Novartis Eyes Acquisition of RNA Specialist Avidity Biosciences in Latest Strategic Move

Pharmaceutical giant Novartis is reportedly considering the acquisition of Avidity Biosciences, a rare disease-focused biotech company specializing in RNA therapies. This potential takeover, if realized, would mark another significant step in Novartis' recent string of strategic acquisitions and partnerships aimed at bolstering its pipeline and expanding its therapeutic reach.

Potential Acquisition Details and Market Response

According to sources familiar with the matter, as reported by The Financial Times, Novartis has approached Avidity Biosciences with an acquisition offer in recent weeks. While the exact terms of the potential deal remain undisclosed, it is expected that any buyout would likely come at a premium to Avidity's current market capitalization, which stood at $5.82 billion as of Wednesday's market close.

The news of the potential acquisition has already had a significant impact on Avidity's stock, with shares surging 26% on Wednesday following the emergence of the takeover rumors. However, it's important to note that there is no certainty that the deal will come to fruition, and other suitors could potentially approach Avidity.

Avidity's Promising Pipeline and Strategic Fit

Analysts at BMO Capital Markets have described the buyout rumors as "unconfirmed" but "reasonable," citing Avidity's leadership in muscular RNAi therapies across key neuromuscular indications. The biotech's clinical candidates target high unmet need neuromuscular indications that currently lack disease-modifying treatments, potentially enabling "two first-in-disease multi-billion dollar opportunities," according to the analysts.

One of Avidity's most promising assets is delpacibart zotadirsen (del-zota), an investigational antibody-oligonucleotide conjugate (AOC) being developed for the treatment of Duchenne muscular dystrophy patients amenable to exon 44 skipping. Del-zota has shown encouraging results in Phase I/II trials, boosting dystrophin expression to 25% of normal levels. The FDA recently granted Breakthrough Therapy designation to del-zota, and Avidity expects to submit a Biologics License Application for the asset by the end of the year.

In addition to del-zota, Avidity is developing del-desiran for myotonic dystrophy type 1 and del-brax for facioscapulohumeral muscular dystrophy, along with several preclinical programs targeting various other neuromuscular indications.

Novartis' Recent Deal-Making Strategy

The potential acquisition of Avidity Biosciences aligns with Novartis' recent aggressive deal-making strategy. In recent months, the company has engaged in several significant transactions:

1. A four-year pact with Flagship Pioneering's startup ProFound Therapeutics, with up to $750 million at stake per cardiovascular target.
2. The $1.7 billion acquisition of Regulus Therapeutics and its miRNA-targeting molecules in April.
3. A $3.1 billion investment to acquire Anthos Therapeutics in February, securing the rights to abelacimab, an anticoagulant antibody previously owned by Novartis.

These moves demonstrate Novartis' commitment to expanding its pipeline and capabilities through strategic acquisitions and partnerships, with a particular focus on innovative therapies and technologies.