Shire to snap up NPS Pharma for $5.2B

Acquisition is a further step by Shire toward building itself into a leading biotech

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DUBLIN—In a deal with some notable risks—but aided in part by the $1.6-billion breakup fee AbbVie paid out when plans to merge fell apart last year—Irish company Shire plc is set to acquire Bedminster, N.J.-based rare disease biopharma NPS Pharmaceuticals Inc.
Shire and NPS Pharma announced Jan. 11 that they have entered into a merger agreement, pursuant to which Shire will acquire all the outstanding shares of NPS Pharma for $46 per share in cash, for a total consideration of approximately $5.2 billion. That represents a 51-percent premium to NPS Pharma’s unaffected share price of $30.47 on Dec. 16, 2014.
Shire plans to accelerate the growth of NPS Pharma’s innovative portfolio through its market expertise in gastrointestinal (GI) disorders, core capabilities in rare disease patient management and global footprint.
“The acquisition of NPS Pharma is a significant step in advancing Shire’s strategy to become a leading biotechnology company,” according to Dr. Flemming Ornskov, Shire’s CEO. “With our global strength and expertise in both rare diseases and GI, Shire is uniquely positioned to drive the continued success of Gattex/Revestive, and … commercialize NPS Pharma’s pipeline compound Natpara/Natpar.”
NPS Pharma’s first product, Gattex/Revestive (teduglutide [rDNA origin]) for injection, is approved in the United States and Europe to treat adults with short bowel syndrome (SBS) who are dependent on parenteral support. NPS Pharma also has Natpara/Natpar (rhPTH [1-84]) for the treatment of hypoparathyroidism (HPT), which was still awaiting approval when the acquisition deal was signed—one of the key risks initially in Shire’s acquisition plan—though it ultimately did earn U.S. Food and Drug Administration (FDA) approval Jan. 23.
Shire maintains that the acquisition represents an “excellent strategic fit” by strengthening Shire’s focus on rare diseases while leveraging industry-leading GI commercial capabilities. The increased global footprint Shire looks forward to is expected to enhance the revenue and earnings growth profile, and Shire expects the transaction to be accretive to non-GAAP earning per share from 2016 onward.
“Shire shares NPS Pharma’s commitment to patients with rare diseases,” noted Dr. Francois Nader, president, CEO and director of NPS Pharma, of the agreement. “We believe that joining our two companies will drive value for shareholders and ensure we continue to transform the lives of patients with short bowel syndrome, hypoparathyroidism and autosomal dominant hypocalcemia worldwide. I am confident that this transaction will accelerate our ambition of creating a world where every person living with a rare disease has a therapy.”
NPS Pharma, which has an operational presence in the United States, Canada, Europe, Latin America and Japan, has—in addition to the other candidates mentioned above—also has an ongoing Phase 2a study evaluating its lead pipeline candidate NPSP795 for the treatment of adults with autosomal dominant hypocalcemia.  
Gattex is the first analog of GLP-2 approved to treat SBS, a disease which may require patients to get their nutrition intravenously through a central line (parenteral support). In the United States, some 6,000 to 7,000 SBS patients are dependent on parenteral support, with a similar prevalence in Europe. Gattex has received Orphan Drug designation from the FDA and was approved in December 2012. Gattex generated sales of $67.9 million in the nine months ending Sept. 30, 2014. In Europe, the drug is known as Revestive and has been launched in Germany and Sweden.
Natpara/Natpar is NPS Pharma’s parathyroid hormone for the treatment of HPT, a rare endocrine disorder characterized by insufficient levels of parathyroid hormone (PTH). In Europe, the European Medicines Agency has validated and initiated its review of NPS Pharma’s marketing authorization application for Natpar. In the United States, approximately 75,000 patients are diagnosed with HPT, with 41,000 having moderate to severe disease, with a similar prevalence in the European countries of France, Germany, United Kingdom, Italy and Spain. Acute symptoms of HPT are largely due to low serum calcium and range from muscle pain and tingling to lack of focus or ability to concentrate, anxiety and depression.
Analysts at Leerink Partners noted of the deal that there was “no shortage of risk” (in part because Natpara had not yet been approved) but that the addition of NPS Pharma could position Shire as a top rare disease company. Leerink notes that the success of this deal “will ultimately be predicated on Natpara’s commercial success.” Natpara’s biologic data exclusivity will end in the United States in 2024 and would end in the European Union between 2024 and 2026.  
Despite the rather high premium Shire is paying for NPS Pharma, research and consulting firm GlobalData calls it a “fairly robust deal,” noting that the combined discounted cash flow contribution from NPS’ lead assets alone is $4.9 billion, and Shire will also earn royalties of $300 million.
Chloe Thornton, a company analyst for GlobalData, states that the move, which is intended to increase Shire’s “rapidly expanding rare disease drug portfolio,” relies on the assets Gattex and Natpara.
“GlobalData estimates that Gattex will reach the $1-billion milestone in 2021, with a total revenue contribution nearing $8 billion through 2029. In terms of contribution, Gattex has an NPV [net present value] of $2.8 billion, assuming generic competition from 2022 onwards.”
For Natpara, GlobalData estimates peak sales of approximately $760 million in 2024, contributing total revenues of $5.7 billion over the next 15 years, and an NPV of $2.1 billion for the drug.
“The deal clearly indicates that Shire is intent on remaining a major player in the biotechnology space, despite the collapse of its $54-billion deal with AbbVie last October, and is actively investing in external assets to meet its growth target,” Thornton concludes.
Although he found it surprising that Shire didn’t wait for FDA approval of Natpara before entering into a merger agreement, John Lyon, professor of practice at Warwick Business School, was positive on the deal from the start.
“This acquisition makes good sense for Shire, and no doubt it will continue to mop up further niche acquisitions in these areas,” according to Lyon. “But that will make Shire a more attractive vehicle as a takeover target. AbbVie has already failed in one bid, but this acquisition could spark renewed interest from U.S. companies and other major pharma firms.”
“The key for Shire is not to acquire too swiftly so acquisitions can be embedded appropriately, ensuring sales forces are dovetailed and streamlined, and at the same time maintain a momentum, ensuring gradual growth as well as a larger stable of approved medicines in the chest, with a pipeline of drug candidates securing a promising future,” he adds.

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