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AstraZeneca bets on next-generation cancer therapy with $2 billion Fusion deal

Published 03/19/2024, 03:10 AM
Updated 03/19/2024, 10:42 AM
© Reuters. FILE PHOTO: Test tubes are seen in front of a displayed AstraZeneca logo in this illustration taken, May 21, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
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By Yadarisa Shabong and Manas Mishra

(Reuters) -AstraZeneca said on Tuesday it will buy Canadian drug developer Fusion Pharmaceuticals Inc for $2 billion in cash as the Anglo-Swedish drugmaker bets on next-generation cancer treatments.

The deal gives AstraZeneca (NASDAQ:AZN) a foothold in the radiopharmaceutical drugs market, which has seen increasing investor interest since 2021 when data from Novartis (SIX:NOVN)' treatment showed that the drug extended survival for prostate cancer patients.

The Novartis drug was approved in 2022 and the space has seen a flurry of deals since then, including Eli Lilly (NYSE:LLY)'s $1.4 billion acquisition of Point Biopharma and Bristol Myers (NYSE:BMY) Squibb's $4.1 billion deal for RayzeBio last year.

AstraZeneca will pay $21 per Fusion share, a premium of more than 97% to the U.S.-listed company's closing price on Monday. Fusion's shares doubled to $21.46 in US premarket trading.

Fusion is developing "next-generation" radioconjugates, which deliver a radioactive isotope directly to cancer cells through precise targeting using molecules.

Fusion's most advanced therapy is called FPI-2265, which is currently in a mid-stage trial to treat patients with metastatic castration-resistant prostate cancer.

"Between 30 and 50% of patients with cancer today receive radiotherapy at some point during treatment, and the acquisition of Fusion furthers our ambition to transform this aspect of care with next-generation radioconjugates," said Susan Galbraith, executive vice president, Oncology R&D at AstraZeneca.

Older radiotherapy and chemotherapy have been the mainstays of cancer treatment for decades.

AstraZeneca has been working on other approaches to develop more targeted cancer treatments, including antibody-drug conjugates and RCs.

"The deal has solid strategic logic, potentially allowing Astra to combine its existing antibody portfolio with radioconjugate payloads," J.P.Morgan wrote in a note.

AstraZeneca will also pay a non-transferable contingent value right of $3 per share, taking the combined transaction value to about $2.4 billion.

© Reuters. FILE PHOTO: Test tubes are seen in front of a displayed AstraZeneca logo in this illustration taken, May 21, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

AstraZeneca's oncology sales were $17.15 billion in 2023, making up more than a third of its total revenue.

The Fusion deal follows a string of others in the past few months, including its $1.05 billion purchase of Amolyt Pharma last week. In late 2023, AstraZeneca signed deals in several spaces including oncology, vaccine and anti-obesity - through a licensing deal.

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