Novartis will acquire the French company, Advanced Accelerator Applications (AAA), for $3.9 billion. This will provide Novartis a position in radiopharmaceuticals and access to a new therapy for the unusual type of pancreatic cancer that killed Steve Jobs.
The acquisition boosts the company’s oncology business which was already improved from the 2015 acquisition of GlaxoSmithKline’s advertised cancer drugs and the approval of an innovative gene-modifying leukemia treatment in August.
The acquisition suits Novartis Chief Executive Joe Jimenez’s strategy of pursuing deals valued around $5 billion. With AAA, Novartis obtains technology that uses trace amounts of radioactive compounds to generate images of organs and lesions to diagnose diseases but it also has the ability to be used to fight cancer.
AAA’s leading product, Lutathera, gained European Union support in September against rare gastroenteropancreatic neuroendocrine tumors. “Novartis has a strong legacy in the development and commercialization of medicines for neuroendocrine tumors,” said Bruno Strigini, head of Oncology. “With Lutathera we can build on this legacy.”
Lutathera attaches a molecule to diagnose cancer but to also provide treatment by striking tumors with high-energy electrons. It revealed a 79 percent risk reduction versus Novartis’s drug Sandostatin against neuroendocrine tumors during trials
“We see the more sophisticated technology to Lutathera commanding a premium price to Sandostatin and estimate peak sales potential at $2 billion,” according to analyst Bruno Bulic.
The deal will bring in Stefano Buono, AAA founder and 11 percent owner, over $420 million. Buono stated that the deal with the world’s largest maker of prescription drugs will not only back Lutathera’s launch but will speed up the development of its therapies. Buono is a former CERN physicist who progressively took on investors and increased manufacturing ability while formulating small acquisitions. AAA went public in a 2015 IPO. Other large shareholders include Fidelity, 9.1 percent, and HBM Healthcare Investments.