Fusion Pharmaceuticals (NASDAQ: FUSN) stock skyrocketed 100% on Tuesday upon news of its $2 billion cash acquisition by AstraZeneca (AZN).
AstraZeneca (NASDAQ: AZN) has announced its acquisition of Canadian drug developer Fusion Pharmaceuticals (FUSN) for $2 billion in cash, a move aimed at bolstering its foothold in the rapidly evolving cancer treatment landscape.
The acquisition provides AstraZeneca with entry into the burgeoning radiopharmaceutical drugs market, a sector that has captured increasing investor attention since 2021. This interest surged following the data from the treatment of Novartis (SIX: NOVN) that demonstrated extended survival for prostate cancer patients.
Novartis’ drug received approval in 2022, sparking a series of deals in the space. These include Eli Lilly’s $1.4 billion acquisition of Point Biopharma and Bristol Myers Squibb’s $4.1 billion deal for RayzeBio last year.
Acquisition Deal Overview
Under the terms of the acquisition, AstraZeneca (NASDAQ: AZN) will pay $21 per share of Fusion Pharmaceuticals (NASDAQ: FUSN), a premium of more than 97% over the closing price of the U.S.-listed company on March 18, 2024. In addition, AstraZeneca will pay a non-transferable contingent value right (CVR) of $3 per share, bringing the total transaction value to around $2.4 billion.
AstraZeneca’s deal, as of December 31, 2023, includes acquiring cash, cash equivalents, and short-term investments from Fusion’s balance sheet, which total $234 million.
Fusion is at the forefront of developing next-generation radioconjugates. These innovative treatments deliver a radioactive isotope directly to cancer cells using precise molecular targeting. Their leading therapy, FPI-2265, is currently undergoing a mid-stage trial for the treatment of patients with metastatic castration-resistant prostate cancer.
Susan Galbraith, Executive Vice President of Oncology R&D at AstraZeneca, emphasized the significance of this acquisition, stating,
“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.”
Traditional radiotherapy and chemotherapy have been the mainstays of cancer treatment for decades. AstraZeneca, however, has been exploring other approaches to develop more targeted cancer treatments, including antibody-drug conjugates and RCs.
J.P.Morgan wrote in a note,
“The deal has solid strategic logic, potentially allowing Astra to combine its existing antibody portfolio with radioconjugate payloads.”
In 2023, the oncology sales of AstraZeneca (NASDAQ: AZN) reached $17.15 billion, accounting for more than a third of its total revenue.
AstraZeneca has recently made the Fusion deal as part of its ongoing acquisitions. These include the $1.05 billion purchase of Amolyt Pharma last week and several deals signed in late 2023 in areas such as oncology, vaccines, and anti-obesity through a licensing deal.
Fusion Pharmaceuticals (NASDAQ: FUSN) Stock Reaction
FUSN stock spiked 99.06% to close at $21.18 on Tuesday. The traders had exchanged hands with 41,241,799 (41.24 million) shares compared to the average daily trading volume of 1.30 million.
Fusion Pharmaceuticals FUSN FUSN shares FUSN stock FUSN stock news NASDAQ: FUSN
