AstraZeneca, an Anglo-Swedish pharmaceutical company, announced on Tuesday that it will acquire Canadian drug researcher Fusion Pharmaceuticals Inc. for $2 billion in cash as part of its bet on cancer medicines of the future.

With this acquisition, AstraZeneca gains a footing in the market for radiopharmaceutical medications, which has drawn interest from investors since Novartis’ treatment revealed in 2021 that the medication increased prostate cancer patients’ survival rates.

Since the Novartis medication was approved in 2022, there have been a number of mergers in the industry, including as Bristol Myers Squibb’s $4.1 billion acquisition of RayzeBio last year and Eli Lilly’s $1.4 billion acquisition of Point Biopharma.

AstraZeneca has agreed to pay $21 each Fusion share, which represents a premium of almost 97% over the closing price of the U.S.-listed firm on Monday. During premarket trading in the US, Fusion’s shares surged to $21.46.

Fusion is creating “next-generation” radioconjugates, which use precise molecular targeting to deliver a radioactive isotope straight to cancer cells.

FPI-2265, Fusion’s most cutting-edge treatment, is presently undergoing a mid-stage clinical 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.

For many years, the cornerstones of cancer treatment have been chemotherapy and older forms of radiation.

In order to provide more specialised cancer medicines, AstraZeneca has been developing additional strategies, such as RCs and antibody-drug conjugates.

“The deal has solid strategic logic, potentially allowing Astra to combine its existing antibody portfolio with radioconjugate payloads,” J.P. Morgan stated in his analysis.

The non-transferable contingent value right of $3 per share will also be paid by AstraZeneca, bringing the total transaction value to roughly $2.4 billion.

In 2023, AstraZeneca’s revenues in the oncology segment accounted for $17.15 billion, or over one-third of its overall revenue.

The Fusion acquisition comes after a series of major deals in recent months, which included its $1.05 billion acquisition of Amolyt Pharma last week. Through licencing agreements, AstraZeneca struck deals in late 2023 in a number of areas, including anti-obesity, oncology, and vaccines.

(Adapted from Bloomberg.com)