Novartis Bets $8.7 Billion on Gene Therapy Company
April 09 2018 - 2:43AM
Dow Jones News
By Alberto Delclaux
Novartis AG agreed to buy U.S.-based gene therapy company AveXis
Inc. for $8.7 billion, marking the first big bet by the Swiss
pharmaceutical giant's new chief as he looks to the deal table to
refresh his drug-development pipeline.
Novartis said Monday it will pay $218 for each share in
Illinois-based AveXis, an 88% premium to its closing price on April
6. Earlier this year, Novartis Chief Executive Vasant Narasimhan
agreed to cash out of its consumer health joint venture with
GlaxoSmithKline PLC -- a deal that gives him cash for what he
describes as "bolt on" deals to replenish Novartis' drug pipeline,
his key focus since taking the reins earlier this year.
That deal gives it the cash to be more flexible acquiring
promising outside medicines. Dr. Narasimhan has promised to refocus
Novartis on drug development. In a conference call Monday, he said
the AveXis deal will be partly funded by the GSK joint venture
sale.
The deal is a bet that at least one promising drug that AveXis
is developing for therapies aimed at spinal muscular atrophy will
translate into a blockbuster. AveXis is a gene-therapy company
conducting several clinical studies for the treatment of SMA, an
inherited neurodegenerative disease caused by a defect in a single
gene, Novartis said. Some form of SMA affects an estimated one out
of every 6,000 to 10,000 children born, it said.
It's also a further endorsement of gene therapy, a treatment
type Novartis has already spearheaded in the field of cancer.
"We would gain with the team at AveXis another gene-therapy
platform, in addition to our CAR-T platform for cancer, to advance
a growing pipeline of gene therapies across therapeutic areas,"
said Dr. Narasimhan.
AveXis's gene therapy candidate AVXS-101 has the potential to be
the first one-time gene replacement therapy for SMA, according to
Novartis. Dr. Narasimhan said on the conference call the drug
promised multibillion-dollar sales potential.
The payoff isn't a sure thing. Even drugs that are showing
promise in late state trials can stumble, failing to live up to
sales forecasts.
Novartis said it expects the deal to slightly hit core operating
income in 2018 and 2019, due to R&D investments. It said the
acquisition should strongly benefit core operating income and core
earnings a share as of 2020, however, driven by an increase in
sales. Novartis said it expects the deal to close by the middle of
the year.
(END) Dow Jones Newswires
April 09, 2018 03:28 ET (07:28 GMT)
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