Another Deal for Novartis - Analyst Blog

Recently, Novartis (NVS) entered into a collaboration with GenVec (GNVC) for the development of treatments for hearing loss and balance disorders. Earlier, preclinical results have found strong potential in GenVec's adenovector technology for the restoration of hearing and balance functions.

Per the agreement, Novartis has acquired worldwide rights to the program, for which it has paid $5 million upfront. GenVec is also eligible to receive up to $213.6 million in the form of milestone payments and royalties on the sale of the drug. In addition, Novartis has purchased shares of GenVec worth $2 million. It will also provide funding to GenVec for conducting research programs for the development of additional adenovectors for hearing loss.

Novartis is looking at strengthening its pipeline to compensate for the loss of revenues once several of its products start facing generic competition. Earlier this month, the company announced its intention to gain full ownership of eye care company Alcon Inc. (ACL).
 
With both Alcon and Novartis possessing complementary eye care product portfolios, this deal should allow Novartis to strengthen its position in the eye care market. The eye care market presents significant growth potential, thanks to the unmet needs of the aging population.
 
In another agreement, in November 2009, Novartis entered into a collaboration and license agreement with Incyte Corporation (INCY) for two of its pipeline candidates – INCB18424, an oral JAK1/JAK2 inhibitor and INCB28060, an oral cMET inhibitor. While the former is currently being studied in a phase III clinical trial for myelofibrosis (MF), the latter is yet to enter phase I trials as a potential treatment for multiple cancers.
 
Novartis is following a strategy of acquiring candidates with strong potential in the early to mid stages of development. While this strategy has its own inherent risks associated with early stage pipeline candidates, the requirement of funds is lower.

Read the full analyst report on "NVS"
Read the full analyst report on "GNVC"
Read the full analyst report on "INCY"
Read the full analyst report on "ACL"
Zacks Investment Research