Novartis Just Made an $8.7 Billion Dollar Bet on this Gene Therapy Company

Novartis and AveXis shares saw big gains in Monday trading after it was announced that the Swiss drugmaker would be buying the gene therapy company for $8.7 billion in cash.

Novartis announced that it would be paying $218 a share for AveXis, a number that represents a 72% premium compared to the stock’s 30-day volume weighted average price.

The transaction, which is expected to be completed mid this year, has been approved by both companies’ board of directors.

AveXis has a lead drug candidate called AVXS-101 that is meant for deadly spinal muscular atrophy (SMA).

“We believe the medicine would have a multi-billion dollar peak sales potential,” Novartis Chief Executive Vas Narasimhan said to reporters.

“It also provides us capabilities in gene therapy,” he explained. “We have a robust internal portfolio of gene therapies in ophthalmology and neuroscience in Novartis Institutes for Biomedical Research. And we look forward to using AveXis’s capabilities and technical development capabilities to be able to advance that portfolio.”

He also said, “We believe the medicine would have a multi-billion dollar peak sales potential. We’ve been regularly scanning and looking for bolt-in acquisition candidates.”

Disclaimer: We have no position in Novartis AG (ADR) (NYSE: NVS) nor AveXis Inc. (NASDAQ: AVXS) and have not been compensated for this article.