On Tuesday, Jefferies adjusted its stance on Fusion Pharmaceuticals, a company traded on NASDAQ under the ticker NASDAQ:FUSN. The firm downgraded the stock from a Buy rating to a Hold. However, in a notable move, the price target was simultaneously increased to $21.00, up from the previous $10.00.
The adjustment by Jefferies follows the announcement that AstraZeneca (NASDAQ:AZN) will acquire Fusion Pharmaceuticals' radiopharmaceutical platform. The deal is valued at approximately $21 per share in cash, which translates to an upfront cost of around $2 billion.
Moreover, there is a contingent value right (CVR) of roughly $3 per share, or $400 million in value, that is dependent on the acceptance of a New Drug Application (NDA) filing by August 2029, an event the analyst views as probable.
AstraZeneca's acquisition is not unexpected, as the pharmaceutical giant was already partnered with Fusion Pharmaceuticals on some of its earlier-stage programs. The leading asset of Fusion Pharmaceuticals, FPI-2265, is anticipated to release Phase II data for prostate cancer treatment soon. The analyst anticipates that this upcoming data release will not contain any significant surprises.
The transaction between Fusion Pharmaceuticals and AstraZeneca is anticipated to be finalized in the second quarter of 2024. The revised stock price target of $21 reflects the expected acquisition terms, while the downgrade to a Hold rating indicates a neutral position on the stock's potential for further price appreciation following the announcement of the acquisition terms.
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