August 21, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Continuing to fend off Dublin-based Shire ’s attempt to buy Deerfield, Ill.-based Baxalta, Baxalta reiterates its reasons for remaining independent today.
On Aug. 4, Shire went public in its attempt to acquire Baxalta for $30 billion, hoping to pressure Baxalta shareholders and board into taking the deal. Baxalta spun off from Baxter International on July 1, 2015. So far, Baxter’s chief executive officer, Ludwig Hantson, and the board, have resisted the offer and spent some time articulating why it is being rejected.
Baxalta mostly argues that the $30 billion offer undervalues the company. Some analysts clearly feel that is a strategy to get Shire to sweeten the deal. Another, perhaps more persuasive argument is that soon after the company’s creation as a public company, a merger would be severely disruptive. It’s also been made clear by Shire that it has yet to conduct its due diligence and has requested more details about Baxalta’s financial outlook.
“We have tried to engage with the management and executives, and we think we have an attractive deal,” said Flemming Ornskov, chief executive officer of Shire in a web conference call on Aug. 4. “But we would like to sit down with them and do our due diligence and discuss the advantages of a merger.”
Hantson has slowly been providing more details, indicating Baxalta plans to launch 20 new drugs by 2020 with projected combined sales exceeding $2.5 billion.
Yesterday, in a Boston Business Journal article, John Orloff, Baxalta’s chief scientific officer, global head of research and development and executive vice president went a little bit further. Part of that article included a tour of Baxalta’s new facility at Kendall Square in Cambridge, Mass., which is still under construction. It has 200,000 square feet, but has no laboratory space, which is decidedly unusual for a research and development facility. Orloff, said, “We’re kind of a ‘small R, big D.’ Our whole approach is one based on external innovation.”
What that apparently means is Baxalta will rely on pre-clinical and discovery performed at universities and small biotech companies, built on at least some already existing relationships with Momenta Pharmaceuticals, Inc. and Merrimack Pharmaceuticals Inc. .
That, at least in part, is the rationale for placing headquarters in Cambridge Square, which is the epicenter for Massachusetts’ burgeoning biotech industry. There are 163 technology, life sciences and information technology companies in Kendall Square per square mile. The next densest cluster in the U.S. is in Palo Alto, Calif., with 36 tech companies per square mile.
Orloff suggests that that density is part of the company’s strategy. “We are discovering that a lot of the discovery and basic research is being done in academia, is being done in biotech. And this is the hub of the biotech community,” he told Boston Business Journal. “We came here to tap into the biotech community.”
Research being conducted in Vienna, Australia and Munich, Germany will continue, but the focus will be on partnerships, acquisitions or in-licensing with smaller companies. That seems unlikely to be persuasive in spurning Shire’s advances, but it does provide more information on the company’s strategies.
Baxalta plans to ultimately have 500 employees at the Kendall Square site by 2016, 350 who will focus on research and development. The remaining 100 to 150 will work in operations, business development, strategy and a small group that will focus on biosimilars. The company indicates about 250 of those employees will be new hires.
