- $2 billion cash acquisition beefs-up cancer portfolio
- Fusion has prostate cancer drug in mid-stage trials
- Cash consideration pitched at 126% premium
Pharmaceutical giant AstraZeneca (AZN) has agreed to buy Nasdaq-listed Fusion Pharmaceuticals (FUSN:NASDAQ) for around $2 billion in cash to boost its cancer portfolio.
The proposed deal is pitched at $21 per share, which is double the $10.64 closing price on 18 March. In US pre-market trading the shares were exchanging hands for around $20.4.
AstraZeneca described the deal as a ‘major step forward’ in delivering on its ambition to transform cancer treatment by replacing traditional regimens like chemotherapy and radiotherapy with more ‘next generation’ targeted treatments.
The biotechnology sector has attracted more mergers and acquisitions in recent months following a three-year bear market which has left the sector on its back and valuations at record lows.
AstraZeneca shares traded 1% lower at £101.96 on the news, taking year to date losses to 6% compared with a flat performance for the blue-chip FTSE 100 index.
TARGETED APPROACH
Fusion Pharmaceuticals is developing medicines which deliver a radioactive isotope directly to cancer cells through precise targeting.
The company has a drug in mid-stage trials which is a potential new treatment for advanced prostate cancer.
AstraZeneca believes this novel approach has many advantages over traditional radiology including minimising damage to healthy cells and enabling access to tumours not reachable through other methods.
Executive vice president Susan Galbraith said: ‘Together with Fusion, we have an opportunity to accelerate the development of FPI-2265 as a potential new treatment for prostate cancer, and to harness their innovative actinium-based platform to develop radioconjugates as foundational regimens.’
If successful, the drug will go head-to-head with Pluvicto, an existing prostate cancer treatment on the market made by Novartis (NOVN:SWX).
In addition to the upfront cash amount AstraZeneca will also pay a contingent value right of $3 per share upon achievement of certain regulatory milestones.
If achieved the total cash consideration has a transaction value of approximately $2.4 billion, representing a 126% premium to the prior closing price.
