Blood Brothers

What’s going on?

AstraZeneca agreed to buy US drugmaker CinCor on Monday, infusing some life into the ailing firm.

What does this mean?

CinCor has been having a hard time. Back in November, work on its flagship blood pressure drug baxdrostat hit a rough patch, with a disappointing trial triggering an investor tizzy that knocked shares down over 50%. That kerfuffle got AstraZeneca’s attention, though, and the pharma giant swept in with an offer to buy the US biotech company for $26 a share on Monday – a cool 121% more than the stock was worth just last Friday, bringing the value of the deal to $1.3 billion. And get this: CinCor shareholders will get an extra $10 per share if and when the baxdrostat drug is submitted for regulatory approval. That’s a win-win: AstraZeneca can fast-track the drug through clinical trials, and potentially combine it with its own fast-growing kidney disease treatment – and CinCor shareholders get a sweet, sweet payday.

Why should I care?

For markets: Eat or be eaten.

Get used to seeing deals like this in the world of pharma. A report out from EY on Monday estimated that global pharmaceutical companies will lose a whopping $200 billion a year in sales between now and 2030, as top-selling drugs lose their patents. Their likely solution: snap up small fry to add promising new drugs to their pipelines. And they’ve got the cash to do it, with analysts estimating they’re sitting on a record $1.4 trillion right now.

The bigger picture: Watch this space.

These giants won’t just be going after anyone, mind you. The grim economic outlook has hit everyone’s appetite for risk, so they’ll be on the lookout for small firms whose drugs show promise or are already making sales. For savvy investors who want to cash in on the trend then, that’s where you could strike gold.

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Originally Posted January 9, 2023 – Blood Brothers