The Edit. 10.27.2025.
Forging the Future of Finance.
Week of October 27th, 2025
Market Update
Novartis AG’s acquisition of Avidity Biosciences, Inc., in a US$12 billion all-cash deal, which strengthens Novartis’s portfolio in rare neuromuscular and RNA-based therapies.
Why it matters: This reflects the accelerating trend of large pharmaceutical companies buying innovative biotech firms to diversify beyond traditional drugs. It also reinforces investor confidence in RNA-targeted medicine as a next-gen therapeutic platform.
Europe’s largest aerospace groups, Airbus, Thales, and Leonardo, agreed to merge their satellite manufacturing operations into a new €10 billion joint venture aimed at competing with Elon Musk’s SpaceX Starlink.
Why it matters: This merger signals Europe’s determination to build technological independence in space communications and defence, and the move would allow Europe to retain control over its domestic space operations.
Eli Lilly agreed to acquire Adverum Biotechnologies, a gene-therapy developer focused on treatments for wet age-related macular degeneration (wAMD), for $262 million.
Why it matters: The acquisition positions Eli Lilly to expand beyond its core areas like diabetes and obesity into high-growth gene therapy and vision care markets, reflecting how major pharmaceutical companies are diversifying into precision-medicine platforms for long-term growth.
Deal of the Week
Biosciences, Breakthroughs and Billions
Novartis Acquires Avidity Biosciences in $12 Billion Cash Transaction
On October 26, 2025, Novartis (SWX: NOVN) unveiled its largest move in over a decade by announcing the acquisition of San Diego based biotech company Avidity Biosciences in a cash deal valued at approximately $12 billion. This transaction, representing a 46% premium over Avidity’s closing price prior to the announcement, underscores Novartis’ commitment to advancing its presence in the rapidly evolving RNA therapeutics space.
Avidity Biosciences, a company specializing in Antibody Oligonucleotide Conjugates (AOCs), has developed an innovative platform that combines the specificity of monoclonal antibodies with the genetic precision of oligonucleotide technology. This proprietary approach helps target debilitating neuromuscular diseases for which treatment options remain limited.
Why This Acquisition Matters
Pipeline Powerup
Novartis gains access to Avidity’s late-stage clinical assets, positioning itself to deliver top-of-the-line therapies for rare neuromuscular disorders with limited treatment options. The acquisition enhances Novartis’ pipeline depth and accelerates its strategy to lead in RNA-based treatment modalities with anticipated product launches expected before 2030.
The RNA Renaissance
The premium paid reflects confidence in the long-term growth prospects of RNA therapies and their transformative potential in addressing unmet medical needs. Novartis CEO Vas Narasimhan emphasized that the deal strengthens the company’s innovation engine, aligning with forecasts of 5-6% compound annual sales growth through 2029.
Cardiology Cutoff
Prior to closing, Avidity will spin off its early-stage cardiology programs into a separate entity, allowing Novartis to concentrate on the most promising neuromuscular assets. This strategic focus underscores Novartis’ intent to streamline development efforts while maximizing impact in core therapeutic areas.
Muscle Meets Medicine
The integration of Avidity’s platform complements Novartis’ existing neuromuscular portfolio, creating opportunities for enhanced patient outcomes and reinforcing the company’s leadership in genetic medical innovation. The acquisition also strengthens collaborations with key patient advocacy groups, fostering a patient-centric approach throughout clinical development.
The Brains Behind The Breakthroughs
Avidity’s leadership and scientific teams will remain actively engaged post-transaction, ensuring seamless integration and sustained innovation into the Novartis ecosystem. This partnership reflects Novartis’ commitment to preserving the expertise and momentum that have been a crucial driving factor in Avidity's success.
Interview Prep Questions
Associate - Investment Banking
Question: How would you evaluate whether a potential acquisition is value-accretive using trading comparables and a DCF, and how do you reconcile differences between the two approaches?
You’re being tested on:
Valuation alignment, consistency across methods, and interpretation of accretion drivers.
Core concept:
Match forecast periods and performance metrics between valuation methods.
Adjust DCF for synergy realization, tax effects, and funding costs.
Use multiples from peer sets to test the implied terminal value and sensitivity.
Interpret differences as signals of risk, optimism, or timing mismatches.
Common pitfalls.
Mixing pre-synergy comps with post-synergy cash flows.
Ignoring the financing structure effects on accretion.
Relying on stale multiples in volatile rate environments.
Double-counting premium or control benefits in both analyses.
Analyst - Sales & Trading
Question: How would you position a portfolio to benefit from a steepening yield curve, and what are the main risks to that trade?
You’re being tested on:
Curve dynamics, trade structuring, and risk management.
Core concept:
Size positions to be duration-neutral while isolating slope exposure.
Monitor carry and rolldown as secondary P&L contributors.
Use futures or swaps for efficient exposure and lower funding cost.
Track macro catalysts such as policy shifts or inflation surprises.
Common pitfalls.
Mis-sizing DV01 between legs, creating level-rate exposure.
Ignoring funding and repo costs that erode carry.
Treating a steepener as a one-way policy bet without scenario stress.
Overlooking convexity or roll differences between tenors.
Associate - Corporate Banking
Question: How do you assess a borrower’s credit profile when structuring a term loan or revolving facility?
You’re being tested on:
Credit fundamentals, leverage capacity, and cash-flow resilience.
Core concept:
Evaluate historical and pro forma metrics: leverage, DSCR, interest coverage.
Assess business cyclicality, customer concentration, and management quality.
Stress-test cash flow under downside scenarios to gauge covenant headroom.
Link loan tenor and pricing grid to credit metrics and relationship returns.
Common pitfalls
Relying on accounting earnings instead of cash-flow measures.
Ignoring off-balance-sheet exposures or contingent liabilities.
Using generic covenants that don’t reflect actual risk tolerance.
Overestimating liquidity by including undrawn or restricted cash.
