The Japan-based drugmaker Sumitomo Dainippon Pharma has agreed to fully acquire one of the biotechs created by Roivant Sciences, a holding company with more than a dozen subsidiaries that each focus on a specific area of drug development.
Sumitomo last year dropped $3 billion to take Roivant’s stake in five of its subsidiaries, including the urinary disease specialist Urovant Sciences. Now, through one of its own subsidiaries, Sumitomo will acquire for $16.25 apiece the remaining 28% of Urovant common shares it doesn’t already own. The companies said Thursday that this deal gives Urovant an equity value of $584 million and an enterprise value of $681 million.
Urovant’s most advanced medicine, called vibegron, is under review at the Food and Drug Administration, with an approval decision expected to come by Dec. 26. Late-stage clinical trials found vibegron helped with bladder control in peope who have overactive bladders. Myrtle Potter, CEO of the acquiring subsidiary Sumitovant Biopharma, said Thursday’s deal will allow Urovant to keep its focus on the potential market launch of vibegron.
Sumitomo has enjoyed double-digit sales growth in 2020. From March through September, the company recorded revenue of 261.5 billion yen, or roughly $2.5 billion, a year-over-year increase of 13% that it attributed to both the launch of new diabetes medications in Japan and the continued strength of its antipsychotic drug Latuda in North American markets.
Latuda, however, is on a timer. In late 2018, Sumitomo inked an agreement with generics manufacturers that will allow cheaper copycats of Latuda to enter the U.S. market in 2023. The company has therefore been hunting for new drugs that can help offset Latuda’s looming decline.
By late 2019, Roivant had tallied more than two dozen clinical-stage drugs across its many subsidiaries. Sumitomo wanted access, and ended up spending billions of dollars for Roivant’s stakes in Urovant and four other companies: Myovant, focused on women’s health and prostate cancer; Enzyvant, focused on pediatric rare diseases; Altvant, focused on respiratory rare diseases; and Spirovant, focused on gene therapies for cystic fibrosis. That deal also gave Sumitomo a 10% equity stake in Roivant.
The more recent deal implies that having full control over Urovant and vibegron is a valuable investment for Sumitomo. At $16.25 apiece, Sumitomo’s offer is a 96% premium to Urovant’s closing share price on Nov. 12 and a 92% premium to its 30-day volume-weighted average share price.
The companies said Thursday their deal has received unanimous approval by a special committee of Urovant’s Board of Directors, though it still needs a thumbs up from the majority of Urovant’s shareholders. The companies expect the deal to close in the first quarter of 2021.
Upon closing, Urovant will become a wholly owned subsidiary of Sumitovant and its common stock will stop trading on the Nasdaq stock market.