Novartis agrees to buy Avidity in $12-billion biotech deal

20251016222812_67e0_x191_2a78_9.jpg

Novartis AG agreed to buy Avidity Biosciences Inc. in a $12-billion deal that’s the Swiss drugmaker’s biggest acquisition in more than a decade and adds several potential blockbuster treatments as generic competition looms for its current top-sellers.

Novartis will pay $72 a share in cash for the biotechnology company, representing a premium of 46% to Avidity’s closing price Friday, the company said Sunday. Bloomberg News previously reported a deal was close.

Avidity is developing experimental drugs to treat diseases including a neuromuscular illness known as myotonic dystrophy type 1, which causes progressive muscle loss and weakness. Two of three Avidity drugs expected to launch before 2030 have multibillion-dollar sales potential, according to Novartis.

Novartis shares traded about 1% lower on Monday morning in Zurich. The stock is up about 16% so far this year. Avidity rose 1.2% to $49.15 in New York trading Friday, bringing the company’s market value to about $6.8 billion.

The acquisition marks a bold move for Novartis Chief Executive Officer Vas Narasimhan, who has previously focused on deals under the $5 billion mark. It also continues his plan to reshape the company to focus on innovative drugs in a number of core areas, including heart, kidney and metabolic drugs, immunology, neuroscience and oncology.

Patent Cliff

Novartis needs to boost the company’s sales beyond 2025 as it’s facing competition from cheap generics later this year for three key drugs, including its top-selling heart medicine Entresto.

So far this year, the drugmaker has agreed to buy Tourmaline Bio Inc. in a $1.4 billion deal, gaining access to a promising treatment to reduce systemic inflammation, a major driver of cardiovascular disease. It also agreed to buy US biotech Regulus Therapeutics for up to $1.7 billion and added to its cardiology portfolio with the acquisition of US biotech Anthos Therapeutics 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.

New Company

As a condition of the deal, Avidity will separate its early-stage precision cardiology programs into a new company, some or all of which Avidity may sell to a third party. The $12 billion valuation includes about $1 billion of cash on Avidity’s balance sheet, and the deal is expected to close in the first half of 2026, subject to the spinoff completing.

The deal raises Novartis’ expected sales compound annual growth rate between 2024-2029 to 6% from 5%, the company said.

The Avidity Biosciences acquisition “meets the very essence of Novartis’ effective and successful acquisition strategy” under the current management, said Vontobel analyst Stefan Schneider in a note. There’s ample potential for revenue generation from the deal, he added.

The transaction adds to a wave of biotechnology M&A as large pharma companies buy smaller drugmakers with innovative technology to boost revenue as older drugs lose patent protection.