Telavant, Inc.

The deal includes a $175m upfront payment for Roivant’s subsidiary Dermavant. Image credit: Shutterstock / testing. Organon is set to acquire Roivant’s immuno-dermatology subsidiary Dermavant in a potential $1.2bn deal. Organon will pay $175m upfront for the business as part of the transaction, which is expected to close in the fourth quarter of this year, as per an 18 September press release. Shares in both Organon and Roivant were down at close compared to their respective market opening prices on the day of the announcement. The bulk of the deal comes in the form of Dermavant’s plaque psoriasis treatment Vtama (tapinarof) The steroid cream is currently under review by the US Food and Drug Administration (FDA) for a label expansion into atopic dermatitis (AD) – if this goes through, Organon will pay Dermavant a milestone payment of $75m. Based on how Vtama does commercially, Dermavant could also be in line for a further $950m of milestone payments. See Also: Pioneering ePRO and eCOA innovations for next-generation clinical trials Dermavant’s lead asset Vtama won FDA approval for plaque psoriasis in May 2022. The drug brought in modest US sales of $78m in 2023 for Roivant, though its quarter-on-quarter growth has been underwhelming. Whilst psoriasis affects eight million people in the US aged 20 and older, AD affects 16.5 million adults in the country, and a further 9.6 million children have the condition. An FDA clearance for AD would open Vtama to a US market predicted to be worth $13.5bn by 2030, according to analysis by GlobalData’s Pharma Intelligence Center. GlobalData is the parent company of Pharmaceutical Technology. Vtama boasted strong results in a Phase III trial for AD earlier this year, with 51% of 728 patients achieving complete disease clearance following 48-week use of the cream. The supplemental new drug application (sNDA) would allow Vtama’s use in adults and children two years of age and older with the inflammatory skin condition – the Prescription Drug User Fee Act (PDUFA) action is expected in the fourth quarter of this year. Organon’s CEO Kevin Ali said: “We look forward to combining Dermavant’s strong dermatology commercial and field medical organisation in the US, with Organon’s market access capabilities, regulatory expertise and worldwide commercial reach.” The deal follows several bolt-on deals by Organon recently, including purchasing US rights to Eli Lilly’s migraine medications Emgality (galcanezumab) and Rayvow (lasmiditan) for $50m in December last year . The deal was updated, giving more rights to Organon for Emgality, for $22.5m last month . While the Dermavant acquisition marks a dermatology expansion for Organon in the US, it also signals the second time in just over a year that Roivant has sold a subsidiary. Roivant earned $7.1bn from Roche when the latter bought its immunology company Telavant in December last year.

Vtama is now facing a major expansion opportunity into atopic dermatitis, which would triple the med’s eligible patient population. With its latest acquisition, women’s health outfit Organon is bringing its dermatology business to the U.S. with a potential blockbuster in tow.Organon is set to acquire Roivant’s immuno-dermatology subsidiary Dermavant for up to $1.2 billion, the companies announced Wednesday. Under the terms of the deal—which is expected to close in the fourth quarter—Organon will dish out an upfront payment of $175 million.Organon will also furnish Dermavant with a $75 million milestone payment contingent upon Vtama’s approval in atopic dermatitis (eczema), which is also expected in the last three months of 2024.Another $950 million is on the table for Dermavant based on the achievement of certain commercial milestones, the companies said. Plus, Organon will pay Dermavent shareholders tiered royalties on net sales. The crown jewel of the deal is undoubtedly Vtama, Dermavant’s steroid-free cream for plaque psoriasis. The drug snagged its initial FDA greenlight in May 2022. While sales of Vtama scaled slowly last year, causing some analysts to temper their blockbuster expectations, Dermavant’s CEO, Todd Zavodnick, has remained confident that the drug will reach its full potential, telling Fierce in November that “[i]t’s not a matter of if, it’s when.”Vtama is nearing a major expansion opportunity in atopic dermatitis, which would triple the med’s eligible patient population. After posting a phase 3 eczema trial win in January, the Roivant unit filed for approval in adults and kids ages 2 years and up in late April. The FDA is expected to issue its verdict on the drug in atopic dermatitis sometime during the fourth quarter.Psoriasis affects more than 8 million people living in the U.S. over the age of 20 and 125 million people worldwide, Organon said. Atopic dermatitis, for its part, affects roughly 16.5 million adults and 9.6 million children in the U.S. According to Organon, women are impacted disproportionately by the skin conditions, with atopic dermatitis in particular linked to higher disease burden for women versus men.For Dermavant’s fiscal year ended March 31, Vtama brought home total sales of $75.1 million. Throughout the earnings period, Vtama steadily grew sales—from $13.7 million in the first quarter to $19.3 million in the fourth.As of May, 15,300 prescribers had written more than 385,000 Vtama prescriptions, according to a Roivant earnings release.Selling off its specialized subsidiaries is nothing new for Roivant.Last October, the company agreed to a $7.1 billion deal for Swiss pharma giant Roche to acquire Telavant and its investigational antibody for inflammatory bowel disease, RVT-3101. The acquisition closed in December.Meanwhile, Organon has been on a dealmaking streak of its own in recent months.Following the $50 million purchase of European rights to two Eli Lilly migraine medicines in December, Organon’s CEO, Kevin Ali, said the deal was “not a one-off,” during an earnings call in February.“There’s plenty in the queue that ultimately we can go after that are really nice opportunities for continuing revenue growth and [earnings] growth,” the CEO said at the time. In August, Organon upped its migraine accord with Lilly to the tune of $22.5 million, expanding its licensing pact to become the sole promoter and distributor of Emgality (included in the original EU deal) in Canada, Colombia, Israel, South Korea, Kuwait, Mexico, Qatar, Saudi Arabia, Taiwan, Turkey and the United Arab Emirates. 

Roivant is once again reaping the benefits of its bespoke business model. This time, it’s selling Dermavant to Organon for up to $1.2 billion. Most of that money — $950 million — is available via commercial milestones, according to Wednesday’s announcement . Organon is paying $175 million upfront plus another $75 million if Dermavant’s skin cream Vtama snags FDA approval to treat atopic dermatitis, a decision that’s expected by the end of the year. It will also pay tiered royalties on sales to Dermavant shareholders. “This is another example of Roivant’s ability to offer creative win-win collaborations,” Roivant CEO Matt Gline said in a statement. In the same release, Organon CFO Matthew Walsh said the milestone-heavy deal structure is meant to reinforce the company’s “commitment to disciplined capital allocation.” Vtama, which was first approved to treat plaque psoriasis in May 2022, brought in $18.4 million in sales in the first quarter , a 10% increase from the same period in 2023. Yet prescriptions have more than doubled, from nearly 200,000 as of August 2023 to over 430,000 by July. An approval in atopic dermatitis would likely provide a significant jolt to revenue potential, with Gline saying that Roivant is “excited for Vtama cream to benefit from Organon’s commercial scale.” In January , Dermavant shared updated data that found more than 80% of patients treated across two studies had a greater than 75% improvement on a skin-clearing endpoint. The deal marks the second acquisition of a Roivant property over the last year after it sold Telavant to Roche for $7.1 billion upfront in late 2023. Other subsidiaries like Priovant and its lead asset, brepocitinib, continue to progress. The company has brepocitinib in two Phase 3 studies for dermatomyositis and non-infectious uveitis, respectively, though recruitment in the NIU trial has yet to begin.