AstraZeneca to buy China's Gracell Biotechnologies for $1.2 bn

Anglo-Swedish multinational pharmaceutical and biotechnology company AstraZeneca has agreed to acquire China-based Gracell Biotechnologies Inc, for about $1.2 billion.

AstraZeneca has entered into a definitive agreement to acquire Gracell, a global clinical-stage biopharmaceutical company developing innovative cell therapies for the treatment of cancer and autoimmune diseases.

The proposed acquisition will add new therapies, including GC012F, a novel, clinical-stage FasTCAR-enabled BCMA and CD19 dual-targeting autologous chimeric antigen receptor T-cell (CAR-T) therapy, a potential new treatment for multiple myeloma, as well as other haematologic malignancies and autoimmune diseases such as systemic lupus erythematosus (SLE), to AstraZeneca’s growing pipeline of cell therapies, the company stated in a release.

Autologous CAR-T is a type of cell therapy created by reprogramming a patient’s immune T cells to target disease-causing cells, and the manufacturing process for this type of treatment is complex and time-consuming. The Gracell FasTCAR platform significantly shortens manufacturing time, enhances T cell fitness, and will potentially improve the effectiveness of autologous CAR-T treatment in patients. Future applications of this technology may also include rare diseases, says a statement issued by AstraZeneca.

 “The proposed acquisition of Gracell will complement AstraZeneca’s existing capabilities and previous investments in cell therapy, where we have established our presence in CAR-T and T-cell receptor therapies (TCR-Ts) in solid tumours. GC012F will accelerate our cell therapy strategy in haematology, with the opportunity to bring a potential best-in-class treatment to patients living with blood cancers using a differentiated manufacturing process, as well as exploring the potential for cell therapy to reset the immune response in autoimmune diseases,” Susan Galbraith, executive vice president, Oncology R&D, AstraZeneca, said.

“By combining our expertise and resources, we can unlock new ways to harness the Gracell FasTCAR manufacturing platform, which we believe has the potential to optimise the therapeutic profile of engineered T cells, to pioneer the next generation of autologous cell therapies,” Dr William Cao, founder, chairman and CEO, Gracell, said.

Once the acquisition process is overt, Gracell will operate as a wholly owned subsidiary of AstraZeneca, with operations in China and the US.

As per the deal, AstraZeneca will acquire all of Gracell’s fully diluted share capital (including shares represented by ADSs) through a merger at a price of $2 per ordinary share in cash at closing (equivalent to $10 per ADS of Gracell) plus a non-tradable contingent value right of $0.30 per ordinary share (equivalent to $1.50 per ADS of Gracell) in cash payable upon achievement of a specified regulatory milestone.

The transaction involves an upfront cash payment of $1 billion,  which is a 62 per cent premium to Gracell’s closing market price on 22 December 2023 and a 154 per cent premium to the 60-day volume-weighted average price (VWAP) of $3.94 before the announcement of the deal.

The upfront cash portion, combined with the potential contingent value payments add up to a transaction value of approximately $1.2 billion, an 86 per cent premium to Gracell's closing price on 22 December 2023 and a 192 per cent premium to the 60-day VWAP.

As part of the transaction, AstraZeneca will acquire the cash, cash equivalents and short-term investments on Gracell’s balance sheet, which totalled $234.1m as of 30 September 2023.

The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions, including regulatory clearances, and Gracell shareholder approval. 

AstraZeneca said the transaction will not have any impact on its financial results for 2023.