Shire locks down rivals to its rare-disease franchise with $5.9B Dyax buy

Want to dodge some competition for your fast-growing products? Buy it up.

That's the tack Shire ($SHPG) took Monday, agreeing to shell out $5.9 billion for Massachusetts-based Dyax ($DYAX). The company boasts on-the-market Kalbitor, an acute treatment for hereditary angioedema (HAE), as well as the Phase III-ready candidate DX-2930, which bears the FDA's fast track and breakthrough tags, as well as orphan drug designations in both the U.S. and EU. If that prospect wins approval in Type 1 and Type 2 HAE, Shire predicts it could net annual global sales of up to $2 billion.

Those blockbuster sales might have come at the expense of Shire's own Cinryze, which it snagged through a 2014 buyout of ViroPharma, Bernstein analyst Ronny Gal wrote in a Monday note to clients. Cinryze would have been "under direct threat from DX-2930," he pointed out.

And that's something the Dublin drugmaker didn't want. Shire has been working to beef up its rare-disease offerings in an effort to flesh out beyond its flagship ADHD franchise. And HAE has been a mainstay in that department: While the malady affects just 18,000 patients in the U.S. and Europe, tiny patient populations help pharmas justify higher price tags (see: Cinryze's $350,000 list price).

HAE "is currently the largest of its highly prized orphan indications," Gal wrote, noting that it accounts for about 15% of revenue and about 20% of earnings. Cinryze and Firazyr--used to treat the acute attacks of swelling that Cinryze prevents--performed well in Q3, Shire said, helping drive up sales by 4% to $1.66 billion.

Shire CEO Flemming Ornskov

Meanwhile, the Dyax deal won't stop the deal-hungry company from pursuing other pickups, CEO Flemming Ornskov stressed in a statement--and that includes longtime target Baxalta ($BXLT). While the new Baxter ($BAX) spinoff has already shot Shire down, Ornskov said last month that his company still thinks a Baxalta tie-up would make a "highly strategic combination" that can help it reach $20 billion in sales by 2020.

- read Shire's release

Special Reports: Pharma's top 10 M&A deals of 2013 - Shire/ViroPharma | The 25 most influential people in biopharma in 2015 - Flemming Ornskov - Shire

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