South Korea’s chemicals giant LG Chem Ltd. announced on Oct. 18 that it will acquire AVEO Pharmaceuticals Inc., a Nasdaq-listed US biotech firm, for $566 million.
Based in Boston, Massachusetts, AVEO developed Fotivda (tivozanib), a new drug that earned approval from the US Food and Drug Administration (FDA) in March 2021 and from the European Medicines Agency (EMA) in August 2017 for the treatment of adult patients with relapsed or refractory advanced renal cell carcinoma (RCC).
LG Chem became the first Korean company to buy a biotech firm with a new FDA-approved drug. It will fully own AVEO for $15 per share in an all-cash transaction, LG Chem said.
For the deal, the chemicals giant will make loans via its Boston-based biotech subsidiary LG Life Science Innovation Center, then establish a special purpose company for the acquisition of AVEO.
The acquisition will be completed in three to six months, LG Chem added.
The deal value, $566 million, is larger than the annual revenue of LG Chem’s life science unit in 2021, which was 760 billion won ($533.7 million).
AVEO's share price surged to as high as $14.59 during pre-market trading hours from its previous close of $10.02.
"The transaction is the biggest milestone in the 40 years of history in LG Chem's bio business," said Shin Hak-cheol, CEO at LG Chem. "Through the deal, we will strengthen our capabilities in clinical studies and commercialization of anti-cancer treatment in the US," he said.
MOMENTUM FOR LG CHEM'S NOVEL DRUG R&D
Fotivda’s US net product revenue amounted to $38.9 million for the last year. The drug’s US net product revenue guidance for fiscal year 2022 is $100 million to $110 million, AVEO’s CEO Michael Bailey stated in August.
The US biotech is expected to achieve another critical milestone through a partnership with US pharmaceutical giant Bristol-Myers Squibb Co.
The two companies entered clinical trials last year to evaluate Fotivda, in combination with Bristol-Myers Squibb’s anti-programmed cell death 1 therapy Opdivo (nivolumab) in pivotal phase III trials. The target disease is advanced relapsed or refractory renal cell carcinoma (RCC) following prior immunotherapy exposure.
In addition to Fotivda, AVEO has three more drugs in the pipeline, including ficlatuzumab in phase III clinical trials for hepatocyte growth factors.
LG Chem, which has been slow in new drug development over the past decade, has gained momentum through the deal.
Its latest new drug is Zemiglo (gemigliptin), a diabetes treatment launched 10 years ago in Korea and now available in India and some countries in Latin America.
LG Chem also owns 20 drug candidates, targeting solid cancer, arthritis, nonalcoholic fatty liver disease and others in pre-clinical and clinical trial stages.
Updated with AVEO and LG Chem's bio business
Write to Jeong-Min Nam and Jae-Young Han at peux@hankyung.com
Jihyun Kim edited this article.
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