Astrazeneca to purchase Fusion Pharma for up to $2.4B
Focus on emerging cancer treatments
Astrazeneca PLC agreed to buy Fusion Pharmaceuticals Inc. for as much as US$2.4 billion as it seeks to transform cancer treatment by replacing traditional methods like chemotherapy with more targeted approaches.
The U.k.-based drug company said it will pay US$21 a share for Fusion, or US$2 billion in cash upfront, plus a further US$400 million dependent on milestones being achieved. The full amount equates to a premium of 126 per cent to Fusion’s closing price on Monday.
Shares of Astra were little changed in early London trading on Tuesday. They are down around five per cent over the last 12 months.
Fusion, based in Hamilton, Ont., is a clinical-stage biotech company developing radioconjugates that deliver radioactive isotopes directly to cancer cells in a targeted way, minimizing damage to healthy cells. Astra believes that radioconjugates are going to help redefine cancer therapy worldwide.
After a shift in focus to develop COVID-19 vaccines during the pandemic, the Fusion deal marks a return to chief executive Pascal Soriot’s core focus on oncology. Smart bets he’s made on cancer treatments in the past have been credited for transforming Astrazeneca’s fortunes over the past decade.
The deal is also the latest in a string of bolt-on sized deals for Astra, which earlier this month agreed to buy Amolyt Pharma, a French company focused on developing treatments for rare endocrine diseases, for just over US$1 billion. In December, Astra stuck a Us$1-billion deal for the U.S. vaccine company Icosavax, and also said it would acquire cell therapy firm Gracell Biotechnologies.
Shares of Astra were little changed in early London trading on Tuesday. They are down around five per cent over the last 12 months. Fusion’s shares jumped 95 per cent in U.S. premarket trading.
Cancer treatments generated about US$17 billion last year for Astra and represent more than a third of its total sales. However, product development can be very expensive in terms of research and marketing, so “Astra is planning for growth through acquisitions to avoid a potential drag on profits from focusing purely on long-term internal drug development,” said Susannah Streeter, head of money and market at Hargreaves Lansdown.
NEW TREATMENTS
The move to purchase Fusion indicates the importance Astra is placing on these relatively new radioconjugates treatments, with the first only approved in the U.S. in 2018. Astra sees an opportunity for growth as between 30 per cent and 50 per cent of patients with cancer receive radiotherapy at some point during treatment.
One of Fusion’s most advanced potential new treatments targets metastatic castration-resistant prostate cancer and could be a better way of treating these patients, said Susan Galbraith, executive vice president of oncology R&D.
There is also the possibility of combining Fusion’s products with Astra’s own pipeline, she said.
Another key aspect is gaining access to Fusion’s manufacturing and supply chain capabilities in radioconjugates. A central challenge when producing these drugs is access to the radioactive metal actinium, and Fusion already has agreements with key suppliers, along with manufacturing capacity for these treatments, said Galbraith.
The global radiopharmaceutical market is expected to grow from US$7 billion in 2022 to US$39 billion by 2032, according to Mark Purcell, an analyst at Morgan Stanley.
Astra’s swoop on Fusion is an “exciting step to expand its ‘smart chemo’ platform for the treatment of cancer,” he said, adding that Fusion has one of the strongest clinical pipelines in radioligand therapy.
Like Astra, other European pharma companies have also been pursuing a series of acquisitions in recent months as they seek to bolster their pipelines. Transactions include GSK PLC’S purchase of Aiolos Bio Inc., Sanofi’s deal for Inhibrx Inc., and Novartis AG’S addition of Morphosys AG. Drug makers are focusing on targeted acquisitions that are smaller in scale than the megadeals seen in years past.