Novartis to buy Avrobio gene therapy for $88M, leaving rest of the biotech on the shelf

Novartis to buy Avrobio gene therapy for $88M, leaving rest of the biotech on the shelf | The Enterprise World

In an unusual agreement, Novartis will pay $87.5 million for a gene therapy candidate from cash-strapped Avrobio gene therapy without agreeing to any milestone payments or royalties in exchange for the clinical-stage product. The announcement follows rumors that Novartis was preparing to acquire the biotech.

 Uncommon genetic disorder cystinosis

The agreement includes AVR-RD-04, a research-based hematopoietic stem cell gene therapy program for the management of the uncommon genetic disorder cystinosis. Data from a phase 1/2 experiment sponsored by the University of California, San Diego showed that after receiving the treatment, the first five patients had ceased using oral cysteamine, the medication used to treat the accumulation of cystine crystals that causes cystinosis.

Based on the information, Avrobio gene therapy was preparing to launch a phase 1/2 trial that would enable registration in the second part of the year. The company, however, decided to sell the candidate to Novartis for an all-in sum of $87.5 million, altering its original plans. No of how well the therapy works, Avrobio will only get that amount.

The conditions mirror Avrobio’s immediate pressures. The Massachusetts-based biotech had $72.3 million at the end of March, which it predicted would be enough to sustain it through the first quarter of 2019. The biotech recognized the Novartis transaction as a strategy to increase its bank balance while constricting its pipeline because its capacity to seek additional funding from investors is constrained given that its stock has been trading below $1 in recent months.

Avrobio gene therapy anticipates having enough cash on hand once the $87.5 million reaches its bank to cover operations through the fourth quarter of 2019. Although estimates the primary completion date as late 2027, even the extended runway may not be enough time for the global registrational phase 2/3 clinical trial of the Gaucher disease treatment AVR-RD-02.

License to use Intellectual Property

 Avrobio gene therapy agreed not to bring claims against Novartis for specific IP violations as part of the agreement and gave the Swiss pharmaceutical company an exclusive license to utilize the certain intellectual property. Avrobio’s current or former emphasis areas, Gaucher disease, Pompe illness, Hunter syndrome, and Fabry disease, are not covered by the agreement not to seek claims.

Why Novartis chose to purchase one program for $87.5 million as opposed to outright purchasing Avrobio gene therapy is one query highlighted by the acquisition. A 100% premium purchase would have cost less than the single-asset deal, and even a 500% premium would be a tiny spend for the Swiss pharmaceutical company, given that Avrobio’s market worth was $34 million when news of the Novartis agreement broke.

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