Novartis to buy out kidney specialist Chinook Therapeutics in $3.5B deal

Novartis is putting down $3.2 billion in cash to acquire kidney-focused biotech Chinook Therapeutics and its two late-stage drugs for a rare chronic kidney disease.

Vas Narasimhan

The Swiss pharma giant already has a top drug, iptacopan, that it said showed promise in IgA nephropathy, which CEO Vas Narasimhan described in a statement as a “devastating disease mostly affecting young adults and potentially leading to dialysis or kidney transplantation.” But Chinook’s atrasentan and zigakibart could represent additional “much-needed” options, he suggested.

At $40 per share, Novartis’ offer marks a 66% premium to Chinook’s previous closing price. Throw in a $4 per share contingent value right (CVR) hinging on regulatory milestones, and the whole value of the buyout can add up to $3.5 billion.

The takeover of Chinook marks Novartis’ first move in the biotech M&A rally of 2023, although it’s stayed busy on other types of dealmaking, with a series of partnering, licensing and program purchases to beef up its pipeline in radiopharmaceuticals as well as gene therapy. It also comes at the tail end of Narasimhan’s dramatic revamp of the company, which has involved spinning out its generic unit Sandoz, laying off 8,000 employees and, more recently, cutting 10% of the pipeline following an R&D review.

As part of his vision for a “pure-play” Novartis, Narasimhan has emphasized a focus on finding bigger assets that can bring in more value.

IgAN is estimated to affect up to 21 people per million per year, according to Novartis, and is the leading cause of kidney failure in Caucasian young adults. Travere and Calliditas have recently won approvals for new treatments.

Other than IgAN, Chinook is testing atrasentan, an oral endothelin A receptor antagonist, in Phase II studies for other diseases related to the kidney, specifically those affecting the organ’s filtration functions. That candidate is already in Phase III for IgAN; zigakibart, an anti-APRIL antibody, is slated to enter Phase III later this year.

Novartis is also running a Phase III trial of iptacopan, its factor B inhibitor being tested for multiple rare diseases, in IgAN after touting mid-stage data.

Hatched by Versant, Chinook launched in 2019 with the explicit focus on kidney diseases, licensed atrasentan from AbbVie in early 2020 and made the jump to the Nasdaq later that year via a reverse merger with Aduro Biotech.

Before it was relegated to a public shell, Aduro had attracted much attention for its work on cancer immunotherapies, including a partnership with Novartis on a STING agonist program — although Novartis eventually walked away.

Other than the late-stage drugs, Novartis noted Chinook boasts of an early pipeline for severe renal conditions as well as a deep expertise in modeling those diseases.

Most of those other candidates are still preclinical, with the exception of CHK-336, which goes after primary and idiopathic hyperoxaluria. In April, Chinook paused a Phase I study of the drug to investigate a severe adverse event experienced by a participant.

“Through this merger, Novartis can apply its substantial resources to pursue broader development efforts and commercialization of atrasentan, zigakibart (BION-1301) and other programs in our pipeline to build its global renal therapeutic area,” Chinook president and CEO Eric Dobmeier said in a statement.

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