# Roivant Sciences Ltd. (ROIV) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Roivant Sciences Ltd.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1635088/000114036123031798/brhc20054745_10k.htm
Accession: 0001140361-23-031798
Filing date: 2023-06-28
Report date: 2023-03-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/ROIV/
All MD&A years: /company/ROIV/mda/
Previous year: /company/ROIV/mda/fy2022/ (FY 2022)
Next year: /company/ROIV/mda/fy2024/ (FY 2024)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of Roivant’s financial condition and results of operations should be read in conjunction with Roivant’s consolidated financial
statements and notes to those statements included elsewhere in this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and
uncertainties. Roivant’s actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Forward-Looking Statements” and “Risk Factors” in this Annual Report on Form
10-K. Our fiscal year ends on March 31 and our fiscal quarters end on June 30, September 30 and December 31.

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. 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. We advance our pipeline by creating nimble subsidiaries or “Vants” to develop and commercialize our
medicines and technologies. Beyond therapeutics, Roivant also incubates discovery-stage companies and health technology startups complementary to its biopharmaceutical business.

Components of Results of Operations

Product revenue, net

With the FDA approval of VTAMA for the treatment of plaque psoriasis in adult patients and our initial product launch in May 2022, we began to recognize product revenues. We record product
revenue net of estimated chargebacks, discounts, rebates, returns, and other allowances associated with the respective sales.

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. Cost of product revenues includes the cost of producing and distributing inventories
related to product revenue during the respective period, including manufacturing, freight, and indirect overhead costs. Additionally, milestone payments made in connection with regulatory approvals and sales-based milestones are capitalized
and amortized to cost of revenue over the remaining useful life of the asset. 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. Research and development expenses primarily include the following:

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[[GREPCENT_TABLE]]
[["","\u2022","Program-specific costs, including direct third-party costs, which include expenses incurred under agreements with contract research organizations (\u201cCROs\u201d) and contract manufacturing organizations (\u201cCMOs\u201d), 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."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","Unallocated internal costs, including:"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25e6","employee-related expenses, such as salaries, share-based compensation, and benefits, for research and development personnel; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25e6","other expenses that are not allocated to a specific program."]]
[[/GREPCENT_TABLE]]

Research and development activities will continue to be central to our business model. We anticipate that our research and development expenses will increase for the foreseeable future as we
advance our product candidates and our recently in-licensed assets through preclinical studies and clinical trials, as well as acquire or discover new product candidates. We expect higher employee-related expenses, including share-based
compensation expenses, as well as higher consulting costs as we hire additional resources to support increasing development activity.

The duration, costs and timing of preclinical studies and clinical trials of our product candidates will depend on a variety of factors that include, but are not limited to, the following:

[[GREPCENT_TABLE]]
[["","\u2022","the scope, rate of progress, expense and results of our preclinical development activities, any future clinical trials of our product candidates, and other research and development activities that we may conduct;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the number and scope of preclinical and clinical programs we decide to pursue;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the uncertainties in clinical trial design and patient enrollment or drop out or discontinuation rates;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the number of doses that patients receive;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the countries in which the trials are conducted;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our ability to secure and leverage adequate CRO support for the conduct of clinical trials;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our ability to establish an appropriate safety and efficacy profile for our product candidates;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the timing, receipt and terms of any approvals from applicable regulatory authorities;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the potential additional safety monitoring or other studies requested by regulatory agencies;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the significant and changing government regulation and regulatory guidance;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our ability to establish clinical and commercial manufacturing capabilities, or make arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the impact of any business interruptions to our operations due to the COVID-19 pandemic or other epidemics; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our ability to maintain a continued acceptable safety profile of our product candidates following approval of our product candidates."]]
[[/GREPCENT_TABLE]]

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.

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.

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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.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses consist primarily of employee-related expenses, such as salaries, share-based compensation, sales incentive compensation, and
benefits, for employees engaged in SG&A activities. SG&A employees include those responsible for the identification and acquisition or in-license of new drug candidates as well as for managing Vant operations and facilitating the use
of our platform and technologies at the Vants. SG&A expenses also consist of marketing programs, advertising, legal and accounting fees, consulting services, and other operating costs relating to corporate matters and daily operations.
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. 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. 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.

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 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. (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.

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.

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Income tax expense

Income tax expense is recorded for the jurisdictions in which we do business. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation
allowance is recorded when, after consideration of all positive and negative evidence, it is not more likely than not that our deferred tax assets will be realizable. When uncertain tax positions exist, we recognize the tax benefit of tax
positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as
consideration of the available facts and circumstances.

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 “Sumitomo Transaction”) that included, among other things, the transfer of our
ownership interest in five Vants to Sumitovant. 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.

Net loss attributable to noncontrolling interests

Net loss attributable to noncontrolling interests consists of the portion of net loss of those consolidated entities that is not allocated to us. Changes 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.

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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:

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Revenues:"],["Product revenue, net","","$","28,011","","","$","\u2014","","","$","28,011"],["License, milestone and other revenue","","","33,269","","","","55,286","","","","(22,017",")"],["Revenue, net","","","61,280","","","","55,286","","","$","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","","","\u2014","","","","(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","","","\u2014","","","","(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","","","","\u2014","","","","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",")"]]
[[/GREPCENT_TABLE]]

Variance analysis for years ended March 31, 2023 and 2022

Product revenue, net

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Product revenue, net","","$","28,011","","","$","\u2014","","","$","28,011"]]
[[/GREPCENT_TABLE]]

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. We did not generate any product revenues, net for the year ended March 31, 2022.

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License, milestone and other revenue

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["License, milestone and other revenue","","$","33,269","","","$","55,286","","","$","(22,017",")"]]
[[/GREPCENT_TABLE]]

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. 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. 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.

Cost of revenues

For the years ended March 31, 2023 and 2022, our cost of revenues consisted of the following:

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Cost of product and other revenues","","$","5,660","","","$","8,966","","","$","(3,306",")"],["Amortization of intangible assets","","","7,468","","","","\u2014","","","","7,468"],["Cost of revenues","","$","13,128","","","$","8,966","","","$","4,162"]]
[[/GREPCENT_TABLE]]

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. 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, 2022, cost of revenues was primarily related to cost associated with the sales of clinical product of tapinarof by Dermavant to Japan Tobacco Inc.

Research and development expenses

For the years ended March 31, 2023 and 2022, our research and development expenses consisted of the following:

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[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022(1)","","","Change"],["","","(in thousands)"],["Program-specific costs:"],["Anti-FcRn franchise(2)","","$","88,747","","","$","52,009","","","$","36,738"],["Tapinarof","","","45,201","","","","64,496","","","","(19,295",")"],["Brepocitinib","","","38,627","","","","24,890","","","","13,737"],["RVT-2001","","","16,075","","","","1,132","","","","14,943"],["AFVT-2101","","","15,628","","","","12,657","","","","2,971"],["ARU-1801","","","12,940","","","","23,312","","","","(10,372",")"],["Namilumab","","","11,757","","","","8,745","","","","3,012"],["RVT-3101","","","7,559","","","","\u2014","","","","7,559"],["LSVT-1701","","","7,173","","","","11,067","","","","(3,894",")"],["ARU-2801","","","3,456","","","","12,031","","","","(8,575",")"],["Other development and discovery programs","","","83,680","","","","74,700","","","","8,980"],["Total program-specific costs","","","330,843","","","","285,039","","","","45,804"],["","","","","","","","","","","","\u2014"],["Unallocated internal costs:"],["Share-based compensation","","","30,914","","","","63,735","","","","(32,821",")"],["Personnel-related expenses","","","131,908","","","","103,827","","","","28,081"],["Other expenses","","","31,550","","","","30,434","","","","1,116"],["Total research and development expenses","","$","525,215","","","$","483,035","","","$","42,180"]]
[[/GREPCENT_TABLE]]

(1) Certain prior year amounts have been reclassified to conform to current year presentation.

(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.

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.

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. Increases in program-specific costs were partially offset by certain decreases,
including $19.3 million for tapinarof, which was primarily due to the completion of ADORING 1 and ADORING 2 phase 3 atopic dermatitis clinical trials during the year ended March 31, 2023.

The increase of $28.1 million in personnel-related expenses largely reflects the progression of our programs, particularly the anti-FcRn franchise. Personnel-related expenses increased at
Immunovant primarily as a result of higher headcount and enhancement of capabilities to support Immunovant’s strategic objectives as clinical activities were resumed and potential new indications were evaluated.

The decrease of $32.8 million in share-based compensation expense was primarily due to the achievement of the liquidity event vesting condition for certain equity instruments upon the closing
of the Business Combination in September 2021, resulting in the recognition of a one-time catch-up expense of $22.9 million relating to cumulative service rendered between the grant date of the respective awards and completion of the Business
Combination and continued recognition of expense over the requisite service periods.

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Acquired in-process research and development expenses

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Consideration for the purchase of IPR&D","","$","87,749","","","$","97,412","","","$","(9,663",")"],["Development milestone payments","","","10,000","","","","42,482","","","","(32,482",")"],["Total acquired in-process research and development expenses","","$","97,749","","","$","139,894","","","$","(42,145",")"]]
[[/GREPCENT_TABLE]]

Acquired in-process research and development expenses decreased by $42.1 million to $97.7 million for the
year ended March 31, 2023, compared to $139.9 million for the year ended March 31, 2022. The decrease was
primarily due to higher consideration for the purchase of IPR&D during the year ended March 31, 2022 as a result of consideration for the purchase of IPR&D of $82.1 million relating to the
acquisition of brepocitinib, a one-time milestone expense of approximately $39 million due to the achievement of a development milestone related to tapinarof, and consideration for the purchase of IPR&D of $14.1 million relating to the
acquisition of RVT-2001. 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.

Selling, general and administrative expenses

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Selling, general and administrative","","$","600,506","","","$","775,033","","","$","(174,527",")"]]
[[/GREPCENT_TABLE]]

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. 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 decrease in share-based
compensation resulted from the achievement of the liquidity event vesting condition for certain equity instruments upon the closing of the Business Combination in September 2021, resulting in the recognition of a one-time catch-up expense of
$350.0 million for the year ended March 31, 2022 for cumulative service rendered between the grant date of the respective awards and completion of the Business Combination.

Change in fair value of investments

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Change in fair value of investments","","$","20,815","","","$","87,291","","","$","(66,476",")"]]
[[/GREPCENT_TABLE]]

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. 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.

Gain on sale of investment

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Gain on sale of investment","","$","\u2014","","","$","(443,754",")","","$","443,754"]]
[[/GREPCENT_TABLE]]

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Gain on sale of investment was $443.8 million for the year ended March 31, 2022 and resulted from
Datavant’s merger with a wholly-owned subsidiary of Heracles Parent, L.L.C., the parent company of CIOX Health, (the “Datavant Merger”) in July 2021 at which point we received approximately $320 million in cash and a minority equity stake in
the combined company.

Change in fair value of debt and liability instruments

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Change in fair value of debt and liability instruments","","$","78,001","","","$","(3,354",")","","$","81,355"]]
[[/GREPCENT_TABLE]]

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 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, 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.

Gain on termination of Sumitomo Options

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Gain on termination of Sumitomo Options","","$","\u2014","","","$","(66,472",")","","$","66,472"]]
[[/GREPCENT_TABLE]]

Gain on termination of Sumitomo Options was $66.5 million for the year ended March 31, 2022 due to the
completion of transactions contemplated by an Asset Purchase Agreement entered into with Sumitomo Pharma Co., Ltd. and its subsidiary Sumitomo Pharmaceuticals (Suzhou) Co., Ltd.

Gain on deconsolidation of subsidiaries

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Gain on deconsolidation of subsidiaries","","$","(29,276",")","","$","(5,041",")","","$","(24,235",")"]]
[[/GREPCENT_TABLE]]

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.

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.

Interest income

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Interest income","","$","(32,184",")","","$","(369",")","","$","(31,815",")"]]
[[/GREPCENT_TABLE]]

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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. The increase is primarily the result of higher interest rates on our invested
cash.

Interest expense

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Interest expense","","$","27,968","","","$","7,041","","","$","20,927"]]
[[/GREPCENT_TABLE]]

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. The increase primarily resulted from Dermavant’s revenue
interest purchase and sale agreement (the “RIPSA”), pursuant to which funding of $160.0 million was received in June 2022 following the approval of VTAMA by the FDA in May 2022.

Income from discontinued operations, net of tax

[[GREPCENT_TABLE]]
[["","","Years Ended March 31,"],["","","2023","","","2022","","","Change"],["","","(in thousands)"],["Income from discontinued operations, net of tax","","$","114,561","","","$","\u2014","","","$","114,561"]]
[[/GREPCENT_TABLE]]

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. We were entitled to the Myovant Top-Up Shares pursuant to the Sumitomo Transaction, and
this right to receive the Myovant Top-Up Shares was treated as contingent consideration upon sale of business and accounted for as a gain contingency. Refer to Note 11, “Discontinued Operations” of our audited financial statements for
additional information.

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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. 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. 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.

Our short-term and long-term liquidity requirements as of March 31, 2023 included:

[[GREPCENT_TABLE]]
[["","\u2022","Contractual payments related to our long-term debt (see Note 9, \u201cLong-Term Debt\u201d of our audited financial statements);"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","obligations under our leases (see Note 15, \u201cLeases\u201d of our audited financial statements);"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","certain commitments to Palantir Technologies Inc. (\u201cPalantir\u201d) totaling $30.0 million related to a master subscription agreement entered in May 2021 for access to Palantir\u2019s proprietary software for a five-year period;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","certain commitments to Samsung Biologics Co., Ltd. (\u201cSamsung\u201d) pursuant to a Product Service Agreement entered between Immunovant and Samsung by which Samsung will manufacture and supply Immunovant with batoclimab drug substance for commercial sale and perform other manufacturing-related services with respect to batoclimab. The minimum purchase commitment related to this agreement is estimated to be approximately $33.3 million; and"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u2022","certain commitments to GSK pursuant to a commercial supply agreement entered between Dermavant and GSK. In conjunction with Dermavant\u2019s entry into the GSK Agreement in 2018, Dermavant entered into a clinical supply agreement pursuant to which GSK would provide a supply of tapinarof and clinical product at an agreed upon price during our clinical trials. 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 July 2022, Dermavant and GSK amended the terms of the clinical supply and commercial supply agreements which released GSK of certain commitments to supply tapinarof and released Dermavant of certain commitments to purchase tapinarof in exchange for a supplementary fee. Other supply and purchase commitments under the agreements remain in effect. In addition, Dermavant and Thermo Fisher Scientific (\u201cTFS\u201d) entered into a Commercial Manufacturing and Supply Agreement for which TFS agreed to provide a supply of tapinarof to Dermavant at an agreed upon price. The agreements discussed above require Dermavant to purchase certain quantities of inventory over a period of five years. The minimum purchase commitment related to these agreements is estimated to be approximately $38.0 million."]]
[[/GREPCENT_TABLE]]

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. Under these agreements we are required to make milestone payments upon successful
completion and achievement of certain development, regulatory and commercial milestones. The payment obligations under the asset acquisition and license agreements are contingent upon future events, such as our achievement of specified
development, regulatory and commercial milestones, and the amount, timing, and likelihood of such payments are not known. We will also be required to make milestone payments and royalty payments in connection with the sale of products
developed under these agreements.

We enter into agreements in the normal course of business with CROs and other vendors for clinical trials and with vendors for preclinical studies and other services and products for
operating purposes, which are generally cancelable upon written notice.

We had cash, cash equivalents and restricted cash of approximately $1.7 billion at March 31, 2023, which we expect to support cash runway into the second half of calendar year 2025.
However, we have based this estimate on assumptions that may prove to be wrong, which may require us to use our capital resources sooner than expected. 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.

RSL Equity Financing Transactions

Since inception, we have completed multiple equity financing transactions, including the following:

In December 2019, together with 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.

In September 2021, we completed our Business Combination with MAAC, a special purpose acquisition company, as well as concurrent PIPE Financing. In connection with the Business Combination
and PIPE Financing, we received approximately $213.4 million in cash at closing.

In September 2022, we entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) to sell our common shares having an aggregate offering price of up to
$400.0 million from time to time through an “at-the-market” equity offering program under which Cowen acts as our agent (the “ATM Facility”). 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. 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.

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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. 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. In addition, in connection with the Sumitomo Transaction, we (i) granted Sumitomo options to purchase all, or in the case of Dermavant, 75%, of
our ownership interests in six other subsidiaries and (ii) provided Sumitomo and Sumitovant with certain rights over and access to our proprietary technology platforms, DrugOme and Digital Innovation. In exchange for these components of the
Sumitomo Transaction, we received approximately $1.9 billion in cash, which was in addition to the approximately $999.2 million from the sale of our common shares to Sumitomo as discussed above.

In June 2021, we completed a transaction with Sumitomo pursuant to which Sumitomo terminated its existing options to acquire our equity interests in certain of our subsidiaries.

In October 2022, Myovant entered into an agreement with Sumitovant, its majority shareholder, under which Sumitovant would acquire the remaining shares of Myovant not already owned by
Sumitovant at a price of $27.00 per share in a cash transaction (the “Myovant Transaction”). The acquisition of Myovant by Sumitovant was completed in March 2023. 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.

Consolidated Vant Equity Financing Transactions

Since inception, we have completed multiple Vant equity financing transactions, including the following:

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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.

During the years ended March 31, 2021 and 2020, Immunovant issued shares of common stock for an aggregate net proceeds of $384.9 million (including an aggregate of $27.5 million of shares
of common stock purchased by us) in private financings, underwritten public offerings, and warrant exercises.

In October 2022, Immunovant completed an underwritten public offering of 12,500,000 shares of its common stock (including 416,667 shares of common stock purchased by us) at a price to the
public of $6.00 per share, for net proceeds to Immunovant of approximately $70.2 million after deducting underwriting discounts and commissions and offering expenses.

Proteovant

In December 2020, following Proteovant Sciences, Inc’s (“Proteovant”) acquisition of Oncopia in November 2020, SK, Inc. (formerly known as SK Holdings Co., Ltd.) (“SK”) entered into a
subscription agreement (the “Subscription Agreement”) pursuant to which SK agreed to make a $200.0 million equity investment in Proteovant, representing an ownership interest of 40.0% on the closing date. In January 2021, in accordance with
the terms of the Subscription Agreement, SK made the first payment of $100.0 million to Proteovant. In July 2021, Proteovant collected the subscription receivable relating to the second $100.0 million payment due under the SK Subscription
Agreement.

Consolidated Vant Debt Financings

Since inception, we have completed multiple Vant debt financings, including the following:

Dermavant

In May 2019, Dermavant entered into a loan and security agreement (the “Hercules Loan Agreement”) with Hercules, pursuant to which Dermavant borrowed an aggregate of $20.0 million. 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.

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. 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. 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.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the discovery efforts, preclinical activities, clinical trials and potential
commercialization of our product candidates. Additionally, we expect to incur significant commercialization expenses with respect to VTAMA. Our operating results, including our net losses, may fluctuate significantly from quarter-to-quarter
and year-to-year, depending on the timing of our planned clinical trials, our expenditures on other research and development activities and our commercialization efforts. We anticipate that our expenses will increase substantially as we:

[[GREPCENT_TABLE]]
[["","\u2022","fund preclinical studies and clinical trials for our product candidates, which we are pursuing or may choose to pursue in the future;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","fund the manufacturing of drug substance and drug product of our product candidates in development;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","seek to identify, acquire, develop and commercialize additional product candidates;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","invest in activities related to the discovery of novel drugs and advancement of our internal programs;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","integrate acquired technologies into a comprehensive regulatory and product development strategy;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","maintain, expand and protect our intellectual property portfolio;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","hire scientific, clinical, quality control and administrative personnel;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","add operational, financial and management information systems and personnel, including personnel to support our drug development efforts;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","achieve milestones under our agreements with third parties that will require us to make substantial payments to those parties;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","seek regulatory approvals for any product candidates that successfully complete clinical trials;"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u2022","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"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","operate as a public company."]]
[[/GREPCENT_TABLE]]

We expect to continue to finance our cash needs through a combination of our cash on hand and future equity offerings, debt financings, sales of subsidiaries, and proceeds received from
collaborations, strategic alliances or marketing, distribution, licensing or similar arrangements with third parties. 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. 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. Our ability to raise additional capital may be adversely impacted by
potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide.

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. Adequate additional funding may not be available to us on acceptable terms, or
at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates, grant rights to
develop and market product candidates that we would otherwise prefer to develop and market ourselves or potentially discontinue operations.

Cash Flows

The following table sets forth a summary of our cash flows for the years ended March 31, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","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"]]
[[/GREPCENT_TABLE]]

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 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. This increase was primarily driven by an increase in cash required to fund operations, particularly as
a result of the progression of clinical programs, and to support the commercial launch of VTAMA.

Investing Activities

Cash flow from investing activities includes cash used for milestone payments; purchase of property and equipment; and proceeds from sale of investment and other equity securities.

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. 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. During the year ended March 31, 2023, cash used in investing activities was primarily driven by milestone payments made relating to VTAMA, which were partially offset by proceeds
from the sale of the Myovant Top-Up Shares.

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Financing Activities

For the year ended March 31, 2023, cash provided by financing activities increased by $192.7 million to
$499.5 million compared to the year ended March 31, 2022. 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, 2022, proceeds were generated by the completion of our Business Combination and PIPE financing in September 2021, payment of the subscription receivable due to
Proteovant by SK in July 2021, and the senior secured credit facility entered into by Dermavant and certain of its subsidiaries with XYQ Luxco, as lender, and U.S. Bank National Association, as collateral agent, partially offset by cash used
to repay all amounts outstanding under a previously existing loan and security agreement with Hercules Capital, Inc.

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. 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. GAAP, we evaluate our estimates and judgments on an ongoing basis. We base our
estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, or
experience. Changes in estimates and assumptions are reflected in reported results in the period in which they become known.

We define our critical accounting policies as those under U.S. GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a
material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

While our significant accounting policies are described in more detail in Note 2, “Summary of Significant Accounting Policies” in our consolidated financial statements included elsewhere in
this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Product Revenue Reserves

We recognize revenue when the customer obtains control of the product, which occurs at a point in time, either upon shipment or delivery to the customer. Revenues from product sales are
recorded at the net sales price, which includes estimates of variable consideration for which reserves are established that result from (a) invoice discounts for prompt payment and specialty distributor and specialty pharmacy service fees,
(b) government and private payer rebates, chargebacks, discounts and fees, (c) performance rebates and administrative fees, (d) product returns and (e) costs of co-pay assistance programs for patients. We establish reserves based on these
gross-to-net adjustments, which are based on amounts earned or to be claimed on the related sale and are classified as reductions of accounts receivable (if the amount is payable to the customer) or accrued expenses and other current
liabilities (if the amount is payable to a party other than a customer). Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration. The estimates of reserves
established for variable consideration reflect current contractual and statutory requirements, our historical experience, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount
of variable consideration that is included in the transaction price may be constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue
recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our estimates, we adjust these estimates in the period such change in estimate
becomes known, which could affect net product revenue and earnings in the period of the adjustment.

We make significant estimates and judgments that materially affect our recognition of net product revenue. Claims by third-party payors for rebates, chargebacks and discounts may be
submitted to us significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes known. We will adjust our estimates based on new information, including information regarding
actual rebates, chargebacks and discounts for our products, as it becomes available.

The following table provides a summary of activity with respect to our sales allowances and accruals (in thousands):

[[GREPCENT_TABLE]]
[["","","March 31, 2023","","","March 31, 2022"],["Sales return, rebate, and discounts balances, beginning of year","","$","\u2014","","","$","\u2014"],["Reduction of gross sales","","","(129,717",")","","","\u2014"],["Cash payments","","","108,923","","","","\u2014"],["Sales return, rebate, and discounts balances, end of year","","$","(20,794",")","","$","\u2014"]]
[[/GREPCENT_TABLE]]

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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. We expense research and development costs as incurred.

We accrue expense for preclinical studies and clinical trial activities performed by vendors based upon estimates of the proportion of work completed. 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.
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. 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.

Share-Based Compensation

We recognize compensation costs related to share-based awards granted to employees, directors, and consultants based on the estimated fair value of the awards on the date of grant. The
grant date fair value of the stock-based awards is recognized over the requisite service period, which is generally the vesting period of the respective awards. We may grant awards with graded-vesting features. When such awards have only
service vesting requirements, we elected to record share-based compensation expense on a straight-line basis. If awards with graded-vesting features contain performance or market conditions, then we record share-based compensation expense
using the accelerated attribution method.

We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires assumptions, including the fair value of our common shares prior to our initial
public offering, volatility, the expected term of our stock options, the risk-free interest rate for a period that approximates the expected term of our stock options, and our expected dividend yield. Certain assumptions used in our
Black-Scholes option-pricing model represent management’s best estimates and involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. If any assumptions
change, our stock-based compensation expense could be materially different in the future.

These subjective assumptions are estimated as follows:

Fair value of common share—Prior to the closing of the Business Combination, as a privately held company, we estimated the fair value of the shares
of common stock underlying our share-based awards on each grant date. To determine the fair value of our common shares underlying option grants, we considered, among other things, valuations of our common share prepared by an unrelated
third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The estimation of the
fair value of the common shares considered factors including the following:

[[GREPCENT_TABLE]]
[["","\u2022","the prices of our common shares sold to investors in arm\u2019s length transactions;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the estimated present value of our future cash flows;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our business, financial condition and results of operations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","our forecasted operating performance;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","the illiquid nature of our common shares;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","industry information such as market size and growth;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","market capitalization of comparable companies and the estimated value of transactions such companies have engaged in; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u2022","macroeconomic conditions."]]
[[/GREPCENT_TABLE]]

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We apply a similar methodology to estimate the fair value of the shares of common stock underlying share-based awards issued by our privately held Vants. Following the closing of the
Company’s business combination with MAAC, our common shares became publicly traded and we began determining the fair value of each common share underlying share-based awards based on the closing price of our common shares as reported by
Nasdaq on the date of grant. Therefore, it will not be necessary to determine the fair value of the new stock-based award pursuant to the methodology described above.

Expected term—We have generally elected to use the “simplified method” for estimating the expected term of options, whereby the expected term equals
the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years).

Expected volatility—Prior to the closing of the Business Combination, we were a privately held company and did not have any trading history for our
common shares; accordingly, the expected volatility was estimated based on the average volatility for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable
companies were chosen based on their similar size, stage in the life cycle or area of specialty. We apply similar methodology to estimate the expected volatility at our privately held Vants. Because we do not have an extended trading history
for our shares of common stock since the closing of the Business Combination, the method used to estimate the expected volatility remained unchanged.

Risk-free interest rate—The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of our stock options at the
time of the grant.

Expected dividend yield—We have not issued any dividends in our history and do not expect to issue dividends over the life of the options; therefore, we have estimated
the dividend yield to be zero.

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”). As an emerging growth company, we may take advantage of certain
exemptions from various public company reporting requirements, including the requirement that our internal control over financial reporting be audited by our independent registered public accounting firm pursuant to Section 404 of the
Sarbanes-Oxley Act, certain requirements related to the disclosure of executive compensation in this Annual Report on Form 10-K and in our periodic reports and proxy statements, and the requirement that we hold a nonbinding advisory vote on
executive compensation and any golden parachute payments. We have also taken advantage of the ability to provide reduced disclosure of financial information in this Annual Report on Form 10-K, such as being permitted to include only two years
of audited financial information and two years of selected financial information in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” disclosure. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those
standards would otherwise apply to private companies. We have elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of
such standards is required for other public companies. However, because we have taken advantage of certain reduced reporting requirements, the information contained herein may be different from the information you receive from other public
companies in which you hold shares.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of Roivant common shares
pursuant to an effective registration statement or (b) in which we have total annual gross revenue of at least $1.235 billion (as adjusted for inflation pursuant to SEC rules from time to time), and (2) the date on which (x) we are deemed to
be a large accelerated filer, which means the market value of Roivant common shares that are held by non-affiliates exceeds $700 million as of the prior September 30th, or (y) the date on which we have issued more than $1.0 billion in
nonconvertible debt during the prior three-year period.

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Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited financial statements. We may continue to be a smaller reporting company as long as either (i) the market value of our common shares held by non-affiliates is less than $250
million as of the end of that year's second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our common shares held by non-affiliates is less than $700
million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies more difficult.