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Novartis Looks to Exit Antibacterial, Antiviral Program

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As per a statement released by media sources, Novartis AG (NVS - Free Report) is all set to exit its antibacterial and antiviral research program.

The Swiss pharma giant also plans to reduce the headcount at Emeryville, CA, campus of Novartis Institutes for BioMedical Research (NIBR) by about 140.

The company is reportedly in discussions to out-license its preclinical programs as well as antibiotic LYS228. The candidate is being evaluated for the treatment of complicated intra-abdominal infection (cIAI) and complicated urinary tract infection (cUTI) in phase II studies.

Per the company, it is in the process of prioritizing its resources in core areas.

The company, however, plans to retain 150 employees in the San Francisco Bay area across the Novartis Institute for Tropical Diseases (NITD) and other functions.

Novartis is not the only company to exit this space, which was once deemed promising. Allergan (AGN - Free Report) too is reportedly looking to sell its infectious disease unit.  Earlier, in 2016, AstraZeneca (AZN - Free Report) sold its anti-infectives business, primarily outside the United States, to Pfizer (PFE - Free Report) .

Novartis is looking to restructure its business, of late. We remind investors that earlier this month Novartis announced that it intends to spin-off its ophthalmology division, Alcon, into a separately-traded standalone company in order to grow as a medicines company solely.

The Alcon business wasn’t performing as per management’s expectations. Although it did revive in between, the company decided to spin-off the same in order to focus better on its legacy drug business.

Novartis has a strong oncology portfolio of drugs like Afinitor, Exjade, Jakavi, Zykadia, Tasigna, Jadenu and Kisqali, which continue to boost its sales. However, it is facing the loss of patent protection for some of the key drugs. Consequently, the company has restructured its business and plans to focus on building its portfolio in markets, which promise potential.

Novartis’ shares have declined 2.6% in the year so far compared with the industry’s gain of 1.2%.

 

Novartis is looking to solidify its presence in the gene therapy space. Earlier, it acquired U.S.-based clinical stage gene therapy company, AveXis, Inc.

Zacks Rank

Novartis carries a Zacks Rank #3 (Hold).

You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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