The Hamilton Spectator

AstraZenec­a agrees to pay $2.4B for Fusion Pharma

U.K. drugmaker believes Hamilton-based firm will redefine cancer therapy


AstraZenec­a Plc agreed to buy Fusion Pharmaceut­icals Inc. for as much as $2.4 billion (U.S.) as European drugmakers snap up promising biotech companies.

The U.K.-based drugmaker will pay $21 a share for Fusion, a Canadian company based in Hamilton, or $2 billion in cash upfront, plus a further $400 million depending on milestones being achieved. The full amount equates to a premium of 126 per cent to Fusion’s closing price on Monday.

Fusion is a biotech developing treatments that deliver radioactiv­e isotopes directly to cancer cells in a targeted way, minimizing damage to healthy cells. Astra believes these radioconju­gates can help redefine cancer therapy worldwide.

After a shift to develop COVID-19 vaccines during the pandemic, the Fusion deal marks a return to Astra chief executive officer Pascal Soriot’s core focus on oncology. Smart bets he’s made on cancer treatments have been credited for transformi­ng the company’s fortunes over the past decade.

The acquisitio­n is also the latest in what’s become a hot area of the cancer market as big drugmakers snap up biotechs that target tumours with radioactiv­e drugs. In October, Eli Lilly & Co. said it will pay $1.4 billion to acquire Point Biopharma Global Inc. It was followed by Bristol Myers Squibb Co. agreeing in December to buy RayzeBio Inc.

Astra shares were little changed in London on Tuesday. They are down about five per cent over the last 12 months. Fusion shares surged as much as 99 per cent.

Cancer treatments generated about $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.

The move to purchase Fusion indicates the importance Astra is placing on these relatively new radioconju­gates, with the first treatment 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 castration-resistant prostate cancer that has spread, and could offer a better way of treating these patients, said Susan Galbraith, Astra’s 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. 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 the treatments, Galbraith said.

The global radiopharm­aceutical market is expected to grow from $7 billion in 2022 to $39 billion by 2032, according to Mark Purcell, an analyst at Morgan Stanley. Astra’s swoop on Fusion will help to expand its “smart chemo” platform as the U.S. biotech has one of the strongest clinical pipelines in radioligan­d therapy, he added.

The Astra deal boosted the stock price of other companies developing radiopharm­aceuticals. Shares of Perspectiv­e Therapeuti­cs Inc. jumped as much as 24 per cent, their biggest increase in nearly two months. Lantheus Holdings Inc. climbed two per cent.

This category of targeted cancer drugs “clearly remains in the crosshairs of pharma business developmen­t strategy, which could bode well for a number of private companies working on innovative technologi­es,” Mizuho’s Jared Holz said in a note Tuesday.

Astra has announced 16 acquisitio­ns over the past five years totalling more than $46 billion, according to data compiled by Bloomberg. The bulk of that came from one deal, the $38.8-billion purchase of Alexion Pharmaceut­icals Inc. in 2021. All of the other deals were about $2 billion or less, with Tuesday’s Fusion purchase being the largest.

Like Astra, other European pharma companies have also been pursuing deals to bolster their pipelines lately. Transactio­ns include GSK PLC’s purchase of Aiolos Bio Inc., Sanofi’s deal for Inhibrx Inc., and Novartis AG’s addition of MorphoSys AG.

Drugmakers are focusing on targeted acquisitio­ns that are smaller in scale than the mega-deals seen in years past.

 ?? PAUL ELLIS AFP VIA GETTY IMAGES FILE PHOTO ?? The Fusion Pharma deal marks a return to AstraZenec­a’s CEO Pascal Soriot’s core focus on oncology after they pivoted to making COVID-19 vaccines during the pandemic.
PAUL ELLIS AFP VIA GETTY IMAGES FILE PHOTO The Fusion Pharma deal marks a return to AstraZenec­a’s CEO Pascal Soriot’s core focus on oncology after they pivoted to making COVID-19 vaccines during the pandemic.

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