Shire's deal for NPS hasn't curbed its M&A appetite

Shire CEO Flemming Ornskov

Shire's ($SHPG) M&A wheelhouse is still churning after its $5.2 billion buyout of NPS Pharmaceuticals ($NPSP). CEO Flemming Ornskov told Bloomberg that the Dublin-based company's recent acquisition won't prevent it from making more deals in the future--especially where rare disease drugs are concerned.

The way Ornskov sees it, the company needs dealmaking to become a leading biotech. Shire is eyeing $10 billion in sales by 2020. Ornskov said Shire can meet that goal without deals, but also sees M&A as one of the company's strengths. Now, with a $1.6 billion breakup fee from its failed marriage with AbbVie ($ABBV) and about $13 billion to boot, Shire remains in good shape for another next takeover.

"Their balance sheet is still relatively clean," CRT Capital's Timothy Chiang told Bloomberg. "M&A remains a recurring theme."

While the company is staying mum on potential M&A candidates for now, its takeover criteria includes high-margin treatments for rare diseases, particularly already-approved or late-stage products, Bloomberg reports. The news outlet compiled a list of possible targets, all developing late-stage or already approved rare disease drugs and valued between $100 million to $10 billion. So who's on it? For one, South Plainfield, NJ-based PTC Therapeutics ($PTCT) tops the list with its rare genetic muscle disorder treatment Translarna. The company, which is valued at $1.8 billion, applied last month for FDA approval of its drug and is projected to surge to more than $500 million in sales by 2018.

Other deal targets include Lexington, MA-based Synageva Biopharma ($GEVA), New York-based Retrophin ($RTRX) and Novato, CA-based Ultragenyx Pharmaceutical ($RARE). Synageva, a $4 billion company, requested last year a priority review from the FDA for its drug for lysosomal acid lipase deficiency and recently reported positive phase III study data. Ultragenyx, which is valued at $1.8 billion, also has a phase III study underway for its metabolic disorder therapy.

Smaller candidate Retrophin is valued at $361 million, but already has approved drugs for gallstones and hypertension. The company also boasts an orphan-drug designated treatment undergoing a phase II trial for a rare disease that can cause kidney failure.

But Shire could also aim for bigger targets, including San Rafael, CA-based BioMarin Pharmaceutical ($BMRN) and Boston-based Vertex Pharmaceuticals ($VRTX). Analysts expect revenue for BioMarin to surpass $1 billion next year and then top $2 billion in 2019. The $14 billion company comes with a suite of experimental treatments for rare diseases and cancer. Vertex, a $28 billion company, has already generated more than $1 billion in annual sales.

In the meantime, Shire can enjoy the fruits of its recent deal with NPS. The company inherited gastrointestinal drug Gattex along with an as-yet-unapproved candidate, Natpara, which would be the first FDA-approved treatment for hypoparathyroidism. The two drugs are expected to bring in about $1.1 billion by 2019, Leerink Partners analyst Jason Gerberry said.

- read the Bloomberg story

Special Report: The 25 most influential people in biopharma today - 2013 - Flemming Ornskov - Shire

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