's very active, very engaged, but also there are questions around, are we sort of holding our breath for something more significant coming? Or you guys want to do a steady stream of smaller size deals? What exactly is on the what's the priority list?
Yes. So there's a couple of different ways to triangulate that question, but in terms of like sort of capital deployment, as of the beginning of this year, we had about $6 billion in deployable cash. And we sort of bucketed that into three places. We said roughly $2 billion of that was for our existing pipeline. It was for things like funding Immunovant, funding brepocitinib, funding Dermavant at the time. Roughly $2 billion of it was for new stuff, BD. We can talk about what that means. And then roughly $2 billion of it we viewed as kind of the excess that we started to return to shareholders via buyback program. So we've now bought back about $900 million in total. We have another, call it $600 million authorized under that program.
Right. So you guys are buying aggressively.
Yeah. So we bought back about 650 of that. We bought back from one holder at $9.10 a share in April. And then since then, we've been out in the market kind of pulling stock in.
Got it. Oh I see.
And so the idea there was to shrink the cash balance a bit and frankly, to own more of the company going into 2025, which as I said is a year we're pretty excited about. So then your question really focuses on that sort of middle two, right? The piece that we expect to deploy on new stuff. Now, I think what I've said in other forums is we'd like to do, call it one "big" and one "smaller" deal a year is probably like the pace that we're shooting for. But what big means for us is mostly big on the capital commitment side, meaning something like the TL1A deal, for example, where it's not so much that we were paying a lot upfront for.
That was 20 million or less.
It's not so much that we were paying a lot upfront for it, but our expectation was that we were going to spend $500 million running phase III programs in IBD, and so it was a big deal for us because it had a meaningful impact on our balance sheet, a meaningful impact on our capital commitments. All of which is to say, I think, and I think everyone understands this about us, but I think we are a bad sort of premium buyer of public biotech companies. We're just preternaturally stingy, so even big deals for us are going to look like relatively low upfront dollar things, but where we can deploy a lot of cash from an R&D perspective to develop assets in big opportunity sets with complicated late-stage development programs.
Do you guys think there's now this expectation that you have to pull at least one TL1A lookalike over the course of whatever next three big deals you do just because that was sort of like the recent track record? And is that something that sort of raises the bar internally as well on what do you do next?
I don't.
I mean, clearly you're trading on cash plus, so it doesn't look like there's a stock.
Right. I don't think anyone expects us to do that, is maybe the right word.
Are your holders sort of holding their breath for something along those lines that you'll find something like that again?
I do think we will find something like that again. I don't know if that's not a direct answer to why people are holding the stock. I think it is hard for people to believe the opportunity set that we see because, look, you and your sort of you all collectively, the sort of buy side, just like play a different sport than we play. And the sport that you play is like a very specific kind of competitive. Whereas the reason that we're able to do what we do is because the sport that we play is mostly not competitive. That is like the number of people around the table for the kinds of things we are looking at is small. And I think that's like hard for people to believe until we do things.
And so I think I don't know if we will ever get credit for the kinds of deals that we do as much as I think we'll get credit for the assets after we do the deals. I do think some of our holders like the upside sort of skew of being able to own the stock before such a deal. And look, if you owned Roivant in the fall of 2022, we were trading at $2-4 a share. And the value that's been created on top of that was in large part, though not entirely, a function of the TL1A deal.
Got it.
Even when we did the TL1A deal, the stock actually went down a bit. Let's be realistic, so. Somebody wrote a note saying it must have meant we got something wrong about it.
Right, right, right.
Somebody.
Makes sense. Makes sense. Okay. But therapeutic areas of focus, you guys are agnostic to it.
We're agnostic. Look, I think there's certain areas where there is a lot of value to concentration, like oncology. And those areas have been harder for us because we don't have a big concentrated portfolio already.
Is there areas you're saying you're not going to do? There's street buzz. You guys are saying CD19 bispecifics not for you.
We like CD19 bispecific.
Oh, is that right? Okay. There's buzz going around that you guys are walking around the list of 25 companies and you were saying, "This is not what we're going to play.
We do have a list of 25 companies or more that we like. It's a lot of things we like. We have a list of things that are interesting late-stage opportunities.
Got it.
But we like CD19 bispecific. In general, my view is like that field has gotten a little bit, specifically CD19, CD3 bispecifics have gotten like a little pricey lately. And I wish if we were going to pull the trigger, we pulled the trigger a while ago. But there's a whole bunch of stuff adjacent to that that I think is pretty interesting. And then I think there are development strategies for T-cell engagers that we could get excited about.
Got it.
But I think it's.
Okay. Until something happens, it's hard to value. Okay.
But I say it's never say never, but it's tough for us to write a $600-700 million check. And that's what some people have had to do to get into that game.
Got it. One last higher level, and I want to start to get into the pipeline programs. There's a question that was on my mind, but it's less relevant now, which was Vivek's shareholding at Roivant. And in a scenario, had he gotten a government job, would that have meant he would have had to liquidate? Like how would that dynamic have worked? I realize it's less relevant now because he doesn't technically have a government job as part of DOGE.
Yeah, I don't think Elon Musk is going to sell all of his Tesla shares. And therefore, I don't think Vivek is going to sell all of his Roivant shares.
Vivek's not buyers for that many shares.
That's right.
For Vivek's shares, you could probably buy it, but.
Look, I think Vivek has been a committed holder of the company. He has not sold a lot of stock over time.
Okay. But as a government employee, you can still hold on to your private holdings.
If you are appointed to a cabinet position in which there is a direct conflict of interest.
HHS.
Like HHS, for example, he might in that situation have to sell his stock. If he was appointed to any other cabinet position.
Manager says he was in the running, but he could still do that.
That's a better question for him.
Yeah.
It would surprise me personally if he wound up as HHS secretary. But lots of things in the world surprise me.
Got it. Okay, got it.
Anyway, that kind of thing I think could require.
But only in that scenario would there have been this dynamic to manage. But it sounds like even in that scenario, it's manageable because you guys were able to buy close to $1 billion from the marketplace.
That's right, and the truth is like, yeah, look, I think if he sold that stock into the market, there would be buyers for it and we would be one of them.
Got it. Okay, excellent. So maybe turning to programs more specifically, I want to start with perhaps the LNP platform because your mind first goes to some of the drugs. But on the LNP, what could the optionality look like in dollar size of a potential settlement or something along those lines?
Those questions are always obviously hard to answer in the middle of a litigation. The simplest thing I can say is there are $150 billion roughly in global COVID vaccine sales. When we've done deals in the LNP for COVID field, those deals have had royalty rates ranging from mid-single digits to mid-teens.
Really? That high?
If it was anywhere in that range, it would be a big dollar number.
Those without.
Those deals were all preclinical deals. They're not necessarily good precedent, but that's the data points we have our hands on.
Got it.
That's across both Pfizer and Moderna. That's across a bunch of different jurisdictions.
Got it. Okay, got it. And we get a summary judgment in the Moderna case in second quarter?
Yeah, summary judgment. Well, sorry, the summary judgment phase of the trial is in second quarter. What that means practically is there are a bunch of legal issues that will be decided then, and then the actual infringement case is a jury trial that is currently scheduled for September, so there will be an infringement and damages outcome in 2025.
September next year.
September next year.
Okay.
Summary judgment will be important, but it's not going to give the final answer.
Okay, fantastic. Excellent. Turning to Immunovant, perhaps I hosted Immunovant earlier today. So a lot of the nuanced stuff I actually did with them as well. So maybe let me start with the TYK2, JAK1 program.
Yeah.
First question, and I remember having a chat with Mayukh a couple of years back on this as well. Should it be our base case that there would be a black box for this program?
I think yes. That should be our base case.
Okay. And he was very realistic in that expectation.
Yeah, I think that should be our expectation.
But he was not in.
That's right. I think the answer to that question is yes.
Okay. So in that backdrop, for this specific indication that you guys are running the phase 3 and remind me the endpoint in dermatomyositis, how established is the endpoint that you guys are running?
Octagam was approved on total improvement score. It's the approvable FDA endpoint. It's widely understood in the doc community. It's where, yeah, so the answer is it's well established as an endpoint. It's one of these like.
So that's the mean TIS score?
That's right, and it's one of these composites though, really.
But do you not want to? So I'm thinking myositis, I'm thinking muscle weakness. So the first thing in my mind is as a patient, you would want to see muscle restrengthening. So when I look at this TIS score and there's all these domains in it, one of the six domains actually hits that manual muscle testing or extramuscular activity. Wouldn't you want to hit those domains in particular regardless of what the score looks like?
Well, and just to be precise on what you just said, the muscle testing is exactly what you're picturing. It's like people lifting weights. Extramuscular activity is actually the opposite of what you're thinking. I lift fewer weights. I should lift more weights. The extramuscular activity is actually the opposite of what you're thinking. That's like measures of skin and things that don't actually have to do with the muscle.
Oh, that's extramuscular.
That's extramuscular. That's other symptoms. Yeah, that's the dermato part. That's like other things that don't have to do with the muscle. Then there's also you look at various enzymes that relate to muscle breakdown. That's another way of measuring activity against the muscle. Look, I think those are really important enzymes. I think that's our endpoints. The sort of functional endpoints there like lifting and things like that are going to matter to patients. That said, remember, morbidity and mortality in DM is bad. These are sick patients. Many of them die within five years. It's like a tough disease, and so I think while it is.
So is there not a requirement to hit those muscle-specific domains in the context or as long as the mean TIS hits?
Hitting TIS is the approvable endpoint.
You have, is there an SPA on this?
There is not an SPA on it. It's not the kind of thing that you would get an SPA on. Again, Octagam, Pfizer's IVIG was approved on this. There is also, there has been an investigator-sponsored open-label study of tofacitinib in dermatomyositis. It's called the STIR study. That study showed meaningful improvement in TIS. It was open-label, so it's hard to compare exactly to what we expect. But yeah, improvement in TIS is the FDA-approvable endpoint.
There's also a dermatomyositis disease activity index. Is that a secondary endpoint? How important is that?
I think it is a secondary endpoint, although I don't remember 100% for sure. And the answer is, I think commercially, look, the honest answer is because there's so few options for these patients, I think the thing that's most important is just hitting on the primary. And I think if we hit on the primary.
When is the readout?
It's middle of next year. It's a 52-week study, and last patient, last visit was, or last patient, 1st visit was, this past summer.
Got it. And the unmet need is high enough that black box or no black box, investigator is more focused on the.
That's right. And this is not, so this is, it's about 40,000 patients in the US Again, the real, other than sort of steroids and ISTs and things like that, the only approved mechanism is IVIG, which is, you know, in addition to not working that well in DM, has other liabilities. It is what it is. It's an IV infusion.
Right, and it's very onerous.
It's very onerous. So I think the answer is the black box is not going to matter. And then, yeah, look, I think, yeah, that's it.
Okay. Okay. Sounds good. I want to talk about the SGC program.
Yeah, sure.
I don't know how many questions you guys get on that, on the.
It varies immensely. Some people ask us a lot of questions about it. Some people ask us.
On the PAH side?
Yeah.
Maybe let's start by, can you remind us your differentiation versus the Merck SGC?
Yes, so we and Merck both have what I would call sort of second-generation SGC programs. They are both, the main thing that is important about them is that they are inhaled SGC. In Merck's case, it's an inhaled SGC stimulator. In our case, it's an inhaled SGC activator. But the main thing about them that makes them different than Adempas, for example, is that Adempas was a systemic SGC stimulator. As far as difference from Merck, there are two that are particularly important. The one that is probably most important is that we have a 40-hour half-life and Merck has a three-hour half-life. And therefore, while Merck is attempting once-daily dosing, excuse me, it's not clear to us that they are going to be able to get the level of activity sustained over the dosing period, whereas we definitely can.
The other difference, which is more technical, which I think holds water, but is just like a little bit harder to judge, is so we are what's called an SGC activator. Merck is what's called an SGC stimulator. Those are actually different ways of interacting with the target. And in particular, SGC exists within the lung in a few different species. Some bound to heme, some not bound to heme. An SGC stimulator requires the heme-bound species in order to drive activity, whereas an SGC activator works across any of the different species of SGC. So in theory, you could imagine an SGC activator having more effect on things like cGMP production than an SGC stimulator. But in practice, we'll have to see how that data plays out. And it's going to be hard to disentangle from the fact that our half-life is so much longer than theirs.
Got it. As you, and I'm sure you've looked at the Merck PH data in a fair amount of detail as well. There was a strange inverted dose response. There was a low dose that was active, higher doses were not. But the more I heard you talk about some of the half-life differences in the heme, could that potentially explain the high variability we saw across the three doses?
I think the main thing that drove the Merck data, in my opinion, was just the short half-life, to be honest. You're looking at that drug is effectively placebo for more than half the day, and so it's just like a little bit hard to call it other than that, so that's probably my best estimate of what happened there, and it's one of the reasons why you see a difference between they had like relatively reasonable PVR reductions, but nonetheless didn't have a lot of disease activity benefit, and I think that's because.
On a six-minute walk.
On a 6-minute walk, for example. And I think that's because PVR is measured relatively shortly after dosing. And so they.
If the half-life is the only difference, presumably activity on the 3 doses should be more consistent. I was thinking more it's the heme difference.
The activator versus stimulator could be a difference. Exactly. That's right. I don't, but yeah, anyway, yeah. So I think certainly activator versus stimulator is a possibility. But I guess I also just think the dose response data is going to be clouded by the fact that the long-duration activity of the agent is going to be relatively limited because of the low half-life.
Okay, got it. Excellent. And the readout timing on this one?
Second half of 2026 is when I see it.
That's a phase II ?
phase II, yep. 120 patients, sort of a dose escalation study.
Merck just entered phase III, correct?
Merck is in a PH-COPD study, which is a phase II study. If they've started a phase III study in PAH, I'm not aware, but they just failed a phase II study.
They failed a Phase II study.
So I think they're in a phase II study in PH-COPD.
Got it. And how.
Which is a different patient population than PAH.
In your PAH trial, how do you control for sotatercept usage?
We're not studying in PAH. We're studying in PH-ILD, which is a subset of group 3 PH patients who have interstitial lung disease. And so sotatercept will not be. It won't be on market. That is, it won't be on label. And sotatercept does not currently have a PH-ILD study, I don't think.
No, no. They're going Group 2 PH.
That's right. So the other approved agent in PHILD is Tyvaso, which in the phase II, we exclude concurrent Tyvaso use, although we allow people who have been on Tyvaso in the past. But in the phase III study, when we get there, we are very likely to allow concurrent Tyvaso use. And my best guess is that PHILD will evolve similar to PAH. That is, that people will be on multiple agents.
Got it. My last question. I know you guys have a fair amount of exposure to Immunovant, and there are certain indications where Immunovant has a certain angle. For example, they can do continuous dosing, which not only makes the case for lack of bounce back in myasthenia gravis, but it also makes the case for a price point, which is half of the competitors because competitors are priced at a certain point with 4 weeks on, 4 weeks off.
With topical dosing.
So when you dose it continuously, their price is technically double. So there's all those angles at Immunovant, and I totally understand that. However, from your perspective, and you guys are sort of at the one level up as a capital allocator and thinking longer term, even beyond just the FcRn approaches, do you think a CD19 or a CD3 engager in general and its utility in B-cell depleters and their utility in myasthenia gravis and some of those indications, you would want to have exposure to that broadly just so you cover it from the FcRn side and from a different side as well?
Look, I'll say first of all, I don't. I think that CD19 T-cell engagers or other target T-cell engagers are going to work. And I think they're going to work well. And I think they're going to be an important part of the treatment paradigm for patients with MG and for other sort of IgG-driven diseases. I think they will not be, frankly, the thing. In some ways, the thing that is most remarkable about FcRn as a target is how safe these drugs have been. Like they're incredibly well tolerated. And it's very hard for me to imagine B-cell depletion being any kind of like first line or like these patients are going to walk around with like the idea of a CD19 T-cell engager is like very, very low B-cell counts for a while. You're going to have cases of CRS.
These patients are going to be in some cases on like IVIG and things like that in order to like manage like immune system risk during the first periods here. I think these are going to be like later line therapies that are going to work and be important and have in some cases, like I think you're going to see, as we've seen in some other cases with the CAR-Ts and things like that, you're going to see patients with like late-stage, very severe RA who like literally are getting up out of their wheelchair and walking. Like these are going to be amazing therapies. I think in terms of like our exposure, first of all, I don't foresee a massive impact on the FcRn class because I think FcRn is sort of necessarily going to be sort of earlier line therapy.
Second of all, if I'm wrong and CD19s eat our lunch, they're going to eat our lunch whether we own one or not. And so like the thing we should do is we should want to own other programs that are really valuable. CD19s could be really valuable. And if there's a good way for us to play in CD19, great. The problem that I have fundamentally with CD19 T-cell engagers as like an investment strategy, and maybe this is a little bit what we were talking about earlier, is everybody's already got one. So like you go into the CD19 T-cell engager space, you are competing now with like Merck and GSK and Roche.
Amgen.
And Amgen, like you're competing with like a whole bunch of really, really big, powerful institutions that are like able to throw a ton of money both from an R&D perspective and from a commercial perspective. We would really have to believe we had an angle in order for us to decide that that's going to be the highest ROI investment for us. And again, in a world where we're wrong about CD19 and they eat our lunch on the FcRn side, which I don't expect, then we just need to make sure the other things we're investing in are valuable.
We would probably invest in T-cell engagers, but my view is the things that I am most excited about in that space either are, you know, if you added targets or involved targets beyond CD19, where maybe there's like a possibility, at least you're making a bet on being differentiated from that like massive scrum of CD19 T-cell engagers, or to do something in that space like we've done with brepocitinib and to find an indication space that doesn't overlap with the others, like whatever, everybody's going to study in MG and lupus and things like that. Like maybe there are indications or places we can play that are like different from that sort of heart of the field. Because otherwise, I think it's just like a pretty scary competitive dynamic and very different from the competitive dynamics in FcRn.
In part, frankly, FcRn has proven to be a relatively difficult target to drug. And so the truth is like how many really good anti-FcRn antibodies are there in the world? Three, four, five? Like not very many. CD19 bispecifics turn out to be shockingly easy to make. And the way that I know that is there are probably 25 companies with CD19 T-cell engagers like at this conference. There are just so many of these things. And it just feels like it's a complicated competitive situation.
Excellent. Anything we missed we should have touched up on?
I think great year for 2025. I'm super excited. I think we're in a great position.
phase three data in the summer on dermatomyositis and then also phase two data next fall, so you have two big clinical readouts as well outside of everything else.
We have phase, I don't know.
And all the Immunovant readouts separately.
All the Immunovant readouts, we've got phase III data, we have the Moderna trial.
Oh, that's right. That's right.