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Why Novartis Is Moving to Acquire Advanced Accelerator Applications

Chris Lange

Advanced Accelerator Applications S.A. (AAAP) shares made a run early on Monday after it came public that Novartis A.G. (NVS) plans to buy the company. This transaction would ultimately strengthen Novartis's oncology presence with both near-term product launches as well as a new technology platform with potential applications across a number of oncology early development programs.

Novartis intends to commence a tender offer for 100% of the company subject to certain conditions.

Under the terms of the memorandum of understanding — approved by Advanced Accelerator’s board of directors — Novartis will make a cash offer of $41 per ordinary share and $82 per American depositary share (each representing two ordinary shares). This transaction is currently valued up to $3.9 billion.

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Part of this acquisition is centering on Advanced Accelerator’s Lutathera, which is a first-in-class RLT product for neuroendocrine tumors (NETs).

Lutathera was approved in Europe in September 2017 for the treatment of unresectable or metastatic, progressive, well differentiated (G1 and G2), somatostatin receptor positive gastroenteropancreatic neuroendocrine tumors (GEP-NETs). Lutathera is under review in the United States with a Prescription Drug User Fee Act (PDUFA) date of January 26, 2018.

Bruno Strigini, CEO, Novartis Oncology, added:

Novartis has a strong legacy in the development and commercialization of medicines for neuroendocrine tumors where significant unmet need remains for patients. With Lutathera we can build on this legacy by expanding the global reach of this novel, differentiated treatment approach and work to maximize Advanced Accelerator Applications broader RLT pipeline and an exciting technology platform.

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Shares of Advanced Accelerator were last seen up more than 10% at $80.41, with a consensus analyst price target of $57.02 and a 52-week trading range of $23.50 to $80.70.

Novartis shares were trading up more than 1% at $81.60. The stock has a 52-week range of $66.93 to $86.90 and a consensus price target of $92.50.

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