Avidity Biosciences (RNA) Surges 22.6% on Novartis Takeover Rumors: Is This the Catalyst for a Biotech Breakout?

Summary
• Avidity Biosciences (RNA) rockets 22.6% to $46.15, hitting an intraday high of $46.90
• Novartis (NVS) rumored to explore acquisition, sparking sector-wide speculation
• Options frenzy: 20 contracts traded, with RNA20250815C45 seeing $863,300 turnover
• Biotech sector diverges as Amgen (AMGN) plunges 5.67%, highlighting RNA’s standalone momentum

Avidity Biosciences’ stock has erupted on rumors of a potential Novartis takeover, with the biotech giant’s shares surging over 20% in a single session. The move has ignited a frenzy in the options market and outpaced broader sector weakness, as Amgen’s decline underscores divergent biotech dynamics. With RNA nearing its 52-week high of $56, the stock’s trajectory hinges on regulatory clarity and Novartis’ strategic calculus.

Novartis Takeover Speculation Ignites Biotech Firestorm
The Financial Times reported that Novartis has approached Avidity Biosciences about a potential acquisition, citing sources familiar with the discussions. This revelation triggered a 22.6% surge in RNA’s shares, with the stock trading at $46.15 as of 3:45 PM ET. The rumor aligns with Novartis’ recent focus on rare disease expansion, a strategic fit for Avidity’s AOC platform targeting genetic muscular dystrophies. While the deal remains unconfirmed, the market’s aggressive reaction reflects optimism about RNA’s pipeline, including Phase 3 trials for DM1 and accelerated approval pathways for FSHD treatments.

Biotech Sector Volatility Amid Takeover Speculation: RNA Outpaces AMGN
The biotech sector remains fragmented, with Avidity Biosciences’ 22.6% rally starkly contrasting Amgen’s 5.67% decline. While RNA’s surge is driven by takeover speculation, Amgen’s drop reflects broader market rotation away from large-cap biotechs. This divergence highlights the sector’s dual dynamics: speculative momentum in small-cap innovators versus earnings-driven corrections in established players. RNA’s performance underscores the sector’s appetite for high-risk, high-reward narratives, particularly in rare disease therapeutics.

Options Playbook: Leveraging RNA’s Volatility with Gamma-Driven Calls
• 200-day average: 33.57 (below current price)
• RSI: 68.15 (overbought)
• MACD: 1.66 (bullish crossover)
• Bollinger Bands: 30.21–38.53 (current price at 46.15, outside upper band)

RNA’s technicals suggest a continuation of its short-term bullish trend, with the 52-week high at $56 acting as a critical resistance. The stock’s 9.4% turnover rate and 68.15 RSI indicate overbought conditions, but the MACD’s positive divergence and Bollinger Band breakout support further upside. For leveraged exposure, focus on options with high gamma and moderate delta to capitalize on volatility.

Top Option 1: RNA20250815C45
• Contract Code: RNA20250815C45
• Type: Call
• Strike Price: $45
• Expiration: 2025-08-15
• IV: 122.28% (high volatility)
• LVR: 9.96% (moderate leverage)
• Delta: 0.618 (moderate directional sensitivity)
• Theta: -0.2829 (rapid time decay)
• Gamma: 0.0402 (strong price sensitivity)
• Turnover: $863,300 (high liquidity)

This call option offers a balance of leverage and liquidity, ideal for a 5% upside scenario. At a 5% move to $48.46, the payoff would be $3.46 per share, translating to a 39% return on the option’s premium. The high gamma ensures the delta increases as the stock rises, amplifying gains.

Top Option 2: RNA20250815C46
• Contract Code: RNA20250815C46
• Type: Call
• Strike Price: $46
• Expiration: 2025-08-15
• IV: 116.25% (high volatility)
• LVR: 11.70% (moderate leverage)
• Delta: 0.576 (moderate directional sensitivity)
• Theta: -0.2733 (rapid time decay)
• Gamma: 0.0435 (strong price sensitivity)
• Turnover: $8,664 (reasonable liquidity)

This contract provides a slightly higher strike price for a more aggressive play. A 5% move to $48.46 would yield a $2.46 payoff, a 21% return. The moderate delta and high gamma make it suitable for a continuation of RNA’s momentum.

Trading Outlook: Aggressive bulls should target RNA20250815C45 for a breakout above $45, while RNA20250815C46 offers a tighter risk-reward profile. Both contracts benefit from RNA’s elevated volatility and gamma-driven acceleration. Watch for a close above $46.90 to confirm the trend’s sustainability.

Backtest Avidity Biosciences Stock Performance
The backtest of RNA's performance after an intraday surge of 21% shows mixed results. While the 3-Day win rate is 48.53%, the 10-Day win rate is slightly higher at 52.76%, and the 30-Day win rate is 57.54%, indicating a higher probability of positive returns in the short term. However, the maximum return during the backtest period was only 8.12%, which suggests that while there is a good chance of positive returns, the overall performance may be modest.

RNA’s Takeover Narrative: A High-Stakes Gamble on Biotech’s Future
Avidity Biosciences’ 22.6% surge hinges on the resolution of Novartis’ takeover speculation and the FDA’s stance on its accelerated approval pathways. The stock’s technicals and options activity suggest a continuation of the bullish trend, but investors must remain cautious of overbought conditions. If RNA breaks above $46.90, the 52-week high of $56 becomes a critical target. Conversely, a pullback below $34.90 (intraday low) could trigger a reevaluation of the takeover narrative. Meanwhile, Amgen’s 5.67% decline underscores the sector’s fragility. For now, RNA’s momentum is a testament to the market’s appetite for disruptive biotech plays—position accordingly.