In a bid to strengthen its portfolio of rare disease drugs,
) announced that it will acquire
) for approximately $50 per share or $4.2 billion.
The offer price of $50.00 per share represents a 27% premium
to ViroPharma's closing share price of $39.38 on Nov 8, 2013, the
last trading day prior to the acquisition announcement.
In addition to its existing cash balance, Shire expects to
finance the acquisition with a $2.6 billion fully underwritten
short-term bank facility and a revolving credit facility of $1.2
ViroPharma - A Strategic Fit
ViroPharma focuses on rare diseases. The growth story for
ViroPharma revolves around Cinryze, which is approved in the U.S.
for routine prophylaxis against angioedema attacks in adolescent
and adults with hereditary angioedema (HAE).
Cinryze complements Shire's Firazyr which is indicated for the
on-demand treatment of acute HAE attacks. Hence, the
addition of Cinryze will bolster Shire's rare disease
We note that ViroPharma was evaluating Cinryze for additional
potential indications such as autoimmune hemolytic anemia,
antibody-mediated rejection post renal transplantation and
The acquisition will also add Plenadren - indicated for the
treatment of adrenal insufficiency (AI), and Buccolam - indicated
for the treatment of pediatric seizures, to Shire's
Further, ViroPharma's pipeline candidates include maribavir
(for the treatment of cytomegalovirus infection in transplant
patients), VP20621 (for the prevention of recurrent clostridium
difficile infection) and VP-20629 (for Friedreich's Ataxia).
Shire will decide on these programs after reviewing its
ViroPharma forecasted net revenues between $445 million and
$465 million in 2013. Cinryze revenues are projected between $395
million and $405 million.
Shire expects the addition of Cinryze to its rare disease
business unit will propel the revenues to grow over $2 billion in
2014, accounting for approximately 40% of Shire's total product
sales. Moreover, Shire expects to realize approximately $150
million of annual cost synergies across the business by 2015 from
the acquisition. The acquisition is expected to be immediately
accretive to Shire's bottom line.
The news of the acquisition does not surprise us as rumors
have been doing the rounds from the last four months leading to a
massive surge in the share price of ViroPharma.
We are positive on Shire's acquisition of ViroPharma which
will further strengthen its HAE franchise as Cinryze and Firazyr
are two complementary therapies for the treatment of HAE.
However, we note that Cinryze's orphan drug exclusivity
expires in 2015 in the U.S., opening the doors for competition
thereby impacting sales. We remind investors that
BioCryst Pharmaceuticals, Inc
) has a candidate in its pipeline, BCX4161, which is being
developed for HAE.
Another matter of concern is the U.S. Food and Drug
Administration's (FDA) warning letter to Sanquin Plasma Products,
which manufacturers Cinryze. The warning letter was regarding
compliance with current Good Manufacturing Practices (cGMP) at
facilities located in Amsterdam and Brussels.
Shares of ViroPharma gained 25.50% to $49.42 on the
While Shire currently carries a Zacks Rank #1 (Strong Buy),
ViroPharma is a Zacks Rank #3 (Hold) stock. Right now,
) also looks attractive with a Zacks Rank #1 (Strong Buy).
BIOCRYST PHARMA (BCRX): Free Stock Analysis
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
SHIRE PLC-ADR (SHPG): Free Stock Analysis
VIROPHARMA (VPHM): Free Stock Analysis Report
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