Roivant rewrites the Spac script, again

After revealing plans to buy one of its holdings out of a Spac, Roivant itself moves towards a blank-cheque company listing.

Just when it seemed that Immunovant, the Spac poster child, was about to disprove the rationale behind this business model, its parent company, Roivant, has moved to rewrite the script by gaining a private listing of its own – via a Spac.

The deal will give Roivant another $556m, to bring net cash up to $2.3bn. However, anyone thinking that this is a sign of Vivek Ramaswamy relinquishing control of Roivant will be in for a shock: even after the complex quadripartite Spac transaction that will give it a public listing, Roivant will be 86% held by the investors who currently own it privately.

Thus the main purpose of reversing into the special-purpose acquisition company currently known as Montes Archimedes Acquisition Corp appears to be to value Roivant publicly by listing a minority stake. The deal also allows cash reserves to be topped up, and Silicon Therapeutics, a separate entity being acquired, to be integrated.

Roivant had announced a $450m all-share deal to acquire Silicon, an AI business, in February. Former Silicon holders will now own 4.6% of the listed entity, with current Montes owners on 5.6% and new investors in a $200m Pipe financing on 2.7%. The Spac is sponsored by Patient Square Capital, which along with key Roivant holders has agreed not to sell 50% of its stake for up to three years.

Montes’s current cash will be added to the $200m Pipe, and net of an impressive $55m of transaction costs this will boost Roivant’s current gross balance of $2.1bn.

In September 2019 Roivant struck a deal with Sumitomo that brought in $3bn up front, so it will not go unnoticed that the company appears to have burned through roughly $1bn in the space of 20 months. Sumitomo had bought Roivant’s stakes in Urovant, Myovant, Enzyvant and Altavant, and under the Spac deal the Japanese group gives up rights to opt in to additional Roivant-controlled entities.

Sources of cash
Spac cash in trust at Montes Archimedes $411m
Pipe financing $200m
Uses of cash
Cash to Roivant balance sheet $556m
Expenses $55m

One of the interesting things about a Spac transaction is that it lays bare, for regulatory compliance reasons, the precise sources of funding and resulting equity shares above.

It also details the precise ownership status and attendant obligations of the transaction’s subject. Thus this deal shines a light into the Roivant stable of companies, around which there had previously been a little less clarity.

Thus roadshow documents appear to stress that the private Dermavant, and its phase 3 AhR agonist tapinarof, is perhaps Roivant’s most important near-term asset. Roivant’s in-house discovery technology, including such assets as a Kras G12D degrader, is interesting but early stage.

Meanwhile, Immunovant is Roivant’s most valuable publicly traded investment, but is mired in a clinical hold. The Spac deal has not changed Roivant’s desire to buy back the large minority Immunovant stake it does not already own.

Once the Spac deal closes, which is guided for the third quarter, Roivant’s business of buying in and selling on pharma assets will likely continue much as it has up to now. But this time in the full glare of a public listing.

Roivant's stable of businesses
Company Stake* Selected projects Notes
Immunovant 54%** IMVT-1401 On clinical hold; milestones & royalties to Hanall Biopharma
Arbutus 32%** AB-729 Royalties on sales by Genevant
Sio Gene Therapies 29%** Axo-Lenti-PD NA
Dermavant 86% Tapinarof Milestones to Glaxosmithkline & Welichem
Aruvant 80% ARU-1801 Milestones & royalties to Cincinnati Children's Hosp
Small-mol disc 60% Protein degrader tech Milestones to Oncopia, milestones & royalties to Uni of Michigan
Genevant 69% LNP tech Arbutus owns a large minority stake
Lysovant 99% LSVT-1701 Milestones & royalties to Intron Biotechnology
Kinevant (namilumab) 88% Namilumab Milestones & royalties to Takeda
Kinevant (gimsilumab) 99% Gimsilumab In ph2 for Covid-19-associated ARDS
Affivant 100% AFM32 Preclinical solid tumour project
Cytovant 68% CVT-TCR-01 Preclinical oncology project
Datavant 48% Data-management tech NA
Vantai 100% In silico discovery tech Integrates Silicon Therapeutics acquisition
Lokavant 86% Big data tech NA
Alyvant 94% IT tech for sales staff NA
Source: roadshow documents. Notes: *diluted; **publicly listed.

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