Novartis to Buy Excellergy in Deal Worth Up to $2 Billion
(Bloomberg) — Novartis AG agreed to buy biotech firm Excellergy Inc. for as much as $2 billion, as it tries to strengthen its portfolio of treatments for food allergies and other immunology conditions.
The transaction includes upfront and milestone payments, the Swiss drugmaker said Friday, without giving a breakdown. Shares of Novartis were little changed in early trading in Zurich. They had risen 9% this year through Thursday’s close.
Novartis has been on a deal streak as its aging best-sellers face generic competition, prompting the company to project its first profit decline in at least six years. The latest deal comes a week after it agreed to buy an experimental breast cancer drug from Synnovation Therapeutics for as much as $3 billion.
San Francisco-based Excellergy’s lead drug candidate is in early-stage testing and targets the Immunoglobulin E antibody associated with conditions including asthma and eczema. Novartis said it could provide improved symptom control across food allergy, hives and other conditions.
While Novartis already co-markets the IgE-targeting asthma and allergy medicine Xolair, Excellergy’s candidate is “designed to go beyond conventional IgE therapy,” said Fiona Marshall, president of biomedical research at Novartis.
“The proposed acquisition strengthens Novartis immunology strategy in food allergy and other IgE-driven diseases,” Vontobel analyst Stefan Schneider said in a note, adding that given Excellergy’s drug candidate is in Phase 1 testing, the deal payment “should be back-end loaded.”
Novartis warned in February its profit would drop this year as some of its top sellers including the heart medicine Entresto get further hit by generic competition. That is testing Chief Executive Officer Vas Narasimhan’s strategy to focus solely on innovative medicines.
In October, Novartis unveiled one of its biggest bets — a $12 billion acquisition of Avidity Biosciences Inc, followed by deals around drugs for allergic diseases and breast cancer.
–With assistance from Amber Tong and Dong Lyu.
(Updates with shares in second paragraph, analyst comment in sixth.)
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