Sumitomo Dainippon Buys 5 Roivant Companies for $3 Billion with Option to Buy 6 More

Pictured: Pile of money/iStock, Ihor Lukianenko

Pictured: Pile of money/iStock, Ihor Lukianenko

In addition, Sumitomo Dainippon is acquiring an equity stake of more than 10% of Roivant shares.

Roivant Sciences, Vivek Ramaaswamy’s umbrella biotech company, agreed to a memorandum of understanding to sell ownership to five of its Vant companies to Japan’s Sumitomo Dainippon Pharma. The upfront stakes are $3 billion.

In addition, Sumitomo Dainippon is acquiring an equity stake of more than 10% of Roivant shares. The Japanese pharma company will also have options to buy up to six additional Vants and gain access to Roivant’s proprietary technology platforms, DrugOme and Digital Innovation.

“We respect Roivant’s innovative business model and underlying culture, and we look forward to deepening our relationship with Roivant, which has a rich development pipeline, technology platforms, and distinctive talents,” stated Hiroshi Nomura, representative director, president and chief executive officer of Sumitomo Dainippon.

Nomura went on to say, “I am hopeful that through this Alliance between the two companies, Sumitomo Dainippon Pharma will not only obtain growth engines after expiry of the U.S. market exclusivity of Latuda, but also address issues identified in the Mid-term Business Plan 2022 and contribute significantly to establish a position as a ‘Global Specialized Player’ which we aspire to be by 2033 through our transformation into a novel pharmaceutical business model leveraging data and digital technologies.”

Latuda is Sumitomo Dainippon’s drug for schizophrenia, which will lose U.S. market exclusivity in 2023. The company is Japan’s seventh-largest pharmaceutical company by revenue, and like other Japanese drug companies, is struggling with a declining domestic population, forcing it to look outside the country for growth.

As Reuters notes, Japan’s pharma companies have been cautious about international acquisitions, but this year Takeda Pharmaceutical completed its $59 billion acquisition of Dublin’s Shire, which may signal a trend for other Japanese biopharma companies.

An entity wholly owned by Sumitomo Dainippon called the Sumitomo Dainippon-Roivant Alliance will take over Roivant’s ownership interest in Myovant Sciences, Urovant Sciences, Enzyvant Therapeutics, Altavant Sciences, and one more company that hasn’t been identified yet, but will be prior to execution of the definitive agreement. The companies focus on: women’s health and prostate cancer (Myovant); urinary diseases (Urovant), pediatric rare diseases (Enzyvant); and respiratory rare diseases (Altavant).

Of the tech platforms, Roivant will continue to use them under separate contract for other Vants and any future business activities. Sumitomo Dainippon indicates it plans to enter contract deals with Roivant Health technology Vants, Datavant and Alyvant, for its own ongoing and future clinical and commercialization activities.

The definitive agreement is expected to be signed by the end of October 2019. Of the 11 companies involved in this deal, they include more than 25 clinical products with several product launches planned between 2020 and 2022.

“We are pleased to enter into this relationship with Sumitomo Dainippon Pharma and we look forward to working closely with them to ensure the success of the Alliance,” Ramaswamy stated. “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. We view this partnership as a major validation of the Roivant platform and we will continue to launch other innovative Vants in the future.”

The apparent early announcement is related to rules overseeing public Japanese companies. Ramaswamy has indicated that, “We’re quite complementary to one another. They have great cash flow but no meaningful growth engine. We have a great growth engine and no meaningful cash flows.”

Ramaswamy’s business model has come with a degree of skepticism. The early approach was to acquire castoff drugs from larger companies at low prices that could potentially be developed for other indications. The company’s earliest efforts were a fairly cataclysmic failure. Axovant acquired intepirdine for $5 million from GlaxoSmithKline. It had a favorable safety and tolerability profile and in a Phase IIb trial showed immediate and sustained efficacy over placebo in Alzheimer’s disease. But GSK had abandoned the drug after four failed clinical trials. Ramaswamy felt the drug could be effective in a narrower patient population. However, in September 2017, the company’s MINDSET trial of 1,315 patients on a stable background therapy of Aricept (donepezil) failed to show any improvement in cognition or measures of activities of daily living.

The failure inspired a retooling on the part of Axovant as well as restructuring of Roivant’s operations. Other Vants, particularly Urovant, have had more success, and this deal with Sumitomo Dainippon would suggest that Ramaswamy’s approach is working.