Roivant disposal deal good for sentiment and cash burn, says Jefferies

After Organon (OGN) announced an agreement to acquire Dermavant, a Roivant (ROIV) company, for “up to” $1.2B, Jefferies said “upon closer look it’s actually $175M upfront” plus a $75M payment on AD approval, expected in Q4 2024, and $950M in commercial milestones that are spread out over time. However, “importantly,” this removes $200M-plus a year in OpEx spend that Roivant books on its profit/loss statement, which should more than accommodate the significant uptick in R&D spend for Immunovant’s (IMVT) pivotal programs and the firm calls “more important to us than upfront economics.” The firm, which calls the Dermavant disposal “good for overall sentiment and cash burn,” has a Buy rating and $18 price target on Roivant shares.