Immunovant flashes secret data behind potential Roivant buyout, but investors see a difficult future
The “non-public information” that made Roivant want to acquire their troubled Immunovant spinout at a potentially substantial premium just became public. But neither investors nor analysts agreed with Roivant’s spin on the data, selling off shares of $IMVT by nearly 40% Thursday
Immunovant announced Tuesday that they saw a path forward for bringing their lead and only drug back into development, after safety issues forced the company to pause its only two active trials over the winter. They now plan to launch a pivotal trial for the rare disease myasthenia gravis by early 2022, while adding three mid-stage studies for other autoimmune disorders.
Central to the plan is new data from their trial for thyroid eye disease, one of two that was cut short after it appeared that patients on the high dose of their drug saw their LDL cholesterol levels rise 60%. Immunovant now says that at a low dose, patients saw similar benefits but with only “minimal” elevated LDL.
A Roivant spokesperson confirmed that these were the data that prompted the company to, in an SEC filing on March 8, that, as the controlling shareholder, they had access to confidential information and were considering buying out the remaining shares of their former subsidiary at a premium. Baird’s Brian Skorney later estimated the premium could be as high as 70% — or $2.6 billion for a company that, after its stock cratered over the winter, had a market cap of around $1.5 billion.
Roivant’s filing tipped off investors that the company was planning to go public, presaging a $7.3 billion SPAC merger last month and prompting speculation over what, precisely, the large biotech saw in its spinout.
Immunovant is competing against a small handful of biotechs to develop an anti-FcRn antibody, designed to clean up so-called auto-antibodies that can drive the immune system to attack healthy tissue. Although the thyroid eye disease trial was aborted too early to reach statistical significance, Immunovant says they saw a 62% reduction in antibodies in the low dose, compared to 80% in the high dose.
“Our view is that makes us competitive in every indication,” a Roivant spokesperson said of Immunovant’s low-dose data.
Yet many investors came to the opposite conclusion. After Immunovant released their update, shares of $IMVT fell 37%, from $15.16 to $9.40.
Although Roivant saw potential in the low dose, the new update revealed that Immunovant conducted an analysis across their various trials and confirmed what had previously only been a suspicion: That the company’s drug led to increased cholesterol levels. They also acknowledged that the drug appeared less effective in the thyroid eye disease than they had hoped.
Argenx, developing a rival anti-FcRn approach, has noted that they’ve seen no such cholesterol-elevating effects.
“All considered, we do think this dosing consideration will make it somewhat more difficult for IMVT-1401 to compete with argenx’s efgartigimod and other FcRn assets, clouding the picture,” Baird’s Brian Skorney wrote in a note to investors.
SVB Leerink’s Thomas J. Smith similarly dropped their price target for Immunovant from $38 to $17. He said the safety data add new risks, but argued they were offset by the likelihood that Roivant steps up for a buyout.
” While no financial details have been disclosed, we expect investors will continue to weigh the likelihood and nature of any potential transaction between Roivant and IMVT,” he said. (SVB Leerink has been hired by Roivant to advise on a potential Immunovant buyout).
Immunovant said in a statement that they believe that with creative dosing and patient monitoring they can manage the effects. “These results present an opportunity for flexibility in dosing, dose intervals, and a lower-volume injection to explore in our future clinical trials,” CEO Pete Salzmann said in a statement.
They will plan those trials, though, without the CMO they hired just five months ago, Rita Jain. In addition to the IMVT-401 news, Immunovant also announced that Jain had departed and will be replaced by longtime Eli Lilly executive William Macias.