Pharmaceutical giant Organon (NYSE: OGN) announced it will acquire Dermavant Sciences Ltd. from Roivant, in a private target merger valued at $1.2 billion.
Under the terms of the merger agreement, Organon will pay $175 million up front and a $75 million milestone payment upon regulatory approval, as well as payouts of up to $950 million upon achieving specified commercial milestones. Further, Organon will pay Dermavant shareholders tiered royalties on net sales.
Dermavant develops and commercializes therapeutics in immuno-dermatology. “Dermavants novel product, VTAMA (tapinarof) cream, 1%, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the U.S. Food and Drug Administration (FDA) in May 2022,” according to the deal’s press release.
Psoriasis affects an estimated 8 million adults in the United States, or approximately 3% of the population, with the diagnosis significantly more prevalent in women and in the white population than in other ethnic groups.
This skin chronic skin condition causes an itchy rash that most commonly occurs on a person’s knees, elbows, trunk, and scalp. The scaly patch can become painful and interfere with sleep and concentration. Psoriasis is caused by a person’s overreactive immune system interfering with new skin development: while it typically takes up to 30 days for old skin to be replaced by new cells, in a person with psoriasis, that process is sped up to just 3-4 days. The speed of new cells replacing the old one creates scales and causes frequent skin shedding on top of skin plaques.
The condition is not contagious but instead rooted in genetics. The rash arises when person born with this predisposition to psoriasis comes into contact to a trigger. While triggers differ among individuals, the most common ones include stress, an infection, allergens, scrapes, and temperature changes. While there are several different types of psoriasis and manifest in varying ways, the most common is plaque psoriasis, which accounts for 80-90% of cases.
The number of patients with the condition is projected to expand significantly in the coming years as increasing awareness and healthcare spending worldwide leads to additional diagnoses. Organon is betting on Dermavant’s VTAMA (tapinarof) topical cream to treat this growing market.
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Organon is advised by law firm Covington & Burling LLP. Dermavant is advised by Freshfields Bruckhaus Deringer LLP and financial adviser Goldman Sachs & Co LLC.
