AstraZeneca to buy Fusion Pharma for up to $2.4 billion
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.
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.
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.