Novartis chases muscular dystrophy treatment with Kate Tx buy

The acquisition of Kate Therapeutics, a San Diego, California-based adeno-associated virus (AAV) gene therapy focused firm, sees Novartis bag therapeutic candidates for Duchenne muscular dystrophy (DMD), facioscapulohumeral dystrophy (FSHD), and myotonic dystrophy type 1 (DM1).

“We are delighted to bring Kate Therapeutics’ platform technologies and programs together with Novartis scientific expertise and leadership in gene therapy and neuroscience innovation,” said Fiona Marshall, president of Biomedical Research at Novartis.

“We have been highly impressed with the rigor and potential of Kate’s science, and we are confident this acquisition will further enhance our ability to bring forward new therapeutic options for patients living with neuromuscular diseases.”

Alongside Kate’s primary programs, Novartis also adds the firm’s technology platforms to its toolkit. Novartis said the platforms integrate capsid and cargo technologies to transport payloads to chosen tissues, while possibly easing off-target effects. This method is said to increase the safety and efficacy of gene therapies, thus creating the possibility to treat neuromuscular diseases.

Specific financial details of the acquisition have not been disclosed, but the transaction value could reach up to $1.1 billion.

Investing in key areas

Neuroscience is one of Novartis’ key therapeutic areas and the company has labelled multiple sclerosis (MS), neurodegenerative diseases, and spinal muscular atrophy (SMA) as areas of focus. In its Q3 2024 earnings call, Vas Narasimhan, CEO of Novartis spoke about M&A activity and said, “we have […] adequate firepower.”

While Narasimhan acknowledged the company has been “very active […] in the sub $1 billion asset space” throughout 2023, he explained how the firm is looking for a “broad range of assets across our key therapeutics areas as well as key technology areas to fill [gaps] we think are critical for us to succeed in [our] four core therapeutic areas or in our three key technology platforms.”

Last week, Novartis ran an investor day in London, UK and updated attendees on its outlook and M&A strategy. The firm highlighted how it will continue to expand its pipeline to include modalities such as radioligand therapies (RLT), xRNA, and cell therapies because of their platform possibilities. Additionally, it predicted its cell and gene therapy (CGT) platform to be worth $55 billion in potential markets by 2030.

Narasimhan said “there is no change to our M&A strategy, we stay very consistent in our belief that we can generate the most value when we can acquire assets primarily in the sub $5 billion space.”

While the firm will “selectively look at the larger deals”, he noted how in the last eight years Novartis has only had two deals made in “that larger space and we are going to stay consistent with that in the future.”  

He described Novartis’ M&A track record as something that is done “very carefully” and viewed “systematically […] We see our overall success rate in line with the overall sector. There are companies that are worse than us, there are a few that are a little bit better than us.”