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Novartis (NVS) Plans to Spin-Off Sandoz in Early October
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Novartis AG (NVS - Free Report) is conducting a meeting for its shareholders on Sep 15, 2023, in relation to the proposed 100% spin-off of its generics and biosimilars business, Sandoz.
The company has issued an invitation for the Extraordinary General Meeting (EGM) to its shareholders after its board of directors unanimously endorsed and recommended shareholders’ approval of the proposed separation of Sandoz via a spin-off.
Novartis previously announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. Due to industry-wide price competition among generic pharmaceutical companies and the consolidation of buyers, Sandoz experienced significant declines in sales and profits, particularly in the United States.
Shareholders of Novartis will vote on two proposals at the EGM- a special distribution of a dividend-in-kind by Novartis to execute the spin-off of the Sandoz arm and a reduction of the share capital of Novartis in connection with the spin-off of the Sandoz group.
Shares of Novartis have gained 11.6% in the year so far compared with the industry’s 7.8% growth.
Image Source: Zacks Investment Research
Assuming the shareholders approve the proposed special distribution at the EGM, the spin-off will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders and of Sandoz American Depositary Receipts (ADR) to Novartis ADR holders.
Novartis shareholders and Novartis ADR holders will receive one Sandoz share for every 5 Novartis shares and one Sandoz ADR for every 5 Novartis ADRs.
The proposed spin-off is planned to occur on or around Oct 4, 2023.
Sandoz reported sales of $9.1 billion in 2022.
With the planned spin-off of Sandoz, Novartis is looking to become a pure-play pharmaceutical company.
It is also streamlining its pharmaceuticals portfolio and has decided to divest its “front of eye” ophthalmology assets to Bausch + Lomb (BLCO - Free Report) , a global eye health company.
Xiidra, the first approved prescription treatment for dry eye disease and SAF312, a first-in-class therapy for chronic ocular surface pain, are pivotal assets included in the transaction. Novartis has signed an agreement with Bausch + Lomb to transfer Xiidra and SAF312 (libvatrep) for $2.5 billion.
This deal comprises $1.75 billion in upfront cash along with additional milestone payments.
The company is also looking to bolster its pipeline further through strategic acquisitions. Novartis recently acquired Chinook Therapeutics for $3.5 billion to strengthen its renal pipeline. The acquisition will add Chinook’s pipeline, which includes two late-stage candidates, atrasentan and zigakibart, for immunoglobulin A nephropathy, to Novartis’ pipeline.
The strong performance of key drugs, strategic acquisitions and streamlined focus should pave the way for solid growth for NVS in the quarters ahead.
Zacks Rank and Stocks to Consider
Novartis currently carries a Zacks Rank #3 (Hold).
The loss per share estimate for SPRO for 2023 has narrowed by 54 cents to 51 cents in the past 30 days. Spero’s earnings beat estimates in all of the trailing four quarters, the average surprise being 72.43%.
The loss per share estimate for DVAX has narrowed by 5 cents to 27 cents for 2023 in the past 30 days. Dynavax has risen 33.8% in the year-to-date period. DVAX’s earnings beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%.
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Novartis (NVS) Plans to Spin-Off Sandoz in Early October
Novartis AG (NVS - Free Report) is conducting a meeting for its shareholders on Sep 15, 2023, in relation to the proposed 100% spin-off of its generics and biosimilars business, Sandoz.
The company has issued an invitation for the Extraordinary General Meeting (EGM) to its shareholders after its board of directors unanimously endorsed and recommended shareholders’ approval of the proposed separation of Sandoz via a spin-off.
Novartis previously announced that it planned to spin off Sandoz into a new publicly traded standalone company following a strategic review. Due to industry-wide price competition among generic pharmaceutical companies and the consolidation of buyers, Sandoz experienced significant declines in sales and profits, particularly in the United States.
Shareholders of Novartis will vote on two proposals at the EGM- a special distribution of a dividend-in-kind by Novartis to execute the spin-off of the Sandoz arm and a reduction of the share capital of Novartis in connection with the spin-off of the Sandoz group.
Shares of Novartis have gained 11.6% in the year so far compared with the industry’s 7.8% growth.
Image Source: Zacks Investment Research
Assuming the shareholders approve the proposed special distribution at the EGM, the spin-off will be implemented through the distribution of a dividend-in-kind of Sandoz shares to Novartis shareholders and of Sandoz American Depositary Receipts (ADR) to Novartis ADR holders.
Novartis shareholders and Novartis ADR holders will receive one Sandoz share for every 5 Novartis shares and one Sandoz ADR for every 5 Novartis ADRs.
The proposed spin-off is planned to occur on or around Oct 4, 2023.
Sandoz reported sales of $9.1 billion in 2022.
With the planned spin-off of Sandoz, Novartis is looking to become a pure-play pharmaceutical company.
It is also streamlining its pharmaceuticals portfolio and has decided to divest its “front of eye” ophthalmology assets to Bausch + Lomb (BLCO - Free Report) , a global eye health company.
Xiidra, the first approved prescription treatment for dry eye disease and SAF312, a first-in-class therapy for chronic ocular surface pain, are pivotal assets included in the transaction. Novartis has signed an agreement with Bausch + Lomb to transfer Xiidra and SAF312 (libvatrep) for $2.5 billion.
This deal comprises $1.75 billion in upfront cash along with additional milestone payments.
The company is also looking to bolster its pipeline further through strategic acquisitions. Novartis recently acquired Chinook Therapeutics for $3.5 billion to strengthen its renal pipeline. The acquisition will add Chinook’s pipeline, which includes two late-stage candidates, atrasentan and zigakibart, for immunoglobulin A nephropathy, to Novartis’ pipeline.
The strong performance of key drugs, strategic acquisitions and streamlined focus should pave the way for solid growth for NVS in the quarters ahead.
Zacks Rank and Stocks to Consider
Novartis currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the overall healthcare sector are Spero Therapeutics (SPRO - Free Report) and Dynavax Technologies (DVAX - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The loss per share estimate for SPRO for 2023 has narrowed by 54 cents to 51 cents in the past 30 days. Spero’s earnings beat estimates in all of the trailing four quarters, the average surprise being 72.43%.
The loss per share estimate for DVAX has narrowed by 5 cents to 27 cents for 2023 in the past 30 days. Dynavax has risen 33.8% in the year-to-date period. DVAX’s earnings beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%.