Still Yearning for Baxalta, Shire Snaps Up Dyax in $5.9 Billion Deal

November 2, 2015
By Mark Terry, Breaking News Staff

Dublin-based Shire announced today that it will acquire Burlington, Mass.-based Dyax Corporation for about $5.9 billion.

Shire will pay $37.30 per Dyax share in cash, totaling around $5.9 billion. In addition, if Dyax’s pipeline product, DX-2930 for the treatment of HAE, a rare, debilitating genetic inflammatory condition, is approved, Dyax shareholders will receive a non-tradable contingent value right (CVR) that will pay $4 in cash per Dyax share. This could add an additional $646 million in aggregate contingent consideration to the deal.

Dyax is publicly traded and focuses on plasma kallikrein (pKal) inhibitors for the treatment of HAE. It currently has a product on the market, Kalbitor, for the treatment of HAE in patients twelve-years-old and up. Dyax's DX-2930 is Phase III-ready, and has received Fast Track, Breakthrough Therapy, and Orphan Drug designations by the U.S. Food and Drug Administration (FDA), and also has received Orphan Drug status in the European Union. Dyax, and now Shire, expect to start Phase III trials before the end of this year. The companies project, if approved, the drug could generate annual global sales of up to $2 billion.

“This highly complementary transaction aligns with and accelerates our strategy to build a global leading biotechnology company focused on rare diseases and specialty conditions,” said Flemming Ornskov, Shire’s chief executive officer, in a statement. “It adds to our portfolio of best-in-class therapies addressing unmet needs in our core therapeutic areas, expanding and extending our leadership position in HAE. We have closely followed DX-2930’s progress in the evolving HAE landscape for some time, and we admire the work of the Dyax team in moving this next-generation therapy forward.”

Since July, Shire has been attempting to acquire Illinois-based Baxalta , although so far the U.S. company has been fending off Shire’s advances. Baxalta, which had only spun off from Baxter International on July 1, has argued that the Shire offer undervalues the company and that a merger this close to its spinoff would be too disruptive.

Shire approached Baxalta with a stock-only deal in July worth about $31 billion. When Baxalta refused to engage on the offer, Shire went public with the offer in an apparent effort to apply pressure to Baxalta’s board of directors and shareholders.

At news of the Dyax deal and a softening of Shire’s stock value, some analysts have thought the Baxalta takeover might be off the table, but Ornskov denies that. “Even with this transaction,” he added “we will continue to have the financial firepower to pursue other value-added strategic acquisitions, including Baxalta.”

Ronny Gal, an analyst with Bernstein, observes in a research note today that the Dyax deal makes complete sense. “The HAE franchise is very important for Shire. It is currently the largest of its highly-prized orphan indicators, accounting for ~15 percent of revenue and ~20 percent of earnings. Shire has made substantial investment in the franchise by acquiring ViroPharma in November 2013 for $4 billion, bringing on board Cinryze, which would be under direct threat from DX-2930.”

Gal, however, does indicate that Bernstein analysts’ belief that the Dyax deal will probably broaden the odds of a Baxalta deal. “(T)his clearly deemphasizes the deal in our minds.” Gal also emphasizes that by acquiring Dyax, Shire minimized the risk of competition should DX-2930 be approved. “Given HAE competition was a threat for the stock in the intermediate run, today’s deal is an important de-risking step prolonging franchise to beyond the concern horizon (10+ years).”

Shire has been fairly volatile this year, although it’s been on the increase lately. Shares traded for $216.23 on Feb. 10, 2015, rose to $260.15 on May 29, dropped to $238.93 on July 8, and jumped back up to $268.08 on Aug. 3. Shares then collapsed to $196.86 on Oct. 13. They are currently trading for $227.05.

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