Dive Brief:
- Organon has agreed to buy Roivant’s dermatology subsidiary Dermavant for $175 million upfront plus more than $1 billion in potential additional payments if certain milestones are hit.
- With the acquisition, Organon will gain Dermavant’s cream called Vtama, which was approved in 2022 to treat plaque psoriasis. The medicine is also awaiting action from the Food and Drug Administration that could expand its use to include atopic dermatitis, commonly known as eczema.
- Approval in eczema, expected in the fourth quarter, would trigger a $75 million payment, Organon said Wednesday. The deal also includes $950 million in potential commercial milestone payments as well as tiered royalties on net sales to Dermavant shareholders. Roivant owns the majority of Dermavant.
Dive Insight:
The deal is another example of a surge in acquisitions of private biotech assets at a time when public company buyouts have become more sparse.
Organon is betting its commercial reach will spur sales of Vtama, which have so far come in below initial analyst expectations. In the quarter ended June 30, net product revenue from the cream reached $18.4 million, Roivant reported last month.
For Roivant, the deal offers a chance to offload an asset that most investors had “lukewarm” feelings about, Jefferies analyst Dennis Ding wrote in a note to clients. It also provides more money for research and development; Roivant executives expect $500 million in cash to flow from the transaction over the next three years including the upfront and milestone payments, he said.
“The deal is another master stroke by Roivant,” Evercore ISI analyst Umer Raffat told his clients Wednesday. “The deal allows Roivant to focus on real innovative assets while cleaning out their balance sheet further.”
Raffat is less bullish on the deal’s upside for Organon, saying he expects it to be “modest.”
Roivant, founded by former Republican presidential candidate Vivek Ramaswamy, is known as a “hub-and-spoke” company, which builds separate entities called “Vants” to advance experimental drugs in varied therapeutic areas. Roivant’s successes with the model include the $7 billion sale of Televant, a subsidiary focused on inflammatory bowel disease, to Roche in 2023.
Dermavant was founded in 2015 as Roivant Dermatology Ltd. and changed its name the next year. The company has U.S. operations in Long Beach, California; Raleigh-Durham, North Carolina; Dallas and Phoenix.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
- PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
- PlatoESG. Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
- PlatoHealth. Biotech and Clinical Trials Intelligence. Access Here.
- Source: https://www.biopharmadive.com/news/roivant-dermavant-organon-sale-deal-vtama-dermatology/727338/