Fusion Pharma acquisition by AstraZeneca unlikely to be topped: Raymond James

The takeover of Canada’s Fusion Pharmaceuticals (Fusion Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials NASDAQ:FUSN) by development partner AstraZeneca is likely to go ahead.

That’s the opinion of Raymond James analyst Rahul Sarugaser, who in a research update to clients March 19, raised his price target on FUSN from $16.00 to $21.00 and changed his rating on the stock from “Strong Buy 1” to “Market Perform”.

On March 19, Hamilton-based FUSN announced it had reached a deal to be acquired by Boston-based Pharma giant AstraZeneca for $21.00 per share, or a total value of approximately $2.4-billion.

“Fusion Chief Executive Officer John Valliant, Ph.D., said: “This acquisition combines Fusion’s expertise and capabilities in radioconjugates, including our industry-leading radiopharmaceutical R&D, pipeline, manufacturing and actinium-225 supply chain, with AstraZeneca’s leadership in small molecules and biologics engineering to develop novel radioconjugates. Expanding on our existing collaboration with AstraZeneca where we have advanced FPI-2068, an EGFR-cMET targeted radioconjugate into Phase I clinical trials, gives us a unique opportunity to accelerate the development of next-generation radioconjugates with the aim of transforming patient outcomes.”

Sarugaser says a bid that tops this one would be unlikely indeed.

“FUSN was the last publicly traded radiopharma takeout candidate that had both a late-stage clinical program under development and material manufacturing operations: the ideal radiopharma starter pack for big pharma. We think this was a pretty solid outcome, and was just a matter of time before a deal like this was executed (which motivated our Strong Buy rating),” he wrote. “We like the ~100% premium to closing price (though, just ~24% above its Jun. 2020 IPO price – a different time) with potential for 126% premium on realization of what we believe is a relatively easy-to-achieve regulatory milestone on FPI-2265 (see Deal Structure below), and we like that FUSN was able to reach an agreement with a partner that saw the potential of targeted alpha therapies very early on. We do not disqualify the potential for other parties to come over the top, but given the all-cash deal, the low hurdles to clear to realize full deal value, and the warm extant relationship between FUSN and AZN, a bully bid here would need, indeed, to be extraordinary.”