January 13, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Although the ink has barely dried on Dublin-based Shire ’s agreement to acquire Bedminster, N.J.-based NPS Pharmaceuticals, Inc. for $5.2 billion, rumors are already swirling about another acquisition by the Irish company in the near future.
Some of this is based on Shire’s cash generation, about $400 million per quarter. It also received a $1.6 billion breakup fee for its failed bid for Chicago-based Abbvie in the middle of last year.
“Their balance sheet is still relatively clean,” said CRT Capital analyst Timothy Chiang in a statement. “M&A remains a recurring theme.”
According to Shire Chief Executive Officer Flemming Ornskov, additional deals are still an option. “Given the amount of cash we generate and our ability to take on further debt, this does not put any restrictions of significance on our strategy to become a leader in the biotech area,” Ornskov said in a statement.
Ornskov is something of a serial acquirer. The NPS deal is his seventh since he became the company’s chief executive in October 2012.
Companies rumored to be on Shire‘s shopping list include PTC Therapeutics Inc. , Synageva Biopharma Corp. , Retrophin Inc. , Ultragenyx Pharmaceuticals , Inc. , and if Shire is feeling ambitious, BioMarin Pharmaceutical Inc., and Vertex Pharmaceuticals Inc. .
BioMarin is valued at $14 billion with revenue having the potential to creep above $1 billion next year with projections of $2 billion in 2019. Boston-based Vertex is valued at $28 billion and already generates more than $1 billion annually. Its stock has risen 51 percent in the last year. The other companies are valued at $100 million to $10 billion.
Shire focuses on neuroscience, rare diseases, GI and internal medicine. It is best known for ADHD medications and ulcerative colitis therapeutics. Prior to the NPS acquisition, its pipeline of experimental compounds was expected to generate $3 billion in additional revenue by 2020.
“They can take much more, they have a lot of scope,” said Guillaume van Renterghem, analyst at UBS AB in Zurich in a statement. “From a commercial point of view, they can integrate a lot.”
NPS markets Gatatex (teduglutide) for treatment of Short Bowl Syndrome (SBS), which is marketed as Revestive in Europe. The drug is projected to have sales of $300 million in 2016.
For tax purposes, Shire is headquartered in Ireland. Chief Executive Officer Flemming Ornskov and other leading executives work out of headquarters in Lexington, Massachusetts. The original AbbVie deal was viewed as a tax inversion for AbbVie, but was ended because of changes in U.S. tax law.
