Novartis buys Endocyte for $2.1B in latest deal under CEO Narasimhan
- Novartis will buy the Indiana-based biotech Endocyte and its experimental radiopharmaceutical drug for $2.1 billion, the Swiss pharma announced Thursday, furthering an expansion into nuclear medicine begun last year with the acquisition of Advanced Accelerator Applications.
- Under CEO Vas Narasimhan, Novartis has bet more heavily on new technology platforms, investing in gene therapy, radiopharmaceuticals and continuing its work in cancer cell therapy. Earlier this year, the drugmaker spent $8.7 billion to buy AveXis, which had developed a gene therapy for spinal muscular atrophy.
- Investors have particularly high expectations for the AveXis' treatment. In an earnings presentation Thursday, Novartis confirmed it's submitted applications for approval of the drug, called AVXS-101, in the U.S. and EU.
Novartis' takeout of Endocyte marks a remarkable return on an investment the smaller company made last year to in-license the pipeline candidate which drew Novartis' eye.
Last October, Endocyte paid $12 million — with promises of $160 million in potential milestone payments — to pick up exclusive worldwide rights to an experimental radioligand cancer therapeutic from ABX GmBH.
Called 177Lu-PSMA-617, the candidate was set to enter Phase 3 trials on the back of positive early data from a single-arm study. After announcement of the deal, shares in Endocyte traded around $5 per share.
Now, with the Phase 3 study underway, Novartis will pay $24 per share to fold Endocyte into its operations.
Radioligand therapies pair a radioactive atom — in this case, 177Lutetium — to a targeting ligand. The aim is to selectively target tumor cells expressing a certain surface protein, using the ligand to hone in on the cancer and the radioactive atom to destroy it.
Endocyte's candidate is directed at prostate cancer cells which display the prostate-specific membrane antigen (PSMA). Between 70% and 80% of patients with metastatic prostate cancer express PSMA, Novartis head of oncology Elizabeth Barrett said on a Thursday call.
Novartis believes Endocyte will pair well with existing radiopharmaceutical research brought on board last year through a $3.7 billion buy of Advanced Accelerator Applications. The pharma has pegged the target of that deal, a radioligand therapy approved in January as Lutathera (lutetium Lu 177 dotatate), as a potential blockbuster.
While the Endocyte deal is the news of the day, investors are more closely watching the spinal muscular atrophy gene therapy Novartis bought through AveXis.
Novartis simultaneously submitted AVXS-101 for approval in the U.S., EU and Japan, and aims to launch the drug for the most severe form of SMA early next year.
Initial results from clinical testing of AVXS-101 showed impressive efficacy, raising expectations that AVXS-101 could become a blockbuster therapy as well.
But gene therapy presents dozens of unique hurdles, not least of which is manufacturing the complex treatments for delivery into patients.
Novartis Pharmaceuticals CEO Paul Hudson was bullish Thursday of the pharma's production capacities, noting he expects significant demand upon launch and that Novartis will be ready to match uptake across all three geographies (assuming approval).
Soon after Novartis bought AveXis, the companies announced a $55 million investment in a new gene therapy manufacturing center.
In the third quarter overall, Novartis reported a 6% increase in group sales driven by particularly strong growth from its drugs Cosentyx (secukinumab) and Entresto (sacubitril/valsartan).
Strong performance from the pharma's drug units helped offset a 4% drop in sales from Novartis' Sandoz division, which has been battered by pricing pressures in the U.S. generic drug market.
Novartis also announced it received a Complete Response Letter from the Food and Drug Administration for canakinumab as a treatment for cardiovascular risk reduction. Company executives said they would evaluate the agency's feedback before commenting on next steps.
Strong results last year among certain high-risk patients treated with canakinumab had boosted Novartis' hopes that the drug, approved as Ilaris for a rare disease, could have a second life as a heart drug.
- Novartis Earnings presentation
- BioPharma Dive Novartis to cut 2,500+ jobs in the UK and Switzerland
- BioPharma Dive Novartis bolsters oncology with $3.9B Advanced Accelerator buy
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