Sumitomo Dainippon goes big on biotech with $3bn Roivant deal

Japanese pharma company Sumitomo Dainippon has announced a strategic deal with Roivant Sciences, a biotech holding company headed by entrepreneur Vivek Ramaswamy, for a hefty upfront payment of $3bn. 

The deal will see the ownership of five of Roivant’s spinout Vant companies transferred to Sumitomo, with the Japanese pharma also gaining the option to acquire up to six additional companies owned by Roivant. Sumitomo will also gain access to Roivant’s technology platforms and will take an equity stake of over 10% of Roivant’s shares.

The five companies Sumitomo is set to take over from Roivant include Myovant, Urovant, Enzyvant, Altavant and another undisclosed spinout company.

These five companies cover a broad range of therapy areas, including women’s health, urinary diseases and paediatric rare diseases. The option to gain an additional six of Roivant’s biotech companies could see Sumitomo gain ownership of over 25 clinical programmes, with potential product launches expected from 2020 to 2022.

“Sumitomo Dainippon's expertise in commercialising 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 Vivek Ramaswamy, founder and chief executive officer of Roivant.

“We view this partnership as a major validation of the Roivant platform and we will continue to launch other innovative Vants in the future,” he added.

The deal is good news for both parties – Sumitomo needs new products ahead of the loss of its US patent for its star schizophrenia drug Latuda, and it will help Roivant to progress further, with the new cash enabling the umbrella company to develop more Vants. The stakes are even higher for Sumitomo, following the failure of napabucasin, a potential pancreatic cancer candidate it acquired from Boston Biomedical, earlier this year.

However, only two of the companies, Enzyvant and Altavant, are privately owned by Roivant, while the other two named companies are publicly traded. Although Sumitomo will gain a major stake in Urovant and Myovant (75% and 45%), the Japanese pharma company may not gain total control over the assets developed by these Vants.

Roivant’s business model is unique in that it focuses on acquiring drug candidates that have been discarded by other companies for commercial reasons, rather than a fundamental issue with the programme.

At this stage, Sumitomo and Roivant have entered into a memorandum of understanding, with the final agreement of the details of the deal expected by the end of October 2019. At that point, it will be clear exactly what Sumitomo will be gaining, as well as outlining any additional information regarding the ongoing terms of the deal.