Novartis acquires Avidity Bio for $12B, continuing RNA and neuroscience growth strategy
Novartis has made RNA drugs one of its top strategic targets and already has RNA therapies targeting cardiovascular indications. The pharmaceutical giant is now making one of its biggest bets ever with a $12 billion acquisition of Avidity Biosciences, which has three late-stage therapeutic candidates that deliver RNA into muscle tissue to treat rare neuromuscular diseases.
The agreement also brings Novartis' Avidity platform technology, which can expand the delivery of RNA therapeutics to more tissue types in the body. Avidity's assets complement Novartis' pipeline and portfolio, which includes spinal muscular atrophy gene therapy Zolgensma, CEO Vas Narasimhan said on an investor call on Monday.
“We have made it clear to you that we want to do transactions in our core therapeutic areas and in our core technology platforms, and this is a deal that fits both,” Narasimhan said. “We are strengthening our neuroscience franchise with the addition of three late-stage neuromuscular programs, building on the extensive experience we have with Zolgensma.”
San Diego-based Avidity's drugs use RNA to address the underlying causes of disease. These therapies harness the targeting ability of antibodies to reach their destination. The RNA component is an oligonucleotide designed to modulate disease processes and is linked to antibodies that target specific tissues in the body. This new type of drug is called an antibody oligonucleotide conjugate (AOC).
The Avidity platform's most advanced programs include delpacibart zotadirsen for the treatment of Duchenne muscular dystrophy (DMD), depacibart eteddesiran for the treatment of myotonic dystrophy type 1 (DM1) and delpacibart braxlosiran for the treatment of facioscapulohumeral muscular dystrophy (FSHD). Last month, Avidity reported new Phase 1/2 data from patients treated for DMD, showing improvements in multiple measures of muscle function one year after treatment. The company said it still expects to submit an application to regulators before the end of the year to seek accelerated approval from the FDA.
Narasimhan acknowledged that DMD is a small indication, but added that new clinical data validates the Avidity platform and shows that the technology can deliver treatment to muscle tissue. Bob Baloh, global head of neuroscience at Novartis Biomedical Research, said the restoration of dystrophin, a key muscle protein deficient in DMD patients, was at a level not seen with currently available Duchenne therapies. Baloh added that Novartis believes the Avidity platform could be used more broadly to reach other types of tissue in the body, but the initial focus will be on muscle diseases.
Many available RNA therapeutics target the liver. One of them is Novartis' Leqvio, a small interfering RNA therapy for patients with high cholesterol. The drug works by targeting the gene that codes for PCSK9, a liver protein whose high levels hinder the body's ability to clear bad cholesterol. The biopharmaceutical industry is interested in delivering RNA therapeutics beyond the liver, and Avidity's technology provides Novartis with the means to achieve this goal.
In addition to neuromuscular diseases, Avidity's research has resulted in five cardiology programs, all in the preclinical stage. The projects will now be spun off into an independent public company called “SpinCo”. The new company will succeed Avidity's collaborations with Bristol-Myers Squibb and Eli Lilly and Company. It will also retain the right to continue using Avidity's technology for other cardiology applications. Narasimhan said the decision to divest Avidity's aerobics program was not driven by antitrust concerns. He said the spin-off provides the simplest and most direct way to resolve the collaboration related to these assets.
Avidity said the transfer of assets to the spin-off company triggers rights of first refusal with existing partners. While the company's regulatory filings don't specify the projects or partners covered, Leerink Partners spoke with Avidity management, who said BMS has the contractual rights. Bristol-Myers Squibb has 10 business days to decide whether to enter exclusive negotiations for the cardiology pipeline, Leerink analyst Joseph Schwartz said in a note to investors on Monday. Commencing these negotiations will trigger a 90-day period to complete due diligence and make an offer. If BMS does not exercise this right, the spin-off company will proceed with the spin-off.
Neuroscience is the smallest of Novartis' four core therapeutic areas by revenue (the others are cardiovascular, renal, metabolic, immunology and oncology). The company's top neuroscience product is multiple sclerosis drug Kesimpta, which generated $3.2 billion in revenue in 2024, up 43% from the previous year. Zolgensma follows closely behind, with revenue of $1.2 billion in 2024, a 2% increase in sales from the previous year. Zolgensma comes from its $8.7 billion acquisition of AveXis in 2018.
Novartis' three Avidity drugs are expected to be available in 2030, Narasimhan said. Avidity's programs for DM1 and FSHD, two diseases for which there currently are no FDA-approved therapies, offer the potential of multiple blockbusters. Leerink's Schwartz described these Avidity programs as very valuable additions to Novartis' neuromuscular pipeline that complements Zolgensma, adding that they will benefit from the pharma giant's global commercialization capabilities.
Avidity is the latest in Novartis' growing list of RNA deals. Following its acquisition of The Medicines Company, the pharmaceutical giant acquired RNAi interference therapy developer startup DTx Pharma in 2023. Last month, Novartis agreed to pay $200 million upfront for the rights to a preclinical RNAi therapy for Parkinson's disease developed by Arrowhead Pharmaceuticals. The Avidity deal has some overlap with gene therapy developer Kate Therapeutics, which Novartis acquired last year. Kate's projects include preclinical treatments for DMD and FSHD.
Financial terms of the Avidity acquisition require Novartis to pay $72 in cash for each Avidity share, which represents a 46% premium to the biotech's closing price on Friday and a 62% premium to the stock's average closing price over the past 30 days. According to Avidity's regulatory filings, its shareholders will also receive one share of SpinCo common stock for each Avidity share held. SpinCo will be launched with $270 million in cash provided by Avidity and will be led by CEO Kathleen Gallagher, currently Avidity's chief program officer. Avidity CEO Sarah Boyce will serve as chair of SpinCo's board of directors.
The transaction has been approved by the boards of directors of Novartis and Avidity, but still requires regulatory and Avidity shareholder approval. The transaction is expected to close in the first half of 2026.
Photo: Adrian Moser/Bloomberg via Getty Images
