Swiss drugmaker Novartis is moving further into gene therapy by buying AveXis for $8.7 billion, adding a rare-disease treatment that could reap billions in sales.
The acquisition reflects a surge of interest in biotech deal-making as large pharmaceutical companies seek promising new assets to boost their pipelines.
The $218-per-share cash deal announced on Monday represents a 72% premium to AveXis’s 30-day volume-weighted average stock price. The transaction is seen closing in mid-2018.
Novartis Chief Executive Vas Narasimhan, who took over on Feb. 1, is flush with cash, having just agreed to sell his company’s stake in a consumer healthcare joint venture to GlaxoSmithKline for $13 billion.
Narasimhan is now counting on AveXis’s main drug, AVXS-101 for deadly spinal muscular atrophy (SMA), as well as the Illinois-based company’s gene therapy expertise and manufacturing capabilities, to bolster Novartis’s neuroscience business, a focus for the Swiss company.
Novartis shares were up 0.8% at 0830 GMT.
The company said the acquisition would slightly dent core operating income in 2018 and 2019, due to research and development costs, before strongly contributing to profits in 2020 as sales accelerate.
