Novartis makes $8.8bn bet on gene therapies with takeover of Avexis

Berenberg Bank set a CHF 91 price objective on shares of Novartis and gave the company a "neutral" rating in a research report on Friday, January 26th.

Swiss pharmaceuticals giant Novartis says it has agreed to buy the USA -based gene therapy company AveXis Inc. for $8.7 billion, part of its goal to become a leader in the treatment of neurodegenerative diseases.

"We look forward on the closing of the deal to a smooth transition for AveXis employees and welcoming them to Novartis", Vas Narasimhan, Novartis' CEO, said in a separate press release.

"The commitment, drive and expertise of the entire AveXis team has created significant stockholder value, and we are pleased that Novartis recognizes that value in the potential of AVXS-101", Sean Nolan, president and CEO of AveXis, said in its release. In January, Novartis inked a licensing and supply deal with Spark Therapeutics to develop, register and commercialize Spark's gene therapy Luxturna (voretigene neparvovec) outside the U.S. Luxturna is a one-time gene therapy to treat patients with biallelic mutations of the RPE65 gene. NVS believes that the drug can strengthen its position as a leader of gene therapy and neuroscience. In addition - and perhaps more importantly in the long term - Novartis will acquire AveXis' gene therapy manufacturing facility and a drug delivery platform based on adeno-associated virus (AAV) 9 technology.

France's Sanofi agreed to buy U.S haemophilia specialist Bioverativ for $11.6 billion and Belgium's Ablynx for 3.9 billion euros.

Thompson Rubinstein Investment Management Inc increased its stake in Novartis Ag Spon Adr (NVS) by 8.39% based on its latest 2017Q4 regulatory filing with the SEC.

United States regulators have already designated AVXS-101 an orphan drug for the treatment of SMA as well as a breakthrough therapy for SMA Type 1, the number one genetic cause of death in infants.

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SMA is a genetic disease affecting the part of the nervous system that controls voluntary muscle movement, and commonly leads to death in young children. Additional data is due for release this month, Narasimhan said.

"Novartis is taking the view that AveXis's. transgene approach trumps Biogen/Ionis' approved Spinraza and other agents in development", UBS analysts wrote.

Mr Narasimhan said the transaction reflected Novartis' strategy of hunting for new medicine and new technologies to buttress the portfolio of drugs it is developing in-house.

"Our goal is to continue to build on our core medicine", he said.

The agreement follows preclinical studies showing that gene therapy using the NAV AAV9 delivery platform is effective against ALS and Rett syndrome.

Novartis's financial adviser on the deal was Dyal Co LLC, while AveXis's was Goldman Sachs.

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