Roivant Sciences Ltd. (ROIV) Q1 2024 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Roivant First Quarter 2024 Earnings 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. [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.

Good morning, and thank you for joining today's call to review Roivant's financial results for the first quarter ended June 30, 2024 along with the business update. I'm Stephanie Lee with Roivant. Presenting today, we have Matt Gline, CEO of Roivant. For those dialing in 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.investor.roivant.com. We'll also be providing the slide numbers as we present to help you follow along. I'd like to remind you that we'll be making certain forward-looking statements during today's presentation. We strongly encourage you to review the information that we have filed with the SEC for more information regarding these forward-looking statements and related risks and uncertainties. And with that, I'll turn it over to Matt.

Great. Thanks, Steph, and thanks everybody for joining. It's always a pleasure to get on these calls. In truth, we saved all of our fund updates for this fall. So today is a relatively straightforward set of updates but a couple of really meaningful clinical execution points and a couple of other things that I'm happy to be talking about. So thank you again. I'll start just quickly on slide 5 in the deck with a reminder. Just kind of where we are this year which is, this is a year of growth and expansion for us. So we're focused very much on delivering clinical data across multiple of our franchise the anti-FcRn franchise where we have some meaningful data sets that's coming as soon as -- the near future as well as over the next call it six months. We have continued clinical development beyond that in our pipeline including in brepocitinib where we'll be beginning our Phase 3 program in NIU shortly where we have data coming in namilumab and sarcoidosis and so on. We're very much looking forward to. We'll talk a little bit about VTAMA today, but the story for VTAMA for this year is really the expansion of the label with AD and some acceleration of psoriasis, certainly volumes and revenues are over time. And then we continue to be hard at work expanding our pipeline looking at mid-late-stage programs. I know there's a lot of focus on that activity. We will be unveiling our much discussed so far undisclosed program just next month, so hold on for a few more weeks there. And then, continuing to work on prioritizing capital allocation we thinking aggressively around the use of capital to continue to buy back shares and so on. We are super proud on slide 6 of the pipeline as it currently stands. And one of the things that -- I'm sure sometimes you get all these questions about IMVT, but every time I look at our pipeline, we still have one of the best I&I pipelines without IMVT, so excited about the breadth of opportunities there, in particular excited about the next, call it, 18 months both in the [indiscernible], we'll talk a lot more about today and then brepocitinib where we have pivotal data coming shortly. So, the main updates for the quarter starting on slide 8. One is on brepocitinib, which is that we've now completed enrollment in our Phase 3 study in dermatomyositis. It's 241 subjects across 90 sites. It is the largest interventional DM study ever conducted. And we can now say with confidence we expect top line data in the second half of next year that study completed enrollment a few weeks back. And we've completed our end of Phase 2 meeting with FDA on the NIU opportunity and are planning to begin a 52-week Phase 3 study in the near future in NIU Phase 3 program. At Immunovant, we had announced that as you may recall a slight delay last quarter for the MG study. We can now say that that study has completed enrollment only a little bit behind the original schedule and so we'll get data in the first quarter of next year as we've previously discussed. And we remain on track for the initiation of registrational program in MG probably for next year as well as multiple other programs we'll talk more about that in a minute. We will unveil our upcoming Phase 2 program, as I said in September next month, excited to do that. It will be the combination of the presentation or some data we will likely do a home hub like this one. So, looking forward to getting together at that time. And then a couple of other updates on slide 9. One is just to say, we continue to be pleased with the progress we're making at Genevant in our IP litigation around COVID vaccines discovery continues and you may have seen, we requested a slightly many case schedule so that we could get some more information from Moderna, which if approved beginning of the trial will be just about a year from now so in September of 2025. And then we achieved some important clinical regulatory milestones that resulted in cash coming in the door. We're going to get a $28 million milestone related to the Japanese approval of VTAMA, we got that in July and we have received our portion of $110 million of the remaining Roche proceeds for Telavant now that they've begun. They hit the definition for that milestone. So that has been received this month. So, pleased with that. And obviously, even though $110 million still a multiple even in this milestone of the capital that we originally invested in the program. So those are the main updates for the quarter. I want to spend a couple of minutes on some things in particular. One of them just to review where we are and our level of enthusiasm around Immunovant around the anti-FcRn opportunity. We've been having some conversations over the last few months, and it occurs to me, but I have a little bit of regret only that we've been drawn into -- as a field, I'd say, a conversation about apportionment of a small pie. One in fact, I think our view is that the biology for FcRn, the biology for B-cell immunology and beyond is very broad. So I just wanted to highlight, again, where we think we are, the amount of data that's been generated here that supports the breadth of the opportunity and a little bit of a reminder of just why we are so excited about the program. So as a reminder, on Slide 11, look, we've said this in multiple places. We really do believe that IMVT-1402 has a potentially best-in-class profile here. That comes, obviously, first and foremost, from our ability to suppress IgG as deeply or deeper than any of the other anti-FcRn antibodies in our view, without any impacts on things like albumin and LDL, which obviously was something that affected our first generation program. And then I think it's worth remembering we are also going to be able to launch in all likelihood IMVT-1402 in an auto-injector, it will be a simple subcutaneous injection that should enable self-administration at home, subject to FDA being okay with that. And we think that will be a really compelling format for patients and a differentiated option versus where -- certainly where the field is right now, and our sense is potentially differentiated relative to even where the field will be in a couple of years. There has been on Slide 12, just absolutely explosive growth over the past couple of years and the breadth of what FcRn has demonstrated. Relying back to 2020, there were eight total FcRn indications in development with about 700,000 addressable patients. There are now 23 indications in development for anti-FcRn antibodies with a current total addressable population of 4 million, and that number is growing often and we expect to add some to it in the relatively near future as well. So, just a huge area of biology and a patient population that prior to this moment kind of unmet need. On Slide 13, you can see there have now been across 22 positive late-stage studies in nine indications, four different anti-FcRn antibodies have been studied at about 2,000 patients. There's a tremendous amount of data about this mechanism, some of which generated by us, its batoclimab in Graves and batoclimab in candidate. Some was generated by others such as in children recently. But overall, just a really compelling picture of a well-tolerated class that shows meaningful efficacy and clinical benefit in a pretty wide range at this point of diseases. So we're really excited about that. The other piece -- I don't want to spend too much time going on this on Slide 14, is there's been a lot of interest, let's say, in competitive mechanisms, IgG degradation or some of the CAR-T or B-cell biology, T-cell engagers for autoimmune disease. I would say nothing on this slide is meant to suggest that we are not enthusiastic about much of that biology. We think it's really great biology. But I think it's been interesting to us only in the sense that it's so much earlier than FcRn. And FcRn is are elegantly cleared to this bar but there's still a lot of work to do in some of these other mechanisms. You can see here, again, multiple approvals for our class in immunology, multiple positive Phase 3 studies, multiple positive Phase 2 studies in thousands of patients. It just sets up a different picture in terms of the level of validation and the proximity of the opportunity. And so what we're excited about that vis-à-vis our place in the competitive field. Again, we think many of these other classes are interesting, watching them closely, we make investments in other areas. And so you can imagine we're watching these areas. And we like the biology. But we feel really good about where FcRn is positioned competitively and just how different it looks in terms of stage of opportunity. On Slide 15, everyone wants to compare themselves to the biggest drugs. And so the Humira comparison is maybe overdone, but I liked a couple of things about it here. But one of the things I liked about it is if you try and stack up where FcRn is versus where the TNF class was at various points in history, it just feels exciting to be at this stage of the biology, right? We are in a much larger set of indications than TNF were being studied in at the time and growing. FcRns have sold extremely well on a time-adjusted basis. The first FcRn approved reported about $1.2 billion in net sales in its first year post launch. And if you look at our forecast, you look at street forecasts, I think there's a chance that class will build, especially given the breadth of early development, meaningfully quicker over time, the TNFs class was able. And I think it's notable from the competitive point, the TNF class didn't achieve these, obviously, phenomenal results just on their own, there were -- by 20 years after launch, there were nine other approved MOAs sort of directly competing with TNFs in many of their indications and yet TNF is being a foundational class being novel biology, being well tolerated, we're able to call down a really meaningful portion of that. So I think as we look at -- and there's many other examples we couldn't take, but as we look at these other spaces, I think our view is -- the opportunity here is big. It's broad. Notably, these are not just many indications. Many of these indications are very large indications. And so we've got even success in a handful of them for any given program that can make a big impact. And indications that are big enough, as many of the TNF indications to accommodate multiple programs multiple mechanisms. This is a big tent. Slide 16 has an aggressive plan. We are excited about that plan. 1402 will be in four to five potential registrational programs this fiscal year, moving up to 10 indications by next fiscal year. So three IND is expected to be active by the end of this calendar year. Really excited of what we're doing with 1402, what we're going to generate for data in the coming months to validate that approach. So and I'll say on Immunovant, but why don't you revisit that topic. A couple of other smaller things. One on Slide 18 just a quick update on VTAMA, $18.4 million in product revenue for the quarter relatively flat on GTN yield. Notably script volumes are doing actually relatively well for -- we get frequently the question it looks flat, it looks flattish. Script volumes are up 20% year-over-year relative to the same quarter last year. They're growing single-digit percent quarter-on-quarter every quarter and we continue to see that. So that suggests, we are continuing to slowly build into the psoriasis market and we're happy with that and it suggests the willingness over time for this -- that behavior to change, we remain the best selling from the volume perspective novel topical. I think in psoriasis and all that sets us up really well for as we said before the main event which is the launch in AD that will come after approval at the end of this year. I think on GTN quickly because the GTN yield fluctuations have sort of obscured the overall positive trend in volume here. I'll just say, we had one payer contract that had a reset effectively earlier this year that we were not getting a rebate on last year that we are rebating now. So that resulted in bolt-on some onetime and also just like an overall reset of GTN. I expect to accrete from here, it will continue to be very [indiscernible] from here. Long term, I don't have a huge difference in my expectations, but I think this year it will sort of build from here instead of we hope might have been a higher level. Notably net price continues to increase over time outside of that one contract. So we continue to see everything trending in the direction that we wanted to. The key upcoming catalysts on Slide 20. First of all not on this slide, but we'll be presenting this undisclosed program we had some clinical data in September. Also upcoming here, we've got 1402 putting out detailed development plan information as well as data from the batoclimab study in Graves' coming this fall, we're pretty excited to put that data out there. We think Graves' is a really exciting opportunity. Namilumab we're going to have top line data from that Phase II trial in sarcoidosis again not an area of great -- sort of external focus right now. But if the data are positive -- if they are positive we're excited about what that will mean. VTAMA, again the big event the atopic dermatitis label expansion hopefully coming at the end of this year and then by the end of the fiscal year data from batoclimab in myasthenia gravis as we talked about, as well as data from the period one of the Phase IIb study in CIDP. And then by the end of fiscal year initiating four to five potential registrational programs in 1402 all of which we together with Immunovant speaking more about in the near future. So finally before I wrap up this relatively quick update on Slide 22, just a financial update, I think, overall a pretty normal quarter for us from a finance perspective. We actually had net income this year -- this quarter of $57 million. Net revenues of $55 million including product revenues had about $18 million. Expenses sort of within our historical balance. We ended the quarter with $5.7 billion in cash and cash equivalents that sort of reflects the Sumitomo repurchase that we had made in April I want to say of last quarter. And then the carrying value of our debt has come down a bit, thanks to the renegotiation that we have done at Dermavant and you can see shares outstanding on the slide as well about 739 million. So with that, I'll wrap up the presentation portion of this on Slide 24. You can see that we have a pretty exciting catalyst calendar coming up with frankly a pretty rich couple of months ahead between the unveil of the new program. I continue to work on the BD side and data coming from batoclimab generally in the coming months. So really looking forward to getting together what I'm sure will be multiple times in the next few months to talk about those updates and to continue to see this all developed. And with that I will wrap up the presentation for the morning. Thank you again for listening and I'll hand it back to the operator for Q&A.

[Operator Instructions] And our first question comes from Allison Bratzel of Piper Sandler. Your line is open.

Hey good morning. Thanks for the update Matt, and thanks for taking the question. Just one for me on Priovant. Now that you've met with FDA on brepo and NIU, just I guess what is left to be worked out or decided on the Phase III design. I think you'd given some high-level guidance looking for 300 to 350-ish patients and a protocol basically as close to NEPTUNE as possible. I guess just high level, is that still the case? And is any of this protocol design dependent on the 52-week readout later this year? And then just I guess on that longer-term follow-up, what would you view as an outcome that reinforces your view on the opportunity in in uveitis? Thanks.

Yes, sure. Thanks. So look first of all extremely constructive interaction with FDA. I think they are really excited to see a new opportunity in NIU, which is a disease that really needs to be studied. I think we feel good about where that's headed. I'd say the previous guidance was largely in line with what we expect to see. And I think we got just about everything we really feel like we needed to make that program a success. So really at this point small freaks but just getting steady up and running and we'll be able to provide a full perception of it pretty soon here honestly. And then I'd say, basically none of the study design hinges on the 52-week data, although obviously, we saw something surprising. We were closely at it. And I think – I don't think there's anything in particular. we're looking for in 52 weeks to reinforce the program other than continued strong benefit to patients, which given the quality of the 24-week data we certainly expect. Thanks, All. Thanks for the great question.

Thank you. Our next question comes from Corinne Johnson of Goldman Sachs. Your line is open.

Hey, good morning, team. This is Craig on for Corinne. So following the completion of enrollment of the VALOR study. Can you kind of outline how the final enrollment compares to your original expectations? And maybe walk us through some powering assumptions there?

Yes. Sure. A couple of things. One is the actual number of patients to be enrolled at 241 was a little bit higher than our original plan for the study originally it had been 225. So we feel extremely well powered. I don't have a lot to say on like baseline characteristics or demographics right now. I think we're perfectly happy with the patients that we've enrolled and we think it sets us up well. I guess the other comment I'll make with a shout out to the Priovant team is PM is an incredibly difficult indication in which to develop drugs, these patients are hard to find. And frankly, our experience is that the key is a lot of leg work with the sites. This is – so we spend a lot of time about talking to investigators trying to get out there in the field to make sure that we have what we needed. And so yes, I'm very proud of the effort there. I'm proud of how quickly that study was able to get to fully enroll and looking forward to sharing that data when it's available. It's the largest as I said earlier. Thanks for the question...

Of course. Just one more if I may. Could you just remind us of what you're looking for in terms of the go no-go decision for the Phase II namilumab data coming relatively soon?

Look I think – we haven't articulated like a simple straightforward bar. And I think the truth is that sarcoidosis is one of these diseases, where there's not a lot of other truth mechanism. There's not a lot of options for patients who were in sick with the disease. So I think the bar is meaningful. I think the bar is – if the study works, it certainly worth progressing. As with all Phase II trials we're going to evaluate the qualitative data and we'll think about what else is on our plate. We're also looking for consistency across not just the primary but across a few secondaries and a bunch of different ways that people look at the treatment of sarcoidosis patients. Thank you.

Got it. Thank you, guys.

Thank you. Our next question comes from Brian Cheng of JPMorgan. Your line is open.

Hey, guys. Good morning. Thanks for taking our question. Maybe first is with the recent sell-off in the market just – does it make it easier or harder for you to find a new asset. Does it change the way how you negotiate?

Thanks, Brian. Great question. I will hand over to Mayukh. But the short thing I'll say is we – look, we work with a wide range of different prospective partners. They are affected by varying degrees to the financial markets. But mostly we're focused on getting great opportunities at prices that we're excited about. But Mayukh, what would you say to the question about the sell-off?

Yes. Look, I think the short answer is it depends. But I think I don't know if it's too much more to add to what Matt said.

Thanks, Mayukh. So Brian I think the short answer – the other piece is sort of the question behind the question is we remain really excited with what we see in the world and we're looking forward to doing the right deal at the right time.

Okay. Maybe just one question on 1402. I guess just overall I just want to get a better sense of how you're thinking around this asset. As we think through the 10 indications that you're lining up for through the next fiscal year and you talked about a lot about the range of themes of opportunities that you have laid out in your slide deck today. So how do you pick and choose the different areas? And I think most importantly is how you get credits for it in front of investors because it seems that investors today are very fixated on MG and CIDP. So in other words, how do you intend to get credits for – to push 1402 into uncharted indications? And then maybe just one, last one more like a housekeeping one. What is the data -- what is the cadence of catalyst flow in the fall because we're going to get Phase II asset unveiling in September. Graves plan also unveiling for Immunovant and sarcoidosis data coming out. So what's the cadence of data flow? Thanks.

Thanks, Brian. All great questions. Look unfortunately, I think the anodyne answer that's also true is obviously, the biggest factor that's going to our picketing through the indications or the quality of the biology the size of the unmet need, where we can be competitively positioned, cost and risk kind of trade-offs. Like those are obviously, the main factors that go in. I'd say, a couple of things about 1402, that I find exciting or about the excellent landscape and it seems like may want to jump in also. One of the things that we've said, over and over again about FcRn, is that anyone's Phase II studies, everyone's Phase II study that goes both ways. It means that we need to be careful about what are made out, but it means that once you know, what the depth of IgG suppression does in a patient population, you could really be front of the pack. And so, I think we're looking at indications where we can be in the front of the pack where we can get out there commercially and sort of be neck and neck, with our competitors hopefully, with deeper IgG suppression. So I think that's obviously, a factor. For what it's worth, we also think MG is a really big opportunity. We also think CIDP is a big opportunity. And as a reminder, we're generating a meaningful data set in MG with batoclimab that will underscore and get to the more better question just in the coming months. So I think there's a lot focus on there even batoclimab focused on the existing commercial indications.

I think you hit most of the point, Matt. I'd just like to way Brian that you framed the question, which is people are focused on MG and CIDP and everything else basically is upside.

That's right. Yes., I think that's a great way to put it. And in terms of cadence of catalyst flow, look, we have a busy call it six to seven months ahead here. I'd say, September will be a busy month and then the nomad data comes later this fall. And then, I think we've said, MG will come kind of early next year and CIDP and kind of probably, a little bit thereafter. So I think that's what the sort of a medium flow looks like. And obviously, shortly on the heels of that we'll be looking at the end and beyond. Q – Brian Cheng: Okay.

Great. Thanks, Brian.

Thank you. Our next question comes from Dave Risinger of Leerink Partners. Your line is open. Q – Dave Risinger: Thanks very much. And thanks for all the updates. So I have two questions, please. First, could you provide more color on the LNP litigation including the event path ahead and then second, could you discuss external transaction prospects including the size potential of deals that you're looking at? Thanks very much.

Yes, sure. Thanks, Dave. Both great questions. So on the LNP litigation, again, there's not that much that we're generally able to say, about an ongoing litigation. But in terms of what's coming, so we're in discovery now. And as I mentioned on the call, that process is going to continue we hope for a few more months, we together with Moderna Arbutus and Genevant have asked for a moderate extension of that process to get answers for few of your outstanding questions. So I think that's the sort of next thing here. And then, that calendar -- there's a call of the judge in the next few weeks to get that approved. But if that calendar is approved, it would have some rejudgment happening kind of in the beginning portion of next year followed by a trial a year from now. So a little bit later than the -- sort of most recent version of the calendar, but for good reason instigated by our size. On external transaction price prospects, I guess I'll hand over to Mayukh to answer that question straight from the source.

Hi, Dave. Thanks for the question. So I think, we have carefully avoided I think getting bucketed whenever sort of asked and I think that that continues, I think -- so I would think about size of opportunity, I think that we're looking at. We really think about this I think as you know Dave, as a portfolio. And so there's going to be 180 in any one deal. But I think overall, I think obviously, our -- so we think about things kind of on a deal-by-deal basis really through that investment lens it's a good investment, but then over sort of the surface area of all those deals we're looking to move the needle on our enterprise overall.

The only thing I'd add is, because we have the question sometimes I'm always surprised, when I get it. I think we are a very unlikely buyer of multibillion dollar public companies. I think, we are stingy by nature and are looking for places, where we can spend more of the dollars on clinical development. So, we are never saying never company, but I think that's just truly about who we are. Thanks, Dave. Q – Dave Risinger: Thank you.

Thank you. Our next question comes from Dennis Ding of Jefferies. Your line is open. Q – Dennis Ding: Hi, good morning. Thanks for taking our questions. Two, for me. So maybe if, we can revisit sarcoidosis briefly. Correct me if I'm wrong, but previously, you may have characterized the Phase II is potentially registrational. Can you reiterate that and see and confirm if that's true? Maybe talk a little bit about the path forward, if that data is positive. And then number two, around OpEx. I mean given Immunovant started a bunch of new trials over the next few years how do you think your OpEx will evolve during that time? Thank you.

Yes, thank you. Look we are -- on sarcoidosis the truth is it's a Phase 2 study. It's 100 patients. It's certainly large enough to serve as at least a pivotal study, if successful and obviously many patients with high unmet needs. So depending on the quality of the data that there's always a conversation to have with the regulators. But then I think our expectation is that it's a Phase 2 study and we would have a program behind it invest in all scenarios and we're just excited to be developing the disease. There are no approved agents outside of steroids. So, the unmet is really significant. On the Immunovant question, look I think the short answer to the question on its phase is given the Immunovant is starting a number of pivotal studies, I would expect their OpEx to increase. I don't have super specific financial guidance right now to offer the cost of a Phase 3 program for an FcRn in general has ranged from call it $80 million to $120 million. And so over the life of those programs, I think those are like reasonable estimates plus overhead personnel and stuff like that. So, I'd expect the firm to go up there over time. Obviously, if you look at some of our competitors I'd say like their R&D expenses may be useful but a big piece of the cost here ultimately lines up come in as we get closer to a commercial launch from a G&A perspective as well. And notably, Immunovant is well-capitalized right now for this program and we are obviously excited to be a good partner for them. Q – Dennis Ding: Great. Thank you.

Thank you. Our next question comes from Yaron Werber of TD Cowen. Your line is open.

Great. Thanks for taking my question. I have a couple. Maybe just the first one we started getting questions and I think you highlighted now that you're planning on unveiling your recently in-licensed Phase 2 program in September. Is there anything you can unveil a little bit today. Just indication or how big is the study? Is it a randomized study? Is it just an open-label study? Has there been other studies with this mechanism in whatever indication you're examining. And then maybe just secondly so it sounds like GMG and CIDP will start Phase 3 let's say Q1 potentially with 1402. For the other three is it sort of Graves', Sjogren’s, and maybe [indiscernible] is that sort of the order? Thank you.

Thanks Yaron. On those sort of assets we're weeks away. So, I think I'm going to mostly reserve comment, other than to reiterate some things we've already said mainly first of all obviously we're excited about the program. There is clinical data to share when we released the program. That clinical data I think is useful and people will find it informative. And there is a competitor program -- there's another program of the same mechanism being studied by a big pharma company to different indication. We've said that publicly before. And other than that we'll reserve comment until we unveil the rest in September, but looking forward to it. Of the programs that we've sort of described obviously the Graves' data is coming shortly and we expect both to communicate talking about data as well as the development plan for that program. And then the MG data and CIDP are coming to begin next year and we've said clearly in a firm study in MG. We haven't said exactly what the other indications are yet. I think in Immunovant will paint a fulsome picture of that relatively soon. But my expectation to be clear is the Phase 3 studies for some of those programs. Again we expect to have three INDs by the end of this year. All of those INDs will be for registrational sort of Phase 2/3 kind of programs. And so I would expect that with these studies to in essence have been done by the end of this year and the other two in the first quarter. Thanks Yaron.

Thank you. Our next question comes from Louise Chen of Cantor. Your line is open.

Hi, thank you for taking my questions here. I had two for you. The first one I wanted to ask you is if the launch of FcRn is a possibility just for Roivant to do on its own. Is that on the table? And then secondly just curious on the market opportunity for VTAMA and AD and how you're preparing for the launch of this product coming at the end of this year? Thank you.

On the first question I'll say we are certainly aware of a once upon a time a small biotech company that launched an anti-FcRn antibody on its own and had some success doing so. And so it certainly seems possible to do that ourselves. And look I think that has been an exciting outcome. I think as the class presents itself the breadth of the opportunity is large. So, I think we're going to do what maximizes the value of that opportunity for us. And beyond that all things are on the table. On VTAMA and AD, look I think there's a couple of things. One is probably most importantly looking for the prescribers who were not currently in front of how are just pediatric allergists pediatric dermatologists really hitting hard impedes where we'll be alone at launch among novel topicals. So I think that's sure that prep is important. And then looking hitting a hard look at our existing sales force targeting and making sure that we're covering all the right docs for the opportunity and getting our messaging exactly right to those docs, especially, frankly because look I think the story in AD is a little bit different than the story they're used to seeing in psoriasis, right? I think like the pediatric population is different. The safety -- the tolerability profile I should say of the drug is even better in the AD data set. I think the quality of our data in AD is differentiated to an even greater degree relative to some of the other novel topicals than it is in psoriasis. And so I think we need to get that across is for example is a major symptom in AD it's acute. Its data is very, very good and I think we'll be making sure to highlight that. So I think really trying to get messaging with all docs right, make sure we're talking to the right docs, to make sure we're especially covering the docs or not kind of overlapping with the psoriasis docs that we're so ready to get out in front of those as soon as we get that on from FDA. Thank you. Both great questions. Appreciate it.

Thank you. Our next question comes from Yatin Suneja of Guggenheim. Your line is open.

Yes. Thank you for taking my question. Maybe just one more on VTAMA specifically on the psoriasis side. I mean, if you look at the past I would say four, five quarters you are in that $18 million to $20 million range on a quarterly basis. I mean what does that imply about the overall market opportunity? What can you do to, sort of, reinflect sales in psoriasis? I understand you atopic dermatitis could give a lift, but just in psoriasis just curious, how you view the market what sort of peak sales you are assuming? Thanks.

So thanks. It’s a good question. First of all, I'll say I continue to be pleased with how we're set up on VTAMA, which is to say industry gives us no credit for it. So I think it's all upside from here which is always a nice place to be. Look I think on the -- sort of tracking the progress as it were as I said in my prepared remarks I think, the -- sort of mechanical sales number probably understates the progression in the sense that we had a little bit of -- just noise around gross to net that we expect to climb out of from here. And volumes are actually building and people have been asking us about the supposed of flattening of this curve for a while were up 20% from a volumes perspective versus the same quarter last year and continuing to grow every quarter. I think as GTN climbs, as GTN normalizes that sort of base that we've been building month-in month-out quarter in and quarter out from a volume perspective we'll continue to work for us. And I still have hope that over time there will be some real compounding effects there the docs that like the product the docs that write the product we'll continue to write it more and more. So I do think psoriasis has the potential to be very meaningful over time. It's just been a little bit of a slower burn. And I think the thing about AD is it's got the potential to be like the inflection of a different sort which is a much larger patient population with a set of data that we think is sort of easier based on what we see the differences versus our peers and so excited for that launch as well. Thank you very much.

Thank you. Our next question comes from Douglas Tsao of H.C. Wainwright. Your line is open. Douglas your line is open.

Hi. Good morning. Thanks for taking my questions. Matt I think from a business development standpoint you have largely focused on pulling individual assets out just given the sort of ongoing status in biotech does it ever change that you become more focused on looking at potentially acquiring companies?

We are generally just agnostic to the form in which great programs come our way. And so I think whether it's a company, whether it's an asset, I don't know if that's like the dividing line for us versus what are we getting and here's the value there? And do we think we can do something that matters with that. Mayukh, you got anything you'd add to that?

I think you got it.

Yes. So I think the answer to that question is we've always sort of been indifferent to that. I think there's -- I guess the only thing I'll say is like, I think a lot of what we are focused on right now, I'd say the vast majority of what we're focused on right now is stuff that's in clinical development. And so when we talk about companies versus assets, I don't think it matters so much whether it's company or asset, but we're honestly going to be looking at companies in that clinical stage or sort of development stage programs. Thank you.

Great. Thank you.

Thank you. Our next question comes from Andy Chen of Wolfe Research. Your line is open.

Good morning. Thank you for taking the question. One more question about VTAMA. Can you talk about specifically how you view competitive dynamics between you and your competition such as RQ that's an insight which patients do you think is going to prefer which product? And then on a related note and your pre-approval engagement work with PBMs do you foresee getting hit on gross to net if they prefer your competition?

Good. Thanks, Andres. Those are good questions and I want to give your special thanks because I think the analysts who come late in the rotation on these calls have a lot of work to do. So I appreciate the thoughtful question late in the morning. Look, on the first question, the key thing about these markets which we've said from the beginning is the competition is not other novel agents. The competition is steroids. There are many, many, many steroid scripts written. And the challenge is in changing well in grain dock behavior. I don't think in general it's like for the medium psoriasis or the median AD patients. It's like oh some docs sitting there and carefully thinking about the attributes absorbing versus Opzelura versus VTAMA and deciding on a patient-by-patient basis to give one or the other. I think the key point is getting docs comfortable that they have things to reach for. There are differences. In AD for example, we would hope for a label all the way down to A2. I think our competitors don't have labels that cover anything like quite that young. So I think there are opportunities to address patient populations that are different there. I think once-a-day application in AD is probably helpful the consistency of formulation the fact that it's a single concentration whereas at least one of our competitors has a couple of different concentrations going to be on the market. I think those things are all helpful, but it's not about like segmenting versus the other novel topicals per se. That's not sort of the major challenge mostly. And on the sort of PBM side, I think the short answer is commercially insured patients should have coverage for VTAMA under our current match care agreements. So I don't expect any super significant changes in the GTN or commercial dynamics on AD approval which is a great question. Thanks.

Thank you.

Thank you. This concludes the question-and-answer session. I would like to turn it back to Matt Gline for closing remarks.

Look yes, thank you everybody. Thank you to all of our analysts for the great questions. Thank you everyone for dialing in for a relatively flat quarterly update. I'm looking forward to getting back on the phone in the coming weeks with some other things to share. And thanks to the Roivant team thanks to those folks actually Ms. [indiscernible]. Thanks to all the patients and investigators who trust us and work with us. And we will talk to you very soon. Have a great day.

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