Here's Why Avidity Biosciences Stock Soared This Week (There's More to the Deal Than You Might Think)
Key Points
Avidity is at the forefront of an exciting new class of treatments.
Avidity shareholders will receive consideration for an exciting spinoff before Novartis acquires Avidity.
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Shares in Avidity Biosciences (NASDAQ: RNA) soared by 42% in the week to Friday morning following the announcement of a unanimous deal for Avidity to be acquired by Novartis (NYSE: NVS) for $72 per share. The deal values Avidity at $12 billion. However, that's not all Avidity shareholders will receive.
A complicated deal
Novartis is acquiring Avidity to enhance its developmental pipeline by leveraging Avidity's expertise in a class of ribonucleic acid (RNA) therapeutics known as antibody oligonucleotide conjugates (AOC). A new class of therapeutics, AOCs offer the potential for targeted precision delivery of gene-modulating oligonucleotides that regulate genes for treatment purposes.
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As such, Novartis will acquire Avidity's pipeline of treatments for muscular dystrophy, which are currently in clinical trials.
However, as part of the deal, Avidity will first spin off its "early stage precision cardiology programs," for which "Avidity stockholders will also receive consideration for the separation of the SpinCo business," according to the press release. The transactions are expected to be complete by the first half of 2026.
Image source: Getty Images.
The deal will please Avidity shareholders, as well as those of Bristol Myers Squibb and Eli Lilly, since these companies have existing collaborations with Avidity in the field of cardiology. Moreover, SpinCo will continue the development of Avidity's proprietary platform, including next-generation technology improvements, for applications in the cardiology field.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.
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