Organon to Snap up Forendo Pharma for $954M


Aiming to expand its pipeline of candidates targeting novel treatments in women’s health, Organon (OGN) inked a deal to acquire Forendo Pharma for approximately $954 million.

Shares of OGN were down 1% in early trading Friday. (See Organon stock charts on TipRanks)

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Benefits of Acquiring Forendo

Forendo is a clinical-stage drug development company focused on treatments in women’s health. Its main investigational clinical compound, FOR-6219, currently entering Phase 2 clinical development, has a potential ability to act locally in the target tissues without impacting systemic hormone levels.

This factor gives it an edge against currently available treatments, making it a potential long-term treatment option for endometriosis.

Furthermore, Forendo’s pipeline includes a preclinical program targeting polycystic ovarian syndrome (PCOS). PCOS is one of the most common women’s health concerns and currently does not have any approved therapies, thereby presenting another opportunity for Organon.

With the acquisition of Forendo, Organon will be able to build an enhanced pipeline of candidates for novel treatments in women’s health with unmet medical needs.

Details

According to the terms of the deal, Organon will pay $75 million upfront payment and assume $9 million of Forendo’s debt. Furthermore, Forendo is entitled to incremental payments of up to $270 million, subject to the achievement of certain development and regulatory milestones, coupled with commercial milestone payments of up to $600 million.

The acquisition is expected to close in December 2021, subject to certain regulatory approvals.

Management Weighs In

Organon CEO Kevin Ali commented, “Organon is dedicated to delivering medically significant women’s healthcare interventions, prioritizing disease areas based on her unmet needs. Endometriosis is among our highest priority areas of focus.”

Forendo CEO Risto Lammintausta highlighted, “This is a great opportunity for Forendo to join forces with a larger organization capable of accelerating the development of our innovative product candidates through mid and late-stage trials and, once approved, make the resulting drugs available to patients suffering from endometriosis and PCOS worldwide.”

Wall Street’s Take

Consensus among analysts is a Moderate Buy based on three Buys and two Holds. The average Organon price target is $39, which implies 12.8% upside potential to current levels.

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