Shire adds rare disease drugs with $5.2bn NPS merger

Shire has agreed a deal to acquire US drugmaker NPS Pharma for $5.2bn and claim three drugs used to treat rare diseases.

The $46-per-share deal – due to complete in February – would give the Dublin-based pharma company an already-marketed drug for short bowel syndrome called Gattex (teduglutide), as well as another on the brink of registration and a third in Phase II testing.

The $5.2bn deal will be financed with cash in hand – boosted by the $1.6bn windfall Shire scooped up after AbbVie pulled out of its $55bn takeover deal last year – and a new $850m loan added to an existing $2.1bn credit facility.

Shire chief executive Flemming Ornskov said his company would be able to accelerate the growth of Gattex – both in the US and also in Europe where it is sold as Revestive – thanks to its strength in gastrointestinal (GI) therapy and internal medicine sales channels.

The GLP-2 agonist is used to decrease or eliminate the need for parenteral support in patients with SBS, which usually results from surgery. It was launched in the US in February 2013 and achieved sales of $67.9m in the first nine months of 2014, and NPS has previously said it expected peak sales of around $350m for the product.

Shire indicated it could help NPS top those earlier projections, particularly by helping roll it out in Europe where to date it has been approved only in Germany and Sweden, although on a conference call with analysts yesterday the company would not reveal how much better it would do.

Shire is already a big player in the GI sector with its Lialda (mesalamine) for ulcerative colitis, and Ornskov said the deal with NPS would allow the company to “extend our rare disease model to GI a franchise.”

Potentially a larger product for the combined company is NPS’ second drug Natpara/Natpar, a recombinant form of parathyroid hormone which has been filed in the US as a treatment for hypoparathyroidism (HPT). The FDA is due to deliver its verdict on the drug at the end of January, while in Europe it could reach the market in early 2016 following a marketing application with the EMA last November.

Once again, Ornskov and NPS chief executive Francois Nader were reluctant to speculate on the potential sales of Natpara with Shire’s additional commercial power, but said they would provide more details during Shire’s end-of-year financial conference next month.

Analysts suggest sales of Gattex/Revestive could eventually pass the $500m mark – with some predicting blockbuster ($1bn-plus) sales potential for both drugs.

Meanwhile, the third pipeline product at NPS is NPSP795, a parathyroid hormone stimulating small molecule for the ultra-rare genetic disorder autosomal dominant hypocalcemia (ADH), which has no approved treatment and can lead to serious renal complications. It is currently in an open-label, proof-of-concept trial that should generate top-line results in the coming weeks.

Ornskov said the acquisition will be lightly dilutive to earnings this year but should boost them from 2016 onwards, with analysts at Jeffries predicting an earnings upside of around 12 per cent next year. The companies are also predicting cost synergies but for now are staying tight-lipped on the savings that could be made.


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