Japan's Sumitomo Dainippon Pharma Co. Ltd. plans to pay $3 billion to acquire Roivant Sciences Ltd.'s ownership interests in five biopharma companies, plus options to acquire up to six more from the prolific company-builder. The deal, slated to close in October, would give Sumitomo Dainippon controlling interests in Myovant Sciences Inc., Urovant Sciences Inc., Enzyvant Therapeutics Inc. and Altavant Sciences Inc., as well as an equity stake of more than 10% in Roivant itself.

Sumitomo Dainippon CEO Hiroshi Nomura said he hopes the deal will drive growth for his company, Japan's 11th most valuable pharma by market cap, after U.S. market exclusivity for its lead product, the schizophrenia and bipolar depression drug Latuda (lurasidone), expires in 2023.

Assets with strong post-Latuda potential highlighted by the Japanese pharma in a presentation on Sept. 6 included Myovant's relugolix, for uterine fibroids, endometriosis and prostate cancer; Urovant's vibegron for overactive bladder; Enzyvant's RVT-802 for pediatric congenital athymia; and Altavant's rodatristat ethyl for pulmonary arterial hypertension.

If completed, the deal would rank as this year's fourth-largest disclosed global biopharma M&A transaction and Sumitomo Dainippon's most expensive acquisition to date, topping predecessor Dainippon Sumitomo Pharma's $2.63 billion acquisition of cancer-focused Boston Biomedical Inc. in 2012. (See BioWorld, March 1, 2012.)

For Roivant, the deal represents what is likely its largest-ever infusion of cash from Japan after Softbank Vision Fund led a monster $1.1 billion equity investment in the company in 2017. (See BioWorld, Aug. 10, 2017.)

Synergies to come?

The relationship between Roivant and Sumitomo Dainippon (SD) extends at least as far back as 2018, when Roivant invested $15 million in Lyon, France-based Poxel SA for U.S., European and other ex-Asia rights to develop and commercialize imeglimin, a potential therapy for metabolic disorders, including type 2 diabetes. SD owns the rights in Japan, China, South Korea, Taiwan and nine other Southeast Asian countries. As conversations between company executives developed, potential synergies became clear. (See BioWorld, April 10, 2019.)

"Sumitomo Dainippon's expertise in commercializing major products globally, combined with support from our technology-oriented Vants and the central Roivant platform, will enhance the value of the product portfolio included in this alliance," said Roivant CEO and founder Vivek Ramaswamy. Ramaswamy was unavailable for further comment.

For Urovant, where shares (NASDAQ:UROV) rose 6.3% to $9.99 on Friday when the deal was announced, Jefferies analyst Biren Amin said immediate benefits of the deal are likely to be modest. SD would own about 75% of the company at the deal's close.

"Initially, Sumitomo will support Urovant on market access through its own market access team, and may assist UROV in discussions with payers on rebating and contracting," he said. Urovant would also "leverage Sumitomo's drug distribution network, and may pay less fees as a result," he added. But in the long-term, after the Roivant deal closes, more upside might appear, with SD potentially seeking to acquire the remaining 25% of Urovant from existing shareholders, he said.

The near-term impact on Myovant, of which SD would own 45% after the transaction's close, was also not likely to be immediately changed. Rating the agreement's potential impact as "neutral to marginally positive," SVB Leerink analyst Ami Fadia found no "immediate synergy" in sight. Myovant shares (NYSE:MYOV) shares fell 6.6% on the Friday announcement to $7.51.

While the deal "could potentially reduce some uncertainty in financing and commercial success for Myovant," she said, "Sumitomo currently does not have much presence in women's health or the Europe market, leaving the most obvious potential synergy in helping relugolix gain penetration into primary care in the U.S.," she added.

Blockbuster umbrella?

Sumitomo Dainippon-Roivant Alliance, a new entity to be created by the deal that would be wholly owned by the Japanese acquirer, will be in charge of 25 clinical programs and multiple potential product launches from 2020 to 2022, the companies said. Among them are potential blockbusters relugolix, poised for an NDA filing before year-end, and vibegron, for which an NDA filing is expected by early 2020.

A biologics license application for Enzyvant's RVT-802, which has been granted breakthrough therapy, regenerative medicine advanced therapy, rare pediatric disease and orphan drug designations by the FDA, has been accepted for priority review.

In another aspect of the substantial deal, SD said it will acquire Roivant's data analysis platform, Drugome, to help support drug selection and development strategy, as well as its Digital Innovation Technology platform, a Roivant-wide service aimed at optimizing business processes. It will also contract with Roivant's Datavant Inc. to facilitate the use of external health care data through de-identification and linking services, and with Alyvant Inc., which provides services for increasing the efficiency of sales and marketing activities.

One additional yet-to-be-disclosed Roivant company will be part of the deal before the partners reach a definitive agreement ahead of October's end. But gene therapy-focused Axovant Sciences Inc., a high-profile unit among the 20 subsidiaries Roivant calls its "Vants," won't be it, SVB Leerink analyst Mani Foroohar said. Sumitomo will have right of first refusal if another company offers to acquire Roivant's share in it, he said.

Altogether, the deal is intended to help SD achieve its vision of becoming a "global specialized player" with leadership positions, by 2023, in psychiatry and neurology, oncology, and regenerative medicine and cell therapy.

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