Summertime Sales from Novartis

It’s been a busy summer for Novartis AG (NYSE: NVS). The Swiss drug-maker has sold off a few assets, one at a loss.

On August 31, Mylan NV (NYSE: MYL) acknowledged that it paid $463 million for Novartis’ cystic fibrosis products. Novartis sold the worldwide rights to commercialize its cystic fibrosis products TOBI Podhaler (tobramycin inhalation powder) and TOBI (tobramycin solution for inhalation). Mylan expects to pay $240 million this year, with the rest coming later.

Then on September 6, Novartis announced the sale of certain assets in its Sandoz U.S. portfolio,  specifically the Sandoz dermatology business and generic oral solids portfolio. It comprises approximately 300 products, as well as additional development projects. The business had net sales of $600 million in the first half of 2018, or approximately $1.2 billion, annualized.

Aurobindo Pharma Ltd. (BSE: AUROBINDO) had been in talks with Novartis, and its final offer came in at $900 million cash upfront, with an additional $100 million of potential earn-outs.

This transaction will result in a roughly $70 million impairment for Novartis, which will be confirmed when it releases third-quarter results in October 2018.

Perhaps Novartis is willing to take the loss in order to fund its 2018 acquisitions, chief of which is the $8.7 billion deal for AveXis, Inc. (NASDAQ: AVXS), which closed on May 15.

AveXis is a clinical-stage gene therapy company focused on rare and life-threatening neurological genetic diseases. It has several ongoing clinical studies for the treatment of spinal muscular atrophy (SMA), an inherited neurodegenerative disease caused by a defect in a single gene.



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