Novartis to Pay $3.9 Billion for Radio-Pharmaceuticals Firm -- Update
31 October 2017 - 12:00AM
Dow Jones News
By Denise Roland
Novartis AG has agreed to acquire Advanced Accelerator
Applications SA for $3.9 billion, a deal that would boost its
oncology portfolio as generic competition eats into sales of
blockbuster blood-cancer drug Gleevec.
The Swiss drug giant said Monday it is offering $41 a share in
cash for the France-based, New York-listed company, which has
recommended the deal to its shareholders.
A deal would hand Novartis AAA's recently-approved Lutathera
treatment, which belongs to a small but growing class of therapies
known as radio-pharmaceuticals. Such treatments carry radioactive
substances directly to tumor cells, allowing them to attack the
cancer at close range.
Lutathera targets gastroenteropancreatic neuroendocrine tumors,
a rare form of cancer that occurs in the gut and pancreas. It was
shown to significantly increase the chances of survival in patients
with neuroendocrine tumors that couldn't be removed surgically,
when compared with the standard hormone therapy.
The European Medicines Agency gave Lutathera the nod in
September, while the Food and Drug Administration is expected to
make a decision on the treatment in January.
The treatment is unlikely to become a blockbuster: analysts at
Citi estimate Lutathera will generate sales of around $500 million
a year at its peak. But it would still help strengthen Novartis's
oncology business, which is under pressure after Gleevec, a blood
cancer drug that generated nearly $5 billion a year, lost patent
protection in 2016.
Novartis is also counting on new drug launches in other disease
areas to offset Gleevec's decline. The two most important of these
are Cosentyx for psoriasis and certain rheumatoid conditions and
Entresto for heart failure.
Bruno Strigini, head of Novartis Oncology, said the acquisition
would allow the company to expand the global reach of Lutathera.
Novartis already sells a drug called Afinitor that treats a range
of cancers including neuroendocrine tumors.
Mr. Strigini also said the acquisition would allow Novartis to
build on AAA's technology platform. AAA is in the early stages of
developing radio-pharmaceuticals for other types of cancer,
including prostate and breast.
Novartis isn't the only large drugmaker to place a bet on
radio-pharmaceuticals. Germany's Bayer AG already sells a product
called Xofigo that irradiates bone metastases in prostate cancer
patients who don't respond to hormone therapy. Bayer is currently
testing the same treatment in various other cancer types.
Novartis, which will fund the acquisition with debt, said the
deal is subject to the approval of regulators and at least 80% of
AAA's shares being tendered.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
October 30, 2017 08:45 ET (12:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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