Shire’s Plan B if Baxalta Bid Falls Through Includes Radius Health, Actelion, and Possibly Ariad
September 8, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Insiders report that Dublin-based Shire plc is developing a Plan B should its attempts to acquire Bannockburn, Ill.-based Baxalta ultimately fail. Alternate acquisition targets apparently include U.S.-based Radius Health and Switzerland-based Actelion Pharmaceuticals.
In July, Shire approached Baxalta over an acquisition, offering about $30 billion for the company based on a stock value of $45.23 per share, which was about 36 percent over the Aug. 3, 2015 stock price of Baxalta. Baxalta spun off from Baxter International on July 1, 2015.
When Baxalta refused to engage on the deal, Shire went public with the offer on Aug. 4 to pressure the Baxalta executives, board and investors into considering the deal.
To date, Baxalta has rejected any offers, arguing that the $45.23 price per share undervalues the company and that so soon after the spinoff an acquisition would be too disruptive. Some sources suggest that Shire’s investors would be willing to up the stakes to $50 per share, but so far that hasn’t happened.
In Sunday’s The Sunday Times, the newspaper reported Shire had appointed several investment banks to work on alternate deals. Another possible alternative, some analysts suggest, is Ariad Pharmaceuticals, Inc. Pharmaceuticals. Late in August, Baxalta was rumored to acquire Cambridge, Mass.-based Ariad, which focuses on oncology and markets Iclusig. However, that deal reportedly was abandoned by Baxalta last week.
Radius Health , headquartered in Waltham, Mass., focuses on therapeutics for osteoporosis and other endocrine-mediated diseases. The company’s lead investigational drug candidate is BA058 (abaloparatide) for the potential prevention of fractures in post-menopausal women at risk of fracture from osteoporosis. It also has RAD1901, a selective estrogen receptor down-regulator/degrader, or SERD, to treat breast cancer brain metastases, as well as, at lower doses, for the possible treatment of menopausal hot flashes.
Actelion, headquartered in Switzerland, focuses on drugs for pulmonary arterial hypertension (PAH) and several other disorders, including Type 1 Gaucher disease, Niemann-Pick type C disease, Digital ulcers in patients suffering from systemic sclerosis, and mycosis fungoides type cutaneous T-cell lymphoma.
Shire’s bid for Baxalta is also facing a problem in that the company’s stock has dropped since the offer. Due to tax implications of the Baxter spinoff, an acquisition of Baxalta would most likely be stock-based in order to avoid a tax penalty. The Sunday Times quoted sources that said Shire wanted its stock price to improve before they made another bid for Baxalta.
traded on June 29, 2015 for $241.24, dropped slightly on July 8 to $238.93, then jumped to $268.08 on Aug. 3, the day it announced the Baxalta acquisition bid. Shares dropped to $240.38 on Aug. 6, then plummeted to $216.75 on Aug. 24. Shares recovered somewhat to $235.96 on Aug. 28, but are currently trading for $222.50.
Bank of America Merrill Lynch reported yesterday that Shire’s backup plans are attractive, but there are some near-term risks that are a concern. “Merrill pointed out that for investors, as Shire’s shares had fallen 15 percent since the announcement of the proposed acquisition, its valuation as an equity investment appeared tempting at 15 times 2017 forecast earnings and 20 percent below the bank’s 6,000p discounted cash flow target price.”
Investors are also eying the U.S. Food and Drug Administration (FDA) review of Shire’s lifitigrast for dry eye disease that is expected Oct. 25. The FDA granted Priority Review and accepted the company’s New Drug Application (NDA) for lifitegrast in April. It has the potential to be the first drug for dry eye disease that treats both signs and symptoms. Analysts indicate it has the potential to exceed $1 billion in annual sales.