Novartis to buy The Medicines Company for $9.7bn

Novartis is to buy The Medicines Company and its cholesterol-lowering drug for $9.7 billion, confirming press speculation.

The Swiss giant is to pay considerably more than expected, with the $85 per share representing a premium of 40% over The Medicines Company’s average over the last 30 days of $60.33.

Reports last week suggested a price tag in the region of $5 billion, although the transaction is in line with Novartis’ strategy of making smaller acquisitions of up to $10 billion, which equates to $5 of its market capitalisation.

At the heart of the deal is inclisiran, The Medicines Company’s phase 3 RNA-silencing drug in phase 3 development to lower levels of “bad” low density lipoprotein (LDL) cholesterol.

Originally developed in partnership with Alnylam, inclisiran is an RNA-silencing (siRNA) drug that if approved could be a competitor to PCSK9 antibodies from Amgen and Sanofi, although with a different mechanism of action.

It works by silencing the RNA coding for the PCSK9 protein, which has the knock-on effect of reducing cholesterol levels.

While Amgen and Sanofi’s Repatha and Praluent have disappointed in terms of sales, inclisiran could have the edge if approved after trial data showed comparable effectiveness and a more convenient subcutaneous administration method.

The drug could be administered twice yearly during routine interactions with healthcare professionals, instead of injections every two weeks.

Analysts from Jefferies suggested that the acquisition will initially drag on earnings per share by around 2-3% in 2020 to 2021.

However with “modest” peak sales of $4 billion, around half of which are likely to be in the US, the buy could add 10% to EPS by 2027.

The drug may also get off to a slow start, as a US survey by Jefferies suggested around 60% of doctors want to see cardiovascular outcomes before prescribing inclisiran.

Amgen and Sanofi also encountered similar issues with their injected cholesterol drugs, and outcomes data will not be available from inclisiran until 2023 or 2024 when the ongoing ORION-4 CVOT gives a data readout.

Jefferies noted that data so far is strong from the ORION-10 and -11 studies in atherosclerotic cardiovascular disease, and the ORION-9 trial in heterozygous familial hypercholesterolaemia.

This showed durable LDL cholesterol reductions of 50%, and Jefferies’ team of analysts noted it did not appear to cause off-target effects seen with previous siRNA molecules.