Roivant says its value now at $7 billion
Roivant Sciences has raised $200 million in a new funding round that makes it one of the most highly valued private firms in the history of the biotechnology industry at $7 billion, according to the company.
Previous backers, including SoftBank’s Vision Fund took part in the new financing, as did new investors NovaQuest Capital Management and RTW Investments, Roivant said Tuesday. In August 2017, the company raised $1.1 billion from the Vision Fund, which has made a series of splashy investments on internet firms and other startups but backed few other biotech ventures.
Roivant is run by 33year-old Vivek Ramaswamy, who began his career as a hedge fund analyst before founding the company. It has a unique structure predicated on Ramaswamy’s belief that pharmaceutical research is more costly than it needs to be and that executives’ incentives are misaligned.
The financing is the latest private biotechnology funding round to top $100 million, which was once rare for the industry but has become routine. Record amounts of private capital have flowed into the sector, leading to private valuations that dwarfed historic norms.
The rush of private capital has in turn led to a boom in initial public offerings. Forty-nine biotechnology companies have gone public on U.S. exchanges this year, close to the all-time record set in 2014 when 53 companies, including a Roivant subsidiary, conducted IPOs. Last week, closely watched startup Moderna Therapeutics, which boasts a similar valuation to Roivant’s new estimate, said it plans to go public soon.
Roivant acts as a parent company for 14 offshoot firms known by their suffix, “vant,” including San Francisco’s Datavant. Each smaller firm has a different area of expertise and the drug-focused units have their own proprietary research pipeline.
The companies often study compounds that larger pharmaceutical outfits have overlooked or retreated from. The company believes that approach can streamline drug research by aligning management teams’ incentives with individual research programs.
That angle attracted new investor NovaQuest Capital Management. NovaQuest, which typically backs late-stage pharmaceutical research programs, also says that drug executives don’t have adequate incentives to ensure that the research programs they oversee will succeed.
If a program fails, “you move on to the next product,” said Matt Bullard, a partner in NovaQuest. “But if you succeed, you may get a few more stock options. Roivant’s subsidiaries, he said, have provided incentives for management teams that promote the success of their individual program.
Late-stage clinical trials are more costly to run than earlier research, but are generally seen as more likely to succeed because the drug candidates have been vetted by earlier studies. But such drugs aren’t guaranteed to clear their final hurdles. Last year, Roivant unit Axovant Sciences saw its shares fall steeply after its experimental Alzheimer’s disease drug failed in a late-stage trial.
Prior to that, Ramaswamy had been hailed as a pharmaceutical wunderkind after taking Axovant public when he was only 29. The company reached a market value of as much as $2.9 billion before the trial failure, after which Ramaswamy was written off by some critics.
Roivant has sought to move on from the Axovant setback. This year, it said it planned to file for Food and Drug Administration approval for one of its drugs that treats an ultra-rare childhood disease.
It has a number of candidates in late-stage study at many of its companies, including Relugolix, a drug for endometriosis and uterine fibroids. The drug was licensed from Takeda Pharmaceutical, which has reported positive final-stage studies already in Japan. Roivant unit Myovant is researching it for markets outside of Japan and Asia.