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AstraZeneca (AZN) to Acquire Vaccine Maker Icosavax for $1.1B

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AstraZeneca (AZN - Free Report) announced that it has entered into a definitive agreement to acquire Icosavax, Inc. for a total deal value of up to $1.1 billion.

Icosavax is currently developing differentiated, high-potential vaccines using its proprietary and innovative protein virus-like particle (VLP) platform.

The impending acquisition deal between the two companies will add Icosavax’s phase III ready investigational vaccine candidate, IVX-A12, to AstraZeneca’s Vaccines & Immune Therapies pipeline.

IVX-A12 is a potential first-in-class, combination protein VLP vaccine that targets both respiratory syncytial virus (RSV) and human metapneumovirus (hMPV). IVX-A12 currently enjoys the FDA’s Fast Track designation in the United States.

RSV and hMPV are the two leading causes of severe respiratory infection and hospitalization in adults aged 60 years and older and those with chronic conditions, such as cardiovascular, renal and respiratory disease.

At present, there are no treatments or preventative therapies for hMPV and no combination vaccines for RSV.

AstraZeneca claims that IVX-A12, which targets both RSV and hMPV diseases, has a differentiated profile versus currently approved monotherapy RSV vaccines. Per the data readout from the phase II study of IVX-A12, it was observed that the candidate demonstrated robust immune responses against both RSV and hMPV, after one month of vaccination.

VLP vaccines work by mimicking how naturally occurring viruses appear to the body’s immune system. The company believes that this novel mechanism of action could offer potential benefits over non-VLP vaccines.

Year to date, shares of AstraZeneca have lost 6.3% against the industry’s 4.3% growth.

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Upon the closing of the deal, AZN will acquire Icosavax for a price of $15 per share in cash, representing a 43% premium over the latter’s closing market price on Dec 11, 2023. This upfront cash portion of the transaction amounts to approximately $0.8 billion.

The acquisition agreement also includes a non-tradable contingent value right for up to $5 per share in cash contingent upon the achievement of certain regulatory and sales-based milestones. Combining the upfront payment amount and the maximum potential contingent value payments, if achieved, will bring the total transaction value up to $1.1 billion. This represents a 91% premium over Icosavax’s closing market price on Dec 11, 2023.

Additionally, AstraZeneca is also entitled to acquire the cash and marketable securities on ICVX’s balance sheet, which totaled $229 million as of Sep 30, 2023, per the terms of the agreement.

Subject to the fulfillment of certain customary and regulatory conditions, the acquisition agreement is expected to close in the first quarter of 2024.

Through this acquisition, AZN plans to leverage Icosavax’s expertise and capabilities in protein VLP science to support the development process of IVX-A12 and other differentiated VLP vaccines for high-burden respiratory infections.

It is important to note that in July 2023, AstraZeneca and Sanofi (SNY - Free Report) announced the FDA approval of their long-acting single-dose antibody, Beyfortus (nirsevimab), for the prevention of lower respiratory tract disease caused by RSV in newborns and infants.

Following the FDA’s approval, Beyfortus became the first monoclonal antibody approved to protect all infants through their first RSV season. The RSV antibody is also approved for use in children aged up to 24 months who are vulnerable to severe RSV disease through their second RSV season.

AstraZeneca and Sanofi launched Beyfortus in the United States ahead of the 2023-24 RSV season.

AZN and SNY entered into an agreement in 2017 to develop and commercialize Beyfortus. Per the terms, AstraZeneca is responsible for development and manufacturing activities, while Sanofi is responsible for commercialization activities and record revenues.

Zacks Rank and Stock to Consider

AstraZeneca currently carries a Zacks Rank #3 (Hold).

A better-ranked stock worth mentioning is Puma Biotechnology, Inc. (PBYI), sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 30 days, the Zacks Consensus Estimate for Puma Biotechnology’s 2023 earnings per share has remained unchanged at 72 cents. During the same time frame, the consensus estimate for Puma Biotechnology’s 2024 earnings per share has increased from 62 cents to 64 cents. Year to date, shares of PBYI have lost 10.2%.

PBYI’s earnings beat estimates in three of the last four quarters while missing on one occasion, delivering a four-quarter average earnings surprise of 76.55%.

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