Where will Novartis spend the $21B from Roche stake sale? Alnylam buyout could be one: report

Novartis
Buying Alnylam would fit in Novartis CEO Vas Narasimhan’s strategy of building the Swiss pharma around cutting-edge platforms. (Novartis)

Novartis is getting a huge influx of cash from selling its 20-year stake in Roche, triggering speculation about where the Swiss pharma will spend the money. Another large acquisition could be next, with a familiar face now reportedly on the shopping list.

Alnylam Pharmaceuticals is a prime potential buyout target for Novartis, Bloomberg reported, citing people with knowledge of the matter.

The Cambridge, Massachusetts-based biotech is the developer of the RNA interference (RNAi) technology behind Novartis’ newly acquired cholesterol drug Leqvio, also known as inclisiran, which nears an FDA decision.

The revelation coincides with Novo Nordisk’ announcement that it is shelling out $3.3 billion to purchase clinical-stage RNAi biotech Dicerna Pharma. It also comes months after Novartis Chairman Joerg Reinhardt said the company was considering venturing into the hot mRNA field. The company currently supports fill and finish of Pfizer and BioNTech’s mRNA COVID-19 vaccine, Comirnaty.

When asked for comments on potentially pursuing mRNA during a conference call in July, Novartis CEO Vas Narasimhan pointed to the drugmaker’s ongoing efforts in RNAi.

RELATED: Novartis exits 20-year Roche stake, creating a $20.7B question about CEO Vas Narasimhan's next M&A move

Buying Alnylam would fit in with Narasimhan’s strategy of building Novartis around cutting-edge platforms. Novartis leads in cell and gene therapy and radiopharmaceuticals, with big assists from acquisitions of AveXis and Endocyte.

Novartis and Alnylam go way back. Long before the takeover of Leqvio developer The Medicines Company, Novartis had formed an alliance with Alnylam in 2005. But the Big Pharma almost left the RNAi space in 2014 amid an industrywide exodus.

At that time, Novartis cited challenges with formulation and delivery as well as the limited range of relevant targets where siRNA could be used. Small interfering RNA (siRNA), which works by silencing mRNA that encodes for disease-causing proteins, is one type of RNAi therapy.

Alnylam pressed on with the Nobel prize-winning science and successfully introduced Onpattro in 2018 as the first FDA-approved RNAi therapeutic. The drug is for nerve damage caused by the rare genetic disorder hereditary transthyretin amyloidosis (hATTR). Alnylam is also looking to expand the drug to ATTR affecting the heart, a potential blockbuster opportunity, with top-line phase 3 data expected mid-2022.

Novartis could help with both indications given its presence in neuroscience and cardiovascular diseases. The company sells multiple sclerosis treatments Gilenya, Mayzent and Kesimpta, spinal muscular atrophy therapy Zolgensma and popular heart failure med Entresto.

Leqvio, approved in Europe for certain patients with high bad cholesterol levels, is the first drug for a common disease coming out of Alnylam’s platform. Other candidates in Alnylam’s pipeline for prevalent diseases include zilebesiran, which is in phase 2 testing for high blood pressure.

RELATED: Alnylam founding CEO Maraganore steps down after pioneering RNA interference therapy

Alnylam is in the middle of a CEO transition, as longtime captain John Maragonore hands the helm to president and chief operating officer, Yvonne Greenstreet. Investors viewed the transition as reducing the possibility of near-term M&A as an option for the company, SVB Leerink analyst Mani Foroohar and Berenberg analyst Zhiqiang Shu wrote in their separate notes after the news a few weeks ago.

The increased chatter about potential transactions also came amid a strategic review of Sandoz after years of building autonomy for the Novartis generics unit. Once Novartis said earlier this month that it would sell back 53.3 million Roche bearer shares for about $20.7 billion, industry watchers started compiling their lists of potential targets. Jefferies analyst Peter Welford at the time figured oncology, cardiovascular disease and novel gene therapies could land in the drugmaker’s crosshairs.

Novartis pharma division’s chief financial officer Mukul Mehta highlighted eye and respiratory diseases as possible areas for bolt-on deals, Welford noted in a Wednesday note after talking to the executive. Oncology belongs to a different division at Novartis.

Gene therapy player BioMarin Pharmaceutical, which often finds itself among the most attractive buyout targets, is also seen as a potential target. Several investors recently polled by Mizuho analyst Salim Syed also proposed cell and gene therapy developer Sangamo Therapeutics and CGRP migraine drug developer Biohaven, among others.