Roivant Sciences Ltd

F:87S

Earnings Call Analysis

Understanding Roivant's Current Position

Roivant Sciences is focused on executing several important clinical trials, leveraging their diverse pipeline to address significant medical needs. As reported during this quarter, two main highlights were discussed: the ongoing clinical trials and a recent positive development linked to their drug brepocitinib for treating non-infectious uveitis (NIU). Roivant aims to capitalize on their robust product pipeline targeting both rare diseases and prevalent conditions. The company expressed optimism about future approvals that could lead to substantial revenue generation.

Positive Data from Brepocitinib Trials

The standout achievement in this earnings call was the impressive 52-week data from the NIU Phase II study, revealing sustained efficacy and safety for brepocitinib. Specifically, more than 90% of the patients treated with the higher dosage did not experience treatment failure after one year, significantly outpacing HUMIRA, which has a reported 50% failure rate at 24 weeks. Moreover, adverse events remained consistent with those of other current JAK inhibitors, signaling a favorable safety profile.

Pipeline Advancements and Clinical Execution

Roivant continues to drive forward on multiple fronts. In addition to brepocitinib, they have initiated the Phase II study of Mosli for pulmonary hypertension and have advanced trials for other drugs, including IMVT-1402 in Graves' disease and rheumatoid arthritis. With a developmental pipeline projected to generate over $10 billion in peak sales spanning several therapeutic areas, Roivant remains focused on refining its clinical execution strategies, especially as it seeks FDA approvals. Importantly, they anticipate the possibility of first approvals within the next couple of years alongside several Phase II and Phase III data readouts.

Financial Health and Shareholder Returns

Despite a reported loss of $237 million for continuing operations, Roivant concluded the quarter with a robust cash position of $5.4 billion, indicating strong financial health. This liquidity not only supports ongoing R&D efforts but also reflects management's commitment to returning value to shareholders. Notably, they have repurchased over $754 million in stock to date, and with fewer operational distractions post-Dermavant deal, future expenses are expected to decrease, enhancing their balance sheet.

Looking Ahead: Guidance and Market Position

Management provided a cautious yet optimistic outlook for upcoming quarter discussions. They aim to leverage the successful data from their trials and the favorable competitive positioning of brepocitinib against HUMIRA and its biosimilars, positioning it well for prescriptions in both refractory and earlier treatment lines. The upcoming year is anticipated to be pivotal, with key clinical data readouts and FDA interactions expected to shape market entry strategies. The company is keenly aware of the potential pricing trajectory, especially given the orphan drug designation, setting expectations around premium pricing aligned with similar or previously established benchmarks in the market.

Earnings Call Transcript 2025-Q2

[Operator]

Good day, and thank you for standing by. Welcome to the Roivant Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Stephanie Lee. Please go ahead.

[Stephanie Lee Griffin, executive]

Good morning, and thanks for joining today's call to review Roivant's financial results for the second quarter ended September 30, 2024, I'm Stephanie Lee with Roivant. Presenting today, we have Matt Gline, CEO of Roivant; and Ben Zimmer, CEO of Priovant. For those dialing in via our conference call, you can find the slides being presented today as well as the press release announcing these updates on our IR website at www.investor.roivant.com. We'll also be providing the current slide numbers that we present to help you follow along.

I'd like to remind you that we'll be making certain forward-looking statements during today's presentation. We strongly encourage you to review the information that we filed with the SEC for more information regarding these forward-looking statements and related risks and uncertainties.

With that, I'll turn it over to Matt.

[Matthew Gline, executive]

Thank you, Stephanie. Thank you, to the operator, and thank you, everyone, for dialing in this morning. We actually have a relatively full update. So I'm excited to share, and there's at least one major new thing we're going to talk about, which is the 52-week data from our NIU study, which as present, I'm pretty excited about. .

So starting on Slide 5. Look, I think there's really 2 major areas of focus for us right now. And the first is clinical trial execution. We have a lot of ongoing trials, all of which are important that are going to generate interesting data coming in the near future here. Obviously, today, we're talking about the 52-week data for brepocitinib and NIU in the Phase II study, we're also -- the Phase III study is ongoing with the first patients enrolled and with Fast Track designations haven't been granted. We presented this quarter batoclimab in Graves' disease. We are now getting our programs up and running for IMVT-1402 in both Graves' disease and rheumatoid arthritis as well as a number of other programs to be starting soon.

We have initiated our Phase II study of Mosli in PH-ILD. And then we have clinical data coming, including namilumab and sarcoidosis by the end of this quarter. Batoclimab data coming next year NGCIDP in 1 and brepocitinib and dermatomyositis top line data coming in the middle of next year as well. So that should be all exciting updates in the near future, all focused on clinical execution.

On Slide 6, the evolution of the business continues in some other ways as well. With the Dermavant deal having closed, just a couple -- a week or so ago, now allowing us to refocus on clinical executions, I just mentioned, while maintaining a large share of potential upside from VTAMA, we talked about that not long ago. We've made some progress with our LNP litigation with a Markman hearing in Pfizer Biotech case in December with trial less than a year from now and the Moderna case currently scheduled. We've continued our plan of returning capital to shareholders. We've so far repurchased an aggregate of $754 million worth of stock as of 9/30 including $106 million in the quarter reporting today, with ongoing commitment we've proven to be deploying this capital. And then, of course, and I know this will be happen the discussion. We have ongoing business development activities in multiple negotiations for potential in-licensing of new programs that we are really excited about. This really does remain one of the most exciting environments for that activity that we've ever been in.

As we've been saying for a little while here on Slide 7, the next chapter for us is really anchored by our late-stage pipeline. That includes IMVT-1402 and batoclimab, together, our FcRn franchise. That includes brepocitinib which will be talking about a fair amount today our TYK2 and JAK1 dual inhibitor that includes nivolumab and mostly and a number of other programs that we expect and hope to bring in in the near future.

Altogether on Slide 8, we think that really does give us one of the most exciting development stage clinical pipelines out there with a path to a $10 billion-plus peak sales portfolio spanning multiple therapeutic areas, obviously, including I&I and pulmonary hypertension as well as others with the first approvals potentially coming in the next couple of years as well as many Phase II and Phase III data readouts and a significant wave of approvals across new indications in the '26 to '30 time frame.

So really looking forward to the next handful of years here as our portfolio has time to mature and develop. So with that as the put overview, what I want to do next is make sure we give you time to the most significant of our updates for today, which is the 52-week data from our NIU Phase II study. And so I'm going to give just a really brief introduction here and then I'm going to hand it over to Ben Zimmer, who's going to take you through the updates on that program in more detail.

So look, on Slide 10, I'm going to steal only tiny bit of Ben's thunder. Basically, as you'll recall, in the spring, we presented the 24-week data, and it looked to be both like a support of the potential best in indication efficacy profile. Data overtime at NIU feel badly have not seen before. And the hope really was just to maintain that level of efficacy through 52 weeks. And I can say, we've definitely hit that bar. We really only had one additional subject in each dose arm with the treatment failure and we have sustained improvement from baseline on important metrics like retinal vascular leakage GST and macular edema. So really, really exciting data. No new safer tolerability signals, the safety data base at this point, as you'll know, comprises 1,400 exposed subjects and patients and is consistent with approved and widely JAK inhibitors. And we've got best practice destination for FDA and NIU with patients currently enrolling. So that's the [indiscernible] overview, but the data is pretty exciting.

So I want to hand it over to Ben Zimmer, as I set the CEO of Priovant, who's going to take you through the next slide here and walk through the actual data. Ben, take it away.

[Unknown Executive]

Great. Thanks, Matt. Before going into the 52-week data, I just wanted to briefly highlight 2 tailwinds in I&I that we are really excited about as it relates to the brepo Phase III programs in NIU as well as in dermatomyositis. And these are outlined on Slide 11.

The first on the left-hand side is you can see that as a category, JAK inhibitors have roughly doubled since 2020 in terms of both treated patients and revenue. And I think this really speaks to the fact that the benefit risk profile of these agents and physicians and patients comfort with that benefit risk profile is quite established at this point, and that even includes in indications with significantly less morbidity than those in which Priovant is operating.

And then in terms of those indications where Priovant is operating these orphan diseases with high morbidity we've also seen over the last few years, several launches in those, including the one played out on the right-hand side of this slide that have really validated this category of indication as a source, not only blockbuster revenue, but blockbuster revenue that can be achieved in a very quick time frame given the prevalence of the disease, high morbidity, high unmet need and concentrated prescriber base with orphan pricing.

And so if you turn to Slide 12, you see that NIU really fits this phenotype quite on the money around 70,000 to 100,000 patients in terms of prevalence, very high morbidity, fourth leading cause of blindness in the developed world among the working age population, very little available for patients and concentrated prescriber base. Most of these patients are seen dedicated uveitis specialty centers.

And turning to Slide 13, we see really supporting a new claims analysis that we did with IQVIA, which reconfirms once again the large number of patients receiving biologic therapy and TNF therapy in particular, in 2022, about 40,000 patients with NIU receiving a TNF inhibitor, including HUMIRA and off-label TNF inhibitors that number, you can see is growing quite significantly and includes between off-label TNF and other biologics, a large number of off-label therapies. And we know both from real-world experience and from clinical trials that HUMIRA is only effective in fewer than 50% of patients with NIU.

So I think the data here really speaks to both the large commercial opportunity in the TNF refractory population but also with all of these off-label therapies, the urgency that physicians and patients feel to find something that does work and the willingness to try that and try it aggressively. And we think that speaks to the additional opportunity for brepocitinib given our data potentially in the broader non interior NIU population.

So with that context, I'll turn to the data itself. Just a brief reminder on Slide 14 of the design of the Phase III NEPTUNE study this enrolled patients with active non-interior NIU, randomized 2:1 to brepo 45-milligrams and 15 milligrams, consistent with past studies, including the registrational study for HUMIRA as well as the treatment paradigm in NIU, given how sick patients are and are in need of immediate therapy to avoid the risk of blindness all patients in both arms received a 2-week 60-milligram per day steroid burst and then are rapidly tapered off those steroids. And the primary goal of the study then is to prevent treatment failure.

Notably, as a reminder, in the NEPTUNE study, the taper occurred over 6 weeks to week 8, while in precedent studies, including the HUMIRA VISUAL 1 study, it occurred over 13 weeks. So the study was designed really to set actually a higher bar for brepocitinib may get more difficult for it to demonstrate efficacy. And so against that backdrop, we're very excited with the results that were generated.

And turning now to Slide 15, to walk through that. We start with the primary endpoint from the NEPTUNE study. And on the left-hand side of the slide, you see the -- what was the primary endpoint, which is a 24-week treatment failure rate, which we've shared previously. And then on the right side, we have the updated data at week 52. In both cases, measured here against the historical placebo rate from the VISUAL I study, as Matt mentioned, only one additional patient that treatment failure criteria in each arm. So excellent data sustained at to week 52. You'll record call that HUMIRA's failure rate at week 24 was over 50% using this analysis that includes discontinuations with 52%, and although AbbVie did not specifically report a 1-year failure rate, the rate based on the data that was published was well in excess of 70% under this analysis. And probably the most effective way to compare to HUMIRA now, which we do on Slide 16, now that we have 1 year data from the NEPTUNE study is, again, it was the prespecified primary endpoint in the VISUAL I study which was median time to treatment failure and you see that on Slide 16, with 3 months for the placebo arm in VISUAL I 5.6 months for the active arm. So again, reinforcing that the median patient fails before 6 months. So more than half of patients even just at the 6-month mark, let alone the 1-year mark, are not able to receive benefit.

And then you see in contrast in BREPO, the low dose are median time to treatment failure 9.3 months. And in the high-dose arm, as we did not get to a 50% treatment failure rate, even if 1 year, it's not estimable over 12 months. So very exciting data on treatment failure.

And on Slide 17, we also see that clinical data supported by what's really the gold standard biomarker for measuring ocular inflammation, which is wide field for -- and geography measurements of retinal vascular leakage. And do you see here on the left side, data for the high-dose arm, 45 milligrams on the right side, the low-dose arm brepo 15 milligrams. The top row is the week 24 data, which we presented at the retina conference this fall. And then the bottom is the new 52-week data today. And you see really great data, particularly from the high-dose arm. No patients were seeing most of the patients improving, and that improvement from week 24, which was already quite significant not only being sustained up to 52 weeks, but actually even increasing slightly. And then you see at both time points, a very clear dose response as it relates to the 15-milligram. So very exciting data here that I think resonates quite a bit with the ophthalmology community in particular.

Turning to Slide 18. I wanted to share an update as well on our macular edema data think this is one where the 52-week data is particularly important because macular edema and uveitis patients really develops over time as the medium to longer-term consequence of inflammation. So even if inflammation can be gotten under control to the point that not impairing visual acuity in the short term, low levels of inflammation over time can lead to macular swelling and ultimately, macular edema, which, of course, is one of the supply ethane uveitis patients and significantly impaired vision otherwise.

And so week 24, as you'll recall, we had quite exciting data in the 45-milligram arm of the 10 patients who did not have macular edema at baseline none developed it. And of the 7 patients who had a baseline, 3 out of those 7 had resolution. But at the time we were very eager to see the extent to which that held up in 1 year and very excited to share that it held up, as you can see here quite well with no new patients developing macular edema and the 3 who had resolution maintaining that resolution.

And again, this compares quite favorably to HUMIRA, which is generally viewed by physicians in the real world is not being super effective at preventing the onset of macular edema and you see that's actually supported by data from the VISUAL I study were at 1 year of patients who did not have macular edema at baseline, half of them had developed it at 1 year. And in the placebo group, that was 6 months.

So again, a small number of patients. We're excited to see what the Phase III data looks like, but certainly very promising in terms of the potential to drive.

And then just very briefly on Slide 9, I want to further reinforce the robustness of this by looking at it means the ST over time, and you see here, in addition to the great data in the 45-milligram arm, a clear dose response with the 15-milligram arm which is great to see as well as time course data that is consistent with what you'd hope to see, particularly looking at the 45-milligram arm, very rapid onset of effect in the first few weeks even while the steroid taper, has already begun at week 2, and then that is clearly sustained over time out to 1 year.

So very excited about the Phase II data, and we're already excited after 6 months, even more excited now after 1 year. And at Priovant, we're already really focused now on the Phase III and not the Phase II and excited to share, as Matt mentioned, and as we announced a few months ago that enrollment of that study is underway and off to a great start.

You see on Slide 20 here, the schematic for the study very closely modeled on the Phase I, as you would suggest -- as one would imagine, we are advancing only the 45-milligram dose into Phase III with patients randomized 1:1 for BREPO 45 against placebo. This study is a single protocol, so technically 1 study, but with 2 identical substudies. So it will be reported out as 2 studies, CLARITY-1 and CLARITY-2 150 subjects per substudy. So 300 subjects total.

And the primary endpoint will be time to treatment failure, so the same primary endpoint as the as the VISUAL I study, and that will be over period 1, which is 1 year of placebo controlled data. And then secondary end points include all of the same measurements as the NEPTUNE study. And notably, as well, we are maintaining the rapid steroid taper that we've seen -- that we've done in the NEPTUNE study based on the great data we had in despite of that paper, we saw no need to to change that and are excited to be bringing that forward and really hopefully setting a new standard for uveitis clinical trials in terms of what therapies should be expected to demonstrate.

And we did have a productive meeting with FDA over the summer, and this design incorporates their input, and we're confident that we're able to deliver successful results, it will support an NDA filing.

So all in all, really a lot of excitement around NIU around the NIU program and BREPO's potential there. I did want to highlight as briefly before handing it back to Matt, as Matt mentioned, actually, although we're very excited about the Phase III NIU program, even before that, we're going to have a readout of the Phase III dermatomyositis program, which is fully enrolled, and we'll be reading out next year.

And I just wanted to highlight on Slide 21 that similar to NIU, this again really meets the criteria of the attributes that we've seen being conducive to a very rapid blockbuster revenue potential indication again, prevalence of around 40,000 adults in the U.S., very high percentage of these patients are in the active treatment funnel. I'll walk through on the next slide. This is a very high morbidity indication, there's really nothing available for patients in terms of modern therapies, mostly just steroids and IVIG, and to get a concentrated prescriber base our claims analysis suggests that about half of these patients are treated at a few hundred tertiary centers of excellence.

And on Slide 22, this provides just a bit more color on kind of what these patients are currently being treated on and where they stand. You see on the -- but here, as mentioned before around 35 patients in 2022, actively treated with late-stage therapies for dermatomyositis. Notably, all of the steroids referenced here are oral or injectable and in no cases to be topical steroids.

And you can see on the left-hand side of the slide that over 50% of these patients are treated with polypharmacy. So I think it really goes to how how sick they are and how limited the efficacy of the currently available treatments are. And then you see on the right-hand side, a different -- the same data, which just looks for any patients on each of these -- yes. supposedly steroid-sparing therapies in terms of ISTs, biologics and IVIG that they're not really achieving that goal in terms of steroid sparing with over 50% of patients or some groups roughly 50%, receiving greater than 10 milligrams per day of oral steroids chronically.

So we're really excited about the DM data readout, and we think that if BREPO's approved this claims analysis really supports a large bolus of potential demand for rapid adoption early in the launch. So before handing it back to Matt, really just to wrap up my section on Slide 23. We've been working on really just as Matt mentioned, development execution over the last few years in Priovant and I think starting next year, that really tees us up to have some major value inflection with the upcoming Phase III data in GM, NIU study to follow soon behind that. We are also planning to start studies in additional orphan indications in 2025. And as I mentioned at the beginning, doing all of this into an environment with quite a few commercial tailwinds. So really excited about what's ahead.

And with that, I'll hand it back to Matt.

[Matthew Gline, executive]

Thanks, Ben. And as I said, really excited about that data as well. So I appreciate all the work Priovant team has done there and looking forward to what's coming.

So I'm going to now read through a couple of other updates that are rehashing some things that have happened in the last couple of months that we are excited about, starting with a reminder of what's going on in our anti-FcRn franchise.

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

We continue to support our premise that deeper IgG reduction is important with our sort of 680 dose with deeper IgG reductions driving mealy higher response rates, which gives us a position for IMVT-1402 be potentially best-in-class. And that's against the backdrop of a very high unmet need with 25% to 30% of Graves' patients, uncontrolled or intolerant ATDs and really with no pharmacologic options. And now [indiscernible] announced the 1402 IND has been cleared by FDA enabling a straight pivotal transition.

I won't go through the data again in great detail, but on 26 and 27 and 28, we repeat that data -- it's just -- it's really exciting data for a disease with really no other options for this portion of the population.

The other announcement from Immunovant on Slide 29 is the first of several new indications now that Immunovant plan to get started in, which is in difficult to treat rheumatoid arthritis. So this is a subset of the RA population between 5% to 20% of the patient population that has failed at least 3 therapies. And what we've seen from another FcRn program for nipocalimab is that specifically an ACPA positive RA patients. This is associated with severe disease and poor outcomes, and the in-class data from nipocalimab suggests that both patients respond to FcRn therapy even when it delivers a comparatively lower IgG suppression than we believe 1402 will be able to deliver. This study did not have built to read out quickly with a quick answer. It's got an open-label lead-in with a randomized withdrawal design that means that all of these patents are going to get on therapy. So we think enrollment should be a relatively straightforward proposition, and we'll get data quickly, which is something we think is valuable for the overall 1402 program. And again, we think our deeper IgG suppression is going to help meaningfully given the data that we've observed from others.

If you look at Slide 30, just a reminder on that patient population, this is a big population of patients, if people think about RA, they think about sort of the full bolus of 1.5 million U.S. RA patients. But for a subset of those patients, they just can't get treatment. They try multiple lines of therapy is just not working. And we're focused specifically on those patients who are ACPA antibody positive. This is a subset of patients, but it's quite sick and really lacks for good options.

So again, I won't go into all the detail here, Ben and team could great call the KOL just last week on this. But on Slide 31, as a reminder, the 2 indications we've announced so far for 1402, or Graves' disease and RA, Graves' we ought to be first-in-class in RA where we think we have clear potential to be best-in-class. We have a number of other indications coming. The immune has indicated that 5 INDs have been included by FDA. So we're excited to talk about more of those indications, some of which are known to the public and some of which are not yet known to the public in the weeks and months to come. And as I'm more excited for some of those as I am for some that were early out. So stay tuned. But excited to see that program developing.

And then finally, on the clinical side, and again, I won't go through it in great detail because we spent time on it on the call earlier this fall. As you recall, this quarter, we unveiled Mosliciguat, which is our Phase II inhaled SGC activator for hypertension patients with interstitial lung disease. Really excited for the potential of that program. I've talked to many folks about it since we unveiled it, I think it could be a really great program for these patients, again, with few treatment options in a market that's now been validated by the very strong continued launch of Tyvaso.

As a reminder, on Slide 34, Mosli has shown among the highest PVR reductions ever seen in either a single or repeat dose setting in a way that makes us excited for the possible translation back to overall improvement in these in these PH-ILD patients. And we're not totally sure even that we've seen the best of that PVR data on Slide 35. You can see the PVRs continue to improve at the time point where they will measure. And we've got -- and this is maybe one of the most important thesis and there's one piece of new data I'll share in a moment here.

A really great dosing profile and formulation with sort of 1 pump once-a-day dosing for these patients. And one of the things that we think is really important here is that as an inhaled sGC activator we don't have systemic vasodilation. And we've gotten some questions as we've been out talking about the program, but how we are confident that obviously, the systemic exposure data that we've talked about is very helpful. We do not see meaningful levels of systemic exposure in assays. But the other evidence we have -- this is the first time we've put this out on Slide 36. p

This is from a different Phase I study of Mosli. This is for a multiple ascending dose study in healthy volunteers. And what you would expect if you were getting just a phase dilation, there's an impact on systemic systolic blood pressure. And you can see on Slide 36, we've got a couple of dose arms. This study did not go all the way up to 4 milligrams, but it's got about 0.5 milligram, 1 milligram and 2 milligrams. And you can see there's really no discernible pattern. And in fact, you would expect if we had systemic exposure reductions in systolic blood pressure. And in fact, the lowest dose arm here is placebo. So we -- this gives us additional confidence that this drug is not having a systemic impact.

So with that, I'm just going to turn a little bit to the future and then in just a minute, we'll open the line up to questions. So on Slide 38, I talked about this in August, but I am just super excited for where we are right now. In the next 18 months, or just like it was at '24, we have a number of really exciting large value creation opportunities, including things like the near-term data of namilumab sarcoidosis, which as we said, a little bit higher risk. It would be a huge opportunity successful, as well as multiple late-stage Ben talked about brepocitinib and VM. We have a number of really important, we think, highly value-creating reads from batoclimab and Immunovant. We have important updates in our LNP litigation. And then at the tail end of this period, the second half 2026, we get that Phase II data proposal.

So this is a period, even with our existing pipeline without thinking about business development, that is stacked with catalysts. And then as I've said a few times, we just could not be more excited for the business development environment we're in. And although everything takes a little longer than you want it to, I am chomping at the bit, waiting to share some of the things we're working on. So -- so continue to give us some more ready to share that. I think you'll agree, it's pretty exciting.

A brief financial update on Slide 40, just to say, continue to be careful on managing burn I think you'll see, especially with Dermavant now out of the picture, these numbers will come down in the coming quarters, and with some onetime expenses behind us, R&D expense of $143 million or adjusted R&D non-GAAP of $132 million. G&A of $203 million non-GAAP of $142 million, and that includes some pretty significant onetime expenses and overall loss for continuing operations $237 million or adjusted $219 million.

We ended the quarter in a very strong cash position of $5.4 billion of cash. Again, most of the dollars we spent in the recent months have been on the share repurchase, including the [ $106 million ] and no debt on the balance sheet following the close Dermavant transaction, the credit facility was repaid at closing Roivant acquired all the remaining debt and a share count that continues to come down over time as we repurchase shares.

So with that, I'll just end by going Slide 42, which lays out the time line for our upcoming catalysts. And I will end there. I'll say thank you again to everybody who's listening this morning, and I will hand it over to the operator to begin Q&A.

[Operator]

[Operator Instructions] Our first question is going to come from the line of Louise Chen with Cantor.

[Louise Chen, analyst]

Congratulations on all the progress and the data today. So I had 2 on brepocitinib. I wanted to ask you what set of efficacy you'd like to see in your Phase III NIU trial? And then also for BREPO and HS, where do you stand and what's the latest update there?

[Matthew Gline, executive]

Yes. I'll let Ben take both those questions other than I'll say what I hope I will say is we're very happy with the efficacy we've seen in Phase II, and I think it gives us a pretty wide margin relative to the competitor programs like HUMIRA, but Ben take it away.

[Unknown Executive]

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

[Matthew Gline, executive]

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

[Unknown Executive]

Yes, don't know have much to add to that.

[Operator]

[Operator Instructions] Our next question comes from the line of Brian Cheng with JPMorgan. .

[Brian Cheng, analyst]

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

[Matthew Gline, executive]

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

[Unknown Executive]

Yes. So in terms of steroids, there's no specific requirement. Patients are allowed on any background steroids of up to 40 milligrams per day or no steroids at all. And again, with the notion that because there's the 2-week burst at the start of the study, that kind of neutralizes whatever the background regimen was before.

In terms of stratification, no particular stratification of material note, and in terms of the 2 sub studies, sites will be assigned to one or the other in some geographies like the United States and certain other larger geographies have sites in both sub-studies and then there are certain countries that will only be in one or the other.

[Operator]

Our next question is going to come from the line of Yaron Werber with TD Cowen.

[Joyce Zhou, analyst]

This is Joyce on for Yaron. Can you talk about your thoughts around pricing for brepocitinib, of course, orphan price point here, but how should we think about pricing by indication?

[Matthew Gline, executive]

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

[Unknown Executive]

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

[Operator]

Our next question is going to come from the line of Andy Chen with Wolfe Research.

[Andy Chen, analyst]

On uveitis Phase III, can you talk about what placebo response you're assuming? So in the HUMIRA trial, I think they saw 13 weeks or 3 months. But in your trial, you have a more stringent tapering. So your tapering is 8 weeks versus HUMIRA trial, which was, I think, 15 weeks.

So in other words, are you assuming 13 weeks, is that going to be the placebo response on the primary endpoint? Is it going to be less than 13 weeks? Or should we be assuming that it's going to be less than 13 weeks?

[Matthew Gline, executive]

That's a great question. Ben?

[Unknown Executive]

Yes. I mean I think as the base case, our assumption was a similar placebo rate to what was seen in VISUAL I. We think there's opportunity potentially for it to be even higher for the reasons you said with the taper, but we didn't want to assume that.

In general, the study is actually overpowered. So even if the placebo rate ends up being significantly higher or the failure rate is significantly lower in the placebo group than we expected and we saw in VISUAL 1, we'd still have an opportunity to detect the difference just being humble about the fact that this is an area where there's really just one precedented study, we wanted to err on the side of being conservative, and that's why we're running as large a program as we are.

[Matthew Gline, executive]

And one thing that's patient-friendly about the study as a reminder is that it's an event-driven study. And as people fail, they'll move right over to the repo, which the patients will like about the study. Thanks, Andy. That was a great question. .

[Operator]

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

[Douglas Tsao, analyst]

Matt, just on that last one, when do patients automatically switch to BREPO if they have treatment dose or do they have the option to switch? And is there a sort of alternative protocol that they pursue. .

[Matthew Gline, executive]

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

[Douglas Tsao, analyst]

Okay. Great. And just as a follow-up for Matt. From a business development standpoint, obviously, with mostly and the creation of format, we have sort of gone beyond what has been a short-term focus on NIU. I'm just curious how you're thinking about why that from a therapeutic category standpoint went out? And does this move respiratory like a big focus for adding additional assets or you're just going to continue to be as you put sort of the economics and pick out the best opportunities as you identified them?

[Matthew Gline, executive]

Yes. Thanks, Doug. It's a great question. It's one that you've been focused on and rightly so. I think we are pretty ruthlessly focused on doing the best things we can -- the analogy that I've been using that you might have heard lately is that we exist in the excess dough outside of other people's cookie cutters. And so we're not the snow man, we're not the Christmas tree. We're the dough in between the 2, and that means we've kind of got to be flexible in terms of therapeutic area, but we think there's a lot of really great cookie to bake out of that, though, as well. .

[Operator]

Our next question comes from the line of Dennis Ding with Jefferies.

[Unknown Analyst]

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

[Matthew Gline, executive]

Yes, thanks. That's -- it's a great question. I'll take a part and then hand it over to Ben. Look, my only reminder is about 2 things. One is a reminder, Pfizer design and ran the DM study was -- sorry, the lupus study. It was one of the last ones from their original brepocitinib program on the overlap point, will say something similar. We have so much data in brepocitinib across such of indications at this point in any 1 study in any 1 indication is really not as informative as the overall data on how efficacious the drug is. So I'm not sure we see a lot of specific commonality between SLE and then prediction from SLE related to DM. But Ben, you want to take that as well as the off-label Jackie's question.

[Unknown Executive]

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

As far as far as Jackson DM, yes, they're used pretty extensively. There was a recent publication that was kind of a literature review of case reports and there were 600 published case reports roughly in that across DM and Juvenile DM in that. And I think if you talk to KOLs and other prescribers and other DM treaters, you'll see that they do use JAK inhibitors. So I think it's certainly an area of a lot of comfort most of the treating physicians here will be rheumatologists and dermatologists, a few neurologists as well, but both rooms and derms are also obviously very comfortable with JAK inhibitors from other indications as well.

And as I mentioned before, both rheumatic and derm indications with less morbidity than JAK inhibitors that are on label for those indications are widely prescribed at this point. And so I think there's a lot of excitement in the physician community about JAK inhibition, I think there's a lot of excitement about a TYK2/JAK1 inhibitor, in particular, given the alignment of of that particular mechanism to the pathobiology of DM and really just the prospect of having a once daily oral approved therapy that's efficacious and targets the underlying disease that would be a new and important development for the field.

[Operator]

Our next question comes from the line of Corinne Johnson with Goldman Sachs. .

[Craig McLean, analyst]

This is Craig on for Corinne. So the first question here is, given the emergence of HUMIRA biosimilars, how do you expect BREPO could be positioned to it potentially gain approval? And then from there, will you recruit or target patients that are refractory to anti-TNF type medicines and CLARITY?

[Matthew Gline, executive]

Yes. Ben, do you want to take [ first great ] both of those?

[Unknown Executive]

Yes.

[Matthew Gline, executive]

So what was -- the first question was just how do we track to position BREPO relative to HUMIRA biosimilar? And then the second was we recruit patients. .

[Unknown Executive]

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

And so I think that will only lead to an expansion of the refractory market. I also think that this is a rare disease, very high unmet need, one of the leading causes of blindness in the United States, if our data is actually differentiated from HUMIRA, there is going to be a very significant outcry from patients and physicians to use this drug for line because people don't want to go blind and they want to use whatever the best available treatment is to prevent that.

[Matthew Gline, executive]

And then just...

[Unknown Executive]

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

[Matthew Gline, executive]

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

[Operator]

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

[Matthew Gline, executive]

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

[Operator]

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