A prolific builder of biopharma and health technology companies, Roivant Sciences Ltd. is poised to join Nasdaq through a newly proposed merger with a special purpose acquisition company (SPAC) sponsored by Patient Square Capital LLC. The deal, which values Roivant at $5 billion, includes $611 million of new money, composed of $411 million held in trust by the SPAC, Montes Archimedes Acquisition Corp., plus $200 million from a committed PIPE financing. The transaction, expected to peg Roivant's initial market cap at $7.3 billion, follows a September 2019 deal in which Roivant sold interests in five biopharmas to Sumitomo Dainippon Pharma Co. Ltd. (SDP) for $3 billion cash. An earlier option SDP had to acquire up to six more Roivant subsidiaries is no longer in force, a representative told BioWorld.

Following the completion of merger, anticipated in third quarter, shares in Roivant are expected to trade on Nasdaq under the ticker symbol ROIV.

Roivant's portfolio of "Vants," as it calls the collection of subsidiaries in its portfolio, includes three advanced programs. Dermavant Sciences Inc. is progressing tapinarof, a phase III aryl hydrocarbon receptor modulating agent for the potential topical treatment of psoriasis, while Aruvant Science Inc. is moving ahead with ARU-1801, a phase II cell-based gene therapy intended for the treatment of sickle cell disease. A pivotal program for the product could be launched in 2022, Roivant CEO Matt Gline said during the investor presentation.

Immunovant Inc.'s IMVT-1401 (batoclimab) has moved to phase IIb in at least one indication, thyroid eye disease, but in February, the company paused dosing in all trials due to elevated total cholesterol and low-density lipoprotein levels observed in patients treated with the anti-Fc neonatal receptor monoclonal antibody. Downplaying the issue, Gline said it was "was just a lab value" and that he wouldn't say more on the matter because, following the completion of Roivant's public offering, Roivant intended to reacquire the company's minority stake in Immunovant and possesses nonpublic information about Immunovant and its products.

Roivant's efforts have also played a role in the development of two FDA-approved medicines, Orgovyx (relugolix) for prostate cancer and Gemtesa (vibegron) for overactive bladder, both brought to market by Sumitovant Biopharma, a subsidiary of Sumitomo Dainippon Pharma. But tapinarof could be the first of the current Roivant program to win approval, following a planned NDA filing for the program in the first half of this year.

With VantAI, Roivant’s machine learning platform for the discovery of new drugs, the company is also expanding beyond its traditional approach of in-licensing assets to build new Vants around. So far, Roivant has invested about $750 million into building out its computational toolkit, he said.

Montes' offer for Roivant wasn't out of the blue. In an investor presentation held to discuss the combination, Jim Momtazee, managing partner of Patient Square and a veteran of investment firm KKR & Co. Inc., said, "We started a dialogue with the management of Roivant literally the day after the IPO of Montes Archimedes priced," in October 2020, not long after its creation in July 2020. With $2.3 billion of cash, it's financed for the next three years.

While SPACs have come in for criticism from some observers for quickly cashing out of the vehicles post-acquisition, Patient Square Capital and key Roivant equity holders and management have agreed to long-term lockups, the companies said May 3. At least 50% of their holdings are locked up for three years. In addition, Patient Square Capital agreed to convert an additional 30% of its shares of Montes Archimedes to earn-out shares subject to performance vesting thresholds, with 20% of the shares vesting at $15 per share and 10% vesting at $20 per share. Shares of the SPAC (NASDAQ:MAAC) closed at $9.95 on May 3.

Investors in the PIPE financing, priced at $10 per share, included Fidelity Management & Research Company LLC, Eventide Asset Management, Suvretta Capital, RTW Investments, LP, Viking Global Investors and SB Management, a subsidiary of Softbank Group Corp. Strategic investors also participated, including Sumitomo Dainippon and Palantir Technologies Inc., which in recent months has made significant new senior hires building the company's access to expertise in life sciences, pharmaceuticals and public health.