Novartis pays $500M to fly DTx's FALCON platform, 3 preclinical neuroscience programs

On Novartis’ previous earnings call, CEO Vas Narasimhan, M.D., insisted that despite a “relatively quiet” year, the Swiss Big Pharma was “very actively” looking at bolt-on M&A to boost the business. With less than a day to go before the company’s next quarterly call, Novartis will certainly have something to point to—having just signed off its second acquisition in as many months.

The latest deal sees Novartis push further into neuroscience courtesy of a $500 million upfront payment for siRNA-focused DTx Pharma. For its money, the Big Pharma is getting full rights to the San Diego-based biotech’s fatty acid ligand-conjugated oligonucleotide (FALCON) platform as well as a preclinical therapy for Charcot-Marie-Tooth disease type 1A (CMT1A), a neuromuscular disorder for which there are currently no approved meds.

In addition, Novartis will gain two other preclinical programs for undisclosed neuromuscular and central nervous system indications. Should those three programs develop as planned, DTx will be eligible to double its money thanks to up to $500 million in milestone payments.

Coming the same morning that Novo Nordisk announced an RNA-focused collaboration with Eleven Therapeutics, Novartis said its acquisition of DTx will expand its own “capabilities in RNA-based therapeutics, adding DTx’s FALCON platform to the Novartis siRNA toolkit.”

The CMT1A program, called DTx-1252, is designed to target the “root cause” of the disorder by tackling the overexpression of a protein called PMP22 that affects the myelin sheath that should normally support nerves in the peripheral nervous system. “The FALCON platform facilitates this targeted approach by conjugating siRNAs to naturally occurring fatty acids to improve the biodistribution and cellular uptake to tissues and cell types of interest,” Novartis explained in this morning’s release.

“The growing arsenal of therapeutic platforms available to us continues to enable the development of novel, high-value medicines—particularly in cases where the underlying biology of disease is well defined,” Robert Baloh, global head of neuroscience for the Novartis Institutes for BioMedical Research, said in the release.

“We look forward to continuing the development of DTx’s potential first-in-class medicine for CMT1A and are hopeful we can bring a therapeutic option to patients living with this debilitating neuromuscular condition,” Baloh said.

DTx Pharma’s chief business officer Peter Condon said the Novartis team's “deep knowledge of CMT1A biology and strong understanding of the patient burden were evident from our first interactions.”

“This agreement is also a strong validation of our FALCON platform and its potential to break open new therapeutic areas by delivering siRNA beyond the liver,” Condon added.

This opportunity to unlock the potential of RNA-targeted therapies beyond the liver, where these therapies have often been limited to until now, has attracted interest from other Big Pharmas like GSK, which has signed a number of oligonucleotide-focused deals in recent months.

For Novartis, the acquisition of DTx comes just a month after the Swiss drugmaker handed over a far larger sum, $3.2 billion, to buy Chinook Therapeutics for a pair of late-stage programs targeting a rare, progressive chronic kidney disease.

Setting out Novartis’ M&A strategy on its first-quarter earnings call in April, Narasimhan said forthcoming deals would “focus primarily in the sub-$5 billion range.” With the company’s next earnings call scheduled for Tuesday, it will be interesting to see whether those ambitions have expanded now that the company has rediscovered its taste for acquisitions.