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Novartis (NVS) to Buy Chinook for $3.5B to Strengthen Pipeline
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Novartis (NVS - Free Report) announced that it would acquire Seattle-based clinical-stage biopharmaceutical company Chinook Therapeutics for $3.5 billion to strengthen its renal pipeline. Shares of Chinook have gained significantly following the announcement.
Per the terms, shareholders of Chinook would receive $3.2 billion ($40.00 per share) in cash upon closing, plus a contingent value right with a value of up to $0.3 billion ($4.00 per share), payable in cash upon the achievement of certain regulatory milestones. The transaction is expected to close in the second half of 2023.
The deal has been unanimously approved by the boards of both companies. The acquisition will add Chinook’s pipeline, which includes two late-stage candidates, atrasentan and zigakibart (BION-1301), for immunoglobulin A nephropathy (IgAN), to Novartis’ pipeline.
IgAN is a progressive, rare kidney disease that generally affects young adults and currently lacks targeted treatment options. The disease affects up to 21 people per million per year in the United States, with a higher incidence in Asian populations. It is the most common cause of kidney failure in Caucasian young adults.
Atrasentan, an oral endothelin A receptor antagonist (ERA), is currently in phase III development for IgAN, with a readout expected in the fourth quarter. The candidate has demonstrated a significant reduction in proteinuria versus baseline in a phase II study with good tolerability, including a favorable liver safety profile. The candidate is also in early-stage development for other rare kidney diseases.
Zigakibart is a targeted biologic therapy with the potential to address the root cause of IgAN, the production of abnormal galactose-deficient IgA and preserve kidney function. Interim phase I/II data showed an impressive reduction in proteinuria versus baseline. A phase III study is expected to start in the next quarter.
The acquisition is in line with Novartis’ strategy to focus on innovative medicines and will significantly expand its renal portfolio, complementing the existing pipeline.
Shares of Novartis have gained 10.5% in the year so far compared with the industry’s 0.8% growth.
Image Source: Zacks Investment Research
Novartis previously announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. The planned spin-off of the Sandoz unit remains on track for the second half of 2023. With the planned spin-off, Novartis is looking to become a pure-play pharmaceutical company.
In 2021, Novartis sold its stake in Roche (RHHBY - Free Report) for $20.7 billion. The company has been a shareholder of RHHBY since May 2001. Novartis was reportedly looking for strategic acquisitions in the pharma space using the cash proceeds from its stake sale in Roche.
Mergers and Acquisitions (M&A) are back in focus in this space.
In March 2023, pharma giant Pfizer (PFE - Free Report) announced that it will acquire oncology-focused biotech company Seagen Inc., for $229 in cash per share or a total enterprise value of $43 billion.
Per Pfizer, Seagen’s medicines, late-stage development programs and pioneering expertise in antibody-drug conjugates (ADCs) strongly complement its oncology portfolio.
Image: Bigstock
Novartis (NVS) to Buy Chinook for $3.5B to Strengthen Pipeline
Novartis (NVS - Free Report) announced that it would acquire Seattle-based clinical-stage biopharmaceutical company Chinook Therapeutics for $3.5 billion to strengthen its renal pipeline. Shares of Chinook have gained significantly following the announcement.
Per the terms, shareholders of Chinook would receive $3.2 billion ($40.00 per share) in cash upon closing, plus a contingent value right with a value of up to $0.3 billion ($4.00 per share), payable in cash upon the achievement of certain regulatory milestones. The transaction is expected to close in the second half of 2023.
The deal has been unanimously approved by the boards of both companies.
The acquisition will add Chinook’s pipeline, which includes two late-stage candidates, atrasentan and zigakibart (BION-1301), for immunoglobulin A nephropathy (IgAN), to Novartis’ pipeline.
IgAN is a progressive, rare kidney disease that generally affects young adults and currently lacks targeted treatment options. The disease affects up to 21 people per million per year in the United States, with a higher incidence in Asian populations. It is the most common cause of kidney failure in Caucasian young adults.
Atrasentan, an oral endothelin A receptor antagonist (ERA), is currently in phase III development for IgAN, with a readout expected in the fourth quarter. The candidate has demonstrated a significant reduction in proteinuria versus baseline in a phase II study with good tolerability, including a favorable liver safety profile. The candidate is also in early-stage development for other rare kidney diseases.
Zigakibart is a targeted biologic therapy with the potential to address the root cause of IgAN, the production of abnormal galactose-deficient IgA and preserve kidney function. Interim phase I/II data showed an impressive reduction in proteinuria versus baseline. A phase III study is expected to start in the next quarter.
The acquisition is in line with Novartis’ strategy to focus on innovative medicines and will significantly expand its renal portfolio, complementing the existing pipeline.
Shares of Novartis have gained 10.5% in the year so far compared with the industry’s 0.8% growth.
Image Source: Zacks Investment Research
Novartis previously announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. The planned spin-off of the Sandoz unit remains on track for the second half of 2023. With the planned spin-off, Novartis is looking to become a pure-play pharmaceutical company.
In 2021, Novartis sold its stake in Roche (RHHBY - Free Report) for $20.7 billion. The company has been a shareholder of RHHBY since May 2001. Novartis was reportedly looking for strategic acquisitions in the pharma space using the cash proceeds from its stake sale in Roche.
Mergers and Acquisitions (M&A) are back in focus in this space.
In March 2023, pharma giant Pfizer (PFE - Free Report) announced that it will acquire oncology-focused biotech company Seagen Inc., for $229 in cash per share or a total enterprise value of $43 billion.
Per Pfizer, Seagen’s medicines, late-stage development programs and pioneering expertise in antibody-drug conjugates (ADCs) strongly complement its oncology portfolio.
Novartis currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.