Novartis inks $3.2B Chinook buyout to lift kidney disease plans

Novartis wants to give a $3.2 billion lift to its kidney disease pipeline. While working to generate phase 3 data on its own IgA nephropathy candidate, the Swiss drugmaker has seized the chance to buy Chinook Therapeutics for a pair of late-stage programs targeting the rare, progressive chronic kidney disease.

Chinook has accepted a buyout bid worth $3.2 billion upfront, plus $300 million payable if it hits certain regulatory milestones. The upfront portion of the deal values the biotech at $40 a share, a 67% premium over its closing price Friday. It's certainly an attractive offer on the surface—Chinook went public in 2020 in a reverse merger with Aduro Biotech, and its share price has never come close to $40. 

Novartis is paying the premium to take control of two late-stage drug candidates. The most advanced of the assets is atrasentan, an oral endothelin A receptor antagonist that Chinook picked up from AbbVie in 2019 in a deal worth up to $135 million in milestones. 

AbbVie took atrasentan into a phase 3 chronic kidney disease trial in 2013 but stopped the study early after exiting the therapeutic area and seeing a lower than expected rate of the primary renal outcome. Chinook took up the baton, reasoning that evidence of endothelin system activation in IgA nephropathy disease progression suggested blockade of the receptor could improve outcomes in high-risk patients. 

Novartis has stepped in before Chinook has a chance to validate that idea in a phase 3 trial, which is due to read out in the fourth quarter. By the time Chinook has delivered data on atrasentan, it should have begun a phase 3 trial of a second IgA nephropathy candidate, zigakibart.

Chinook is moving the anti-APRIL monoclonal antibody, also known as BION-1301, into phase 3 on the strength of evidence that it can drive durable reductions in mechanistic biomarkers and corresponding clinically meaningful reductions in proteinuria within three months of starting treatment

The drug candidates face competition. Calliditas Therapeutics’ corticosteroid treatment Tarpeyo and Travere Therapeutics’ dual ARB/endothelin receptor antagonist are already on the market, and a clutch of biopharma companies have therapies in development. Novartis, which began a phase 3 trial of iptacopan in IgA nephropathy 2020, is among the companies challenging Chinook for the sector.

Novartis’ decision to get deeper into IgA nephropathy comes after it axed 10% of its pipeline programs to narrow its focus on to five therapeutic areas: cardiovascular, hematology, solid tumors, immunology and neuroscience. In a statement to disclose the Chinook deal, Novartis said the takeover is “fully in line” with its “strategy to focus on innovative medicines and will significantly expand its renal portfolio, complementing the existing pipeline.”