BASEL, Switzerland - Organon (NYSE: OGN), a global healthcare company, has agreed to acquire Dermavant Sciences Ltd., a subsidiary of Roivant Sciences (NASDAQ: NASDAQ:ROIV), in a deal potentially worth up to $1.2 billion. The acquisition will enhance Organon’s dermatology portfolio in the U.S. by adding VTAMA® (tapinarof) cream, 1%, a non-steroidal topical treatment for plaque psoriasis in adults.
VTAMA cream was approved by the U.S. Food and Drug Administration (FDA) in May 2022 and is currently under FDA review for treating atopic dermatitis in adults and children aged two and older. The Prescription Drug User Fee Act (PDUFA) action for this additional indication is expected in the fourth quarter of 2024.
Organon’s CEO, Kevin Ali, expressed confidence in the merger’s ability to bring VTAMA cream to the millions living with plaque psoriasis and potentially atopic dermatitis, emphasizing the company's commitment to improving women's health. Matt Gline, CEO of Roivant, highlighted the transaction's potential for both companies, noting that it preserves meaningful economics tied to VTAMA's future success.
The terms of the transaction include an upfront payment of $175 million, a $75 million milestone payment upon regulatory approval in atopic dermatitis, and up to $950 million for achieving certain commercial milestones. Organon will also pay tiered royalties on VTAMA cream's net sales.
The acquisition, expected to close in the fourth quarter of 2024, is subject to customary conditions and Hart-Scott-Rodino Antitrust Improvements Act review. Organon will assume approximately $286 million in Dermavant liabilities, and the transaction is not anticipated to impact Organon’s full-year 2024 non-GAAP guidance ranges. The deal is projected to be modestly dilutive to Adjusted EBITDA in 2025 but accretive in 2026.
VTAMA cream has demonstrated safety and efficacy in randomized, double-blind, vehicle-controlled trials for psoriasis and is being evaluated for atopic dermatitis in Phase III clinical studies.
Organon’s acquisition of Dermavant is based on a press release statement and aims to expand its dermatology capabilities, particularly in the U.S., while adhering to its mission to improve women's health.
In other recent news, Organon & Co. has reported a modest 2% revenue increase in its Q2 2024 earnings call, totaling $1.6 billion, with its women's health and biosimilars franchises showing growth of 3% and 22% respectively. However, the established brands franchise experienced a minor decline. For the full year 2024, Organon expects to achieve revenue in the range of $6.25 billion to $6.45 billion, marking a growth forecast of 2% to 4.7% at constant currency.
In a recent move, Organon expanded the distribution of its migraine medication, Emgality, to additional markets including Canada, Colombia, Israel, South Korea, Kuwait, Mexico, Qatar, Saudi Arabia, Taiwan, Turkey, and the United Arab Emirates. This expansion is part of Organon's ongoing commitment to addressing the higher incidence of migraines in women.
Despite these developments, JPMorgan downgraded Organon's stock from Neutral to Underweight, citing challenges in finding growth and potential intellectual property issues. However, the firm raised its price target to $20 from the previous $18, suggesting a tempered expectation of future performance. These are among the recent developments for Organon.
InvestingPro Insights
As Organon (NYSE: OGN) gears up for its strategic acquisition of Dermavant Sciences Ltd., investors are closely monitoring the company's financial health and market performance. Organon's commitment to expanding its dermatology portfolio is supported by solid financial indicators. The company boasts a market capitalization of approximately $5.29 billion, reflecting its significant presence in the healthcare industry.
Two key metrics stand out for Organon: a low Price/Earnings (P/E) ratio and a strong dividend yield. The current P/E ratio is at 5.27, which drops even lower to 4.83 when adjusted for the last twelve months as of Q2 2024. This suggests that Organon's stock may be undervalued relative to its earnings, which could be attractive to value investors. In addition, the company's dividend yield as of late 2024 stands at a robust 5.45%, signaling a substantial return to shareholders through dividend payments.
An InvestingPro Tip to consider is Organon's high shareholder yield, which is a testament to its commitment to returning value to its investors. Moreover, the company is trading at a high Price/Book multiple of 36.74 as of Q2 2024, indicating that the market recognizes the value of its assets and future growth prospects.
For investors seeking additional insights, there are 7 more InvestingPro Tips available for Organon, including detailed analyst predictions and profitability assessments. These tips can provide a deeper understanding of Organon's market position and future potential, especially as the company navigates the Dermavant acquisition and looks to bring new treatments to the market.
As Organon continues to make strategic moves to enhance its product offerings and strengthen its market position, these financial metrics and InvestingPro Tips can help investors make informed decisions. To explore further, interested parties can find additional InvestingPro Tips by visiting https://www.investing.com/pro/OGN.
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