In order to expand its pipeline of late-stage drug research products, Novartis said that it has reached an agreement to acquire American biotech company Chinook Therapeutics at up to $3.5 billion, boosting the stakes in the competition for a cure for a rare kidney ailment.
In accordance with the agreed-upon arrangement, Chinook shareholders in Seattle would get $3.2 billion, worth $40 per share, in cash, as well as a contingent value right with a maximum value of $300 million, according to a Monday statement from Novartis.
A premium of 66.7% over Chinook's Friday price at the closing bell is represented by the advance payment. In early trading on Monday, Chinook's stock was at $40.1.
After spearheading efforts to reduce costs and restructure the Swiss pharmaceutical company to concentrate on fewer therapeutic fields and the most prospective geographic regions, Novartis CEO Vas Narasimhan is ready to increase the possibility of future blockbuster pharmaceuticals.
IgA Nephrophathy, also known as IgAN, is a rare condition that can cause kidney failure among young adults and has drawn the attention of a variety of researchers. A treatment candidate being investigated by Novartis has already been produced with IgAN as its target, and Chinook, whose stock closed at $23.99 last Friday, has a leading chemical for treating it.
Prior to this purchase, Narasimham stated that he would focus on prospects with a $5 billion or less market value.
According to a statement from Novartis, the deal would likely finalize in the second half of 2023.
A clinical trial during the third and final stage of the development of the oral medication candidate atrasentan for the treatment of IgAN is expected to provide the key readout in the final quarter of this year, according to Chinook.
Another investigational injectable IgAN therapy being developed by Chinook is called zigakibart, and a Phase 3 trial on this medication is expected to begin in the third quarter of 2023.
One of two new medications essential to the business's sales growth, the breast cancer treatment Kisqali, was proved in a study to benefit a wider patient group, giving Narasimhan a significant victory this year.
Iptacopan, another potential medication, is currently undergoing clinical trials for its ability to treat a variety of uncommon genetic diseases, including IgAN along with another kidney condition.
Vera Therapeutics, Ionis , Omeros, Roche and unlisted HI-Bio are among the companies developing potential IgAN therapies.
IgAN, a progressive autoimmune illness that primarily affects young adults, can cause kidney failure that necessitates dialysis or organ transplantation. According to Novartis, there are no available targeted therapeutic alternatives.
Up to 21 individuals per million are impacted by IgAN annually in the US, with Asian groups experiencing the disease at a higher rate. In Caucasian young people, IgAN is the most typical cause of kidney failure, stated Novartis.
With the planned spinoff of its generic medicine subsidiary Sandoz in the second half of 2023, Novartis is expected to become more reliant on the success of its drug research efforts.
Last month, when short-seller Muddy Waters declared that it was betting on the company to decline because it believed atrasentan was not likely to attain market maturity, Chinook shares plunged but rapidly recovered.