Novartis Promises Growth Despite 'Historic' Patent Cliffs - I Broadly Agree
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Edmund InghamInvesting Group LeaderFollow5ShareSavePlay(15min)CommentsSummaryNovartis AG faces significant patent expiries but is aggressively acquiring pipeline assets, including a $2bn deal for Pikavation and a $12bn buyout of Avidity.NVS projects >5% annual revenue growth to ~$70bn by 2030, driven by eight de-risked assets and a robust late-stage pipeline, despite looming patent cliffs.Recent M&A activity, while raising questions about pipeline confidence, is viewed as strategic to offset $12bn in expiring revenues and maintain growth momentum.I see potential for NVS shares to rise 25% by 2030, though near-term earnings softness may offer more attractive entry points as the market digests patent and pipeline risks.Looking for more investing ideas like this one? Get them exclusively at Haggerston BioHealth. Learn More »Investment Overview - Novartis Latest M&A Deal Speaks to Pipeline Pressure A few days ago (March 20th), Swiss Pharmaceuticals giant Novartis (NVS) announced it would pay $2bn up front (the deal may rise to $3bn if milestones are met) to acquire Pikavation Therapeutics, a wholly owned subsidiary of Synnovation, a privately owned Biotech headquartered in Delaware. The clue is in the name - Pikavation is developing SNV4818, a pan-mutant‑selective PI3Kα inhibitor, "exploring a next-generation approach for the treatment of patients with HR+/HER2- breast cancer and potentially other solid tumor indications." Drug candidates that target PI3Kα are highly prized - in January 2025, Eli Lilly (LLY), the world's most valuable Pharma company, paid ~$1.5bn upfront and pledged another $1bn in milestone payments to Scorpion Therapeutics in exchange for its candidate STX-478, also an inhibitor of PI3Kα, also being developed for breast cancer and other solid tumors. In a press release, Shreeram Aradhye, M.D., President of Development at Novartis, remarked that: While mutated PI3Kα is a well‑established driver in HR+/HER2‑ breast cancer, there remains a challenge in achieving effective pathway inhibition with a tolerable therapeutic profile. SNV4818 applies new mutant‑selective chemistry to more precisely target tumor biology while sparing normal cells. This approach has the potential to translate proven biology into improved tolerability and more durable benefit for patients through precision medicine. Novartis clearly believes it has acquired a potential "best-in-class" candidate; however, the deal does not seem to have gone down so well on Wall Street - Novartis stock is down nearly 10% on a one-week basis. Share price is presently $147.5, and market cap valuation $279bn. The pharma already markets and sells a PI3Kα-targeting drug, Piqray, approved in 2019 to treat breast cancer, which earned $382m of revenues last year - down ~15% year-on-year, but its new, next-generation asset will now compete against Lilly's asset, as well as similar drugsThis article was written byEdmund Ingham14.82K FollowersFollowEdmund Ingham is a biotech consultant. He has been covering biotech, healthcare, and pharma for over 5 years, and has put together detailed reports of over 1,000 companies. He leads the investing group Haggerston BioHealth. The group is for both novice and experienced biotech investors. It provides catalysts to look out for and buy and sell ratings. It also provides product sales and forecasts for all the Big Pharmas, forecasting, integrated financial statements, discounted cash flow analysis and market by market analysis. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in NVS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.