AstraZeneca bets on next-generation cancer therapy

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

The deal gives AstraZeneca a foothold in the radiopharmaceutical drugs market, which has seen increasing investor interest since 2021 when data from Novartis’ 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’s $1.4 billion acquisition of Point Biopharma and Bristol Myers 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.

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.