Roche has agreed to acquire Telavant Holdings for up to $7.25 billion, in a deal designed to bolster the buyer’s pipeline with an inflammatory bowel disease candidate that could potentially also be developed for “multiple” other diseases, the companies said today.

Through the acquisition, Roche will gain development, manufacturing, and commercialization rights in the U.S. and Japan for RVT-3101, a novel tumor necrosis factor-like cytokine 1A (TL1A)- directed antibody. RVT-3101 is being developed for inflammatory bowel disease (IBD), including ulcerative colitis (UC) and Crohn’s disease.

RVT-3101 has been shown to modulate the severity of inflammation and fibrosis by stimulating the TH1 and TH17 pathways, in addition to activating fibroblasts. Because of its novel method of action targeting both inflammation and fibrosis, Roche and Telavant reason, RVT-3101 can provide greater efficacy against IBD and can also be developed for multiple diseases, though the companies did not specify those in their announcement.

Telavant was jointly formed by Roivant and Pfizer last year to develop and commercialize RVT-3101 in the U.S. and Japan. Telavant is 25%-owned by Pfizer, which holds commercialization rights to the drug outside of those countries and previously sought to develop RVT-3101 under the name PF-06480605.

The remaining shares of Telavant are owned by Roivant Sciences, a creator of more than 20 portfolio companies or “vants,” each specializing in developing therapies for a specific therapeutic area. Telavant’s focus is inflammatory and fibrotic diseases. Roivant’s founder, Vivek Ramaswamy, is seeking the Republican Party’s nomination for U.S. president next year.

Roivant investors sent shares declining 5.5% in midday trading, from $9.66 to $9.13 as of 12:48 p.m. ET. Roche shares on the SIX Swiss Exchange inched down nearly 1%, from an even CHF 239 ($267.53) to CHF 237.55 ($266.48).

“We’ve been of the mindset that Roche was more likely than not to do a bolt-on deal, rather than something transformative,” Emily Field, a director and head of European pharmaceuticals equity research at Barclays, wrote in a research note, according to Bloomberg News. “The real question is, is this enough to improve sentiment? It’s a start, but we think investors want to see more out of Roche’s internal pipeline as well.”

Added Bloomberg Intelligence pharma analyst John Murphy: “The price tag looks high given it represents just U.S. and Japan rights to the drug in a field where the Swiss company has limited experience.” Murphy noted that RVT-3101 has shown higher rates of remission in Phase II IBD studies compared to other recently acquired assets.

Roche is the third company to acquire a TL1A candidate this year for autoimmune and gastrointestinal indications. Merck inherited PRA023 (which it has since renamed MK-7240) when it acquired Prometheus Biosciences for $10.8 billion, in a deal completed in June. On October 4, Sanofi said it had agreed to co-develop Teva Pharmaceutical Industries’ TEV574 for UC and Crohn’s disease for up to $1.5 billion—including €469 million (about $500 million) upfront and up to €940 million ($1.001 billion) in development and launch milestones.

Pfizer investors viewed the acquisition more favorably, with its shares climbing nearly 1.5%, from $30.65 to $31.10 as of 12:48 p.m.

Drawn by positive data

Roche appears to have been drawn to RVT-3101 based on positive data from the Phase IIb TUSCANY-2 trial (NCT04090411), a global, randomized, double-blinded, placebo controlled trial assessing the drug in patients with moderate to severe UC.

TUSCANY-2 generated the first long-term, dose finding data in a large patient population—245 participants—with the study’s maintenance treatment phase following induction resulting in improved clinical remission (36% at week 56) and endoscopic improvement (50% at week 56) at the proposed Phase III dose, administered subcutaneously every month. The maintenance dosing period of RVT-3101 also showed a favorable safety profile across all patients, Telavant and Roche said.

RVT-3101 also generated positive data from the earlier Phase IIa TUSCANY trial (NCT02840721), in which the drug showed an acceptable safety profile and statistically significant endoscopic improvement (38.2%) 14 weeks after treatment in participants with moderate to severe UC—a result “warranting further study in a larger participant cohort,” researchers concluded in a 2021 study.

“We strongly believe this novel TL1A directed antibody has the transformational potential to make a significant difference for patients living with inflammatory bowel disease and potentially other diseases,” Roche Group CEO Thomas Schinecker said in a statement.

Schinecker, who succeeded now-Chairman Severin Schwan as CEO in March, has sought to broaden the company’s pipeline beyond blockbuster cancer drugs that are facing competition from cheaper biosimilars, such as Avastin® (bevacizumab) and Herceptin® (trastuzumab) and Rituxan® (rituximab).

While RVT-3101 is “not exactly cheap at first glance”, it could become a best-in-class drug for inflammatory bowel disease, according to unnamed analysts at Zuercher Kantonalbank quoted by Reuters.

Roche agreed to pay Roivant $7.1 billion upfront for Telavant, and $150 million more tied to initiating a Phase III trial of RVT-3101 in UC, a milestone disclosed in a Roivant regulatory filing.

“Roche is committed to starting a global Phase [III] trial for RVT-3101 as soon as possible to bring this promising therapy to the patients suffering from inflammatory bowel disease,” the pharma giant said in its announcement.

Following the closing of the acquisition deal, Roche will have an option to enter into a global collaboration with Pfizer on PF-07261271, a Pfizer next-generation p40/ TL1A directed bispecific antibody, currently in a Phase I trial (NCT05536440) in IBD.

Roche’s acquisition of Telavant is expected to be completed later in the fourth quarter or in the first quarter of 2024, subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions.

Alex Philippidis is Senior Business Editor of GEN.

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