Q2 2022 Roivant Sciences Ltd Earnings Call
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[music].
Good day and thank you for standing by welcome to the Boy you bet.
<unk> 2022 earnings.
Conference call at this time, all participants are in a listen only mode.
After the speakers.
That would be a question and answer session.
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I'd now like to hand, the conference over to your Speaker today, Jeffrey comments head of strategic Finance. Please go ahead.
Good morning, and thank you for joining today's call to discuss financial results for the quarter ended September 32022.
Presenting today, we have Matt Klein, our Chief Executive Officer.
The dialing in via conference call you can find the slides being presented today as well as the press release announcing his update on our IR website at Www Dot Investor Dot Raymond.
We'll also be providing the current slide numbers as we please.
To help you follow along I would like to remind you that we will be making certain forward looking statements that reflect our current expectations, including those related to our financial performance.
Angela attributes of our products and product.
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 these forward looking statements.
The related risks.
We will begin with Matt Klein, who will review key business updates across right in front of that and provide a financial update we will end the call.
Q&A.
And with that I'll turn it over.
Yeah.
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.
Some updates from the quarter and more recent.
Some of these updates we already shared last week as a consequence of the financing that we did and some of them are new and.
And instead I look forward, Jeff sharing everything.
We're going to cover a few topics at notably I can start with a discussion on the launch of the camera and then we'll go through some clinical updates and some other updates around the business as well as the financial update at the end.
So I'm going to start on slide six.
With just an update on the became a launch and really a reminder.
We are.
Really really pleased with how this launch is going.
So you can see that the script data here, including for the quarter itself as well as for the more recent periods.
We continue to see we continue to see great growth in scripts.
We're very pleased with that I will talk a little bit more about the revenue.
Also excited to announce that we did $5 million in net product revenue for that for the quarter ending September 30.
One 5% net yield.
Which I'm, giving you that all occurred prior to the signing of RPM contracts again.
A testament to the quality of our scripts into the number of docs, who are willing to go through that prior authorization process.
Joe.
On slide seven one of the most important updates here is we have our first major PV on payer contract signed we indicated that would be coming for the end of the year and we're very pleased that it was effective as of October 1st.
We haven't said, which patriots win but most importantly, it gives us exactly the kind of coverage and access that we wanted.
Requiring only an automatic look back.
For steroid on the patient's chart.
Or if the physician prefers in gestation.
Prior to steroid use which is a really easy bar to clear. So this is.
Better than what we had initially hoped for in terms of the quality of coverage, indeed insurers because close to 90% of psoriasis patients use of topical steroids.
As first line therapy.
Us.
Really accessing all of the patients that we are focused on and notably as we said, we're still focused on becoming a mainstay of therapy, ultimately supplant them steroids, which means of course.
<unk> access is straightforward and as a reminder, as countries in this contract.
And our sort of co pay card.
Any covered claim with the pharmacy, you should have a zero dollar co pay for patients and so this should create a really positive experience for the patients covered here as well.
So on.
On slide eight I'll also just remind everybody. We're obviously pleased to have a once youre growing in absolute terms. We also were pleased with how this looks relative to other <unk> launches that we've observed we became the number one most brent topical eight weeks into our launch them. We've comfortably stayed there since.
And we continue to keep pace with the launch of <unk> Lora, which is notable because at floors any Catholic dermatitis has about four times as many scripts to draw from where now meaningfully over 50000 prescriptions written number over 6000 about 6400 unique prescribers since launch.
Broad prescriber base.
And volumes that were really happy with at this stage.
And I wanted to talk a little bit on slide nine about the P&L.
We're still not giving explicit long term gross to net guidance, what we've said since our investor day that we are confident we're going to get to a commercially attractive P&L and I think you can see in some of the metrics on slide nine sort of why we had that confidence even before we knew what the sort of PGM.
PVM contract looked like we had $5 million in net product revenue, which for this stage in the launch we feel really good about and a 12% net yield again this is al.
A clear demonstration of prescriber enthusiasm for the drug and given the sort of work required before that PVM contract to get medical exceptions during formulary review.
So we're very pleased with the metrics and again.
We expect to get steady state gross to net guidance. After we've signed some additional <unk> payer contracts, but we expect to see this GT and yield improving from here.
As we execute on.
As we execute on more of these contracts will provide those updates.
As they come.
And on Slide 10, I think it's just an important point to hit we're really pleased with how the launch has gone.
And certainly the sort of weekly script numbers, but I want to point out. We are really just getting started here. There are over 90000 topical prescriptions than psoriasis alone. The vast majority of which are topical steroids and there are over 320000 topical prescriptions in atopic dermatitis, which will be a market accessible to us.
When we get our data and approval there are data is coming in the first half of next year.
And so no matter, how well things are going at this stage. There is just a huge market to draw from.
As we work to replace steroids as a topical steroids is the mainstay of care for these diseases, and notably to get to a blockbuster product, we need like 5% to 10% chair here, so really modest relative to the quality of the product.
Talked a little bit about sort of how the launch goes from here and the one thing I'll say is we have a lot of useful.
Rules and levers to continue to drive adoption and we're excited now that payer coverage is coming on line to continue to build the script volume and ticket.
Grow into what we believe should be.
An important multi blockbuster product opportunities.
Second to continue to share updates.
As we progress.
As important to the stages the quantitative metrics if you look on slide 11.
<unk> gotten just tremendous tremendous high quality feedback from early prescribers.
We held our Investor day in September a panel of Kols, which I recommend listening to you if you haven't and we've got I think.
Great to have representatives.
Indications from prescribers on that panel, including <unk>.
Great feedback on onset of action we're seeing.
Dark, saying that their patients are telling them, we're clearing as early as a couple of weeks into therapy.
Docks understanding that this is really potentially a first line monotherapy topical treatment that cleans up.
Use of steroids and use multiple steroids and then it's a real significant paradigm shift in house or IC patients can be managed we've had great feedback on the feel of the cream itself and certainly.
Not heard any meaningful reports.
Tolerability issues that affect prescriber behavior.
And yes, just just a huge amount of a tremendous support for.
The camera from prescribers are really fantastic.
Base to build from.
Yes.
I want to highlight on slide 12, an update that is relevant for our upcoming atopic dermatitis data as well as just a good reminder, on sort of the quality of the safety profile of <unk>, 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 body surface area of atopic dermatitis of up to 90% with a mean body surface area of 43%. So just picture what that literally means on a person that's a remarkable body surface area to be treated with ecommerce. So we were using quite.
A lot of the camera.
Tamara on these patients and we saw a really favorable safety profile with a very low incidence incidents of adverse events no SAE.
A PK profile consistent with what we saw on the adult psoriasis population and really minimal to no systemic exposure even under these sort of maximal use conditions. So.
We feel really good about the quality of this data and what it's going to mean for safety and Tolerability and I'll note 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 Pts in adult patients in psoriasis and atopic dermatitis. There is only one script for anyone to remember, it's a single dose of the product and single sort of 1% spinoff with Greenbee tomo.
Some of our competitor products have multiple doses, depending on whether youre in psoriasis, whether youre an E D.
Whether you have a pediatric patient or not.
So really pleased with that simplicity.
Is a direct function of the safety profile of the compound.
We're very pleased with that data and think it will be a useful.
A useful factor as we get towards the data and then as a final reminder, on <unk> on slide 13.
<unk> data is coming our phase three program.
<unk> is on track, we expect data in the first half of next year.
There's a ton of patient and investigator enthusiasm for the study and Thats built obviously, including on the safety data that I. Just described but also on the very strong phase II data that we've already made public as well as the positive outcome from our Japanese partners.
Tiger study, which they reported over the summer so.
Overall again incredibly pleased with the quality of launching it.
Furby tomo.
Looking forward to continuing to provide those updates and looking forward to that.
Improvement in GTS and other things that will come from PVM contract as well as from other contracts that mall.
Are you looking to do here.
And I've said on the Tam, although I'm sure we'll come back to it in the Q&A.
So I want to turn now and talk about a couple of other.
Clinical updates.
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 inflammation and immunology, but also in some other areas as well.
A truly broad late stage pipeline.
Some some opportunities that we won't talk about it so much today like Brexit and Ed where we've talked a fair amount in the past about that upcoming data set.
In SLE and Internet at my side, as well as <unk> and others.
So as of right now on slide 16, we have seven ongoing major studies, including at least four of them pivotal.
We expect three more to initiate.
The near future.
As well so it will be up sort of 10 pivotal a pivotal enabling studies.
<unk>.
<unk> breadth of R&D from our perspective across the portfolio.
Want to spend a few minutes and this was an update.
During the September 30 quarter.
Everybody about.
An important development at <unk> and franchise starting on slide 17.
What we announced is that we've got a new next generation anti F. <unk> antibody to complement <unk> 14, O two which was developed in house and what we've shown in animal studies delivers what we think should be deep.
<unk> potentially best in class Agg, lower similar to what we get for marks our first antibody you could talk about Abbott, 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 MTS youre, an antibody to have both minimal or no impact in albumin and LDL as well as.
That deep potentially best in class Agg and all of that in a simple sub Q administration that is also differentiated versus our competitors and one of the great things and will hit US again at the end of this section about MTS urine antibodies is that agg lowering has been a really great biomarker across a range of indications and so we feel.
We have a real potential for accelerated development here, where we can use proprietary data from our own studies and well known biology as well as data from.
Industry wide trials and anti <unk> antibodies to design, our own pivotal programs and so we think.
Lately after getting our first in human data from IMTT, Fortino, too, which will come in the middle of next year.
We'll be able to go through.
Accelerated paths right into pivotal studies thereafter, which is something that's unique to the class and sets us up to be really right in the pack with all of our competitors with a best in class drug.
Yes.
So you can see the data as a reminder, on slide 18, I Love. This data because it shows so clearly we get the same IGT suppression.
As Betoken map, we've got here at the sort of Super saturated 50 make dosing you can see right on top of each other in terms of that.
Level of IGD suppression.
Which is important because we think it's necessary to be able to get to that in humans. As a reminder, we are hoping that it gets to 80 plus percent suppression of ITG.
Which is more than some of our competitors are able to achieve which we think will be relevant.
Across disease populations across patient populations within <unk>.
And then you can see on slide 19, as a reminder, again.
We're sort of right.
Right on top of placebo.
At therapeutic doses as far as.
As far as albumin in LVL impact are concerned and so we get kind of everything we need here in terms of.
In these monkey studies at minimal impact or no impact on albumin in LDL.
And the level of ITG suppression that we think will continue to keep us differentiated as best in class. So again as a reminder, at data coming in humans.
As you are in the middle of next year.
Fairly often the question of sort of how did we achieve this.
On Slide 20, just as a reminder, we put the slide up before you can see the crystal structures were telco mab as with many of the full length antibody step CRM binds.
<unk> F CRM to configuration, that's very good for suppressing agg, but also you could see sort of interferes with the steric hindrance of albumin binding on the CRM as well.
And so.
That sort of causes the impact in albumin.
<unk> 14, or two on the right hand side.
<unk> high quality binding from an IGD suppression perspective.
But that does not interfere with albumin binding and so it doesn't affect.
That.
The admin levels and therefore LDL.
As a reminder, this is another question that we got a little bit on slide 21, we wanted to summarize all of this in one place.
Across all of the known Ntfs Huron program generally including Tokyo.
Our own program.
As well as many of the other antibodies that are sort of public.
Public data the translation from Monkey data to clinical data has been very strong.
On albumin, so the impact on albumin observed in Hps has generally been translatable humans and so I wanted just to summarize this data in one place or the people had a good reference for it and we've got all the publications at the bottom there.
The demonstrated over and over again that monkeys are a good predictor of human data for App for impact in albumin and therefore, we think impact on LDL and again, we will get the data from <unk> 14 to unless you're in mid 2023.
So.
Last thing I'll say on our <unk> and franchised before moving on to other updates on slide 22.
As a reminder, this is very broad disease biology, there are many different diseases, ranging from ultra rare diseases to more common diseases, and we have a pretty unique ability because we have both <unk> and <unk> in our pipeline to tailor the development strategy for each drug two different disease populations and should be able to.
Compete in ways that I think our individual competitors will struggle usher differentially in let's say rare disease settings versus more common settings, where we can take the profile of our drug and we can take the commercial strategy around each of these different compounds.
And optimize the choice of compounds in development strategy and the commercial strategy to the selection of indications. So looking forward to providing more updates on our development strategy for both <unk> and <unk> in the quarters to come.
You should expect continuous updates on those as we as we get programs up and running and as we sort of learned from our own data and from industry wide data and think it's going to be <unk>.
Credibly exciting opportunity we are truly in my view the best in class anti extra and franchise at this moment with that.
Sort of fortunate to being a sort of clear best in class potential antibody and the role of <unk> in our portfolio, allowing us to do some really interesting and differentiated thanks.
Okay, So I'm not going to cover many of the other sort of clinical updates at this point, we continue to make progress in a number of other programs, including representing them.
Marching toward its SLE data as well as the Milam admin sarcoidosis and so on.
I wanted to stay focused today on some of the key new things. So I'm going to have just a couple of additional updates on other parts of the business now including on slide 20 for some data that we have not presented before so we've not spent a lot of time talking about our discovery organization or a greater discovery efforts.
<unk>.
To chug, along and we're doing some interesting things there it remains a small fraction of our overall burn and Abbvie.
A lesser focus but given some of the high quality data that we've seen recently in our integrators I just wanted to highlight that we have an ear to greater program.
And this is some new data about that program at demonstrating.
You are equal or better tumor volume reduction compared to the most advanced of greater.
None in ER and you can see on the left hand side you can see the in vitro data on degradation in the.
Right hand side, you can see.
That our compound has either equal or better tumor reduction.
Tumor reduction mouse models.
Exciting opportunity it's early days there we.
We will provide more updates on that program when we have them, but just wanted to highlight that we continue to believe we're going to be able to using our unique combination of platforms to develop some interesting best in class. The greater is and this is not a bet on the next couple of years. This is a bet on the future beyond but excited with 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.
An update on Gen events IP litigation.
A relatively recent development, but some of you may have seen which is on November 2nd the Federal District Court in Delaware.
Denied <unk> partial motion to dismiss at which as we've talked about before they have filed on the basis of this U S contract in 2014, 98, which was an attempt to find alternative shift liability for.
It is alleged infringement or at least a portion of it to U S government and taxpayers and we were pleased to see the court denied <unk> motion.
And most importantly for the case that means that we'll now move to the pretrial discovery phase, where we'll be able to learn more about that that's a place that we should be able provide more updates on that.
That phase progresses.
So to round out.
The overall discussion on the sort of heart of the business year on slide 26, I will just say I could not be more excited for.
For 2023.
It's an incredibly impactful year for US first of all it will be our first full year of the camera on the market and we look forward to continued prescription and meaningful revenue growth.
As well as sort of watching early television and payer wins really translate into.
Sort of approaching steady state GPM in the commercially attractive P&L that we've signaled over and over again at this point. We are confident we are going to obtain so looking for it to be able to write more guidance there looking forward to watching that matures.
But I think we're going to we're going to do some impressive things there on top of that we'll continue to build on the <unk> franchise, if you will with.
Phase III data in <unk> coming in the first half which opens up.
And even larger market.
For every camera that we're excited to get into and we think the high quality of our safety data the simplicity of our dosing, it's all going to be important.
In continuing tissue to grow into that market.
And as I mentioned, just a moment ago, we're going to get human data in <unk>.
Which is expected to be in the clinic starting in the first quarter.
Initial phase one data expected mid year.
That will come together in the.
The second half of next year initial phase II data and graves disease.
Would you be able to take for chemo to straight to pivotal.
Thereafter, and that great data isn't cocomat, but will inform.
The development strategy for <unk>, which is a great example of sort of how we think we can move fast with <unk>.
And then finally, not a focus for today's call, but as a reminder.
The sort of.
Pivotal readout from our global Phase III study now fully enrolled.
In SLE. After every one of our two Registrational studies if that data is successful in the second half of next year in regions that we believe we have a possibility of being some of the best SLE data that the world has ever seen so really looking forward to that data as well.
I'm going to round out today's call with a financial update.
Slide 28 as partial guidance here some of these updates including some of the updates have already given on this call. We gave beginning of last week because as I'm sure. Many of you saw we did a.
$150 million follow on offering.
Great institutional investors that were really excited about it it was catalyzed by a reverse inquiry.
But we are excited to take advantage of especially in this market.
Yes.
Even before that offering we have.
Taken some important steps in our business to make sure that we could give.
We've extended our runway that we could give extended runway guidance. So our runway is now comfortably extended into the second half of calendar year 2025.
I will talk in a moment about what we've sort of achieved there what that extended runway buys us in terms of additional catalysts there are many.
Including some really important datasets.
We achieved that in a variety of ways, we achieved it with some.
Cost reduction and efficiencies you may have seen an article the weekend about.
And impactful relatively modest at round of layoffs that we've done that we don't we don't think youre going to have any meaningful business impact.
Terms of slowing us down or changing catalysts, but together with other other tangible business will give us the ability to really sort of drive length of runway, which we think is important given where the market is and given how choppy things have continued to be overall.
Overall for the quarter.
Adjusted R&D expense of $123 million, adjusted G&A of $102 million and notably.
The majority of that G&A expense relates to <unk>. The commercial launch of <unk> at this point. So we think that's sort of an important position to be in and then ended the quarter with $1 6 billion of cash or $1 9 billion in effect.
After our follow on offering of installing offering and anticipated proceeds from the sale of minority just sumitomo pharma.
So a really strong financial position and continue to be pleased with our ability to generate cash from a variety of sources to fund the business many of which non dilutive.
Looking forward to taking advantage of this position a number of ways, including frankly with some attractive in licensing opportunities that we see that could bring new programs into our portfolio. So stay tuned for updates on that as well.
So I'll finish my prepared remarks on slide 29, with just a reminder, I said 'twenty 'twenty four 'twenty 'twenty three it was a really impactful year from a catalyst perspective, as we sort of thought about extending runway and making sure that we should have catalyzed well into 2025, there's really.
A tremendous amount now within that window not only that.
The data from next year in atopic dermatitis state of the representative data and so on but.
Additional important data from <unk> in multiple indications.
Including C IDP, including Mg.
Disease, representing a data and in Dermatomyositis. In addition to the Brexit date or necessarily is coming next year.
As well as act continued data from RBC 2001.
Our program in low risk transfusion dependent anemia, and low risk Myelodysplastic syndrome.
And a number of other important catalysts as well as what will then be multiple years of.
Sales into the tomo and sort of a clear demonstration of what we think will be doing at that point, which is.
Adding towards blockbuster territory on that product.
Really really excited for next year are really really excited for what our current capital runway allows us to achieve in a choppy market and looking forward to continue to provide updates.
And each quarter and more frequently.
As they presented so I'm going to wrap up my comments there.
I want to thank everyone again for joining I'm going to hand, it back over to the operator to open line for Q&A. So thank you everybody.
As a reminder to ask a question press star one one on your telephone please.
Please standby, while we compile the Q&A roster.
Our first question comes from David Risinger with SBB Securities. Your line is now open.
Thanks, very much and congrats Matt to you and your team on all the progress so I wanted to focus on.
The good news on Big Tamra, and just better understand the contracting so could you provide more color on what percentage of lives are actually covered immediately with your PVM 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 Pbms coverage.
And how you're thinking about opportunities there thanks very much.
Yes, Thanks, David I appreciate the question and back I appreciate Youre listening and obviously this is look this is top of mind for us in terms of our overall strategy at this point on the <unk> launch.
So first of all I think what most companies would say about the CPM contract is that the PVM covers about 30% of commercial lives David you and I have talked a fair amount about this we've been a little bit more nuanced in how we describe.
This process you know the Pbms have custom national Formularies and many lives are covered by that national formulary and so we'll get access to a decent number we havent said exactly which because of what you reveal a little bit more about what <unk>. When we signed the contract with but a decent number of lives kind of immediately on the back of this contract. But also this now gives us a template for all of the downstream customers that have that.
Our ppm that even for the ones that have their own custom formularies.
The yen.
They now have sort of a template they understand the commercial picture they understand the value judgment that this PVM placed on the product and we're sort of confident and looking forward to continuing sort of built into that this is true for all launches. Once you get the PVM contract you can kind of work your way through the customers of the <unk>. We've said probably three to six months to hit the tail of what that looks like but I think.
You can expect lives that are covered under this PVM sort of.
Turning on for coverage over that period as we continue to work our way through those customers, notably I'd say, you mentioned employers specifically I'd say employers are probably less likely than some other payers to have.
Custom formularies as their own and so its just going to vary by sort of which specific type type of plan. It is.
And.
We're sort of.
Every bit is focused on every covered lives we can get our hands on so in terms of.
Pbms, which are obviously.
The overall keys to the process and then the health plans and the employers I think we're equally focused on all of these things.
We probably will not provide specific updates as we get contracts with downstream customers of the PVM, we may comment on it a little bit, but it's just sort of at this point to us.
Routine from here.
As far as assets.
As far as sort of continuing to build into these downstream plants.
Great. Thanks very much.
Thanks, Dave.
Please standby for our next question.
Our next question comes from Brian Cheng with JP Morgan. Your line is now open.
Hey, Matt and team. Thanks for taking my question and congrats on the progress.
My first question is on <unk>.
First TBM contract in place.
Can you walk us through the.
The process, perhaps from getting the script at the Doctor's office to getting the <unk> in hand, and how much read through is there from the PPA step that we see here from the only prior steroid use from the first major ppm contract two other pbms discussions are ongoing and then I have a follow up thank you.
Yeah. Thanks, Brent. Thank you for listening. Thank you for joining I'm excited to have you have you on the call. So welcome to the welcome to the group here.
I think it's a great question. So first of all I think it's an important point.
The patient experience from having a PVM contract in terms of like timeline and process actually isn't that different thanks to the co pay card program that we have in place originally so patient gets a prescription from the doctor.
Many of these docs work with independent retail pharmacies and so.
That gets the farm the.
Shifting over to the pharmacy, the pharmacy works with the patients who get fulfilled.
Fire to the contract.
If you Werent covered we then pay a $75 co pay because they became a card the rest will be covered by the copay cards and now those same patients. If they are covered by the CDM contracted by any other coverage that we obtained would pay a zero dollar co pay.
Because thats sort of the design of our co pay card, but again, we would then get coverage from the.
From the payer of the insurance company.
So thats kind of the search process for a for a patient to get a script filled and we think it's good.
Good straightforward.
Process.
In terms of the template here I think this was a perfect outcome from a coverage perspective from my perspective. It gives us everything we need it gives us access to the patients who are really seeking which are the patients who are on steroids now which is what we said from 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 feared.
Sure 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 from an active discussions with all the major pbms.
Getting the product covered and that discussion is very.
Very constructive given where we are in a volume perspective, I think you said you had a follow up question.
Okay, and then maybe just one on <unk>, we're going to get topline data.
From the phase II trial for <unk> in the second half next year.
Can you remind us what you want to see in terms of the primary endpoint, which is set for that you need to see in the phase III to be Dms SaaS in the trial.
And maybe just if I can squeeze in one more.
We noticed that you that there was that workforce reduction.
It was announced over the weekend just curious if you can provide a little bit more color.
How whether that has any impact on.
That program.
Yes.
Yeah. Thanks so.
On the <unk> question.
We haven't given the numerical bar will continue to talk more about what we expect out of that study over the course of next year's data becomes closer.
As I say we have.
A high bar for what we want to achieve there we think the agent is.
Is it powerful agents and we think the biology of the dual inhibition should be relevant as.
Specifically, the SLE disease biology, so we feel we feel really good we would want to see excellent data and SRA for some meaningful improvement on key secondaries as well sort of talk a little bit more about how we think about those scales.
As we get closer.
I think we have.
Evidence from other JAK one was in evidence from other TIK twos on what they've done in SLE and we think we have a possibility of being more and more impactful than either of those agents on their own because of the biology here.
Kind of looking out for that.
On the on the question of the of the risks. These are always tough decisions and the impact People's lives. So I don't want to sort of.
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 nothing that we've talked about on this call should be affected.
At all by this we're focused on G&A efficiency, we focus and sort of taking the most benefit we could from the model.
So making sure that our early stage programs were really focused on the most important and impactful will that work and so I would say that's kind of where we went there and as you saw on the endpoint articles about 12% of overall of overall SaaS. So.
Not something that we expect to have a meaningful business impact.
Thank you Matt Thank you.
Thanks, Brian .
Please standby for our next question.
Our next question comes from Corinne Jenkins with Goldman Sachs. Your line is now open.
Hey, good morning, guys.
So I guess it looks like the effective date for this payer contracts went into effect in October 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.
Yes, Thanks, Sharon and thanks for thanks.
Thanks for joining the call and obviously, thanks for all your coverage.
Yes.
We haven't we haven't given a specific guidance for what percentage of our scripts are covered by.
This specific contract Youre, referring to the answer to Dave's question earlier in terms of the way. These generally works. This PVM covers about 30% of covered lives altogether.
We expect kind of percolate through those covered lives starting with the bulk of them, but the big chunk of them that we have now.
Sure Percolating gone through over call it three to six month period.
So I'd expect to see yet.
Continued development.
Sure.
<unk>.
I think as.
As we get more payer contracts that will accelerate but I think you can expect to see kind of resulted in improvement in GTS starting in the current quarter is starting and according to them, we'll announce the December 31st quarter because of the contract was effective October 31, but it will take some time for all this appropriately through them.
And to really show to reach reach steady state.
Right. Thanks, and then you mentioned interest in additional in licensing opportunities how should we think about the appropriate cadence for in.
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.
Yes.
It's a great question I think look one of the reasons that we're focused on making sure. Our runway is long because this is a great market to be.
In a strong capital position there are some really amazing.
<unk> available to companies like Us, we're really focused on high quality programs that can be impactful.
Near and medium term.
I think if we we've said before kind of one or two of those a year or we ask representing them earlier this year.
I Wouldnt expect any sort of major change in cadence there other than that in the current capital environment. The bar is really high and we want to do things, we can be very capital efficient in executing and in terms of what we're looking for we remained pretty open from a therapeutic area perspective, what we're looking for things, where we think we're going to be able to do an important job developing the drug.
Differentially good job developing the drug.
We're looking for things that are at the moment.
The later stage.
Things that can add to the sort of bulk of our late stage portfolio, while sort of fitting within our financial goals.
Great. Thank you.
Sure.
Please standby for next question.
Our next question comes from Robyn Karnofsky with true list. Your line is now open.
Hi, Congrats on the quarter. This is Alex for Robyn.
We wanted to know as you continue discussions with physicians and payers.
A lot of positive feedback looks great launch looks very positive have you received any pushback.
A detailed discussion that might change how you view or approach the launch strategy and then also for unfortunate two very sizable opportunity. There. We're really excited how do you think about prioritizing which indications to pursue initially.
And the cadence going into different indications thereafter.
Yes, Thanks, guys I appreciate it appreciate it.
Appreciate it guys I appreciate youre listening.
On the retail my question.
Look obviously, we are constantly taking feedback from docs and from a payer conversations and so on and making sure that we're tailoring all of our messaging and covering our launch plans for that feedback in terms of pushback.
Honestly I think the answer is we have not gotten very much here I think the drug has been extremely well received you heard it in our K well panel I think you hear it in your own backhaul I think.
They're just excited and Baxter is excited to have a new topical option that really candidly works.
And works without many of the liabilities storage widely understood to have some so I'd say no meaningful pushback.
But obviously, we're constantly adjusting and reacting and even if you think about this PVM contract obviously.
We had a bar that we had set for what we hope the quality of coverage look like.
This PVM contract represents extremely high quality coverage, that's going to work for patients and docs and I think were.
Learning every day as we start to see the patient at Baxter and so as we see the quality of.
What payers are willing to do given the meaningful impact of the project.
Sure.
On <unk>.
Yeah, I think look our plans for <unk>.
You said a few times.
To focus on indications, where it looked like deep and sustained suppression of helpful. So.
Chronic administration in diseases, where we think.
The LDL or the impact might be more material for patients. So I think broader market diseases and chronic diseases.
So I think that's kind of the sort of general framework will get more specific with it as we as we progressed.
And then we think Fortunately tokamak fit really nicely together.
Because both can achieve sort of deepest possible best in class.
Suppression of <unk>.
And so we can kind of go after any indication with either.
And expect to be able to deliver comparable or better efficacy at <unk>.
Many of our competitors and so we can really sort of Taylor.
Dosing strategy and indication selection by program.
In a comfortable way so feeling really good about <unk>.
That portfolio as well.
Excellent well congrats on the quarter.
Thank you.
Please standby for our next question.
Our next question comes from Juran wherever with Cowen. Your line is now open.
Hi, guys. This is brendan on for your own thanks, very much for taking my questions and congrats on the update just a couple of quick ones from us.
First on the time obviously.
PVM on payer discussions as they focus here as you guys kind of outlined.
But maybe just wanted to ask maybe promote the broader commercial competitive dynamic standpoint, I mean, what are the next steps are all focusing on to the launch maybe beyond payer coverage just in terms of getting it in.
Patient physician has a little bit earlier.
Relative to competitors.
And then just a quick one for the PRN franchise can.
Can you just remind us if you need to or plan to run kind of a more traditional big phase one study phase two.
<unk> two before moving into pivotal studies or would you be able to move more or less directly into some of these larger registrational study. Thanks.
I appreciate the questions. Thanks for thanks for listening I'll take the second question first because it's an easy answer which is we believe that our sort of our planned phase one will get initial data from the middle of next year will be sufficient together with the data that we have in IGT suppression to go right into pivotal studies. So we think there's a clear path to take.
Go straight from sort of the planned phase one into pivotal studies and I think what we said is sort of six 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 <unk> class given the quality of ITG actually clinical biomarker. So I'll ask the first question a lot because to be honest.
To me given the quality of nearly payer contracts, we feel really really good about where we are.
Coverage perspective, and then 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.
4000 trips a week is great and we feel really happy about it how do we get to 40000 scripts a week.
And that obviously requires continuing to work on changing prescriber behavior continuing to educate patients.
What <unk> has to offer that is completely different than what they've been able to get historically with topical steroids. So.
Different plans for that obviously DTC as a component of that that we started test 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 targeted.
Precise focused on sort of.
That process and then yes look we have.
A large and highly capable MSL force that is out there sort of doing it.
Physician education and scientific communication that we think is important here because again this really is a paradigm shift in the treatment.
Psoriasis, obviously, we think our atopic dermatitis data is going to be impactful here. The simplicity of the product you are prescribed in the <unk> setting. The fact that we have such a young.
A young cohort in the pediatric study with the same drug on the same dose same product I think 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 messages out there and to help people understand.
The camera can do.
And again the nice thing is the.
The product really does deliver on.
So much differentiation from topical corticosteroids in terms of ease of administration no duration limits no body surface area limits.
None of the really severe tolerability issues, we have a particularly clean label.
From a safety and tolerability relative to other.
Novel topical.
Concomitant meds noticed there's nothing like that so just a really straightforward set up if we want we went to auction patients to think of that as they reach for the garage so lots of strategies to deploy.
And excited to keep working on that sort of bigger goal, there and I feel I feel like we're really well set up for it.
Alright, great. Thank you very much.
Please standby for our next question.
Our next question comes from Louise Chen with Cantor. Your line is now open.
Hi, Congrats on all the progress this quarter and thanks for taking my questions.
Thank you for you first one I wanted to ask you about was how do you think about pricing for your first and second generation anti SCR and will this be a competitive advantage for you.
And then secondly, the opportunity for <unk> in Australia, and also DM and how the economics work with Pfizer.
Then last question I had for you is how are you thinking about framing the ADT data readout in 2023, especially in light of what we saw was Japan tobacco and then say versus your Chris.
Prior phase two data in Shannon. Thank you.
Yes, Thanks, Louise Thank you for listening and thanks for the great questions all three of them.
So starting with CRM.
It's probably premature to comment.
Okay.
Either.
Broke November 14th two specifically.
I'll, just say it sort of has to be a competitive advantage to have both drugs available in terms of being able to think about price point to being able to think about other commercial levers theres sort of deploy a franchise strategy across the two program. So I'd say it's.
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 all for that and all of the other reasons that I've shared.
Yes.
Yes.
On DM unnecessarily for breath.
We've given a little bit of guidance on the size of the <unk> population.
I think we've given a little bit of information on the size of the SMA population of all but I think thats.
Obviously, a very well understood population at this point these are huge commercial markets.
Success in either of them.
On its own would be sort of a comfortable blockbuster product in our view.
Honestly across the two of them just a huge opportunity and there's obviously room to go beyond those with representatives in other indications as well so.
Very large commercial opportunity.
From.
And economic perspective with Pfizer.
Yes.
We.
We have.
Effectively U S and Japan as our focus.
<unk> pay Pfizer.
Relatively modest royalties I think what we've said.
Publicly is.
Is James is sort of.
High single digit low double digit tiered royalties.
And then.
We pay them that on our territories.
They pay us that on.
Their territories, and then Pfizer owned 25%.
Of upfront event as well.
And then Jay.
You asked about how how we were thinking about the <unk> data.
Positioning.
First of all.
You mentioned I think we have great.
Comfort here in part because of the.
The quality study run by Japan tobacco that was successful in part because of the Max use PK study.
In young pediatric 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 major event for this for the.
A drug to have that data obviously is also.
A really important market you mentioned you Chris I think it's a market that has had a little bit more in the way of novel topical is there's obviously a crystal theres lots of Lora.
But none of those drugs either from an efficacy perspective or from a tolerability perspective or from a legal perspective afforded the kind of clean steroid replacement potential.
The camera affords.
Given this given the safety and what we believe is the potential efficacy profile.
The drugs. So we think it should really fit.
In a similar place in <unk>.
Psoriasis is a potential mainstay of therapy.
We like the fact that some of the other topical and especially some of the more recently launched once more.
More recently launched one.
Has done such a good job of highlighting demand for a novel topical in atopic dermatitis and it's clearly a popular driving is clearly doing well.
Might have some pretty meaningful limitations.
On its label.
And they've done a great job with commercial coverage.
Now in their sort of gross net yields are progressing so we feel really good about that about what that means for our potential.
We think we'll have an <unk>.
Fortunately differentiated products.
Thank you.
Please standby for our next question.
Our next question comes from Neena <unk> Garg with Citi. Your line is now open.
Hey, guys. Thanks for taking my question just on the last question on atopic dermatitis I'm just curious what you're hearing from different types of physicians that are prescribing to pair off currently about their desire to prescribe it for atopic dermatitis, and whether or not they have actually tried that.
And then also regarding the LNP patent update just wondering if there is any.
10 shell next steps, let me turn it could take to actually try and push the motion to dismiss the partial motion to dismiss again or if you are confident that there really is no. Other recourse if they can they can take at this point. Thanks.
Yeah. Thanks, Thanks, Neal thanks for the questions and thanks for listening.
Yes.
On the <unk> study.
In terms of physician feedback.
Ed.
Don't get specific evidence of off label prescriptions and things like that so we don't have a specific view on sort of how it's being used but we get a ton of prescriber enthusiasm for the drug.
A lot of enthusiasm for it not just in psoriasis with Navy.
In other settings.
For starters, we have a ton of enthusiasm from the investigators in our <unk> study who are using the drug actively.
Is it part of the trial process and who are closer super enthusiastic for.
For what comes next.
I think from that perspective.
<unk> on schedule I think we have the.
Sort of promise there and as a reminder, in our phase III data, we are 49% sort of Iga clear almost clear.
In des and a two greater greater improvement, we get compared to 13% on vehicles. So.
A really meaningful.
A really meaningful opportunity there.
Our phase <unk> study.
Great feedback from our from our phase III investigators.
That study as well.
So.
On the on the A&P question.
<unk>.
Ordered <unk> to file an answer by November 16th the original complaint.
<unk>.
We expect that they will file an answer.
They've asked for a modest extension, which at which time it granted so we feel pretty confident.
<unk>.
That debt that we'll hear back from them and then we'll be able to move on as I said to the discovery phase of the process.
Got it thank you.
Please standby for our next question.
Our next question comes from Douglas Tsao with H C. Wainwright. Your line is now open.
Hi, Good morning, Thanks for taking my questions just Matt in terms of it and congrats on the progress in terms of the ppm contract.
<unk> do you think operationally, we should see that reflected.
In terms of the script volume trend, presumably as it gets easier for patients or for.
Our doctor right there'll be more inclined 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. Thank you.
Yes, Thanks, Doug appreciate the question.
I appreciate I appreciate youre listening so yes.
Yes, I think look there's a lot of different things sort of conspiring towards the quality of our script volume trajectory.
Where's the camera.
I would say ease of 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 the contract will help too.
I think as docs have confidence that their patients will have a good coverage experience our QC scripts filled.
I think the high prescribing docs already have a lot of that conviction just because of the way we've handled the early commercial launch, but I think coverage will certainly help continue to build that out I think you will continue to see scripts building.
Over the coming months and quarters.
Im.
That's important I would say, we expect to see some.
Stairstep.
Our prescriptions over time.
<unk> <unk> coverage is one of them the holidays, obviously affect prescriber behavior. There is some seasonality there as some of these populations. So I'd say it may not be kind of literally linear from a sheer volume perspective, but I do think all of these things are going to add up to.
Yes.
Consistently growing demand once you take one step back from a week on week numbers and again, we feel really good about what that what the contract lets us do there.
<unk>.
With what the market is sort of.
Guiding towards at this point from a from enthusiasm perspective.
Okay, Great and then and then as a follow up I'm just curious have you.
Given thought about how the IRS might affect your development of certain assets because that certainly is something that we started to hear from companies.
And certainly it sort of rationalizing some of the opportunities that they were planning to pursue.
Just given the potential impact thank you.
Yes, it's a great question.
We should 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.
Alright.
We think differently about small molecules and what you should think we should I think differently in general about specific programs.
We are.
Obviously compared to some of our bigger peers.
Less impacted in the near term than some of them might be and so we've got a little bit more time to kind of watch and learn.
It's just it's a pretty rapidly evolving situation, but absolutely affect the capital decisions today.
Okay, great. Thank you.
Thanks, Doug.
As a reminder to ask a question press star one on your telephone please standby for our next question.
Our next question comes from Dennis staying with Jefferies. Your line is now open.
Hi. Thanks. This is the challenge with Jefferies two questions on our end the first an EU launch an effort could you just tell US where you are and when you would expect any update 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.
Nice to hear that judge deny Madonna the motion to dismiss but.
Factually what are the next steps here on what specific data do we need to know and when do you expect us to move to discovery.
Yeah. Thanks.
Both good questions. So on EU for <unk>, 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 the number of patients. So.
An update when we have one thats more specific but I don't have a specific date or time line to provide today.
And then.
And just as a reminder, by the way the Japanese program.
It is now on a path to approval after the positive study there so.
And we will get some commercial economics from the launch in Japan.
Sure.
As far as the as far as the Madrone question is concerned I said in November we expected return is overall response and again, we expect to move into discovery.
Just after ash. So I think you can expect there'll be a calendar set for discovery that'll be the subject to some discussions with the judge.
And perhaps once that calendar set will be a provide a little more of an update whether that sort of end of this year early next year or something like that on timing, but I would expect.
Every process will take some time.
And.
Perhaps more updates over the course of next year as that progresses.
Okay, great. Thank you.
Thank you.
Please standby for our next question.
And our next question comes from Dennis <unk> with Jefferies.
So I think that was a prior question.
<unk>.
One moment please.
I am showing no further questions I would now like to turn the conference back to Matthew <unk> for closing remark.
Thank you very much. Thank you for the operator, thank you too.
Everyone, who worked to get us through a pretty impactful important quarter and thank you everyone for listening this morning.
Continuing to provide updates at upcoming investor conferences in the 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.
Goodbye.
The conference will begin shortly to raise Johan during Q&A, you can dial star one one.
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