Swiss pharmaceutical giant Novartis (NYSE: NVS) acquired DTx Pharma for $500 million in cash, plus an additional $500 million in future payments if certain milestones are met. San Diego-based DTx Pharma is a pre-clinical biotech company that specializes in developing RNA therapies that treat disorders affecting neuromuscular and central nervous system functions.
Unique Deal Terms
Given the stage of DTx’s assets, the amount of the upfront purchase price, and the fact that DTx was dual-tracking a new round of financing at the time, negotiations resulted in unique deal terms which balanced conditionality on closing, remedies for failure to close, and financing concerns. That balance resulted in terms of the definitive agreement that provided Novartis with a level of risk mitigation and DTx with a high degree of certainty of the path moving forward.
The acquisition reinforced that biopharma companies using RNA platforms will be highly sought after by potential acquirers. It set a high benchmark for upfront consideration for the sale of a private, pre-clinical stage, biopharma company.
Through the acquisition, Novartis gained an innovative, small interfering RNA (siRNA) platform for drug discovery and a pipeline of pre-clinical programs. The deal includes a potential therapy for the neuromuscular disorder Charcot-Marie-Tooth disease type 1A (CMT1A), and two additional preclinical programs for other neuroscience indications.
Entrepreneurial Success Story
Founded in 2017, DTx was started with an idea, no data, and $20,000 from each co-founder. The initial team used funds from their 401(k)s and zero percent interest credit cards to survive. Arthur Suckow, PhD, co-founder and CEO of DTx at the time of the deal closing, never compromised his vision for the company.
For more Deals of the Year coverage, see Mergers and Acquisitions Names the 2024 Middle-Market Deals of the Year.
