Roivant Sciences built a business out of scouting for overlooked drug candidates that stalled in the labs of pharmaceutical companies or universities and bringing them in-house to develop under subsidiaries formed around each asset. The company has assembled a pipeline spanning multiple therapeutic areas, and many of those molecules are making clinical progress. But Roivant’s business is now much more than searching for drugs shelved by others. By going public in a merger deal, Roivant is revealing just how much its business and its vision has changed in its short history.
New York and Basel, Switzerland-based Roivant announced Monday that it has agreed to a merger with publicly traded Montes Archimedes Acquisition Corp., a special purpose acquisition company (SPAC). According to the deal terms, Montes Archimedes shareholders will convert their shares and warrants into common shares and warrants of Roivant. The combined company will operate under the Roivant name and about 92% of the firm will be owned by shareholders of the original Roivant, assuming the Montes Archimedes shareholders don’t cash out (some of the equity holders have agreed to lockups that prevent them from selling at least half of their shares for the next three years. The new Roivant will have an expected market capitalization of $7.3 billion, which includes a $2.3 billion net cash balance.
The new Roivant will continue to operate under the drug company’s current management team, which is led by CEO Matthew Gline. Vivek Ramaswamy, the company’s founder and former CEO, will continue to serve as executive chairman. When the deal closes, shares of the new Roivant will trade on the Nasdaq under the stock symbol “ROIV.”
Since its 2014 launch, Roivant has formed more than 20 “vants,” which is what it calls its subsidiaries. Those companies have advanced the development of more than 40 drug candidates. One of Roivant’s earliest bets was also perhaps its biggest failure. The same year that Roivant launched, it announced the acquisition of a drug candidate for neurological disorders that was shelved by GlaxoSmithKline. Axovant, the subsidiary formed to develop the compound, eventually went public as it advanced the neuro drug’s development. But the compound failed a Phase 3 test in Alzheimer’s disease, and months later flunked a mid-stage study in dementia with Lewy bodies. Roivant went on to shake up the subsidiary and its management; the unit’s new focus was reflected in its new name: Sio Gene Therapies.
Since Axovant’s Phase 3 failure, Roivant’s subsidiaries have had better success, producing successful results in eight Phase 3 studies. Some vants have turned into acquisitions by other companies. In 2019, Sumitomo Dainippon Pharma began a research alliance with Roivant, spanning the development of up to 11 companies and 25 drug programs. As part of the deal, the Japanese pharma company paid $3 billion to buy five vants and take a 10% equity stake in Roivant. Two FDA-approved drugs emerged from those vants: prostate cancer drug relugolix and overactive bladder treatment vibregon. That Sumitomo deal was transformative for Roivant, Ramaswamy said, speaking during an investor conference call.
“We took the cash and we invested in various areas of our platform,” he said. “And even though we believe that’s been a good acquisition for Sumitomo, we’re even happier with what it’s allowed us to do in taking our discovery and development platform to the next level.”
Though Roivant’s initial vision was to find overlooked drugs that were discovered by others, the company has expanded its scope. Gline said that of the vants that Roivant has built, the ones that are technology companies have computational tools that make the firm better at developing or commercializing medicines. As an example, he pointed to Lokavant, which provides real-time analysis of clinical trials. The technology was initially developed by Roivant for its own clinical trials. Gline said that a contract research organization Roivant worked with, Parexel, saw the technology and decided to become a user—one of the first customers of Lokavant.
Another subsidiary, Datavant, takes patient data from databases, strips out identifying information, and follows data across siloed datasets to better understand patient populations. Yet another subsidiary, Alyvant, is using AI and machine learning to help sales representatives target physicians for the commercialization of drugs.
Roivant’s transformation included a move into drug discovery, precipitated in part, Gline said, by the company’s difficulty finding the right drug candidates to in-license. So Roivant modified its AI technology, using it for finding molecules that could become new medicines. That move led to VantAI, Roivant’s machine-learning platform for drug discovery. The company has poured about $750 million into computational drug discovery tools, according to Gline. The company has also added to these capabilities via the $450 million acquisition of Silicon Therapeutics, a startup that uses AI and machine learning to identify promising drug candidates. Silicon Therapeutics brought its pipeline of internally discovered drugs and its technology gives Roivant the ability to discover more.
Going forward, Roivant will be infused with $611 million to support the strategies started under its transformation. The cash breaks down to $411 million from Montes Archimedes and $200 million from institutional investors that have agreed to purchase Roivant stock at $10 per share. The investors participating in this financing include Fidelity Management & Research Company, Eventide Asset Management, Suvretta Capital, Palantir Technologies, RTW Investments, LP, Viking Global Investors, Sumitomo Dainippon Pharma, and SB Management, a subsidiary of SoftBank Group.
The transaction still needs approval of Montes Archimedes shareholders but is expected to close in the third quarter of this year. Roivant said that the proceeds from the merger are expected to support the company through mid-2024.
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