LG Chem Acquires US Abeo... Expanding Global Reach with FDA-Approved Anticancer Drug Platform

Total Acquisition Amount $566 Million... Acquisition Price Per Share $15
2021 Kidney Cancer Anticancer Drug 'Potibda' FDA Approval

[Asia Economy Reporter Lee Chun-hee] LG Chem has embarked on full-scale investment in the bio business by acquiring a U.S. oncology biotech company that holds an FDA-approved anticancer drug.

On the 18th, LG Chem announced that it will acquire 100% of the shares of AVEO Pharmaceuticals, a Nasdaq-listed company, for $566 million (approximately 813.1 billion KRW). The acquisition price is $15 per share, which represents a premium of about 43% compared to AVEO's previous closing price of $10.48.

AVEO, established in 2002 in Boston, Massachusetts, is recognized as a company with comprehensive capabilities specialized in the oncology market, including clinical development, approval, sales, and marketing. It was listed on Nasdaq in 2010. Last year, it received FDA approval in the U.S. for the adult advanced renal cell carcinoma (RCC) treatment drug FOTIVDA (active ingredient tivozanib). This is the first time a Korean company has acquired a company holding an FDA-approved new drug.

Since the launch of FOTIVDA, AVEO's performance has shown continuous growth. This year, sales are expected to reach 150 billion KRW, nearly tripling compared to the previous year. The U.S. securities industry forecasts that sales will reach 500 billion KRW by 2027. If the ongoing combination clinical trials of FOTIVDA and immuno-oncology drugs succeed, the treatment's application range will expand, leading to additional sales growth.

This merger and acquisition will be carried out by LG Chem investing acquisition funds into its life sciences subsidiary located in Boston, 'LG Chem Life Sciences Innovation Center (LG CBL),' which will then establish a special purpose company (SPC) to proceed with the AVEO acquisition. Subsequently, procedures such as AVEO's shareholders' meeting approval and Foreign Investment Committee review will follow. The merger is expected to take approximately 3 to 6 months to complete.

LG Chem stated, "Through this acquisition, we have secured oncology commercialization capabilities in the U.S. in a short period," adding, "We have established a foothold to launch various self-developed new drugs in the U.S., the world's largest pharmaceutical market." The U.S. is considered a challenging market to enter due to its very different healthcare and distribution systems compared to Korea, requiring localized capabilities. However, the oncology field operates with sales organizations centered on a small number of specialized cancer medical institutions, making it feasible to run the business with AVEO, which already possesses commercialized drugs.

AVEO's FOTIVDA firmly established itself as a kidney cancer treatment by obtaining Category 1 Recommendation status in the U.S. National Comprehensive Cancer Network (NCCN) Guideline in August. Additionally, AVEO has secured three clinical development-stage oncology pipelines, including the head and neck cancer treatment drug 'Ficlatuzumab,' which is currently in Phase 3 clinical trials.

LG Chem plans to leverage this to strengthen its oncology-centered business portfolio in the new drug sector and leap forward as a 'global innovative pharmaceutical company.' In particular, by internalizing AVEO's commercialization and clinical capabilities, it aims to achieve sales of approximately 2 trillion KRW in the life sciences sector alone by 2027.

Vice Chairman Shin Hak-cheol said, "This acquisition decision is the most important milestone in LG Chem's over 40-year history in the bio business and has laid the foundation for this business to leap globally." He added, "We will actively expand local sales by continuously strengthening U.S. commercialization capabilities and accelerate our leap to become a global innovative pharmaceutical company by further enhancing U.S. clinical and approval capabilities centered on oncology."

This content was produced with the assistance of AI translation services.