Novartis strikes deal with UK biotech for up to US$1.7 billion

[BASEL] Novartis will pay UK biotech Relation Therapeutics as much as US$1.7 billion to help find drug targets to treat allergic diseases.

The Swiss drugmaker will pay US$55 million upfront to combine its expertise in immuno-dermatology with the British firm’s drug discovery AI platform, which uses patient data including from human tissue to unpack the genetic basis for how diseases present, Relation’s chief executive officer David Roblin said.

Relation, whose investors include DCVC and Nvidia’s venture capital arm NVentures, is also eligible for milestone payments of as much as US$1.7 billion, as well as tiered royalties on sales of products, Relation told Bloomberg in a statement.

Novartis has been on a deal spree this year, including the US$12 billion acquisition of Avidity Biosciences – its largest in more than a decade. The Swiss drugmaker needs to boost sales beyond 2025 as it’s facing competition from cheaper generics for three key drugs, including its top-selling heart medicine Entresto. 

Shares of Novartis were little changed. They have risen about 21 per cent this year.

Atopic diseases, which result in an allergic reaction caused by the immune system not functioning correctly, affect hundreds of millions of people around the world, according to Relation. The company is focused on identifying causal genes more quickly and nominating targets for drug discovery and development which are more likely to make it through trials.

Among drugs that enter phase 2 trials, 75 per cent fail because of lack of efficacy or safety, according to Roblin. “That fundamentally means that you didn’t understand the biology well enough at the start,” he said in an interview. 

Talks with Novartis began at JP Morgan’s annual health-care conference, Roblin said, after he bumped into Novartis’s president of biomedical research, Fiona Marshall. “This idea of doing something in immunology and allergy emerged, and over the past year we’ve been building a research plan with them.”

Relation previously agreed a similarly structured deal with GSK in 2024. 

SEE ALSO

Novartis Q3 operating income up 6% on new drug sales

Novartis agrees to buy Avidity in US$12 billion biotech deal

Novartis Singapore steps up in the race to net zero

Earlier this year, Novartis agreed to buy Tourmaline Bio in a US$1.4 billion deal, gaining access to a promising treatment to reduce systemic inflammation. It also agreed to buy US biotech Regulus Therapeutics for as much as US$1.7 billion and added to its cardiology portfolio with the acquisition of US biotech Anthos Therapeutics to gain a preventative stroke medicine. BLOOMBERG