Organon is expanding its presence in the dermatology sector through an acquisition of Dermavant, a subsidiary of Roivant Sciences, primarily focusing on a commercialized plaque psoriasis treatment that may soon be applicable to atopic dermatitis, a more common inflammatory skin condition. Organon’s deal could total up to $1.2 billion, with an upfront payment of $175 million to Roivant, and further payments contingent on achieving certain milestones.
Dermavant’s principal product is Vtama, a non-steroidal topical cream originally approved for treating plaque psoriasis—a standard indication for which topical steroids are also typically prescribed. Vtama operates by inhibiting certain signaling proteins involved in inflammation, making it a potential therapy for various inflammatory skin disorders. The formulation is under FDA review for atopic dermatitis, and its approval could lead to an additional $75 million milestone payment from Organon.
Vtama is the only commercially launched product from Roivant and had sales of $75.1 million in the fiscal year ending March 31, a significant increase from $28 million the previous year. However, despite the growth, the drug faces a competitive market that has tempered its financial success. Analyst David Risinger of Leerink Partners has revised his forecast for Vtama’s 2032 revenue from $1.4 billion down to $407 million, attributing the underperformance to the comfort level physicians and patients have with existing generic and branded alternatives. Nevertheless, there is optimism about Vtama’s potential in treating atopic dermatitis, especially for usage in children where non-steroidal and non-systemic treatments are preferable.
Organon, which was spun off from Merck in 2021 with a portfolio including women’s health and off-patent drugs, also houses other dermatological products like Diproson and Elocon—used to treat conditions like eczema, psoriasis, and other skin irritations. Along with other therapies, these generated $782 million in revenue last year, accounting for 12% of Organon’s total sales, primarily outside the U.S.
The acquisition not only includes the upfront and milestone payments but also involves Organon assuming the debt of the Roivant subsidiary and entitles Roivant to royalties on Vtama’s sales. Importantly, Organon will secure global rights to market Vtama, excluding China and Japan where rights are retained by other entities. Both Organon CEO Kevin Ali and Roivant CEO Matt Gline stressed the importance of leveraging Organon’s larger scale to maximize Vtama’s commercial reach, particularly highlighting the potential to merge Dermavant’s U.S. commercial efforts with Organon’s broader market access and regulatory expertise.
Roivant’s business strategy involves acquiring promising drug candidates from academic institutions and other pharmaceutical entities, then advancing these candidates through subsidiaries dubbed “Vants.” Roivant obtained the rights to Vtama from GSK in 2018, successfully shepherded the drug through clinical trials, and saw its FDA approval in 2022, marking Roivant’s first solo commercialization effort.
Despite Vtama’s underwhelming sales trajectory, Roivant continues to engage actively in the pharmaceutical marketplace, focusing on drugs with blockbuster potential. This includes buying and selling subsidiaries based on strategic evaluations, such as its sale of Televant, a subsidiary focused on an inflammatory bowel disease drug acquired from Pfizer and sold to Roche for $7.1 billion. Recently, Roivant also revealed Pulmovant, which is preparing for Phase 2 trials of a drug targeting pulmonary hypertension related to interstitial lung disease, acquired from Bayer.
Not only does the deal underscore Organon’s strategic focus on strengthening and expanding its dermatology portfolio, but it also demonstrates the fluid dynamics of the pharmaceutical industry where strategic acquisitions, divestures, and cross-market collaborations are crucial for addressing various health conditions effectively and expansively.
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