Top-notch biotech stock Roivant Sciences — founded by presidential candidate Vivek Ramaswamy — reported steep losses and lighter-than-expected sales on Monday. But ROIV stock inched higher.
Investors are closely watching Roivant's progress with a drug called RVT-3101, a potential treatment for inflammatory conditions like Crohn's disease and ulcerative colitis. Merck just bought Roivant's close rival, Prometheus Biosciences, for almost $11 billion.
But during the second quarter, Roivant lost 48 cents per share on $21.6 million in sales.
According to FactSet, ROIV stock analysts projected a per-share loss of 28 cents and $24.5 million in sales. Losses matched the year-earlier period, while sales rocketed year over year.
Roivant's sales include nearly $16.7 million from psoriasis cream Vtama. Roivant subsidiary, Dermavant, won Food and Drug Administration approval for Vtama last year. Roivant is now testing the drug as a treatment for eczema in patients as young as 2 years old.
On today's stock market, ROIV stock rose 1.2% to 11.71.
ROIV Stock: 'Incredibly Busy Quarter'
The balance of Roivant's sales, almost $5 million, came from license, milestone and other payments.
"This was an incredibly busy quarter with multiple clinical readouts and (study) initiations," Roivant Chief Executive Matt Gline said in a written statement.
Vtama results were in line with expectations from ROIV stock analyst Leerink Partners' David Risinger. He recently cut his Vtama forecast to $16 million from $18 million. Broadly, the Street expected $17 million from the psoriasis treatment. Meanwhile, other revenue missed projections for $7 million, according to Risinger.
The bigger opportunity for Roivant's Vtama will be as an eczema treatment.
"Vtama total prescriptions have not grown in recent months," Risinger said in a note to clients. "Need to be patient for (the) big opportunity in atopic dermatitis, which should be approved at the end of 2024."
Biotech stock investors are keeping an eye on the potential shift into eczema treatment, which could help Roivant rival big names like Regeneron Pharmaceuticals' Dupixent. Risinger has an outperform rating on ROIV stock.
New Opportunity In Inflammation
Future results for RVT-3101 could also drive the biotech stock higher. The drug blocks a ligand associated with inflammation called TL1A, similar to the Prometheus drug that drove Merck's buyout. Roivant is developing the drug with Pfizer. Last month, a report suggested Roche could buy Roivant for around $7 billion and ROIV stock rose.
In June, Roivant shares jumped after the company said about 36% of ulcerative colitis patients entered remission following a year of treatment with RVT-3101. Roughly half showed improvement in symptoms visible by an endoscopy. An endoscopy also showed 21% of patients had completely resolved symptoms.
ROIV stock has a strong Relative Strength Rating of 98. That put the biotech stock in the top 2% of all stocks when it comes to 12-month performance, according to IBD Digital.
Shares were also above a buy point at 10 out of a consolidation, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
