Novartis to buy gene therapy company AveXis for $8.7 billion

Novartis announced Monday an agreement to acquire gene therapy company AveXis for $218 per share, or a total of $8.7 billion, gaining the latter's lead product candidate AVXS-101 for the treatment of spinal muscular atrophy (SMA). The transaction, which represents a premium of 88 percent to AveXis' closing share price on April 6, is expected to close in mid-2018 having been approved by the boards of both companies.

Vas Narasimhan, CEO of Novartis, said "we believe AVXS-101 could create a lifetime of possibilities for the children and families impacted by this devastating condition…and have a multi-billion dollar peak sales potential." The Swiss drugmaker noted that a US filing for the therapy, which has the potential to be the first-ever one-time therapy for SMA by replacing the defective SMN1 gene, is expected in the second half of 2018, with approval and launch next year.

Phase I study results detailed last year showed that all 15 infants treated with AVXS-101 were event free at 20 months compared with an event-free survival rate of 8 percent in an historical cohort. The therapy has been granted FDA orphan drug designation for the treatment of SMA, as well as breakthrough therapy status for SMA Type 1. Meanwhile, AVXS-101 has PRIME designation in the EU and Sakigake in Japan.

Biogen and Ionis Pharmaceuticals' Spinraza (nusinersen) gained FDA approval at the end of 2016 for use in children and adults with SMA, making the drug the first treatment approved in the US in this indication. Spinraza was authorised last year in Europe for the treatment of 5q SMA, making it the first therapy authorised in the region for the condition.

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"The acquisition would also accelerate our strategy to pursue high-efficacy, first-in-class therapies and broaden our leadership in neuroscience," Narasimhan remarked, adding "we would gain with the team at AveXis another gene therapy platform, in addition to our CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas."

Novartis indicated that the purchase of AveXis also "offers a valuable gene therapy platform" that has potential beyond SMA, as well as "scalable manufacturing" to accelerate potential future gene therapy programmes. AveXis pipeline includes products for Rett Syndrome and a genetic form of amyotrophic lateral sclerosis caused by mutations in the SOD1 gene.

"Our goal is to build on a core of medicines as a medicines company powered by data and digital,” Narasimhan said, adding "a deal like this fits right in that sweet spot." According to Novartis, the purchase of AveXis will be "slightly negative" to core operating income this year and in 2019, due to R&D costs, while it is forecast to "strongly contribute" to core operating income and core earnings per share in 2020 as sales accelerate.

Commenting on the deal, Vontobel analyst Stefan Schneider said "this acquisition makes strategic sense," noting that AVXS-101 is predicted to reach the market about the same time that Novartis' Afinitor and Gilenya face competition from generic versions.

For related analysis, see ViewPoints: Bogey on Spinraza’s radar just got a whole lot bigger.

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