LG Chem completes acquisition of US biotech firm AVEO

LG Chem Ltd. is set to complete its $571 million purchase of the US biotech firm AVEO Pharmaceuticals Inc. on Friday, which would strengthen its anti-cancer drug portfolio and accelerate its foray into the US market.

The acquisition is in line with LG’s ambition to join the ranks of the world’s top 30 pharmaceutical companies, the South Korean company said on Thursday.

To that end, it will invest 2 trillion won ($1.6 billion) in R&D of new medicines between 2023 and 2027.

It is aiming to launch four new medicines for cancer and metabolic diseases by 2030, pending approval by the US Food and Drug Administration (FDA).

“AVEO will lead our growth in the cancer treatment market,” LG Chem Vice Chairman Shin Hak-cheol said in a statement.

“We will take a leap to join the ranks of the global top 30 pharmaceutical companies with a focus on anti-cancer medicines.”

Founded in 2002, Boston-based AVEO developed the FDA-approved, renal cancer treatment Fotivda in 2021. The targeted cancer therapy has been driving up AVEO’s sales.

AVEO specializes in clinical trials and marketing of cancer therapies.

As a wholly owned subsidiary of LG Chem, it will take charge of late-stage clinical trials in the pipeline and commercializing the medicines.

For its part, LG Chem will focus on preclinical, or early-stage clinical trials and the production of drugs. 

In the mid to long term, LG will transfer its portfolio of anti-cancer treatments to AVEO to commercialize them in the US.

LG Chem’s new drugs in the preclinical development phase include cell therapies and immune checkpoint inhibitors.

Pharmaceuticals are one of its three growth pillars, alongside battery and eco-friendly materials.

The deal value of $571 million, based on the Jan. 18 exchange rate, almost matched the annual revenue of LG Chem’s life science division in 2021.

The cancer therapy market is forecast to grow by an average of 10.4% a year to 410 trillion won ($330 billion) by 2026, versus 250 trillion won in 2021, LG said. The US controls 40% of the market.

Sales at AVEO are projected to soar by about 60% on-year to 210 billion won in 2023, compared to last year's 130 billion won. US brokerage houses forecast its sales to more than double to 450 billion won in 2027.

It is now carrying out additional clinical trials to expand the application of Fotivda and working on new therapies for cancers of the head and neck.

Write to Jae-Fu Kim at hu@hankyung.com
Yeonhee Kim edited this article.