The end of 2020 is shaping up to be a busy time for drugmaker Urovant Sciences Ltd.
The Irvine-based company said this month it is being acquired by its largest shareholder, Sumitovant Biopharma, just as it prepares to take its initial product—a drug designed to treat overactive bladder issues—to market.
Federal approval for the drug, dubbed vibegron, is expected by year’s end.
Regulatory filings indicate that Sumitovant, a subsidiary of Japanese pharmaceutical firm Sumitomo Dainippon Pharma, will pay about $142 million for the outstanding stock of the urological drugmaker (Nasdaq: UROV).
The all-cash deal places an approximately $584 million total equity value on Urovant, on a fully diluted basis, the two companies said when announcing the sale.
Sumitovant said will pay $16.25 per share for the outstanding shares in the company, a premium of 96% over Urovant’s closing price on Nov. 12, the day the deal was announced.
Sumitovant already had about a 72% stake in the Irvine company, according to regulatory filings.
The deal marks a quick end to Urovant’s run as a public company. It raised $140 million at $14 a share in its initial public offering in late 2018.
The company sported a $507 million market capitalization as of late last week.
Jobs Safe, Growing
Urovant will become a privately held subsidiary of Sumitovant.
The company will remain an Irvine-based firm once the deal closes in the first quarter of 2021, Jim Robinson, chief executive of Urovant, wrote in a note to employees on Nov. 12.
Job cuts aren’t expected.
“In fact, as before we plan to add a sales force and many critical new members to our team in preparation for the vibegron launch,” Robinson said.
“We expect that our current leadership team will remain in place, and we do not expect the agreement announced on November 12 to have any significant staffing impact,” added Cornelia Haag-Molkenteller, EVP and chief medical officer at Urovant, in a separate letter to partners and vendors.
Urovant is OC’s fastest-growing drugmaker, according to Business Journal research. It has added some 48 employees over the past year.
The company has previously stated it will hire about 155 sales representatives to commercialize vibegron, a product that Robinson touted to the Business Journal in July as being the first big breakthrough drug in the urology market in years.
“I believe this change will put our company in an even stronger position to bring vibegron to the market,” said Robinson of the sale. “Sumitovant’s investment represents the immense confidence they have in Urovant’s future success and sets us up for becoming a world-leading urology company.”
Cash Flush
Urovant hadn’t won favor on Wall Street in the two years since its IPO.
Its shares fell to around $7 twice in the past year and hovered around $8.28 on Nov. 12.
Robinson was named CEO in March, after joining the company’s board the prior year.
The company also received a $300 million loan facility, as part of a deal Sumitomo struck last November with Swiss firm Roivant Sciences, in which it paid $3 billion for ownership in five ‘Vant’ companies—including the 72% stake in Urovant.
The added financing backing is crucial for clinical-stage Urovant, which has been racing the clock to bring its product to market.
It reported cash and cash equivalents falling to $74.4 million, with $128.5 million available for drawdown on its loan facility, in its fiscal second-quarter ended September 30.
The company expects to burn $185 million to $190 million this fiscal year, according to Chief Financial Officer Ajay Bansal.
Analysts have predicted losses to continue into 2022, making the recently announced transaction welcome news for Urovant.
“Our foremost purpose is to give Urovant access to capital for its long-term business objectives and ensure focus on its mission to develop and commercialize innovative therapies for its patients,” Myrtle Potter, chief executive of Sumitovant, told industry publication FierceBiotech last week.
Vibegron’s Advantage
The FDA has set a deadline of Dec. 26 to approve Urovant’s principal therapy, vibegron.
The drug candidate could be the first breakthrough product in the category since 2012, according to Robinson, who previously oversaw the commercial launches of two of the most successful overactive bladder therapies in the U.S. as president of Americas Operations at Japanese giant Astellas Pharma Inc.
Urovant’s Phase 3 clinical trial, called “Empowur,” demonstrated its drug has met all seven key secondary endpoints. However, there was skepticism on Wall Street that the drug failed to clearly outperform generic medication and Urovant shares fell 28% to below $10 in the two weeks following the Phase 3 news.
Vibegron’s key edge is time, Robinson told the Business Journal in June. The current treatment for overactive bladder is a therapy that takes up to two months to work, he said. As a result, out of 3.5 million patients on the current therapy, about a third will drop out, he said.
By contrast, vibegron demonstrated a two-week onset of efficacy in its Phase 3 trial.
Urovant’s second product candidate, URO-902, is a novel gene therapy that it is developing for patients with overactive bladder who have failed oral pharmacological therapy.
Growth Potential
More than 30 million Americans are affected by urology problems, Urovant said in its latest annual report. In 2018, over 18 million prescriptions for oral overactive bladder medications were written for an estimated 3.3 million patients in the United States.
Urovant launched a virtual community website for potential patients over the summer, and surveys revealed 86% are bothered by overactive bladder and 68% are not currently on treatment, Robinson said on the company’s second-quarter earnings call.
“The ability to provide curated content on demand to people that are interested in learning more about how to talk to their doctor about it, as well as the potential products that are available, significantly changed in the last five to 10 years,” Robinson said, noting the company will launch a direct-to-patient campaign in 2021.
Urovant also entered into a co-promotion agreement with Sumitomo subsidiary Sunovion Pharmaceuticals in June, in which Sunovion will dedicate $60 million in marketing spend and 90 sales representatives to the commercialization of vibegron.
“We believe that Urovant will be defined by the success of this launch and our ability to advance our development pipeline,” Robinson said in his note to employees. “I hope you agree that our future is bright indeed.”
