- Novartis agreed to acquire Chicago-area company AveXis for $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.
- AveXis, incorporated in 2010, sold shares in an initial public offering in 2016 at $20 a share. CEO Sean Nolan is a former executive at InterMune and Ovation Pharmaceuticals.
- The transaction is Novartis' second deal to advance in gene therapy this year—and the first led by new CEO Vas Narasimhan. The Swiss drugmaker is redeploying some of the $13 billion in proceeds from the sale of its stake in a consumer-health joint venture to partner GlaxoSmithKline to gain more firepower in prescription medicines before some of its existing best-sellers lose patent protection.
- 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, according to Novartis.
- Roche Holding and Biogen are other drugmakers that may be interested in acquiring the U.S. company, Biren Amin, an analyst for Jefferies in New York, said in a report.
- 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. The first medication for the disease, Biogen's Spinraza, won approval less than a year ago. Babies with the most severe form of the disease typically die before age two.
- The first gene therapy approved in Western Europe, UniQure's Glybera, turned out to be a flop. The company withdrew it from the market last year and is shifting its focus to hemophilia treatments.
- AVXS +81.23%, BOLD +9.57%, ADVM +7.25%, ABEO +7.14%, CRSP +5.27%, NTLA +5.04%, SGMO +4.42%, BLUE +4.39%, VYGR +3.34%, EDIT+3.01%, IONS +1.77%, ONCE +1.60%, ALNY +1.13%; other gene therapy stocks: QURE, SELB, AGTC, NITE
AveXis to be acquired by Novartis (NVS) for $218/share in cash, or approximately $8.7 bln
AveXis has several ongoing clinical studies for the treatment of spinal muscular atrophy (SMA), an inherited neurodegenerative disease caused by a defect in a single gene, the survival motor neuron (SMN).
- Assuming mid 2018 completion, the acquisition impact would be slightly negative to Core Operating Income in 2018 and 2019, mainly due to R&D investments. As of 2020, Novartis would expect the acquisition impact to strongly contribute to Core Operating Income and Core EPS accretion driven by a significant increase in sales.
- Novartis is permitted under specified antitrust related circumstances to extend the Outside Date to October 6, 2018. If Novartis elects to extend the Outside Date, the offer price will increase from $218 per share to $225 per share in cash.
Completion of the transaction is expected in mid-2018, pending the successful completion of the tender offer and all other closing conditions.
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