Novartis NVS announced that it is planning to acquire France-based Advanced Accelerator Applications AAAP, a radiopharmaceutical company focused on developing nuclear medicine for a cash offer of $3.9 billion. The company said that it will make an offer for the acquisition upon completion of works council consultation.
The buyout will strengthen Novartis’ presence in cancer space by adding Advanced Accelerator’s RadioLigand Therapy (“RLT”), Lutathera, in its portfolio. The deal will also expand the company’s pipeline into RLT programs, which has significant sales potential for being an innovative approach to treating cancer.
Earlier in September, Lutathera was approved in the EU for treatment of gastroenteropancreatic neuroendocrine tumors (GEP-NETs) in adults. It is also under review in the United States for the given indication with a response expected on Jan 26, 2018 from the FDA.
Shares of Novartis have underperformed the industry year to date. The stock has gained 13.5% compared with the industry’s 14.5% rally during the period.
Significantly, Novartis is actively pursuing deals in order to build a long-term portfolio. In the past few years, the company has been seen inking several licensing deals and targets to achieve more on the front in the future.
Earlier, in March 2015, Novartis had acquired certain oncology products and pipeline compounds from GlaxoSmithKline GSK. In exchange, it sold its non-influenza Vaccines business to Glaxo.
We remind investors that Novartis already has a strong oncology portfolio of drugs like Afinitor, Exjade, Jakavi, Zykadia, Tasigna, Jadenu and an improved formulation of Exjade. Also, the FDA recently approved its breakthrough gene transfer treatment, Kymriah suspension, for treating patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (“ALL”) that is refractory or in second or later relapse. The approval of Kymriah is a major boost to Novartis, given its potential in the CAR T therapy space.
Zacks Rank & Stocks to Consider
Novartis currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Ligand Pharmaceuticals Inc. LGND, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ligand’s earnings per share estimates have moved up from $3.68 to $3.70 for 2018 over the last 30 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 6.19%. Share price of the company has soared 40.7% year to date.
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