October 19, 2015
By Mark Terry, BioSpace.com Breaking News Staff
It’s been quiet regarding Dublin-based Shire ‘s acquisition attempt of Illinois-based Baxalta that created a lot of attention in August. Although that deal may not be quite dead, rumors are surfacing that Shire is setting its sites on a smaller target, Waltham, Mass.-based Radius Health .
On Aug. 4, 2015, Shire went public with its plans to buy Baxalta. On July 10, Shire approached the recent spinoff from Baxter International , only nine days old at that point, with a stock-only deal worth almost $31 billion. Ludwig Hantson, president and chief executive officer of Baxalta, refused to engage on the offer.
Shire then went public in an attempt to pressure Baxalta’s board of directors and shareholders into considering the deal.
Baxalta’s all-stock bid — which, due to regulations involving the original spinoff, would incur a tax penalty if cash was involved — was worth about $45 per share, which at that time was a 30 percent premium over Baxalta’s Aug. 3 share price. Since then, however, Shire stock has dropped almost 22 percent.
On Aug 3., Shire traded for $268.08, dropped after the announcement to $240.38, rebounded for a while, but continued to drop. On Aug. 24 shares traded for $216. 75. On Oct. 13, shares traded for $196.86 and are currently selling for $209.63.
For its part, Baxalta management argued that the Shire bid undervalued the company, came too soon after its spinoff, and that the company was worth more in the long-term without Shire.
Baxalta spiked after the news broke in August. Shares traded on Aug. 3 for $33.15 and jumped to $39.79 on Aug. 10. On Aug. 17 shares traded for $40.35, then settled to $34.22 on Sept. 9. Shares are currently trading for $32.96.
Shire management argued that the merger would create a company that could generate $13 billion in rare disease drug sales and $20 billion in overall sales by 2020. Some of the company’s share drop was the result of investors’ qualms about the deal, but were undoubtedly affected by the public and government’s discussion of price controls for specialty drugs in the wake of Turing Pharmaceuticals’ 5,000 percent price hike for its toxoplasmosis drug Daraprim and chief executive officer Martin Shkreli’s tone-deaf media responses.
Although the Shire bid is less likely than it was because of the stock value and Baxalta’s adamant resistance to it, rumors have spread that Shire is preparing a bid for Radius Health Inc. This deal would be small enough to not necessarily affect a potential Baxalta deal, and in fact, could strengthen an attempt by boosting its share value.
Radius is worth about $3 billion and focuses on osteoporosis and endocrine-mediate diseases. On Oct. 12, the company announced positive top-line results from its Phase III clinical trial of abaloparatide (ABL) for osteoporosis, followed by alendronate (ALN).
“Abaloparatide was designed to have a unique mechanism of action with the goal of stimulating bone formation, increasing bone mineral density, restoring bone microarchitecture and augmenting bone strength,” said Felicia Cosman, lead investigator of the trial and medical director of the Clinical Research Center at Helen Hayes Hospital and senior clinical director of the National Osteoporosis Foundation, in a statement. “Impressive results on bone density and fracture risk were seen throughout the skeleton after the first six months of the ACTIVExtend trial, when women were given alendronate after 18 months of abaloparatide treatment. This therapeutic sequence could have the potential to help a broad range of osteoporosis patients.”
Meanwhile, Shire has taken a hit after the U.S. Food and Drug Administration (FDA) failed to approve the company’s lifitegrast for dry eye disease last week, requesting more information. The company indicates it will still plan for a 2016 launch and will provide more data from a Phase III trial by the end of this year.
“If the study is positive,” Flemming Ornskov, Shire’s chief executive officer, said in a statement, “we plan to refile our lifitegrast submission in the first quarter of 2016, and will remain on track for the planned lifitegrast launch next year.”
The company plans a third-quarter financial report for Oct. 23, which will perhaps provide some light on both the Baxalta deal and any pending news regarding Radius Health.
