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Acquisitions and Licensing Arrangements | 3 Months Ended
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Mar. 31, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions and Licensing Arrangements | Acquisitions and Licensing Arrangements Biogen Inc. (“Biogen”) In March 2025, Organon acquired from Biogen the regulatory and commercial rights in the United States for Tofidence. Tofidence, launched in the U.S. market in May 2024, is indicated in certain patients for the treatment of moderately to severely active rheumatoid arthritis, giant cell arthritis, polyarticular juvenile idiopathic arthritis, systemic juvenile idiopathic arthritis, and COVID-19. Under the terms of the agreement, Organon will pay an upfront payment of $51 million in July 2025, that is accrued in Accrued and other current liabilities as of March 31, 2025, as well as tiered royalty payments based on net sales and tiered annual net sales milestone payments of up to $45 million from a previous in-license arrangement with Bio-Thera Solutions Ltd., the product developer for Tofidence. In the first quarter of 2025, the Company recognized an intangible asset of $51 million, related to the upfront payment to Biogen, which will be amortized over 10 years. Dermavant Sciences Ltd. (“Dermavant”) On October 28, 2024, Organon acquired Dermavant, a company dedicated to developing and commercializing innovative therapeutics in immuno-dermatology. Dermavant’s novel product, Vtama, for the topical treatment of mild, moderate, and severe plaque psoriasis in adults, was approved by the U.S. Food and Drug Administration (the “FDA”) in May 2022. In December 2024, the FDA approved Vtama for the treatment of atopic dermatitis, also known as eczema, in adults and children two years of age and older. Atopic dermatitis is one of the most common inflammatory dermatological conditions in adults, presenting a higher disease burden for women compared to men. The acquisition allows Organon to further expand its existing portfolio of established brands and biosimilar dermatology treatments. Consideration for Dermavant consists of the upfront payment of $175 million and a $75 million milestone payment upon regulatory approval, which was paid in the first quarter of 2025, as well as payments of up to $950 million for the achievements of certain commercial milestones, tiered royalties on net sales, and the assumption of liabilities, including certain debt obligations, which were accounted for at fair value on the acquisition date. The transaction was accounted for as a business combination. The estimated aggregate consideration is calculated as follows:
(in millions) |  |
Cash consideration paid to Dermavant at closing |  | $ | 198 |
Fair value of contingent consideration |  | 383
Aggregate purchase price consideration |  | $ | 581 |
Contingent consideration included as part of the consideration relates to potential future milestone obligations of up to $1.025 billion, including: (i) up to $75 million in cash payable upon regulatory approval, and (ii) up to $950 million for the achievements of certain commercial milestones. The fair value of the contingent consideration recognized on the acquisition date was estimated by using the inputs disclosed in Note 11. “Financial Instruments.” The Company reassesses its acquisition-related contingent consideration liabilities each quarter for changes in fair value. The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2025. As a result, Organon recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value of intangible assets, goodwill, inventories, debts assumed, contingent considerations and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date. In the first quarter of 2025, the Company paid $75 million related to the regulatory milestone related to Vtama’s atopic dermatitis indication which was achieved during the fourth quarter of 2024 and paid $35 million related to sales-based milestones that were achieved in the fourth quarter of 2024 related to an assumed licensing agreement. In April 2025, Health Canada approved Nduvra™ (tapinarof cream), 1%, the first in a novel class of aryl hydrocarbon receptor agonists to be approved in Canada for the topical treatment of plaque psoriasis in adults. Suzhou Centergene Pharmaceuticals (“Centergene”) Due to changes in the evolving fertility landscape in China, the Company will exit their current agreement with Centergene. As a result, the Company recognized $6 million as of March 31, 2025 in Acquired in-process research and development and milestones. The Company will continue to assess and evaluate future commercial opportunities with Centergene. Eli Lilly (“Lilly”) As of March 31, 2025, Organon has $240 million accrued in Other noncurrent liabilities related to the probable sales-based milestones. In January 2025, the Company paid $20 million related to the milestones. Shanghai Henlius Biotech, Inc. (“Henlius”) In February 2025, Organon paid $10 million related to the milestone for the development of HLX11, an investigational biosimilar of Perjeta 2 (pertuzumab), which was recognized as Acquired in-process research and development and milestones in 2024. In March of 2025, the European Medicines Agency validated the marketing authorization application for HLX11. Oss Biotech Site Organon has entered into an agreement with Merck to acquire the Oss Bio-Tech manufacturing facility in the Netherlands. This agreement covers Organon’s fertility drug substance production and associated support functions. Organon will pay aggregate consideration of $25 million, of which $15 million will be paid upon closing in the third quarter of 2025 and the remaining $10 million will be paid in the first half of 2026.

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