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Shares of Shire PLC-ADR [NASDAQ:SHPG] fell 5.4% to close at $253.60 a share on Tuesday, after the company announced an unsolicited $30 billion bid for Baxalta Inc. [NYSE:BXLT], in an all-stock offer, worth $45.23 a share at August 3 market prices, to create the world's leading rare diseases specialist with combined product sales of $20 billion by 2020. If the deal is approved, Baxalta shareholders would receive 0.1687 Shire American Depository Receipt, or ADR, for each Baxalta share. Shares of Baxalta surged 11.92% to close at $37.10 a share on Tuesday.
Baxalta, a biopharma business spun-off from Baxter International [NYSE:BAX] this year in June, focuses on bleeding disorders and immunology. The company is also expanding into niche areas of oncology and advanced gene therapy. Before the spinoff, the biopharma unit had revenues of more than $6 billion in 2014, with haemophilia products Advate, Rixubis and Feiba generaing sales of $3.4 billion, plasma-derived biotherapeutics including Gammagard (immune globulin) adding another $2.1 billion and haematology/oncology products making up the remainder.
The new products in the pipeline include long-acting haemophilia A therapy BAX 855, with potential sales of about $3 billion in the coming years, BAX 835 gene therapy for haemophilia B, and BAX 817, a short-acting recombinant Factor VIIa replacement therapy for on-demand treatment of haemophilia A. Baxalta’s hemophilia A and B drugs, which generate more than half of its revenues, may be under some threats from Novo Nordisk-ADR [NYSE:NVO] drugs NovoSeven and NovoEight, and drugs from Biogen [NASDAQ:BIIB], Alprolix and
Eloctate.
NovoSeven, approved in 1998 for a treatment for people with hemophilia A or B, generated revenues of about $1.5 billion last year. A newer drug, NovoEight, for hemophilia A treatment, is already available in Europe and Japan. Novo Nordisk will be rolling out NovoEight in the U.S. this year. Relatively new Biogen drugs, Alprolix and Eloctate, posted sales of just $74 million and $54 million, respectively, in the second-quarter 2015.
Baxalta was not the only company receiving an unsolicited bid from Shire this year. According to Business ETC, Shire made an unofficial acquisition offer of $18.9 billion in June for Actelion Pharmaceuticals Ltd, a company focusing on the development of drugs for pulmonary arterial hypertension, a rare disease known to affect some 15-50 people in a population of a million. For Shire, the best defensive strategy against becoming a possible takeover target themselves, may be to go out and acquire someone else.
Shire announced its second-quarter 2015 revenues of $1.56 billion, compared to $1.5 billion in 2014, up 4% year-on-year. Non-GAAP diluted earnings per American Depository Share (ADS) of $2.63 in 2015, compared to $2.67 in 2014, down 2% year-on-year. Wall Street expected non-GAAP diluted earnings per ADS of $2.80.
Sales during the quarter of Vyvanse (lisdexamfetamine) for treatment of attention deficit hyperactivity disorder were $425 million, up 18% year-on-year. Sales of Lialda/Mezavant, anti-inflammatory drugs used to treat inflammatory bowel disease, such as ulcerative colitis and mild-to-moderate Crohn's disease, were $158 million, up 10% year-over-year.
The 12-month target price for SHPG on Yahoo Finance is $283.91 per share. Shire will report its third-quarter 2015 earnings in October. Analysts are expecting earnings per ADS of $2.89, down 1.4% compared to the same period last year, on revenue of $1.63 billion, up 2.1%. The full year 2015 estimate is $11.39 per share, up 7.45% year on year, on revenue of $6.38 billion, up 6%.
Disclosure: Long positions in SHPG and BIIB with no recommendation. No positions in other companies mentioned. |
