Roche to Pay $7.1 Billion for Telavant to Boost Its Pipeline

Roche Holding AG will pay $7.1 billion to acquire Telavant Holdings, Inc. in a bid to shore up its pipeline of experimental medicines.

(Bloomberg) — Roche Holding AG will pay $7.1 billion to acquire Telavant Holdings, Inc. in a bid to shore up its pipeline of experimental medicines.

The Swiss pharmaceutical company said Monday it will gain rights in the US and Japan to develop and market RVT-3101, a promising new therapy for treating inflammatory bowel disease, or IBD. Roche will also provide a near-term milestone payment of $150 million. 

The antibody therapy developed by Telavant, which is owned by Roivant Sciences Ltd. and Pfizer Inc., targets both inflammation and fibrosis, giving it the potential to be applied in multiple other diseases, Roche said. The drug, which can be delivered at home via injection, has shown it can be used safely by patients in clinical trials so far.

The deal is the company’s largest acquisition since buying InterMune Inc. in 2014. Roche has come under pressure to improve its pipeline with medicines it can commercialize soon as a windfall of revenue from products used in the Covid-19 pandemic comes to an end. The drugmaker said it will start a global third-phase trial for RVT-3101 as soon as possible.

“Roche is determined to support its growth rate beyond 2025 by acquiring late-stage assets,” wrote Stefan Schneider, an analyst at Bank Vontobel. RVT-3101 may have blockbuster potential because the medical need in IBD is high, he said.

Inflammatory bowel disease is a group of chronic gastrointestinal disorders that affects almost 8 million people worldwide and most of them, some 80%, cannot find lasting treatments. 

Roivant sees a $15 billion market for inflammatory bowel disease in the US alone, according to an investor presentation in January. 

Shares of the Swiss drugmaker were little changed Monday morning. The stock plunged last week after the company didn’t upgrade its financial targets and reported declining quarterly revenue.

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Chief Executive Officer Thomas Schinecker faces a two-pronged challenge: the loss of billions of dollars of pandemic-linked revenue at the same time that some clinical trial stumbles have left many investors questioning the company’s ability to deliver on its highest-profile projects.

Schinecker has pledged to improve the drugmaker’s research and development productivity. Transactions are “not a must” and the existing pipeline and portfolio will be able to fuel growth, Schinecker said in an interview with Bloomberg Television recently.

“For us it’s important if we look at early-stage deals or late-stage deals that it make sense from a scientific perspective and it has to make sense from a financial perspective,” Schinecker said.

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RVT-3101 is an antibody that works by blocking a protein called TL1A that’s thought to play a role in autoimmune disease. Interest in the drug class has risen sharply since Merck & Co. edged out competitors, including AbbVie Inc. and Bristol-Myers Squibb Co., in April to buy Prometheus Biosciences Inc. for $10.8 billion, primarily for its IBD treatment, which is expected to generate 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 and Pfizer owns the rest. 

Roivant attracted interest from several large drug companies wanting to purchase a mid-stage drug in the potentially lucrative immunology treatment area. Sanofi agreed earlier this month to pay Teva Pharmaceutical Industries Inc. as much as $1.5 billion to help develop and sell its experimental medicine for inflammatory bowel disease. 

Roivant released data at the end of June showing that its treatment was more effective than previously thought.



–With assistance from Lisa Pham and Allegra Catelli.

(Updates with shares in eighth paragraph)

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