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

[NEW YORK] Novartis agreed to buy biotechnology company Avidity Biosciences in a deal that values it at US$12 billion, according to the Swiss drugmaker.

Novartis will pay US$72 a share in cash, representing a premium of 46 per cent, the company said in a statement. Bloomberg News previously reported a deal was close.

While the deal has an equity value of US$12 billion, Avidity is expected to have cash of about US$1 billion once the deal closes, giving it an enterprise value of about US$11 billion, Novartis said.

Avidity is developing experimental drugs to treat rare diseases, including a neuromuscular disease known as myotonic dystrophy type 1. The deal adds to a wave of biotechnology M&A as large pharma companies buy smaller drugmakers with innovative technology to boost revenue as older drugs go off patent.

Avidity rose 1.2 per cent to close at US$49.15 in New York trading on Friday (Oct 24), giving the company a market value of about US$6.8 billion.

Before the deal closes, Avidity plans to separate its early-stage precision cardiology programmes into a new company called SpinCo, some or all of which Avidity may sell to a third party, Novartis said. Avidity shareholders will get one SpinCo share per 10 Avidity shares they own and/or cash proceeds if the assets or the SpinCo are sold before the Novartis deal closes.

The full deal is expected to close in the first half of 2026, subject to the completion of the separation.

Novartis, which focuses on heart, kidney and metabolic drugs, immunology, neuroscience and oncology, is looking to boost its portfolio. It’s facing competition from cheap generics later this year for three key drugs, including its top-selling heart medicine Entresto.

The drugmaker in September agreed to buy Tourmaline Bio in a deal valued at about US$1.4 billion. The New York-based biotech Tourmaline is developing a promising treatment to reduce systemic inflammation, a major driver of cardiovascular disease.

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In April, Novartis agreed to buy US biotech Regulus Therapeutics in a deal that could be valued at up to US$1.7 billion. Novartis also added to its cardiology portfolio earlier this year with the acquisition of US biotech Anthos Therapeutics for as much as US$3.1 billion 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.

The US Food and Drug Administration has granted “breakthrough therapy” designation for an Avidity drug for the treatment of certain Duchenne muscular dystrophy patients. BLOOMBERG