Stocks

Shire Buying NPS To Boost Specialty Drug Portfolio

Dublin-based Pharma Shire PLC announced on Sunday, January 12th that it planned to acquire NPS Pharmaceuticals for $5.2 billion.

The deal will mean an expansion Shire’s portfolio of specialty drugs, which typically command much higher prices than medications for more common conditions. The attention deficit disorder drugs Vyvanse and Adderall XR are currently big sellers for Shire.

The deal has been approved by the boards of directors of both firms. This is an all-cash transaction as Shire will acquire all outstanding shares of the Bedminster, N.J.-based NPS for $46 per share in cash, around 15% above its closing price on Friday.

The Irish drug maker noted it anticipates that expects the deal will be accretive to its adjusted earnings from 2016 onward. The firm expects cost savings of around 25% to 35% of analyst consensus estimates for NPS’s standalone future operating costs from 2017.

Shire

More on NPS

Of note, NPS currently has only one drug on the market in the U.S. and Europe: Gattex, which is used to treat short bowel syndrome, a potentially life-threatening chronic condition that prevents patients from absorbing nutrients from food. Newly approved Gattex brought in total sales of $67.9 million for the first nine months of 2014.

The company is also hoping for approval from the FDA for a second drug, Natpara, which treats a rare condition called hypoparathyroidism, where the body produces insufficient levels of parathyroid hormone. The parathyroid hormone controls the body’s serum calcium and phosphate levels as well as activates vitamin D.

The up or down decision on the drug from the FDA was due in late October, but the aqency decided to extend its review of the new compound by three months.

Collapse of Shire – AbbVie deal last fall

Shire and AbbVie gave up on a $55 billion mega-deal that would have brought the two companies together.

AbbVie was planning to purchase Shire and undertake a tax inversion deal by reincorporating on the British island of Jersey (where Shire is incorporated). AbbVie’s BoD backed out on the deal after intense public pressure and the U.S. government made changes limiting the tax benefits of incorporating overseas.