Swiss drugmaker Novartis said on Sunday it has agreed to acquire U.S. biotech firm Avidity Biosciences for about $12 billion in cash, as the company looks to bolster its portfolio of treatments for rare muscle disorders.
Under the terms of the deal, Avidity shareholders will receive $72 per share in cash, representing a 46% premium to the company’s close on Friday. Bloomberg News previously reported on the deal, citing a person familiar with the matter.
Novartis has been proactively closing deals this year to address the looming patent cliff for some of its most successful drugs, including Entresto for heart failure, Xolair for asthma and Cosentyx for autoimmune diseases.
Under the terms of the deal, Avidity will spin off its early-stage precision cardiology programs into a new company called Spinco, which is expected to be a publicly traded company, Avidity said in a separate statement.
With this acquisition, Novartis is expanding into areas with limited treatment options, while strengthening its presence in the rare disease landscape.
Avidity, a clinical-stage company based in San Diego, California, is developing treatments for various muscle disorders and advancing several first-in-class drug candidates.
Its lead drug, Del-zota, is in early to mid-stage development as a potential treatment for a rare form of Duchenne muscular dystrophy, while the company is also working on two other drugs for serious muscle diseases.
Avidity, which has a market capitalization of nearly $6.7 billion, is working on three experimental drug candidates aimed at treating rare neuromuscular disorders. These candidates, which are expected to seek approval by 2026, use special technology designed to deliver RNA therapies directly to muscle tissue.
Kathleen Gallagher, Avidity’s current chief program officer, will take the helm of Spinco after the spinoff, Avidity said.
The deal helps Novartis establish a stronger position in the US market amid a possible strong tariff threat to the pharmaceutical sector from US President Donald Trump.
In response to tariff proposals put forward by the Trump administration, major pharmaceutical companies such as Johnson & Johnson, Roche and Sanofi have pledged several billion dollars in U.S. investment as they seek to navigate uncertain trade policies.
The Trump administration imposed 39% tariffs on Switzerland in August, causing a sharp drop in Swiss exports to the United States that month. However, pharmaceutical companies were exempt from the initial US duties.