Novartis takes new route in €7bn deal

Novartis, the Swiss drugmaker which employs 1,600 people in Ireland, has agreed to acquire AveXis for $8.7bn (€7.1bn) to gain a promising drug to treat a rare disease that afflicts infants, hastening a shift towards gene therapy and precision medicines.

In Europe, Novartis employs 600 people at a plant in Ringaskiddy in Cork making ingredients for its cancer, respiratory and skin disease drugs, and has 350 workers at its Alcon subsidiary in Cork city where it makes eye care products.

It also has 350 people at a business centre in Dublin.

The transaction is Novartis’s second deal to advance in gene therapy this year —and the first led by new chief executive Vas Narasimhan.

The drugmaker is redeploying some of the $13bn in proceeds from the sale of its stake in a consumer-health joint venture to partner GlaxoSmithKline to gain more firepower in prescription medicines before some of its existing best-sellers lose patent protection.

“Our goal is to build on a core of medicines as a medicines company powered by data and digital,” said Mr Narasimhan in a conference call with investors. “A deal like this fits right in that sweet spot,” he said.

AveXis is developing a product to treat spinal muscular atrophy, an inherited neurodegenerative disease caused by a defect in a single gene, which shows the potential to become a blockbuster, according to Novartis.

In buying AveXis, the Swiss drugmaker is also gaining a product to address a rare disease. Like gene therapies, such treatments command high prices that have sparked interest even from unexpected players in the industry.

Last month, Takeda Pharmaceutical said it was considering a bid for Shire, a leader in rare diseases, which would rank as the Japanese company’s biggest takeover ever. Shire has significant facilities in Co Meath and Dublin.

AveXis also has valuable manufacturing and research capabilities that would give its Swiss buyer a platform alongside its research in cancer “to advance a growing pipeline of gene therapies across therapeutic areas,” said Mr Narasimhan.

Novartis’s Kymriah won US regulatory approval in August, making it the first drug approved from a new class of treatments that have been heralded as a promising approach to treating and potentially curing cancers as well as genetic conditions such as blindness.

Like other gene therapies, it is used only once on a patient, and carries a high price tag, $475,000, in the case of Kymriah. Avxs-101 helped a small group of babies with spinal muscular atrophy hit development milestones at a rate previously unseen, a study showed in November.

Bloomberg. Additional reporting Irish Examiner