Roivant Sciences and Pfizer Gain Ground as Roche Agrees to Acquire Immunology Company

by Warren Seah

Shares of Roivant Sciences Ltd. (ROIV) and Pfizer Inc. (PFE) saw positive movement in premarket trading on Monday following an announcement that Roche Holding AG (RHHBY) will be acquiring immunology company Telavant for a whopping $7.1 billion. While Roivant currently owns 75% of Telavant shares, Pfizer holds the remaining 25%.

This acquisition will grant Roche the exclusive rights to develop, manufacture, and commercialize RVT-3101, an investigational treatment primarily targeted at inflammatory bowel disease but with potential applications in various other diseases, as stated by Roche in their recent press release.

Aside from the upfront payment of $7.1 billion, Roche will also make a near-term milestone payment of $150 million. Moreover, this deal will allow Roche the option to establish a global collaboration with Pfizer for a next-generation antibody currently undergoing phase 1 trials.

David Risinger, an analyst from Leerink Partners, described this transaction as “transformative” for Roivant in a recent note. He also expressed anticipation to hear how the management plans to reinvest the substantial cash influx. Risinger reiterated his outperform rating on Roivant shares.

Following the news, Roivant’s shares experienced an 8% increase in premarket trading on Monday, while Pfizer’s shares rose by 1%. However, Roche’s American depositary receipts saw a slight decrease of 0.5% in premarket trading.

According to the Centers for Disease Control and Prevention, over 3 million adults in the United States have been diagnosed with inflammatory bowel disease, which includes Crohn’s disease and ulcerative colitis.

Roivant’s stock made significant gains in late June when the company released clinical data on RVT-3101 in adults with ulcerative colitis. The data demonstrated an improved clinical remission of 36% at week 56 compared to 29% at week 14.

Telavant, a joint venture between Roivant and Pfizer, was originally formed last year with the exclusive purpose of developing and commercializing RVT-3101 in the United States and Japan.

Roche has expressed their commitment to initiating a global phase 3 trial for RVT-3101 at the earliest opportunity. Levi Garraway, Roche’s chief medical officer and head of global product development, stated that this treatment has the potential to become the first therapy offering high efficacy and safety for individuals with inflammatory bowel disease, along with the convenience of at-home subcutaneous administration.

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