Roivant Sciences is hoping for a big year. Earlier this month, the company revealed positive data for an inflammatory bowel disease drug it’s developing with Pfizer, positioning it as a competitor to a closely watched medicine from rival Prometheus Biosciences.
The parent company of many biotechnology subsidiaries, Roivant is part of a growing wave of life sciences companies to emerge in recent years with a “hub-and-spoke” model. The company’s strategy is to pluck drugs off the shelves of pharmaceutical companies and house them within new biotechs, and it’s led to successes and setbacks since Roivant’s formation in 2014 — like the $3 billion sale of Myovant and, conversely, the collapse of Alzheimer’s drug developer Axovant.
More big moments could be coming for Roivant, too. The company is expecting to read out clinical trial data later this year drug candidates including for the TYK2 inhibitor brepocitinib and the eczema treatment tapinarof.
“Ultimately, the way value is created in our business is by generating important scientific data,” Matt Gline, Roivant’s CEO, told BioPharma Dive in an interview.
Gline, who oversaw the company’s decision to go public via a merger with a special purpose acquisition company, is familiar with the way good data can make a biotech’s future and how bad data can doom its prospects. He was Roivant’s chief financial officer when Axovant’s big Alzheimer’s drug bet ended in failure.
That setback, Gline said, provided valuable lessons about building companies and repurposing assets that have been discarded by other drugmakers.
“We are cognizant of our large appetite for late-stage R&D, which is expensive, and always trying to balance that with the fact that we're well-capitalized and we can use that as a competitive advantage in a tough market,” Gline said.
BioPharma Dive spoke with Gline about Roivant’s hub-and-spoke model and the company’s recent progress. The following conversation has been lightly edited and condensed for clarity.
BIOPHARMA DIVE: Roivant was one of the first biotechs to employ the hub-and-spoke business model. How has that worked out?
MATT GLINE: I've come to view it as what I call ‘a means to an end,’ which is to say we see an opportunity for drug development to be more efficient at scale. Biotech companies have clearly done a pretty good job of developing drugs over the past couple of decades, but big pharma has struggled a little bit. We think some of that has to do with incentive alignment, nimbleness and entrepreneurial spirit.
Our model is built to scale up biotech by virtue of having all of these different companies under one umbrella, so that we can capture some of the benefits of scale that come from being a bigger enterprise — especially on the commercial side and especially, frankly, in what I call ‘boring areas,’ like distribution costs. The things that people don't like to think about, but are huge differences between big pharma companies and biotech companies that go straight to the bottom line once you’re commercial.
How would you differentiate Roivant from other hub-and-spoke models?
GLINE: I want to successfully develop medicines, and I want to get them approved by the [Food and Drug Administration] and out to patients. [Our] hub-and-spoke model, the ‘Vant’ model, was just a tool to make that happen. It's a tool to recruit great leaders and put great people with the right expertise in charge of programs that matter. Do they want to be the VP of dermatology at Roivant? I don’t know. Do they want to be the CEO of Dermavant and be able to craft their own destiny? Yes, definitely.
The ‘Vant’ model lets us put really strong talent in capital constrained, back-to-the-wall entrepreneurial setups, and that's how we feel people operate at their best.
In terms of how that compares to our peers using the same model, it’s hard to say. Jim Momtazee, who was the sponsor of the SPAC we went public with and is on our board, is also on the BridgeBio [Pharma] board and knows them extremely well. Both we and Bridge have learned over time that public subsidiaries are harder to manage than wholly owned subsidiaries. And so most of our ‘Vants’ are wholly owned, not independently listed companies, and I think that'll remain true.
What lessons have you learned from building these types of companies?
GLINE: There is a difference between us and company creation investors. The difference is the time horizon point.
The truth is investment firms don't need to get drugs approved to be successful. For an investment firm, the product is the company. The thing you need to build is a company that other investors want to buy from you. And in many cases, they've created companies that matter and change the world. But they're not fundamentally going to own these things forever.
When we build a ‘Vant,’ we assume we're going to own it forever. We have had successes and failures. You may be familiar with Axovant, a company we built to develop a drug for Alzheimer's. We wrote that value up to $2 billion-plus. It did not succeed. We wrote it all the way back down to basically zero. Now Sio [Gene Therapies] is going to liquidate and we'll get a little bit of cash out.
If we had been an investment firm, we would have realized many times our investment. We would have sold shares before that trial readout and it would have been a phenomenally successful investment. For Roivant, it wasn't a phenomenally successful investment. It was a thing that we bet on because we thought it was a good bet to make.
Conversely, there are other things we've built that are worth a lot today that we might have sold earlier had we been a company creation investor. So I do think it's different being a biotech company than it is being an investor, in that our product is the pharmaceuticals that we want to get approved. We’ve now gotten five products approved by the FDA. Our goal is to get more of those, to own and commercialize them and build a business that way.
How has Roivant’s experience with Axovant informed company creation now?
GLINE: In some ways, Sio had run its course. That is not the only failure, to be fair. Part of building a portfolio in our industry is to have failures. We learned some important lessons about the kind of people that thrive in the Roivant context. We've learned lessons about how to build a distributed portfolio from a risk perspective. Roivant’s fate is not levered to a single program or a single scientific exercise. We've always had a diverse portfolio and that's something that's important to us as we run the business.
I don't think you want to learn the wrong lessons from failure, though. The world knew and we knew that developing that drug and many others that have not worked out were scientifically risky bets. We have scientifically risky bets in our portfolio right now. There are things we are developing right now that may or may not work. If they do, they will impact patients. If they don't, we took our best shot.
If the lesson you learned is not to take risks, biotech’s a tough business to succeed in. We want to learn the lessons around operating well, and we want to learn the lessons around taking clean shots.
What challenges face biotech going into 2023? How is Roivant preparing?
GLINE: Big pharma companies, although they are clearly focused and constrained on being efficient with R&D spend, are in many cases swimming in cash right now. Capital is not a concern for big pharma companies, while it definitely is a concern for small biotech companies.
Big pharma companies are like very large ships. On one hand, they're hard to steer, but on the other hand, they have a lot of momentum. If there's a hurricane, a very large oil tanker can generally plow through it. Whereas if you're in a dinky little sailboat, it's much harder. One of the things that is hard about being a biotech company is you're a little bit at the whim of the prevailing winds.
In 2021, there were many — not Roivant — discovery-stage platform technology companies that were just en vogue. That was a thing that was easy to raise capital for and the markets were excited about it.
That trend has shifted significantly. Investors are looking for safe harbors in the storm. Early-stage scientific platforms are not safe harbors. You set out on a course that will take two to seven years to prove, or more. The problem with that is if the prevailing winds shift at year two and a half. If what you were doing was trendy, you could raise lots of money around it and attract lots of talent in year one, but there’s no guarantee that you'll be able to keep doing those things in year four.