Novartis Agrees to Buy Avidity in $12 Billion Biotech Deal
(Bloomberg) — Novartis AG agreed to buy biotechnology company Avidity Biosciences Inc. in a deal valued at $12 billion, making it the Swiss drugmaker’s biggest acquisition in more than a decade and adding several potential blockbuster treatments as generic competition looms for its current top-sellers.
Novartis will pay $72 a share in cash, representing a premium of 46% over Avidity’s closing price Friday, the company said in a statement. Bloomberg News previously reported a deal was close.
Avidity is developing experimental drugs to treat rare diseases, including a neuromuscular disease known as myotonic dystrophy type 1. The deal adds to a wave of biotechnology M&A as large pharma companies buy smaller drugmakers with innovative technology to boost revenue as older drugs go off patent.
The acquisition marks a bold move for Novartis Chief Executive Officer Vas Narasimhan, who has previously focused on bolt-on deals under the $5 billion mark. Three Avidity drugs are expected to launch before 2030, two of which could have multi-billion-dollar sales potential, according to a company presentation. The deal raises Novartis’ expected sales compound annual growth rate between 2024-2029 to 6% from 5%, it added.
While the deal has an equity value of $12 billion, Avidity is expected to have about $1 billion of cash once the deal closes, giving it an enterprise value of about $11 billion, Novartis said.
Avidity rose 1.2% to close at $49.15 in New York trading Friday, bringing the company’s market value to about $6.8 billion.
Patent Cliff
Before the deal closes, Avidity plans to separate its early-stage precision cardiology programs into a new company called SpinCo, some or all of which Avidity may sell to a third party, Novartis said. Avidity shareholders will get one SpinCo share for every 10 Avidity shares they own and/or cash proceeds if the assets or SpinCo itself are sold before the Novartis deal closes.
The full deal is expected to close in the first half of 2026, subject to completion of the separation.
Novartis, which focuses on heart, kidney and metabolic drugs, immunology, neuroscience and oncology, is looking to boost its portfolio. It’s facing competition from cheap generics later this year for three key drugs set to lose patent protection, including its top-selling heart medicine Entresto.
The drugmaker in September agreed to buy Tourmaline Bio Inc. in a deal valued at about $1.4 billion. The New York-based biotech is developing a promising treatment to reduce systemic inflammation, a major driver of cardiovascular disease.
In April, Novartis agreed to buy US biotech Regulus Therapeutics in a deal that could be valued at up to $1.7 billion. Novartis also added to its cardiology portfolio earlier this year with the acquisition of US biotech Anthos Therapeutics for as much as $3.1 billion to gain a preventative stroke medicine.
As the company’s revamp efforts start to pay off, Novartis raised its profit outlook for the year in April and then again in July, driven by medicines for breast cancer, multiple sclerosis and psoriasis. The company is expected to report results on Tuesday.
Avidity specializes in a new type of drugs called antibody-oligonucleotide conjugates, which use synthetic RNA to target genetic causes of diseases. The US Food and Drug Administration has granted “breakthrough therapy” designation for an Avidity drug for the treatment of certain Duchenne muscular dystrophy patients.
–With assistance from Amber Tong.
(Adds detail on deal starting from fourth paragraph.)
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