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Novartis has agreed to buy Avidity Biosciences, a biotech focused on rare diseases, for $12bn, in the biggest acquisition by the drugmaker in more than a decade.
The deal, at $72 a share is a 46 per cent premium to the company’s closing price on Friday. It will be Novartis’ biggest acquisition under the tenure of longtime chief executive Vas Narasimhan. The acquisition gives the company, which has net cash, an enterprise value of $11bn.
Narasimhan said two of the three potential drugs in Avidity’s late-stage pipeline have the potential to reach annual peak sales of many billions of dollars, while the third would generate between $500mn and $1bn of revenue in its peak year.
Novartis has been on an acquisition spree as it seeks to offset patent cliffs in leading drugs this year.
“These are late-stage assets that we believe can launch in this pre-2030 period. In our minds, we want to both bolster the next five years, importantly, as we know we have [patent] expiries coming in the early 2030s,” he told the Financial Times. “Everything we can do to bring assets that can launch before then — and bolster that 2030 to 2040 growth profile — is something we’re prepared to do.”
Talks between Novartis and Avidity were first reported by the Financial Times in August.
Narasimhan said the drugs to treat muscular dystrophy — a potentially fatal muscle-wasting disease — were a “complete strategic fit” because Novartis already sold medicines for neuromuscular diseases, such as Zolgensma, a gene therapy for spinal muscular atrophy. The company would be able to use the same sales force for these drugs.
Shares in Avidity closed at about $49 a share on Friday, giving the San Diego-based biotech a market value of nearly $6.7bn.
Avidity will spin off its cardiovascular programmes into another company as part of the deal.
Novartis expects the deal to increase its compound annual growth rate between 2024 and 2029 from 5 to 6 per cent. But the deal will dilute profitability by 1 to 2 percentage points over the next few years. It will not affect this year’s guidance.
In September, Avidity reported positive mid-stage trial results from its lead drug Del-zota, which is part of a new class of therapeutics that uses RNA. The company plans to submit an application for regulatory approval before the end of the year.
Novartis last month bought cardiovascular biotech Tourmaline Bio for $1.4bn. Earlier this year, it also acquired heart drug biotech Anthos Therapeutics for up to $3.1bn from Blackstone’s life sciences arm, and struck a deal of up to $1.7bn for kidney disease biotech Regulus Therapeutics.
It has also struck a collaboration worth up to $5.2bn for rights to a cardiovascular drug from Chinese company Argo Biopharma.
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