Organon (NYSE: OGN) has recently announced its acquisition of Dermavant Sciences Ltd., a company dedicated to developing and commercializing innovative therapeutics in immuno-dermatology. The acquisition, valued at up to approximately $1.2 billion, includes an upfront payment of $175 million and a $75 million milestone payment upon regulatory approval in atopic dermatitis (AD), with additional payments of up to $950 million for certain commercial milestones.
Dermavant's flagship product, Vtama® (tapinarof) cream, 1%, is a novel, non-steroidal topical therapy approved for the treatment of plaque psoriasis in adults and is under FDA review for an additional indication to treat atopic dermatitis. Vtama cream has shown promising results, with over 275,000 patients benefiting from its relief for plaque psoriasis within just two months after its launch.
In terms of financial implications, Organon expects the transaction to be modestly dilutive to adjusted EBITDA in 2025 but turning accretive in 2026. It also anticipates net leverage to be elevated above 4.0x as a result of the acquisition, with the transaction not expected to result in a revision to Organon’s capital allocation priorities.
The completion of the acquisition is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, with the closing expected to take place in the fourth quarter of 2024. Upon closing, Organon would assume Dermavant liabilities with an approximate value of $286 million reported by Roivant as of June 30, 2024.
Vtama cream, a non-steroidal once-daily topical treatment, works by activating aryl hydrocarbon receptors in the skin to reduce inflammation and normalize the skin barrier. The safety and effectiveness of Vtama cream have been evaluated through randomized, double-blind, vehicle-controlled trials for psoriasis, as well as phase III clinical studies for atopic dermatitis.
Organon, an independent global healthcare company with a mission to improve the health of women throughout their lives, expects the acquisition to extend its international dermatology capabilities to the U.S. This aligns with Organon's strategy to invest in treatments for conditions that affect women differently, as indicated by its CEO, Kevin Ali.
The transaction marks a significant opportunity for continued growth and innovation for Dermavant, allowing it to thrive under the new structure at Organon. The acquisition represents another example of Roivant's ability to offer creative collaborations, providing an attractive transaction to both Roivant and Dermavant stakeholders.
Today the company's shares have moved 0.1% to a price of $12.05. If you want to know more, read the company's complete 8-K report here.
