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Novartis (NVS) to Acquire Subsidiary of IFM Therapeutics

Zacks Equity Research

Novartis AG NVS announced that it will acquire IFM Tre, a subsidiary of IFM Therapeutics LLC.

The acquisition will add a broad portfolio of immunomodulatory medicines, focused on developing anti-inflammatory medicines targeting the NLRP3 (nucleotide-binding domain, leucine-rich repeat-containing receptor pyrin domain containing 3) inflammasome. The acquisition will give Novartis full rights to IFM Tre's portfolio of NLRP3 inhibitors.

The three inhibitors include IFM-2427, a clinical-stage systemic antagonist for an array of chronic inflammatory disorders, including gout, atherosclerosis and nonalcoholic steatohepatitis (NASH); a preclinical-stage gut-directed molecule for the treatment of inflammatory bowel disease; and a preclinical-stage central nervous system (CNS)-penetrant molecule. The acquisition is expected to be complementary to Novartis’ pipeline of anti-inflammatory medicines.

The transaction will close in the second quarter. Per the agreement, Novartis will acquire all of the outstanding capital stock of IFM Tre. In addition, IFM Tre will receive an upfront payment and will be eligible for downstream milestone payments.

Last year was a transformative year for Novartis, as it restructured its business to focus on becoming a core drug-focused company, powered by data and digital technologies.

The company earlier entered into a clinical development agreement with Pfizer PFE. The agreement includes a clinical trial to evaluate the combination of tropifexor (LJN452) and one or more Pfizer compounds for the treatment of NASH.

NASH is a key target area for most pharma/biotech companies, given the market potential. Key players with promising candidates in the space include Intercept Pharmaceuticals, Inc. ICPT, which recently announced positive top-line results from its pivotal phase III REGENERATE study on obeticholic acid (OCA) in patients with liver fibrosis due to NASH.  Allergan plc AGN too has an interesting candidate, cenicriviroc in its pipeline for the treatment of NASH.

Shares of the company have gained 13.5% in the past six months compared with the industry's 3.6% growth.


Meanwhile, Novartis is looking to solidify its presence in the gene-therapy space. It acquired U.S.-based clinical-stage gene-therapy company, AveXis, Inc. The company also acquired Endocyte to expand expertise in radiopharmaceuticals. We expect more acquisitions in the coming months, as the company looks to further restructure its business.

Zacks Rank

Novartis currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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