Novartis Pharmaceuticals (NVS.US) bets US$1.7 billion on British AI pharmaceutical companies to lay out new targets for allergic diseases

The Zhitong Finance App learned that Novartis Pharmaceuticals (NVS.US) will pay British biotech company Relation Therapeutics Ltd. up to $1.7 billion to help find drug targets to treat allergic diseases.

Relation CEO David Roblin said in an interview that the deal aims to combine Novartis Pharmaceuticals' expertise in immunodermatology with the British company's drug discovery artificial intelligence platform. The platform uses patient data, including human tissue, to reveal the genetic basis of disease presentation.

Relation's investors include DCVC and NVentures, the venture capital arm of Nvidia (NVDA.US). Relation indicated in a statement that the company will receive $55 million in initial funding, including advance payments, equity investments, and R&D funding. Additionally, Relation is eligible for milestone payments of up to $1.7 billion and tiered edition tax benefits based on product sales.

Novartis Pharmaceuticals has been in the midst of a boom in deals since this year, most notably the company's successful acquisition of Avidity Biosciences (RNA.US) at a high price of $12 billion — the largest acquisition deal in more than a decade. For the Swiss pharmaceutical giant, there is no time to delay increasing sales after 2025, after all, it is facing competition from cheaper generic drugs for three key drugs (including its best-selling heart medicine, Entresto).

According to Relation, the root cause of atopic diseases is abnormal immune system function, which in turn causes allergic reactions. Hundreds of millions of people around the world are suffering from such diseases. The company focuses on speeding up the identification process of pathogenic genes while nominating targets that have more potential and are more likely to successfully pass clinical trials in drug discovery and development.

Roblin said that 75% of the drugs entering phase II clinical trials failed due to poor efficacy or safety issues. “This essentially means that your understanding of biology wasn't thorough enough at first.” he said.

Roblin said that negotiations with Novartis began during the J.P. Morgan Chase Annual Healthcare Conference, when he met Fiona Marshall, president of Novartis Pharmaceuticals' biomedical research department. “The idea of collaborating in the field of immunology and allergy came from this, and we have been developing research plans with them for the past year.”

Relation previously reached an agreement with GlaxoSmithKline in 2024 with a similar structure.

Earlier this year, Novartis agreed to buy Tourmaline Bio for $1.4 billion to obtain a treatment that promises to reduce systemic inflammation. The company also agreed to buy American biotech company Regulus Therapeutics for up to $1.7 billion and further enrich its cardiology product portfolio with the acquisition of American biotech company Anthos Therapeutics to obtain a stroke prevention drug.