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May 12, 2014

Shire Acquires Lumena for $260M+

  • Shire said today it will acquire Lumena Pharmaceuticals for more than $260 million, in a deal designed to complement the buyer’s existing presence in gastrointestinal (GI) drugs with two mid-clinical-phase rare liver disease pipeline compounds. 

    Shire will pay $260 million upfront for Lumena, plus an additional undisclosed payment for net cash at the closing of the deal, followed by near-term payments tied to milestones related to ongoing clinical trials. The deal ends plans by Lumena to go public through an initial public offering designed to raise $75 million, coming weeks after the company raised $45 million in Series B venture financing led by New Enterprise Associates, saying it would use the proceeds to advance the two compounds.

    The transaction also marked Shire’s second acquisition deal just this month. On May 1 the company snapped up Fibrotech for $75 million upfront plus payments tied to undisclosed milestones, in return for rights to fibrosis compound FT011, a small molecule now in a Phase IB study in patients with renal impairment and a Phase II study in patients with another rare kidney disease, FSGS.

    In its latest deal, Shire will acquire two new oral once-daily therapeutic compounds developed to date by Lumena -- LUM001, a Phase II drug candidate with four potential orphan indications; and LUM002, a drug ready to enter Phase II later this year.

    “The Lumena team will work closely with Shire to finish the ongoing Phase II clinical programs as part of our commitment to the patient populations we have championed since we formed Lumena Pharmaceuticals,” Lumena President and CEO Mike Grey said in a statement. 

    Founded in 2011, Lumena is headquartered in San Diego and has focused on treating rare liver disorders.

    LUM001 and LUM002 are both inhibitors of the apical sodium-dependent bile acid transporter (ASBT), which is primarily responsible for recycling bile acids from the intestine to the liver. LUM001 is in Phase II study for four rare cholestatic liver disease indications, with a potential 2016 launch. The four indications are: Alagille syndrome (ALGS), progressive familial intrahepatic cholestasis (PFIC), primary biliary cirrhosis (PBC) and primary sclerosing cholangitis (PSC).

    ALGS and PFIC can only be treated now through surgery, while patients with cholestatic liver diseases generally may ultimately require liver transplants. By reducing serum bile acids, LUM001 may offer a new therapeutic approach for alleviating the pruritus and progressive liver damage associated with cholestatic liver diseases. LUM001 has received orphan drug designation for all four potential indications in both the U.S. and E.U.

    LUM002 has completed Phase I safety trials in healthy volunteers and a Phase Ib trial in patients with metabolic disease. The compound is in development for the treatment of nonalcoholic steatohepatitis (NASH), a liver disease characterized by fat deposits in the liver and inflammation which can progress to significant fibrosis. A Phase II clinical trial in patients with NASH is anticipated to start in the second half of 2014.

    While the underlying cause of liver injury in NASH is not fully known, it is strongly associated with obesity, Type 2 diabetes, high cholesterol and triglycerides, and other metabolic disorders. By blocking bile acid reabsorption, LUM002 is thought to modulate colonic bile acid concentrations and receptor signaling on cells in the lower portion of the GI tract. The signaling is believed to result in the secretion of peptides that regulate insulin release from the pancreas, glucose metabolism and the synthesis of cholesterol and fatty acids.

    By blocking bile acid transport with ASBT inhibitors, the drugs are designed to reduce bile acid absorption, offering the potential to improve liver function and relieve disease symptoms such as extreme itching associated with cholestatic liver diseases – and thus to slow disease progression. Shire reasons it can leverage its GI drug portfolio – which generated more than $800 million in revenues last year – and complement its recent acquisition of Fibrotech, through which Shire has added pipeline programs to address unmet patient need in other fibrotic conditions including renal impairment.

    Shire said it will discuss LUM001 and LUM002 in greater detail later this year at an Investor Day event.

    “These attractive potential treatments may offer new hope to patients with rare cholestatic liver disease and further contribute to Shire’s future growth,” Shire CEO Flemming Ornskov, M.D., said. “We are excited by the possibilities of these new assets in liver disease.  We have the resources, the infrastructure and the operating capacity to invest in these new potential growth drivers which add further value to Shire’s innovative pipeline.”

    Shire also said it does not expect the Lumena acquisition to result in a change to its previously stated earnings guidance for 2014. The company raised that guidance on May 1, saying it now expected to deliver non-GAAP earnings per ADS growth in the mid-to-high 20% range, after a first quarter that saw the company’s total revenues rise to $1.347 billion, up 19% from a year earlier; and product sales increase to $1.308 billion, 18% above Q1 2013.

    On a GAAP basis, however, operating income was down 15% to $307 million. Shire cited charges related to its ViroPharma acquisition, completed in January; and a $166 million impairment charge for in-process R&D (“IPR&D”) intangible asset related to SHP602, a compound for children and adults with transfusion iron overload whose Phase II trial the company placed on clinical hold to evaluate nonclinical toxicology findings: “The potential relevance of these findings to humans, if any, is unknown.”


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