Organon makes dermatology play with $1.2bn Dermavant buyout

Organon is paying $175 million upfront to buy Roivant's dermatology unit Dermavant and its topical psoriasis therapy Vtama, which is also under review by the FDA for atopic dermatitis.

If it goes through, the deal will also mark the expansion of Organon's dermatology business into the US, and accelerate the rollout of Vtama (tapinarof) in international markets, said the two companies.

Along with the upfront payment, Organon is offering a $75 million milestone payment if Vtama gets an FDA green light in atopic dermatitis, along with other payments of up to $950 million if the drug hits its sales targets, taking the total value to around $1.2 billion.

Vtama is a first-in-class, once-daily topical therapeutic aryl hydrocarbon receptor modulating agent (TAMA), originally developed by GSK, that was approved in 2022 with a broad label spanning mild, moderate, and severe psoriasis and an unlimited duration of use.

That broad label led to speculation of possible blockbuster sales, positioned as an alternative to topical corticosteroids, which can cause problems with long-term use like skin thinning. Still, the market for psoriasis drugs is pretty crowded and Vtama has been slow to gather momentum, bringing in $75 million in the year ending 31st March.

Analysts – and presumably Organon – think the product will go up a gear if approved for atopic dermatitis. Dermavant posted positive results from the ADORING phase 3 trials in that indication in January and filed for approval the following month for use in adults and children aged two and over.

An FDA decision on the marketing application is due before the end of the year, and tapinarof is already approved for atopic dermatitis as well as psoriasis in Japan, where it is licensed to Japan Tobacco.

Atopic dermatitis, commonly known as eczema, is one of the most common inflammatory skin diseases and affects around 16.5 million adults and more than 9.6 million children in the US - more than three times the number of people with psoriasis.

The Dermavant transaction comes as Organon – which specialises mainly in women's health – has been expanding its product portfolio and pipeline with a series of bolt-on deals in the last year or so.

Earlier this month it licensed rights in China to a long-acting FSH drug for fertility treatment from BaoPharma's CenterGene subsidiary, while in August it expanded an agreement with Eli Lilly to distribute migraine therapy Emgality (galcanezumab) in Europe and other ex-US markets.