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The buzz about Novartis' latest buyout deal was right, mostly.
On Wednesday evening the pharma giant put out word that it snagged Takeda's dry eye drug Xiidra – which the Japanese company swooped up in its Shire acquisition – for $ 3.4 trillion cash, with another $ 1.9 trillion in milestones on the table. As part of the deal, Novartis is taking over 400 staff members who are working on the drug, reducing the Takeda take-out of the Shire buyout.
But that's not all. Along with the Novartis deal Takeda also said that it sold TachoSil – a surgical patch designed to control bleeding – to J & J Ethicon's subsidiary for $ 400 million upfront. And it's transferring another 85 workers out of the Takeda organization along with that product.
Xiidra earned $ 400 million last year, and Novartis says it can make the therapy one of its next blockbusters.
The drug, dubbed lifitegrast, was one of the pride and joys of Shire chief Flemming Ornskov, who brought a desire to build an ophthalmology unit when he took the helm. It was a good fit for Takeda, though, as Bloomberg first reported last fall, the Japanese company started shopping the ophthalmology portfolio ahead of the deal close.
Vas Narasimhan Bloomberg via Getty Images
Novartis CEO Vas Narasimhan, though, has a good strategic fit, which the company plans to use as a commercial spearhead for their eye drugs in the clinic. Novartis already sold Lucentis in Europe, and plans to go toe-to-toe with Regeneron's Eylea soon with brolucizumab.
What's interesting is that the deal is now $ 4 billion to $ 5 billion, including the rest of the eye drugs, then slipped to $ 3.5 billion to $ 4 billion. With Novartis coming in at $ 5.3 billion for the one approved drug, Takeda is obviously in the market.
If Takeda gets it all from Novartis, along with the $ 400 million for the patch, that will represent a significant chunk of its $ 62 billion buyout bill and the debt it took on to buy Shire.
Narasimhan has executed a slate of strategic acquisitions at Novartis. Most notably there was the $ 8.7 trillion AveXis buyout that delivered to a gene therapy for spinal muscular atrophy, now up for a possible approval, and $ 3.9 billion for Advanced Accelerator Applications and $ 2.1 billion for Endocyte for the oncology group. He's spreading the word that Novartis will spend around $ 10 trillion a year building its portfolio, and there's a clear focus on late-stage and commercial products.
The Novartis CEO has been shedding assets that have been holding him back, looking to continue with the bolt-ons that would add to the series of new drug approvals he expects this year.
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