Roivant, Pfizer shares rise as Roche agrees to buy immunology company for $7.1 billion

By Eleanor Laise

'Transformative transaction' for Roivant gives Roche rights to promising inflammatory bowel disease treatment

Shares of Roivant Sciences Ltd. (ROIV) and Pfizer Inc. (PFE) gained ground premarket on Monday after Roche Holding AG (RHHBY) agreed to buy immunology company Telavant for $7.1 billion. Roivant owns 75% of Telavant shares, and Pfizer owns the remaining 25%.

The deal for Telavant gives Roche the rights to develop, manufacture and commercialize RVT-3101, an investigational treatment for inflammatory bowel disease that also has the potential to be applied in several other diseases, Roche said in a statement.

The agreement, which includes a $7.1 billion upfront payment and a $150 million near-term milestone payment, also gives Roche an option to collaborate globally with Pfizer on a next-generation antibody that is currently in phase 1 trials, Roche said.

The deal is a "transformative transaction" for Roivant, Leerink Partners analyst David Risinger wrote in a note Monday, adding that he looks forward to hearing how management plans to reinvest the cash. Risinger reiterated his outperform rating on Roivant shares.

Roivant shares gained 8% premarket on Monday, while Pfizer shares gained 1%. Roche's American depositary receipts were down 0.5% premarket.

More than 3 million U.S. adults have been diagnosed with inflammatory bowel disease, which includes Crohn's disease and ulcerative colitis, according to the Centers for Disease Control and Prevention.

Roivant stock soared in late June after the company released data on RVT-3101 in adults with ulcerative colitis, showing the treatment resulted in improved clinical remission of 36% at week 56, versus 29% at week 14.

Telavant was formed by Roivant and Pfizer last year to develop and commercialize RVT-3101 in the U.S. and Japan.

Roche said Monday that it is committed to starting a global phase 3 trial as soon as possible for RVT-3101. The treatment "has the potential to be the first therapy that offers both high efficacy and safety for people with inflammatory bowel disease and the convenience of an at-home, subcutaneous administration," Levi Garraway, Roche's chief medical officer and head of global product development, said in a statement.

-Eleanor Laise

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10-23-23 0836ET

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