Novartis AG, the Swiss drugmaker, has reportedly announced its acquisition of Chinook Therapeutics, a biotech company based in Seattle. The deal, valued at $3.5 billion, aims to expedite the late-stage drug development portfolio of Novartis with a new treatment for a rare & severe kidney disease.

The agreement involves the merger of a newly-formed Novartis unit with Chinook, and it is expected to be finalized in the latter half of 2023, as stated in a press release on Monday.

Under the terms of the agreement, Chinook shareholders will an equivalent to $40 per share, i.e., receive $3.2 billion in cash, signifying a significant premium of 66.7% over the closing price on Friday. Pre-market trading for Chinook's shares stood at $40.1.

Additionally, shareholders will be entitled to a contingent value right, potentially valued at up to $300 million, contingent upon specific regulatory milestones achieved, according to Novartis.

Vas Narasimhan, CEO of Novartis, achieved a significant victory this year with Kisqali, a breast cancer drug pivotal to the company's sales growth, which demonstrated efficacy in a broader patient population during a study. Another drug in contention is iptacopan, currently undergoing trials for a rare genetic blood ailment, potentially posing a challenge to Soliris and Ultomiris drugs of AstraZeneca.

Meanwhile, Chinook is anticipating the release of data from its late-stage study on atrasentan, an experimental oral drug for the treatment of a kidney disease called IgAN, scheduled for the fourth quarter of this year.

The company is also actively developing zigakibart, an experimental IgAN treatment administered through injections, and plans to commence a late-stage trial in the third quarter.

Notably, IgAN is a progressive autoimmune disease that primarily affects young adults and can result in kidney failure necessitating dialysis or transplantation. According to Novartis, there are no targeted treatment options currently available for IgAN.

As per industry experts, Novartis' forthcoming spin-off of its generic drugs division, Sandoz, in the latter half of the year signifies the company's increasing reliance on the fortunes of its drug development endeavors.

Source Credit: https://www.reuters.com/markets/deals/novartis-acquire-us-based-chinook-32-bln-upfront-2023-06-12/