Some market buzz hits the mark even when it is the worst-kept secret on the street.
AstraZeneca (NASDAQ:AZN) on March 19 agreed to buy Fusion Pharmaceuticals, Inc. (NASDAQ:FUSN). AstraZeneca moved after two radiopharmaceutical companies similar to Fusion were bought in the second half of 2023. Following Bristol-Myers Squibb Company’s (NYSE:BMY) $4.1 billion purchase of RayzeBio, investors and researchers tipped Fusion and the last, pure-play radiopharmaceutical takeout target available.
AstraZeneca did not flinch at the opportunity. AstraZeneca said it would pay Fusion approximately $2 billion in cash upfront at a valuation of $21 per share. In addition, Fusion shareholders will receive a non-transferable contingent value right (CVR) of $3.00 per share in cash payable upon the achievement of a specified regulatory milestone.
The total of $2.4 billion represents a 126% premium to Fusion’s closing market price on March 18, 2024, and a 111% premium to the 30-day average closing price. AstraZeneca will acquire the $234 million in cash, cash equivalents and short-term investments held on Fusion’s balance sheet as of December 31, 2023.
SanaCurrents recorded returns of 210% and as of March 19, 153%, for the acquisitions of RayzeBio and Fusion, respectively.
The Fusion purchase price reflects the similar 100% premium paid by Bristol-Myers in its acquisition of RayzeBio. And like RayzeBio, Fusion was sold prior to releasing phase II/III data on its lead drug FPI-2265. Fusion acquired FPI-2265 in February 2023.
Radiopharmaceutical drugs are enjoying a renaissance as cancer treatments, mostly because their respective second- and third-generation efforts are more and more targeted to the exact cancer cells that need to be destroyed. For Fusion, it also helps market researchers forecast the global prostate cancer market will grow to $27.1 billion by 2032, up from $12 billion in 2022.
Novartis’ (NYSE:NVS) recently raised its expectations for its pioneering radiopharmaceutical drug Pluvicto to $3 billion in global sales. Like Pluvicto, FPI-2265 is a prostate specific membrane antigen (PSMA)-targeted therapy. AstraZeneca clearly sees a path to capturing part of the prostate cancer radiophama market with FPI-2265.