Novartis has been busy doing M&A to focus on higher-margin, innovative medicines under CEO Vas Narasimhan. Toward that goal, the Swiss drugmaker has taken another step and offloaded three endocrine drugs to Recordati.
The drugs on the chopping board are Signifor, its long-acting sister Signifor LAR and in-development follow-up osilodrostat (LCI699). For the three of them, Novartis is getting $390 million upfront, with milestone payments tied to osilodrostat.
These drugs are meant to treat Cushing’s disease and acromegaly, endocrine disorders marked by excessive production of hormones by the adrenal gland or pituitary gland. Cushing's disease is often caused by a benign pituitary tumor, so it’s grouped in Novartis’ oncology portfolio.
Novartis was optimistic about Signifor LAR's prospects when the FDA approved it in 2014. At that time, the Swiss drugmaker was hoping it could help make up sales lost to Sandostatin copycats. But after years off-patent, the Sandostatin franchise in 2018 still turned in $1.59 billion in worldwide sales. And the majority came from Sandostatin LAR, which still faces no generic competition in the U.S. or the E.U. As for Signifor, it only sold $72 million last year, according to Recordati—a figure that was clearly too small for Novartis’ taste.
While Signifor must be administered by a healthcare professional by intramuscular injection, phase 3 candidate osilodrostat is an oral drug that inhibits 11 beta-hydroxylase, an enzyme involved in cortisol synthesis.
Italy’s Ricordati, which was recently picked up by private equity player CVC Capital Partners, thinks the drugs would fit well into its rare-disease portfolio. “These important additions to our product portfolio of treatments for severe rare diseases represent a key and historical milestone for Recordati,” the company’s CEO, Andrea Recordati, said in a statement.
The deal represents a small sale for Novartis, which has been an active player on the M&A scene. As a seller, it recently jettisoned the Sandoz U.S. dermatology business and some generic drugs to India’s Aurobindo Pharma for $1 billion, returned its stake in a consumer health joint venture with GlaxoSmithKline, and spun off the eyecare business Alcon. At the same time, it has bought Takeda’s Xiidra eye drug in a deal potentially worth $5.3 billion and has doubled down on novel platforms, including gene and cell therapies and radiotherapies, all done under Narasimhan’s plan to focus Novartis as a “medicines company.”