LONDON—Dublin-based Shire plc and ViroPharma Incorporated have announced that their boards of directors have unanimously approved a merger agreement whereby Shire will acquire all the outstanding shares of the rare disease company ViroPharma for $50 per share in cash, for a total consideration of about $4.2 billion. The $50 per share price in the transaction represents a 27 percent premium to ViroPharma's closing share price on Friday, November 8, 2013, the last trading day prior to announcement, and a 64% premium to ViroPharma's unaffected share price of $30.47 on September 12, 2013.
ViroPharma is a high growth, rare disease biopharmaceutical company, whose commercial product CINRYZE® (C1 esterase inhibitor [human]), is a leading brand for the prophylactic treatment of hereditary angioedema (HAE).
According to various news reports, several companies including France's Sanofi, were interested in ViroPharma. Shire Chief Executive Flemming Ornskov declined to comment on competition to clinch the deal, but he said he was under no pressure and the price agreed was good for both sets of shareholders.
He added that “The acquisition of ViroPharma will immediately benefit Shire and is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio. It brings us a new growth-Driving product which augments our already strong growth prospects.
“Shire is uniquely positioned to drive the continued success of CINRYZE for the benefit of patients through our knowledge of the rare disease space, our international infrastructure and our biologics manufacturing expertise.
“Shire is also excited by the prospect of being able to offer two complementary treatments, FIRAZYR for the treatment of acute HAE attacks and CINRYZE for prophylactic treatment of patients suffering from HAE. Shire’s priority will be to ensure CINRYZE patients continue to enjoy high standards of service.” FIRAZYR, he notes, is one of Shire’s fastest growing therapeutics.
“We have conducted a thorough and collaborative due diligence process over the last few months and, following completion of the transaction, the integration process will be focused on delivering value to all stakeholders. This acquisition is expected to create a $2 billion rare disease revenue base and deliver further strong growth prospects,” he notes.
"Hereditary angioedema is a devastating rare disease that affects about 18,000 patients in the U.S. and EU," he told reporters on Monday.
Treatments for such rare disorders can command huge prices, running into hundreds of thousands of dollars a year per patient. Though some investors have raised concerns about the sustainability of the business model for rare disease drugs, healthcare providers have so far generally accepted the high costs, given the transforming effects of the medicines and the very small number of patients who need them.
Rare diseases are already a central plank of Shire's strategy, and acquisitions have helped it build up a portfolio of drugs including treatments for Gaucher's and Fabry diseases.
It said buying ViroPharma, based in Exton, Pennsylvania, would take its rare diseases unit to $2 billion a year in revenues, or 40 percent of Shire's total, up from about 30 percent today.
Vincent J. Milano, ViroPharma's CEO said “We are pleased to announce our merger with Shire, which like ViroPharma, is focused on developing products for patients suffering from rare diseases. After thoroughly evaluating our strategic options we determined that this transaction is in the best interests of ViroPharma, our shareholders and our patients.
“By joining with Shire, ViroPharma will become part of a larger, more diverse biopharmaceutical company and will benefit from Shire’s innovation, scale and global reach. We will have access to resources to expand product distribution, giving us a platform to provide our crucial therapies, such as CINRYZE, to more patients than ever before. We look forward to working with Shire’s team and to being part of an even stronger, more geographically diverse organization.”
Shire, which also makes blockbuster drug VYVANSE® (lisdexamfetamine dimesylate) to treat hyperactivity – now approved for sale in Brazil, Canada and the U.S. – has largely grown by acquiring promising companies and licensing drugs rather than building its portfolio from first-stage research. Ornskov said mergers and acquisition and in-licensing were in Shire's DNA: "Our focus on this does not stop as a result of today's transaction."
ViroPharma is a leading rare disease company with CINRYZE as well as a number of other marketed products and a pipeline of product candidates in the rare disease space. ViroPharma generated total worldwide net revenues of $428 million in 2012. Total worldwide net revenues are forecast by ViroPharma to be in the range of $445 million to $465 million in 2013.
Ornskov said ViroPharma also had a number of other biological drugs, and a portfolio of development programs targeted at other rare diseases. He said the group expected to make annual synergy savings of $150 million a year by 2015. Shire also says it will be able to cut ViroPharma's tax bill from the mid-high thirties percent to the high-teens rate that Dublin-based Shire pays.