Polar Capital investee Novartis confirms Alcon spin-off
Novartis shares have risen by 4% today in response to news that it will conduct a 100% spin off next year of its Alcon eye-care unit into a separately traded company listed in Switzerland and the US. The move, which comes after a strategic review of the long under-performing unit, will result in Novartis becoming focused exclusively on prescription medicines (70-80% innovative medicines and 20-30% generics). Novartis is the second largest holding for Polar Capital Global Healthcare Trust (PCGH, 4.4% of NAV) and also held by non sector specialist trust such as Edinburgh Investment (EDIN, 2.2% of NAV).
Novartis originally acquired Nestlé’s 77% shareholding in Alcon in 2008 for $39bn, later acquiring the 23% shares remaining in public hands in 2010 for $12.9bn. It later split off and transferred Alcon’s ophthalmic pharmaceuticals business into its own Innovative Medicines division, leaving the Alcon division with the surgical and vision care (contact lens) businesses, where it is respectively the market leader and joint leader with J&J.
The Swiss drugs giant has also disclosed plans to spend $5bn on a buy-back of its own shares, a sum equivalent to the net proceeds of its $13bn sale of its stake in a consumer-health products joint venture to GlaxoSmithKline after the $8.7bn spent earlier this year on its acquisition of the US gene therapy company AveXis. Novartis is looking to expand its gene-therapy pipeline – already one of the strongest among big pharma – and concentrate on cancer, neuroscience and ophthalmology. The acquisition of AveXis brought a gene therapy for the treatment of spinal muscular atrophy (SMA), an inherited neurodegenerative disease caused by a defect in a single gene (SMN1). The lead product, AVXS-101, has orphan drug designation as well as breakthrough therapy designation for SMA Type 1. Regulatory filings for AVX-101 are expected to be made in the second half of this year, allowing for potential approval and launch in 2019. AveXis also has other pipeline products for Rett Syndrome and a genetic form of amyotrophic lateral sclerosis caused by mutations in the superoxide dismutase 1 (SOD1) gene.
Novartis has announced that the European Medicines Agency (EMA) has adopted a positive opinion recommending approval of another of its pioneering therapies – Kymriah (tisagenlecleucel) for relapsed/refractory B-cell acute lymphoblastic leukemia and diffuse large B-cell lymphoma (DLBCL), which paves the way for formal approval in the next few months. The CAR-T-cell therapy was approved for the same two indications in the US in January and May this year. The EMA also issued a positive opinion on Gilead’s Yescarta (axicabtagene ciloleucel) CAR-T cell therapy for relapsed/refractory DLBCL and primary mediastinal large B-cell lymphoma.