Roche to buy pharmaceutical company Telavant for US$7.1 billion

Roche will pay US$7.1 billion to acquire Telavant, a company developing promising treatments for inflammatory bowel disease, in a bid to bolster its pipeline of experimental drugs. This is Roche’s largest acquisition since buying InterMune Inc. in 2014.

The Swiss pharmaceutical company said Monday that it will acquire rights in the United States and Japan to develop and commercialize the drug, known as RVT-3101. Roche will also provide a short-term payment of $150 million.

The antibody therapy, developed by Telavant, a company owned by Roivant Sciences and Pfizer, targets inflammation and fibrosis, giving it potential for some other diseases, Roche said. The drug, which can be administered at home by injection, has been shown to be safe for patients to use in clinical trials to date.

Roche is under pressure to improve its offering of drugs it can commercialize soon as windfalls from products used during the Covid-19 pandemic run out. The drugmaker said it will begin a phase three global trial of RVT-3101 as soon as possible.

Theresa Graham, head of Roche’s pharmaceuticals division, said in an interview that Roche continues to look for “the best deals in the portfolio,” both in late and early stages. “In terms of wanting to go out there and find the best science possible, I think it’s absolutely a business that you can expect us to do more of.”

Inflammatory bowel diseases are a group of chronic gastrointestinal disorders that affect nearly 8 million people worldwide, and most of them, about 80%, cannot find long-term treatment. Ruavan sees a $15 billion inflammatory bowel disease market in the U.S. alone, according to a January investor presentation.

“It’s a terribly debilitating disease just from a quality of life standpoint,” Graham said. “If you talk to patient groups, they’ll tell you the most common thing people have on their phone is a bathroom locator because they just can’t be out of reach of the bathroom.”

What Bloomberg Intelligence Says

“The price seems high given that it represents only the US and Japanese rights to the drug in an area where the Swiss company has limited experience. This asset has shown higher remission rates in phase 2 trials in inflammatory bowel disease compared to other recently acquired assets.” – John Murphy, BI Pharmaceutical Analyst.

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Roche is paying Telavant to join Merck and Sanofi in FP1A

CEO Thomas Schienecker has faced a double whammy: losing billions of dollars in revenue linked to the pandemic, while some setbacks in clinical trials have led many investors to question the company’s ability to deliver on its high-profile projects.

RVT-3101 is an antibody that works by blocking a protein called TL1A, which is believed to play a role in autoimmune diseases. Interest in the drug class has soared since Merck beat out rivals including AbbVie and Bristol-Myers Squib to buy Prometheus Biosciences in April for billions of dollars in revenue.

Telavant was formed in 2022 specifically to develop and commercialize RVT-3101 in the US and Japan. Roivant owns 75% of Telavant, while Pfizer owns the rest.

Roivant has attracted interest from several large pharmaceutical companies looking to acquire mid-tier drugs in the potentially lucrative field of immune therapies. Earlier this month, Sanofi agreed to pay Teva Pharmaceutical Industries Inc. up to $1.5 billion to help develop and market its experimental inflammatory bowel disease drug.

Roivant published data in late June showing that its treatment was more effective than previously thought.

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