AstraZeneca to acquire biotech firm​

By Jake Rickman
Image credit - Mats Wiklund / Shutterstock.com​

What do you need to know this week?

The Anglo-Swedish pharma giant AstraZeneca announced on Monday that it has agreed to acquire the shares in a US biotech company, CinCor, in a deal valued as much as $1.8bn, or $26 per share.

CinCor is a Massachusetts-based biotech company focused on the research and development of cardiovascular treatments. In particular, it has been developing a new course of treatment for patients with untreatable hypertension. However, in November, it announced that the phase 2 trial for the drug was unsuccessful, which precipitated a share sell-off that wrote off half of its market capitalisation as the public reacted to the disappointing news.

Following AstraZeneca’s announcement, CinCor’s shares rallied to nearly $28 by the time markets closed on Monday.

AstraZeneca’s enterprise value, which approximates its market value, is more than $240bn. This reflects the giant’s extensive portfolio of pharmaceutical and biotechnology brands around the world.

The Financial Times notes that the S&P index of smaller biotech companies is down nearly 20% compared to January 2021, which reflects an increase in investors’ risk aversion following a year of interest rate hikes.

Why is this important for your interviews?

A public merger has appeared in the wild! A welcome sight, given the dramatic slow-down in traditional M&A transactions over the past few months.

If you are interested in M&A law, it is always good practice to familiarise yourself with the particulars of recent high-profile transactions, as well as the business case underlying the deal. This is especially true in the transaction desert that has emerged over the past several months.

The deal will see AstraZeneca acquire all the cash and securities on CinCor’s balance sheet. AstraZeneca also intends to offer existing shareholders an additional $10 per share (paid in cash) if CinCor submits its hypertension drug, baxdrostat, for regulatory approval by the Food and Drug Administration.

As the Financial Times observes, if the deal reaches $1.8bn, this would reflect more than 200% above CinCor’s trading price last week. This therefore likely suggests AstraZeneca is somewhat confident in CinCor’s ability to develop its hypertension drug.

How is this topic relevant to law firms?

Covington & Burling is advising AstraZenenca, with American law firm Cooley advising CinCor.