Novartis buys cancer specialist Endocyte for $2.1bn

Novartis has agreed another bolt-on deal to boost its pipeline, buying nuclear medicine firm Endocyte for $2.1bn as it raised its sales forecasts for the year on a strong third quarter.

The $24-per-share offer – around $8.50 above Endocyte’s closing share price yesterday – has the backing of the biotech’s board, but still needs the approval of its shareholders.

Novartis wants to merge the company with a newly-formed subsidiary that will focus on radiopharmaceutical drugs for cancer, with Endocyte’s portfolio blended with in-house assets such as Lutathera (¹⁷⁷Lu- oxodotreotide) for gastroenteropancreatic neuroendocrine (GEP-NET) tumours, acquired along with French company Advanced Accelerator Applications for $3.9bn a year ago.

Heading up Endocyte’s pipeline is ¹⁷⁷Lu-PSMA-617, a potential first-in-class drug for the treatment of metastatic castration-resistant prostate cancer (CRPC). The drug targets prostate-specific membrane antigen (PSMA), which is expressed on prostate cancer cells, and delivers a cell-killing radioisotope directly to the tumour. It is currently in a phase 3 registration trial – called VISION – that is due to report results in 2020.

Novartis said radiopharma is a “key growth driver” for its business  and that Endocyte’s offer “significant sales potential” from ¹⁷⁷Lu-PSMA-617, particularly if its use can be extended into earlier-stage prostate cancer, as well as early-stage development programmes.

The latest deal comes shortly after Novartis agreed a $8.7bn deal to acquire AveXis, a US specialist in spinal muscular atrophy (SMA).

It’s worth pointing out that buying Endocyte also gives Novartis an additional platform in CAR-T cancer immunotherapy to complement its current assets, including already-marketed therapy Kymriah (tisagenlecleucel) for CD19-positive blood cancers. Endocyte has developed an approach that could be used to generate a single, universal CAR-T therapy for multiple cancer types which is currently in preclinical development.

Cosentyx saw its sales rise 37%

News of the latest bolt-on deal came as Novartis revealed a 6% rise in third-quarter sales to $12.8bn in constant currencies on the back of gains for new psoriasis drug Cosentyx (secukinumab) and Entresto (sacubitril/valsartan) for heart failure – up 37% to $750m and 113% to $271m, respectively – as well as Sandoz’ biosimilar drugs.

Lutathera brought in $56m as it continues to roll out in the US following FDA approval in January, which Novartis said was a good performance, but while CAR-T Kymriah saw sales last triple year-on-year they remained low at $20m, up from $16m in the second quarter. The company has been working to resolve product consistency issues that have disrupted supplies.