AstraZeneca to Acquire Fusion Pharmaceuticals for $2.4 Billion, Gaining Leadership in Actinium-225-Based Radiopharmaceuticals

On March 19, AstraZeneca announced that it had reached a definitive agreement to acquire Fusion Pharmaceuticals, a clinical-stage biopharmaceutical company.This acquisition brings AstraZeneca pioneering R&D, manufacturing, and supply chain capabilities for radioligand therapies primarily based on Actinium-225, while strengthening AstraZeneca's presence in Canada.

Fusion is a clinical-stage oncology company dedicated to developing the next generation of radiopharmaceuticals. By fusing alpha particle-emitting isotopes to various targeting molecules through nuclear fusion, it selectively delivers alpha particle payloads to tumors. Upon completion of the acquisition, Fusion will become a wholly-owned subsidiary of AstraZeneca and continue its operations in Canada and the United States.

This acquisition complements AstraZeneca's leading oncology portfolio, gaining access to Fusion's pipeline of drugs, including its most advanced program, FPI-2265, a potential new therapy for patients with metastatic castration-resistant prostate cancer (mCRPC). FPI-2265 targets prostate-specific membrane antigen (PSMA) and is currently in Phase II clinical trials.

According to the terms of the final agreement,AstraZeneca will operate through a subsidiaryAcquisition of all outstanding shares of Fusion Pharmaceuticals, Inc. at an acquisition price of $21 per share, to be paid in cash at closing, plus an additional $3 per share in non-transferable or valuable rights, payable in cash upon achieving specified regulatory milestones.

The upfront cash portion represents a transaction value of approximately $2 billion, reflecting a 97% premium over Fusion's closing price of $10.64 on March 18 and an 85% premium over the 30-day volume-weighted average price (VWAP) of $11.37.

Including the upfront payment and maximum potential or valuable payments, the estimated transaction value is approximately $2.4 billion, representing a 126% premium over Fusion's closing price on March 18 and an 111% premium over the 30-day VWAP.As part of the transaction, AstraZeneca will acquire the cash, cash equivalents, and short-term investments on Fusion's balance sheet. As of December 31, 2023, the total amount on Fusion's balance sheet was US$234 million.

If regulatory approvals and Fusion shareholder approval, among other customary closing conditions, are met, the transaction is expected to close in the second quarter of 2024.

α-Targeted Radionuclide Therapy (TAT), as a specific targeted tumor treatment method, can enhance the killing effect on small lesions and diffuse micrometastases, reduce bone marrow toxicity, and overcome the issue of hypoxic tumor radiotherapy resistance due to the high linear energy transfer (LET) value and short penetration distance of α-emitting radionuclides.

In November 2020, AstraZeneca partnered with Fusion Pharmaceuticals to develop and commercialize next-generation alpha-emitting radiopharmaceuticals and combination therapies for cancer treatment, entering the field of nuclear medicine.

In April 2023, Fusion announced that the IND applications for its new drug [225Ac]-FPI-2068 and the companion molecular imaging agent [111In]-FPI-2107 have been accepted. Fusion will collaborate with AstraZeneca to jointly develop FPI-2068.

FPI-2068 is an ɑ radionuclide-targeted therapy (TAT) designed to deliver Ac-225 to various solid tumors co-expressing EGFR and cMET. The targets EGFR and cMET are commonly co-expressed in head and neck squamous cell carcinoma, non-small cell lung cancer, colorectal cancer, and pancreatic ductal adenocarcinoma.

In January 2024, Fusion announced significant progress in the FPI-2265 development program, updated Phase 1 data for the FPI-1434 study, and produced the first clinical doses at its proprietary manufacturing facility.

"Our CEO, Dr. John Valliant, said: 'Fusion has begun full-scale operation of the TAT manufacturing facility for clinical doses of FPI-2265. We have reached an agreement with the FDA on the protocol and development plan for FPI-2265, providing the team with a potential registration pathway.'"If approved, FPI-2265 will become the first marketed PSMA-targeted radioligand therapy based on Actinium [Ac].Considering the huge and growing market for PLUVICTO™ (Novartis RDC drug), we believe FPI-2265 will address a significant unmet need during or after lutetium [Lu]-based therapy.

Actinium [Ac-225], once dubbed "the rarest drug on Earth," reached a price extreme of $1 million/mCi. The main reason is the significant supply gap caused by its scarce production, keeping prices consistently high.

According to the "Radiopharmaceuticals Industry White Paper" by VCBeat and VBInsight, RDC has become a research and development hotspot in the radiopharmaceuticals industry in recent years. Its principle is to combine tumor-specific ligands with radionuclides to target and kill tumors, utilizing targeted molecules labeled with radionuclides for disease treatment and precise internal radiation therapy on lesions.

In addition, RDC is the only drug in clinical practice that can achieve integrated diagnosis and treatment. By loading isotopes with a relatively short half-life, the drug quickly enters the target tissue, where the radionuclide binds to primary or metastatic tumors, providing signals within an extremely short half-life and generating comprehensive medical imaging results through molecular imaging.

In the R&D of RDC, β-emitters currently receive the most attention, but the cutting-edge focus is shifting from β-emitters to α-emitters. Compared with β-rays, α-rays have larger particle mass, higher potency, and a shorter range, resulting in lower harmful radiation doses to other healthy tissues and organs. Ac-225 has a half-life of 9.9 days, ranking high among α-emitter drugs, providing sufficient treatment time. The formulated drug using actinium [225Ac] has a valid shelf life of up to 120 hours.

Therefore, Actinium [Ac-225] has become a research and development hotspot in α-nuclide RDC, showing good therapeutic potential for tiny tumor lesions widely distributed throughout the body. It can be used for conditions such as pancreatic cancer, prostate cancer, neuroendocrine tumors, and leukemia. According to incomplete statistics, there are 20 Actinium [Ac-225] radiopharmaceutical pipelines globally that have entered clinical trials, with two drugs already in Phase III clinical trials.

According to the 2022 global market research by Clairvoyance Research, the annual demand for Ac-225 is expected to reach approximately 17Ci by 2025 and 523Ci by 2031. However, the supply of Ac-225 isotopes is very tight, with current global production at about 1.8Ci per year, mainly relying on a few institutions such as the Oak Ridge National Laboratory (ORNL) in the United States. Particularly, the supply of high-purity GMP-grade Ac-225 will become a core competitive advantage in the future production of RDC.

AstraZeneca's straightforward payment of $2.4 billion might be due to its recognition of Fusion's production and manufacturing capabilities. It is reported that Fusion has completed the validation of its most advanced GMP production facility and produced the first clinical dose of α-nucleus-targeted therapy.

Fusion's factory has clinical and commercial-scale manufacturing capabilities, designed to support the company’s growing TAT pipeline, with an expected annual production capacity of up to 100,000 doses. The doses produced at Fusion’s manufacturing facilities are not only expected to support the production of FPI-2265 but are also anticipated to expand in the future to include other proprietary and collaborative projects of Fusion.

As a latecomer in MNC's nuclear medicine layout, AstraZeneca may want to overtake competitors by enhancing production and manufacturing capabilities as well as advancing clinical-stage pipelines.