Switzerland-based Novartis A.G. (NYSE: NVS) has agreed to pay $8.7 billion in cash to acquire Illinois-based AveXis Inc. (NASDAQ: AVXS) in a massive bet that the smaller firm’s gene-therapy treatment for spinal muscular atrophy (SMA) will become a blockbuster drug.

Novartis is paying $218 in cash for each share of AveXis, a premium of 88% to the latter’s closing price on Friday. The boards of both companies have approved the deal.

AveXis’s lead gene-therapy candidate, AVXS-101 is involved in several current clinical studies for the treatment of SMA, an inherited neurodegenerative disease, which is the leading genetic cause of infant deaths. About one in every 6,000 to 10,000 children are born with some form of SMA and nine out of 10 do not live to their second birthdays.

Vas Narasimhan, Novartis CEO, said:

We believe AVXS-101 could create a lifetime of possibilities for the children and families impacted by this devastating condition. The acquisition would also accelerate our strategy to pursue high-efficacy, first-in-class therapies and broaden our leadership in neuroscience. We would gain with the team at AveXis another gene therapy platform, in addition to our CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas.

The U.S. Food and Drug Administration (FDA) has granted AVXS-101 orphan drug status, and a filing for a Biologics License Application (BLA) is expected in the second half of this year. A BLA is a request for permission to introduce or deliver for introduction a biologic product into interstate commerce. In its announcement, Novartis said it expects approval and launch of the drug in the United States next year.

Novartis expects the acquisition to close by the middle of this year. The acquisition is expected to be slightly negative to core operating income in 2018 and 2019, but beginning in 2020 Novartis anticipates “the acquisition impact to strongly contribute to Core Operating Income and Core EPS accretion driven by a significant increase in sales.”

Novartis stock traded up about 0.8% in Monday’s premarket session to $80.85, in a 52-week range of $72.67 to $94.19.

AveXis traded up 82.5% at $211.49, well above the 52-week range of $65.23 to $138.46. The stock closed at $115.91 on Friday.

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