Organon acquires Roivant’s immuno-dermatology unit for $1.2bn

Organon is poised to acquire Dermavant, an immuno-dermatology subsidiary of Roivant, in a deal potentially worth up to $1.2 billion. According to a press release dated September 18, Organon will make an upfront payment of $175 million for the company, with the transaction expected to conclude in the fourth quarter of this year.

On the day of the announcement, shares of both Organon and Roivant experienced a decline compared to their opening market prices. The primary focus of the deal centers around Dermavant’s plaque psoriasis treatment, Vtama (tapinarof). Currently, Vtama is under review by the U.S. Food and Drug Administration (FDA) for a label expansion to include atopic dermatitis (AD). If the FDA grants this approval, Organon will make an additional milestone payment of $75 million to Dermavant. Depending on Vtama's commercial success, Dermavant could receive up to $950 million in further milestone payments.

Vtama gained FDA approval for treating plaque psoriasis in May 2022. However, its U.S. sales amounted to a modest $78 million in 2023, with less-than-encouraging quarter-on-quarter growth. Plaque psoriasis affects eight million Americans aged 20 and older, whereas AD impacts 16.5 million adults and 9.6 million children in the country. FDA approval for AD would significantly expand Vtama's market, which is projected to reach $13.5 billion in the U.S. by 2030, as per GlobalData’s Pharma Intelligence Center analysis.

In a Phase III clinical trial for AD earlier this year, Vtama showed promising results, with 51% of the 728 patients achieving complete disease clearance after using the cream for 48 weeks. The supplemental new drug application (sNDA) aims to extend Vtama’s use to adults and children aged two years and older suffering from this inflammatory skin condition. The Prescription Drug User Fee Act (PDUFA) action on this sNDA is expected by the fourth quarter of this year.

Kevin Ali, CEO of Organon, emphasized the potential benefits of merging Dermavant’s robust dermatology commercial and field medical organization in the U.S. with Organon’s market access capabilities, regulatory expertise, and global commercial reach.

This acquisition is part of Organon's broader strategy to expand its portfolio through bolt-on deals. In December of last year, Organon acquired U.S. rights to Eli Lilly’s migraine medications Emgality (galcanezumab) and Rayvow (lasmiditan) for $50 million. The deal was later updated to grant Organon additional rights to Emgality for an extra $22.5 million just last month.

The Dermavant acquisition signifies Organon's expansion into the U.S. dermatology market. Additionally, it marks the second instance within just over a year that Roivant has divested a subsidiary. In December last year, Roivant earned $7.1 billion from Roche when the latter acquired its immunology company, Telavant.