Novartis AG agreed to acquire AveXis Inc for US$8.7 billion to gain a promising drug to treat a rare disease that afflicts infants, hastening a shift toward gene therapy and precision medicines.
Shareholders of the Bannockburn, Illinois-based company would receive US$218 a share in cash in a tender offer, Novartis said in a statement yesterday.
The price is 88 percent above where AveXis closed on Friday.
The transaction is Novartis’ second deal to advance in gene therapy this year — and the first led by new chief executive officer Vas Narasimhan.
The Swiss drugmaker is redeploying some of the US$13 billion in proceeds from the sale of its stake in a consumer-health joint venture to partner GlaxoSmithKline PLC to gain more firepower in prescription medicines before some of its existing best-sellers lose patent protection.
“Our goal is to build on a core of medicines as a medicines company powered by data and digital,” Narasimhan said in a conference call with investors. “A deal like this fits right in that sweet spot.”
AveXis is developing a product to treat spinal muscular atrophy, an inherited neurodegenerative disease caused by a defect in a single gene, which shows the potential to become a blockbuster, a Novartis statement said.
In buying AveXis, the Swiss drugmaker is also gaining the company’s AVXS-101 product to address a rare disease. Like gene therapies, such treatments command high prices that have sparked interest even from unexpected players in the industry.
AveXis also has valuable manufacturing and research capabilities that would give its Swiss buyer a platform alongside its research on chimeric antigen receptor T-cell therapy (CAR-T) in cancer “to advance a growing pipeline of gene therapies across therapeutic areas,” Narasimhan said.
Novartis’ Kymriah won US regulatory approval in August last year, making it the first drug approved from a new class of treatments called CAR-Ts that have been heralded as a promising approach to treating and potentially curing cancers as well as genetic conditions such as blindness. Like other gene therapies, it is used only once on a patient, and thus carries a high price tag — US$475,000, in the case of Kymriah.
AVXS-101 helped a small group of babies with spinal muscular atrophy hit development milestones at a rate previously unseen, a study showed in November last year.
The first medication for the disease, Biogen Inc’s Spinraza, won approval less than a year ago. Babies with the most severe form of the disease typically die before age two.
“This acquisition makes strategic sense,” Vontobel AG analyst Stefan Schneider wrote in a note to clients.
Novartis’ drugs Gilenya and Afinitor would probably face competition from cheaper generics next year — about the same time that AveXis’ first experimental drug might reach the market, Schneider said.
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