What happened
Shares of Roivant Sciences (ROIV 3.21%), a pharmaceutical company that specializes in smaller portfolio companies that it calls Vants, were up by 25.3% for the week, as of Thursday afternoon, according to data provided by S&P Global Market Intelligence. The main reason for the jump this week is the proposed $10.8 billion purchase by Merck of Prometheus Biosciences, which has a rival drug to Roivant's inflammatory bowel disease (IBD) candidate, RVT-3101, which is in phase 2 trials to treat two IBD disorders, ulcerative colitis (UC) and Crohn's disease (CD). Roivant's shares closed at $7.11 last week and hit a high of $8.97 on Wednesday. The stock's shares are up a little more than 10% this year.
So what
If Merck was willing to pay $10.8 billion for a company whose main pipeline candidate is an IBD drug, the thinking was that Roviant's RVT-3101 might be quite valuable as well. Roivant recently reported that, in a phase 2 trial, the clinical remission rate for UC was 32% and the endoscopic improvement rate was 40%. On top of that, Roivant, unlike Prometheus, already has a marketed drug in plaque psoriasis therapy Vtama and 16 programs in clinical trials to only five pipeline programs for Prometheus.
Now what
Roivant already has a collaboration with Pfizer to develop and commercialize RVT-3101. If the drug is a first-in-class therapy, as some think it may be, the company's finances should take off. According to the National Institute of Diabetes and Digestive and Kidney Diseases, between 600,000 and 900,000 people in the United States have UC. As of the third quarter in fiscal 2023, Roivant had $1.5 billion in cash. It lost $384.9 million in the quarter, compared to $306.1 million in the same period last year. It had $17.2 million in revenue in the quarter, including $9.2 million in Vtama sales.
