LG Chem's Global Leap with FDA-Approved Cancer Drug through Direct Acquisition of US Biotech (Comprehensive)

'Abeo', an Anti-Cancer Biotech
Acquired for $566 Million

2021 Kidney Cancer Drug 'Fortibda'
Received FDA Approval

'Big Pharma' Eli Lilly
Also Acquires Gene Therapy Biotech

LG Chem and Aveo logos (from left)

[Asia Economy Reporter Lee Chun-hee] LG Chem has embarked on full-scale investment in the bio business by acquiring the U.S. oncology biotech AVEO Pharmaceuticals. AVEO owns the FDA-approved anticancer drug 'FOTIVDA' (generic name tivozanib), marking the first time a domestic company has directly acquired a firm with an FDA-approved new drug.

According to industry sources on the 19th, LG Chem announced the day before that it will acquire 100% of AVEO, a Nasdaq-listed company, for $566 million (approximately 813.1 billion KRW). The acquisition price was $15 per share, about a 43% premium over AVEO's previous closing price of $10.48. On the same day, AVEO's stock price surged to close at $14.92.

Founded in 2002 in Boston, Massachusetts, AVEO is a biotech specializing in anticancer drugs and was listed on Nasdaq in 2010. Last year, it received FDA approval for FOTIVDA as a third-line treatment for adult advanced renal cell carcinoma (RCC) and as a first-line treatment for kidney cancer outside the U.S. Additionally, it is conducting Phase 3 combination clinical trials with the anti-PD-L1 immunotherapy drug Opdivo for kidney cancer patients with prior immunotherapy history, and Phase 2 combination trials with the anti-PD-L1 immunotherapy drug Imfinzi for liver cancer patients. FOTIVDA generated sales of $39 million (approximately 55.7 billion KRW) in the U.S. alone last year.

AVEO's performance is also growing. Bloomberg expects AVEO's revenue this year to triple from the previous year to $100 million (approximately 142.7 billion KRW), reaching about $300 million by 2027. This is due to anticipated additional revenue growth if the combination trials with Opdivo and Imfinzi succeed. AVEO is also conducting Phase 3 trials for the head and neck cancer treatment 'Piclatuzumab.'

This acquisition involves LG Chem's U.S.-based life sciences subsidiary, 'LG Chem Life Sciences Innovation Center (LG CBL),' providing acquisition funds, after which LG CBL will establish a special purpose company (SPC) to acquire AVEO. The merger is expected to be completed in about 3 to 6 months following AVEO's shareholders' meeting approval and review by the Foreign Investment Committee.

LG Chem stated, "Through this acquisition, we have secured anticancer 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 company also set a strategy to strengthen its oncology-centered business portfolio in the new drug sector and leap forward as a global innovative pharmaceutical company. It aims for 2 trillion KRW in life sciences sector sales by 2027.

Shin Hak-cheol, Vice Chairman of LG Chem, said, "This acquisition decision is the most important milestone in LG Chem's over 40-year bio business history and lays the foundation for a global leap," adding, "We will continuously strengthen our U.S. commercialization capabilities and actively expand local sales."

Consecutive Biotech M&As Amid Lower Stock Prices... Is the Acquisition Competition Starting?

Meanwhile, on the same day, global big pharma Eli Lilly announced the acquisition of gene therapy biotech Akouos for a similar total amount of $610 million (approximately 870.5 billion KRW). The deal consists of a $487 million upfront payment and a $123 million contingent value right (CVR).

Akouos is developing gene therapies for hearing loss based on adeno-associated virus (AAV). Its main candidate, AK-OTOF, is a treatment for hearing loss caused by otoferlin gene mutation (OTOF). It received FDA approval for its clinical trial plan (IND) last month.

Seung-min Kim, a researcher at Mirae Asset Securities, evaluated, "It's not about which deal is better, but about the acquirer's position and whether the deal fits that position." He analyzed, "LG Chem acquired a company with an FDA-approved drug, focusing on small molecules with fierce competition, reducing clinical risk by securing an approved item and emphasizing direct entry into the global market. Lilly, on the other hand, acquired a first-in-class gene therapy with IND approval, a new modality with high clinical failure risk, thereby securing a new modality and additional new indications."

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