Fusion Pharmaceuticals: Hold Rating Amid AstraZeneca Acquisition and Radiopharmaceutical Prospects

Fusion Pharmaceuticals (FUSN – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Andrew Tsai from Jefferies downgraded the rating on the stock to a Hold and gave it a $21.00 price target.

Andrew Tsai has given his Hold rating due to a combination of factors surrounding Fusion Pharmaceuticals’ recent developments and its acquisition by AstraZeneca (AZN). Tsai acknowledges the significance of the acquisition, with AZN buying FUSN’s radiopharmaceutical platform at a substantial premium of $21 per share in cash, translating into an upfront deal value of around $2 billion. Additionally, there is a contingent value right (CVR) of $3 per share tied to a future regulatory milestone, potentially increasing the total deal value to approximately $2.4 billion. This CVR hinges on the FDA acceptance of a New Drug Application (NDA) for Fusion’s lead asset, FPI-2265, by August 2029, which Tsai believes is likely to occur given the company’s progress and the anticipated initiation of pivotal Phase II/III trials.

Furthermore, Tsai’s perspective on the Hold rating is influenced by the current landscape of Big Pharma’s interest in radiopharmaceuticals, a trend he expects to continue into 2024. He notes that Fusion Pharmaceuticals fits the criteria sought by Big Pharma, given its strong supply agreements, technical expertise, and in-house manufacturing capabilities, which could exceed 100,000 doses annually. Moreover, the impending Phase II prostate cancer data for FPI-2265, expected to be competitive with existing treatments, reinforces the rationale behind the acquisition. Tsai predicts no complications with the deal’s closure expected in Q2:24, subject to shareholder and regulatory approval, and therefore maintains a Hold rating, reflecting a balanced view on FUSN’s current valuation and future prospects under AZN’s ownership.

In another report released today, Leerink Partners also downgraded the stock to a Hold with a $21.00 price target.

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Fusion Pharmaceuticals (FUSN) Company Description:

Fusion Pharmaceuticals Inc is a clinical stage bio-pharmaceutical company focused on developing alpha therapeutics for curing cancer.