AstraZeneca (LON: AZN) to acquire Caelum Biosciences: Buy alert?

British Swedish pharmaceutical major AstraZeneca PLC (LON: AZN) said its subsidiary Alexion would fully acquire US-based rare diseases biotech firm Caelum Biosciences after Alexion exercised the option for the remaining equity in Caelum. 

The deal will help in the acquisition of the CAEL-101, which is a fibril-reactive monoclonal antibody (mAb) used for the treatment of a rare disease, light chain (AL) amyloidosis.

Alexion is a group within the company which is also focused on rare diseases.

AstraZeneca’s (LON: AZN) share price performance

AstraZeneca’s shares were trading at GBX 8,752.00, up by 3.28 per cent on 29 September 2021 at 14:11 PM BST. Comparatively, the FTSE 100 index was trading at 7,085.99, up by 0.82 per cent.

AstraZeneca emerged as the highest riser in the FTSE 100 index, which it is a part of, following the news.

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The company’s market cap stands at £131,273.11 million and has a year to date return of 19.54 per cent as of 29 September.

AstraZeneca’s acquisition deal details

Alexion had entered into a collaboration agreement with Caelum in 2019, taking a minority interest stake with the firm, it also included an exclusive option to acquire Caelum’s remaining equity.

The deal for the remaining stake Caelum Biosciences is expected to be worth up to US$ 150 million, with a potential facility for making additional payments of US$ 350 million upon hitting certain milestones. The acquisition is expected to close on 5 October. 

CAEL-101 details 

About 20,000 people in the US, France, Germany, the UK and other countries suffer from AL amyloidosis and have an AL amyloidosis disease classification of Mayo stage IIIa or IIIb.

According to earlier comments made by analysts, the incident cases of AL amyloidosis indicates a potential revenue range between US$ 750 million and US$ 1 billion for the CAEL-101 treatment.

CAEL-101 is currently undergoing an evaluation under the Cardiac Amyloid Reaching for Extended Survival (CARES) clinical programme, in conjunction with standard of care therapy, to ascertain the efficacy and safety of the treatment.  

It is currently involved in two parallel global phase 3 trials. 

Bottom Line

AstraZeneca had acquired Alexion in 2020 in a deal worth up to US$ 39 billion in order to strengthen its immunology business segment.

The company was among one of the first vaccine makers approved for mass use against the covid-19 vaccine. However, due to its commitment of making the vaccine available at cost, it has not seen a significant boost in profits from its covid-19 vaccine.

Analysts expect the Caelum deal will thus help boost AstraZeneca’s rare diseases portfolio and prove to be another avenue for generating revenues.stock