Shire Announces $6 Bil Offer for Biotech Dyax On Monday

According to a statement released Monday, Shire Plc has made an offer to buy biotech firm Dyax Corp. for around $5.9 billion in cash. Dyax is developing a promising compound known as DX-2930 to treat hereditary angioedema. The new HAE treatment will begin a stage 3 human clinical trial by the end of this year.

Shares of Shire dropped by around 1% to 4,871 pence in morning trading on the FTSE in London.

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More on Shire – Dyax merger

Shire has agreed to pony up $37.30 per Dyax share, according to Monday’s statement. That represents a 35% premium to the share price at the close on Friday. If DX-2930 receives approval from the FDA for treating HAE (a debilitating and often fatal condition), Dyax investors may receive an additional $646 million, or $4 per share.

Pharmaceutical industry analysts point out that Dyax’s DX-2930 is project to produce sales of $2 billion a year globally, and would have patent protection through at least 2030. The new HAE therapy has won fast track, breakthrough therapy and orphan drug designations from the U.S. Food and Drug Administration.

The acquisition of Dyax will hurt Shire’s earnings for a couple of years, then become accretive as of 2018, assuming DX-2930 is approved by then. Of note, Dyax already offers the medication Kalbitor for the treatment of acute attacks of HAE in patients less than 12 years old.

Dublin-based Shire and Massachusetts-based Dyax hosted a conference call to discuss the merger offer at 8:00 ET on Monday.

Shire noted in the statement that it will fund the acquisition (expect to be finalized by the first half of 2016) with the combination of a $5.6 billion term loan and a $2.1 billion revolving credit facility.

Of note, while the deal is supported by the BODs of both firms, the transaction must still be approved by a majority of Dyax shareholders.

Statement from Shire CEO Flemming Ornskov

“Even with this transaction, we will continue to have the financial firepower to pursue other value-added strategic acquisitions, including Baxalta,” Shire CEO Flemming Ornskov commented in the statement announcing the offer.

Analysts at Jefferies opine:

We see a logical strategic rationale driven by Dyax’s Phase III ready DX-2930 for HAE prophylaxis, widely seen as a potential competitive threat for Shire’s existing HAE franchise after impressive Phase I data. Hence, the deal should provide operational synergies and remove a potential overhang. As a debt-funded cash deal we see no direct implication for the proposed all-equity Baxalta combination.