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Investing.com - Raymond James upgraded Avidity Biosciences (NASDAQ:RNA) from Outperform to Strong Buy following the announcement of Novartis’s acquisition of the company’s neuromuscular assets. The upgrade comes as the company shows strong momentum, with InvestingPro data revealing a remarkable 55% price return over the past six months and robust liquidity metrics, including a current ratio of 9.26.
Novartis will purchase Avidity’s neuromuscular assets and AOC platform for $72 per share, valuing the company at approximately $12 billion on a fully-diluted basis. The offer represents a 46% premium over Avidity’s October 24 share price of $49.15 and a 62% premium to the 30-day volume-weighted average price of $44.42. According to InvestingPro analysis, the company appears overvalued at current levels, with 10+ additional ProTips available to subscribers regarding the company’s financial health and market position.
The deal includes Avidity’s key drug candidates del-desiran for myotonic dystrophy type 1, del-zota for Duchenne muscular dystrophy, and del-brax for facioscapulohumeral muscular dystrophy. Early-stage precision cardiology assets will be separated into a publicly traded company referred to as "SpinCo." For deeper insights into Avidity’s financial position and comprehensive analysis, access the full Pro Research Report, available exclusively on InvestingPro, covering this and 1,400+ other US equities.
Avidity shareholders will receive $72 in cash per share and one share of SpinCo for every 10 shares of RNA currently owned. Shareholders may alternatively receive a pro-rata cash distribution if SpinCo or its assets are purchased by a third party.
The transaction is expected to close in the first half of 2026, subject to regulatory approvals, RNA shareholder approval, and completion of the SpinCo separation. SpinCo will be led by Kathleen Gallagher, currently Avidity’s chief program officer, and will be capitalized with $270 million in cash.
In other recent news, Novartis has announced its acquisition of Avidity Biosciences for $12 billion in cash, marking a significant move to enhance its neuroscience portfolio. The deal offers a 46% premium to Avidity’s recent closing price and is expected to finalize in the first half of 2026, pending regulatory and stockholder approvals. Following this announcement, Bernstein downgraded Avidity Biosciences from Outperform to Market Perform, though the price target was raised to $72.00. Additionally, Avidity Biosciences has delayed its drug submission for delpacibart zotadirsen, aimed at Duchenne muscular dystrophy, to the first quarter of 2026 to meet regulatory requirements. Meanwhile, Roth/MKM initiated coverage of Avidity with a Buy rating, highlighting the company’s pioneering efforts in genetic medicines. In another development, Avidity successfully closed a public offering, raising $690 million through the sale of 17.25 million shares. This influx of capital is expected to support the company’s ongoing projects and strategic initiatives. These recent developments reflect the dynamic changes and strategic decisions shaping Avidity Biosciences.
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