Novartis AG Scoops Up U.S. Sickle Cell Drugmaker Selexys in $665 Million Deal

Published: Nov 22, 2016

Novartis Scoops Up U.S. Sickle Cell Drugmaker Selexys in $665 Million Deal November 21, 2016
By Mark Terry, Breaking News Staff

Swiss-based Novartis today acquired Selexys Pharmaceuticals. Novartis exercised its option to acquire the company based on the SUSTAIN Phase II clinical trial of SelG1, an anti-P-selectin antibody being evaluated for vaso-occlusive pain crises in patients with sickle cell disease (SCD).

Selexys Pharmaceuticals, headquartered in Oklahoma City, Oklahoma, recently finished a Phase II trial, although data won’t be released for several weeks. In 2012, Novartis had inked a deal with the company that gave it a buyout option, which it now chose to take. The deal is valued up to $665 million. The details of the Phase II trial will be released at the American Society of Hematology (ASH) meeting being held in San Diego from December 3-6.

The acquisition will expand Novartis’ presence in hematology and blood diseases. It’s also consistent with the company’s chief executive officer, Joe Jiminez’s, expressed interest in bolt-on acquisitions.

Whether it will assuage investors who are concerned about faltering share price is an open question.

“It’s definitely an improvement of the hematology pipeline within the oncology business,” Michael Nawrath, an analyst with Zuercher Kantonalbank, wrote in a note to investors, “but it’s not exactly a bargain and it won’t have any influence on the share price. Novartis’ problems—revenue losses from patent-expired Gleevec, lacking growth at Alcon and the weak sales begin for Entresto—easily overshadow this acquisition.”

Vaso-occlusive crises in SCD occur when the sickle-shaped red blood cells interrupt blood flow within blood vessels.

So far, the news hasn’t moved the needle on Novartis . Shares traded at a year high of $88.05 on Dec. 29, 2015, dropped to $71.11 on Feb. 29, 2016, and popped back to $83.46 on July 25. Shares are currently trading for $70.64.

Community Financial News reported this morning that Novartis shares had an average rating of “Hold” from 17 different brokerages. Two analysts gave it a “sell,” 10 a “hold,” four offered a “buy” and one a “strong buy.” The average 12-month price target among analysts who have updated in the last year is $88.50.

Although it’s somewhat difficult to evaluate the promise of the acquisition without details from the clinical trial, John Carroll, writing for Endpoints News, said, “Whatever Oklahoma City-based Selexys Pharmaceuticals just saw in its newly-wrapped Phase II study for sickle cell disease, the data must have been impressive. Pharma giant Novartis has stepped in and closed the loop on its 2012 buyout option, bagging the company in a deal valued at up to $665 million.”

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