Q2 2024 Roivant Sciences Ltd Earnings Call
Okay.
Good day and thank you for standing by welcome to the right that Q2 2023 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.
I ask a question during the session you will need to press star one one on your phone you will then.
In here an automated message advising you had just raised to withdraw your question. Please press star one again.
Today's conference is being recorded and I would now like to hand, the conference over to your speaker today Ms. Stephanie Lee. Please go ahead.
Good morning, and thanks for joining today's call to review financial results for the second quarter ended September 30th 'twenty along with it.
And Stephanie Lee with Rite aid presenting today, we have Matt Klein CEO.
Styling and via conference call you can find the slides being presented today as well as the press release announcing these updates on our IR website at Www Dot investor about right now.
We'll also be providing the current slide number eight we present to help Ya blah blah blah.
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 our E statements and related risk.
And with that I'll turn it over to Matt.
Thank you Stephanie and good morning, everybody.
Thank you for joining us on this call this morning.
It's been a highly eventful quarter.
But comparatively uneventful call given that most of the major updates, including data from September and the shell deal with Roche I have already been discussed, but I'm looking forward to giving everyone of our normal business update and taking the questions and answers.
Yeah.
The play here is can you talk a little bit about where we are as a business I'm going to remind everybody of the parameters of the sale.
Oh, we're going to give a brief overview of the data to remove that presented back in September.
A little bit about the camera launch.
A brief reminder of the upcoming Brexit and a beta and then we'll wrap up with financials.
Q&A.
So I'm going to start on slide six in the presentation.
Which is that.
Was it just like it's fun to put up so we're sitting here in November of 2023.
And I keep saying on these calls but it's true.
Been a pretty wild here. We said this is going to be our biggest year, yet and at this point it has surpassed certainly my expectations.
We've delivered some really great phase III data for <unk> in atopic dermatitis as well as continued progress on that commercial launch we'll talk more about that a little later on this call but.
Believe it or not where the first clinical data sets this year.
We delivered some extraordinary clinical data for <unk> 31 to one our anti <unk> antibody in ulcerative colitis, both at the beginning of the year in the induction phase and maintenance phase, obviously, we announced the culmination of that journey.
A couple of weeks ago with the planned sale of that program to Roche.
We announced the first cut of the 14 or too healthy.
Healthy volunteers sad and Mad data set.
Timber and show the profile that we believe sets us up to have a potentially best in class anti F <unk> antibody.
We've been talking about like agg suppression and at least in the cohorts shown so far no impact on OBL or albumin.
And that's all true up until now and believe it or not there's still more data coming through the rest of this year, including the final 600 milligram multiple ascending dose cohorts.
The <unk> data for the phase <unk> study of Brexit Nib.
More about that.
The grades data unit also coming this year. So just a year really chockfull of clinical data and I could not be more proud of how it has gone so far.
And of the revenue all of our teams for delivering on it.
So.
On the next slide.
Just wanted to ask.
Talk a little bit about the acquisition here that we've already messaged.
You said that the plan here is for us to sell.
And our NTT I Wanna antibody program.
To Roche.
What are the person who's got that a couple of weeks ago.
The sale was for $7 $1 billion upfront for $150 million milestone as a reminder.
<unk> owns about 75% of that business to our cash proceeds will be about $5 2 billion.
As well as $110 million from that milestone with we expect next year.
At the close of this transaction.
Pro forma for or including the proceeds from that transaction as well as.
Follow on offering we expect cash and cash equivalents consolidated for Reagan of $7 billion.
Which is an extraordinary capital position, we will talk a little bit more on this call and a lot more in the future about what we plan to do.
With that capital.
And Pfizer will keep commercial rights to the program outside of the U S and Japan.
And we'll continue to partner with Roche on the program.
As a reminder of why on slide seven.
First of all we think for the program Roche.
Roche will continue to do great things, obviously, we were proud of the work that we had done in wood.
Would've been excited continue developing the program, but certainly adds the resources and expertise of a large global pharma companies to maximize access for patients across indications.
For us this is tremendous near term value generation.
With that.
With proper value to a large opportunity.
Yes.
With a lot of capital efficiency relative to the modest amount that we can so far <unk> invested in the program.
And this is a transformational capital opportunity for us.
As we've said on the previous call are going to be patient and thoughtful.
And I've heard it from a lot of investors people were looking for a sense of what we're going to do with the capital I'll just remind people we have a phenomenal pipeline already between immune event and.
Our CRM program and a number of others that we're excited about some of the capital to work there we see transaction opportunities in the relatively near term that are as large and exciting as anything we've ever done before at <unk> included we expect to continue to be capital efficient in those business drop in transactions and while I would never rule anything out I think it is more likely.
We'll continue to look like the ones, we've done before with relatively smaller upfront components.
But again, we're taking stock of the whole opportunity set and there is a great opportunity and we have the potential to return capital to shareholders.
Above and beyond that given the significant summit. So we'll talk more about all three of those things in the near future and overtime.
As a reminder, on slide eight you know one of the questions I've gotten frequently from investors is what is the catalyst roadmap look like now that this deal has happened and my answer is while it looks much the same as it did before.
The tier one <unk> program will be definitely the crohns data at the end of that you didn't have any near term catalysts our pipeline is tremendously rich today.
With the camera obviously your commercial program with a significant amount of data coming at both perhaps it may have been especially in R&D FTR and franchise in the next 12 months and we look forward to continuing to generate.
Important clinical data from those and other programs in the months to come.
So with that I'm going to do a brief review of where we are at immune event.
Yes.
And some of the other programs and I will just start on slide 10.
With a reminder.
We are very proud of the MTF Sharon franchise that we have.
We believe we have two rate programs, both of which are capable.
As best we can tell from the data we have available expressing agg.
As deeply or deeper than anybody else.
And one of them, but total Nab will generate a lot of data and are continuing to generate mid stage clinical data any indications that matter, where we think we're going to be able to prove out that deeper better IGT hypothesis.
And the other one I MBT 14, or two we're coming close behind now looking like it delivers that same agg suppression, but without an impact on LDL and albumin, so a really exciting opportunity for us.
Franchise of these programs.
As a reminder, on slide 11.
<unk> is in the late innings of this single ascending and multiple ascending dose healthy volunteer study that was designed to be.
Reveal the clinical profile of that program. It had both multiple single ascending dose cohorts that were IV.
From 100 milligrams, all the way up to 1200 milligrams IV.
It had a subcutaneous single ascending dose cohorts of 306 hundred and then multiple ascending dose cohorts at 300 600, a sub Q1 at this point, we've delivered all other than that higher dose 600 milligram multiple sending dose subdued cohort.
As a reminder, any signals are they expected this month and that is fully on track.
I'm not going to share all of the data here, obviously everything we believe that we shared in September it was fully consistent and painted.
Pursuing picture as far as we were concerned of what this drug can do.
On slides 12, and beyond I, just kind of a multiple ascending dose data, which as a reminder shows.
On slide 12, very much of a cocoa and I have like agg suppression with $314 <unk> suppressing agg by a very similar amount to.
340 milligrams.
So we're fortunate to similar token that $3 40.
And then on Slide 13, you can see that that's achieved with really no.
No time course impact on albumin at all albumin wound up at the end slightly.
Slightly above.
Baseline and slightly both placebo number down is the direction to be concerned about.
Unlike typical math, which in the multiple ascending dose data showed.
A clear dose dependent time course dependent impact on that.
Albumin and then you can see in the LDL data, which unfortunately, we don't have the same study from telco Mab, but you can see again really no time course impact of note.
On LDL with LDL in this case winding up slightly below baseline.
As a reminder, there was variability in these data.
We said, we expected variability in LDL to the plus or minus 10% toone.
But we believe the consistency of it across all of this suggests that we have a strong profile and we're looking forward to sharing the scanner.
Milligram that data once we have it.
Ajay.
Sort of a final reminder, on slide 15.
Just to note. This is an incredibly broad target even since September when we shared our data we've continued to see developments in the field, including the full J&J calendar RNA data, we've continued to make progress on our own studies with great data coming later this year.
<unk> is an indication that I think is significantly underappreciated for the commercial potential and the number of patients that we can help and it's.
Just a really broad targets with at this point, great clinical validation across multiple indications that <unk> is active.
And then it matters clinically.
In a number of diseases as well so really excited about what's to come there are very very data rich.
Instead of months and really a full year ahead.
Excited to generate that data to continue to evaluate strategic options that I believe will present themselves into.
And to continue to communicate about where we are as that plays forward.
So next up I'm going to provide a brief update on the.
The camera launch starting on slide 17.
So I would say.
Overall, we continue to be pleased.
How.
Sure.
With how this launch is going.
Yes.
Could you just group volume continues to grow.
At a steady clip probably not.
Write as fast as we would like at this stage, but we're overall pleased with the reaction from a patient from physicians and the reactions from patients and.
And we see continued uptake of the products that works.
Hopeful that we're going to be able to continue to bend the curve and generate more more volume in psoriasis. This remains the best launching topical.
In history.
And now we're in particular excited for the atopic dermatitis launch in the second half of next year, where we have terrific data and with a significantly larger patient population I'm sorry, we just got the financials here.
Revenues continued to bill will begin about $18 4 million for the quarter.
<unk> yield accretive I'd say modestly up to $27 six.
Through the contracting process at this point so I would expect you can youll continue to improve.
Modestly at a steady clip over time as we approach the steady states, which we think long term, we'll get to the 50% that we've talked about and will take some time to build up there as well.
Communicated.
Adam.
Finally, just a couple of notes.
Where we are from a data perspective, theres actually been some additional data generated or published in this program in the last month or two.
On slide 19.
One of the things that at least one of our competitors has talked aggressively about is efficacy intertriginous psoriasis psoriasis inside the skinfold inside the elbow in the growing et cetera.
Psoriasis is furniture to some work some of the other especially the most potent steroids are not permitted.
See we have really phenomenal data and Intertriginous psoriasis, we think.
As good in our view on our crush our comparison as anybody else here. So we feel.
Very good about what we deliver.
Sure ISS.
We also put out some additional data which is super important in the atopic dermatitis area, which is the speed of onset for etch and so you can see on slide 20.
We had a statistically significant separation from placebo as early as week, one and just a clearer visible separation really within within 24 hours and a meaningful reduction in itch within 24 hours. So we feel.
Very good about the.
The speed of onset and Thats something that matters quite a lot to a catheter types patients.
It's data we're excited to continue.
Do you need to put out there as we get closer to that NDA filings and eventual launch and then as a reminder, on slide 21, we just couldnt be more excited for the clinical profile of this agent.
In <unk>.
With some really.
Phenomenal data when you look across mechanisms. This is with respect to $1 75 published before.
Ross mechanism some of the best data.
That's ever been shown with a safety profile that is.
About as good as any.
In fact.
Efficacy profile looks numerically differentiated from even some of the.
Systemic therapies, so really exciting and looking forward to that.
As a reminder, expected F&D to go in.
Early next year and expect to launch.
Sort of later next year.
Finally on the program side I, just want to give a reminder of the upcoming data in breakfast at nib.
Sure.
Really exciting drug act to me.
In some ways you had been sort of sitting in the shadow of I'd say the tier one.
Rene in MCR and programs, but it's an incredibly effective agent we have now.
Six positive phase II studies with some of the best data that's been shown across the Jack Arctic two questions I think we have the single best.
Medical.
Right in Crohn's disease for example that we talked about on last call. So just a very potent kind of begun agent for inflammatory disease.
We are really excited about what our plans are for the program, which included the sort of main program for which we set up here, which was the Registrational study that we're running in dermatomyositis rehab 'twenty 'twenty five but more importantly near term. We also have this phase <unk> study one of two pivotal and SLE.
Reading out this quarter.
We've talked a lot about some of the challenges in SLE and thats not the sort of main or at least the sole focus of the program, but if it works and if it generates what we think it should be capable of as an agent.
That's an indication that is in need of highly effective therapies and we think if we can beat the sort of geographic shipment equivalent bar that we've set for ourselves we will have a really big opportunity to benefit patients. So we're looking forward to it.
Potential beyond that including another dataset, we have a proof of concept study in non infectious uveitis reading out in the first quarter of next year.
As well as the possibility to run.
Just to run the study and hydrogen cheetah.
Which is an area that attracted a lot of attention recently.
So really excited from reps hitting them on slides 24, and 25 and we just have a reminder of the.
Of the study designs and each of SLE.
Yeah.
And the Niu study reading out at the beginning of next year.
Both of which were really looking forward to seeing that data and sharing it with the world.
So I will wrap up here.
Or is it relatively quick updates.
Just a reminder of the financials on slide 27.
I won't read all of the numbers on here, but.
Relatively straightforward quarter.
And excited again for that $7 billion consolidated cash balance by giving it back.
Back to the closing of the deal, which should put us in a very strong position.
Lots of great things in this next phase of our life.
So I won't go through the four catalysts roadmap again on slide 29, other than just say 2023. It was a huge year for us it will be hard to talk with you in 2024, but we are definitely going to try.
And.
We're excited for quite a lot of data that's coming our way.
Help us out.
So.
With that I will say, thank you to everybody. Thank you to the entire team at relevant to our investors.
Who help make this make this quarter possible in this year.
I'll hand, it back over to the operator for Q&A.
Thank you.
As a reminder to ask a question. Please press star one one on your phone and wait for your name to be announced to Australia. A question. Please press star one again standby as we compile the Q&A roster.
Okay.
One moment please for our first question.
Our first question will come from David Risinger of Leerink Partners. Your line is open.
Yes, thanks very much.
Matt and team so I have a few questions first obviously the camera scripts have flattened.
For many months now could you talk about prospects ahead, and whether we should really.
Assume flattish scripts.
Into calendar 'twenty, four or do you think there might be drivers for prescriptions to grow ahead of the addition of AED to the label at the end of calendar 'twenty four.
And then.
Second.
Clearly management has shown.
And exceptional ability to acquire.
Highly compelling assets and create tremendous shareholder value.
But now the company will have a huge amount of money to work with and probably faces undue pressure too.
Put that money to work quickly. So could you just talk a little bit about.
Hum.
I guess.
How the company can.
<unk> time.
Putting money to work and exceptional business deal, making in short order I E.
Sure.
It's really not up to ROI band when great assets are up for sale.
Roy Van can acquire them and so how are you balancing considering transactions with what may be.
Pressure to put cash to work thanks, so much.
Thanks, Dave.
Both great questions I appreciate youre listening this morning.
On the <unk>.
Yes.
All of my conversation with investors not been a significant investor focus of weight, but.
We agree that scripts have been growing as I said earlier is slower than we would've hoped.
We continue to see growth in demand and I think if you look quarter over quarter, it's growing every quarter.
I would expect that to be at sort of at least steady.
Over the coming quarters, we have some ideas about how to create some inflection one of the main pieces of feedback that we continue to get from prescribers as concerns about coverage in the patient experience, especially at some of the larger pharmacies like the Walgreens, where the sort of middle of the distribution back to writing fewer scripts tend to send patients.
In fact, our coverage position is very good now.
Just going to dish.
Any other any other topical and we think patients who show up at the pharmacy or very likely to have a good experience. So I think theres a little bit of a perception gap there that we are working to close.
Retirement with other with other demand generation tools, including DTC alright.
I would expect as it.
Base case, I would expect sort of continued progression at about this pace until the <unk> launch, but theres certainly the possibility for better.
We're working on it.
I'd say two other things one is there will be launches a really big opportunity. Obviously the patient size is much larger I think the program is on a path to being a source of non dilutive financing if thats, what wed like for it and that through either.
As it ramps to profitability, which we think it will continue to do.
Or through other means partnership et cetera.
And the only other thing I'd say is I think.
In the spirit of your second question I think one of the reasons. We said we're going to be patients here is we don't want to make the mistake of having a lot of capital and therefore spending accounted by default by Fiat and so we are evaluating every dollar that goes into every one of our programs, including E. Com are critically and making sure that we're spending those dollars in a place where they are going to be most.
Most valuable that said again I think.
As <unk> ramps profitability it'll be quite as useful.
Useful baseline for the business. So that's on the on the first question.
The second question.
I expect I'm going to say this a few times today, but we really believe that patient is in assets. We believe the ability to be patient is important.
We think that is what's going to get us the best opportunities, we think thats whats going to put us in the strongest position to take advantage of as you said, we don't control exactly when the great assets become available and we don't want to be in a position, where we miss something because we do something else thats not quite as good.
We're being very thoughtful about what we see.
The truth is that we see some really great opportunities as I've said.
Are these that are in my opinion every bit as exciting as a number of other programs.
So there is certainly the possibility for near term deployment of capital on something like that but I think you will see us youll see us be patient because we think it is a huge advantage, especially in the current market with so much available.
To be patient.
Yes, I think I think.
There's many factors that determine where patients in one sentence, but we feel we feel good about that.
We're not going to go into a dark period, we're going to continue to update the street regularly on where we're at.
We will continue to talk about our plans will continue to talk about capital deployment as we see the <unk> data as.
We see some more of the CRM data as we get some transactions done. So I would expect continued updates we're not asking people to trust us and silence were just asking.
You come along with us.
On our capital deployment process.
Great. Thank you.
Thanks, Dave.
Thank you.
And one moment please for our next question.
Next question will come from Brian Cheng of Jpmorgan. Your line is open.
Good morning, guys. Thanks for taking my questions.
First one probably listen that's upcoming phase III data and that's all.
Matt you talked about the difference of steroid tapering between the study comparator to request phase II can you talk about just how might that impact the read out and given that <unk> is a heterogeneous indication.
Are there other variables that we should also consider that could impact the outcome ahead of the readout and then I have a follow up thank you.
Yes, Thanks, Brian we're obviously tremendously excited about about repo and.
Those are some of the right question.
Italy.
It is an important disease, it's a tough indication historically for a variety of reasons. There's a lot of as you say a heterogeneity in a patient population, there's a lot of variability in things like placebo response rates.
We're generally happy with the study design it was designed that way.
<unk>.
But only slightly modified since we took the program on advisory has been executing the study I would think you could design.
As you noted there are some modest differences in the mandatory steroid taper between our studies and <unk> study, but they will have mandatory steroid taper so.
It's been more similar than different.
A lot of variability in general both in placebo response rates engine studies across the board and so for that reason I think we're just being appropriately measured in what we signal here.
But.
In short I would say.
Hi.
The agent it looks to us as good biologically is any agent in asset when you could at this moment at least as a small molecule.
And.
And the study design was a solid study design, so sort of in the hands of SLE page.
At the present moment, Mike anything you'd add.
Sure I mean, I think you had massive.
Matt I think.
Brian as you well appreciate it.
Hi.
Genius.
And Theres a lot of different several different nuances.
Every trial.
You asked about the steroid taper I think a couple of other factors might be for example, just to give you a sense of.
Things that are different are slightly different.
And each of them contribute.
And their own different ways, but severe.
The severity of disease at baseline so baseline sleep.
Or are things like baseline steroids, all sort of contribute to the Max.
And also just on graves readout later this quarter.
Can you help us set expectations there how does that look like to you and given as a single arm trial in the first half CRM programming and Grace.
How do you think this SaaS right.
How do you think that the read through coming from.
<unk> showing in other indications.
Yes, Thanks, that's a great question.
We're tremendously excited about what rates could be.
I'll take it and then Frank 100, or if you've gotten any better than you would've been team has spoken about this.
Great.
Straightforward biologically here.
Relatively well understood to be auto antibody mediated and.
And there is a clear biomarker entire hormone levels that youre looking to normalized.
The data will tell us what we've got I think we'll have a clearer sense of.
What we've got I think what we're looking for is relatively high rates of normalization of thyroid hormone levels and we're also tracking people's ability to get off.
Oral antipyretic drugs and I think we will have.
A pretty clear answer to that question from this data.
Anything you'd add to that.
I would say as a bar as we've talked to Kols. They've said look you can.
Get patients about 50% of the patients are normalized library at levels that would be really clinically meaningful to them.
So that the bar, we look to a level of importance.
Great. Thank you so much.
Thanks, Brian.
Thank you.
And one moment for our next question.
Our next question will come from Yaron Werber of PD Cowen Your line is open.
Great. Thanks for taking my question. So I also have a.
A couple.
One breath, though and then another one just on immune event. So for breakfast, maybe just to follow up.
Lucas industrial lease for non infectious uveitis definitely more little bit less competitive.
What is the bar for you.
Is it we sort of have a good sense already what the safety profile of <unk>. So is it mostly on the efficacy side as youre looking to differentiate and for non infectious uveitis sort of what do you want to see to continue forward and then I have a quick follow up.
Yes, I'll take the SME question Mike.
Maybe I'll hand, it over to you for the question.
On <unk> I think we've said this before we think the safety profile of <unk> is as you have said well understood. We have been in well over a thousand patients we have a lot of data.
It is effectively Jack like from a safety profile perspective, and we expect the FDA to treat it like a JAK inhibitor. So it will have the appropriate labels and so on so I think thats pretty well characterized I think for us it's about efficacy.
I think we feel the bar has been set by by the <unk> studies.
Which are the current sort of.
Best oral data in a large late stage program that we've seen.
Our view of the bar that Duke resets adjusting for some pretty significant imbalances in their dosing arms is like a mid teens SSRI for a placebo adjusted Delta and so we'd like to do.
We'd like to do kind of.
Better than that.
In order to feel confident about progressing program, but it'll be a balance of factors, we'll look at multiple endpoints.
And so on.
On.
On Niu outlining somebody <unk> I think we sort of laid this out on the last call but may you. Please go ahead.
Sure sure. So I think what we're making overall assessment.
Kind of a.
Signal finding study here really we're looking for a treatment failure rate of no greater than 270%.
The treatment failure rate.
This is quite high.
Okay.
Not for treatment.
That's a good bar.
Overall, I think really the back here across these indications is fundamentally is on efficacy and so thats. The thing that we're really looking to robustly.
And just to clarify.
I know you're studying youre right its about Pfizer.
That's right that's right that's our study.
Okay great.
Yes.
Okay.
We've got a lot of questions on and I know you have as well.
When you guys announced appeal when they deal with Roche.
<unk> was.
To monetize.
Can you just help us understand kind of philosophically or conceptually, how you're thinking about that thank you.
Because you cut out literally as you said what work we can do something to monetize.
I think it was a ruthlessly monetize daniela and stake.
I think we said we'd be ruthlessly economics about we'd be advanced stages.
I think I said all that we can go back and look at the transcript, but I think that's true.
The way that we've always thought about this is we're going to do what what maximizes value. We think the FTR and program is.
As good a program as biotech has to offer at this point that has true best in class potential.
Numerically as an investment class potential in an area, where <unk> has been a phenomenal biomarker for clinical efficacy and where we have really exciting agg suppression.
With a clean safety picture as to what we can tell so far so I think that program our hands without monetizing it could.
Could be the basis for.
Yes.
The great Ini biotech companies or the next generation than we are.
Excited and fully resource to progress.
That program that way.
But along the way as we have shown historically, we're going to evaluate options and we're going to make sure we understand the competitive landscape and understand the strategic options available to us and we're going to be ruthlessly economics.
In assessing it.
In assessing that position and that's just that's just that's just who we are.
Thank you Ron.
Thank you.
And one moment please for our next question.
Our next question will come from Corbijn Jenkins of Goldman Sachs. Your line is open.
Yes. Good morning, maybe a couple from ice first you mentioned the commercial potential you see with graves disease could you just step us through how youre thinking about the market opportunity, there and in particular or which patients within Grace disease. Do you think are candidates for new therapeutic agents.
Yeah, perfect. Thanks, and ill ask Frank anything if he's got anything <unk>. After I give a first got here, but this is a large indication it has.
Hundreds of thousands of patients.
And our study is on patients who are uncontrolled.
Ete's that's the existing study, there's a pretty significant percentage of patient special accounts 40, 50% of patients on Atvs do not wind up.
Fully controlled.
So there's hundreds of thousands of uncontrolled patients.
Surgery, and radiation are effective but surgery and radiation are complicated and not every one wants to sign up for that so uncontrolled patients currently don't have a great therapeutic option that has not been real novel drug development and Grace for a long time. So we think this is a.
It's one of these indications where there is just a very large patient population that has unmet need.
And if you talk to these patients.
Yes.
We're clear about that frankly, some of the patients who are controlled on atvs youll feel like they have symptoms, although obviously going to start with the uncontrolled patients. So we think this has the potential to be really really large market that people were not appreciate it because it's been a while since SaaS since you have in development.
One thing I'll add to that before handing over to Frank is.
It was sort of interesting dynamic here, where media et cetera, and with data and in some ways. The better. The data is the more closely we may need to keep some of it.
Invest because we've said before anyone phase II studies everyone's phase II study and that worked in our favor in many other indications, but it's just something we need to be thoughtful about here, but in short we think the commercial potential is really really large frank anything you'd add there.
I think you've covered most of.
The important part I mean, just to restate it.
Substantial opportunity in patients who are anti thyroid medicine factory.
And there isn't it.
Very large both incident and prevalent population.
Patients who are just not getting enough benefit. This is a category of medicine hasnt seen meaningful innovation.
In decades, and so there is it.
Ripe opportunity to come in or something that really matters and disrupt that and we'll look forward to talking about it more detail soon.
Great. Thanks, and then you mentioned any ones Subaru as everyone is super Prime So maybe that's a good segue to the data over the weekend and rheumatoid arthritis from J&J I guess what were your takeaways from those results and how are you thinking about the read across your own program and plan and manage rheumatic disease.
Perfect. So.
It will obviously speak more to this consistently over time as we as we lay out our steady planes and get everything geared up I guess I continue to feel about the J&J RNA data of the way that I felt when we had first seen the abstract which is its tremendously exciting to see in CRM show signs of activity in an immune complex disease.
And it opens.
Large envelope of what of what could be possible I would say like this data in and of itself.
Need some work to better understand and characterize the J&J is doing some of that work.
Encouraging signs including debt.
No.
So response rates look pretty solid specifically in.
In patients who have the auto antibody measured.
And the sort of efficacy as well correlated with auto antibody expression and as we talked about before.
One of the things that's interesting about <unk> in this study as it was it seem to us somewhat under dosed and so they really only got two I think it was about a 58%.
Present suppression of ITG, I think lowered Matt on the auto antibody and so I think it's possible to understand that there is room for better efficacy.
Higher IGT suppression.
I think it is not very likely although this is for them to.
Ultimately announce that we're going to immediately begin a large phase III program.
But I think it certainly really informative data for <unk>.
How we see the next year in class developing and it suggests activity and an even broader set of indications.
And then one might have originally imagined.
I think thats kind of what we think about it.
Great. Thank you.
Thank you.
Thank you.
And one moment for our next question.
Our next question will come from the line of Robyn <unk> of Twist Securities. Your line is open.
Hi, guys. Thanks for taking my question and I Love the word ruthless economic.
That's a great great service to our company.
So I have three first can you just mentioned grades and we have to keep some of that data close to your guidance and how much did it would you release or would you just say the results were positively here moving forward.
Second question is really about the other comment you made about retirement may shape up to be an opportunity for diluted financing and given that you've sold out before how do you think about running the company.
Thinking about where you can do just that.
Breeding ground, where you get Brian developed and then you sell them and then you had some that you keep and how do you figure that out and then the last question is on the Tommy.
You mentioned gross margins were 28% relatively flat, hoping to see over time.
What what's influencing the gross margin rate. So sampling is that still implementing not how do we model those.
Help us model gross margins over the next say 18 months.
Yes, Thanks, Robert I appreciate Youre listening I appreciate all the great questions.
The first question I'll say.
Having not yet seen the greatest data.
It's hard to say exactly what we would disclose it.
And it probably depends a little bit on the data on exactly what we see in the controllers.
But I think the full range is on the table in terms of in terms of.
When and how we share that data other than we expect to get the main thrust of it in the relatively near future and so it will be able to say something I'm confident.
That would be helpful.
On the other two questions I guess.
I will take the bigger strategic one first and I'll come back to sort of retain but GTA and progression.
We are here to build a.
Great durable long lasting important biopharma company that delivers medicines to patients.
As we did with the camera that will mean that we commercialized products as we did with the <unk> that will mean, sometimes we can partner and monetize them.
And you used the phrase again, we're going to be ruthlessly economic and deciding.
Which of those again just to be clear, we meant non dilutive financing in terms of the timeline I think the nice thing about the camera is.
In the event that we monetize it or partner or geographies or whatever that's one source of non dilutive financing in the event that we don't build it into profitability.
A steady stream of free cash flow out into the late 2000 <unk>.
Different source of non dilutive financing.
And on top of that we've learned a tremendous amount about commercialization.
Got some infrastructure, we've got distribution agreements and things like that that should be leveraged bolt if we add additional products and so I think overall the launch of <unk> has been an important formative experience for us.
Does that continue to see it play out.
Excited to get the HD launch up and running.
And I am confident we will commercialize many products.
In our long life.
From here.
On.
I'm sort of GCN trajectories, and I said I think we're largely through contracting and so the things that are going to drive <unk> from here, it's not sampling per se. We've never has sampling program that meaningfully affected our yields.
It's getting patients onto the right side of the copay card.
It's getting.
It's getting more patients into a covered position at pharmacies like Walgreens and Cvs and so on.
Which is all it's all <unk>.
<unk> work at some level, it's just getting out there and talking to docs and working through the issues to make sure that patients are getting on drugs. So.
I would model.
Steady improvement in GTS yield over time.
Maybe at around or a slightly faster clip than the one that we've had in recent quarters.
And I would expect that to sort of continue to build up too yes.
It's kind of 40, plus getting to 50, eventually ask sort of a steady state that product seems to get to.
Think.
I think some of the dynamics over the past couple of quarters with new contracts signed that created a little bit of volatility in the progression, but I expect it to be pretty steady from here.
And then one follow up.
On <unk> two you can work it seems like with so many different indications you can go after and how aggressive you're competitors are spending money toward all of these indication how do you compete with them like how do you compete can you just go into indications where theyre not going it seems like it's pretty competitive.
Asking clients, we can argue that you're best in class Ron.
How do you expect to run like 20 trials, how do we think about it.
Our plans for 2014 are too given the plan.
Perfect.
The first thing we do to compete as monetizing NTT <unk> antibody and generate quite a lot of.
Capital, which puts us in a <unk>.
Strong position, if we ultimately need to run 20 trials.
To be able to do that so I think we're in.
We're in a really good spot from that perspective, I think we're going to be.
Act capital efficient as we always try to be I think we're going to be thoughtful about where we go.
In terms of exactly which indications and how we compete.
I think we have to be aggressive and I think we are positioned to be aggressive and I think it's a huge opportunity.
Yeah.
If we are aggressive I think.
First and foremost we have some clear white space in front of us with graves disease, and some others like it.
We'll we'll carve out as ours and I think that will give us a real foothold and then I think the second thing is really lineup all of the other phase II studies that anybody is doing and decide which of those we wanted to use this guidance for our own our own pivotal programs. So that we say approach to the front of the line everywhere that matters.
I think that's sort of how we're thinking about it.
More generally but theres multiple first in class opportunities that we have.
The capital to to deliver on it.
Great Congrats and thanks for the question.
Thank you.
Thank you.
One moment please for our next question.
Our next question will come from Louise Chen Cantor Your line is open.
Hi, Thanks for taking my question. So I wanted to ask you as you look to grow the company.
Europe's Utica areas do you see the most unmet need and then what areas do you think might be a little bit too crowded and then secondly on the Hs indication for <unk> have you decided if youre going to move forward with it and if you have when do you think you'll start the studies and then just lastly on 14 O. Two just curious how youre thinking about the first indication.
Can it go after thank you.
Yes, so I'll go in reverse order there so.
First of all cases that we've disclosed as working with new indication has been graves.
Our client if that data is successful.
Is to progress.
Engraved although we're working on lots of other things that we just haven't talked about yet so I'll leave it to prevent to give.
Quick updates at their cadence on drop off rates, Yes, I think we have not made a final decision yet and so there's no. There's no specific plan studies start timeline, we're in a pretty close to ready position in terms of the basics, but we need to actually start study. If we're gonna start study I think the Soe data will be informative in terms of thinking about what payers with what I'm, just having a franchise. So I think we'll try.
We come back with a little bit more of an update on that sure after either the SLE are the salient Niu data.
And then in terms of therapeutic areas, where we see the most unmet need.
We've always been therapeutic area.
We continue to be therapeutic area agnostic there is unmet need for patients in every therapeutic area that's clear.
Some areas are more competitive than others. Obviously this has been a year with a lot of activity in ice.
Although it has also proven to be.
Youre aware some mechanisms have had an easier goal of it than others and ISO.
We're looking across therapeutic area landscape.
Are really open to anything.
Thank you.
Thank you. Thank you.
Okay.
And one moment please for our next question.
Our next question will come from Douglas Tsao of H C. Wainwright Your line is open.
Hi, good morning, Thanks for taking my question.
Maybe as a starting point, Matt if you could provide some color on the time I know you sort of indicated.
Physicians are having some questions are sort of misperceptions around the coverage I'm just curious what feedback you've gotten from a clinical standpoint.
Both the positive and negative and what sort of things you might need to correct within the physician community to perhaps sort of jumpstart growth, but then alright. Thank you.
Yes perfect.
So on the.
The payer side you covered it well.
On the clinical side, we really have a little bit of a tale of two cities, where we have docs, who use it quite a lot in their practice.
And loves the drug report constantly positive both patient feedback on their own feedback in terms of how it helps them.
To have a real steroid alternative with this level of safety and efficacy.
And then we have got two are writing I'd say like six or fewer scripts amongst.
We bucket them in a couple of different ways.
I think those docs are still sort of experimenting and so we get different feedback I'd say like we're not getting a lot of like specific negative perception that we need to counter act.
The main thing is these are docs, who because they only use the product a little bit have not sort of figured out how they want to think about it vis vis steroids and so if anything the feedback is yes. This is a great product, but steroids are pretty good too and so I think thats what were sort of most actively working on is how to help those docs to see the benefits were starting to see.
The limited benefits see the Tolerability benefit the Intertriginous data that we just put out here is potentially helpful. Pat.
To support our position, although we've always had good data there. So I think those are the kinds of messages that matter.
Really about working on continuing strategies to convert those docs.
You're right it more so as I said, we're hopeful about the work that we're doing there, but I want to be measured given what we've seen over the past call it five or six months.
Hi.
Maybe as a follow up and I know you touched on it a little bit on the telephone call debt just given you.
You're sort of what your capital position will be does that change.
Sort of opportunities that you've looked at.
Commitment that those would take.
From a development standpoint, your score as well as ultimately a commercial standpoint in terms of the infrastructure needed to support thank you.
Yeah, I think the short answer is it just puts us in an incredibly strong position to do anything.
And so I have commercialized drugs.
Do develop drugs, we feel like we have the capital to pursue the biggest opportunities aggressively.
I think we are still.
Frugal by nature, and so I think it's still hard for us to stomach large upfront capital commitments generally.
I think thats, probably the one thing where if we do it it will be something really special but other than that I'd say the main way I think about the capital as it just lets us do more.
I think I've said this in a couple places now.
In hindsight it doesn't seem like it should have been but the decision to pursue the gona program a year ago was not a totally easy decision at least not for our entire team because those would've been extensive phase III studies and we're doing at a time, where everyone's access to capital in their own access to capital, we're somewhat limited and I think.
I don't want to be in a position next time.
Tip toeing around an opportunity that is that good so I think having this capital base and being able to put it to work.
Really gives us strength in those kinds of discussions.
And then maybe just one follow up final follow up for me.
Over the last couple of years, you're seeing sort of a progressive de emphasis on some of the internal drug discovery efforts by the company does.
Does that do those some of those come back into focus a little bit more just given your cash needs or cash position how much stronger. Thank you.
Yeah.
Evolution of that exercise in general for US has been a positive one it has been challenging at times, but I think we've got some some best on right now I think AI.
Colgate assignment that we are excited about and one of the things we like about it is I think we found very capital efficient ways for that work to be funded through partnership or by outside capital suggest that we have a lot of optionality on success, but it's always been a pretty small piece of our burn and I'd say, it's significantly smaller.
Over the past several years as our late stage pipeline has come into sharper relief I don't candidly expect that to change significantly in the near term just.
Just because I think we're pretty well set on how those businesses are running than we'd like.
We'd like to welcome Scott.
Okay, great. Thank you.
Thanks, Doug.
Thank you.
And one moment please for our next question.
Our next question will come from the line of Yadkin nature.
<unk> Securities Your line is open.
Hey, Good morning. This is <unk> on for yacht and thanks for taking my questions two for us.
First is on <unk>, and then I have another one kind of on broader strategy.
On <unk>.
How would your Pos change for Dermatomyositis if.
If you didn't meet the bar that <unk> in SLE.
And then from a strategic standpoint, when youre thinking about the potential progression of avoidance, you are 20% to $30 billion company.
What proportion of the growth comes from the existing pipeline that you already have versus an external BD opportunity. So in other words do you have to bring in an asset or two to to reach that future valuation.
Yeah. So.
I'll start with the.
With the first one of that which is that which is I don't think I'll review of the Pos in DM would change it all depends.
Depending on the outcome.
SLE.
The at the biology of <unk> is very clear we have six positive large well run phase II studies, and SLE is known to be difficult.
Place.
So I think overall.
There will be no change in our view of records likelihood of success in DM.
As a function of any kind of outcome in SLE.
You can either direction, except for works great necessarily I'm not sure it will materially affect our profitability in DM at this point <unk> has presented itself as an agent and it's just a question of finding the right therapeutic applications for its profile. So that's on on that question.
On the general strategy and I can't say, there's clearly enough.
We never do another BD deal and that is not we are definitely going to do more BD deals, but if we never do another BD deal. We're sitting on we think today.
The most exciting late stage ini portfolio between CRM, and <unk> and became on others.
And.
And there is no question in my mind, but frankly, I mean, we know this from our competitor.
CRM alone can support that kind of value creation.
It alone drug like Brexit and which.
Certainly again pursuing a different strategy, but RIN work is on track to do fantastically, well and I think we have an agent that has some real competitive advantages versus we're involved with particular activities.
I think there is no question to me that we don't need to do BD.
For the next major leg of growth for us that said practically speaking if youre asking me what I expect I expect to see significant value creation.
Outside of our late stage pipeline as well.
New opportunities just because we've always been active because the opportunity set is literally is which now as it has ever been in terms of the quality of things that we see.
And we expect to take full advantage of that given our current capital position.
Yes.
Thank you very much appreciate it.
My pleasure.
Thank you.
And this will end the Q&A portion of the conference I would now like to turn the conference back to Matt Klein for closing remarks.
Yes. Thank you I just want to say, thank you again to everybody into the <unk>.
<unk> advent teams to all of our investors to the patients and investigators.
In our studies to our partners, it's been a phenomenal year. This is probably not the last time, we got on the phone together given the amount of data coming up but.
But just want to thank everybody for following along what has felt like a really really exciting moment for us. So.
If we don't talk before thanks.
And I guess again, it's possible that we will but if we don't talk before Thanksgiving you have a great holiday for those are celebrated and looking forward to getting on the phone again soon thank you very much.
Yes.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
Goodbye.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Yes.
[music].
Yes.
Yes.
[music].
Yeah.
So.
Tim.
Yes.
[music].
Yes.
[music].
<unk>.