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 (LON:0QLR)' 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 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.