$1.2 billion! The first Chinese biotech company to go public has been acquired | Insight Research

In the current cold winter of the pharmaceutical industry, the first Chinese biotech company to go public has been acquired, which is particularly significant as it was announced on the second day after Christmas.

Although it is called an acquisition, it is not a derogatory term. For the Chinese biotech industry in the cold winter, this should be regarded as an innovation. Chinese biotech companies can also be sold as a whole to realize shareholder value.

On December 26th, Astrazeneca announced that it has reached a final acquisition agreement with Chinese biotech company Gracell Biotechnologies (NASDAQ: GRCL).

According to the final agreement, Astrazeneca will acquire all diluted shares of Gracell Biotechnologies, including all American Depositary Shares (ADS). The transaction terms include a cash payment of $2.00 per ordinary share ($10.00 per ADS), as well as additional non-transferable or valuable rights and interests of $0.3 per ordinary share ($1.5 per ADS), subject to the achievement of specific regulatory milestones.

The cash portion of the transaction is valued at approximately $1 billion, representing a 62% premium over Gracell Biotechnologies' closing price on December 22, 2023, and a 154% premium over the 60-day volume-weighted average price. Including the initial payment and potential or contingent payments, the total transaction value is approximately $1.2 billion, representing an 86% premium over the closing price on December 22, and a 192% premium over the 60-day VWAP.

As part of the transaction, Astrazeneca will receive the cash, cash equivalents, and short-term investments on Gracell Biotechnologies' books. As of September 30, 2023, these amounted to $234.1 million.

Astrazeneca is attracted by excellent product data

Gracell Biotechnologies' representative CAR-T product, GC012F, is a novel cell therapy in the clinical stage. It uses FasTCAR technology and is a dual-target autologous chimeric antigen receptor T-cell (CAR-T) therapy targeting BCMA and CD19. It is expected to become a new treatment option for multiple myeloma, other hematologic malignancies, and autoimmune diseases such as systemic lupus erythematosus.

According to the data released by the company at ASH, as of June 9, 2023, a total of 22 patients participated in the CAR T-cell therapy study for multiple myeloma, and the safety and efficacy were evaluated. The main results are as follows:

• Overall Response Rate (ORR): The ORR reached 100%, indicating that all patients participating in the study responded to the treatment.
• Stringent Complete Response Rate (sCR): 95.5% of patients achieved sCR, which is a stringent evaluation indicator of treatment response.
• Duration of Response (DOR) and Progression-Free Survival (PFS): The median DOR and PFS have not been reached, indicating that the treatment may have long-term efficacy, but longer follow-up is needed to determine.
• Safety and Cytokine Release Syndrome (CRS): Only 6 patients (27%) experienced low-grade CRS, with 23% being grade 1 (5 patients) and 4% being grade 2 (1 patient). There were no grade 3 or higher CRS related to treatment, any grade of immune effector cell-associated neurotoxicity syndrome (ICANS), or any deaths in the study.
• CAR T-cell expansion: Strong CAR T-cell expansion was observed in all patients. The median peak expansion (Cmax) was 62,131 copies/μg DNA, and the median time to maximum expansion (Tmax) was 10 days (range 9-14 days).

In addition, the company has multiple products in clinical development.

In addition to this excellent product, Astrazeneca is also targeting Gracell Biotechnologies' CAR-T platform.

Autologous CAR-T therapy is a cell therapy that reprograms a patient's own immune T cells to target disease cells. The manufacturing process of this treatment is usually complex and time-consuming. However, Gracell's FasTCAR platform significantly shortens the manufacturing time, enhances the adaptability of T cells, and may improve the effectiveness of autologous CAR-T therapy. The potential applications of this technology may also extend to the treatment of rare diseases.

In response, Dr. William Cao, Founder, Chairman, and CEO of Gracell Biotechnologies, said, "We look forward to collaborating with Astrazeneca to accelerate the realization of our common goal and bring transformative cell therapies to more patients with debilitating diseases." By combining our expertise and resources, we can unlock new ways to utilize the Gracell FasTCAR manufacturing platform. We believe that this platform has the potential to optimize the therapeutic characteristics of engineered T cells, thus pioneering the next generation of autologous cell therapy.

In conclusion, the acquisition of Gracell Biotechnologies by Astrazeneca is a groundbreaking milestone as the first international pharmaceutical company to acquire a Chinese biotech company.

This not only signifies the recognition and influence of Chinese biotech companies in the international market but also sets an example for their counterparts in China on how to maximize shareholder value and create a win-win situation through appropriate means at the right time.