Jersey City-based Organon announced Sept. 18 it entered into an agreement to acquire Dermavant Sciences Ltd. in a $1.2 billion deal.

The terms of the deal include an upfront payment of $175 million and a $75 million milestone payment upon regulatory approval in atopic dermatitis (AD), as well as payments of up to $950 million for achieving certain commercial milestones.

Dermavant, a Roivant company, is dedicated to developing and commercializing innovative therapeutics in immune-dermatology.

That includes its novel product, VTAMA cream. Approved by the Food & Drug Administration in May 2022, the once-daily, steroid-free cream is used for the topical treatment of mild, moderate and serve plaque psoriasis in adults. The common chronic inflammatory skin disease affects more than 8 million Americans 20 years of age or older and 125 million people worldwide.

The FDA is also reviewing an application to use VTAMA as a potential treatment for atopic dermatitis (AD) in adults and children 2 years of age and older. One of the most common inflammatory skin conditions, AD impacts some 16.5 million adults and more than 9.6 million children in the U.S.

Organon will pay Dermavant shareholders tiered royalties on net sales. Dermavant owns the rights to VTAMA cream globally, excluding China and has out licensed Japan rights.

Expanding expertise

Organon says that the acquisition extends its international dermatology capabilities to the U.S. and expands its commercial presence into dermatology. The company notes psoriasis presents a significant impact to quality of life and AD is associated with a higher disease burden for women compared to men.

Organon CEO Kevin Ali said the deal delivers on the company’s objective to improve the health of women throughout their life stages by investing in treatments for conditions that affect women differently.

“We look forward to combining Dermavant’s strong dermatology commercial and field medical organization in the U.S., with Organon’s market access capabilities, regulatory expertise and worldwide commercial reach,” said Ali. “This will allow us to bring VTAMA cream, a patient-focused innovation in dermatology, providing an effective, well-tolerated, non-steroidal treatment option to the millions of people living with plaque psoriasis and potentially atopic dermatitis.”

Roivant CEO Matt Gline said this deal marks another example of his company’s ability to offer creative win-win collaborations.

“We are able to meet Organon’s structural objectives and to create a transaction that is very attractive to both Roivant and Dermavant stakeholders, while still preserving meaningful economics tied to the potential future success of VTAMA,” said Gline. “Additionally, we are excited for VTAMA cream to benefit from Organon’s commercial scale. We believe they have the capabilities and reach to ensure patients globally can access this important medicine.”

‘Unparalleled opportunity’

“This is an unparalleled opportunity for continued growth and innovation for Dermavant, preserving our values and vision and allowing them to thrive in the new structure at Organon,” said Todd Zavodnick, chief executive officer of Dermavant. “We set out to revolutionize the standard of care in dermatology, and we delivered—becoming the #1 branded topical for plaque psoriasis within just two months after launching VTAMA cream and providing over 275,000 patients with the relief they desperately needed. I am certain that this merger will provide us the scope and global scale to unleash the potential of VTAMA cream.”

The transaction is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act and other standard conditions. Closing is expected in the fourth quarter of this year.

Freshfields Bruckhaus Deringer LLP served as legal advisor for Roivant while Goldman Sachs served as financial advisor. Covington & Burling LLP represented Organon as legal advisor.

“We structured the deal economics to be heavily weighted towards success-based milestones and royalties, similar to other transactions we have executed to date,” said Matthew Walsh, CFO, Organon. “This is consistent with our commitment to disciplined capital allocation as we look to continue to reduce our leverage, but also strategically add growth assets.”

More moves in skincare health:

• Johnson & Johnson closes $1.25B Yellow Jersey acquisition
• Johnson & Johnson completes $850M Proteologix acquisition