Rare Daily Staff

Drug giant Novartis agreed to acquire gene therapy developer AveXis for $8.7 billion or $218 per share in cash.

The offer represents an 88 percent premium on AveXis’ closing price on April 6, 2018, and a 72 percent premium to the company’s 30-day volume-weighted average stock price. Both companies’ boards have unanimously approved the transaction.

AveXis lead program AVXS-101 is an experimental gene therapy for spinal muscular atrophy, or SMA, type 1, the leading genetic cause of infant mortality, and SMA types 2 and 3. The U.S. Food and Drug Administration has granted AVXS-101 Orphan Drug designation for the treatment of all types of SMA and Breakthrough Therapy designation, as well as Fast Track designation for the treatment of SMA type 1.

For Novartis, the deal strengthens its position in both gene therapy and neurological diseases. It follows the company’s agreement to license rights outside the United States to Spark Therapeutics’ gene therapy Luxturna to treat a certain form of inherited eye disease for $105 million and potential milestones of $65 million. For AveXis, the agreement provides Big Pharma muscle to see development of its gene therapies to market and beyond.

“With worldwide reach and extensive resources, Novartis should expedite our shared vision of bringing gene therapy to these patient communities across the globe as quickly and safely as possible,” said Sean Nolan, president and CEO of AveXis.

Under the terms of the agreement, Novartis has formed an acquisition subsidiary, Novartis AM Merger Corporation, that will commence the tender offer to purchase all outstanding shares of AveXis for $218 per share in cash. AveXis will file a recommendation statement containing the unanimous recommendation of the AveXis board that AveXis stockholders tender their shares to Novartis.

The tender offer and the merger are subject to customary closing conditions. The merger agreement includes termination provisions for both AveXis and Novartis, including a right for either party to terminate if the transactions have not been completed by July 6, 2018. Novartis is permitted under specified antitrust related circumstances to extend the Outside Date to October 6, 2018. If Novartis elects to extend the outside date, the offer price will increase from $218 per share to $225 per share in cash.

The merger agreement provides that, in connection with the termination of the merger agreement under specified circumstances, including termination by AveXis to accept a superior proposal, AveXis will be required to pay to Novartis a fee equal to $284 million.

The merger agreement also provides that, in connection with the termination of the merger agreement under specified antitrust related circumstances, Novartis will be required to pay to AveXis a “reverse termination fee” equal to $437 million, which fee increases in the event Novartis elects to extend the outside date in accordance with the terms of the merger agreement.

Novartis said it plans a smooth transition of AveXis operations and the integration of AveXis’ employees into the Novartis organization to continue the mission of bringing AVXS-101 to patients worldwide.

Completion of the transaction is expected in mid-2018, pending the successful completion of the tender offer and all other closing conditions. Until that time, AveXis will continue to operate as a separate and independent company.

April 9, 2018
Photo: Sean Nolan, president and CEO of AveXis