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.
