Shire expands rare disease focus with $4.2-billion deal to buy ViroPharma

Shire announced Monday a merger agreement to acquire rare disease company ViroPharma for $50 per share in cash, or approximately $4.2 billion. The price of the transaction, which has been approved by both companies' board of directors, represents a 27 percent premium to ViroPharma's closing share price on November 8.

Flemming Ornskov, CEO of Shire, remarked that the deal "is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio." Shire noted that ViroPharma's Cinryze (C1 esterase inhibitor [human]), which is approved for the prophylactic treatment of hereditary angioedema (HAE), will complement its own HAE therapy Firazyr (icatibant). "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," Ornskov added.

Shire said that ViroPharma generated revenues of $428 million in 2012, with Cinryze posting US sales in the year of $321 million. Shire noted that it sees "significant opportunity for future revenue growth" for the product in both the US and other markets, as new HAE patients are identified and treated and additional physicians gain experience with the therapy. ViroPharma also markets Plenadren (hydrocortisone) for adrenal insufficiency in adults and Buccolam (midazolam) for prolonged seizures in infants, children and adolescents, while its pipeline includes maribavir for the treatment of cytomegalovirus infection in transplant patients.

In September, sources suggested that Sanofi and Shire were among companies to have shown an interest in acquiring ViroPharma. "Shire has 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," Ornskov commented. The executive added that the "acquisition is expected to create a $2 billion rare disease revenue base" in 2014, representing 40 percent of Shire's total product sales.

The company indicated that it expects the purchase of ViroPharma, which is set to close before the end of the year, to be immediately accretive to earnings and generate annual cost savings of around $150 million by 2015.

Commenting on the deal, UBS analyst Guillaume van Renterghem said "Cinryze is an attractive drug and the pipeline could provide additional revenues, but the valuation appears demanding." Deutsche Bank analyst Robyn Karnauskas suggested that maribavir, which is in Phase II development, has a 50 percent probability of reaching the market.

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