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Roivant has struck another deal to sell one of its “vants.” This time around, the dermatology focused Dermavant will head to Organon in a deal valued up to $1.2 billion.
Organon will be the new owner of Vtama, a non-steroidal topical therapy for plaque psoriasis that was approved in 2022. The cream is also currently under FDA review for atopic dermatitis, with a decision expected before the end of the year.
Jefferies analysts said Dermavant was considered the lesser of Roivant’s offerings. “Most considered Dermavant as value-destructive, so we’d argue it’s important from a sentiment perspective to off-load Dermavant,” they wrote in an investors note. The Organon deal, they added, clears the way for Roivant to spend more on pivotal programs for its autoimmune-focused company, Immunovant.
The complex deal will see Organon pay out $175 million upfront, then a potential $75 million in milestones upon the AD approval and up to $950 million for certain commercial milestones. All told, the deal could reach $1.2 billion. Dermavant shareholders will also receive royalties on net sales. Organon CFO Matthew Walsh saidin a statementthat the deal was structured around specific milestone payments rather than an upfront lump sum, similar to how the pharma has done other recent deals.
“This is consistent with our commitment to disciplined capital allocation as we look to continue to reduce our leverage, but also strategically add growth assets,” Walsh said.
Organon is a women’s health–focused pharma company that spun out of Merck & Co. in 2021. CEO Kevin Ali said the acquisition of Dermavant fits in with the company’s mission to invest in treatments that affect women differently.
In recent years, the company has primarily stuck to rights deals with major pharmas to bolster its offerings. Organon signed a deal with Eli Lilly for European rights to the pharma’s migraine meds Emgality and Rayvow for $50 million at the end of 2023. Other deals include the licensing of Daré Bioscience’s bacterial vaginosis gel Xaciato and Chinese rights to contraceptive pills Marvelon and Mercilon from Bayer, both in 2022.
As for Roivant, the parent of Dermavant, the Matt Gline–led company has been the apple of Big Pharma’s eye for deal opportunities of late. Almost exactly a year ago, Roivant sold Telavant, which formed around a Pfizer-developed inflammatory bowel disease medicine, to Roche for a whopping $7.1 billion.
Jefferies said the Organon deal removes $200 million in operating expenses from Roivant’s balance sheet, which the analysts said will likely be put into R&D at Immunovant, which is expecting to kick off several pivotal Phase III studies in the years to come. Immunovant is developing autoimmune disease therapies, including batoclimab for myasthenia gravis and thyroid eye disease.
“Most investors were lukewarm on Dermavant given the modest revenue and slow launch trajectory while also incurring high OpEx i.e. cash burning and likely won’t flip profitable,” the firm wrote in a Wednesday note to clients.
Jefferies was not too worried about Roivant’s cash position, as the company has a reported $5 billion on hand already, but the cost savings and flexibility it means for Immunovant are a nice bonus.
As for whether Roivant will deal again—the company has 10 vants in its roster—Jefferies analysts said that while “multiple discussions are occurring,” Roivant executives have said they do not expect to make any business development announcements in the near term.
“Timing ultimately comes down to pharma and not necessarily [Roivant] who logically wants to capitalize on the current BD environment,” Jefferies wrote.