This $5 Billion Biotech Home Run Took Less Than a Year

livemint.com:

You can’t completely blame Pfizer’s executives, yet Roche’s $7 billion acquisition of a bowel-disease treatment that it owned until last year isn’t a great look. In a deal that now feels like a biotech version of “Moneyball," Roivant announced it was selling an asset that only 11 months ago it got for free from Pfizer. (The Wall Street Journal had reported the talks back in July).

Big pharma companies focused on the drug industry equivalent of free agent signings will often overlook one of their own hot prospects. In fact, Republican presidential candidate Vivek Ramaswamy founded Roivant on the idea that pharma’s trash can be another company’s treasure. But this one became an almost instant All-Star.

Pfizer out-licensed the monoclonal antibody to Roivant back in December with the idea that the biotech would shoulder the heavy costs of developing the drug, which targets a protein linked to inflammation called TL1A, while Pfizer would hold on to a 25% equity stake. The speed at which the drug went from Pfizer to Roivant and then to Roche stunned even Wall Street veterans long accustomed to seeing pharma pass on promising compounds. Pfizer certainly didn’t anticipate one of its big pharma rivals swooping so quickly.

Barclays analyst Carter Gould had an awkward exchange with Pfizer management during its second quarter earnings call after The Wall Street Journal reported the Roche talks: “You out-licensed your TL1A late last year. Your partner then turns around and sells it for quite substantially more…. Were Pfizer shareholders well served by this course of events?" In response, Pfizer Chief Business Innovation Officer Aamir Malik said that the deal was part of a research and development prioritization decision and that,