Shares in Swiss drugmaking giant Novartis (NVS) were looking perkier today after it sealed a $5.2 billion deal with a Chinese peer fighting heart disease.
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Heart Beating
Novartis was up over 1% as it signed the licensing and options deal with Argo Biopharmaceutical for its experimental drug candidates targeting cardiovascular disease.
Argo is developing treatments using RNA interference technology, or RNAi, to tackle genes that contribute to disease or render them ineffective.
The deal builds on Novartis’ ongoing collaboration with Argo, and includes the right of first negotiation for Argo’s snappily named experimental drug, BW-00112.
It should also help NVS keep up its stellar performance this year, which has beaten a number of its drug developing peers – see below:
This RNAi drug is currently in mid-stage development for severe hypertriglyceridemia, which leads to elevated levels of a type of fat in the blood and increases the risk of cardiovascular diseases such as heart attack and stroke.
Paradigm Shift
“Argo’s candidates, which are designed to “deeply and durably target disease-causing proteins, represent an important paradigm shift in the prevention and treatment of cardiovascular diseases,” said Shaun Coughlin, Global Head of Cardiovascular and Metabolism at Novartis Biomedical Research.
Under the agreement for sales outside China, Argo would receive an upfront payment of $160 million and up to $5.2 billion in milestone payments and royalties on future sales.
According to the terms of the deal, Novartis will also have the option to license two discovery-stage drug candidates, one for severe hypertriglyceridemia, and the other for mixed dyslipidemia which is another heart risk, as well as an additional RNA-based molecule expected to enter clinical trials next year.
Argo said Novartis has also expressed a non-binding intention to take part in its next round of equity financing.
Novartis will also hope the deal will give its Chinese business a boost. In its Q2 earnings it highlighted a sector-wide slowdown in pharmaceutical spending in China.
Is NVS a Good Stock to Buy Now?
On TipRanks, NVS has a Hold consensus based on 1 Buy and 3 Hold ratings. Its highest price target is $129. NVS stock’s consensus price target is $112.33, implying a 12.40% downside.
