Roivant Sciences - Q2 2025

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Roivant Second Quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephanie Lee. Please go ahead.

Stephanie Lee (Head of Clinical Development)

Good morning, and thanks for joining today's call to review Roivant's financial results for the second quarter ended September 30th, 2024. I'm Stephanie Lee with Roivant. Presenting today, we have Matt Gline, CEO of Roivant, and Ben Zimmer, CEO of Priovant. For those dialing in via conference call, you can find the slides being presented today, as well as a 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'd like to remind you that we'll be making certain forward-looking statements during today's presentation. We strongly encourage you to review the information that we filed with the SEC for more information regarding these forward-looking statements and related risks and uncertainties. With that, I'll turn it over to Matt.

Matt Gline (CEO)

Thank you, Stephanie. Thank you to the operator, and thank you, everyone for dialing in this morning. We actually have a relatively full update, so I'm excited to share. And there's at least one major new thing we're going to talk about, which is the 52-week data from our NIU study, which I'm pretty excited about. So starting on slide five, look, I think there's really two major areas of focus for us right now. And the first is clinical trial execution. We have a lot of ongoing trials, all of which are important and are going to generate interesting data coming in the near future here. Obviously, today we're talking about the 52-week data for brepocitinib in NIU in the phase II study. We're also the phase III study is ongoing with the first patients enrolled and with fast-track designations having been granted.

We presented this quarter batoclimab in Graves' disease. We are now getting our programs up and running for IMVT-1402 in both Graves' disease and in difficult-to-treat rheumatoid arthritis, as well as a number of other programs to be starting soon. We have initiated our phase II study of mosliciguat in PH-ILD. And then we have clinical data coming, including the namilumab in sarcoidosis by the end of this quarter, batoclimab data coming next year in MG, CIDP, and TED, and brepocitinib in dermatomyositis top-line data coming in the middle of next year as well. So that should be all exciting updates in the near future, all focused on clinical execution.

On slide six, the evolution of the business continues in some other ways as well, with the Dermavant deal having closed just a week or so ago, now allowing us to refocus on clinical execution, as I just mentioned, while maintaining a large share and potential upside from VTAMA. We talked about that not long ago. We've made some progress with our LNP litigation, with a Markman hearing in the Pfizer-BioNTech case in December, with a trial less than a year from now in the Moderna case currently scheduled. We've continued our plan of returning capital to shareholders. We've so far repurchased an aggregate of $754 million worth of stock as of 9/30, including $106 million in the quarter reporting today, with an ongoing commitment to be prudent and thoughtful in deploying this capital.

And then, of course, and I know this will be a topic of discussion, we have ongoing business development activities and multiple negotiations for potential and licensing of new programs that we are really excited about. This really does remain one of the most exciting environments for that activity that we've ever been in. As we've been saying for a little while here on slide seven, the next chapter for us is really anchored by our late-stage pipeline that includes IMVT-1402 and batoclimab together, our FcRn franchise. That includes brepocitinib, which we'll be talking about a fair amount today, our TYK2 and JAK1 dual inhibitor. That includes namilumab and mosliciguat and a number of other programs that we expect and hope to be bringing in in the near future.

Altogether, on slide eight, we think that really does give us one of the most exciting development stage clinical pipelines out there, with a path to a $10 billion-plus peak sales portfolio spanning multiple therapeutic areas, obviously including NIU and pulmonary hypertension as well as others, with the first approvals potentially coming in the next couple of years, as well as many phase II and phase III data readouts and a significant wave of approvals across new indications in the 2026-2030 timeframe. So really looking forward to the next handful of years here as our portfolio has time to mature and develop. So with that as the 30,000-foot overview, what I want to do next is make sure we give due time to the most significant of our updates for today, which is the 52-week data from our NIU phase II study.

And so I'm going to give just a really brief introduction here, and then I'm going to hand it over to Ben Zimmer, who's going to take you through the updates on that program in more detail. So look, on slide 10, I'm going to steal only a tiny bit of Ben's thunder. Basically, as you'll recall, in the spring, we presented the 24-week data, and it looked to be built like it supported a potential best-in-indication efficacy profile, data of a kind that the NIU field bluntly had not seen before. And the hope really was just to maintain that level of efficacy through 52 weeks. And I could say we've definitely hit that bar. We really only had one additional subject in each dose arm with a treatment failure, and we had sustained improvement from baseline on important metrics like retinal vascular leakage, CST, and macular edema.

So really, really exciting data. No new safety or tolerability signals. The safety database at this point, as you'll know, comprises 1,400 exposed subjects and patients and is consistent with approved and widely prescribed JAK inhibitors. And we've got fast-track designations from FDA and NIU with patients currently enrolling. So that's the 30,000-foot overview, but the data is pretty exciting. So I want to hand it over to Ben Zimmer, as I said, the CEO of Priovant, who's going to take you through the next slides here and walk through the actual data. Ben, take it away.

Ben Zimmer (CEO)

Great. Thanks, Matt. Before going into the 52-week data, I just wanted to briefly highlight two tailwinds in immunology that we are really excited about as it relates to the brepo phase III programs in NIU as well as in dermatomyositis, and these are outlined on slide 11. The first on the left-hand side is, you can see that as a category, JAK inhibitors have roughly doubled since 2020 in terms of both treated patients and revenue. And I think this really speaks to the fact that the benefit-risk profile of these agents and physicians and patients' comfort with that benefit-risk profile is quite established at this point, and that even includes indications with significantly less morbidity than those in which Priovant is operating.

Then in terms of those indications where Priovant is operating, these orphan diseases with high morbidity, we've also seen over the last few years several launches in those, including the ones laid out on the right-hand side of this slide, that have really validated this category of indication as a source not only of blockbuster revenue, but blockbuster revenue that can be achieved in a very quick timeframe given the prevalence of the disease, high morbidity, high unmet need, and concentrated prescriber base with orphan pricing. So if you turn to slide 12, you see that NIU really fits this phenotype quite on the money around 70,000-100,000 patients in terms of prevalence, very high morbidity, fourth-leading cause of blindness in the developed world among the working-age population, very little available for patients, and concentrated prescriber base.

Most of these patients are seen at dedicated uveitis specialty centers, and turning to slide 13, we see, really supporting this, a new claims analysis that we did with IQVIA, which reconfirms once again the large number of patients receiving biologic therapy and TNF therapy in particular. In 2022, about 40,000 patients with NIU receiving a TNF inhibitor, including Humira and off-label TNF inhibitors. That number, as you can see, is growing quite significantly and includes, between off-label TNFs and other biologics, a large number of off-label therapies, and we know both from real-world experience and from clinical trials that Humira is only effective in fewer than 50% of patients with NIU.

So I think this data here really speaks to both the large commercial opportunity in the TNF refractory population, but also with all of these off-label therapies, the urgency that physicians and patients feel to find something that does work and the willingness to try that and try it aggressively. And we think that speaks to the additional opportunity for brepocitinib, given our data potentially in the broader non-anterior NIU population. So with that context, I'll turn to the data itself. Just a brief reminder on slide 14 of the design of the phase II Neptune study.

This enrolled patients with active non-anterior NIU, randomized two to one to brepocitinib 45 milligrams and 15 milligrams, consistent with past studies, including the registrational study for Humira, as well as the treatment paradigm in NIU, given how sick these patients are and are in need of immediate therapy to avoid the risk of blindness. All patients in both arms receive a two-week 60 milligrams per day steroid burst and then are rapidly tapered off those steroids. And the primary goal of the study then is to prevent treatment failure. Notably, as a reminder, in the NEPTUNE study, the taper occurred over six weeks to week eight, while in pivotal studies, including the Humira VISUAL-1 study, it occurred over 13 weeks. So the study was designed really to set actually a higher bar for brepocitinib, make it more difficult for it to demonstrate efficacy.

And so against that backdrop, we're very excited with the results that were generated. Turning now to slide 15 to walk through that, we start with the primary endpoint from the NEPTUNE study. On the left-hand side of the slide, you see what was the primary endpoint, which was the 24-week treatment failure rate, which we've shared previously. Then on the right side, we have the updated data at week 52. In both cases, measured here against the historical placebo rate from the VISUAL-1 study. As Matt mentioned, only one additional patient met treatment failure criteria in each arm. Excellent data sustained after week 52. You'll recall that Humira's failure rate at week 24 was over 50% using this analysis that includes discontinuations with 62%.

And although AbbVie did not specifically report a one-year failure rate, their rate based on the data that was published was well in excess of 70% under this analysis. And probably the most effective way to compare to Humira now, which we do on slide 16, now that we have one-year data from the NEPTUNE study, is against what was the pre-specified primary endpoint in the VISUAL-1 study, which was median time to treatment failure. And you see that on slide 16 with three months for the placebo arm in VISUAL-1, 5.6 months for the active arm. So again, reinforcing that the median patient fails before six months. So more than half of patients, even just at the six-month mark, let alone the one-year mark, are not able to receive benefit.

And then you see, in contrast, in brepocitinib, the low-dose arm median time to treatment failure, 9.3 months. And in the high-dose arm, as we did not get to a 50% treatment failure rate, even at one year, it's not estimable over 12 months. So very exciting data on treatment failure. And on slide 17, we also see that clinical data supported by what's really the gold standard biomarker for measuring ocular inflammation, which is wide field fluorescein angiography measurements of retinal vascular leakage. And you see here on the left side data for the high-dose arm, brepocitinib 45 milligrams. On the right side, the low-dose arm, brepocitinib 15 milligrams. The top row is the week 24 data, which we presented at the EURETINA conference this fall. And then the bottom is the new 52-week data today. And you see really great data, particularly from the high-dose arm.

No patients worsening, most of the patients improving. And that improvement from week 24, which was already quite significant, not only being sustained out to 52 weeks, but actually even increasing slightly. And then you see at both time points a very clear dose-response as it relates to the 15 milligram data. So very exciting data here that I think resonates quite a bit with the ophthalmology community in particular. Turning to slide 18, wanted to share an update as well on our macular edema data. I think this is one where the 52-week data is particularly important because macular edema in uveitis patients really develops over time as a medium- to longer-term consequence of inflammation.

So even if inflammation can be gotten under control to the point that it's not impairing visual acuity in the short term, low levels of inflammation over time can lead to macular swelling and ultimately macular edema, which of course is one of the causes of blindness in uveitis patients and significantly impaired vision otherwise, and so week 24, as you'll recall, we had quite exciting data in the 45 milligram arm of the 10 patients who did not have macular edema at baseline, none developed it, and of the seven patients who had it at baseline, three out of those seven had resolution.

But at the time, we were very eager to see the extent to which that held up at one year and very excited to share that it held up, as you can see here, quite well with no new patients developing macular edema and the three who had resolution maintaining that resolution. And again, this compares quite favorably to Humira, which is generally viewed by physicians in the real world as not being super effective at preventing the onset of macular edema. And you see that's actually supported by data from the VISUAL-1 study where at one year of patients who did not have macular edema at baseline, half of them had developed it at one year. And in the placebo group, that was at six months. So again, a small number of patients.

We're excited to see what the phase III data looks like, but certainly very promising in terms of the potential of the drug, and then just very briefly on slide 19, wanted to further reinforce the robustness of this by looking at mean CFT over time, and you see here, in addition to the great data in the 45 milligram arm, a clear dose response with the 15 milligram arm, which is great to see, as well as time course data that is consistent with what you'd hope to see, particularly looking at the 45 milligram arm, very rapid onset of effect in the first few weeks, even while the steroid taper has already begun at week two, and then that is clearly sustained over time out to one year, so very excited about the phase II data.

We're already excited after six months, even more excited now after one year. At Priovant, we're already really focused now on the phase III, not the phase II. Excited to share, as Matt mentioned, and as we announced a few months ago, that enrollment of that study is underway and off to a great start. You see on slide 20 here the schematic for the study, very closely modeled on the phase II, as one would imagine. We are advancing only the 45 mg dose into phase III with patients randomized one to one for brepocitinib 45 mg against placebo. This study is a single protocol, so technically one study, but with two identical sub-studies. So it will be reported out as two studies, CLARITY 1 and CLARITY 2, 150 subjects per sub-study, so 300 subjects total.

The primary endpoint will be time to treatment failure, so the same primary endpoint as the VISUAL-1 study. That will be over period one, which is one year of placebo control data. Secondary endpoints will include all of the same measurements as the NEPTUNE study. Notably as well, we are maintaining the rapid steroid taper that we've seen that we've done in the NEPTUNE study based on the great data we had in spite of that taper. We saw no need to change that and are excited to be bringing that forward and really hopefully setting a new standard for uveitis clinical trials in terms of what therapies should be expected to demonstrate. We did have a productive meeting with FDA over the summer, and this design incorporates their input.

We're confident that if we're able to deliver successful results, it will support an NDA filing. All in all, really a lot of excitement around NIU, around the NIU program and brepocitinib's potential there. I did want to highlight, as briefly, before handing it back to Matt. As Matt mentioned, actually, although we're very excited about the phase III NIU program, even before that, we're going to have a readout of the phase III dermatomyositis program, which is fully enrolled and will be reading out next year. I just wanted to highlight on slide 21 that similar to NIU, this again really meets the criteria of the attributes that we've seen being conducive to a very rapid blockbuster revenue potential indication.

Again, prevalence of around 40,000 adults in the U.S., very high percentage of these patients are in the active treatment funnel, as I'll walk through on the next slide. This is a very high morbidity indication with really nothing available for patients in terms of modern therapies, mostly just steroids and IVIG, and again, concentrated prescriber-based, our claims analysis suggests that about half of these patients are treated at a few hundred tertiary centers of excellence, and on slide 22, this provides just a bit more color on kind of what these patients are currently being treated on and where they stand. You see on the left here, as mentioned before, around 35 patients in 2022 actively treated with late-stage therapies for dermatomyositis. Notably, all of the steroids referenced here are oral or injectable, and in no cases did we count topical steroids.

You can see on the left-hand side of the slide that over 50% of these patients are treated with polypharmacy. So I think it really goes to how sick they are and how limited the efficacy of the currently available treatments are. Then you see on the right-hand side a different cut of the same data, which just looks at for any patients on each of these supposedly steroid-sparing therapies in terms of ISTs, biologics, and IVIG, that they're not really achieving that goal in terms of steroid sparing, with over 50% of patients, or some groups, roughly 50% receiving greater than 10 milligrams per day of oral steroids chronically. So we're really excited about the DM data readout, and we think that if brepocitinib's approved, this claims analysis really supports a large bolus of potential demand for rapid adoption early in the launch.

So before handing it back to Matt, really just to wrap up my section on slide 23, we've been working on really just, as Matt mentioned, development execution over the last few years at Priovant. And I think starting next year, that really tees us up to have some major value inflection with the upcoming phase III data in DM, NIU study to follow soon behind that. We are also planning to start studies in additional orphan indications in 2025. And as I mentioned at the beginning, doing all of this into an environment with quite a few commercial tailwinds. So really excited about what's ahead. And with that, I'll hand it back to Matt.

Matt Gline (CEO)

Thank you, Ben. And as I said, really excited about that data as well. So I appreciate all the work the Priovant team has done there and looking forward to what's coming. So I'm going to now breeze through a couple of other updates that are rehashing some things that have happened over the past couple of months that we are excited about, starting with a reminder of what's going on in our anti-FcRn franchise.

On slide 25, I know everyone's familiar with this data, but we're just really thrilled with it. We've put out some really, really good proof of concept data in Graves' disease, which we think positions IMVT-1402 to be a potentially best-in-class and a first-in-class program in that indication. As you'll remember, we had an over 75% response rate in patients who were uncontrolled on ATDs, with over 50% of patients becoming ATD-free, being able to completely titrate their ATD dose and getting to normal T3 and T4 levels by 12 weeks.

We continue to support our premise that deeper IgG reduction is important with our subQ 680 dose with deeper IgG reductions driving meaningfully higher response rates, which gives us a position for IMVT-1402 to be potentially best in class. And that's against the backdrop of a very high unmet need with 25%-30% of Graves' disease patients uncontrolled or intolerant to ATDs, and really with no pharmacologic options. And now, as Immunovant has announced, the 1402 IND has been cleared by FDA, enabling a straight-to-pivotal transition. I won't go through the data again in great detail, but on 26 and 27 and 28, we repeat that data. It's really exciting data for a disease with really no other options for this portion of the population.

The other announcement from Immunovant on slide 29 is the first of several new indications now that Immunovant is planning to get started in, which is in difficult-to-treat rheumatoid arthritis, so this is a subset of the RA population between 5%-20% of the patient population that has failed at least three therapies, and what we've seen from another FcRn program from nipocalimab is that specifically in ACPA-positive RA patients, this is associated with severe disease and poor outcomes, and the in-class data from nipocalimab suggests that those patients respond to FcRn therapy even when it delivers comparatively lower IgG suppression than we believe 1402 would be able to deliver. This study design is built to read out quickly with a quick answer. It's got an open label read-in with a randomized withdrawal design that means that all of these patients are going to get on therapy.

We think enrollment should be a relatively straightforward proposition, and we'll get data quickly, which is something we think is valuable for the overall 1402 program. And again, we think our deeper IgG suppression is going to help meaningfully, given the data that we've observed from others. If you look at slide 30, just a reminder on that patient population, this is a big population of patients. People think about RA, they think about sort of the full bolus of the 1.5 million U.S. RA patients. But for a subset of those patients, they just can't get treatment. They try multiple lines of therapy. It's just not working. And we're focused specifically on those patients who are ACPA autoantibody positive. This is a subset of patients that is quite sick and really lacks for good options. So again, I won't go into all the detail here.

The Immunovant team did a great call to KOL just last week on this, but on slide 31, as a reminder, the two indications we've announced so far for 1402 are Graves' disease, where we ought to be first in class, and RA, where we think we have clear potential to be best in class. We have a number of other indications coming. The Immunovant team has indicated that five INDs have been cleared by FDA, so we're excited to talk about more of those indications, some of which are known to the public and some of which are not yet known to the public in the weeks and months to come, and as we're more excited for some of those as I am for some of the ones we've already announced, so stay tuned, but excited to see that program developing.

And then finally, on the clinical side, and again, I won't go through it in great detail because we spent time on it on a call earlier this fall. As you'll recall, this quarter, we unveiled mosliciguat, which is our phase II inhaled sGC activator for pulmonary hypertension patients with interstitial lung disease. Really excited for the potential of that program. I've talked to many folks about it since we unveiled it. I think it could be a really great program for these patients, again, with few treatment options in a market that's now been validated by the very strong continued launch of Tyvaso. As a reminder, on slide 34, mosliciguat has shown among the highest PVR reductions ever seen in either a single or repeat dose setting in a way that makes us excited for the possible translation of that to overall improvement in these PH-ILD patients.

And we're not totally sure even that we've seen the best of that PVR data on slide 35. You can see the PVRs continue to improve at the time point where they were measured. And this is maybe one of the most important pieces, and there's one piece of new data I'll share in a moment here, a really great dosing profile and formulation with sort of one puff once a day dosing for these patients. And one of the things that we think is really important here is that as an inhaled sGC activator, we don't have systemic vasodilation. And we've gotten some questions as we've been out talking about the program about how we are confident in that. Obviously, the systemic exposure data that we've talked about is very helpful. We do not see meaningful levels of systemic exposure in assays.

But the other evidence we have, this is the first time we've put this out on slide 36, is that this is from a different phase I study of mosliciguat. This is from a multiple ascending dose study in healthy volunteers. And what you would expect if you were getting systemic vasodilation is an impact on systemic systolic blood pressure. And you can see on slide 36, we've got a couple of dose arms here. This study did not go all the way up to four milligrams, but it's got about a half a milligram, one milligram, and two milligrams. And you can see there's really no discernible pattern. And in fact, you would expect if we had systemic exposure reductions in systolic blood pressure. And in fact, the lowest dose arm here is placebo. So this gives us additional confidence that this drug is not having a systemic impact.

So with that, I'm just going to turn a little bit to the future, and then in just a minute, we'll open the lineup to questions. So on slide 38, I talked about this in August, but I am just super excited for where we are right now. In the next 18 months, or this slide goes out 24, we have a number of really exciting large value creation opportunities, including things like the near-term data of namilumab sarcoidosis, which, as we said, is a little bit higher risk. It will be a huge opportunity to be successful, as well as multiple late-stage readouts. Ben talked about brepocitinib and in DM. We have a number of really important, we think, highly value-creating readouts from batoclimab and Immunovant. We have important updates in our LNP litigation.

And then at the tail end of this period, the second half of 2026, we get that phase II data from mosliciguat. So this is a period, even with our existing pipeline, without thinking about business development that is stacked with catalysts. And then, as I've said a few times, we just could not be more excited for the business development environment we're in. And although everything takes a little bit longer than you want it to, I am chomping at the bit waiting to share some of the things we're working on. So continue to give us a minute, and when we're ready to share that, I think you'll agree it's pretty exciting. A brief financial update on slide 40, just to say, continue to be careful on managing burn.

I think you'll see, especially with Dermavant now out of the picture, these numbers will come down in the coming quarters and with some one-time expenses behind us. R&D expense of $143 million or adjusted R&D non-GAAP of $132 million, G&A of $203 million non-GAAP of $142 million, and that includes some pretty significant one-time expenses. Overall, loss from continuing operations $237 million or adjusted of $219 million. We ended the quarter in a very strong cash position with $5.4 billion of cash.

Again, most of the dollars we spent in the recent months have been on the share repurchase, including the Sumitomo dollars, and no debt on our balance sheet following the closing Dermavant transaction. The credit facility was repaid at closing and Organon acquired all the remaining debt and our share count that continues to come down over time as we repurchase shares. So with that, I'll just end by pointing you to slide 42, which lays out the timeline for our upcoming catalysts. And I will end there. I'll say thank you again to everybody who's listening this morning, and I will hand it over to the operator to begin Q&A.

Operator (participant)

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Louise Chen with Cantor. Your line is open. Please go ahead.

Louise Chen (Managing Director)

Hi. Congratulations on all the progress and the data today. Thanks taking my question.I had two on brepocitinib, but I wanted to ask you what type of efficacy you'd like to see in your phase III NIU trials. And then also for brepocitinib and HS, where do you stand and what's the latest update there? Thank you.

Matt Gline (CEO)

Yeah. So I'll let Ben take both those questions. Other than, I'll say what I hope Ben will say is we're very happy with the efficacy we've seen in phase II, and I think it gives us a pretty wide margin relative to the competitor programs like Humira. But Ben, take it away.

Ben Zimmer (CEO)

Yeah. I would agree with that. I think anything that even approximates the phase II would be terrific. And I think even if there's some standard drop-off in efficacy that one often sees between phase II and phase III, this is a space where there's very little available for patients. TNF inhibitors are widely used in spite of their quite limited efficacy. And so I think anything that gets the drug approved would support widespread adoption. And certainly, anything that supports a potential better product profile than Humira would support widespread adoption, potentially even in the first-line setting.

Matt Gline (CEO)

Yeah. And then on HS, and Ben, you can jump in if you have any comments as well. But I guess what I'd say is I can say this from the outset. I've been really happy with the work that the Priovant team has done on indication expansion, and we have some other ideas. HS is a great indication. We have very good phase II data in it. It's a competitive field with a lot of other mechanisms, and there are some great places to take brepocitinib that may be less competitive. But we're continuing to consider a wide variety of indications, and certainly, HS remains on our radar.

Ben Zimmer (CEO)

Yeah. Don't really have much to add to that.

Matt Gline (CEO)

Thank you, Louise. Thanks for the questions. Really appreciate it.

Operator (participant)

Thank you. And one moment as we move on to our next question. Our next question comes from the line of Brian Cheng with JPMorgan. Your line is open. Please go ahead.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Hey, guys. Thanks for taking our question this morning. Maybe just a question on CLARITY design. Are you requiring patients to have a certain steroid dose for entry? And are there any stratification strategy that we should make note of? And also on the studies between CLARITY-1 and CLARITY-2, what is the difference here? Is there a geographical location difference?

Matt Gline (CEO)

Great. I'll let Ben take all of those.

Ben Zimmer (CEO)

Yeah. So in terms of steroids, there's no specific requirement. Patients are allowed on any background steroid dose of up to 40 milligrams per day or no steroids at all, and again, with the notion that because there's the two-week burst at the start of the study, that kind of neutralizes whatever the background regimen was before. In terms of stratification, no particular stratification of material note. In terms of the two sub studies, sites will be assigned to one or the other. Some geographies like the United States and certain other larger geographies will have sites in both sub studies. Then there's certain countries that will only be in one or the other. Thanks, Brian.

Brian Cheng (Executive Director and Senior Biotech Analyst)

Appreciate it.

Operator (participant)

Thank you. Thank you. One moment for our next question. Our next question is going to come from the line of Yaron Werber with TD Cowen. Your line is open. Please go ahead.

Joyce Zhou (Research Analyst)

Hey. Good morning, guys. This is Joyce on here. Thanks for taking our question. Can you talk about your thoughts around pricing for brepocitinib? Of course, orphan price point here, but how should we think about pricing by indication? Thank you.

Matt Gline (CEO)

Thanks. Look, appreciate the question. Thank you for asking. Look, it's obviously premature to have a firm view on pricing for a program at this stage. We're focused on orphan disease with high unmet needs, so we think a pretty wide range of prices is supportable. What I would say, and I'll give it to Ben to answer as well, is the only thing I'd say is other competitors in dermatomyositis have talked about net pricing in sort of the high $100,000 range. I think that's a useful benchmark for us as we think about the range of possibilities in that indication. But other than that, I think a pretty wide range of what's possible.

Ben Zimmer (CEO)

But yeah, I'm now just echoing what Matt said. I think if you look at benchmarks for recent orphan launches, including both biologics and small molecules that have been at similar price points, that's obviously the kind of band and range we'll be looking at. But we don't have any sort of firm decisions or plans at this point in time. Thank you.

Operator (participant)

Thank you. And one moment for our next question. Our next question is going to come from the line of Andy Chen with Wolfe Research. Your line is open. Please go ahead.

Andy Chen (Director, Senior Analyst, and Equity Research)

Hey. Good morning. Thank you for taking the question. On uveitis phase III, can you talk about what placebo response you're assuming? So in the Humira trial, I think they saw 13 weeks or three months. But in your trial, you have a more stringent tapering. So your tapering is eight weeks versus the Humira trial, which was, I think, 15 weeks. So in other words, are you assuming 13 weeks? Is that going to be the placebo response on the primary endpoint? Is it going to be less than 13 weeks, or should we be assuming that it's going to be less than 13 weeks? Thank you.

Matt Gline (CEO)

That's a great question, Ben.

Ben Zimmer (CEO)

Yeah. I mean, I think as a base case, our assumption was a similar placebo rate to what was seen in VISUAL-1. We think there's opportunity potentially for it to be even higher for the reasons you said with the taper, but we didn't want to assume that. In general, the study is actually overpowered. So even if the placebo rate ends up being significantly higher or the failure rate significantly lower in the placebo group than we expect or than we saw in VISUAL-1, we'd still have an opportunity to detect the difference, just being humble about the fact that this is an area where there's really just one precedent study.

We wanted to err on the side of being conservative, and that's why we're running as large a program as we are. And one thing that's patient-friendly about the study, as a reminder, is that it's an event-driven study. And as people fail, they'll move right over to brepocitinib, which some of your patients will like about the study. Thanks, Andy. That was a great question.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Douglas Tsao with H.C. Wainwright. Your line is open.

Douglas Tsao (Managing Director of Equity Research)

Please go ahead. Hi. Good morning. Thanks for taking the question. Matt, just on that last one, do patients automatically switch to brepocitinib if they have treatment failure, or do they have the option to switch? And is there a sort of alternative protocol that they could pursue?

Matt Gline (CEO)

They automatically switch to brepocitinib. Obviously, they can drop out of the study if they wish and do not have to take brepocitinib. But if they want to stay in the study, the kind of first fail, and obviously, we don't know whether patients are on placebo or drug, or neither do the investigators. So the first rescue medication in the event of failure is brepocitinib along with some other different options that the investigators have to deploy along with that. And then if the patient then fails for a second time in the open label period, then there's an even wider array of options that the physician has available. And then at that point, the patient can choose whether or not they want to stay on drug and can still remain in the study.

Douglas Tsao (Managing Director of Equity Research)

Okay. Great. Thanks. And just as a follow-up to Matt, from a business development standpoint, obviously, with mosliciguat and the creation of Pulmovant, we have sort of gone beyond what had been a short-term focus on IND. I'm just curious how you're thinking about Roivant from a therapeutic category standpoint right now. And does this move respiratory like a big focus for adding additional assets, or you're just going to continue to be, as you put it, sort of ruthlessly economic and seek out the best opportunities as you identify them? Thank you.

Ben Zimmer (CEO)

Yeah. Thanks, Doug. It's a great question. It's one you've been focused on, and rightly so. I think we are pretty ruthlessly focused on doing the best things we can. The analogy that I've been using that you might have heard lately is that we exist in the excess dough outside of other people's cookie cutters. And so we're not the snowman. We're not the Christmas tree. We're the dough in between the two. And that means we've kind of got to be flexible in terms of therapeutic area. But we think there's a lot of really great, a lot of really great cookie to bake out of that dough as well.

Douglas Tsao (Managing Director of Equity Research)

Okay. Great. Thank you.

Operator (participant)

Thank you. And one moment for our next question. Our next question comes from the line of Dennis Ding with Jefferies. Your line is open. Please go ahead.

Anthea Li (Equity Research)

Good morning. This is Anthea on for Dennis. Thanks for taking our questions. Two on DM. Could you talk about your plan to share the full lupus data and if you see any overlaps between lupus and DM? And then also, what's the willingness from doctors to prescribe JAKs in DM, and how much off-label use is there currently, if any? Thank you.

Matt Gline (CEO)

Yeah. Thanks. That's a great question. I'll take a part of it and then hand it over to Ben. Look, on lupus, my only reminder is about two things. One is a reminder. Pfizer designed and ran the DM study. It was one of, sorry, the lupus study. Thank you. It was one of the last ones from their original brepocitinib program.

I guess on the overlap point, and I'm sure Ben would say something similar. We have so much data on brepocitinib across such a breadth of indications at this point that any one study and any one indication is really not as informative as the overall body of data on how efficacious the drug is. So I'm not sure we see a lot of specific commonality between SLE and DM or any prediction from SLE related to DM. But Ben, do you want to take that as well as the off-label JAK use question?

Ben Zimmer (CEO)

Yeah. I don't see a ton of read-through there. I mean, I think one lesson from these sort of rheumatic diseases in general and our lupus data was an example of that is you have to be very focused on managing placebo response. That's something I can't say that in the DM study where we've designed it and are running it ourselves, we've been extremely focused on that, including with a mandatory steroid taper in the study and a very high operational focus from our team on ensuring adherence to that taper, among other kind of study execution-related steps we're doing.

As far as JAKs in DM, yeah, they're used pretty extensively. There was a recent publication that was kind of a literature review of case reports, and there were 600 published case reports roughly in that across DM and juvenile DM in that. I think if you talk to KOLs and other prescribers and other DM treaters, you'll see that they do use JAK inhibitors. I think it's certainly an area of a lot of comfort.

Most of the treating physicians here will be rheumatologists and dermatologists, a few neurologists as well. But both rheums and derms are also obviously very comfortable with JAK inhibitors from other indications as well. And as I mentioned before, both rheumatic and derm indications with less morbidity than DM JAK inhibitors that are on label for those indications are widely prescribed at this point. And so I think there's a lot of excitement in the physician community about JAK inhibition. I think there's a lot of excitement about a TYK2 JAK1 inhibitor in particular, given the alignment of that particular mechanism to the pathobiology of DM and really just the prospect of having a once-daily oral-approved therapy that's efficacious and targets the underlying disease. That would be a new and important development for the field.

Anthea Li (Equity Research)

Great. Thank you.

Operator (participant)

Thank you. And one moment for our next question. Our next question comes from the line of Corinne Jenkins with Goldman Sachs. Your line is open. Please go ahead.

Craig McLean (Research Analyst)

Hey. Good morning. This is Craig on for Corinne. So the first question here is, given the emergence of Humira biosimilars, how do you expect brepocitinib could be positioned if it potentially gains approval? And then from there, will you recruit or target patients that are refractory to anti-TNF-type medicines within CLARITY?

Matt Gline (CEO)

Yeah. Ben, do you want to take a first crack at both those?

Ben Zimmer (CEO)

Yeah. So what was the, sorry, the first question was just how do we try to position brepocitinib relative to Humira biosimilars?

Craig McLean (Research Analyst)

Yeah.

Ben Zimmer (CEO)

And then the second was, will we recruit refractory patients?

Craig McLean (Research Analyst)

Yeah.

Ben Zimmer (CEO)

So on the first one, look, I think our base case kind of view of the market here is to be used predominantly in the TNF-refractory population. I think we're going into this with a lot of excitement about brepocitinib's potential in NIU, even if that is the only population into which we're launching. I think, as I mentioned before, Humira's failure rate is high, and its use is high. And I think with biosimilars available, we'd expect the use to be at least as high and the failure rate to be at least as high. And so I think that will only lead to an expansion of the TNF-refractory market.

I also think that this is a rare disease, very high unmet need, one of the leading causes of blindness in the United States. If our data is actually differentiated from Humira, there is going to be a very significant outcry from patients and physicians to use this drug first line because people don't want to go blind, and they want to use whatever the best available treatment is to prevent that.

Craig McLean (Research Analyst)

And then there's the study.

Ben Zimmer (CEO)

Oh, yeah. And then no. So there's no particular stratification or requirement in that regard. That's something we discussed with FDA. It's not something they are focused on in the study. I think our expectation is that we will be enrolling a number of patients who have been on prior TNF therapy, just given the extent to which these drugs are used, and we'll be tracking that and be able to analyze those subgroups. But it's not something that we're in any way stratifying for or pre-specifying. Yeah.

I would just reiterate, tolerance for ocular inflammation is very low. I think if brepocitinib improves, as the phase II data suggests may, to be a best-in-class agent with a pretty wide margin, there's just going to be a lot of demand to use it in an earlier setting as people can get comfortable because that's how you treat this disease most effectively. We'll see. It's going to be a conversation with FDA and so on. We feel confident, given the profile of phase II data, that we have a good shot at a bigger population even than the refractory population, acknowledging also that the refractory population is very large.

Craig McLean (Research Analyst)

Great. Thank you very much.

Operator (participant)

Thank you. I would now like to hand the conference back over to Matt Gline for any further remarks.

Matt Gline (CEO)

Great. Thank you, operator. Thanks, everyone, for listening this morning. Thanks, obviously, to Ben and the Priovant team for the phase II study in NIU and for getting the phase III going. Thanks to all the patients and investigators. Thanks to the entire Roivant team who gets these results together and then moves us forward every quarter. Looking forward to a little bit of a busy end of the year with the namilumab data coming and then a very busy 2025. So we'll talk to you all very soon. Thank you. Have a good day.

Operator (participant)

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