Novartis’ push into advanced therapy medical products (ATMPs) gathered pace this morning after it announced an $8.7bn agreement to take over gene therapy company AveXis.
The Swiss pharma group is paying $218 per share in cash for the US biotech and its lead gene therapy candidate for spinal muscular atrophy (SMA), with the price tag more than covered by Novartis’ $13bn sale of its consumer health joint venture stake to GlaxoSmithKline.
It’s the first big pipeline-building deal under Novartis’ new chief executive Vas Narasimhan, who took over the helm earlier this year, and builds on existing gene therapy interests including ex-US rights to Spark Therapeutics’ recently-approved Luxturna (voretigene neparvovec-rzyl) for an inherited eye disease.
AveXis’ lead candidate AVXS-101 could have “multi-billion-dollar sales potential”, according to Narasimhan, who said on a conference call that the agreement would also build on the company’s position in neuroscience and provide “another gene therapy platform, in addition to our CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas”.
Last year, Biogen secured approval for the first drug treatment for SMA, a progressive, debilitating muscle-wasting disease that affects about 23,500 patients worldwide. Its antisense drug Spinraza (nusinersen) is being sold in the US for $750,000 in the first year and $375,000 thereafter and is predicted to become a $1bn-$2bn product at peak.
As a gene therapy for SMA, AVXS-101 could potentially replace regular drug treatment with a one-off intervention, and the early signs are good. Last year, data from a small, 15-patient trial of the gene therapy were published in the New England Journal of Medicine and showed that the therapy lived longer than expected, with 100% of those enrolled reaching 20 years of age. Only around 8% of SMA patients from a matched, historic cohort were still alive at that age.
Along with AVXS-101, AveXis’ pipeline also includes two candidates for hearing loss and eye disorder retinitis pigmentosa in phase I testing, as well as preclinical programmes in genetic neurological disorder Rett syndrome and inherited amyotrophic lateral sclerosis (ALS) that are scheduled to start trials in late 2018 or early 2019. The deal also brings a manufacturing facility for gene therapeutics in Libertyville, Illinois.
The acquisition is expected to close in mid-2018 and has already been approved by the boards of both companies.
Analyst Stefan Schneider at Vontobel said the deal made good strategic sense, particularly as AVXs-101 could be ready for market around the time that Novartis could lose patent protection for some big sellers like cancer drug Afinitor and Gilenya for multiple sclerosis in 2019, according to a report on aktiencheck.de.
He added however that the deal would need “flawless execution” to ensure that the 88% premium that Novartis is paying on AveXis’ share price on Friday is justified.