Novartis buys US gene therapy group AveXis for $8.7bn
Deal is latest strategic move by Swiss drugmaker’s new chief executive
Swiss pharmaceuticals company Novartis plans to spend $8.7bn buying AveXis, a US specialist in spinal muscular atrophy, a childhood wasting disease, in the latest strategic move by its new chief executive.
Vas Narasimhan, who took over as Novartis’s boss in February, said Nasdaq-listed AveXis, which has yet to report any revenues, would significantly increase Novartis’s strength in gene therapies, and offered “multibillion sales potential”.
The new Novartis boss has embarked on an acquisition spree as part of his plans to boost Novartis’s core business areas of innovative prescription medicines, as well as oncology, generics and eyecare.
The cash offer came less than two weeks after Novartis’s sale to GlaxoSmithKline of its 36.5 per cent stake in their consumer health joint venture, which raised $13bn. Mr Narasimhan said proceeds from that deal would be used to fund the latest transaction.
“We have been of course regularly scanning and looking for value-creative ‘bolt on’ acquisitions in our main therapeutic areas,” he said on Monday.
Novartis is offering $218 per share for Chicago-based AveXis, which was listed in February 2016 and specialises in developing treatments for patients with rare and life-threatening neurological genetic diseases. That represented a premium of 88 per cent over Friday’s closing price of $115.91.
The Swiss group expected AveXis to contribute “strongly” to operating income and earnings from 2020. The acquisition will help compensate in coming years for the expiry of patents on some of Novartis’s best-selling existing medicines.
But Stefan Schneider, analyst at Vontobel in Zurich, said the “blockbuster” potential of AveXis’s gene therapies had yet to be proven and the price premium Novartis was offering assumed “flawless execution” of the deal.
The latest deal follows the $3.9bn acquisition last October — shortly after Mr Narasimhan’s appointment was announced — of Advanced Accelerator Applications, the French nuclear medicines business. Novartis has also won US approval to develop a new chimeric antigen receptor therapy, known as Car-T, for children and young adults with a type of leukaemia.
Mr Narasimhan said the price offered for AveXis was in line with similar deals in the sector over the past decade, and represented an “attractive” deal given Novartis’s assessment of AveXis’s product pipeline and gene therapy capabilities.
Novartis believed AveXis’s AVXS-101 treatment had the potential to be “the first-ever one-time gene replacement therapy” for spinal muscular atrophy (SMA). Nine out of 10 infants with SMA Type 1 do not reach their second birthday or are permanently dependent on ventilators.
“Bringing AveXis on board would support both our ambition to be a leader in neurodegenerative diseases and our neuroscience franchise priorities to strengthen our position in devastating paediatric neurological diseases such as SMA,” said Paul Hudson, head of Novartis’s pharmaceuticals division.
Sean Nolan, AveXis’s chief executive, said Novartis’s global operations and resources “should expedite” the use of its gene therapies around the world.
Mr Narasimhan was previously head of drugs development at Novartis. His predecessor, Joe Jimenez, had restructured and streamlined the Basel-based drugmaker following its rapid global expansion through mergers and acquisitions under his predecessor Daniel Vasella.
Novartis’s shares were little changed at SFr78.94 in early Zurich trading.