|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
Not Applicable
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
☒
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
||
Emerging growth company
|
Page
|
||
PART I—FINANCIAL INFORMATION
|
||
Item 1.
|
7 | |
7 | ||
8 | ||
9 | ||
10 | ||
11 | ||
12 | ||
Item 2.
|
30 |
|
Item 3.
|
43 | |
Item 4.
|
43 | |
PART II—OTHER INFORMATION
|
||
Item 1.
|
44 | |
Item 1A.
|
44 | |
Item 2.
|
102 | |
Item 3.
|
102 | |
Item 4.
|
102 | |
Item 5.
|
103 | |
Item 6.
|
104 | |
105 |
• |
Our relatively 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. We have generated limited revenue from our operations since inception, and there is no guarantee that we will generate significant
revenues in the future.
|
• |
We may never achieve sustained profitability.
|
• |
We have relatively limited experience as a commercial-stage company and the marketing and sale of VTAMA® (tapinarof) or any future products may be
unsuccessful or less successful than anticipated.
|
• |
Our business is dependent to a significant extent on the successful commercialization of VTAMA and the development, regulatory approval and
commercialization of our current and future products and product candidates.
|
• |
We may not be successful in our efforts to acquire or in-license new product candidates, and newly acquired or in-licensed product candidates may not
perform as expected in clinical trials or be successful in eventually achieving marketing approvals.
|
• |
We face risks associated with the allocation of capital and personnel across our businesses.
|
• |
We face risks associated with the Vant structure.
|
• |
We face risks associated with potential future payments related to our products and product candidates.
|
• |
Our business strategy and potential for future growth relies on a number of assumptions, some or all of which may not be realized.
|
• |
We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
|
• |
We face risks associated with the use of our cash, cash equivalents and restricted cash, including any return of capital to shareholders.
|
• |
Clinical trials and preclinical studies are very expensive, time-consuming, difficult to design and implement and involve uncertain outcomes. We may
encounter substantial delays in clinical trials, or may not be able to conduct or complete clinical trials or preclinical studies on the expected timelines, if at all.
|
• |
We may encounter difficulties enrolling and retaining patients in clinical trials, and clinical development activities could thereby be delayed or
otherwise adversely affected.
|
• |
The results of our preclinical studies and clinical trials may not support our proposed claims for our products or product candidates, or regulatory
approvals on a timely basis or at all, and the results of earlier studies and trials may not be predictive of future trial results.
|
• |
Interim, top-line or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become
available and are subject to audit and verification procedures that could result in material changes in the final data.
|
• |
Obtaining approval of a new drug is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or another regulator may delay, limit or
deny approval. If we are unable to obtain regulatory approval in one or more jurisdictions for any products or product candidates, our business will be substantially harmed.
|
• |
Our clinical trials may fail to demonstrate substantial evidence of the safety and efficacy of product candidates that we may identify and pursue for their
intended uses, which would prevent, delay or limit the scope of regulatory approval and commercialization.
|
• |
Our products and product candidates may cause adverse effects or have other properties that could delay or prevent their regulatory approval, cause us to
suspend or discontinue clinical trials, abandon further development or limit the scope of any approved label or market acceptance.
|
• |
We depend on the knowledge and skills of our senior leaders and may not be able to manage our business effectively if we are unable to attract and retain
key personnel.
|
• |
If we are unable to obtain and maintain patent and other intellectual property protection for our technology, products and product candidates or if the
scope of the intellectual property protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.
|
• |
If the patent applications we hold or have in-licensed with respect to our products or product candidates fail to issue, if their breadth or strength of
protection is threatened, or if they fail to provide meaningful exclusivity for our current and future products or product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten
our ability to commercialize our products. Any such outcome could have a materially adverse effect on our business. Our pending patent applications cannot be enforced against third parties practicing the claims in such applications
unless and until a patent issues from such applications.
|
• |
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.
|
• |
If our performance does not meet market expectations, the price of our securities may decline.
|
• |
We have incurred and will continue to incur increased costs as a result of operating as a public company and our management has devoted and will continue
to devote a substantial amount of time to new compliance initiatives.
|
• |
If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements
could be impaired, investors may lose confidence in our financial reporting and the trading price of our common shares may decline.
|
• |
Anti-takeover provisions in our memorandum of association and bye-laws, as well as provisions of Bermuda law, could delay or prevent a change in control,
limit the price investors may be willing to pay in the future for our common shares and could entrench management.
|
• |
Our largest shareholders own a significant percentage of our common shares and are able to exert significant control over matters subject to shareholder
approval.
|
• |
Future sales, or the perception of future sales, of our common shares by us or our existing shareholders could cause the market price for our common shares
to decline and impact our ability to raise capital in the future.
|
• |
our relatively limited operating history and the inherent uncertainties and risks involved in biopharmaceutical product development and commercialization;
|
• |
our relatively limited experience as a commercial-stage company and ability to successfully commercialize VTAMA® (tapinarof);
|
• |
our ability to acquire or in-license new product candidates;
|
• |
the allocation of capital and personnel across our business;
|
• |
our Vant structure and the potential that we may fail to capitalize on certain development opportunities;
|
• |
potential future payments related to our products and product candidates;
|
• |
our ability to consummate strategic transactions;
|
• |
the use of our cash and cash equivalents;
|
• |
clinical trials and preclinical studies, which are very expensive, time-consuming, difficult to design and implement and involve uncertain outcomes;
|
• |
the novelty, complexity and difficulty of manufacturing certain of our products and product candidates, including any manufacturing problems that result in delays in
development or commercialization of our products and product candidates;
|
• |
difficulties we may face in enrolling and retaining patients in clinical trials, which could affect or otherwise delay clinical development activities;
|
• |
the results of our clinical trials not supporting our proposed claims for a product candidate;
|
• |
interim, top-line and/or preliminary data from our clinical trials changing as more data becoming available or data being delayed due to audit and verification processes;
|
• |
changes in product manufacturing or formulation that could lead to the incurrence of costs or delays;
|
• |
the failure of any third-party we contract with to conduct, supervise and monitor our clinical trials to perform in a satisfactory manner or to comply with applicable
requirements;
|
• |
the fact that obtaining approvals for new drugs is an extensive, lengthy, expensive and inherently uncertain process that may end with our inability to obtain regulatory
approval by the FDA or other regulatory agencies in other jurisdictions;
|
• |
the failure of our clinical trials to demonstrate substantial evidence of the safety and efficacy of our products and product candidates, including, but not limited to,
scenarios in which our products and product candidates may cause adverse effects that could delay regulatory approval, discontinue clinical trials, limit the scope of approval or generally result in negative media coverage of us;
|
• |
our inability to obtain regulatory approval for a product or product candidate in certain jurisdictions, even if we are able to obtain approval in certain other jurisdictions;
|
• |
our ability to effectively manage growth and to attract and retain key personnel;
|
• |
any business, legal, regulatory, political, operational, financial and economic risks associated with conducting business globally;
|
• |
our ability to obtain and maintain patent and other intellectual property protection for our technology, products and product candidates;
|
• |
the inadequacy of patent terms and their scope to protect our competitive position;
|
• |
the failure to issue (or the threatening of their breadth or strength of protection) or provide meaningful exclusivity for our current and future products and product
candidates of our patent applications that we hold or have in-licensed;
|
• |
the fact that we do not currently and may not in the future own or license any issued composition of matter patents covering certain of our products and product candidates and
our inability to be certain that any of our other issued patents will provide adequate protection for such products and product candidates;
|
• |
the fact that our largest shareholders own a significant percentage of our stock and will be able to exert significant control over matters subject to shareholder approval;
|
• |
future sales of securities by us or our largest shareholders, or the perception of such sales, and the impact thereof on the price of our common shares;
|
• |
the outcome of any pending or potential litigation, including but not limited to our expectations regarding the outcome of any such litigation and costs and expenses associated
with such litigation;
|
• |
changes in applicable laws or regulations;
|
• |
the possibility that we may be adversely affected by other economic, business and/or competitive factors; and
|
• |
any other risks and uncertainties, including those described under Part II, Item 1A. “Risk Factors.”
|
June 30, 2024
|
March 31, 2024
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Investments measured at fair value
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Current portion of long-term debt (includes $
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Liability instruments measured at fair value
|
|
|
||||||
Operating lease liabilities, noncurrent
|
|
|
||||||
Long-term debt, net of current portion (includes $
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 12)
|
||||||||
Shareholders’ equity:
|
||||||||
Common shares, par value $
|
|
|
||||||
Additional paid-in capital
|
|
|||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Shareholders’ equity attributable to Roivant Sciences Ltd.
|
|
|
||||||
Noncontrolling interests
|
|
|
||||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months Ended June 30,
|
||||||||
2024
|
2023
|
|||||||
Revenues:
|
||||||||
Product revenue, net
|
$ | $ | ||||||
License, milestone and other revenue
|
||||||||
Revenue, net
|
||||||||
Operating expenses:
|
||||||||
Cost of revenues
|
|
|
||||||
Research and development (includes $
|
|
|
||||||
Acquired in-process research and development
|
|
|
||||||
Selling, general and administrative (includes $
|
|
|
||||||
Total operating expenses
|
|
|
||||||
Gain on sale of Telavant net assets |
||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
||||
Change in fair value of investments
|
(
|
)
|
|
|||||
Change in fair value of debt and liability instruments
|
(
|
)
|
|
|||||
Interest income
|
(
|
)
|
(
|
)
|
||||
Interest expense |
||||||||
Other expense (income), net
|
|
(
|
)
|
|||||
Income (loss) before income taxes
|
|
(
|
)
|
|||||
Income tax expense
|
|
|
||||||
Net income (loss)
|
|
(
|
)
|
|||||
Net loss attributable to noncontrolling interests
|
(
|
)
|
(
|
)
|
||||
Net income (loss) attributable to Roivant Sciences Ltd.
|
$
|
|
$
|
(
|
)
|
|||
Net income (loss) per common share:
|
||||||||
Basic |
$ |
$ | ( |
) | ||||
Diluted |
$ |
$ | ( |
) | ||||
Weighted average shares outstanding:
|
||||||||
Basic |
||||||||
Diluted |
Three Months Ended June 30,
|
||||||||
2024
|
2023
|
|||||||
Net income (loss)
|
$
|
|
$
|
(
|
)
|
|||
Other comprehensive loss:
|
||||||||
Change in fair value of debt due to change in subsidiary credit risk
|
( |
) | ||||||
Foreign currency translation adjustment
|
(
|
)
|
(
|
)
|
||||
Total other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Comprehensive income (loss)
|
|
(
|
)
|
|||||
Comprehensive loss attributable to noncontrolling interests
|
(
|
)
|
(
|
)
|
||||
Comprehensive income (loss) attributable to Roivant Sciences Ltd.
|
$
|
|
$
|
(
|
)
|
Shareholders’ Equity
|
||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Retained Earnings |
Noncontrolling
Interests
|
Total
Shareholders’
Equity
|
|||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||
Balance at March 31, 2024
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||
Issuance of the Company’s common shares in connection with
equity incentive plans and tax withholding payments
|
( |
) | ( |
) | ||||||||||||||||||||||||
Issuance of subsidiary common shares, net |
||||||||||||||||||||||||||||
Subsidiary stock options exercised |
— |
|||||||||||||||||||||||||||
Cash contributions to majority-owned subsidiaries
|
— | ( |
) | |||||||||||||||||||||||||
Repurchase of common shares
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Share-based compensation |
—
|
|
|
|
|
|
|
|||||||||||||||||||||
Change in fair value of debt due to change in subsidiary credit risk |
— | ( |
) | ( |
) | |||||||||||||||||||||||
Foreign currency translation adjustment
|
—
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Net income (loss)
|
—
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||
Balance at June 30, 2024
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Shareholders’ Equity
|
||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Other
Comprehensive
Loss
|
Accumulated
Deficit
|
Noncontrolling
Interests
|
Total
Shareholders’
Equity
|
|||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||
Issuance of the Company’s common shares in connection with
equity incentive plans and tax withholding payments
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Subsidiary stock options exercised | — |
|||||||||||||||||||||||||||
Cash contributions to majority-owned subsidiaries
|
— |
( |
) | |||||||||||||||||||||||||
Dividend declared by subsidiary |
— |
( |
) | ( |
) | |||||||||||||||||||||||
Share-based compensation
|
—
|
|
|
|
|
|
|
|||||||||||||||||||||
Foreign currency translation adjustment
|
—
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Net loss
|
— |
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Balance at June 30, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
Three Months Ended June 30,
|
||||||||
2024
|
2023
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss) |
$
|
|
$
|
(
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Share-based compensation
|
|
|
||||||
Change in fair value of investments
|
(
|
)
|
|
|||||
Change in fair value of debt and liability instruments
|
(
|
)
|
|
|||||
Gain on sale of Telavant net assets
|
( |
) | ||||||
Depreciation and amortization
|
||||||||
Non-cash lease expense
|
||||||||
Other
|
|
(
|
)
|
|||||
Changes in assets and liabilities, net of effects from acquisition and divestiture:
|
||||||||
Other current assets
|
( |
) | ( |
) | ||||
Accounts payable
|
(
|
)
|
|
|||||
Accrued expenses
|
(
|
)
|
(
|
)
|
||||
Operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Other
|
|
|
||||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(
|
)
|
(
|
)
|
||||
Other
|
||||||||
Net cash (used in) provided by investing activities
|
(
|
)
|
|
|||||
Cash flows from financing activities:
|
||||||||
Repayment of debt by subsidiary
|
(
|
)
|
(
|
)
|
||||
Payments on principal portion of finance lease obligations
|
( |
) | ( |
) | ||||
Proceeds from exercise of the Company’s and subsidiary stock options
|
||||||||
Taxes paid related to net settlement of equity awards
|
(
|
)
|
(
|
)
|
||||
Repurchase of common shares
|
( |
) | ||||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
( |
) | ( |
) | ||||
Net change in cash, cash equivalents and restricted cash
|
(
|
)
|
(
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
||||
Non-cash investing and financing activities:
|
||||||||
Dividend payable
|
$ | $ | ||||||
Issuance of subsidiary shares in connection with Debt Renegotiation
|
$ | $ | ||||||
Other
|
$
|
|
$
|
(
|
)
|
June 30, 2024
|
March 31, 2024
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash (included in “Other current assets”)
|
|
|
||||||
Restricted cash (included in “Other assets”)
|
||||||||
Cash, cash equivalents and restricted cash
|
$
|
|
$
|
|
•
|
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.
|
June 30, 2024 |
March 31, 2024
|
|||||||
Gross amount
|
$ |
$
|
|
|||||
Less: accumulated amortization
|
( |
) |
(
|
)
|
||||
Net book value
|
$ |
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Prepaid expenses
|
$
|
|
$
|
|
||||
Trade receivables, net
|
|
|
||||||
Restricted cash | ||||||||
Inventory |
||||||||
Income tax receivable
|
|
|
||||||
Interest receivable | ||||||||
Milestone receivable
|
||||||||
Other
|
|
|
||||||
Total other current assets
|
$
|
|
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Research and development expenses
|
$
|
|
$
|
|
||||
Compensation-related expenses
|
|
|
||||||
Sales allowances | ||||||||
Other expenses
|
|
|
||||||
Total accrued expenses
|
$
|
|
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Deferred revenue
|
$
|
|
$
|
|
||||
Income tax payable
|
|
|
||||||
Other
|
|
|
||||||
Total other current liabilities
|
$
|
|
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Fair value of long-term debt
|
$
|
|
$
|
|
||||
Less: current portion
|
(
|
)
|
(
|
)
|
||||
Total long-term debt, net
|
$
|
|
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Principal amount
|
$
|
|
$
|
|
||||
Exit fee
|
|
|
||||||
Less: unamortized discount and debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Total debt, net
|
|
|
||||||
Less: current portion
|
|
|
||||||
Total long-term debt, net
|
$
|
|
$
|
|
June 30, 2024
|
March 31, 2024
|
|||||||
Carrying balance
|
$
|
|
$
|
|
||||
Less: unamortized issuance costs
|
(
|
)
|
(
|
)
|
||||
Total debt, net
|
|
|
|
|
||||
Less: current portion
|
(
|
)
|
(
|
)
|
||||
Total long-term debt, net
|
$
|
|
$
|
|
Number of Options
|
||||
Options outstanding at March 31, 2024
|
|
|||
Granted
|
|
|||
Exercised |
( |
) | ||
Options outstanding at June 30, 2024
|
|
|||
Options exercisable at June 30, 2024
|
|
Number of Shares
|
||||
Non-vested balance at March 31, 2024
|
|
|||
Granted
|
|
|||
Vested
|
(
|
)
|
||
Forfeited
|
(
|
)
|
||
Non-vested balance at June 30, 2024
|
|
Number of CVARs
|
||||
Non-vested balance at March 31, 2024
|
|
|||
Vested
|
(
|
)
|
||
Forfeited
|
(
|
)
|
||
Non-vested balance at June 30, 2024
|
|
a.
|
|
b. |
c. |
The remaining number of common shares issued to the MAAC Sponsor and each of MAAC’s independent directors are not subject to the vesting conditions described above (the “Retained Shares”).
|
As of June 30, 2024
|
As of March 31, 2024
|
|||||||||||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Balance as of
June 30,
2024
|
Level 1
|
Level 2
|
Level 3
|
Balance as
of March 31,
2024
|
|||||||||||||||||||||||||
Assets:
|