July 14, 2015
By Mark Terry, BioSpace.com Breaking News Staff
A year after Chicago-based AbbVie gave up its $54 billion bid for Ireland-based Shire PLC, Shire has streamlined its operations, shifted its research and development focus and continued to look for other companies to buy.
In July 2014, AbbVie and Shire showed all evidence of a merger. On Oct. 16, 2014, AbbVie announced the deal was off. The takeover was to be a “tax inversion” deal where AbbVie would have moved its global headquarters to Ireland to lower its corporate tax rate of anywhere between 22 percent and 26 percent to about 13 percent.
However, in September 2014, the U.S. Treasury Department set new rules to discourage tax inversions. Around the same time, Irish regulators indicated they would be closing tax loopholes that made those sorts of deals so attractive.
As part of the breakup, Shire received a $1.6 billion break-up fee from AbbVie. In February 2015, Shire used that money to acquire NPS Pharmaceuticals, Inc. for about $5.2 billion.
At the time, Flemming Ornskov, chief executive officer of Shire, told The New York Times, “This is a statement of our intent to be a strong, thriving independent company. It speaks to the company’s ability to generate cash and to execute on strategically relevant deals.”
Since the AbbVie deal fell through, Shire has rewritten its severance benefits in order to provide better protection for its employees should another takeover occur. It cut hundreds of jobs at a Philadelphia-area site. It also spread out its research focus into brain, eye and stomach diseases. Its lead focus has been the treatment of attention-deficit and hyperactivity disorder (ADHD) with its lead product Adderall.
In addition, the company continues to look for acquisition deals. One reason is a goal of doubling sales to $10 billion by 2020. Another is to give the company some clout needed to avoid unwanted takeover bids.
For example, on May 4, 2015, Shire announced an agreement with the Foundation Fighting Blindness to research for a treatment for autosomal dominant retinitis pigmentosa (adRP). The Foundation and its research partners will provide Shire with expertise and clinical information, as well as counsel on preclinical or clinical development of Shire compounds in development. Shire will compensate the Foundation for its expertise, as well as provide regulatory guidance on any new drug applications.
On April 30, 2015, Shire announced its first quarter earnings, with total revenues in the first quarter of $1.488 billion, a growth of 11 percent from the previous quarter. The primary drivers of revenue were sales of Vyvanse, Cinryze, Firazyr and Lialda/Mezavanto.
The company has more than 20 new drugs currently in human testing. One drug, lifitegrast, for the treatment of dry eye, is awaiting final FDA approval. Analysts indicate it has the potential to exceed $1 billion in annual sales. In January of this year, the FDA approved Natpara, a once-daily subcutaneous injectable to treat hypocalcemia in patients with hypoparathyroidism, which affects about 60,000 people in the U.S.
“During the first quarter, Shire continued to exemplify the characteristics of a leading biotechnology company, delivering strong revenue growth and cash generation, while materially advancing our innovative pipeline and boosting our future growth profile through the acquisition of NPS,” said Ornskov in a statement. “Our continued financial performance driven by the strength of our commercial operations, focus on efficiency, and breadth of our innovative pipeline are indicators of our bright future.”
