Organon, the former biosimilars, women’s health and certain legacy established brands from Merck & Co, which were spun off in a separate company in 2021, has agreed to acquire Dermavant Sciences, a subsidiary of Roivant focused on immuno-dermatology, in a deal worth up to $1.2 billion ($175 million upfront and $975 million in milestone payments). 

Dermavant Sciences is one of the so-called “vants” of Roivant, a New York-based bio/pharmaceutical and healthcare company. Founded in 2014, Roivant consists of multiple wholly owned or majority-owned bio/pharmaceutical subsidiaries (“vants”) each focused on a different disease area. The company employs a “hub and spoke” model for research and development, whereby each bio/pharmaceutical subsidiary functions as an independent entity (“spoke”) using shared resources from the parent (“hub”). Other vants consist of technology-based platforms that support the operations of the bio/pharmaceutical vants with data-driven tools for drug development. 

Dermavant Sciences is one of 11 vants now part of Roivant. In December 2019, Roivant finalized a $3-billion strategic alliance with Sumitomo Dainippon Pharma under which the companies formed a strategic alliance and which Sumitomo Dainippon Pharma formed a new company, Sumitovant Biopharma, which took the ownership interest of five Roivant vants or bio/pharma companies: Myovant Sciences (women’s health and prostate cancer), Urovant Sciences (urinary diseases), Enzyvant Therapeutics (pediatric rare diseases), Altavant Sciences (respiratory rare diseases), and Spirovant Sciences (genetic lung disease) as well as Sumitomo taking ownership of certain technology platforms. 

Dermavant’s main product, Vtama (tapinarof) cream, 1%, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the US Food and Drug Administration (FDA) in May 2022. The FDA is reviewing a supplemental new drug application for Vtama cream as a potential treatment for atopic dermatitis (AD) (i.e., eczema) in adults and children two years of age and older, with Prescription Drug User Fee Act action expected in the fourth quarter of 2024. 

Under the acquisition agreement, Organon has agreed to acquire Dermavant for aggregate consideration of up to approximately $1.2 billion, with an upfront payment of $175 million and a $75-million milestone payment upon regulatory approval in AD, as well as payments of up to $950 million for the achievements of certain commercial milestones. In addition, Organon will pay Dermavant shareholders tiered royalties on net sales. Dermavant owns the rights to Vtama cream globally, excluding China, and has out licensed rights in Japan. Upon closing of the transaction, as part of the purchase price consideration, Organon would assume Dermavant’s liabilities with an approximate value of $286 million as reported by Roivant as of June 30, 2024. 

The deal is expected to close in the fourth quarter of 2024, subject to review under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. 

Source: Organon