In key news on UK stocks, AstraZeneca PLC (GB:AZN) announced its acquisition of Canada-based Fusion Pharmaceuticals Inc. (NASDAQ:FUSN) to expand its cancer portfolio. Fusion is a clinical-stage biopharmaceutical company that develops next-generation radioconjugates (RCs) to cure cancer. AZN stock is trading down by 1.05% at the time of writing.
The deal is the latest addition to AstraZeneca’s several other billion-dollar acquisitions amid the rapidly increasing M&A activity in the pharmaceutical sector. Last week, AstraZeneca acquired French biotech company Amolyt Pharma for $1.05 billion in cash to strengthen its rare disease segment.
AstraZeneca is a leading global pharmaceutical company, serving billions of people worldwide. The company operates in three main categories: Oncology, Rare Diseases, and BioPharmaceuticals.
Details of the Transaction
Under the terms of the agreement, AstraZeneca will purchase all outstanding shares of Fusion at $21 per share in cash, totalling $2 billion. The offer price is 97% higher than Fusion’s closing price on Monday. Additionally, the transaction includes a non-transferable contingent value right of $3.00 per share, payable upon achieving a specified regulatory milestone.
The agreement is anticipated to be finalized in the second quarter of 2024, upon getting all the necessary approvals and meeting regulatory requirements.
Rationale Behind AstraZeneca’s Acquisition of Fusion
The Fusion acquisition represents a significant advancement for AstraZeneca in realizing its ambition to revolutionize cancer treatments by replacing chemotherapy and radiotherapy with better-targeted treatments. The acquisition will align with this ambition of the company with next-generation RCs, which are more precise in targeting cancer cells, presenting a hopeful advancement in cancer therapy in recent times.
Additionally, the acquisition enriches AstraZeneca’s prominent oncology portfolio by integrating the Fusion pipeline of RCs, mainly their flagship program, FPI-2265. This program holds promise as a potential new therapy for patients grappling with metastatic castration-resistant prostate cancer.
In FY2023, the company’s oncology segment achieved revenue growth of 21% to $18.4 billion on a constant exchange rate, compared to the previous year. The segment contributed 40% to the overall revenues in 2023, up from 35% in 2022.
Is AstraZeneca a Good Buy Now?
As per the consensus rating on TipRanks, AZN stock received a Moderate Buy rating, supported by a total of 17 recommendations. The AstraZeneca share price forecast stands at 11,182.08p, signifying a potential upside of about 10% in the share price.
