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Novartis targets eye, respiratory units for potential sell-offs after Sandoz: Bloomberg

Amid an organizational reshuffling, an 8,000-person layoff round and a spinoff of generics giant Sandoz, Novartis CEO Vas Narasimhan, M.D., is still not done with his restructuring.

The Swiss pharma is weighing various options, including sales, for its ophthalmology and respiratory disease businesses, Bloomberg reports, citing people familiar with the matter. The two sectors fall outside of the five core therapeutic areas Narasimhan is targeting for the future of Novartis.

Some private equity firms are already sizing up the assets, with the value of the larger ophthalmology franchise being pegged at about $5 billion, the people reportedly told Bloomberg. Still, any potential deals are likely to happen next year after Novartis finishes its planned separation of generics and biosimilars outfit Sandoz. The discussions are in early stages, and the company may decide against sell-offs, according to Bloomberg.

A Novartis spokesperson declined to comment on market rumors.

Novartis is currently undergoing a major overhaul that it launched in April. As part of the restructuring, the Swiss pharma combined its oncology and other drugs into one innovative medicines franchise, but with separate U.S. and ex-U.S. leaders. The company is also laying off 8,000 staffers worldwide to streamline its organization.

The spinoff of the Sandoz business, meanwhile, officially kicked off in August.

In his first investor presentation following the Sandoz announcement, Narasimhan outlined a U.S.-first strategy and a company goal to join the top five drugmakers in the key market by 2027. For the post-restructuring Novartis, Narasimhan is focusing the firm on cardiovascular diseases, immunology, neuroscience, solid tumors and hematology.

A sale of eye drugs would mark a complete exit for Novartis in ophthalmology after its 2019 spinoff of eye care specialist Alcon. It would also follow the epic launch failure of next-generation anti-VEGF drug Beovu and the biosimilar attack at Roche-partnered Lucentis. In Novartis’ third-quarter earnings report, Beovu didn’t even get a mention, and Lucentis sales slid 7% at constant currencies to $455 million.

Aside from marketed offerings, Novartis has several drugs in clinical testing for eye indications. These include PPY988, formerly known as GT005, an investigational ocular gene therapy Novartis just bought along with its developer Gyroscope Therapeutics for $800 million upfront. Gene and cell therapies are a key technology platform that Narasimhan has emphasized at Novartis. In addition, Novartis also sells Roche’s eye gene therapy Luxturna outside the U.S.

What’s more, Novartis earlier this year launched a phase 2 trial of oral factor B inhibitor iptacopan in age-related macular degeneration. The drug just topped AstraZeneca’s Soliris and Ultomiris in a phase 3 trial of the blood disorder paroxysmal nocturnal hemoglobinuria. If Novartis does decide to wash its hands of ophthalmology operations, market watchers would want to see how Novartis deals with potential eye indications for the drug.

As for respiratory disease, Novartis isn’t a major player in that arena. The company sells a few inhalers for diseases such as COPD, including Onbrez Breezhaler. The Swiss pharma in 2018 sold its TOBI cystic fibrosis line to Mylan, which is now Viatris. Novartis’ respiratory business now exists mostly outside of the U.S.

Novartis currently lists three pipeline drugs in the respiratory field, including the midstage assets CMK389, an IL-18 inhibitor, and LTP001, a SMURF1 inhibitor.