Roche to Buy Telavant from Roivant Sciences, Pfizer for $7.1 Billion

Telavant, which is developing a promising drug candidate to treat inflammatory bowel disease, was jointly formed last year by Roivant Sciences and Pfizer (PFE). It was created to develop and commercialize the drug, known as RVT-3101, in the U.S. and Japan.

The deal represents and extraordinary coup for Roivant, which picked up its majority ownership of RVT-3101 for next to nothing less than a year ago. In December 2022, Pfizer said that it had given RVT-3101, which it had brought through Phase 2 clinical trials, to the newly formed Telavant. Roivant received 75% of Telavant, and Pfizer 25%. Roivant did not make any payment to Pfizer as part of the deal.

Since then, Roivant has reported new positive data on RVT-3101. The Wall Street Journal first reported on Roche’s interest in the drug in July. The deal represents an exceptional return on Roivant’s investment.

RVT-3101 is designed to target a cytokine called tumor necrosis factor-like ligant 1A, or TL1A. No similar drug has received Food and Drug Administration approval, but in April pharmaceutical company
Merck
(MRK) paid $10.8 billion to acquire the biotech Prometheus Biosciences, which is also developing a drug targeting Tl1A.

The two deals highlight drugmakers’ interest in immunology drugs, which have proven to be reliable blockbusters for big pharma companies.

Under the terms of Monday’s agreement, Roche (ROG.Switzerland) will take on the rights to develop and commercialize it in the U.S. and Japan pending regulatory approval. The Swiss company will pay a near-term milestone payment of $150 million on top of the $7.1 billion. Pfizer will retain commercialization rights to the drug outside of the U.S. and Japan.

The agreement also includes the option for Roche to collaborate with Pfizer on a next-generation antibody currently in early-stage trials.

Write to Callum Keown at callum.keown@barrons.com