Novartis (NVS - Analyst Report) announced the submission of its Biologic License Application (BLA) for meningitis B vaccine candidate Bexsero to the FDA for marketing approval among adolescents and young adults within the age group of 10–25 years.
The FDA granted Breakthrough Therapy designation to Bexsero in Apr 2014. We note that Bexsero is already approved in Europe for invasive meningococcal disease caused by serogroup B.
The Vaccines Division generated $1.4 billion in sales in 2013. Earlier, Novartis entered into an agreement with GlaxoSmithKline (GSK - Analyst Report) in Apr 2014 for the exchange of certain assets.
Under the agreement, Novartis would divest its Vaccines business (excluding flu) to GlaxoSmithKline for $7.1 billion ($5.25 billion is upfront and up to $1.8 billion in milestone payments) along with royalties.
On the other hand, Novartis would acquire GlaxoSmithKline’s oncology products for $14.5 billion and up to $1.5 billion as milestone payments. The agreement also provides Novartis with opt-in rights to GlaxoSmithKline’s current and future oncology R&D pipeline.
Novartis expects to close the deal with GlaxoSmithKline by the first half of 2015. Novartis also divested its blood transfusion diagnostics unit to Grifols S.A. for approximately $1.7 billion in cash in Jan 2014.
The acquisition of GlaxoSmithKline’s oncology products and divestment of Vaccines business is a step in the right direction for Novartis. It will broaden Novartis’ portfolio and enable it to focus better on its core capabilities besides contributing immensely to the top line. Margins are also expected to get a significant boost.
Novartis currently carries a Zacks Rank #3 (Hold). Investors looking for better-ranked stocks may consider companies like Gilead Sciences (GILD - Analyst Report) and Allergan (AGN - Analyst Report) . Both stocks carry a Zacks Rank #1 (Strong Buy).