Why Avidity Biosciences And Dyne Therapeutics Stocks Soared 40% Monday

JHVEPhoto / Getty Images Avidity Biosciences is being bought by Novartis in a $12 billion deal.

Key Takeaways

Novartis is buying Avidity Biosciences in an all-cash deal valued at $12 billion to access Avidity's experimental treatments for neuromuscular diseases. The purchase price of $72 per share is a 46.5% premium to Avidity's closing price Friday. Avidity stock was up more than 40% in midday trading Monday, as were shares of Dyne Therapeutics, which is also developing RNA therapies for neuromuscular diseases.

Shares of Avidity Biosciences (RNA) soared more than 40% Monday after Novartis (NVS) agreed to buy the U.S. biopharmaceutical firm for about $12 billion in cash to expand its RNA-based disease-fighting pipeline.

The Swiss-based drugmaker said Avidity investors would be paid $72 for every share they owned, a 46.5% premium to Avidity’s closing price Friday. It noted that prior to completion of the sale, Avidity will spin off its early stage precision cardiology programs into a new company.

Why This News Is Significant

With this acquisition, Novartis is expanding its footprint in RNA-based therapies. The deal gives the company access to late-stage treatments for serious neuromuscular diseases. The deal illustrates growing investor and industry interest in RNA therapeutics.

The acquisition gives Novartis access to three of Avidity’s late-stage experimental treatments for serious genetic neuromuscular disease, which use RNA therapeutics called Antibody Oligonucleotide Conjugates, or AOC.

Adding Avidity’s AOC platform ​and its late-stage assets will “bolster our commitment to delivering innovative, targeted and potentially first-in-class medicines to treat devastating, progressive neuromuscular diseases," said Novartis CEO Vas Narasimhan. The transaction is expected to close in the first half of next year.

The company believes that the purchase will boost its 2024 to 2029 sales compound annual growth rate from 5% to 6%.

Meanwhile, shares of Dyne Therapeutics (DYN) skyrocketed more than 40% Monday after analysts at Jefferies said the company, which also is developing RNA therapies for neuromuscular diseases, stands to benefit from Novartis picking up Avidity.

With the gains Monday, Avidity shares have risen 140% since the start of the year, while Dyne stock has inched back into positive territory. U.S.-listed shares of Novartis, which have gained about a third of their value so far this year, were down 1% in recent trading.

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