Novartis Makes USD8.7 Billion Deal For US Gene Therapy Firm

Novartis to buy US gene therapy group Ave Xis for $8.7 billion

The US$218-per-share cash deal announced yesterday represents a 72 per cent premium to AveXis' 30-day volume-weighted average stock price.

He recently chose to sell Novartis' stake in its consumer healthcare joint venture with GlaxoSmithKline for $13 billion.

However, Novartis' appetite for deals had grown in recent months: On October 30, the pharma giant announced plans to acquire Advanced Accelerator Applications (AAA) for $3.9 billion cash, in a transaction created to expand the buyer's neuroendocrine tumor (NET) pipeline with radiopharmaceutical candidates led by the first-in-class RadioLigand Therapy (RLT) Lutathera (Lu-Dotatate).

Buying AveXis gives Novartis access to AVXS-101, an experimental gene replacement therapy for spinal muscular atrophy that could reach the USA market in 2019 if all goes according to plan.

Narasimhan said the deal would "broaden our leadership in neuroscience" and give Novartis a "gene therapy platform, in addition to our CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas".

In the ophthalmology field, Novartis agreed in January to pay $105 million upfront and up to $65 million in milestone payments for rights to Spark's Luxturna gene therapy for blindness outside the United States. NVS believes that the drug can strengthen its position as a leader of gene therapy and neuroscience.

The US Food and Drug Administration has granted AVXS-101 designation for the treatment of SMA including breakthrough therapy designation for SMA Type 1.

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Basel, Switzerland-based Novartis called the deal set to close in mid-2018 a "financially attractive acquisition with multi-billion dollar peak sales potential" even if it isn't expected to add to core operating income until 2020.

In recent months, France's Sanofi agreed to buy USA haemophilia specialist Bioverativ for US$11.6 billion and Belgium's Ablynx for €3.9 billion (S$6.3 billion).

Japan's Takeda Pharmaceutical is also considering a deal for London-listed Shire, which has a market value of about $47 billion. But Narasimhan estimated the patient population of SMA at only 23,500 in Novartis's established markets.

Thompson Rubinstein Investment Management Inc increased its stake in Novartis Ag Spon Adr (NVS) by 8.39% based on its latest 2017Q4 regulatory filing with the SEC.

SMA patients now have a treatment option in the form of Biogen's Spinraza but data on AVX-101, plus the benefits of a one-time gene therapy over ongoing dosing, suggest AveXis' product may be preferable for some people. The disease affects infants and the nervous system controlling voluntary muscle movement.

Mr Narasimhan said the transaction reflected Novartis' strategy of hunting for new medicine and new technologies to buttress the portfolio of drugs it is developing in-house.

Novartis's financial adviser on the deal was Dyal Co LLC, while AveXis's was Goldman Sachs.

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