Hamilton-based biopharmaceutical precision oncology firm Fusion Pharmaceuticals has entered an agreement that will see it acquired by pharmaceutical giant AstraZeneca for up to $2.4 billion USD.
Fusion debuted on the NASDAQ at $17 per share, but has fallen as low as $2.31 per share in the past year.
Fusion Pharmaceuticals was founded out of McMaster University in 2014 with the goal to cure cancer by developing targeted alpha therapeutics, a method that employs radioactive substances that undergo radioactive decay to treat diseased tissue at close proximity.
Fusion has been doing just that, developing radioconjugates (RCs), which combine the precise targeting of antibodies, small molecules, or peptides with medical radioisotopes that aim to deliver radiation directly to cancer cells. Fusion, which has been working with AstraZeneca on developing certain RCs, says the treatment provides a more precise mechanism to kill cancer cells compared to traditional radiation therapy.
Fusion CEO John Valliant said in a statement that the acquisition will bring together Fusion’s expertise in RCs, including its research, development, manufacturing, and supply chain, with AstraZeneca’s work in small molecules and biologics engineering to develop new RCs.
“Expanding on our existing collaboration with AstraZeneca where we have advanced [a] targeted [RC] into Phase I clinical trials gives us a unique opportunity to accelerate the development of next-generation [RC] with the aim of transforming patient outcomes,” Valliant said.
AstraZeneca said the acquisition will strengthen its presence in Canada.
Following the acquisition, which is expected to close in the second quarter of 2024, Fusion will become a wholly owned subsidiary of AstraZeneca and continue its operations in Canada and the United States (US).
The transaction’s upfront value is approximately $2 billion USD and will see Fusion’s shareholders receive $21.00 per share, a 97 percent premium on its March 18 closing price of $10.64. However, it has the potential to be valued as high as $2.4 billion upon filing a new drug application with the US Food and Drug Administration by 2029, according to The Globe and Mail. The bonus will be paid out as $3.00 per share in a cash payable, non-transferable contingent value right.
Following Fusion’s spinout from McMaster, the company raised a $25-million USD Series A round in 2017 led by its founding venture investor, Johnson & Johnson Innovation. The company later picked up investors like OrbiMed in its $105 million USD Series B round in 2019 and the Canada Pension Plan Investment Board (CPPIB) in a $26-million raise ten months later.
Fusion debuted on the NASDAQ in June 2020 at a share price of $17.00, but has fallen as low as $2.31 per share in the past year. Following the announcement of the deal, its stock price sits at $21.15 as of 2:00 pm EST Wednesday.
As part of the transaction, AstraZeneca said it will acquire the cash, cash equivalents and short-term investments on Fusion’s balance sheet, which totalled $234 million as of December 31, 2023.
Feature image courtesy Fusion Pharmaceuticals.
