Roivant Sciences, a New York-based bio/pharmaceutical and healthcare technology company, and Montes Archimedes Acquisition Corp. (MAAC), a special purpose acquisition company (SPAC) sponsored by Patient Square Capital, have formed a merger agreement under which Roviant Sciences will go public with a projected initial market capitalization of $7.3 billion.

Founded in 2014 by Vivek Ramaswamy, who now functions as the company’s Executive Chairman, Roivant consists of multiple wholly owned or majority-owned biopharmaceutical subsidiaries (so-called “Vants”), each focused on a different disease area. The company employs a “hub and spoke” model for research and development, whereby each biopharmaceutical 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.

In December 2019, Roivant finalized a $3-billion strategic alliance with 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.

Under the new deal, MAAC has agreed to merge with Roivant in a transaction that includes a private financing, in which Palantir Technologies, Viking Global Investors, Softbank and others will invest $200 million in the publicly traded equity. Thee deal is expected to deliver up to $611 million of gross proceeds to fund discovery and development programs. This includes up to $411 million currently held in MAAC’s trust account as well as a concurrent $200-million common stock private investment in public equity (PIPE) priced at $10.00 per share. Assuming a share price of $10.00 per share and no redemptions of MAAC shares, Roivant is expected to have an initial market capitalization of $7.3 billion inclusive of its pro forma net cash balance of approximately $2.3 billion.

Patient Square Capital and key Roivant equity holders and management have agreed to long-term lockups, with at least 50% of their holdings locked up for three years. In addition, Patient Square Capital has agreed to convert an additional 30% of its shares of MAAC to earn-out shares subject to performance vesting thresholds: 20% of its shares will vest at $15.00 per share and 10% will vest at $20.00 per share for 20 of 30 trading days within five years of closing.

Roivant will continue to operate under its current management team led by Matthew Gline, CEO. Roivant founder, Vivek Ramaswamy, will continue to serve as Executive Chairman.

The boards of directors of both Roivant and MAAC have unanimously approved the proposed transaction. Completion of the transaction, which is expected in the third quarter of 2021, is subject to approval of MAAC shareholders and the satisfaction or waiver of certain other customary closing conditions.

Assuming no redemptions of MAAC shares, current shareholders of Roivant will own approximately 92% of Roivant immediately post-closing (including shares issued in connection with Roivant’s recent acquisition of Silicon Therapeutics) and existing Roivant shareholder participation in the PIPE.

Source: Roivant Sciences