Novartis Pursuit of Cytokinetics Cools
Swiss pharma giant had been expected to clinch a deal for the heart-drug developer as soon as this week
Novartis NOVN -0.25%decrease; red down pointing triangle has backed away from its pursuit of Cytokinetics CYTK -22.31%decrease; red down pointing triangle, putting a damper on the prospects of a deal for the promising heart-drug developer.
The Swiss drug giant had been closing in on a purchase of South San Francisco-based Cytokinetics, with an agreement expected as soon as this week, The Wall Street Journal reported Monday. But Novartis, which had been pursuing the biotech for several months, backed away sometime in the past day or two, according to the people.
After jumping on the Journal report, Cytokinetics shares have been falling as the days ticked by without an announcement, on fears there wouldn’t be a deal. Its market value now stands at just above $8 billion.
Cytokinetics has been running a sale process, and it is possible Novartis or another suitor could re-emerge or the company could pursue another type of deal like a capital raise.
Cytokinetics is focused on so-called muscle activators and inhibitors as potential treatments for people with debilitating diseases in which muscle performance is compromised, according to its website.
The company’s shares soared last month on the back of successful data for its experimental heart drug that treats hypertrophic cardiomyopathy, the most common genetic heart disease, which can lead to blood clots, strokes and, in rare cases, death.
Cytokinetics reported that the drug worked safely shortly before the new year, sending its stock up more than 60% that day.
Truist analysts forecast the Cytokinetics drug would generate up to $3.6 billion in sales by 2032.
Cytokinetics shares had been buoyed in recent weeks by reports of a possible sale of the company.
Novartis, one of the world’s biggest pharmaceutical companies by sales, faces declining revenue later this decade after several products lose patent protection, including heart drug Entresto, which accounted for $4.6 billion of Novartis’s $50.5 billion global sales in 2022.
Its shares have been rising lately, thanks in part to positive study results for drugs including Kisqali for breast cancer and the rollout of cancer radiotherapy Pluvicto.
Cytokinetics’ cardiomyopathy therapy could complement drugs like the cholesterol treatment called Leqvio that Novartis acquired as part of a nearly $10 billion deal for the Medicines Company in 2020.
But Novartis Chief Executive Vasant Narasimhan said in an interview on CNBC on Tuesday that “Our overall M&A strategy…is really to focus on sub-$5 billion assets.”