Novartis AG (NYSE:NVS) Is Moving Further Into Gene Therapy By Buying AveXis (AVXS) for $8.7B- Merck & Co., Inc. (NYSE:MRK)

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Swiss drugmaker, Novartis AG (NYSE:NVS) shares scoring 1.08% to $81.07 in active trade session, while looking at the shares volume, around 2.54 Million shares have changed hands in last session. Novartis (NOVN) reported that it is moving further into gene therapy by buying AveXis (AVXS) for $8.7B, adding a rare-disease treatment that could reap billions in sales.

The purchase reflects a increase of interest in biotech deal-making as great pharmaceutical companies seek promising new assets to boost their pipelines. The $218-per-share cash contract released on Monday represents a 72% premium to AveXis’s 30-day volume-weighted average stock price. The transaction is seen closing in mid-2018.

Novartis CEO Vas Narasimhan, who took over on Feb. 1, is flush with cash, contain just decided to sell his firm’s stake in a consumer healthcare joint venture to GlaxoSmithKline (GSK.L) for $13 billion. Narasimhan is now counting on AveXis’s main drug, AVXS-101 for deadly spinal muscular atrophy (SMA), as well as the Illinois-based company’s gene therapy expertise and manufacturing capabilities, to bolster Novartis’s neuroscience business, a focus for the Swiss company.

This is Novartis’s second notable gene therapy contract current year following it decided to pay $105M upfront and up to $65M in milestone payments for rights to Spark’s blindness treatment Luxturna outside the U.S.

“We believe the medicine would have a multi-billion dollar peak sales potential,” Narasimhan told reporters of AVXS-101, which has so-called breakthrough therapy designation in the United States and is expected to be submitted to regulators this year.

He added, “It also provides us capabilities in gene therapy. “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.” The firm has institutional ownership of 11.00%, while insider ownership included 9.30%. NVS attains analyst recommendation of 2.50 with week’s performance of 1.86%. Investors looking further ahead will note that the Price to next year’s EPS is 7.59%.

Shares of Merck & Co., Inc. (NYSE:MRK) swings enthusiastically in regular trading session, it an advance of 5.25% to close at $56.16. Merck &Co’s (MRK) blockbuster drug Keytruda assisted previously untreated lung cancer patients live longer in a late-stage trial, possible cementing its position as the dominant player in the lucrative lung cancer market.

Merck is already considered the frontrunner in the space and Keytruda is anticipated to earn peak sales of more than $10B in 2023, according to Credit Suisse. Keytruda is already permitted in the U.S. to treat patients with non-small cell lung cancer (NSCLC) who have not received prior therapies and whose tumors show PD-L1 protein levels of 50 percent or greater.

If the firm can show that the new data benefits patients whose PD-L1 expression is between 1 and 49 percent, it would expand Keytruda’s market and raise the competitive benchmark for rivals Bristol-Myers Squibb (BMY.N) and AstraZeneca Plc (AZN.L), BMO Capital Markets analyst Alex Arfaei said.

An independent data monitoring committee determined the examination, which tested Keytruda as a monotherapy to treat NSCLC, expanded the lives of patients significantly compared to chemotherapy. Additional data from Merck, as well as results from trials of competitors, could eventually determine which companies will snatch the largest slice of the pie for the lung cancer market.

Guggenheim Securities analyst Tony Butler told Reuters,“I think the market still believes that there could be other players in the lung cancer market, which would combat overall sales of Keytruda in this setting. “Because we don’t know the full data set we don’t know the survival benefit here.”

Moving forward to saw long-term intention as investor, the experts calculate Return on Investment of 8.20%. The stock is going forward its fifty-two week low with 6.30% and lagging behind from its 52-week high price with -15.43%. MRK last month stock price volatility remained 2.15%.

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