AstraZeneca to buy cancer drug developer for up to $1.2 billion

AstraZeneca Plc agreed to acquire Chinese cell therapy developer Gracell Biotechnologies Inc. for as much as $1.2 billion as the British drug giant bolsters its bets on medical innovation in the world's second-biggest economy.

Under the agreement, Astra will acquire Shanghai-based Gracell for $2 a share, amounting to an upfront cash payment of $1 billion. An additional share-purchase contingent on reaching certain regulatory milestones would eventually push the deal value to $1.2 billion, the companies said in a statement Tuesday.

The acquisition will enrich Astra's pipeline with a so-called CAR-T therapy that modifies a patient's own immune cells to fight cancer. One candidate that Gracell has been working on, dubbed GC012F, could be a potential treatment for blood cancers such as multiple myeloma and autoimmune diseases like lupus, according to the statement.

The deal came after Astra struck a deal in November with Chinese biotech Eccogene Inc. to co-develop a weight loss pill, one of the hottest classes of medicine, as it seeks to contend with Novo Nordisk A/S and Eli Lilly & Co., two companies that have led the industry's gold rush for obesity drugs.

While China is Astra's second-largest market after the US, Chief Executive Officer Pascal Soriot has previously said the firm is keen to tap into the country's medical innovation that's prompted many pharmaceutical giants from developed nations to work with local drugmakers to co-develop promising drug candidates with blockbuster potential. 

If Gracell is able to meet the required regulatory milestones, Astra's offer price of equivalent to $11.50 per American depositary share represents an 86% premium to Gracell's closing price on Dec. 22. Shares in Gracell are up almost 170% this year.