No­var­tis CEO Vas Narasimhan cuts loose an old an­chor and sets sail with $8.7B AveX­is buy­out

Vas Narasimhan is start­ing his tenure as CEO of No­var­tis $NVS with a bold move on the gene ther­a­py front.

The phar­ma gi­ant has struck a deal to buy AveX­is for $8.7 bil­lion in cash, scoop­ing up the biotech as it looks to par­lay im­pres­sive ear­ly-stage re­sults for their gene ther­a­py AVXS-101 for spinal mus­cu­lar at­ro­phy in­to a swift FDA ap­proval.

The deal reg­is­ters at $218 a share $AVXS, al­most dou­ble AveX­is’ Fri­day close. And it un­der­scores a few key points about Narasimhan’s man­age­ment style.

First, the phar­ma gi­ant chief is clear­ly will­ing to jump out of its cau­tious sweet spot of $2 bil­lion to $5 bil­lion for bolt-ons, brush­ing off their well tai­lored dis­taste for pay­ing big pre­mi­ums to grab a front run­ner in drug de­vel­op­ment. And Narasimhan, at 41, is serv­ing no­tice that af­ter win­ning an his­toric CAR-T ap­proval, he in­tends to keep No­var­tis out front on cell and gene ther­a­py, come what may.

No­var­tis is play­ing R&D like a big biotech, will­ing to in­vest bil­lions in new tech­nolo­gies to leap out ahead of ri­vals. And that could prove in­flu­en­tial as ma­jor play­ers like GSK and Eli Lil­ly try to blaze new R&D paths of their own in Big Phar­ma. Biotech M&A has been rolling along this year in the wake of deals for Kite and Juno, ri­vals to No­var­tis, as well as a like­ly bid for Shire by Take­da.

No­var­tis’ spot­light­ed its in­ten­tions in lead­ing the gene ther­a­py field with a re­cent $170 mil­lion deal to li­cense ex-US rights to Spark’s Lux­tur­na, which won a land­mark FDA ap­proval for treat­ing RPE65 mu­ta­tion-as­so­ci­at­ed cas­es of reti­nal dy­s­tro­phy.

“The pro­posed ac­qui­si­tion of AveX­is of­fers an ex­tra­or­di­nary op­por­tu­ni­ty to trans­form the care of SMA…,” said Narasimhan in a state­ment. “The ac­qui­si­tion would al­so ac­cel­er­ate our strat­e­gy to pur­sue high-ef­fi­ca­cy, first-in-class ther­a­pies and broad­en our lead­er­ship in neu­ro­science. We would gain with the team at AveX­is an­oth­er gene ther­a­py plat­form, in ad­di­tion to our CAR-T plat­form for can­cer, to ad­vance a grow­ing pipeline of gene ther­a­pies across ther­a­peu­tic ar­eas.”

In­vestors liked the sound of it. No­var­tis shares surged 0.75% in ear­ly morn­ing trad­ing.

Last No­vem­ber AveX­is riv­et­ed the biotech world with da­ta from a small study on SMA. Of 15 pa­tients in Phase I, all were able to reach 20 months with­out the need for con­stant res­pi­ra­to­ry sup­port, or dy­ing. And many achieved im­prove­ments in mo­tor symp­toms, speak­ing to the po­ten­tial — though still un­proven — of this as a once-and-done ther­a­py for a rare but dire ail­ment.

AveX­is CEO Sean Nolan

AveX­is went on to forge plans to sit down with reg­u­la­tors in Q2 for a pre-BLA meet­ing as they ham­mered out a strat­e­gy to gain the fastest pos­si­ble mar­ket­ing ap­proval for their ther­a­py, which could blow Spin­raza, a new and ex­pen­sive SMA ther­a­py from Bio­gen and Io­n­is, out of the wa­ter. That dis­ap­point­ed some back­ers who had ex­pect­ed the biotech to start a rolling sub­mis­sion at the be­gin­ning of Jan­u­ary with the FDA sig­nal­ing its in­ter­est in snap ap­provals for rare dis­eases.

No­var­tis says that the com­pa­ny ex­pects their deal will close mid-year, set­ting up a BLA fil­ing in the sec­ond half and a mar­ket launch in 2019.

That’s al­so good news for Re­genxbio $RGNX, which ex­pand­ed its tech li­cens­ing deal with AveX­is a few months ago to in­clude an ex­clu­sive li­cense cov­er­ing SMA. Re­genxbio gets $140 mil­lion in cash and near-term fees, $120 mil­lion in mile­stones and roy­al­ties. That was al­so worth a 23% spike in its share price.

If AveX­is de­cides not to go through with it, they would need to pay a $284 mil­lion breakup fee, with No­var­tis on the hook for $437 mil­lion for a re­verse ter­mi­na­tion fine. And some an­a­lysts think that this could still turn in­to a bid­ding war. Notes Jef­feries’ Biren Amin:

There’s been spec­u­la­tion that Bio­gen may need to eval­u­ate Avex­is at some point and may be this will be a trig­ger that forces it to do so. Bio­gen has in­di­cat­ed it has a SMA gene ther­a­py in pre­clin­i­cal de­vel­op­ment, and plans to move in­to the clin­ic in 2018. Ad­di­tion­al­ly, we’ve al­ways felt Roche could have an in­ter­est in AVXS giv­en its de­vel­op­ment pro­gram with RG7916 (an­oth­er oral ad­min­is­tered SMN2 splic­ing mod­i­fi­er) and the fact that AVXS Chair­man Dan Welch was the CEO of In­ter­mune when Roche pur­chased In­ter­mune in 2014 for $8.3B.

For now, though, it’s full speed ahead.

“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, our first in class man­u­fac­tur­ing ca­pa­bil­i­ties and our gene ther­a­py pipeline, all of which serve to trans­form the lives of peo­ple dev­as­tat­ed by rare and life threat­en­ing neu­ro­log­i­cal dis­eases such as SMA, Rett syn­drome and ge­net­ic ALS,” said Sean Nolan, the CEO of AveX­is. “With world­wide reach and ex­ten­sive re­sources, No­var­tis should ex­pe­dite our shared vi­sion of bring­ing gene ther­a­py to these pa­tient com­mu­ni­ties across the globe as quick­ly and safe­ly as pos­si­ble.”


Im­age: Vas Narasimhan. NO­VAR­TIS

Roivant par­lays a $450M chunk of eq­ui­ty in biotech buy­out, grab­bing a com­pu­ta­tion­al group to dri­ve dis­cov­ery work

New Roivant CEO Matt Gline has crafted an all-equity upfront deal to buy out a Boston-based biotech that has been toiling for several years now at building a supercomputing-based computational platform to design new drugs. And he’s adding it to the Erector set of science operations that are being built up to support their network of biotech subsidiaries with an eye to growing the pipeline in a play to create a new kind of pharma company.

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Tar­get­ing a Po­ten­tial Vul­ner­a­bil­i­ty of Cer­tain Can­cers with DNA Dam­age Re­sponse

Every individual’s DNA is unique, and because of this, every patient responds differently to disease and treatment. It is astonishing how four tiny building blocks of our DNA – A, T, C, G – dictate our health, disease, and how we age.

The tricky thing about DNA is that it is constantly exposed to damage by sources such as ultraviolet light, certain chemicals, toxins, and even natural biochemical processes inside our cells.¹ If ignored, DNA damage will accumulate in replicating cells, giving rise to mutations that can lead to premature aging, cancer, and other diseases.

Ken Frazier, Merck CEO (Bess Adler/Bloomberg via Getty Images)

UP­DAT­ED: Mer­ck takes a swing at the IL-2 puz­zle­box with a $1.85B play for buzzy Pan­dion and its au­toim­mune hope­fuls

When Roger Perlmutter bid farewell to Merck late last year, the drugmaker perhaps best known now for sales giant Keytruda signaled its intent to take a swing at early-stage novelty with the appointment of discovery head Dean Li. Now, Merck is signing a decent-sized check to bring an IL-2 moonshot into the fold.

Merck will shell out roughly $1.85 billion for Pandion Pharmaceuticals, a biotech hoping to gin up regulatory T cells (Tregs) to treat a range of autoimmune disorders, the drugmaker said Thursday.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,100+ biopharma pros reading Endpoints daily — and it's free.

Steve Cutler, Icon CEO (Icon)

In the biggest CRO takeover in years, Icon doles out $12B for PRA Health Sci­ences to fo­cus on de­cen­tral­ized clin­i­cal work

Contract research M&A had a healthy run in recent years before recently petering out. But with the market ripe for a big buyout and the Covid-19 pandemic emphasizing the importance of decentralized trials, Wednesday saw a tectonic shift in the CRO world.

Icon, the Dublin-based CRO, will acquire PRA Health Sciences for $12 billion in a move that will shake up the highest rungs of a fragmented market. The merger would combine the 5th- and 6th-largest CROs by 2020 revenue, according to Icon, and the merger will set the newco up to be the second-largest global CRO behind only IQVIA.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,100+ biopharma pros reading Endpoints daily — and it's free.

Fol­low biotechs go­ing pub­lic with the End­points News IPO Track­er

The Endpoints News team is continuing to track IPO filings for 2021, and we’ve designed a new tracker page for the effort.

Check it out here: Biopharma IPOs 2021 from Endpoints News

You’ll be able to find all the biotechs that have filed and priced so far this year, sortable by quarter and listed by newest first. As of the time of publishing on Feb. 25, there have already been 16 biotechs debuting on Nasdaq so far this year, with an additional four having filed their S-1 paperwork.

CEO Fred Aslan (Artiva)

NK cell ther­a­py play­er Arti­va makes some more noise, pulling in $120M Se­ries B less than a month af­ter Mer­ck deal

Not even one month after Big Pharma took notice of Artiva when Merck signed a collaboration worth nearly $2 billion in milestones, the off-the-shelf NK cell biotech already has its next big fundraise.

Artiva returns from the venture well Friday with a $120 million Series B round, money they will use to get their first program into the clinic and to file INDs for another two candidates. The raise marks the latest development in a rapidly expanding footprint for Artiva, which, in addition to the Merck deal last month, has now raised almost $200 million since its Series A last June.

Doug Ingram (file photo)

Why not? Sarep­ta’s third Duchenne MD drug sails to ac­cel­er­at­ed ap­proval

Sarepta may be running into some trouble with its next-gen gene therapy approach to Duchenne muscular dystrophy. But when it comes to antisense oligonucleotides, the well-trodden regulatory path is still leading straight to an accelerated approval for casimersen, now christened Amondys 45.

We just have to wait until 2024 to find out if it works.

Amondys 45’s approval was unceremonious, compared to its two older siblings. There was no controversy within the FDA over approving a drug based on a biomarker rather than clinical benefit, setting up a powerful precedent that still haunts acting FDA commissioner Janet Woodcock as biotech insiders weighed her potential permanent appointment; no drama like the FDA issuing a stunning rejection only to reverse its decision and hand out an OK four months later, which got more complicated after the scathing complete response letter was published; no anxious tea leaf reading or heated arguments from drug developers and patient advocates who were tired of having corticosteroids as their loved ones’ only (sometimes expensive) option.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 102,100+ biopharma pros reading Endpoints daily — and it's free.

Mark Mal­lon charts post-Iron­wood course by tak­ing CEO job at NeoGe­nomics; Glax­o­SmithK­line vet Feng Ren joins In­sil­i­co as CSO

Mark Mallon steps aside at Ironwood on March 12 after close to two years at the helm, and he already has a new change of scenery squared away. Beginning April 19, Mallon takes charge as CEO of cancer-focused genetic test maker NeoGenomics out of Fort Myers, FL while his predecessor, Douglas VanOort, is retiring after 12 years as NeoGenomics’ chairman and CEO.

It’s a fresh start for Mallon after what will amount to a tumultuous 23 months as Ironwood’s chief executive. Last year was marked by trial failures that spelled double trouble, leaving the Ironwood cupboard bare: first, a Linzess reformulation for irritable bowel syndrome with diarrhea (IBS-D) in May, and then the drug IW-3718 for persistent acid reflux in September. After IW-3718’s discontinuation, Ironwood chopped its staff by 35%. On Feb. 8, Mallon announced his departure at Ironwood, with president Tom McCourt getting bumped up to interim CEO.

S&P ex­pects steady ero­sion in Big Phar­ma's cred­it pro­file in 2021 as new M&A deals roll in — but don't un­der­es­ti­mate their un­der­ly­ing strength

S&P Global has taken a look at the dominant forces shaping the pharma market and come to the conclusion that there will be more downgrades than upgrades in 2021 — the 8th straight year of steady decline.

But it’s not all bad news. Some things are looking up, and there’s still plenty of money to be made in an industry that enjoys a 30% to 40% profit margin, once you factor in steep R&D expenses.