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What changed in Roivant Sciences Ltd.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Roivant Sciences Ltd.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+1256 added−1080 removedSource: 10-K (2024-05-30) vs 10-K (2023-06-28)

Top changes in Roivant Sciences Ltd.'s 2024 10-K

1256 paragraphs added · 1080 removed · 616 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

219 edited+97 added−270 removed310 unchanged
Biggest changeWe expect topline data from the induction period to be available in the fourth quarter of calendar year 2024. • We are preparing a large, randomized, controlled Phase 3 clinical program of RVT-3101 in patients with UC. • Roivant ownership : • As of March 31, 2023, we own 75% of the issued and outstanding shares of Telavant and 75% on a fully diluted basis. 32 Table of Contents Genevant Overview • Overview : • Genevant is a technology-focused nucleic acid delivery and development company with two delivery platforms—a lipid nanoparticle (“LNP”) platform and a ligand conjugate platform—an expansive intellectual property portfolio and deep scientific expertise, currently focused on partnering with other pharmaceutical or biotechnology companies to enable the development of nucleic acid therapeutics for unmet medical needs. • Delivery platforms : • Genevant has two delivery platforms: LNP and ligand conjugate. • LNP platform: • Proven technology as demonstrated by head-to-head in vivo ionizable lipid study assessing LNP potency and immune stimulation • Clinically validated for hepatocyte and vaccine applications and in various stages of development for other traditionally hard-to-reach tissues and cell types, including lung, eye, central nervous system, and hepatic stellate and immune cells • Over 650 issued patents and pending patent applications as of March 31, 2023 • Ligand conjugate platform: • Novel GalNAc ligands with demonstrated ability to deliver to the liver in preclinical studies • In preclinical head-to-head testing, demonstrated equal or better preclinical potency, assessed by duration and magnitude of knockdown, compared to a current industry benchmark • Applying delivery expertise to design novel extrahepatic ligands to expand therapeutic reach • Collaboration-based business model : • Genevant uses its expertise in the delivery of nucleic acid therapeutics to develop optimal delivery systems for its collaborators’ identified payloads or target tissues. • Genevant collaboration-based business model is to seek some or all of upfront payments, R&D reimbursements, and milestones and royalties (or profit share) upon success, while also retaining certain rights in the delivery-related intellectual property developed in the context of the collaboration for potential use or out-license. • Some current collaboration partners include BioNTech, Takeda, Sarepta, Gritstone, ST Pharm, 2seventy bio, Korro Bio, Chulalongkorn University (through its Vaccine Research Center) and Providence Therapeutics. • Clinical data : • Genevant LNP technology has been in clinical testing in over a dozen distinct product candidates, representing hundreds of subjects of clinical experience. • Genevant LNP technology is included in the first RNA-LNP product to receive FDA-approval, Alnylam’s Onpattro (patisiran). • Roivant ownership : • As of March 31, 2023, we own 83% of the issued and outstanding common shares of Genevant and 65% on a fully diluted basis.
Biggest changeThe most common TEAEs were nasopharyngitis, dyspnea, bronchitis, and headache. • Development plan and upcoming milestones : • We have completed enrollment for a Phase 2 trial to evaluate the safety and efficacy of namilumab in pulmonary sarcoidosis, with data expected in the fourth quarter of calendar year 2024. 20 Table of Contents The below schematic shows the trial design for the Phase 2 trial in pulmonary sarcoidosis: • Roivant ownership : o As of March 31, 2024, we own 96% of the issued and outstanding common shares of Kinevant, and 90% on a fully diluted basis. 21 Table of Contents Genevant Overview • Overview : • Genevant is a technology-focused nucleic acid delivery and development company with two delivery platforms—a lipid nanoparticle (“LNP”) platform and a ligand conjugate platform—an expansive intellectual property portfolio and deep scientific expertise, currently focused on partnering with other pharmaceutical or biotechnology companies to enable the development of nucleic acid therapeutics for unmet medical needs. • Delivery platforms and patent portfolio : • Genevant has two delivery platforms: LNP and ligand conjugate. • LNP platform: • Proven technology as demonstrated by head-to-head in vivo ionizable lipid study assessing LNP potency and immune stimulation. • Clinically validated for hepatocyte and vaccine applications and in various stages of development for other traditionally hard-to-reach tissues and cell types, including lung, eye, central nervous system, and hepatic stellate and immune cells. • Approximately 650 issued patents and pending patent applications as of March 31, 2024, including patents directed to: • lipid structures, including cationic and PEG-lipids • particle compositions, including commonly used ranges of lipid ratios for nucleic acid-containing particles • nucleic acid-containing particles with certain structural characteristics • mRNA-containing LNP formulations • various aspects of our manufacturing process • Ligand conjugate platform: • Novel GalNAc ligands with demonstrated ability to deliver to the liver in preclinical studies. • In preclinical head-to-head testing, demonstrated equal or better preclinical potency, assessed by duration and magnitude of knockdown, compared to a current industry benchmark. • Applying delivery expertise to design novel extrahepatic ligands to expand therapeutic reach. • Collaboration-based business model : • Genevant seeks to partner with other pharmaceutical or biotechnology companies in the development of RNA therapeutics, crafting mutually beneficial collaborations that allow collaboration partners to access innovative technologies while providing Genevant the opportunity to leverage our expertise to expand the technology and its therapeutic application. • Genevant uses its expertise in the delivery of nucleic acid therapeutics to develop optimal delivery systems for its collaborators’ identified payloads or target tissues. • Genevant’s collaboration-based business model is to seek upfront payments, R&D reimbursements, milestones and royalties payment or profit sharing upon success, while also retaining certain rights in the delivery-related intellectual property developed in the context of the collaboration for potential use or out-licensing. • Some current collaboration partners include Novo Nordisk, BioNTech, Takeda, Gritstone, Tome Biosciences, ST Pharm, Korro Bio, Chulalongkorn University (through its Vaccine Research Center) and Providence Therapeutics. • Clinical and preclinical data : • Genevant LNP technology has been in clinical testing in over a dozen distinct product candidates, representing hundreds of subjects of clinical experience. • In a head-to-head study comparing multiple LNP formulations varying only the key ionizable lipid, Genevant’s current lead formulation outperformed third-party formulations.
In December 2018, Immunovant Sciences GmbH, (“ISG”) obtained and assumed all rights, title, interest and obligations under the HanAll Agreement from RSG, including all rights to batoclimab and IMVT-1402 in the HanAll Licensed Territory, for an aggregate purchase price of $37.8 million.
In December 2018, Immunovant Sciences GmbH, (“ISG”) obtained and assumed all rights, title, interest and obligations under the HanAll Agreement from RSG, including all rights to IMVT-1402 and batoclimab in the HanAll Licensed Territory, for an aggregate purchase price of $37.8 million.
A European patent in this family was issued on May 10, 2023 with claims directed to batoclimab as defined by its heavy and light chain variable sequences. There are also issued patents in this family in Canada, Israel, Mexico, and Saudi Arabia. In this family, applications are pending in Brazil, Argentina, the U.S. and in Europe.
A European patent in this family was issued on May 10, 2023 with claims directed to batoclimab as defined by its heavy and light chain variable sequences. There are also issued patents in this family in Brazil, Canada, Israel, Mexico, and Saudi Arabia. In this family, applications are pending in Argentina, Mexico, the U.S. and in Europe.
Among other provisions, the IRA contains (i) a drug price negotiation program for certain high spend Medicare drugs that have been on the market for a certain length of time and lack generic or biosimilar competition, under which Medicare prices for such drugs are capped by a “maximum fair price”; (ii) new manufacturer rebate obligations on certain drugs paid under Medicare Part B or D whose prices increase faster than inflation relative to a benchmark period; and (iii) a redesign of the Part D benefit, including capping patients’ annual out-of-pocket costs on Part D drugs, lowering the beneficiary out-of-pocket threshold, streamlining the Part D benefit to eliminate the “coverage gap” phase, and replacing the manufacturer coverage gap discount program with a new manufacturer discount program that provides discounts throughout the post-deductible benefit phases.
Among other provisions, the IRA contains (i) a drug price negotiation program for certain high spend Medicare drugs that have been on the market for a certain length of time and lack generic or biosimilar competition, under which Medicare prices for such drugs are capped by a “maximum fair price”; (ii) new manufacturer rebate obligations on certain drugs paid under Medicare Part B or D whose prices increase faster than inflation relative to a benchmark period; and (iii) a redesign of the Part D benefit, including capping patients’ annual out-of-pocket costs on Part D drugs, lowering the beneficiary out-of-pocket threshold, streamlining the Part D benefit to eliminate the “coverage gap” phase, and replacing the manufacturer coverage gap discount program with a new manufacturer discount program – the Medicare Part D Manufacturer Discount Program – that provides discounts throughout the post-deductible benefit phases.
Second- and third-line treatment options, including immunosuppressive therapies and biologics, are limited by slow onset, safety risk, inconsistent effectiveness, and reimbursement challenges, leaving significant unmet medical need that could be met by a novel biologic. • Clinical data : o Early clinical data in pharmacokinetic/pharmacodynamic (PK/PD) and subsequent Phase 2 studies showed namilumab to be well-tolerated with a single subcutaneous injection given up to every four weeks. o In a Phase 1 study of healthy volunteers with a single subcutaneous injection, namilumab was observed to be generally well-tolerated. o In a Phase 2 trial in patients with moderate to severe rheumatoid arthritis conducted by Takeda, namilumab demonstrated decreased disease activity compared to placebo.
Second- and third-line treatment options, including immunosuppressive therapies and biologics, are limited by slow onset, safety risk, inconsistent effectiveness, and reimbursement challenges, leaving significant unmet medical need that could be met by a novel biologic. • Clinical data : • Early clinical data in pharmacokinetic/pharmacodynamic (PK/PD) and subsequent Phase 2 studies showed namilumab to be well-tolerated with a single subcutaneous injection given up to every four weeks. • In a Phase 1 study of healthy volunteers with a single subcutaneous injection, namilumab was observed to be generally well-tolerated. • In a Phase 2 trial in patients with moderate to severe rheumatoid arthritis conducted by Takeda, namilumab demonstrated decreased disease activity compared to placebo.
The Food and Drug Administration Safety and Innovation Act (the “FDASIA”) amended the FDCA to require that a sponsor who is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan (“PSP”), within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 study.
The Food and Drug Administration Safety and Innovation Act amended the FDCA to require that a sponsor who is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan (“PSP”), within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 study.
Among the changes made by the ACA to preexisting law of importance to the pharmaceutical industry are that the ACA: • made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs to 23.1% of average manufacturer price (“AMP”), and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP. 64 Table of Contents • imposed a requirement on manufacturers of branded drugs to provide a 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) point-of-sale discount off the negotiated price of branded drugs dispensed to Medicare Part D beneficiaries in the coverage gap (i.e., “donut hole”) as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D. • extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations. • expanded the entities eligible for discounts under the 340B Drug Discount Program. • established a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected. • imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs. • established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Among the changes made by the ACA to preexisting law of importance to the pharmaceutical industry are that the ACA: • made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs to 23.1% of average manufacturer price (“AMP”), and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP. • imposed a requirement on manufacturers of branded drugs to provide a 70% (increased pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) point-of-sale discount off the negotiated price of branded drugs dispensed to Medicare Part D beneficiaries in the coverage gap (i.e., “donut hole”) as a condition for a manufacturer’s outpatient drugs being covered under Medicare Part D. • extended a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations. • expanded the entities eligible for discounts under the 340B Drug Discount Program. • established a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected. • imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs. • established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Market research with HCPs and third-party analysis of claims data suggest that approximately 25% of diagnosed and treated pulmonary sarcoidosis would be eligible for treatment with second-line or later therapy. • Limitations of current treatments : o Corticosteroids are the most widely used treatment for sarcoidosis, but they carry significant side effects when used longer-term.
Market research with HCPs and third-party analysis of claims data suggest that approximately 25% of diagnosed and treated pulmonary sarcoidosis would be eligible for treatment with second-line or later therapy. • Limitations of current treatments : • Corticosteroids are the most widely used treatment for sarcoidosis, but they carry significant side effects when used longer-term.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA review or approval may not be shortened. Furthermore, fast track designation, priority review, accelerated approval, breakthrough therapy and RMAT designation do not change the standards for approval.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or the time period for FDA review or approval may not be shortened. Furthermore, fast track designation, priority review, accelerated approval and breakthrough therapy designation do not change the standards for approval.
The FDA does not always meet its PDUFA goal dates for standard and priority NDAs or BLAs, and the review process is often extended by FDA requests for additional information or clarification. During the COVID-19 pandemic, because of travel and other restrictions, the FDA has significantly curtailed its inspection program.
The FDA does not always meet its PDUFA goal dates for standard and priority NDAs or BLAs, and the review process is often extended by FDA requests for additional information or clarification. During the COVID-19 pandemic, because of travel and other restrictions, the FDA significantly curtailed its inspection program.
These patents and pending applications, if issued, are expected to expire as early as 2035, in each case without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees, and (2) exclusively licensed rights to three patent families for ropsacitinib containing at least 126 issued patents and 51 pending patent applications in the U.S. and other jurisdictions, including the European Union and Japan, with claims covering a composition of matter, a treatment of hidradenitis and a crystalline form.
These patents and pending applications, if issued, are expected to expire as early as 2035, in each case without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees, and (2) exclusively licensed rights to three patent families for ropsacitinib containing at least 126 issued patents and 25 pending patent applications in the U.S. and other jurisdictions, including the European Union and Japan, with claims covering a composition of matter, a treatment of hidradenitis and a crystalline form.
The process generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with GLP requirements; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an IRB, or independent ethics committee at each clinical trial site before each human trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations and requirements, GCP requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of an NDA or BLA; • a determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review; 54 Table of Contents • satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug or biologic will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity; • potential FDA inspection of the clinical trial sites that generated the data in support of the NDA or BLA and/or us as the sponsor; • payment of user fees for FDA review of the NDA or BLA (unless a fee waiver applies); • agreement with FDA on the final labeling for the product and the design and implementation of any required REMS; and • FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug or biologic in the United States.
The process generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with GLP requirements; • submission to the FDA of an IND, which must become effective before human clinical trials may begin; • approval by an IRB, or independent ethics committee at each clinical trial site before each human trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations and requirements, GCP requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of an NDA or BLA; • a determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review; • satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug or biologic will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug or biologic’s identity, strength, quality and purity; • potential FDA inspection of the clinical trial sites that generated the data in support of the NDA or BLA and/or us as the sponsor; 31 Table of Contents • payment of user fees for FDA review of the NDA or BLA (unless a fee waiver applies); • agreement with FDA on the final labeling for the product and the design and implementation of any required REMS; and • FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug or biologic in the U.S.
For more information on Roivant’s ownership interest in Datavant, please refer to Note 4 to Roivant’s audited consolidated financial statements included in this Annual Report on Form 10-K. 8 Table of Contents In the upcoming year, we have a robust set of expected near-term catalysts, including the items set forth below.
For more information on Roivant’s ownership interest in Datavant, please refer to Note 4 to Roivant’s audited consolidated financial statements included in this Annual Report on Form 10-K. 9 Table of Contents Upcoming Catalysts In the upcoming year, we have a robust set of expected near-term catalysts, including the items set forth below.
While FDA has historically exercised enforcement discretion against laboratory developed tests—tests which are developed and performed in a single Clinical Laboratory Improvement Amendments (“CLIA”) certified laboratory—the 2018 alert and a subsequent 2019 Warning Letter against Inova Genomics Laboratory suggest that FDA may prioritize for enforcement certain uncleared or unapproved tests marketed as companion diagnostic tests.
While FDA has historically exercised enforcement discretion against laboratory developed tests—tests which are developed and performed in a single Clinical Laboratory Improvement Amendments (“CLIA”) certified laboratory—the 2018 alert and a subsequent 2019 Warning Letter against Inova Genomics Laboratory suggested that FDA may prioritize for enforcement certain uncleared or unapproved tests marketed as companion diagnostic tests.
Please refer to “—Asset Acquisition and License Agreements; Other Vant Agreements” and the agreements themselves, filed as exhibits to this Annual Report on Form 10-K, for more information on the terms of these agreements. The following table summarizes our ownership of certain of our subsidiary companies and affiliates as of March 31, 2023.
Please refer to “—Asset Acquisition and License Agreements; Other Vant Agreements” and the agreements themselves, filed as exhibits to this Annual Report on Form 10-K, for more information on the terms of these agreements. Vant Ownership The following table summarizes our ownership of certain of our subsidiary companies and affiliates as of March 31, 2024.
The Credit Agreement provides for a term loan of $40.0 million (the “Term Loan”), the proceeds of which were used by the Borrowers to repay in full and terminate an existing credit facility with Hercules Capital Inc., with the remaining proceeds to be used for working capital and other general corporate purposes.
The Credit Agreement provides for a term loan of $40.0 million (the “Term Loan”), the proceeds of which were used by the Borrowers to repay in full and terminate a then-existing credit facility with Hercules Capital Inc., with the remaining proceeds to be used for working capital and other general corporate purposes.
These patents and pending applications, if issued, are expected to expire between 2029 and 2042, in each case without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees.
These patents and pending applications, if issued, are expected to expire between 2029 and 2044, in each case without taking into account any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees.
European Union and United Kingdom Drug Development On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union (commonly referred to as Brexit). Thereafter, on March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty.
European Union and United Kingdom Drug Development On June 23, 2016, the electorate in the U.K. voted in favor of leaving the European Union (commonly referred to as Brexit). Thereafter, on March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty.
In addition, the proposal envisages changes to the concept of unmet medical need and considers introducing novel rewards for orphan medical products addressing high unmet medical need. The adoption of the new legislation is not expected before 2024 and it will start to apply 18 months after the entry in force.
In addition, the proposal envisages changes to the concept of unmet medical need and considers introducing novel rewards for orphan medical products addressing high unmet medical need. The adoption of the new legislation is not expected before 2025 and it will start to apply 18 months after the entry in force.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the drug or biologic, suspension of the approval, complete withdrawal of the drug from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; 60 Table of Contents • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug or biologic approvals; • drug or biologic seizure or detention, or refusal to permit the import or export of drugs; • injunctions or the imposition of civil or criminal penalties; or • debarment from producing or marketing drug products or biologics.
Other potential consequences include, among other things: • restrictions on the marketing or manufacturing of the drug or biologic, suspension of the approval, complete withdrawal of the drug from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug or biologic approvals; • drug or biologic seizure or detention, or refusal to permit the import or export of drugs; • injunctions or the imposition of civil or criminal penalties; or • debarment from producing or marketing drug products or biologics.
In addition, under the GSK Agreement, DSG assumed all obligations under the Welichem Agreement, including initially up to CAD$180.0 million in potential development and commercial milestone payments, of which CAD$105.0 million have been achieved and paid as of March 31, 2023.
In addition, under the GSK Agreement, DSG assumed all obligations under the Welichem Agreement, including initially up to CAD$180.0 million in potential development and commercial milestone payments, of which CAD$105.0 million have been achieved and paid as of March 31, 2024.
Pursuant to the HanAll Agreement, RSG granted to HanAll an exclusive, royalty-free license under certain RSG patents, know-how and other intellectual property relating to such antibodies and products to develop, manufacture and commercialize such antibodies and products for use outside of the HanAll Licensed Territory.
Pursuant to the HanAll Agreement, RSG granted to HanAll an exclusive, royalty-free license under certain RSG patents, know-how and other intellectual property controlled by RSG relating to such antibodies and products to develop, manufacture and commercialize such antibodies and products for use outside of the HanAll Licensed Territory.
Vants have access to, and are supported by, these technologies. • Allocating capital to maximize R&D efficiency: We apply an objective, rigorous decision framework across the drug development process designed to ensure resources and capital are continuously directed towards programs we believe have a higher probability of success and away from those that fail to meet our internal hurdles.
Vants have access to, and are supported by, these technologies. 6 Table of Contents • Allocating capital to maximize R&D efficiency: We apply an objective, rigorous decision framework across the drug development process designed to ensure resources and capital are continuously directed towards programs we believe have a higher probability of success and away from those that fail to meet our internal hurdles.
For more information regarding the risks related to our intellectual property, see “Risk Factors—Risks Related to Roivant’s Business and Industry—Risks Related to Our Intellectual Property.” Government Regulation Government authorities in the United States at the federal, state and local level and in other countries regulate, among other things, the research, development, manufacture, testing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, as well as diagnostics, and any future product candidates.
For more information regarding the risks related to our intellectual property, see “Risk Factors—Risks Related to Roivant’s Business and Industry—Risks Related to Our Intellectual Property.” Government Regulation Government authorities in the U.S. at the federal, state and local level and in other countries regulate, among other things, the research, development, manufacture, testing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, as well as diagnostics, and any future product candidates.
The Vant model is designed to facilitate rapid decision making and calculated risk taking, by empowering, aligning and incentivizing Vant teams around the outcomes of their specific products or product candidates. 6 Table of Contents • Developing and deploying proprietary technologies: We believe we are able to develop transformative medicines faster by building and applying computational tools to drug discovery, development and commercialization.
The Vant model is designed to facilitate rapid decision making and calculated risk taking, by empowering, aligning and incentivizing Vant teams around the outcomes of their specific products or product candidates. • Developing and deploying proprietary technologies: We believe we are able to develop transformative medicines faster by building and applying computational tools to drug discovery, development and commercialization.
ITEM 1. BUSINESS References to “Roivant,” “the Company,” “we,” “us” or “our” in the following section refer to Roivant Sciences Ltd. and its subsidiaries, unless the context otherwise requires. Overview Roivant is a commercial-stage biopharmaceutical company that aims to improve the lives of patients by accelerating the development and commercialization of medicines that matter.
ITEM 1. BUSINESS References to “Roivant,” the “Company,” “we,” “us” or “our” in the following section refer to Roivant Sciences Ltd. and its consolidated subsidiaries, unless the context otherwise requires. Overview Roivant is a commercial-stage biopharmaceutical company that aims to improve the lives of patients by accelerating the development and commercialization of medicines that matter.
Other Regulatory Matters Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in the United States in addition to the FDA, including the Centers for Medicare and Medicaid Services (the “CMS”), the Office of Inspector General and Office for Civil Rights, other divisions of the Department of HHS, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.
Other Regulatory Matters Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in the U.S. in addition to the FDA, including the Centers for Medicare and Medicaid Services (the “CMS”), the Office of Inspector General and Office for Civil Rights, other divisions of the Department of HHS, the Department of Justice, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.
Patent Term Restoration and Marketing Exclusivity Depending upon the timing, duration and specifics of FDA approval of our future product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments.
Patent Term Restoration and Marketing Exclusivity Depending upon the timing, duration and specifics of FDA approval of our future products, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments.
The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the product candidate. • Phase 2 clinical trials involve studies in disease-affected patients to evaluate proof of concept and/or determine the dose required to produce the desired benefits.
The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the product candidate. 32 Table of Contents • Phase 2 clinical trials involve studies in disease-affected patients to evaluate proof of concept and/or determine the dose required to produce the desired benefits.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and Additional Laws and Regulations Governing International Operations If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and Additional Laws and Regulations Governing International Operations If we further expand our operations outside of the U.S., we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
Any patent issued from these patent families may expire in 2043, without taking into account any possible patent term adjustment or extension and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. ISG also owns a U.S. provisional application directed to high concentration protein formulations with polysorbate excipients and methods of making the same.
Any patent issued from these patent families may expire in 2043, without taking into account any possible patent term adjustment or extension and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. ISG also owns a PCT application directed to high concentration protein formulations with polysorbate excipients and methods of making the same.
The reduction in pre-approval inspections has resulted in delays to some product approvals.
The reduction in pre-approval inspections resulted in delays to some product approvals.
We believe we are uniquely positioned to accomplish this by: • Leveraging complementary approaches to identify or discover promising drug candidates: We assembled our current development-stage product candidate pipeline by leveraging our business development expertise and vast network of industry relationships to relentlessly pursue opportunities to in-license or acquire programs where we believe we can deliver successful outcomes on accelerated timelines.
We believe we are uniquely positioned to accomplish this by: • Leveraging our business development expertise to identify and in-license promising drug candidates: We assembled our development-stage product candidate pipeline by leveraging our business development expertise and vast network of industry relationships to relentlessly pursue opportunities to in-license or acquire programs where we believe we can deliver successful outcomes on accelerated timelines.
Dermavant Financing Agreements—Dermavant Revenue Interest Purchase and Sale Agreement In May 2021, DSG, as seller, entered into a Revenue Interest Purchase and Sale Agreement (the “RIPSA”) with XYQ Luxco, NovaQuest Co-Investment Fund XVII, L.P., an affiliate of NovaQuest Capital Management, LLC, and MAM Tapir Lender, LLC, an affiliate of Marathon Asset Management, L.P. (collectively, the “Purchasers”), together with U.S.
Other Information.” Dermavant Financing Agreements—Dermavant Revenue Interest Purchase and Sale Agreement In May 2021, DSG, as seller, entered into a Revenue Interest Purchase and Sale Agreement (the “RIPSA”) with XYQ Luxco, NovaQuest Co-Investment Fund XVII, L.P., an affiliate of NovaQuest, and MAM Tapir Lender, LLC, an affiliate of Marathon Asset Management, L.P. (collectively, the “Purchasers”), together with U.S.
Since the regulatory framework in the United Kingdom covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorizations, commercial sales, and distribution of pharmaceutical products is derived from EU Directives and Regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the United Kingdom, as the UK legislation now has the potential to diverge from EU legislation.
Since the regulatory framework in the U.K. covering the quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorizations, commercial sales, and distribution of pharmaceutical products is derived from EU Directives and Regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the U.K., as the UK legislation now has the potential to diverge from EU legislation.
With respect to transfers of personal data from the EEA to the United Kingdom, on June 28, 2021 the European Commission issued an adequacy decision in respect of the UK’s data protection framework, enabling data transfers from EU member states to the UK to continue without requiring organizations to put in place contractual or other measures in order to lawfully transfer personal data between the territories.
With respect to transfers of personal data from the EEA to the U.K., on June 28, 2021 the European Commission issued an adequacy decision in respect of the UK’s data protection framework, enabling data transfers from EU member states to the UK to continue without requiring organizations to put in place contractual or other measures in order to lawfully transfer personal data between the territories.
As part of its review of the PMA, the FDA will typically conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation (the “QSR”), which requires manufacturers to follow design, testing, control, corrective and preventative action, documentation, and other quality assurance procedures.
As part of its review of the PMA, the FDA will typically conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation (the “QSR”), which will transition to the Quality Management System Regulation once effective and requires manufacturers to follow design, testing, control, corrective and preventative action, documentation, and other quality assurance procedures.
Additionally, as of May 17, 2023, independent of the licensed patent portfolio, ISG owns patent families directed to methods of treating thyroid eye disease (Graves’ ophthalmopathy) and methods of treating warm autoimmune hemolytic anemia using anti-FcRn antibodies that include patent applications in the U.S. as well as foreign counterparts in certain jurisdictions.
Additionally, as of May 22, 2024, independent of the licensed patent portfolio, ISG owns patent families directed to methods of treating thyroid eye disease (Graves’ ophthalmopathy) and methods of treating warm autoimmune hemolytic anemia using anti-FcRn antibodies that include patent applications in the U.S. as well as foreign counterparts in certain jurisdictions.
European Union and United Kingdom Drug Marketing Much like the federal Anti-Kickback Statue prohibition in the United States, the provision of benefits or advantages to physicians and/or healthcare organizations to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, administration or use of medicinal products is also prohibited in the EEA and United Kingdom.
European Union and United Kingdom Drug Marketing Much like the federal Anti-Kickback Statue prohibition in the U.S., the provision of benefits or advantages to physicians and/or healthcare organizations to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, administration or use of medicinal products is also prohibited in the EEA and U.K.
The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The FCPA also obligates companies whose securities are listed in the U.S. to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
HanAll also reserves the right to conduct discovery or research activities with the batoclimab antibody, and certain back-up and next-generation antibodies, with or through a contract research organization or service provider in the HanAll Licensed Territory.
HanAll also reserves the right to conduct discovery or research activities with the batoclimab antibody, and certain back-up and next-generation antibodies (including IMVT-1402), with or through a contract research organization or service provider in the HanAll Licensed Territory.
Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.
Information about certain clinical trials, including clinical trial results, must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. A sponsor who wishes to conduct a clinical trial outside of the U.S. may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. 68 Table of Contents European Union and United Kingdom Drug Review and Approval In the EEA, medicinal products can only be commercialized after obtaining a marketing authorization (“MA”).
Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment. European Union and United Kingdom Drug Review and Approval In the EEA, medicinal products can only be commercialized after obtaining a marketing authorization (“MA”).
If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.
If we expand our presence outside of the U.S., it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the U.S., which could limit our growth potential and increase our development costs.
References to our website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document or any other document that we file with or furnish to the SEC.
References to our website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document or any other document that we file with or furnish to the SEC. 51 Table of Contents
In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.
In the U.S., the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance.
Now that the United Kingdom (which comprises Great Britain and Northern Ireland) has left the European Union, Great Britain is no longer covered by centralized MAs (under the Northern Irish Protocol of the Withdrawal Agreement, centralized MAs will continue to apply in Northern Ireland, although this may change if the Windsor Agreement is implemented).
Now that the U.K. (which comprises Great Britain and Northern Ireland) has left the European Union, Great Britain is no longer covered by centralized MAs (under the Northern Irish Protocol of the Withdrawal Agreement, centralized MAs will continue to apply in Northern Ireland, although this may change if the Windsor Agreement is implemented).
Anti-FcRn Franchise Following ISG’s assumption of all rights, title, interest and obligations under the HanAll Agreement from RSG in December 2018, by virtue of the license of patent rights under the HanAll Agreement, ISG is the exclusive licensee of technology directed to batoclimab, IMVT-1402 and certain back-up and next-generation antibodies, and products containing such antibodies, in the licensed territory.
Anti-FcRn Franchise Following ISG’s assumption of all rights, title, interest and obligations under the HanAll Agreement from RSG in December 2018, by virtue of the license of patent rights under the HanAll Agreement, ISG is the exclusive licensee of certain patents, patent applications and know-how directed to batoclimab, IMVT-1402 and certain back-up and next-generation antibodies, and products containing such antibodies, in the HanAll Licensed Territory.
Moreover, the competent authorities and courts in a number of EU Member States increasingly scrutinize and question the GDPR compliance of processing of personal data by US-based entities or entities with links to US-based entities, independently of whether personal data is actually transferred outside the EEA.
The competent authorities and courts in a number of EU Member States continue to closely scrutinize and question the GDPR compliance of processing of personal data by US-based entities or entities with links to US-based entities, independently of whether personal data is actually transferred outside the EEA.
Marketing exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.
Marketing exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first applicant to gain approval of an NDA for a new chemical entity.
GM-CSF, a key pathogenic cytokine, has been implicated in multiple parts of the granulomatous response. o Sarcoidosis affects approximately 200,000 people in the United States, with over 90% of cases presenting with pulmonary involvement. o An estimated 54% of pulmonary sarcoidosis patients are diagnosed, and approximately 90% of these patients receive some form of treatment.
GM-CSF, a key pathogenic cytokine, has been implicated in multiple parts of the granulomatous response. • Sarcoidosis affects approximately 200,000 people in the U.S., with over 90% of cases presenting with pulmonary involvement. • An estimated 54% of pulmonary sarcoidosis patients are diagnosed, and approximately 90% of these patients receive some form of treatment.
The UK GDPR and the UK Data Protection Act 2018 set out the United Kingdom’s data protection regime, which is independent from but aligned to the European Union’s data protection regime. Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.
The UK GDPR and the UK Data Protection Act 2018 set out the U.K.’s data protection regime, which is independent from but aligned to the European Union’s data protection regime. Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher.
Following the FDA approval of VTAMA in May 2022, DSG became obligated to pay a regulatory milestone to GSK of £100.0 million (approximately $126.0 million on the date of achievement) following the receipt of marketing approval of VTAMA in the United States. The milestone was paid in July 2022.
Following the FDA approval of VTAMA in May 2022, DSG became obligated to pay a regulatory milestone to GSK of £100.0 million (approximately $126.0 million on the date of achievement) following the receipt of marketing approval of VTAMA in the U.S. The milestone was paid in July 2022.
For example, in March 2010, the ACA was enacted in the United States. The ACA includes measures that have significantly changed, and are expected to continue to significantly change, the way healthcare is financed by both governmental and private insurers.
For example, in March 2010, the ACA was enacted in the U.S. The ACA includes measures that have significantly changed, and are expected to continue to significantly change, the way healthcare is financed by both governmental and private insurers.
Under the HanAll Agreement, RSG received (i) the non-exclusive right to manufacture and (ii) the exclusive, royalty-bearing right to develop, import and use the antibody referred to as batoclimab and certain back-up and next-generation antibodies (including IMVT-1402), and products containing such antibodies, and to commercialize such products, in the United States, Canada, Mexico, the E.U., the U.K., Switzerland, the Middle East, North Africa and Latin America (the “HanAll Licensed Territory”), for all human and animal uses.
Under the HanAll Agreement, RSG received (1) the non-exclusive right to manufacture and (2) the exclusive, royalty-bearing right to (a) develop, import and use (i) the antibody referred to as batoclimab, (ii) certain back-up and next-generation antibodies (including IMVT-1402), and (iii) products containing such antibodies, and (b) to commercialize such products, in the U.S., Canada, Mexico, the E.U., the U.K., Switzerland, the Middle East, North Africa and Latin America (the “HanAll Licensed Territory”), for all human and animal uses.
Subjects in the study include those who have previously completed treatment with VTAMA or vehicle in ADORING 1 or ADORING 2, as well as subjects who have completed a maximal use PK study, and those pediatric subjects who would not qualify for inclusion in ADORING 1 or 2 due to milder or more severe disease.
Subjects in the study include those who have previously completed treatment with VTAMA or vehicle in ADORING 1 or ADORING 2, as well as subjects who have completed a pediatric maximal usage pharmacokinetics (MUPK) study, and those pediatric subjects who would not qualify for inclusion in ADORING 1 or 2 due to milder or more severe disease.
Government Regulation of Drug and Biological Products In the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (the “FDCA”) and its implementing regulations and biologics under the FDCA and the Public Health Service Act (the “PHSA”), and their implementing regulations.
Government Regulation of Drug and Biological Products In the U.S., the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (the “FDCA”) and its implementing regulations and biologics under the FDCA and the Public Health Service Act (the “PHSA”), and their implementing regulations.
Once cleared or approved, the companion diagnostic device must adhere to post-marketing requirements including the requirements of FDA’s quality system regulation, adverse event reporting, recalls and corrections along with product marketing requirements and limitations.
Once cleared or approved, the companion diagnostic device must adhere to post-marketing requirements including the requirements of FDA’s QSR, adverse event reporting, recalls and corrections along with product marketing requirements and limitations.
The United Kingdom formally left the European Union on January 31, 2020. A transition period began on February 1, 2020, during which EU pharmaceutical law remained applicable in the United Kingdom. However this ended on December 31, 2020.
The U.K. formally left the European Union on January 31, 2020. A transition period began on February 1, 2020, during which EU pharmaceutical law remained applicable in the U.K. However, this ended on December 31, 2020.
For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy, a form of drug utilization management, for Part B drugs, which took effect on January 1, 2020. Other legislative changes have been proposed and adopted in the United States since the ACA was enacted.
For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy, a form of drug utilization management, for Part B drugs, which took effect on January 1, 2020. 41 Table of Contents Other legislative changes have been proposed and adopted in the U.S. since the ACA was enacted.
No consistent policy regarding the scope of claims allowable in patents in the fields of genetic therapy, cell therapy, biologics or pharmaceutical products generally has emerged in the United States or in Europe, among other countries.
No consistent policy regarding the scope of claims allowable in patents in the fields of genetic therapy, cell therapy, biologics or pharmaceutical products generally has emerged in the U.S. or in Europe, among other countries.
As of May 17, 2023, the in-licensed patent portfolio includes a patent family covering batoclimab with pending patent applications and/or issued patents in the U.S., Argentina, Brazil, Canada, Colombia, European Patent Office, Egypt, Israel, Mexico and Saudi Arabia.
As of May 22, 2024, the in-licensed patent portfolio includes a patent family covering batoclimab with pending patent applications and/or issued patent(s) in the U.S., Argentina, Brazil, Canada, Colombia, European Patent Office, Egypt, Israel, Mexico and Saudi Arabia.
This DS patent has a natural expiration date in 2038 assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees and without taking into account any possible patent term adjustments or extensions.
The DS patents have a natural expiration date in 2038 assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees and without taking into account any possible patent term adjustments or extensions.
The GDPR also imposes strict rules on the transfer of personal data outside of the EEA to countries that do not ensure an adequate level of protection, like the United States.
The GDPR also imposes strict rules on the transfer of personal data outside of the EEA to countries that do not ensure an adequate level of protection, like the U.S.
However, as of January 1, 2021, the United Kingdom’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain UK specific amendments) into UK law, referred to as the UK GDPR.
However, as of January 1, 2021, the U.K.’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain UK specific amendments) into UK law, referred to as the UK GDPR.
Any agency or judicial enforcement action could have a material adverse effect on our business, the market acceptance of our products and our reputation. Our product candidates must be approved by the FDA through either an NDA or a BLA (as defined below) process before they may be legally marketed in the United States.
Any agency or judicial enforcement action could have a material adverse effect on our business, the market acceptance of our products and our reputation. Our product candidates must be approved by the FDA through either an NDA or a BLA process before they may be legally marketed in the U.S.
As in the United States, medicinal products can be marketed only if a marketing authorization from the relevant competent authority has been obtained. Similar to the United States, the various phases of preclinical and clinical research in the EEA and United Kingdom are subject to significant regulatory controls.
As in the U.S., medicinal products can be marketed only if a marketing authorization from the relevant competent authority has been obtained. Similar to the U.S., the various phases of preclinical and clinical research in the EEA and U.K. are subject to significant regulatory controls.
Finally, DSG owns a method-of-use patent in the U.S. covering the method of treating mild to severe plaque psoriasis by topically administering VTAMA to achieve treatment success as measured by psoriasis PGA scores. This patent expires in 2039.
DSG also owns a method-of-use patent in the U.S. covering the method of treating mild to severe plaque psoriasis by topically administering VTAMA to achieve treatment success as measured by psoriasis PGA scores.
Genevant Cross-License Agreement with Arbutus Biopharma Corporation In April 2018, our subsidiary, Genevant Sciences Ltd. (together with its subsidiaries, “Genevant”), entered into a cross-license agreement with our affiliate, Arbutus Biopharma Corporation (“Arbutus”), which the parties amended twice in June 2018 (as amended, the “Arbutus Cross-License Agreement”).
(together with its subsidiaries, “Genevant”), entered into a cross-license agreement with our affiliate, Arbutus Biopharma Corporation (“Arbutus”), which the parties amended twice in June 2018 (as amended, the “Arbutus Cross-License Agreement”).
In both of these trials, which enrolled over 400 patients each, VTAMA met its primary endpoint and all secondary endpoints and statistically significant results.
In both of these trials, which enrolled over 400 patients each, VTAMA met its primary endpoint and secondary endpoints with clinically meaningful and statistically significant results.
There are also a number of ongoing consultations on the future legislation in the UK. 67 Table of Contents In the EEA, which is comprised of the Member States of the European Union plus Norway, Iceland and Liechtenstein, and in the United Kingdom, our future products also may be subject to extensive regulatory requirements.
There are also a number of ongoing consultations on the future legislation in the UK. In the EEA, which is comprised of the Member States of the European Union plus Norway, Iceland and Liechtenstein, and in the U.K., our future products also may be subject to extensive regulatory requirements.
Any patent issued from these patent families may expire in 2039 and 2040, respectively, without taking into account any possible patent term adjustment or extension and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. ISG also has rights to an in-licensed patent family covering IMVT-1402 and its uses to treat autoimmune disease.
Any patent issued from these patent families may expire in 2039 and 2040, respectively, without taking into account any possible patent term adjustment or extension and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. ISG jointly owns rights with HanAll to a patent family covering IMVT-1402 and its uses to treat autoimmune disease.
FDA approval of an NDA or BLA must be obtained before a drug or biologic may be marketed in the United States. 56 Table of Contents Under the Prescription Drug User Fee Act (the “PDUFA”), as amended, each NDA or BLA must be accompanied by a user fee. FDA adjusts the PDUFA user fees on an annual basis.
FDA approval of an NDA or BLA must be obtained before a drug or biologic may be marketed in the U.S. Under the Prescription Drug User Fee Act (the “PDUFA”), as amended, each NDA or BLA must be accompanied by a user fee. FDA adjusts the PDUFA user fees on an annual basis.
ISG also owns U.S. provisional patent applications directed to methods of treating Graves’ Disease and methods of treating Chronic Inflammatory Demyelinating Polyneuropathy using anti-FcRn antibodies including batoclimab and IMVT-1402.
ISG also owns PCT applications directed to methods of treating Graves’ Disease and methods of treating Chronic Inflammatory Demyelinating Polyneuropathy using anti-FcRn antibodies including IMVT-1402 and batoclimab.
Failure to comply with these laws can result in the imposition of significant civil and criminal penalties. 63 Table of Contents Additionally, the federal Physician Payments Sunshine Act (the “Sunshine Act”), within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, physicians, certain other healthcare professionals, and teaching hospitals and to report annually certain ownership and investment interests held by physicians, certain other healthcare professionals, and their immediate family members.
Additionally, the federal Physician Payments Sunshine Act (the “Sunshine Act”), within the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to CMS information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, physicians, certain other healthcare professionals, and teaching hospitals and to report annually certain ownership and investment interests held by physicians, certain other healthcare professionals, and their immediate family members.
On December 30, 2020, the United Kingdom and European Union signed the Trade and Cooperation Agreement, which includes an agreement on free trade between the two parties.
On December 30, 2020, the U.K. and European Union signed the Trade and Cooperation Agreement, which includes an agreement on free trade between the two parties.
Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued ”Written Request” for such a study.
This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and reform government program reimbursement methodologies for drugs.
There has been increasing legislative and enforcement interest in the U.S. with respect to drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and reform government program reimbursement methodologies for drugs.
The RIPSA contains certain representations and warranties and covenants applicable to DSL and its subsidiaries. The RIPSA also contains certain Events of Default (as defined in the RIPSA) such as the breach of payment and other obligations, bankruptcy-related events and cross-defaults with respect to other related documents and agreements creating indebtedness.
The RIPSA also contains certain Events of Default (as defined in the RIPSA) such as the breach of payment and other obligations, bankruptcy-related events and cross-defaults with respect to other related documents and agreements creating indebtedness.
The patents of this patent family and any pending applications, if issued, may expire in 2035, without taking into account any possible patent term adjustments or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. In addition, the in-licensed patent portfolio includes another patent family that discloses a pharmaceutical formulation for an anti-FcRn antibody.
The patents of this patent family may expire in 2035, without taking into account any possible patent term adjustment or extension and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees. 29 Table of Contents In addition, the in-licensed patent portfolio includes another patent family that discloses a pharmaceutical formulation for an anti-FcRn antibody.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe commercial success of VTAMA and the clinical and commercial success of other product candidates will depend on a number of factors, including the following: • our ability to successfully implement and execute on a marketing strategy for VTAMA and to commercialize any of our product candidates in the United States and internationally, if approved, whether alone or in collaboration with others; • acceptance by physicians, payers, and patients of the benefits, safety, and efficacy of VTAMA or any product candidates, if approved, including relative to alternative and competing treatments; 79 Table of Contents • timely completion of our nonclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; • whether we are required by the FDA or similar foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of our product candidates or any future product candidates; • acceptance of our proposed indications and primary and secondary endpoint assessments relating to the proposed indications of our product candidates by the FDA and similar foreign regulatory authorities; • the prevalence, duration, and severity of potential side effects or other safety issues experienced with VTAMA or our product candidates; • the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; • achieving, maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to VTAMA or any of our product candidates; • the willingness of physicians and patients to utilize or adopt VTAMA and our product candidates, if approved; • the ability of third parties upon which we rely to manufacture clinical trial and commercial supplies of VTAMA or any of our product candidates to remain in good standing with relevant regulatory authorities and to develop, validate, and maintain commercially viable manufacturing processes that are compliant with Current Good Manufacturing Practice (“cGMP”); • the availability of coverage and adequate reimbursement from private third-party payers and governmental healthcare programs, such as Medicare and Medicaid; • patient demand for any approved products; • our ability to establish and enforce intellectual property rights in and to any current and future products and product candidates; • our ability to avoid third-party patent interference, intellectual property challenges, or intellectual property infringement claims; and • the ability to raise any additional required capital on acceptable terms, or at all.
Biggest changeThe commercial success of VTAMA and the clinical and commercial success of our other current and future products and product candidates will depend on a number of factors, including the following: 54 Table of Contents • our ability to successfully implement and execute on a marketing strategy for VTAMA and to commercialize any of our current or future products in the U.S. and internationally, whether alone or in collaboration with others; • acceptance by physicians, payers and patients of the benefits, safety and efficacy of VTAMA or any of our current or future products, including relative to alternative and competing treatments; • timely completion of our nonclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; • whether we are required by the FDA or foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of our current or future products or product candidates; • acceptance of our proposed indications and primary and secondary endpoint assessments relating to the proposed indications of our current or future products or product candidates by the FDA and foreign regulatory authorities; • the prevalence, duration and severity of potential side effects or other safety issues experienced with VTAMA or our current or future products or product candidates; • the timely receipt of necessary marketing approvals from the FDA and foreign regulatory authorities for our current or future products or product candidates; • achieving, maintaining and, where applicable, ensuring that our third-party contractors achieve and maintain compliance with our contractual obligations and with all regulatory requirements applicable to VTAMA or any of our current or future products or product candidates; • the willingness of physicians and patients to utilize or adopt VTAMA and any of our current or future products or product candidates, if approved; • the ability of third parties upon which we rely to manufacture clinical trial and commercial supplies of VTAMA or any of our current or future products or product candidates to remain in good standing with relevant regulatory authorities and to develop, validate and maintain commercially viable manufacturing processes that are compliant with Current Good Manufacturing Practice (“cGMP”); • the availability of coverage and adequate reimbursement from private third-party payers and governmental healthcare programs for VTAMA and any of our current or future products or product candidates, such as Medicare and Medicaid; • patient demand for VTAMA and any of our current or future products or product candidates; • our ability to establish and enforce intellectual property rights in and to any of our current or future products or product candidates; • our ability to avoid third-party patent interference, intellectual property challenges or intellectual property infringement claims; and • the ability to raise any additional required capital on acceptable terms, or at all.
If we are unable to manage the risks and uncertainties associated with the commercialization of VTAMA and any future products or product candidates that receive marketing approval, we may be unable to generate significant revenues from the sales of these products and product candidates to achieve profitability, which will materially affect our business, prospects, financial condition and results of operations.
If we are unable to manage the risks and uncertainties associated with the commercialization of VTAMA and any future products or product candidates that receive marketing approval, we may be unable to generate significant revenues from the sales of these products and product candidates or to achieve profitability, which will materially affect our business, prospects, financial condition and results of operations.
If we elect to increase our expenditures to fund commercialization activities ourselves, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring a product or, if approved, product candidate to market or generate product revenue.
If we elect to increase our expenditures to fund commercialization activities ourselves, we may need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring a product or, if approved, product candidate to market or generate product revenue.
Factors affecting the trading price of our Common Shares may include: • actual or anticipated fluctuations in our quarterly and annual financial results or the quarterly and annual financial results of companies perceived to be similar to it; • changes in the market’s expectations about operating results; • our operating results failing to meet market expectations in a particular period; • a Vant’s operating results failing to meet market expectations in a particular period, which could impact the market prices of shares of a public Vant or the valuation of a private Vant, and in turn adversely impact the trading price of our Common Shares; 130 Table of Contents • receipt of marketing approval for a product or product candidate in one or more jurisdictions, or the failure to receive such marketing approval; • the results of clinical trials or preclinical studies conducted by us and the Vants; • changes in financial estimates and recommendations by securities analysts concerning us, the Vants or the biopharmaceutical industry and market in general; • operating and stock price performance of other companies that investors deem comparable to us; • changes in laws and regulations affecting our and the Vants’ businesses; • the outcome of litigation or other claims or proceedings, including governmental and regulatory proceedings, against us or the Vants; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • the volume of our Common Shares available for public sale and the relatively limited free float of our Common Shares; • any significant change in our board of directors or management; • sales of substantial amounts of our Common Shares by directors, executive officers or significant shareholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Factors affecting the trading price of our common shares may include: • actual or anticipated fluctuations in our quarterly and annual financial results or the quarterly and annual financial results of companies perceived to be similar to it; • changes in the market’s expectations about operating results; • our operating results failing to meet market expectations in a particular period; • a Vant’s operating results failing to meet market expectations in a particular period, which could impact the market prices of shares of a public Vant or the valuation of a private Vant, and in turn adversely impact the trading price of our common shares; • receipt of marketing approval for a product or product candidate in one or more jurisdictions, or the failure to receive such marketing approval; • the results of clinical trials or preclinical studies conducted by us and the Vants; • changes in financial estimates and recommendations by securities analysts concerning us, the Vants or the biopharmaceutical industry and market in general; • operating and stock price performance of other companies that investors deem comparable to us; • changes in laws and regulations affecting our and the Vants’ businesses; • the outcome of litigation or other claims or proceedings, including governmental and regulatory proceedings, against us or the Vants; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • the volume of our common shares available for public sale and the relatively limited free float of our common shares; • any significant change in our board of directors or management; • sales of substantial amounts of our common shares by directors, executive officers or significant shareholders or the perception that such sales could occur; and 109 Table of Contents • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Our ability to execute on our business model and generate revenues depends on a number of factors, including our ability to: • successfully continue to commercialize VTAMA; • identify new acquisition or in-licensing opportunities; • successfully complete ongoing preclinical studies and clinical trials and obtain regulatory approvals for our current and future products and product candidates; • successfully identify new product candidates through our discovery efforts and advance those product candidates into preclinical studies and clinical trials; • successfully grow our healthcare technology Vants and market the products and services offered by those Vants; • raise additional funds when needed and on terms acceptable to us; • attract and retain experienced management and advisory teams; • add operational, financial and management information systems and personnel, including personnel to support clinical, preclinical manufacturing and commercialization efforts and operations; • launch commercial sales of future product candidates, whether alone or in collaboration with others, including establishing sales, marketing and distribution systems; • initiate and continue relationships with third-party suppliers and manufacturers and have commercial quantities of products and product candidates manufactured at acceptable cost and quality levels and in compliance with FDA and other regulatory requirements; • set acceptable prices for products and product candidates and obtain coverage and adequate reimbursement from third-party payors; • achieve market acceptance of products and product candidates in the medical community and with third-party payors and consumers; and 76 Table of Contents • maintain, expand and protect our intellectual property portfolio.
Our ability to execute on our business model and generate revenues depends on a number of factors, including our ability to: • successfully continue to commercialize VTAMA; • successfully complete ongoing preclinical studies and clinical trials and obtain regulatory approvals for our current and future product candidates; • identify new acquisition or in-licensing opportunities; • launch commercial sales of future product candidates, whether alone or in collaboration with others, including establishing sales, marketing and distribution systems; • successfully grow our healthcare technology Vants and market the products and services offered by those Vants; • attract and retain experienced management and advisory teams; • add operational, financial and management information systems and personnel, including personnel to support clinical, preclinical manufacturing and commercialization efforts and operations; • initiate and maintain relationships with third-party suppliers and manufacturers and have commercial quantities of products and product candidates manufactured at acceptable cost and quality levels and in compliance with FDA and other regulatory requirements; 52 Table of Contents • set acceptable prices for products and product candidates and obtain coverage and adequate reimbursement from third-party payors; • achieve market acceptance of products and product candidates in the medical community and with third-party payors and consumers; • raise additional funds when needed and on terms acceptable to us; • successfully identify new product candidates through our discovery efforts and advance those product candidates into preclinical studies and clinical trials; and • maintain, expand and protect our intellectual property portfolio.
Further, we, the FDA or other regulatory authorities may suspend our clinical trials in an entire country at any time, or an IRB/EC may suspend our clinical trial sites within any country, if it appears that we or our collaborators, or the principal investigator, are failing to conduct a trial in accordance with the protocol, applicable regulatory requirements, including Good Clinical Practice (“GCP”) regulations, that we are exposing participants to unacceptable health risks, or if the FDA or other regulatory authority finds deficiencies in our IND or equivalent applications for other countries or in the manner in which clinical trials are conducted.
We, the FDA or other regulatory authorities may suspend our clinical trials in an entire country at any time, or an IRB/EC may suspend our clinical trial sites within any country, if it appears that we or our collaborators, or the principal investigator, are failing to conduct a trial in accordance with the protocol, applicable regulatory requirements, including Good Clinical Practice (“GCP”) regulations, that we are exposing participants to unacceptable health risks, or if the FDA or other regulatory authority finds deficiencies in our IND or equivalent applications for other countries or in the manner in which clinical trials are conducted.
The degree of market acceptance for any product or product candidates we may develop, if approved for commercial sale, will depend on a number of factors, including: 98 Table of Contents • the efficacy and safety of such products and product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals; • the potential and perceived advantages compared to alternative treatments, including any similar generic treatments; • the ability to offer these products for sale at competitive prices; • the ability to offer appropriate patient financial assistance programs, such as commercial insurance co-pay assistance; • convenience and ease of dosing and administration compared to alternative treatments; • the clinical indications for which the product or product candidate is approved by FDA or comparable non-U.S. regulatory agencies; • product labelling or product insert requirements of the FDA or other comparable non-U.S. regulatory authorities, including any limitations, contraindications or warnings contained in a product’s approved labelling; • restrictions on how the product is dispensed or distributed; • the timing of market introduction of competitive products; • publicity concerning these products or competing products and treatments; • the strength of marketing and distribution support; • favorable third-party coverage and sufficient reimbursement; and • the prevalence and severity of any side effects or adverse events.
The degree of market acceptance for any product or product candidates we may develop, if approved for commercial sale, will depend on a number of factors, including: • the efficacy and safety of such products and product candidates as demonstrated in pivotal clinical trials and published in peer-reviewed journals; • the potential and perceived advantages compared to alternative treatments, including any similar generic treatments; • the ability to offer these products for sale at competitive prices; • the ability to offer appropriate patient financial assistance programs, such as commercial insurance co-pay assistance; • convenience and ease of dosing and administration compared to alternative treatments; • the clinical indications for which the product or product candidate is approved by FDA or comparable non-U.S. regulatory agencies; 76 Table of Contents • product labelling or product insert requirements of the FDA or other comparable non-U.S. regulatory authorities, including any limitations, contraindications or warnings contained in a product’s approved labelling; • restrictions on how the product is dispensed or distributed; • the timing of market introduction of competitive products; • publicity concerning these products or competing products and treatments; • the strength of marketing and distribution support; • favorable third-party coverage and sufficient reimbursement; and • the prevalence and severity of any side effects or adverse events.
Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our products and product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • manufacturing and product quality issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • failure to comply with applicable laws, regulations and standards, including cGMP and similar standards; • deficient or improper record-keeping; • inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; • termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our products or product candidates in a timely fashion, in sufficient quantities or under acceptable terms; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or other regulatory sanctions related to the manufacturer of another company’s product candidates; • carrier disruptions or increased costs that are beyond our control; and • failure to deliver our products or product candidates under specified storage conditions and in a timely manner.
Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our products and product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • manufacturing and product quality issues related to scale-up of manufacturing; 66 Table of Contents • costs and validation of new equipment and facilities required for scale-up; • failure to comply with applicable laws, regulations and standards, including cGMP and similar standards; • deficient or improper record-keeping; • inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; • termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on a limited number of sources, and in some cases, single sources for product components, such that if we are unable to secure a sufficient supply of these product components, we will be unable to manufacture and sell our products or product candidates in a timely fashion, in sufficient quantities or under acceptable terms; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier or other regulatory sanctions related to the manufacturer of another company’s product candidates; • carrier disruptions or increased costs that are beyond our control; and • failure to deliver our products or product candidates under specified storage conditions and in a timely manner.
One or more competitors may circumvent these patents by filing a marketing application with the FDA under Sections 505(b)(2) or 505(j) of the Federal Food, Drug and Cosmetic Act containing a paragraph IV certification for a competitive product containing the active moiety in VTAMA and successfully challenging the validity of the three patents or successfully designing around the three patents.
One or more competitors may circumvent these patents by filing a marketing application with the FDA under Sections 505(b)(2) or 505(j) of the Federal Food, Drug and Cosmetic Act containing a paragraph IV certification for a competitive product containing the active moiety in VTAMA and successfully challenging the validity of the patents or successfully designing around the patents.
Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization. We have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support additional marketing approvals. We cannot be certain that our current clinical trials or any other future clinical trials will be successful.
Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization. We have relatively limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support additional marketing approvals. We cannot be certain that our current clinical trials or any other future clinical trials will be successful.
For example, Dermavant, ThermoFisher and GSK have entered into agreements pursuant to which ThermoFisher and GSK are providing commercial drug product and drug substance for VTAMA as well as drug product and drug substance for Dermavant’s recently completed pivotal atopic dermatitis Phase 3 ADORING 1 and ADORING 2 trials of VTAMA as well as its ongoing open label long-term extension study of VTAMA in atopic dermatitis.
For example, Dermavant, ThermoFisher and GSK have entered into agreements pursuant to which ThermoFisher and GSK are providing commercial drug product and drug substance for VTAMA as well as drug product and drug substance for Dermavant’s completed pivotal atopic dermatitis Phase 3 ADORING 1 and ADORING 2 trials of VTAMA as well as its ongoing open label long-term extension study of VTAMA in atopic dermatitis.
Patient enrollment and retention in clinical trials depends on many factors, including EC approval of patient participation as proposed, the size of the patient population, the nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, delays in enrollment due to travel or quarantine policies, or other factors, including those related to the ongoing COVID-19 pandemic or future pandemics, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites, the eligibility criteria for the trial and the proportion of patients screened that meets those criteria, our ability to obtain and maintain patient consents and our ability to successfully complete prerequisite studies before enrolling certain patient populations.
Patient enrollment and retention in clinical trials depends on many factors, including EC approval of patient participation as proposed, the size of the patient population, the nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, delays in enrollment due to travel or quarantine policies, or other factors, including those related to any ongoing effects of COVID-19 pandemic or future pandemics, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites, the eligibility criteria for the trial and the proportion of patients screened that meets those criteria, our ability to obtain and maintain patient consents and our ability to successfully complete prerequisite studies before enrolling certain patient populations.
Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain profitability or successfully commercialize our products and, if approved, product candidates.
Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain sustained profitability or successfully commercialize our products and, if approved, product candidates.
For example, our three issued U.S. patents covering VTAMA may not provide adequate protection from competitive products developed by 505(b)(1) NDA, 505(b)(2) NDA or 505(j) ANDA applicants containing paragraph IV certifications if such applicants are able to design around the three patents.
For example, our issued U.S. patents covering VTAMA may not provide adequate protection from competitive products developed by 505(b)(1) NDA, 505(b)(2) NDA or 505(j) ANDA applicants containing paragraph IV certifications if such applicants are able to design around the patents.
Any successful challenge against the three patents and/or designing around one or more of the patents could result in a generic version of VTAMA being commercialized before the expiration of the three patents. If the three patents are successfully challenged or designed around, our business, results of operations, financial condition and prospects would be harmed.
Any successful challenge against the patents and/or designing around one or more of the patents could result in a generic version of VTAMA being commercialized before the expiration of the patents. If the patents are successfully challenged or designed around, our business, results of operations, financial condition and prospects would be harmed.
We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to successfully market our products, acquire or in-license new products or product candidates, complete the development and commercialization of our products and product candidates and continue to pursue our drug discovery efforts.
We may require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to successfully market our products, acquire or in-license new products or product candidates, complete the development and commercialization of our products and product candidates and continue to pursue our drug discovery efforts.
As we continue to develop and seek regulatory approval of additional products and product candidates, as well as additional indications for VTAMA, and to pursue regulatory approvals for VTAMA and other products and product candidates outside the U.S., it could be difficult for us to obtain and devote the resources necessary to successfully manage our commercialization efforts.
As we continue to develop and seek regulatory approval of additional products and product candidates, as well as additional indications for VTAMA, and to pursue regulatory approvals for VTAMA and other products and product candidates outside the U.S., it could be difficult for us to obtain and devote the resources necessary to successfully pursue our commercialization efforts.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims, including the Moderna Action, the Pfizer Action and the Acuitas Action, may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims, including the Moderna Action and the Pfizer Action, may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities.
Risks Related to Our Business and Industry Risks Related to Our Financial Position and Strategy Our limited operating history and the inherent uncertainties and risks involved in biopharmaceutical product development may make it difficult for us to execute on our business model and for you to assess our future viability.
Risks Related to Our Business and Industry Risks Related to Our Financial Position and Strategy Our limited operating history and the inherent uncertainties and risks involved in biopharmaceutical product development and commercialization may make it difficult for us to execute on our business model and for you to assess our future viability.
If our current or future licensors or collaboration partners fail to obtain, maintain, defend, protect or enforce any patents or patent applications licensed to us, our rights to such patents and patent applications may be reduced or eliminated and our right to develop and commercialize products and product candidates that are the subject of such licensed rights could be adversely affected. 120 Table of Contents Furthermore, certain of our current and future licenses may not provide us with exclusive rights to use the licensed intellectual property and technology, or may not provide us with rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology, products and product candidates in the future.
If our current or future licensors or collaboration partners fail to obtain, maintain, defend, protect or enforce any patents or patent applications licensed to us, our rights to such patents and patent applications may be reduced or eliminated and our right to develop and commercialize products and product candidates that are the subject of such licensed rights could be adversely affected. 98 Table of Contents Furthermore, certain of our current and future licenses may not provide us with exclusive rights to use the licensed intellectual property and technology, or may not provide us with rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology, products and product candidates in the future.
Obtaining marketing approval of a new drug is an extensive, lengthy, expensive and inherently uncertain process and the FDA or other non-U.S. regulatory authorities may delay, limit or deny approval of a product candidate for many reasons, including: 91 Table of Contents • we may not be able to demonstrate that a product candidate is safe and effective as a treatment for the targeted indications, and in the case of our product candidates regulated as biological products, that the product candidate is safe, pure and potent for use in its targeted indication, to the satisfaction of the FDA or other relevant regulatory authorities; • the FDA or other relevant regulatory authorities may require additional pre-approval studies or clinical trials, which would increase costs and prolong development timelines; • the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or other relevant regulatory authorities for marketing approval; • the FDA or other relevant regulatory authorities may disagree with the number, design, size, conduct or implementation of clinical trials, including the design of proposed preclinical and early clinical trials of any future product candidates; • the CROs that we retain to conduct clinical trials may take actions outside of our control, or otherwise commit errors or breaches of protocols, that adversely impact the clinical trials and ability to obtain marketing approvals; • the FDA or other relevant regulatory authorities may not find the data from nonclinical, preclinical studies or clinical trials sufficient to demonstrate that the clinical and other benefits of a product candidate outweigh its safety risks; • the FDA or other relevant regulatory authorities may disagree with an interpretation of data or significance of results from nonclinical, preclinical studies or clinical trials or may require additional studies; • the FDA or other relevant regulatory authorities may not accept data generated at clinical trial sites, including in situations where the authorities deem that the data was not generated in compliance with GCP, ethical standards or applicable data protection laws; • if an NDA, BLA or a similar application is reviewed by an advisory committee, the FDA or other relevant regulatory authority, as the case may be, may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA or other relevant regulatory authorities, as the case may be, require, as a condition of approval, additional nonclinical, preclinical studies or clinical trials, limitations on approved labelling or distribution and use restrictions; • the FDA or other relevant regulatory authorities may require development of a risk evaluation and mitigation strategy (“REMS”) or its equivalent, as a condition of approval; • the FDA or other relevant regulatory authorities may require additional post-marketing studies and/or patient registries for product candidates; • the FDA or other relevant regulatory authorities may find the chemistry, manufacturing and controls data insufficient to support the quality of our product candidates; • the FDA or other relevant regulatory authorities may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers; or • the FDA or other relevant regulatory authorities may change their approval policies or adopt new regulations.
Obtaining marketing approval of a new drug is an extensive, lengthy, expensive and inherently uncertain process and the FDA or other non-U.S. regulatory authorities may delay, limit or deny approval of a product candidate for many reasons, including: • we may not be able to demonstrate that a product candidate is safe and effective as a treatment for the targeted indications, and in the case of our product candidates regulated as biological products, that the product candidate is safe, pure and potent for use in its targeted indication, to the satisfaction of the FDA or other relevant regulatory authorities; • the FDA or other relevant regulatory authorities may require additional pre-approval studies or clinical trials, which would increase costs and prolong development timelines; • the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or other relevant regulatory authorities for marketing approval; • the FDA or other relevant regulatory authorities may disagree with the number, design, size, conduct or implementation of clinical trials, including the design of proposed preclinical and early clinical trials of any future product candidates; • the CROs that we retain to conduct clinical trials may take actions outside of our control, or otherwise commit errors or breaches of protocols, that adversely impact the clinical trials and ability to obtain marketing approvals; • the FDA or other relevant regulatory authorities may not find the data from nonclinical, preclinical studies or clinical trials sufficient to demonstrate that the clinical and other benefits of a product candidate outweigh its safety risks; • the FDA or other relevant regulatory authorities may disagree with an interpretation of data or significance of results from nonclinical, preclinical studies or clinical trials or may require additional studies; • the FDA or other relevant regulatory authorities may not accept data generated at clinical trial sites, including in situations where the authorities deem that the data was not generated in compliance with GCP, ethical standards or applicable data protection laws; 69 Table of Contents • if an NDA, BLA or a similar application is referred for review by an advisory committee, the FDA or other relevant regulatory authority, as the case may be, may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA or other relevant regulatory authorities, as the case may be, require, as a condition of approval, additional nonclinical, preclinical studies or clinical trials, limitations on approved labelling or distribution and use restrictions; • the FDA or other relevant regulatory authorities may require development of a risk evaluation and mitigation strategy (“REMS”) drug safety program or its equivalent, as a condition of approval; • the FDA or other relevant regulatory authorities may require additional post-marketing studies and/or patient registries for product candidates; • the FDA or other relevant regulatory authorities may find the chemistry, manufacturing and controls data insufficient to support the quality of our product candidates; • the FDA or other relevant regulatory authorities may identify deficiencies in the manufacturing processes or facilities of third-party manufacturers; or • the FDA or other relevant regulatory authorities may change their approval policies or adopt new regulations.
These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to challenge the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings.
These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to challenge the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review (“IPR”), and derivation proceedings.
Additionally, we may pursue additional in-licenses or acquisitions of product candidates or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise.
Additionally, we may pursue additional in-licenses or acquisitions of product candidates or programs, which entails additional risk to us. Identifying, selecting and acquiring promising product candidates requires substantial technical, financial, legal and human resources expertise.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 117 Table of Contents Even if they are unchallenged, our owned and licensed patents and pending patent applications, if issued, may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative technologies or therapeutics in a non-infringing manner.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. 95 Table of Contents Even if they are unchallenged, our owned and licensed patents and pending patent applications, if issued, may not provide us with any meaningful protection or prevent competitors from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative technologies or therapeutics in a non-infringing manner.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products and, if approved, our product candidates.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability through product revenue, or commercialize our products and, if approved, our product candidates.
Although off-label use may infringe or contribute to the infringement of method-of-use patents, the practice is common, and this type of infringement is difficult to prevent or prosecute. 118 Table of Contents Our owned and licensed patents and pending patent applications, if issued, may not adequately protect our intellectual property or prevent competitors or others from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative technologies or therapeutics in a non-infringing manner.
Although off-label use may infringe or contribute to the infringement of method-of-use patents, the practice is common, and this type of infringement is difficult to prevent or prosecute. 96 Table of Contents Our owned and licensed patents and pending patent applications, if issued, may not adequately protect our intellectual property or prevent competitors or others from designing around our patent claims to circumvent our owned or licensed patents by developing similar or alternative technologies or therapeutics in a non-infringing manner.
We were formed in April 2014, and our operations to date have primarily been limited to acquiring or in-licensing product candidates, pursuing the clinical development and commercialization of those product candidates, efforts to discover new product candidates, financing activities and the creation or acquisition of healthcare technology companies and products, as well as the oversight and management of our subsidiaries developing and commercializing medicines, which we refer to as “Vants.” Last year, following the approval by the U.S.
We were formed in April 2014, and our operations to date have primarily been limited to acquiring or in-licensing product candidates, pursuing the clinical development and commercialization of those product candidates, efforts to discover new product candidates, financing activities and the creation or acquisition of healthcare technology companies and products, as well as the oversight and management of our subsidiaries developing and commercializing medicines, which we refer to as “Vants.” Following the approval by the U.S.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect: • the demand for our products and, if approved, product candidates; • our ability to receive or set a price that we believe is fair for our products; • our ability to generate revenue and achieve or maintain profitability; • the amount of taxes that we are required to pay; and • the availability of capital.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect: • the demand for our products and, if approved, product candidates; • our ability to receive or set a price that we believe is fair for our products; • our ability to generate revenue and achieve sustained profitability; • the amount of taxes that we are required to pay; and • the availability of capital.
Patent terms and their scope may be inadequate to protect our competitive position on current and future products and product candidates for an adequate amount of time. Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
Patent terms and their scope may be inadequate to protect our competitive position on current and future products and product candidates for an adequate amount of time. Patents have a limited lifespan. In the U.S., if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
Failure to comply with applicable privacy and data security laws and regulations could result in enforcement actions against us, including possible fines, imprisonment of company officials and public censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.
Any failure by us, or our subsidiaries or affiliates, to comply with applicable privacy and data security laws and regulations could result in enforcement actions against us, including possible fines, imprisonment of company officials and public censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.
At the federal level, regulations promulgated pursuant to HIPAA establish privacy and security standards for “covered entities” (group health plans and most healthcare providers) that limit the use and disclosure of individually identifiable health information those entities receive or create (“protected health information”), and require the implementation of administrative, physical and technological safeguards to protect the security, confidentiality, integrity and availability of electronic protected health information.
At the federal level, regulations promulgated pursuant to HIPAA establish privacy and security standards for “covered entities” (group health plans and most healthcare providers) that limit the use and disclosure of individually identifiable health information those entities and their service providers receive or create (“protected health information”), and require the implementation of administrative, physical and technological safeguards to protect the security, confidentiality, integrity and availability of electronic protected health information.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties currently ranging from $11,803 to $23,607 for each false claim or statement for penalties assessed after December 13, 2021, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal health care fraud statute (established by Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false or fraudulent statements relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the Administrative Simplification provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information on health plans, health care clearing houses and most healthcare providers (collectively, “covered entities”), and such covered entities’ “business associates,” defined as independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of the covered entity; • various privacy, cybersecurity and data protection laws, rules and regulations at the international, federal, state and local level impose obligations with respect to safeguarding the privacy, security, and cross-border transmission of personally identifiable data, including personal health information; • the federal Civil Monetary Penalties Law, which authorizes the imposition of substantial civil monetary penalties against an entity that engages in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment; 101 Table of Contents • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians, certain other healthcare providers, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (covered manufacturers are required to submit reports to the government by the 90th day of each calendar year); and • analogous state and EU and foreign national laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and several recently passed state laws that require disclosures related to state agencies and/or commercial purchasers with respect to certain price increases that exceed a certain level as identified in the relevant statutes, some of which contain ambiguous requirements that government officials have not yet clarified; and EU and foreign national laws prohibiting promotion of prescription-only medicinal products to individuals other than healthcare professionals, governing strictly all aspects of interactions with healthcare professionals and healthcare organizations, including prior notification, review and/or approval of agreements with healthcare professionals, and requiring public disclosure of transfers of value made to a broad range of stakeholders, including healthcare professionals, healthcare organizations, medical students, physicians associations, patient organizations and editors of specialized press.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties currently ranging from $13,508 to $27,018 for each false claim or statement for penalties assessed after January 30, 2023, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal health care fraud statute (established by Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false or fraudulent statements relating to healthcare matters; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the Administrative Simplification provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information on health plans, health care clearing houses and most healthcare providers (collectively, “covered entities”), and such covered entities’ “business associates,” defined as independent contractors or agents of covered entities that create, receive or obtain protected health information in connection with providing a service for or on behalf of the covered entity; • various privacy, cybersecurity and data protection laws, rules and regulations at the international, federal, state and local level, which impose obligations with respect to safeguarding the privacy, security, and cross-border transmission of personally identifiable data, including personal health information; • the federal Civil Monetary Penalties Law, which authorizes the imposition of substantial civil monetary penalties against an entity that engages in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment; • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians, certain other healthcare providers, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other “transfers of value” to such physician owners (covered manufacturers are required to submit reports to the government by the 90th day of each calendar year); and 79 Table of Contents • analogous state and EU and foreign national laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, and state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and several recently passed state laws that require disclosures related to state agencies and/or commercial purchasers with respect to certain price increases that exceed a certain level as identified in the relevant statutes, some of which contain ambiguous requirements that government officials have not yet clarified; and EU and foreign national laws prohibiting promotion of prescription-only medicinal products to individuals other than healthcare professionals, governing strictly all aspects of interactions with healthcare professionals and healthcare organizations, including prior notification, review and/or approval of agreements with healthcare professionals, and requiring public disclosure of transfers of value made to a broad range of stakeholders, including healthcare professionals, healthcare organizations, medical students, physicians associations, patient organizations and editors of specialized press.
The orphan market exclusivity applies in parallel to the “normal” data and market exclusivity in the EEA, whereby no company can make reference to (rely on) the innovator drug company’s preclinical and clinical data in order to obtain a marketing authorization for eight years from the date of the first approval of the innovator drug in the EEA and no generic drug can be marketed for ten years from the first approval of the innovator drug in the EEA; the innovator drug may qualify for an extra year’s protection.
The orphan market exclusivity applies in parallel to the “normal” data and market exclusivity in the EEA, whereby no company can make reference to (rely on) the innovator drug company’s preclinical and clinical data in order to obtain a marketing authorization for eight years from the date of the first approval of the innovator drug in the EEA and no generic or biosimilar drug can be marketed for ten years from the first approval of the innovator drug in the EEA; the innovator drug may qualify for an extra year’s protection.
Data privacy remains an evolving landscape at both the domestic and international level, with new laws and regulations being adopted and coming into effect. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices. Significant resources are needed to understand and comply with this changing landscape.
Data privacy remains an evolving landscape at both the domestic and international level, with new laws and regulations frequently being adopted and coming into effect. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our current practices. Significant resources are needed to understand and comply with this changing landscape.
Such laws include, without limitation: • the federal Anti-Kickback Statute, which is a criminal law that prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program (such as Medicare and Medicaid).
Such laws include, without limitation: 78 Table of Contents • the federal Anti-Kickback Statute, which is a criminal law that prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program (such as Medicare and Medicaid).
We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future.
We may retain future earnings, if any, for future operations, expansion and debt repayment and have no plans to pay any cash dividends for the foreseeable future.
The following examples are illustrative: • others may be able to make formulations or compositions that are the same as or similar to our products or product candidates, but that are not covered by the claims of the patents that we own; • others may be able to make product candidates that are similar to our products or product candidates that we intend to commercialize that are not covered by the patents that we exclusively licensed and have the right to enforce; • we, our licensor or any collaborators might not have been the first to make or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensor or any collaborators might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive product candidates for sale in our major commercial markets; and we may not develop additional proprietary technologies that are patentable; • third parties performing manufacturing or testing for us using our products, product candidates or technologies could use the intellectual property of others without obtaining a proper license; • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; • the patents of others may harm our business; and • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent application covering such intellectual property.
The following examples are illustrative: • others may be able to make formulations or compositions that are the same as or similar to our products or product candidates, but that are not covered by the claims of the patents that we own; • others may be able to make product candidates that are similar to our products or product candidates that we intend to commercialize that are not covered by the patents that we exclusively licensed and have the right to enforce; • we, our licensor or any collaborators might not have been the first to make or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensor or any collaborators might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive product candidates for sale in our major commercial markets; and we may not develop additional proprietary technologies that are patentable; • third parties performing manufacturing or testing for us using our products, product candidates or technologies could use the intellectual property of others without obtaining a proper license; 108 Table of Contents • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; • the patents of others may harm our business; and • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property.
Violations of the FDCA in the United States and other comparable laws and regulations in other jurisdictions relating to the promotion of prescription drugs may lead to enforcement actions and investigations by the FDA, Department of Justice, State Attorneys General and other comparable non-U.S. regulatory agencies alleging violations of United States federal and state health care fraud and abuse laws, as well as state consumer protection laws and comparable laws in other jurisdictions.
Violations of the FDCA in the U.S. and other comparable laws and regulations in other jurisdictions relating to the promotion of prescription drugs may lead to enforcement actions and investigations by the FDA, Department of Justice, State Attorneys General and other comparable non-U.S. regulatory agencies alleging violations of U.S. federal and state health care fraud and abuse laws, as well as state consumer protection laws and comparable laws in other jurisdictions.
Moreover, risks associated with broader market conditions, including high levels of inflation, rising interest rates and increasing market and banking sector instability and volatility, all of which have been observed in recent periods, may further adversely impact our ability to obtain financing on acceptable terms or at all.
Moreover, risks associated with broader market conditions, including high levels of inflation, heightened interest rates and increasing market and banking sector instability and volatility, all of which have been observed in recent periods, may further adversely impact our ability to obtain financing on acceptable terms or at all.
To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or in an inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and reputational damage and the commercialization efforts for our products and further development of any product candidate could be delayed.
To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or in an unauthorized disclosure of personal, confidential or proprietary information, we could incur liability and reputational damage and the commercialization efforts for our products and further development of any product candidate could be delayed.
Likewise, the results of early clinical trials or preclinical studies of our product candidates may not be predictive of the results of future development programs.
Likewise, the results of early clinical trials or preclinical studies of our product candidates may not be predictive of the results of current or future development programs.
In addition, the proposal envisages changes to the concept of unmet medical need and considers introducing novel rewards for orphan medicinal products addressing a high unmet medical need. The adoption of the new legislation is not expected before 2024 and it will start to apply 18 months after the entry in force.
In addition, the proposal envisages changes to the concept of unmet medical need and considers introducing novel rewards for orphan medicinal products addressing a high unmet medical need. The adoption of the new legislation is not expected before 2025 and it will start to apply 18 months after the entry in force.
Any increase in such attacks on us or our third-party vendors or other systems could adversely affect our network systems or other operations. 109 Table of Contents We generally require our third-party providers to implement effective security measures and to identify and correct for any information technology security failures, deficiencies or breaches.
Any increase in such attacks on us or our third-party vendors or other systems could adversely affect our network systems or other operations. 87 Table of Contents We generally require our third-party providers to implement effective security measures and to identify and correct for any information technology security failures, deficiencies or breaches.
While we generally are not subject to the HIPAA privacy or security regulations, we do business with various entities that are subject those HIPAA regulations (including clinical trial investigators) and we have to expend resources to understand their obligations, adjust contractual relationships in light of those obligations, or otherwise modify our business practices.
While we generally are not subject to the HIPAA privacy or security regulations, we do business with various entities (including clinical trial investigators) that are subject those regulations, and we have to expend resources to understand their obligations, adjust contractual terms in light of those obligations, or otherwise modify our business practices.
Our U.S. counsel expresses no opinion with respect to our PFIC status for the current or future taxable years. We will endeavor to determine our PFIC status for each taxable year and make such determination available to U.S. holders. 138 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our U.S. counsel expresses no opinion with respect to our PFIC status for the current or future taxable years. We will endeavor to determine our PFIC status for each taxable year and make such determination available to U.S. holders. 115 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, U.S. patent applications filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Therefore, patent applications covering our products and product candidates could have been filed by others without our knowledge.
In addition, U.S. patent applications filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside the U.S. remain confidential until patents issue. Therefore, patent applications covering our products and product candidates could have been filed by others without our knowledge.
In the United States, the Medicare Modernization Act (“MMA”) contains provisions that may change U.S. importation laws and expand pharmacists’ and wholesalers’ ability to import cheaper versions of an approved drug and competing products from Canada, where there are government price controls.
In the U.S., the Medicare Modernization Act (“MMA”) contains provisions that may change U.S. importation laws and expand pharmacists’ and wholesalers’ ability to import cheaper versions of an approved drug and competing products from Canada, where there are government price controls.
As a result, we cannot predict with certainty how much protection, if any, will be given to our patents if we attempt to enforce them and they are challenged in court and if any such suits, including the Moderna Action and the Acuitas Action, will ultimately be resolved successfully.
As a result, we cannot predict with certainty how much protection, if any, will be given to our patents if we attempt to enforce them and they are challenged in court and if any such suits, including the Moderna Action and the Pfizer Action, will ultimately be resolved successfully.
In addition, later discovery of previously unknown adverse events or other problems with our products or product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may negatively impact our business and the price of our Common Shares and may yield various results, including: 95 Table of Contents • restrictions on the manufacture of such products or product candidates; • restrictions on the labelling or marketing of such products or product candidates, including a “black box” warning or contraindication on the product label or communications containing warnings or other safety information about the product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials, or any regulatory holds on our clinical trials; • requirement of a REMS (or equivalent outside the United States); • Warning or Untitled Letters or similar communications from other relevant regulatory authorities; • withdrawal of the product or product candidates from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products or product candidates; • fines, restitution or disgorgement of profits or revenues; • suspension, variation, revocation or withdrawal of marketing approvals; • refusal to permit the import or export of our products or product candidates; • seizure of our products or product candidates; or • lawsuits, injunctions or the imposition of civil or criminal penalties.
In addition, later discovery of previously unknown adverse events or other problems with our products or product candidates, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may negatively impact our business and the price of our common shares and may yield various results, including: • restrictions on the manufacture of such products or product candidates; • restrictions on the labelling or marketing of such products or product candidates, including a “black box” warning or contraindication on the product label or communications containing warnings or other safety information about the product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials, or any regulatory holds on our clinical trials; • requirement of a REMS (or equivalent outside the U.S.); • Warning or Untitled Letters or similar communications from other relevant regulatory authorities; • withdrawal of the product or product candidates from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products or product candidates; • fines, restitution or disgorgement of profits or revenues; • suspension, variation, revocation or withdrawal of marketing approvals; • refusal to permit the import or export of our products or product candidates; 73 Table of Contents • seizure of our products or product candidates; or • lawsuits, injunctions or the imposition of civil or criminal penalties.
Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable to predict when and if our products and product candidates will achieve various milestones in their clinical development, including marketing approval from the FDA or other regulatory authorities, the timing or amount of increased expenses related to these activities or when we will be able to generate meaningful revenues or achieve or maintain profitability, if ever.
Because of the numerous risks and uncertainties associated with biopharmaceutical product development and commercialization, we are unable to predict when and if our products and product candidates will achieve various milestones in their clinical development, including marketing approval from the FDA or other regulatory authorities, the timing or amount of increased expenses related to these activities or when we will be able to generate significant revenues or maintain profitability.
Failure by any future CROs to properly execute study protocols in accordance with applicable law could also create product liability and healthcare regulatory risks for us as sponsors of those studies. 88 Table of Contents Our CROs are independent, third-party organizations and we do not control whether they devote sufficient time, attention and resources to our clinical and nonclinical programs.
Failure by any future CROs to properly execute study protocols in accordance with applicable law could also create product liability and healthcare regulatory risks for us as sponsors of those studies. Our CROs are independent, third-party organizations and we do not control whether they devote sufficient time, attention and resources to our clinical and nonclinical programs.
We may not be able to complete certain strategic transactions if a proposed transaction may be subject to review or approval by regulatory authorities pursuant to certain U.S. laws or regulations. Certain potential acquisitions or business combinations that we may pursue could be subject to review or approval by regulatory authorities pursuant to certain U.S. laws or regulations.
We may not be able to complete certain strategic transactions if a proposed transaction may be subject to review or approval by regulatory authorities pursuant to certain U.S. laws or regulations. Certain potential acquisitions, divestitures or other business combinations that we may pursue could be subject to review or approval by regulatory authorities pursuant to certain U.S. laws or regulations.
Immunovant plans to seek orphan drug designation from the FDA for batoclimab and/or IMVT-1402 where there is a medically plausible basis for batoclimab and/or IMVT-1402’s use. Immunovant may also seek orphan drug designation for batoclimab and/or IMVT-1402 for the treatment of other indications in the E.U.
Immunovant plans to seek orphan drug designation from the FDA for IMVT-1402 and/or batoclimab where there is a medically plausible basis for IMVT-1402 and batoclimab’s use. Immunovant may also seek orphan drug designation for IMVT-1402 and batoclimab for the treatment of other indications in the E.U.
In their capacities as directors, those individuals may owe fiduciary duties to the Vants and their shareholders under applicable law, which may at times require them to take actions that are not directly in our interest.
In their capacities as directors, those individuals may owe fiduciary duties to the Vants and their shareholders under applicable law, which may at times require them to take actions that are not directly in our interest as a shareholder.
Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts.
Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, which complicates compliance efforts.
If taxing authorities were to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase its consolidated tax liability, which could adversely affect our financial condition, results of operations and cash flows. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes.
If taxing authorities were to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, it would increase its consolidated tax liability, which could adversely affect our financial condition, results of operations and cash flows. 113 Table of Contents Significant judgment is required in evaluating our tax positions and determining our provision for income taxes.
This decentralized model could also make compliance with applicable laws and regulations more challenging to monitor and may expose us to increased costs that could, in turn, harm our business, financial condition, results of operations or prospects. 81 Table of Contents In addition, a single or limited number of the Vants may, now or in the future, comprise a large proportion of our value.
This decentralized model could also make compliance with applicable laws and regulations more challenging to monitor and may expose us to increased costs that could, in turn, harm our business, financial condition, results of operations or prospects. In addition, a single or limited number of the Vants may, now or in the future, comprise a large proportion of our value.
In addition, even if a product candidate qualifies as a breakthrough therapy, the FDA may later decide that such product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Recently, there has been heightened scrutiny of the accelerated approval pathway, with some stakeholders advocating for reform.
In addition, even if a product candidate qualifies as a breakthrough therapy, the FDA may later decide that such product candidate no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. 74 Table of Contents Recently, there has been heightened scrutiny of the accelerated approval pathway, with some stakeholders advocating for reform.
Furthermore, if any of our products, or any future product candidates that are approved, cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including: 93 Table of Contents • regulatory authorities may withdraw, suspend, vary, or limit their approval of the product or require a REMS (or equivalent outside the United States) to impose restrictions on its distribution or other risk management measures; • regulatory authorities may require that we recall a product; • additional restrictions being imposed on the distribution, marketing or manufacturing processes of the products or any components thereof, including a “black box” warning or contraindication on product labels or communications containing warnings or other safety information about the product; • regulatory authorities may require the addition of labelling statements, such as warnings or contraindications, require other labelling changes of a product or require field alerts or other communications to physicians, pharmacies or the public; • we may be required to change the way a product is administered or distributed, conduct additional clinical trials, change the labelling of a product or conduct additional post-marketing studies or surveillance; • we may be required to repeat preclinical studies or clinical trials or terminate programs for a product candidate, even if other studies or trials related to the program are ongoing or have been successfully completed; • we may be sued and held liable for harm caused to patients, or may be subject to fines, restitution or disgorgement of profits or revenues; • physicians may stop prescribing a product; • reimbursement may not be available for a product; • we may elect to discontinue the sale of our products; • our products may become less competitive; and • our reputation may suffer.
Furthermore, if any of our products, or any future product candidates that are approved, cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw, revoke, suspend, vary, or limit their approval of the product or require a REMS (or equivalent outside the U.S.) to impose restrictions on its distribution or other risk management measures; • regulatory authorities may request or require that we recall a product; • additional restrictions being imposed on the distribution, marketing or manufacturing processes of the products or any components thereof, including a “black box” warning or contraindication on product labels or communications containing warnings or other safety information about the product; • regulatory authorities may require the addition of labelling statements, such as warnings or contraindications, require other labelling changes of a product or require field alerts or other communications to physicians, pharmacies or the public; • we may be required to change the way a product is administered or distributed, conduct additional clinical trials, change the labelling of a product or conduct additional post-marketing studies or surveillance; • we may be required to repeat preclinical studies or clinical trials or terminate programs for a product candidate, even if other studies or trials related to the program are ongoing or have been successfully completed; • we may be sued and held liable for harm caused to patients, or may be subject to fines, restitution or disgorgement of profits or revenues; • physicians may stop prescribing a product; • reimbursement may not be available for a product; • we may elect to discontinue the sale of our products; • our products may become less competitive; and • our reputation may suffer.
We are currently and may in the future be subject to third-party pre-issuance submissions of prior art to the USPTO or its equivalents and we or our licensors have in the past, and may in the future, become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings in the U.S. or in other jurisdictions challenging our patent rights or the patent rights of others.
We are currently and may in the future be subject to third-party pre-issuance submissions of prior art to the USPTO or its equivalents and we or our licensors have in the past, and may in the future, become involved in opposition, derivation, reexamination, IPR, post-grant review or interference proceedings in the U.S. or in other jurisdictions challenging our patent rights or the patent rights of others.
Failure to manage the risks associated with such changes, or misinterpretation of the laws providing such changes, could result in costly audits, interest, penalties, and reputational damage, which could adversely affect our business, results of our operations, and our financial condition. 136 Table of Contents Our actual effective tax rate may vary from our expectation and that variance may be material.
Failure to manage the risks associated with such changes, or misinterpretation of the laws providing such changes, could result in costly audits, interest, penalties, and reputational damage, which could adversely affect our business, results of our operations, and our financial condition. Our actual effective tax rate may vary from our expectation and that variance may be material.
Once granted, patents may remain open to invalidity challenges including opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant.
Once granted, patents may remain open to invalidity challenges including opposition, interference, re-examination, post-grant review, IPR, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant.
Any of the foregoing could harm our business, financial condition, results of operations and prospects. 128 Table of Contents We may not be successful in obtaining necessary intellectual property rights to future product candidates through acquisitions and in-licenses. A third-party may hold intellectual property, including patent rights, that are important or necessary to the development of our product candidates.
Any of the foregoing could harm our business, financial condition, results of operations and prospects. We may not be successful in obtaining necessary intellectual property rights to future product candidates through acquisitions and in-licenses. A third party may hold intellectual property, including patent rights, that are important or necessary to the development of our product candidates.
“Global intangible low-taxed income” may include most of the remainder of a CFC’s income over a deemed return on its tangible assets. We believe that we will not be classified as a CFC for the taxable year ended March 31, 2023. However, our non-U.S. subsidiaries will be classified as CFCs for the taxable year ended March 31, 2023.
“Global intangible low-taxed income” may include most of the remainder of a CFC’s income over a deemed return on its tangible assets. We believe that we were not classified as a CFC for the taxable year ended March 31, 2024. However, our non-U.S. subsidiaries will be classified as CFCs for the taxable year ended March 31, 2024.
The risks associated with patent rights generally apply to patent rights that we in-license now or in the future, as well as patent rights that we may own now or in the future. 115 Table of Contents It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
The risks associated with patent rights generally apply to patent rights that we in-license now or in the future, as well as patent rights that we may own now or in the future. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
We and the Vants will need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, including in our subsidiaries, our shareholders may experience substantial dilution.
We and the Vants may need additional capital in the future to continue our operations. To the extent we raise additional capital by issuing equity securities, including in our subsidiaries, our shareholders may experience substantial dilution.
Competition for senior leadership in the healthcare investment industry is intense, and we cannot guarantee that we will be able to retain our key personnel or that of our Vants. Our senior leaders and key employees may terminate their positions with us at any time.
Competition for senior leadership in the healthcare investment industry is intense, and we cannot guarantee that we will be able to retain our key personnel or that of our Vants. 83 Table of Contents Our senior leaders and key employees may terminate their positions with us at any time.
Currently and in the coming years, there may be an increased risk of cybersecurity attacks due to the Russian invasion of Ukraine, including cybersecurity attacks perpetrated by Russia or others at its direction in response to economic sanctions and other actions taken against Russia as a result of the invasion.
Currently and in the coming years, there may be an increased risk of cybersecurity attacks due to the ongoing Russia-Ukraine conflict, including cybersecurity attacks perpetrated by Russia or others at its direction in response to economic sanctions and other actions taken against Russia as a result of the invasion.
If a third-party is found to be infringing such patents, we and our direct subsidiaries may not be able to permanently enjoin the third-party from making, using, offering for sale or selling the infringing product or activity for the remaining life of such patent in the United States or other jurisdictions when the patent is assigned to a subsidiary, which is not the entity that is or would be commercializing a potentially competitive product or service.
If a third party is found to be infringing such patents, we and our direct subsidiaries may not be able to permanently enjoin the third-party from making, using, offering for sale or selling the infringing product or activity for the remaining life of such patent in the U.S. or other jurisdictions when the patent is assigned to a subsidiary, which is not the entity that is or would be commercializing a potentially competitive product or service.
For example, the California Confidentiality of Medical Information Act (the “CMIA”), a statute similar to the HIPAA privacy and security regulations, expressly applies to pharmaceutical companies (as well as companies that provide certain technologies for processing personal health information), and imposes stringent data privacy and security requirements and obligations with respect to the personal health information of California residents.
For example, the California Confidentiality of Medical Information Act (the “CMIA”), a statute that expressly applies to pharmaceutical companies (as well as companies that provide certain technologies for processing personal health information), imposes stringent data privacy and security requirements and obligations with respect to the personal health information of California residents.
While we have launched VTAMA in the U.S., we have limited experience as a commercial company and therefore face significant risks and uncertainties relating to the commercialization of VTAMA and any future products that receive marketing approval in the U.S. or another jurisdiction, including: • our ability to recruit and retain effective sales, marketing and customer service personnel; • our ability to obtain and retain access to physicians or persuade adequate numbers of physicians to prescribe VTAMA and any future products; • the inability to manufacture and to price VTAMA and any future products at a price point sufficient to ensure an adequate and attractive level of profitability; • the extent to which coverage and adequate reimbursement for VTAMA and any future products will be available from government health administration authorities, private health insurers and other organizations; • the risks associated with potential co-promotion or partnership agreements, including the failure to realize the expected benefits of such arrangements; and • other unforeseen costs, expenses and risks associated with the commercialization of biopharmaceutical products, including compliance costs.
While we have launched VTAMA in the U.S., we have relatively limited experience as a commercial-stage company and therefore face significant risks and uncertainties relating to the commercialization of VTAMA and any future products that receive marketing approval in the U.S. or another jurisdiction, including: • our ability to recruit and retain effective sales, marketing and customer service personnel; • our ability to obtain and retain access to physicians or persuade adequate numbers of physicians to prescribe VTAMA and any future products; • the inability to manufacture and to price VTAMA and any future products at a price point sufficient to ensure an adequate and attractive level of profitability; • the extent to which coverage and adequate reimbursement for VTAMA and any future products will be available from government health administration authorities, private health insurers and other organizations; • the risks associated with potential co-promotion or partnership agreements, including the failure to realize the expected benefits of such arrangements; • the costs and other risks associated with expansion of a commercial product into multiple indications, including increased sales and marketing costs; and • other unforeseen costs, expenses and risks associated with the commercialization of biopharmaceutical products, including compliance costs.
If any of these assumptions are incorrect or overstated, our results and future prospects will be materially and adversely affected. We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
If any of these assumptions are incorrect or overstated, our results and future prospects will be materially and adversely affected. 57 Table of Contents We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
On April 26, 2023, as part of the EU Pharmaceutical Strategy, the European Commission published a proposal for a comprehensive revision of the EU pharmaceutical legislation (which will not apply in the UK).
In April 2023, as part of the EU Pharmaceutical Strategy, the European Commission published a proposal for a comprehensive revision of the EU pharmaceutical legislation (which will not apply in the UK).
There can be no assurance that our products or, if approved, product candidates, will be considered medically reasonable and necessary, that they will be considered cost-effective by third-party payors, that coverage or an adequate level of reimbursement will be available, or that reimbursement policies and practices in the United States and in other countries where our products and, if approved, product candidates, are sold will not harm our ability to profitably sell our products and, if approved, product candidates.
There can be no assurance that our products or, if approved, product candidates, will be considered medically reasonable and necessary, that they will be considered cost-effective by third-party payors, that coverage or an adequate level of reimbursement will be available, or that reimbursement policies and practices in the U.S. and in other countries where our products and, if approved, product candidates, are sold will not harm our ability to profitably sell our products and, if approved, product candidates.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is or may be relevant to or necessary for the commercialization of products or product candidates in any jurisdiction.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the U.S. and abroad that is or may be relevant to or necessary for the commercialization of products or product candidates in any jurisdiction.
The general permission or the specific permission would cease to apply if we were to cease to be listed on the Nasdaq or another appointed stock exchange. 135 Table of Contents We may become subject to unanticipated tax liabilities and higher effective tax rates. We are incorporated under the laws of Bermuda.
The general permission or the specific permission would cease to apply if we were to cease to be listed on the Nasdaq or another appointed stock exchange. We may become subject to unanticipated tax liabilities and higher effective tax rates. We are incorporated under the laws of Bermuda.
In the United States, the FDA may designate a drug or biologic as an orphan drug if it is intended to treat a rare disease or condition, which is defined as a disease or condition that affects fewer than 200,000 individuals annually in the United States or for which there is no reasonable expectation that costs of research and development of the drug for the disease or condition can be recovered by sales of the drug in the United States.
In the U.S., the FDA may designate a drug or biologic as an orphan drug if it is intended to treat a rare disease or condition, which is defined as a disease or condition that affects fewer than 200,000 individuals annually in the U.S. or for which there is no reasonable expectation that costs of research and development of the drug for the disease or condition can be recovered by sales of the drug in the U.S.
We cannot provide any assurance that we will submit an IND, NDA, CTA or other similar application for regulatory approval for our product candidates within projected timeframes or whether any such application will be approved by the relevant regulatory authorities.
We cannot provide any assurance that we will submit an IND, NDA, CTA or other similar application for regulatory approval for our product candidates within projected timeframes or whether any such application will be accepted for review or ultimately approved by the relevant regulatory authorities.
Given the amount of time required for the development, testing and regulatory review of products and product candidates, patents protecting our products and product candidates might expire before or shortly after such candidate begins to be commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we are prosecuting patents.
Given the amount of time required for the development, testing and regulatory review of products and product candidates, patents protecting our products and product candidates might expire before or shortly after such candidate begins to be commercialized. We expect to seek extensions of patent terms in the U.S. and, if available, in other countries where we are prosecuting patents.
For example, a third-party may develop a competitive product that provides benefits similar to one or more of our products or product candidates but that falls outside the scope of our patent protection. Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed.
For example, a third party may develop a competitive product that provides benefits similar to one or more of our products or product candidates but that falls outside the scope of our patent protection. Moreover, patents have a limited lifespan. In the U.S., the natural expiration of a patent is generally 20 years after it is filed.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our and our subsidiaries’ leased facilities are in good condition and are well maintained and that our current arrangements will be sufficient to meet our needs for the foreseeable future and that any required additional space will be available on commercially reasonable terms to meet space requirements if they arise.
Biggest changeWe do not own any properties. 116 Table of Contents We believe that our and our subsidiaries’ leased facilities are in good condition and are well maintained and that our current arrangements will be sufficient to meet our needs for the foreseeable future and that any required additional space will be available on commercially reasonable terms to meet space requirements if they arise.
ITEM 2. PROPERTIES Our principal executive offices are located at 7th Floor, 50 Broadway, London SW1H 0DB, United Kingdom. Our registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. Certain of our subsidiaries and affiliates also have business operations in New York, New York, Boston, Massachusetts and Basel, Switzerland.
ITEM 2. PROPERTIES Our principal executive offices are located at 7th Floor, 50 Broadway, London SW1H 0DB, United Kingdom. Our registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. Certain of our subsidiaries and affiliates also have business operations in New York, New York and Basel, Switzerland.
Our subsidiary Roivant Sciences, Inc. subleases 83,340 square feet of office space located in New York, New York, pursuant to a sublease agreement that expires in October 2032. Certain of our subsidiaries and affiliates also lease office space in Boston, Massachusetts and Basel, Switzerland. We do not own any properties.
Our subsidiary Roivant Sciences, Inc. subleases 83,340 square feet of office space located in New York, New York, pursuant to a sublease agreement that expires in October 2032. Certain of our subsidiaries and affiliates also lease office space in New York, New York and Basel, Switzerland.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference. Sales of Unregistered Securities and Use of Proceeds None. Issuer Repurchases of Equity Securities None. 140 Table of Contents ITEM 6. [RESERVED]
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans in Item 12 of Part III of this Annual Report on Form 10-K is incorporated herein by reference.
The actual number of holders of our Common Shares and warrants is greater than these numbers of record holders and includes stockholders who are beneficial owners but whose Common Shares or warrants are held in street name by banks, brokers and other nominees. Dividend Policy We have never declared or paid cash dividends on our capital stock.
The actual number of holders of our common shares is greater than this number of record holders and includes shareholders who are beneficial owners but whose common shares are held in street name by banks, brokers and other nominees. Dividend Policy We have never declared or paid cash dividends on our capital stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES Market Information Our Common Shares began trading on The Nasdaq Global Market (“Nasdaq”) under the symbol “ROIV” on October 1, 2021. Prior to that date, there was no public trading market for our Common Shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares are listed on the Nasdaq Global Select Market under the symbol “ROIV.” Holders As of May 28, 2024, there were approximately 70 holders of record of our common shares.
Removed
Warrants to purchase our Common Shares originally began trading on The Nasdaq Stock Market LLC as units under the symbol “MAACU” on October 6, 2020, in connection with the initial public offering of Montes Archimedes Acquisition Corp. (“MAAC”).
Added
Performance Graph The following stock performance graph illustrates a comparison from October 1, 2021 (the date our common shares commenced trading on the Nasdaq Global Market) through March 31, 2024, of the total cumulative shareholder return on our common shares, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Removed
Following the completion of the Business Combination with MAAC on September 30, 2021, we assumed MAAC’s obligations under the warrants and they began trading on The Nasdaq Global Market under the symbol “ROIVW” on October 1, 2021.
Added
This graph assumes an initial investment of $100 on October 1, 2021 at the market closing price of $9.35 per share, and that all dividends were reinvested (although dividends have not been paid on our common shares).
Removed
Holders As of June 26, 2023, there were 100 holders of record of our Common Shares and two holders of record of warrants to purchase our Common Shares.
Added
The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common shares. 118 Table of Contents The information included under the heading Performance Graph is “furnished” and not “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be “soliciting material” subject to Regulation 14A or incorporated by reference in any filing under the Securities Act or the Exchange Act.
Added
Sales of Unregistered Securities and Use of Proceeds None. Issuer Repurchases of Equity Securities None. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChanges in the amount of net loss attributable to noncontrolling interests are directly impacted by the net loss of our consolidated entities and changes in ownership percentages. 144 Table of Contents Results of Operations Comparison of the years ended March 31, 2023 and 2022 The following table sets forth our results of operations for the years ended March 31, 2023 and 2022 : Years Ended March 31, 2023 2022 Change (in thousands) Revenues: Product revenue, net $ 28,011 $ — $ 28,011 License, milestone and other revenue 33,269 55,286 (22,017 ) Revenue, net 61,280 55,286 $ 5,994 Operating expenses: Cost of revenues 13,128 8,966 4,162 Research and development 525,215 483,035 42,180 Acquired in-process research and development 97,749 139,894 (42,145 ) Selling, general and administrative 600,506 775,033 (174,527 ) Total operating expenses 1,236,598 1,406,928 (170,330 ) Loss from operations (1,175,318 ) (1,351,642 ) 176,324 Change in fair value of investments 20,815 87,291 (66,476 ) Gain on sale of investment — (443,754 ) 443,754 Change in fair value of debt and liability instruments 78,001 (3,354 ) 81,355 Gain on termination of Sumitomo Options — (66,472 ) 66,472 Gain on deconsolidation of subsidiaries (29,276 ) (5,041 ) (24,235 ) Interest income (32,184 ) (369 ) (31,815 ) Interest expense 27,968 7,041 20,927 Other income, net (15,808 ) (3,237 ) (12,571 ) Loss from continuing operations before income taxes (1,224,834 ) (923,747 ) (301,087 ) Income tax expense 5,190 369 4,821 Loss from continuing operations, net of tax (1,230,024 ) (924,116 ) (305,908 ) Income from discontinued operations, net of tax 114,561 — 114,561 Net loss (1,115,463 ) (924,116 ) (191,347 ) Net loss attributable to noncontrolling interests (106,433 ) (78,854 ) (27,579 ) Net loss attributable to Roivant Sciences Ltd. $ (1,009,030 ) $ (845,262 ) $ (163,768 ) Variance analysis for years ended March 31, 2023 and 2022 Product revenue, net Years Ended March 31, 2023 2022 Change (in thousands) Product revenue, net $ 28,011 $ — $ 28,011 Product revenue, net was $28.0 million for the year ended March 31, 2023 , consisting of net product revenues from the sale of VTAMA, following the approval of VTAMA for the treatment of plaque psoriasis in adult patients by the FDA in May 2022.
Biggest changeChanges in the amount of net loss attributable to noncontrolling interests are directly impacted by the net loss of our consolidated entities and changes in ownership percentages. 122 Table of Contents Results of Operations Comparison of the years ended March 31, 2024 and 2023 The following table sets forth our results of operations for the years ended March 31, 2024 and 2023 : Years Ended March 31, 2024 2023 Change (in thousands) Revenues: Product revenue, net $ 75,057 $ 28,011 $ 47,046 License, milestone and other revenue 49,738 33,269 16,469 Revenue, net 124,795 61,280 $ 63,515 Operating expenses: Cost of revenues 15,560 13,128 2,432 Research and development 501,736 525,215 (23,479 ) Acquired in-process research and development 26,450 97,749 (71,299 ) Selling, general and administrative 687,443 600,506 86,937 Total operating expenses 1,231,189 1,236,598 (5,409 ) Gain on sale of Telavant net assets 5,348,410 — 5,348,410 Income (loss) from operations 4,242,016 (1,175,318 ) 5,417,334 Change in fair value of investments 47,973 20,815 27,158 Change in fair value of debt and liability instruments 78,943 78,001 942 Gain on deconsolidation of subsidiaries (32,772 ) (29,276 ) (3,496 ) Interest income (146,425 ) (32,184 ) (114,241 ) Interest expense 34,778 27,968 6,810 Other expense (income), net 6,089 (15,808 ) 21,897 Income (loss) from continuing operations before income taxes 4,253,430 (1,224,834 ) 5,478,264 Income tax expense 22,224 5,190 17,034 Income (loss) from continuing operations, net of tax 4,231,206 (1,230,024 ) 5,461,230 Income from discontinued operations, net of tax — 114,561 (114,561 ) Net income (loss) 4,231,206 (1,115,463 ) 5,346,669 Net loss attributable to noncontrolling interests (117,720 ) (106,433 ) (11,287 ) Net income (loss) attributable to Roivant Sciences Ltd. $ 4,348,926 $ (1,009,030 ) $ 5,357,956 Variance analysis for years ended March 31, 2024 and 2023 Product revenue, net Years Ended March 31, 2024 2023 Change (in thousands) Product revenue, net $ 75,057 $ 28,011 $ 47,046 Product revenue, net increased by $47.0 million to $75.1 million for the year ended March 31, 2024 , compared to $28.0 million for the year ended March 31 , 2023 , primarily due to higher units sold.
We anticipate that our expenses will increase substantially as we: • fund preclinical studies and clinical trials for our product candidates, which we are pursuing or may choose to pursue in the future; • fund the manufacturing of drug substance and drug product of our product candidates in development; • seek to identify, acquire, develop and commercialize additional product candidates; • invest in activities related to the discovery of novel drugs and advancement of our internal programs; • integrate acquired technologies into a comprehensive regulatory and product development strategy; • maintain, expand and protect our intellectual property portfolio; • hire scientific, clinical, quality control and administrative personnel; • add operational, financial and management information systems and personnel, including personnel to support our drug development efforts; • achieve milestones under our agreements with third parties that will require us to make substantial payments to those parties; • seek regulatory approvals for any product candidates that successfully complete clinical trials; 154 Table of Contents • build out our sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize VTAMA and any drug candidates for which we may obtain regulatory approval; and • operate as a public company.
We anticipate that our expenses will increase substantially as we: • fund preclinical studies and clinical trials for our product candidates, which we are pursuing or may choose to pursue in the future; • fund the manufacturing of drug substance and drug product of our product candidates in development; 130 Table of Contents • seek to identify, acquire, develop and commercialize additional product candidates; • invest in activities related to the discovery of novel drugs and advancement of our internal programs; • integrate acquired technologies into a comprehensive regulatory and product development strategy; • maintain, expand and protect our intellectual property portfolio; • hire scientific, clinical, quality control and administrative personnel; • add operational, financial and management information systems and personnel, including personnel to support our drug development efforts; • achieve milestones under our agreements with third parties that will require us to make substantial payments to those parties; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • build out our sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize VTAMA and any drug candidates for which we may obtain regulatory approval; and • operate as a public company.
License, milestone and other revenue License, milestone and other revenue includes the recognition of upfront payments received in connection with license agreements as well as revenue generated by subscription and service-based fees. Cost of revenues We began to recognize cost of product revenues after the initial product launch of VTAMA in May 2022.
License, milestone and other revenue License, milestone and other revenue includes the recognition of payments received in connection with license agreements as well as revenue generated by subscription and service-based fees. Cost of revenues We began to recognize cost of product revenues after the initial product launch of VTAMA in May 2022.
The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingencies as of the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. In accordance with U.S.
GAAP”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingencies as of the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. In accordance with U.S.
Any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Additionally, any agreements for future debt or preferred equity financings, if available, may involve covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Research and development expenses primarily include the following: 141 Table of Contents • Program-specific costs, including direct third-party costs, which include expenses incurred under agreements with contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), manufacturing costs in connection with producing materials for use in conducting nonclinical and clinical studies, the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, and any other third-party expenses directly attributable to the development of our product candidates. • Unallocated internal costs, including: ◦ employee-related expenses, such as salaries, share-based compensation, and benefits, for research and development personnel; and ◦ other expenses that are not allocated to a specific program.
Research and development expenses primarily include the following: • Program-specific costs, including direct third-party costs, which include expenses incurred under agreements with contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), manufacturing costs in connection with producing materials for use in conducting nonclinical and clinical studies, the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, and any other third-party expenses directly attributable to the development of our product candidates. • Unallocated internal costs, including: ◦ employee-related expenses, such as salaries, share-based compensation, and benefits, for research and development personnel; and ◦ other expenses that are not allocated to a specific program.
As of March 31, 2023, we had $400.0 million of remaining capacity available under the ATM Facility. In November 2022, we completed an underwritten primary and secondary public offering of 30,000,000 of our common shares at a price to the public of $5.00 per share.
As of March 31, 2024, we had $400.0 million of remaining capacity available under the ATM Facility. In November 2022, we completed an underwritten primary and secondary public offering of 30,000,000 of our common shares at a price to the public of $5.00 per share.
In April 2019, Dermavant entered into a commercial supply agreement with GSK to continue to provide certain quantities of tapinarof and commercial product at agreed upon minimum quantities and price. The commercial supply agreement commenced in April 2022 upon completion of certain quality and regulatory conditions.
In April 2019, Dermavant entered into a commercial supply agreement with GSK to continue to provide certain quantities of tapinarof and commercial product at agreed upon minimum quantities and prices. The commercial supply agreement commenced in April 2022 upon completion of certain quality and regulatory conditions.
In connection with the closing of the Myovant Transaction, we received approximately $114.6 million in March 2023 for the sale of the Myovant Top-Up Shares. Refer to Note 11, “Discontinued Operations” of our audited financial statements for additional information.
In connection with the closing of the Myovant Transaction, we received approximately $114.6 million in March 2023 for the sale of the Myovant Top-Up Shares. Refer to Note 9, “Discontinued Operations” of our audited financial statements for additional information.
Change in fair value of debt and liability instruments for the year ended March 31, 2023 primarily consisted of an unrealized loss of $59.6 million relating to the NovaQuest facility, which was primarily due to the impact of VTAMA approval in psoriasis, and an unrealized loss of $24.1 million relating to the warrant and earn-out share liabilities issued as part of the Business Combination.
Change in fair value of debt and liability instruments for the year ended March 31, 2023 primarily consisted of a loss of $59.6 million relating to the NovaQuest facility, which was primarily due to the impact of VTAMA approval in psoriasis, and a loss of $24.1 million relating to the warrant and earn-out share liabilities issued as part of the Business Combination.
Change in fair value of debt and liability instruments Change in fair value of debt and liability instruments primarily includes the unrealized loss (gain) relating to the measurement and recognition of fair value on a recurring basis of certain liabilities, including debt issued by a wholly-owned subsidiary of Dermavant Sciences Ltd. to NovaQuest Co-Investment Fund VIII, L.P.
Change in fair value of debt and liability instruments Change in fair value of debt and liability instruments primarily includes the loss relating to the measurement and recognition of fair value on a recurring basis of certain liabilities, including debt issued by a wholly-owned subsidiary of Dermavant Sciences Ltd. (“Dermavant”) to NovaQuest Co-Investment Fund VIII, L.P.
Our cost of revenues also relates to subscription and service-based revenue recognized for the use of technology developed and consists primarily of employee, hosting, and third-party data costs. Research and development expenses Research and development expenses consist mainly of costs incurred in connection with the discovery and development of our product candidates.
Our cost of revenues also relates to subscription and service-based revenue recognized for the use of technology developed and consists primarily of employee, hosting, and third-party data costs. 119 Table of Contents Research and development expenses Research and development expenses consist mainly of costs incurred in connection with the discovery and development of our product candidates.
Change in fair value of investments Change in fair value of investments primarily includes the unrealized loss on equity investments in publicly-traded companies, including Arbutus Biopharma Corporation (“Arbutus”), as well as our equity investment in Heracles Parent, L.L.C., the parent entity of the Datavant business (“Datavant”). We have elected the fair value option to account for these investments.
Change in fair value of investments Change in fair value of investments primarily includes the unrealized loss on equity investments in publicly-traded companies, including Arbutus Biopharma Corporation (“Arbutus”), as well as our equity investment in Heracles Parent, L.L.C. (“Datavant”). We have elected the fair value option to account for these investments.
Under the terms of the RIPSA, Dermavant is obligated to pay royalties based on a capped single-digit revenue interest in net sales of tapinarof for all dermatological indications in the United States, up to a cap of $344.0 million, in exchange for the $160.0 million in committed funding to be paid to Dermavant, conditioned on the approval of tapinarof by the FDA, which was achieved in May 2022.
Under the terms of the RIPSA, Dermavant is obligated to pay royalties based on a capped single-digit revenue interest in net sales of tapinarof for all dermatological indications in the U.S., up to a cap of $344.0 million, in exchange for the $160.0 million in committed funding to be paid to Dermavant, conditioned on the approval of tapinarof by the FDA, which was achieved in May 2022.
Consolidated Vant Equity Financing Transactions Since inception, we have completed multiple Vant equity financing transactions, including the following: 153 Table of Contents Immunovant In December 2019, Immunovant raised $111.0 million (including $5.1 million related to common shares purchased by us) through a business combination with Health Sciences Acquisition Corporation, a special purpose acquisition company.
Consolidated Vant Equity Financing Transactions Since inception, we have completed multiple Vant equity financing transactions, including the following: Immunovant In December 2019, Immunovant raised $111.0 million (including $5.1 million related to common shares purchased by us) through a business combination with Health Sciences Acquisition Corporation, a special purpose acquisition company.
These increases will likely include salaries, sales incentive compensation, share-based compensation and travel expenses associated with our sales force, which began promoting VTAMA in the United States following approval by the FDA in May 2022, as well as expected costs associated with the further build out of our commercial operations functions.
These increases will likely include salaries, sales incentive compensation, share-based compensation and travel expenses associated with our sales force, which began promoting VTAMA in the U.S. following approval by the FDA in May 2022, as well as expected costs associated with the further build out of our commercial operations functions.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution, licensing or similar arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our products and product candidates, future revenue streams, research programs or technologies or grant licenses on terms that may not be favorable to us.
In May 2021, all amounts outstanding under the Hercules Loan Agreement were repaid using the proceeds from the $40.0 million senior secured credit facility entered into by Dermavant with XYQ Luxco S.A.R.L (“XYQ Luxco”), as lender, and U.S. Bank National Association, as collateral agent, in May 2021, and Dermavant terminated the Hercules Loan Agreement.
In May 2021, all amounts outstanding under the Hercules Loan Agreement were repaid using the proceeds from the $40.0 million senior secured credit facility (the "Credit Facility") entered into by Dermavant with XYQ Luxco S.A.R.L (“XYQ Luxco”), as lender, and U.S.
Net proceeds to us were approximately $216.9 million after deducting underwriting discounts and commissions and offering expenses. Sumitomo Transaction In December 2019, we closed the Sumitomo Transaction, including the transfer of our ownership interest in five Vants – Myovant, Urovant Sciences Ltd., Enzyvant Therapeutics Ltd., Altavant Sciences Ltd., and Spirovant Sciences Ltd. – to Sumitovant, a wholly-owned subsidiary of Sumitomo.
Net proceeds to us were approximately $199.8 million after deducting offering expenses. Sumitomo Transaction In December 2019, we closed the Sumitomo Transaction, including the transfer of our ownership interest in five Vants – Myovant, Urovant Sciences Ltd., Enzyvant Therapeutics Ltd., Altavant Sciences Ltd., and Spirovant Sciences Ltd. – to Sumitovant, a wholly-owned subsidiary of Sumitomo.
The minimum purchase commitment related to these agreements is estimated to be approximately $38.0 million. The above purchase commitments do not represent all of our anticipated purchases, but instead represent only the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts. Additionally, we have certain payment obligations under various asset acquisition and license agreements.
The minimum purchase commitment related to these agreements was estimated to be approximately $33.3 million. 127 Table of Contents The above purchase commitments do not represent all of our anticipated purchases, but instead represent only the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts. Additionally, we have certain payment obligations under various asset acquisition and license agreements.
Interest income Interest income consists of interest earned on our cash equivalents. Interest expense Interest expense results from interest accrued on long-term debt and the amortization of debt discount and issuance costs. 143 Table of Contents Income tax expense Income tax expense is recorded for the jurisdictions in which we do business.
Interest expense Interest expense results from interest accrued on long-term debt and the amortization of debt discount and issuance costs. Income tax expense Income tax expense is recorded for the jurisdictions in which we do business.
Change in fair value of debt and liability instruments for the year ended March 31, 2022 primarily consisted of an unrealized gain of $30.8 million relating to the warrant and earn-out share liabilities issued as part of the Business Combination, partially offset by an unrealized loss of $27.3 million relating to the NovaQuest facility, which was largely due to the passage of time and increased probabilities of success as a result of advancement in the stage of development of the product candidate.
Change in fair value of debt and liability instruments for the year ended March 31, 2024 primarily consisted of a loss of $46.1 million relating to the warrant and earn-out share liabilities issued as part of the Business Combination and a loss of $32.1 million relating to the NovaQuest Facility, which was largely due to the passage of time and increased probabilities of success as a result of advancement in the stage of development of the product candidate.
Of these common shares, 20,000,000 were sold by us and 10,000,000 were sold by certain selling shareholders. Net proceeds to us were approximately $94.7 million after deducting underwriting discounts and commissions and offering expenses.
Of these common shares, 20,000,000 were sold by us and 10,000,000 were sold by certain selling shareholders. Net proceeds to us were approximately $94.7 million after deducting underwriting discounts and commissions and offering expenses. We did not receive any proceeds from the sale of common shares by the selling shareholders in the offering.
Following the approval of VTAMA by the FDA in May 2022, Dermavant received $160.0 million in June 2022 pursuant to the terms of the RIPSA entered with XYQ Luxco, NovaQuest Co-Investment Fund XVII, L.P., an affiliate of NovaQuest Capital Management, LLC, and MAM Tapir Lender, LLC, an affiliate of Marathon Asset Management, L.P., together with U.S.
Bank National Association, as collateral agent, in May 2021, and Dermavant terminated the Hercules Loan Agreement. 129 Table of Contents Following the approval of VTAMA by the FDA in May 2022, Dermavant received $160.0 million in June 2022 pursuant to the terms of the RIPSA entered with XYQ Luxco, NovaQuest Co-Investment Fund XVII, L.P., an affiliate of NovaQuest Capital Management, LLC, and MAM Tapir Lender, LLC, an affiliate of Marathon Asset Management, L.P., together with U.S.
We did not receive any proceeds from the sale of common shares by the selling shareholders in the offering. 152 Table of Contents In February 2023, we completed an underwritten public offering of 30,666,665 of our common shares (including 3,999,999 common shares issued and sold upon the full exercise of the underwriters' option to purchase additional shares) at a price to the public of $7.50 per share.
In February 2023, we completed an underwritten public offering of 30,666,665 of our common shares (including 3,999,999 common shares issued and sold upon the full exercise of the underwriters’ option to purchase additional shares) at a price to the public of $7.50 per share.
For the year ended March 31, 2023 , cash flow from investing activities changed by $347.6 million to net cash used in investing activities of $44.3 million from net cash provided by investing activities of $303.3 million for the year ended March 31, 2022 .
For the year ended March 31, 2024 , cash flow from investing activities changed by $5.2 billion to net cash provided by investing activities of $5.2 billion from net cash used in investing activities of $44.3 million for the year ended March 31, 2023 .
Income from discontinued operations, net of tax Years Ended March 31, 2023 2022 Change (in thousands) Income from discontinued operations, net of tax $ 114,561 $ — $ 114,561 Income from discontinued operations, net of tax was $114.6 million for the year ended March 31, 2023 and resulted from the gain on sale of common shares of Myovant (the “Myovant Top-Up Shares”) after Sumitovant’s acquisition of Myovant in March 2023.
Income from discontinued operations, net of tax Years Ended March 31, 2024 2023 Change (in thousands) Income from discontinued operations, net of tax $ — $ 114,561 $ (114,561 ) Income from discontinued operations, net of tax was $114.6 million for the year ended March 31, 2023 and resulted from the gain on sale of common shares of Myovant Sciences Ltd.
Cash Flows The following table sets forth a summary of our cash flows for the years ended March 31, 2023 and 2022 : Years Ended March 31, 2023 2022 (in thousands) Net cash used in operating activities $ (843,393 ) $ (677,729 ) Net cash (used in) provided by investing activities $ (44,269 ) $ 303,295 Net cash provided by financing activities $ 499,462 $ 306,792 Operating Activities Cash flow from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities.
Cash Flows The following table sets forth a summary of our cash flows for the years ended March 31, 2024 and 2023 : Years Ended March 31, 2024 2023 (in thousands) Net cash used in operating activities $ (765,268 ) $ (843,393 ) Net cash provided by (used in) investing activities $ 5,203,623 $ (44,269 ) Net cash provided by financing activities $ 419,364 $ 499,462 131 Table of Contents Operating Activities Cash flow from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities.
During the year ended March 31, 2023 , cost of revenues included $1.8 million of costs relating to the sale of VTAMA as well as $7.5 million of amortization expense recognized in connection with milestones capitalized following the FDA approval of VTAMA in May 2022.
During the year ended March 31, 2024 and 2023 , cost of revenues included $3.4 million and $1.8 million, respectively, of costs relating to VTAMA sales. Cost of revenues additionally included amortization expense recognized in connection with milestones capitalized following the FDA approval of VTAMA in May 2022.
Cost of revenues For the years ended March 31, 2023 and 2022, our cost of revenues consisted of the following: Years Ended March 31, 2023 2022 Change (in thousands) Cost of product and other revenues $ 5,660 $ 8,966 $ (3,306 ) Amortization of intangible assets 7,468 — 7,468 Cost of revenues $ 13,128 $ 8,966 $ 4,162 Cost of revenues increased by $4.2 million to $13.1 million for the year ended March 31, 2023 , compared to $9.0 million for the year ended March 31, 2022 .
Cost of revenues For the years ended March 31, 2024 and 2023 , our cost of revenues consisted of the following: Years Ended March 31, 2024 2023 Change (in thousands) Cost of product and other revenues $ 5,928 $ 5,660 $ 268 Amortization of intangible assets 9,632 7,468 2,164 Cost of revenues $ 15,560 $ 13,128 $ 2,432 Cost of revenues increased by $2.4 million to $15.6 million for the year ended March 31, 2024 , compared to $13.1 million for the year ended March 31, 2023 .
Acquired in-process research and development expenses for the year ended March 31, 2023 was driven by consideration for the purchase of IPR&D of $87.7 million relating to the acquisition of RVT-3101 and the achievement of a development milestone relating to batoclimab, which resulted in a one-time milestone expense of $10.0 million.
The decrease was primarily due to higher consideration for the purchase of IPR&D during the year ended March 31, 2023 as a result of consideration for the purchase of IPR&D of $87.7 million relating to the acquisition of RVT-3101 in November 2022 and the achievement of a development milestone relating to batoclimab, which resulted in a one-time milestone expense of $10.0 million.
Today, Roivant’s pipeline is concentrated in inflammation and immunology and includes VTAMA, a novel topical approved for the treatment of psoriasis and in development for the treatment of atopic dermatitis; batoclimab and IMVT-1402, fully human monoclonal antibodies targeting the neonatal Fc receptor (“FcRn”) in development across several IgG-mediated autoimmune indications; and RVT-3101, an anti-TL1A antibody in development for ulcerative colitis and Crohn’s disease, in addition to several other therapies in various stages of clinical development.
Today, Roivant’s pipeline is concentrated in inflammation and immunology and includes VTAMA, a novel topical approved for the treatment of psoriasis and in development for the treatment of atopic dermatitis; IMVT-1402 and batoclimab, fully human monoclonal antibodies targeting the neonatal Fc receptor (“FcRn”) in development across several IgG-mediated autoimmune indications; and brepocitinib, a potent small molecule inhibitor of TYK2 and JAK1 for the treatment of dermatomyositis and non-infectious uveitis, in addition to several other therapies in various stages of clinical development.
The change of $66.5 million was primarily driven by changes in the public share prices of our equity investments, including Arbutus, as well as the change in fair value of our investment in Datavant following the completion of the Datavant Merger (as defined below) in July 2021.
The change of $27.2 million was primarily driven by changes in the public share prices of our equity investments, including Arbutus, as well as the change in fair value of our investment in Datavant.
Gain on deconsolidation of subsidiaries Years Ended March 31, 2023 2022 Change (in thousands) Gain on deconsolidation of subsidiaries $ (29,276 ) $ (5,041 ) $ (24,235 ) Gain on deconsolidation of subsidiaries was $29.3 million for the year ended March 31, 2023 and resulted from the deconsolidation of certain subsidiaries in November 2022 and July 2022.
(“VantAI”) in July 2023 and Proteovant in August 2023. Gain on deconsolidation of subsidiaries was $29.3 million for the year ended March 31, 2023 and resulted from the deconsolidation of certain subsidiaries in November 2022 and July 2022.
The Sumitomo Transaction was presented as discontinued operations during the year ending March 31, 2020, and the right to receive certain common shares of Myovant was treated as a contingent consideration upon a sale of the business and accounted for as a gain contingency.
The Sumitomo Transaction was presented as discontinued operations during the year ending March 31, 2020, and the right to receive the Myovant Top-Up Shares was treated as a contingent consideration upon a sale of the business and accounted for as a gain contingency. Refer to Note 9, “Discontinued Operations” of our audited financial statements for additional information.
Our short-term and long-term liquidity requirements as of March 31, 2023 included: • Contractual payments related to our long-term debt (see Note 9, “Long-Term Debt” of our audited financial statements); • obligations under our leases (see Note 15, “Leases” of our audited financial statements); • certain commitments to Palantir Technologies Inc.
Our short-term and long-term liquidity requirements as of March 31, 2024 included: • contractual payments related to our long-term debt (see Note 8, “Long-Term Debt” and Note 18, “Subsequent Events” of our audited financial statements); • obligations under our leases (see Note 13, “Leases” of our audited financial statements); • certain commitments to Samsung Biologics Co., Ltd.
The minimum purchase commitment related to this agreement is estimated to be approximately $33.3 million; and 151 Table of Contents • certain commitments to GSK pursuant to a commercial supply agreement entered between Dermavant and GSK.
As of March 31, 2024, the remaining minimum purchase commitment related to this agreement was estimated to be approximately $46.2 million; and • certain commitments to GSK pursuant to a commercial supply agreement entered between Dermavant and GSK.
Interest income Years Ended March 31, 2023 2022 Change (in thousands) Interest income $ (32,184 ) $ (369 ) $ (31,815 ) 149 Table of Contents Interest income increased by $31.8 million to $32.2 million for the year ended March 31, 2023 , compared to $0.4 million for the year ended March 31, 2022.
Interest income Years Ended March 31, 2024 2023 Change (in thousands) Interest income $ (146,425 ) $ (32,184 ) $ (114,241 ) Interest income increased by $114.2 million to $146.4 million for the year ended March 31, 2024 , compared to $32.2 million for the year ended March 31, 2023 .
The successful development of our product candidates is highly uncertain, and we cannot reasonably estimate the costs that will be necessary to complete the remainder of the development of our product candidates. In addition, the probability of success for our product candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability.
The successful development of our product candidates is highly uncertain, and we cannot reasonably estimate the costs that will be necessary to complete the remainder of the development of our product candidates.
Selling, general and administrative expenses Years Ended March 31, 2023 2022 Change (in thousands) Selling, general and administrative $ 600,506 $ 775,033 $ (174,527 ) Selling, general and administrative expenses decreased by $174.5 million to $600.5 million for the year ended March 31, 2023 , compared to $775.0 million for the year ended March 31, 2022 .
Selling, general and administrative expenses Years Ended March 31, 2024 2023 Change (in thousands) Selling, general and administrative $ 687,443 $ 600,506 $ 86,937 Selling, general and administrative expenses increased by $86.9 million to $687.4 million for the year ended March 31, 2024 , compared to $600.5 million for the year ended March 31, 2023 .
(the “NovaQuest Facility”), and other liability instruments, including warrant and earn-out share liabilities issued in connection with our business combination (the “Business Combination”) with Montes Archimedes Acquisition Corp. (“MAAC”), a special purpose acquisition company. Gain on deconsolidation of subsidiaries Gain on deconsolidation of subsidiaries resulted from the determination that we no longer had a controlling financial interest in certain subsidiaries.
(the “NovaQuest Facility”), and other liability instruments, including warrant liabilities, prior to their redemption, and earn-out share liabilities issued in connection with our business combination (the “Business Combination”) with Montes Archimedes Acquisition Corp. (“MAAC”), a special purpose acquisition company.
Interest expense Years Ended March 31, 2023 2022 Change (in thousands) Interest expense $ 27,968 $ 7,041 $ 20,927 Interest expense increased by $20.9 million to $28.0 million for the year ended March 31, 2023 , compared to $7.0 million for the year ended March 31, 2022 .
Interest expense Years Ended March 31, 2024 2023 Change (in thousands) Interest expense $ 34,778 $ 27,968 $ 6,810 126 Table of Contents Interest expense increased by $6.8 million to $34.8 million for the year ended March 31, 2024 , compared to $28.0 million for the year ended March 31, 2023 .
Change in fair value of debt and liability instruments Years Ended March 31, 2023 2022 Change (in thousands) Change in fair value of debt and liability instruments $ 78,001 $ (3,354 ) $ 81,355 Change in fair value of debt and liability instruments was an unrealized loss of $78.0 million and unrealized gain of $3.4 million for the years ended March 31, 2023 and 2022 , respectively.
Change in fair value of debt and liability instruments Years Ended March 31, 2024 2023 Change (in thousands) Change in fair value of debt and liability instruments $ 78,943 $ 78,001 $ 942 Change in fair value of debt and liability instruments were losses of $78.9 million and $78.0 million for the years ended March 31, 2024 and 2023 , respectively.
As of March 31, 2023 , we had cash and cash equivalents of approximately $1.7 billion and our accumulated deficit was approximately $3.8 billion . Through our subsidiary Dermavant, we launched our first commercial product, VTAMA, following approval by the FDA in May 2022.
As of March 31, 2024 , we had cash and cash equivalents of approximately $6.5 billion and our retained earnings was approximately $576.2 million. Through our subsidiary Dermavant, we launched our first commercial product, VTAMA, following approval by the FDA in May 2022. We began generating product revenue, net from sales of VTAMA in the U.S. in May 2022.
The following table provides a summary of activity with respect to our sales allowances and accruals (in thousands): March 31, 2023 March 31, 2022 Sales return, rebate, and discounts balances, beginning of year $ — $ — Reduction of gross sales (129,717 ) — Cash payments 108,923 — Sales return, rebate, and discounts balances, end of year $ (20,794 ) $ — 156 Table of Contents Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates.
The following table provides a summary of activity with respect to our sales allowances and accruals (in thousands): March 31, 2024 March 31, 2023 Sales return, rebate, and discounts balances, beginning of year $ (20,794 ) $ — Reduction of gross sales (207,372 ) (129,717 ) Cash payments 199,151 108,923 Sales return, rebate and discounts balances, end of year $ (29,015 ) $ (20,794 ) Accrued Research and Development Expenses, Including Clinical Trial Accruals As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.
Acquired in-process research and development expenses Acquired in-process research and development (“IPR&D”) expenses include consideration for the purchase of IPR&D through asset acquisitions and license agreements as well as payments made in connection with asset acquisitions and license agreements upon the achievement of development milestones. 142 Table of Contents Consideration for the purchase of IPR&D through asset acquisitions and license agreements includes cash upfront payments, shares and other liability instruments issued, and fair value of future contingent consideration payments.
Consideration for the purchase of IPR&D through asset acquisitions and license agreements may include cash upfront payments, shares and other liability instruments issued, and the fair value of future contingent consideration payments.
We began generating product revenue, net from sales of VTAMA in the United States in May 2022. We also have generated revenue through license agreements as well as from subscription and service-based fees.
We also have generated revenue through license agreements as well as from subscription and service-based fees.
During the year ended March 31, 2023 , proceeds were generated by funding pursuant to the terms of the RIPSA following the approval of VTAMA by the FDA in May 2022 as well as net proceeds from the issuance of our common shares and common shares of our majority-owned subsidiary Immunovant.
During the year ended March 31, 2023 , proceeds were generated by funding pursuant to the terms of the RIPSA following the approval of VTAMA by the FDA in May 2022 as well as net proceeds from the issuance of our common shares and the common shares of our majority-owned subsidiary Immunovant. 132 Table of Contents Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
We anticipate these expenses to further increase if any of our other current or future product candidates receives regulatory approval in the United States or another jurisdiction.
We anticipate these expenses to further increase if any of our other current or future product candidates receives regulatory approval in the U.S. or another jurisdiction. Gain on sale of Telavant net assets Gain on sale of Telavant net assets represents the gain resulting from the sale of our entire equity interest in our majority-owned subsidiary, Telavant Holdings, Inc.
Cash flow from operating activities is derived from adjusting our net loss for non-cash items and changes in working capital. For the year ended March 31, 2023 , cash used in operating activities increased by $165.7 million to $843.4 million compared to the year ended March 31, 2022 .
Cash flow from operating activities is derived from adjusting our net loss for non-cash items and changes in working capital.
During the year ended March 31, 2022 , license, milestone and other revenue primarily related to payments received in connection with license agreements and the licensing of technology as well as revenue relating to the sales of clinical product and milestone income at Dermavant pursuant to a collaboration and license agreement with Japan Tobacco Inc.
The increase was primarily driven by $15.0 million of revenue relating to milestone income at Dermavant pursuant to a collaboration and license agreement with Japan Tobacco Inc. during the year ended March 31, 2024 .
Research and development expenses increased by $42.2 million to $525.2 million for the year ended March 31, 2023 , compared to $ 483.0 million for the year ended March 31, 2022, primarily due to increases in program-specific costs of $45.8 million and personnel-related expenses of $28.1 million, partially offset by a decrease in share-based compensation of $32.8 million.
Research and development expenses decreased by $23.5 million to $501.7 million for the year ended March 31, 2024 , compared to $525.2 million for the year ended March 31, 2023 , primarily due to a decrease in program-specific costs of $42.4 million , partially offset by increases in other expenses of $10.7 million , personnel-related expenses of $4.5 million , and share-based compensation of $3.7 million . 124 Table of Contents The decrease of $42.4 million in program-specific costs was primarily driven by a decrease of $83.1 million in other development and discovery program expense, which in part resulted from the deconsolidation of Proteovant Sciences, Inc.
Additionally, SG&A expenses include costs incurred relating to the identification, acquisition or in-license and technology transfer of promising drug candidates along with costs incurred relating to the integration of new technologies. We expect SG&A expenses to increase in future periods as we continue to expand our sales and marketing infrastructure and general administrative functions.
We expect SG&A expenses to increase in future periods as we continue to expand our sales and marketing infrastructure and general administrative functions.
We determine such estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with our internal personnel and external service providers as to the progress or stage of completion and the agreed-upon fee to be paid for such services.
Our process for determining such estimates includes reviewing open contracts, vendor agreements, and purchase orders; communicating with our internal personnel and external service providers to understand the progress or stage of completion of services performed on our behalf; and estimating the associated costs for these services when we have not yet been invoiced.
In connection with the Sumitomo Transaction, we raised net proceeds of approximately $999.2 million due to the sale of our common shares to Sumitomo. In September 2021, we completed our Business Combination with MAAC, a special purpose acquisition company, as well as concurrent PIPE Financing.
(“Sumitomo”), we completed the transactions contemplated by the transaction agreement by and between us and Sumitomo, dated as of October 31, 2019. In connection with the Sumitomo Transaction, we raised net proceeds of approximately $999.2 million due to the sale of our common shares to Sumitomo.
We did not generate any product revenues, net for the year ended March 31, 2022. 145 Table of Contents License, milestone and other revenue Years Ended March 31, 2023 2022 Change (in thousands) License, milestone and other revenue $ 33,269 $ 55,286 $ (22,017 ) License, milestone and other revenue decreased by $22.0 million to $33.3 million for the year ended March 31, 2023 , compared to $55.3 million for the year ended March 31, 2022 .
Product revenue, net consists of net product revenues from VTAMA sales, following the approval of VTAMA for the treatment of plaque psoriasis in adult patients by the FDA in May 2022. 123 Table of Contents License, milestone and other revenue Years Ended March 31, 2024 2023 Change (in thousands) License, milestone and other revenue $ 49,738 $ 33,269 $ 16,469 License, milestone and other revenue increased by $16.5 million to $49.7 million for the year ended March 31, 2024 , compared to $33.3 million for the year ended March 31 , 2023 .
Refer to Note 11, “Discontinued Operations” of our audited financial statements for additional information. 150 Table of Contents Liquidity and Capital Resources For the years ended March 31, 2023 and 2022 , we incurred losses from continuing operations of approximately $1.2 billion and $924.1 million , respectively.
Liquidity and Capital Resources For the years ended March 31, 2024 and 2023 , we had income from continuing operations of approximately $4.2 billion and incurred a loss from continuing operations of approximately $1.2 billion , respectively.
Dermavant used the RIPSA proceeds primarily for the milestone obligations to GSK, which was achieved upon FDA approval, and Welichem Biotech Inc., which was achieved upon the first sale of VTAMA. Other Datavant In July 2021, we received approximately $320 million in cash as a result of the Datavant Merger.
Dermavant used the RIPSA proceeds primarily for the milestone obligations to GSK, which was achieved upon FDA approval, and Welichem Biotech Inc., which was achieved upon the first sale of VTAMA. On May 24, 2024, Dermavant entered into amendments to (i) the NovaQuest Agreement, (ii) the Credit Facility, and (iii) the RIPSA.
See “Forward-Looking Statements” and “Risk Factors” in this Annual Report on Form 10-K. Our operations to date have been financed primarily through the sale of equity securities, sale of subsidiary interests, debt financings and revenue generated from licensing and collaboration arrangements.
Our operations to date have been financed primarily through the sale of equity securities, sale of subsidiary interests, debt financings and revenue generated from licensing and collaboration arrangements. RSL Equity Financing Transactions Since inception, we have completed multiple equity financing transactions, including the following: In December 2019, together with Sumitomo Pharma Co., Ltd.
Income from discontinued operations, net of tax Income from discontinued operations, net of tax represents the gain on sale of common shares of Myovant Sciences Ltd. (“Myovant”) as a result of Sumitovant Biopharma Ltd.’s (“Sumitovant”) acquisition of Myovant in March 2023. We were entitled to these shares of Myovant pursuant to the December 2019 transaction with Sumitomo Pharma Co., Ltd.
(the “Myovant Top-Up Shares”) after Sumitovant Biopharma Ltd.’s (“Sumitovant”) acquisition of Myovant Sciences Ltd. (“Myovant”) in March 2023. We were entitled to the Myovant Top-Up Shares pursuant to the December 2019 transaction with Sumitomo Pharma Co., Ltd. (the “Sumitomo Transaction”) that included, among other things, the transfer of our ownership interest in five Vants to Sumitovant.
Research and development expenses For the years ended March 31, 2023 and 2022 , our research and development expenses consisted of the following: 146 Table of Contents Years Ended March 31, 2023 2022 (1) Change (in thousands) Program-specific costs: Anti-FcRn franchise (2) $ 88,747 $ 52,009 $ 36,738 Tapinarof 45,201 64,496 (19,295 ) Brepocitinib 38,627 24,890 13,737 RVT-2001 16,075 1,132 14,943 AFVT-2101 15,628 12,657 2,971 ARU-1801 12,940 23,312 (10,372 ) Namilumab 11,757 8,745 3,012 RVT-3101 7,559 — 7,559 LSVT-1701 7,173 11,067 (3,894 ) ARU-2801 3,456 12,031 (8,575 ) Other development and discovery programs 83,680 74,700 8,980 Total program-specific costs 330,843 285,039 45,804 — Unallocated internal costs: Share-based compensation 30,914 63,735 (32,821 ) Personnel-related expenses 131,908 103,827 28,081 Other expenses 31,550 30,434 1,116 Total research and development expenses $ 525,215 $ 483,035 $ 42,180 (1) Certain prior year amounts have been reclassified to conform to current year presentation.
Research and development expenses For the years ended March 31, 2024 and 2023 , our research and development expenses consisted of the following: Years Ended March 31, 2024 2023 (1) Change (in thousands) Program-specific costs: Batoclimab (1) $ 74,265 $ 78,477 $ (4,212 ) IMVT-1402 (1) 43,102 10,270 32,832 Brepocitinib 38,563 38,627 (64 ) RVT-3101 35,129 7,559 27,570 Tapinarof 34,256 45,201 (10,945 ) Namilumab 13,236 11,757 1,479 RVT-2001 10,132 16,075 (5,943 ) Other development and discovery programs 39,767 122,877 (83,110 ) Total program-specific costs 288,450 330,843 (42,393 ) Unallocated internal costs: Share-based compensation 34,595 30,914 3,681 Personnel-related expenses 136,425 131,908 4,517 Other expenses 42,266 31,550 10,716 Total research and development expenses $ 501,736 $ 525,215 $ (23,479 ) (1) Certain prior period amounts have been reclassified to conform to current period presentation.
This change in cash flow from investing activities is primarily related to $320 million in cash we received as a result of the Datavant Merger during the year ended March 31, 2022 .
This change in cash flow from investing activities is primarily due to proceeds received upon closing of the Roche Transaction during the year ended March 31, 2024 . Financing Activities For the year ended March 31, 2024 , cash provided by financing activities decreased by $80.1 million to $419.4 million compared to the year ended March 31, 2023 .
Gain on deconsolidation of subsidiaries was $5.0 million for the year ended March 31, 2022 and resulted from the deconsolidation of a subsidiary in January 2022.
Gain on deconsolidation of subsidiaries Years Ended March 31, 2024 2023 Change (in thousands) Gain on deconsolidation of subsidiaries $ (32,772 ) $ (29,276 ) $ (3,496 ) Gain on deconsolidation of subsidiaries was $32.8 million for the year ended March 31, 2024 and resulted from the deconsolidation of certain subsidiaries, including VantAI Holdings, Inc.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common shareholder.
To the extent that we raise additional capital by issuing equity securities at Roivant or the Vants, our existing shareholders’ ownership, or our ownership in the Vants, may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that could harm the rights of our shareholders.
The decrease was primarily due to a decrease in share-based compensation expense of $314.6 million, partially offset by higher selling, general and administrative expenses at Dermavant as a result of the commercial launch of VTAMA.
The increase was primarily due to an increase in selling, general and administrative expenses of $55.7 million at Dermavant as a result of the progression of the commercial launch of VTAMA and an increase in personnel-related expenses of $25.1 million, primarily as a result of a special one-time cash retention bonus award granted to employees.
If the actual timing of the performance of services or the level of effort varies from the estimate, the accrual is adjusted accordingly. Nonrefundable advance payments for goods and services are deferred and recognized as expense in the period that the related goods are consumed or services are performed.
In making these estimates, we consider various factors, including status and timing of services performed, the number of patients enrolled, and the rate of patient enrollment. If the actual timing of the performance of services or the level of effort varies from our estimate, the accrual or prepaid expense is adjusted accordingly.
However, actual costs and timing of preclinical studies and clinical trials are highly uncertain, subject to risks, and may change depending upon a number of factors, including our clinical development plan. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known at that time.
We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. 133 Table of Contents We recognize expenses related to clinical trials based on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical trials on our behalf.
Recently Adopted Accounting Pronouncements We did not adopt any material accounting pronouncements during the year ended March 31, 2023. Implications of Being an Emerging Growth Company and Smaller Reporting Company We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Recently Adopted Accounting Pronouncements We did not adopt any material accounting pronouncements during the year ended March 31, 2024 .
Change in fair value of investments Years Ended March 31, 2023 2022 Change (in thousands) Change in fair value of investments $ 20,815 $ 87,291 $ (66,476 ) Change in fair value of investments was an unrealized loss of $20.8 million and unrealized loss of $87.3 million for the years ended March 31, 2023 and 2022 , respectively.
Refer to Note 6, “Recent Transactions” of our audited financial statements for further information regarding the Roche Transaction. 125 Table of Contents Change in fair value of investments Years Ended March 31, 2024 2023 Change (in thousands) Change in fair value of investments $ 47,973 $ 20,815 $ 27,158 Change in fair value of investments were unrealized losses of $48.0 million and $20.8 million for the years ended March 31, 2024 and 2023, respectively.
The increase is primarily the result of higher interest rates on our invested cash.
This increase is primarily due to higher cash balances in our interest-bearing cash accounts as well as higher interest rates.
Removed
(the “Sumitomo Transaction”) that included, among other things, the transfer of our ownership interest in five Vants to Sumitovant.
Added
In addition, the probability of success for our product candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability. 120 Table of Contents Acquired in-process research and development expenses Acquired in-process research and development (“IPR&D”) expenses include consideration for the purchase of IPR&D through asset acquisitions and license agreements as well as payments made in connection with asset acquisitions and license agreements upon the achievement of development milestones.
Removed
During the year ended March 31, 2023 , license, milestone and other revenue primarily related to payments received in connection with licensing arrangements, including the collaboration and license agreement entered between Covant Therapeutics Operating, Inc. and Boehringer Ingelheim International, GmbH in March 2023.
Added
(“Telavant”), to Roche Holdings, Inc. (“Roche”) in December 2023 (the “Roche Transaction”). Prior to the Roche Transaction, we held 75% of the issued and outstanding shares of common stock and preferred stock of Telavant, and Pfizer Inc. owned the remaining 25%, in each case on an as-converted basis. At closing, we received approximately $5.2 billion in cash.
Removed
During the year ended March 31, 2022 , cost of revenues was primarily related to cost associated with the sales of clinical product of tapinarof by Dermavant to Japan Tobacco Inc.
Added
We are also eligible to receive an additional one-time milestone payment of approximately $110 million if the milestone payment condition is satisfied. Refer to Note 6, “Recent Transactions” of our financial statements for further information regarding the Roche Transaction.
Removed
(2) Reflects program-specific costs relating to Immunovant’s batoclimab program for the treatment of neurology, endocrine, and hematology diseases and Immunovant’s IMVT-1402 program.
Added
Refer to Note 15, “Earn-Out Shares, Public Warrants and Private Placement Warrants” of our financial statements for further information regarding the redemption of our warrants.
Removed
The increase of $45.8 million in program-specific costs largely reflects the progression of our programs and drug discovery, including the anti-FcRn franchise, RVT-2001, brepocitinib, and RVT-3101. The asset acquisitions of brepocitinib, RVT-2001, and RVT-3101 were completed in September 2021, November 2021, and November 2022, respectively.
Added
Gain on deconsolidation of subsidiaries Gain on deconsolidation of subsidiaries resulted from the determination that we no longer had a controlling financial interest in certain subsidiaries. 121 Table of Contents Interest income Interest income consists of interest earned on our cash equivalents.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Under SEC rules and regulations, because we are considered to be a “smaller reporting company,” we are not required to provide the information required by this item in this report. 159
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Under SEC rules and regulations, we are not required to provide the information required by this item in this report because we are eligible to use the scaled disclosure requirements applicable to a “smaller reporting company.” 134 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Roivant Sciences Ltd.
Added
Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 42 ) 136 Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 2024 and 2023 140 Consolidated Statements of Operations for the Years Ended March 31, 2024 and 2023 141 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended March 31, 2024 and 2023 142 Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interest for the Years Ended March 31, 2024 and 2023 143 Consolidated Statements of Cash Flows for the Years Ended March 31, 2024 and 2023 144 Notes to Consolidated Financial Statements 145 135 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Roivant Sciences Ltd.
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Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Roivant Sciences Ltd.
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(the Company) as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and redeemable noncontrolling interest and cash flows for each of the two years in the period ended March 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
Added
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with U.S. generally accepted accounting principles.
Added
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated May 30, 2024 expressed an unqualified opinion thereon.
Added
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Added
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Added
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Added
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Added
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
Added
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 136 Table of Contents Clinical Trial Accrual Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by contract research organizations.
Added
In making these estimates, the Company considers various factors, including status and timing of services performed, the number of patients enrolled and the rate of patient enrollment.
Added
Auditing the Company’s accrual for clinical trial costs is especially complex due to the fact that information necessary to estimate the accruals is accumulated from clinical research organizations and the Company’s assessment of that information is subject to variability and uncertainty.
Added
In addition, in certain circumstances, the determination of the nature and amount of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided and there may be delays in invoicing from clinical study sites and other vendors.
Added
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls that addressed the identified risks related to the information used in the Company’s process for recording clinical trial accruals.
Added
For example, we tested controls over management’s review of clinical trial progress in comparison to information and invoices received from third parties, and over the completeness and accuracy of data used to calculate the accrual.
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To test the clinical trial accrual, our audit procedures included, among others, reading a sample of the Company’s agreements with the service providers to understand key financial and contractual terms and testing the accuracy and completeness of the underlying data used in the accrual computations.
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We also evaluated management’s estimates of the vendor’s progress for a sample of clinical trials by making direct inquiries of the Company’s operations personnel overseeing the clinical trials and obtaining information directly from certain service providers about the service providers’ estimate of costs that had been incurred through March 31, 2024.
Added
To evaluate the completeness of the accruals, we also examined subsequent invoices from the service providers and cash disbursements to the service providers, to the extent such invoices were received, or payments were made prior to the date that the consolidated financial statements were issued. 137 Table of Contents Valuation of Investment in Datavant Description of the Matter At March 31, 2024, the fair value of the Company’s minority equity investment in Heracles Parent, L.L.C.
Added
(“Datavant”) was $147.5 million and was classified as Level 3 within the fair value hierarchy. As discussed in Notes 4 and 16 to the consolidated financial statements, the Company has elected the fair value option to account for its investment in Datavant.
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Management determines the fair value of the Company’s investment in Datavant using the income approach and implementation of the option pricing method, which uses significant unobservable inputs. Determining the fair value of the Company’s investment in Datavant requires management to make significant judgments about the valuation methodologies, including the unobservable inputs and other assumptions and estimates used in the measurements.
Added
Auditing the fair value of the Company’s investment in Datavant was complex and required substantial auditor judgment due to the significant estimation required in determining the fair value of the investment in Datavant.
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In particular, to value its investment in Datavant, the Company used significant unobservable inputs such as the weighted average cost of capital, revenue growth rate, earnings before interest, taxes, depreciation and amortization and terminal growth rate, which are affected by expectations about future market or economic conditions.
Added
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the process for valuing the Company’s investment in Datavant, including controls over management’s review of the significant inputs described above.
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To test the fair value of the Company’s investment in Datavant, our audit procedures included, among others, assessing the valuation methodologies used and testing the significant unobservable inputs discussed above, including testing the completeness, accuracy and relevance of underlying data used by the Company in the valuation.
Added
We compared the significant inputs and underlying data used by management to current industry and economic trends, historical financial results, and other relevant factors. We analyzed the significant unobservable inputs to evaluate the change in the fair value of the Company’s investment in Datavant resulting from changes in the inputs.
Added
We also assessed the historical accuracy of the underlying financial projections developed by Datavant by comparing to actual historical results. In addition, we involved our valuation specialists to assist in evaluating the valuation methodology and significant unobservable inputs described above used to develop the fair value estimate.
Added
The valuation specialists’ procedures included independently developing fair value estimates and comparing them to the amounts recorded. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2016. Iselin, New Jersey May 30, 2024 138 Table of Contents ROIVANT SCIENCES LTD.
Added
Consolidated Balance Sheets (in thousands, except share and per share amounts) March 31, 2024 March 31, 2023 Assets Current assets: Cash and cash equivalents $ 6,535,706 $ 1,676,813 Other current assets 196,122 121,774 Total current assets 6,731,828 1,798,587 Property and equipment, net 19,058 39,086 Operating lease right-of-use assets 46,892 53,251 Investments measured at fair value 247,753 304,317 Intangible assets, net 137,842 144,881 Other assets 39,109 49,482 Total assets $ 7,222,482 $ 2,389,604 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 53,225 $ 37,830 Accrued expenses 175,586 167,129 Operating lease liabilities 9,893 11,693 Current portion of long-term debt (includes $ 6,000 and $ 26,940 accounted for under the fair value option at March 31, 2024 and 2023 , respectively ) 12,000 40,720 Other current liabilities 16,054 15,076 Total current liabilities 266,758 272,448 Liability instruments measured at fair value 25,737 63,546 Operating lease liabilities, noncurrent 47,265 53,476 Long-term debt, net of current portion (includes $ 204,371 and $ 180,700 accounted for under the fair value option at March 31, 2024 and 2023 , respectively) 430,591 375,515 Other liabilities 3,602 17,032 Total liabilities 773,953 782,017 Commitments and contingencies (Note 14) Shareholders’ equity: Common shares, par value $ 0.0000000341740141 per share, 7,000,000,000 shares authorized and 806,677,954 and 760,143,393 shares issued and outstanding at March 31, 2024 and 2023 , respectively — — Additional paid-in capital 5,396,492 4,933,137 R etained earnings / (a ccumulated deficit) 576,172 (3,772,754 ) Accumulated other comprehensive loss (4,083 ) (2,617 ) Shareholders’ equity attributable to Roivant Sciences Ltd. 5,968,581 1,157,766 Noncontrolling interests 479,948 449,821 Total shareholders’ equity 6,448,529 1,607,587 Total liabilities and shareholders’ equity $ 7,222,482 $ 2,389,604 The accompanying notes are an integral part of these consolidated financial statements. 139 Table of Contents ROIVANT SCIENCES LTD.
Added
Consolidated Statements of Operations (in thousands, except share and per share amounts) Years Ended March 31, 2024 2023 Revenues: Product revenue, net $ 75,057 $ 28,011 License, milestone and other revenue 49,738 33,269 Revenue, net 124,795 61,280 Operating expenses: Cost of revenues 15,560 13,128 Research and development (includes $ 34,595 and $ 30,914 of share-based compensation expense for the years ended March 31, 2024 and 2023 , respectively) 501,736 525,215 Acquired in-process research and development 26,450 97,749 Selling, general and administrative (includes $ 164,841 and $ 186,603 of share-based compensation expense for the years ended March 31, 2024 and 2023 , respectively) 687,443 600,506 Total operating expenses 1,231,189 1,236,598 Gain on sale of Telavant net assets 5,348,410 — Income (loss) from operations 4,242,016 (1,175,318 ) Change in fair value of investments 47,973 20,815 Change in fair value of debt and liability instruments 78,943 78,001 Gain on deconsolidation of subsidiaries (32,772 ) (29,276 ) Interest income (146,425 ) (32,184 ) Interest expense 34,778 27,968 Other expense (income), net 6,089 (15,808 ) Income (loss) from continuing operations before income taxes 4,253,430 (1,224,834 ) Income tax expense 22,224 5,190 Income (loss) from continuing operations, net of tax 4,231,206 (1,230,024 ) Income from discontinued operations, net of tax — 114,561 Net income (loss) 4,231,206 (1,115,463 ) Net loss attributable to noncontrolling interests (117,720 ) (106,433 ) Net income (loss) attributable to Roivant Sciences Ltd. $ 4,348,926 $ (1,009,030 ) Amounts attributable to Roivant Sciences Ltd.: Income (loss) from continuing operations, net of tax $ 4,348,926 $ (1,123,591 ) Income from discontinued operations, net of tax — 114,561 Net income (loss) attributable to Roivant Sciences Ltd. $ 4,348,926 $ (1,009,030 ) Net income (loss) per common share, basic: Income (loss) from continuing operations $ 5.55 $ (1.58 ) Income from discontinued operations, net of tax $ — $ 0.16 Net income (loss) $ 5.55 $ (1.42 ) Net income (loss) per common share, diluted: Income (loss) from continuing operations $ 5.23 $ (1.58 ) Income from discontinued operations, net of tax $ — $ 0.16 Net income (loss) $ 5.23 $ (1.42 ) Weighted average shares outstanding: Basic 783,248,906 712,791,115 Diluted 831,049,444 712,791,115 The accompanying notes are an integral part of these consolidated financial statements. 140 Table of Contents ROIVANT SCIENCES LTD.
Added
Consolidated Statements of Comprehensive Income (Loss) (in thousands) Years Ended March 31, 2024 2023 Net income (loss) $ 4,231,206 $ (1,115,463 ) Other comprehensive loss: Foreign currency translation adjustment (936 ) (1,490 ) Total other comprehensive loss (936 ) (1,490 ) Comprehensive income (loss) 4,230,270 (1,116,953 ) Comprehensive loss attributable to noncontrolling interests (117,190 ) (106,252 ) Comprehensive income (loss) attributable to Roivant Sciences Ltd. $ 4,347,460 $ (1,010,701 ) The accompanying notes are an integral part of these consolidated financial statements. 141 Table of Contents ROIVANT SCIENCES LTD.
Added
Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interest (in thousands, except share data) Shareholders’ Equity Redeemable Noncontrolling Interest Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss (Accumulated Deficit) / Retained Earnings Noncontrolling Interests Total Shareholders’ Equity Shares Amount Balance at March 31, 2022 $ 22,491 694,975,965 $ — $ 4,421,614 $ (946 ) $ (2,763,724 ) $ 381,999 $ 2,038,943 Issuance of the Company’s common shares, net of issuance costs — 50,666,665 — 311,683 — — — 311,683 Issuance of common shares in connection with equity incentive plans and tax withholding payments — 10,903,648 — (8,737 ) — — — (8,737 ) Issuance of the Company’s common shares related to settlement of transaction consideration — 1,455,719 — — — — — — Issuance of the Company’s common shares and other consideration for an acquisition — 2,029,877 — 8,836 — — 112 8,948 Issuance of subsidiary common shares to the Company and cash contributions to majority-owned subsidiaries — — — (5,463 ) — — 5,463 — Issuance of subsidiary common shares, net of issuance costs — — — 19,599 — — 48,129 67,728 Subsidiary stock options exercised — — — 392 — — 278 670 Issuance of subsidiary preferred shares — — — — — — 87,500 87,500 Deconsolidation of subsidiaries (22,491 ) — — — — — (292 ) (292 ) Issuance of common shares under employee stock purchase plan — 111,519 — 316 — — — 316 Share-based compensation — — — 184,897 — — 32,884 217,781 Foreign currency translation adjustment — — — — (1,671 ) — 181 (1,490 ) Net loss — — — — — (1,009,030 ) (106,433 ) (1,115,463 ) Balance at March 31, 2023 $ — $ 760,143,393 $ — $ 4,933,137 $ (2,617 ) $ (3,772,754 ) $ 449,821 $ 1,607,587 Issuance of the Company’s common shares, net of issuance costs — 19,600,685 — 199,822 — — — 199,822 Issuance of the Company’s common shares in connection with equity incentive plans, net of forfeitures, and tax withholding payments — 18,926,077 — 10,857 — — — 10,857 Issuance of the Company’s common shares related to settlement of warrants — 7,554,549 — 83,264 — — — 83,264 Issuance of the Company’s common shares related to settlement of transaction consideration — 313,023 — — — — — — Issuance of the Company’s common shares under employee stock purchase plan — 140,227 — 951 — — — 951 Issuance of subsidiary common shares, net of issuance costs — — — 129,763 — — 108,970 238,733 Subsidiary stock options exercised — — — 3,192 — — 2,550 5,742 Issuance of subsidiary common shares to the Company and cash contributions to majority-owned subsidiaries — — — (106,531 ) — — 106,531 — Deconsolidation of subsidiaries — — — — — — (35,148 ) (35,148 ) Dividend declared by subsidiary — — — — — — (6,000 ) (6,000 ) Disposition of Telavant — — — — — — (87,500 ) (87,500 ) Share-based compensation — — — 142,037 — — 57,914 199,951 Foreign currency translation adjustment — — — — (1,466 ) — 530 (936 ) Net income (loss) — — — — — 4,348,926 (117,720 ) 4,231,206 Balance at March 31, 2024 $ — 806,677,954 $ — $ 5,396,492 $ (4,083 ) $ 576,172 $ 479,948 $ 6,448,529 The accompanying notes are an integral part of these consolidated financial statements. 142 Table of Contents ROIVANT SCIENCES LTD.
Added
Consolidated Statements of Cash Flows (in thousands) Years Ended March 31, 2024 2023 Cash flows from operating activities: Net income (loss) $ 4,231,206 $ (1,115,463 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Non-cash acquired in-process research and development — 87,749 Share-based compensation 199,627 217,781 Change in fair value of investments 47,973 20,815 Change in fair value of debt and liability instruments 78,943 78,001 Gain on deconsolidation of subsidiaries (32,772 ) (29,276 ) Gain on sale of Telavant net assets (5,348,410 ) — Gain on recovery of contingent consideration — (114,561 ) Depreciation and amortization 22,036 18,857 Non-cash lease expense 6,845 7,565 Other 10,249 (21,206 ) Changes in assets and liabilities, net of effects from acquisition and divestiture: Other current assets (81,478 ) (31,670 ) Other assets 16,488 (17,416 ) Accounts payable 22,684 4,359 Accrued expenses 40,150 38,956 Operating lease liabilities (8,326 ) (8,604 ) Accrued interest 21,977 18,571 Other liabilities 7,540 2,149 Net cash used in operating activities (765,268 ) (843,393 ) Cash flows from investing activities: Proceeds from sale of Telavant net assets, net 5,233,396 — Proceeds from sale of subsidiary interests 47,500 — Cash decrease upon deconsolidation of subsidiaries (84,483 ) (6,706 ) Proceeds from sale of Myovant Top-Up Shares — 114,561 Milestone payments — (140,136 ) Purchase of property and equipment (1,382 ) (12,690 ) Other 8,592 702 Net cash provided by (used in) investing activities 5,203,623 (44,269 ) Cash flows from financing activities: Proceeds from issuance of the Company’s common shares, net of issuance costs paid 199,822 311,981 Proceeds from issuance of subsidiary common shares, net of issuance costs paid 238,733 67,727 Proceeds from subsidiary debt financings, net of financing costs paid — 159,899 Payment of subsidiary dividend (6,000 ) — Repayment of debt by subsidiary (29,158 ) (29,452 ) Payment of offering costs and loan origination costs — (2,250 ) Taxes paid related to net settlement of equity awards (37,715 ) (10,881 ) Proceeds from exercise of the Company’s and subsidiary stock options 54,314 2,814 Payments on principal portion of finance lease obligations (1,547 ) (692 ) Proceeds from issuance of the Company’s common stock under employee stock purchase plan 951 316 Proceeds from exercise of the Company’s warrants 5 — Payment for redemptions of the Company’s warrants (41 ) — Net cash provided by financing activities 419,364 499,462 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 616 6,281 Net change in cash, cash equivalents and restricted cash 4,858,335 (381,919 ) Cash, cash equivalents and restricted cash at beginning of period 1,692,115 2,074,034 Cash, cash equivalents and restricted cash at end of period $ 6,550,450 $ 1,692,115 Non-cash investing and financing activities: Cashless exercise of the Company’s warrants $ 83,258 $ — Issuance of the Company’s common shares and other consideration for an acquisition $ — $ 9,694 Other $ 2,231 $ 10,860 Supplemental disclosure of cash paid: Income taxes paid $ 12,354 $ 5,128 Interest paid $ 10,268 $ 5,303 The accompanying notes are an integral part of these consolidated financial statements. 143 Table of Contents ROIVANT SCIENCES LTD.
Added
Notes to Consolidated Financial Statements Note 1—Description of Business and Liquidity (A) Description of Business Roivant Sciences Ltd. (inclusive of its consolidated subsidiaries, the “Company” or “RSL”) aims to improve the lives of patients by accelerating the development and commercialization of medicines that matter.
Added
The Company does this by creating nimble subsidiaries or “Vants” to develop and commercialize its medicines and technologies. Beyond therapeutics, the Company also incubates discovery-stage companies and health technology startups complementary to its biopharmaceutical business. The Company was founded on April 7, 2014 as a Bermuda exempted limited company.
Added
VTAMA ® (tapinarof) was approved by the United States Food and Drug Administration (“FDA”) in May 2022 for the treatment of plaque psoriasis in adult patien ts. A Supplemental New Drug Application for VTAMA (tapinarof) for the topical treatment of atopic dermatitis in adults and children 2 years of age and older was accepted by the FDA in April 2024.
Added
The Company has determined that it has one operating and reporting segment as it allocates resources and assesses financial performance on a consolidated basis. The Company’s subsidiaries are wholly owned subsidiaries and majority-owned or controlled subsidiaries. Refer to Note 4, “Equity Method Investments” for further discussion of the Company’s investments in unconsolidated entities.
Added
RSL completed its business combination (the “Business Combination”) with Montes Archimedes Acquisition Corp. (“MAAC”), a special purpose acquisition company, on September 30, 2021 and on October 1, 2021 began trading on Nasdaq under the ticker symbol “ROIV.” (B) Liquidity Historically, the Company incurred significant operating losses and negative cash flows from operations since its inception.
Added
During the year ended March 31, 2024, the Company recognized a gain of approximately $5.3 billion on the sale of Telavant Holdings, Inc. ( “Telavant”) net assets. As of March 31, 2024, the Company had cash and cash equivalents of approximately $6.5 billion and its retained earnings was approximately $576.2 million.
Added
For the years ended March 31, 2024 and 2023, the Company had income from continuing operations of approximately $4.2 billion and incurred a loss from continuing operations of approximately $1.2 billion, respectively. The Company has historically financed its operations primarily through the sale of equity securities, sale of subsidiary interests, debt financings and revenue generated from licensing and collaboration arrangements.
Added
Through its subsidiary, Dermavant Sciences L td. (“Dermavant”), the Company has launched its first commercial product, VTAMA, following approval by the FDA in May 2022.
Added
The Company is subject to risks common to companies in the biopharmaceutical industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals to market its product candidates, dependence on key products, dependence on third-party service providers, such as contract research organizations, and protection of intellectual property rights.
Added
Management expects to incur additional losses in the future to fund its operations and conduct product research and development and may require additional capital to fully implement its business plan.
Added
The Company expects its existing cash and cash equivalents will be sufficient to fund its committed operating expenses and capital expenditure requirements for at least the next 12 months from the date of issuance of these consolidated financial statements.
Added
Note 2—Summary of Significant Accounting Policies (A) Basis of Presentation and Principles of Consolidation The Company’s fiscal year ends on March 31, and its fiscal quarters end on June 30, September 30, and December 31. The accompanying audited consolidated financial statements and notes thereto have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Added
Any references in these notes to applicable accounting guidance are meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (‘‘ASC’’) and Accounting Standards Updates (‘‘ASU’’) of the Financial Accounting Standards Board (‘‘FASB’’).
Added
The consolidated financial statements include the accounts of RSL and the subsidiaries in which it has a controlling financial interest, most often through a majority voting interest. Certain prior year amounts have been reclassified to conform with the current period presentation. These reclassifications had no effect on the previously reported results of operations.
Added
All intercompany balances and transactions have been eliminated in consolidation. 144 Table of Contents For consolidated entities where the Company owns or is exposed to less than 100% of the economics, the Company records net loss attributable to noncontrolling interests in its consolidated statements of operations equal to the percentage of common stock ownership interest retained in the respective operations by the noncontrolling parties.
Added
The Company presents noncontrolling interests as a component of shareholders’ equity on its consolidated balance sheets. The Company accounts for changes in its ownership interest in its subsidiaries while control is retained as equity transactions. The carrying amount of the noncontrolling interest is adjusted to reflect the change in RSL’s ownership interest in the subsidiary.
Added
Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is recognized within shareholders’ equity attributable to RSL. (B) Use of Estimates The preparation of financial statements in conformity with U.S.
Added
GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, costs, expenses, contingent liabilities, share-based compensation and research and development costs.
Added
The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Added
(C) Concentrations Financial instruments that potentially subject the Company to concentration of credit risk include cash and cash equivalents. The Company maintains cash deposits and cash equivalents in highly-rated, federally-insured financial institutions in excess of federally insured limits. The Company has established guidelines relative to diversification and maturities to maintain safety and liquidity.
Added
The Company has not experienced any credit losses related to these financial instruments and does not believe that it is exposed to any significant credit risk related to these instruments. The Company has long-lived assets in different geographic locations. As of March 31, 2024 and 2023, a majority of the Company’s long-lived assets were located in the United States (“U.S.”).
Added
(D) Cash, Cash Equivalents, and Restricted Cash Cash and cash equivalents include cash deposits in banks and all highly liquid investments that are readily convertible to cash. The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Added
Cash as reported in the accompanying consolidated statements of cash flows includes the aggregate amounts of cash, cash equivalents, and restricted cash as presented on the accompanying consolidated balance sheets as follows (in thousands): March 31, 2024 March 31, 2023 Cash and cash equivalents $ 6,535,706 $ 1,676,813 Restricted cash (included in “Other current assets”) 5,367 5,011 Restricted cash (included in “Other assets”) 9,377 10,291 Cash, cash equivalents and restricted cash $ 6,550,450 $ 1,692,115 (E) Contingencies The Company may be, from time to time, a party to various disputes and claims arising from normal business activities.
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The Company continually assesses any litigation or other claims it may confront to determine if an unfavorable outcome would lead to a probable loss or reasonably possible loss which could be estimated.
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The Company accrues for all contingencies at the earliest date at which the Company deems it probable that a liability has been incurred and the amount of such liability can be reasonably estimated.
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If the estimate of a probable loss is a range and no amount within the range is more likely than another, the Company accrues the minimum of the range.
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In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the contingent loss, including an estimable range, if possible. 145 Table of Contents (F) Inventory Inventories are recorded at the lower-of-cost or net realizable value, with cost determined based on a first-in, first-out basis.
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Net realizable value is the estimated selling price in the ordinary course of the Company’s business, less reasonably predictable costs of completion, disposal, and transportation. The cost basis of the Company’s inventories is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions.
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Inventories include the cost for raw materials, the cost to manufacture the raw materials into finished goods, freight charges, and overhead. The Company performs an assessment of the recoverability of inventories during each reporting period and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified.
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If they occur, such impairment charges are recorded as a component of cost of revenues in the consolidated statements of operations. Prior to initial regulatory approval, the Company expenses costs relating to the production of inventory as research and development expenses when incurred.
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After such time as the product receives initial regulatory approval, the Company capitalizes inventory costs related to the product. Inventory is included in “Other current assets” on the accompanying consolidated balance sheets.
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(G) Property and Equipment Property and equipment, consisting primarily of computers, laboratory and other equipment, furniture and fixtures, software, and leasehold improvements, is recorded at cost, less accumulated depreciation. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred.
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Upon disposal, retirement or sale, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in the results of operations. Depreciation of property and equipment is recorded using the straight-line method over the estimated useful lives of the related assets once the asset has been placed in service.
Added
Leasehold improvements are amortized using the straight-line method over the estimated useful life or remaining lease term, whichever is shorter.
Added
The following table provides the range of estimated useful lives used for each asset type: Property and Equipment Estimated Useful Life Computers 3 years Laboratory and other equipment 5 - 10 years Furniture and fixtures 7 years Software 3 years Leasehold improvements Lesser of estimated useful life or remaining lease term The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.
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Recoverability is measured by comparison of the book values of the assets to the future net undiscounted cash flows that the assets are expected to generate.
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If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the assets exceed their fair value, which is measured based on the projected discounted future net cash flows arising from the assets.
Added
(H) Investments Investments in equity securities may be accounted for using (i) the fair value option if elected, (ii) fair value through earnings if fair value is readily determinable or (iii) for equity investments without readily determinable fair values, the measurement alternative to measure at cost adjusted for any impairment and observable price changes, as applicable.
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The election to use the measurement alternative is made for each eligible investment. The Company has elected the fair value option to account for certain investments over which the Company has significant influence. The Company believes the fair value option best reflects the underlying economics of the investment.
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See Note 4, “Equity Method Investments.” 146 Table of Contents (I) Intangible Assets, Net Finite-lived intangible assets are recorded at cost, net of accumulated amortization, and, if applicable, impairment charges.
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Amortization of finite-lived intangible assets is recorded over the assets’ estimated useful lives on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Added
See Note 5, “Intangible Assets.” (J) Fair Value Measurements The Company utilizes fair value measurement guidance prescribed by U.S. GAAP to value its financial instruments. The guidance establishes a fair value hierarchy for financial instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs).
Added
Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Added
Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
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Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date.
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As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a three-tier fair value hierarchy that distinguishes among the following: • Level 1-Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. • Level 2-Valuations are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. • Level 3-Valuations are based on inputs that are unobservable (supported by little or no market activity) and significant to the overall fair value measurement.

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