Novartis AG (ADR) (NYSE:NVS) is reportedly planning to buy gene therapy firm AveXis in a deal reportedly valued at $8.7 billion.
The announcement by Novartis highlights its plan to place more focus on gene therapy. The decision to acquire AveXis for $8.7 billion also marks a major investment for the company and also a big step for its new CEO, Vas Narasimhan who took over the position on February 1st. It is part of the company’s new changes aimed at refreshing the drug development pipeline.
The acquisition was announced on Monday and it involves a 72 percent premium on the 30-day volume-weighted average stock price of AveXis. Narasimhan is particularly hopeful of AveXis’ drug pipeline which includes the spinal muscular atrophy (SMA) called AVXS-101. Novartis also expects the acquisition to provide access to AveXis’ manufacturing capabilities as well as expertise. These factors should contribute significantly towards boosting the Swiss pharmaceutical giant’s neuroscience business.
“The proposed acquisition of AveXis offers an extraordinary opportunity to transform the care of SMA. We believe AVXS-101 could create a lifetime of possibilities for the children and families impacted by this devastating condition,” stated Novartis CEO, Vas Narasimhan.
Narasimhan also added that the acquisition would help his firm to speed up its strategy of pursuing first-in-class high, efficacy therapies as well as its mission to expand its neuroscience leadership. The Novartis CEO also pointed out that the acquisition of AveXis means the team will bring on board another gene therapy platform other than the already existing CAR-T platform for cancer.
The new platform will contribute towards advancing the already expanding gene therapy pipeline across a variety of therapeutic areas. Narasimhan also added that Novartis looks forward to finalizing the acquisition deal and also a smooth transition for the employees of AveXis as they join Novartis.
Novartis revealed that the acquisition will disrupt its core operating income for the rest of 2018 and also in 2019 owing to heavy costs accrued in research and development. However, the acquisition is expected to contribute significant profits by 2020.
Novartis stock closed the latest trading session on Monday at $81.07.