Shire will acquire ViroPharma for $4.2 billion, in an all-cash deal designed to fulfill the buyer’s strategy of growing its rare-disease portfolio by adding a marketed drug with growing sales, Cinryze® (C1 esterase inhibitor [human]) for hereditary angioedema (HAE), the companies said today.
Shire says Cinryze, a routine prophylactic treatment, will complement its own product Firazyr® (icatibant injection), indicated for acute HAE attacks in adults and adolescents. Firazyr is approved in the United States and the European Union, among a total 41 countries worldwide.
“Shire is uniquely positioned to drive the continued success of Cinryze for the benefit of patients through our knowledge of the rare disease space, our international infrastructure, and our biologics manufacturing expertise,” Shire CEO Flemming Ornskov, M.D., said in a statement. “Shire’s priority will be to ensure Cinryze patients continue to enjoy high standards of service.”
The company says adding Cinryze to its rare disease business unit will swell its 2014 annual revenues to $2 billion—representing 40% of Shire’s total product sales on a pro-forma basis—and add to long-term revenues as well.
Cinryze generated $102 million in U.S. net sales during the third quarter, up 21% from the same period in 2012; and $290 million in the first nine months of 2013, up 28% from the previous year. But ViroPharma’s contract manufacturer of Cinryze, Sanquin, has been cited by the FDA for issues related to processing of the biologic via Form 483 and a warning letter, which could dampen future revenues. Issues included cGMP deficiencies such as inadequate investigations, production and process controls, laboratory controls, and cleaning procedures, ViroPharma said in its third-quarter Form 10-Q filed with the SEC on October 3.
ViroPharma markets another product in the United States, Vancocin® (vancomycin hydrochloride), an oral capsule antibiotic approved to treat both enterocolitis caused by Staphylococcus aureus (including methicillin-resistant strains) and Clostridium difficile-associated diarrhea or CDAD. However, Vancocin has struggled over the past year with falling prices and reduced sales since competing generic products came onto the market following FDA approval in April 2012, with ViroPharma recording a $104.2 million impairment charge, reducing the drug’s intangible asset value to $7.4 million.
In Europe, the company markets Buccolam® (oral mucosal solution, midazolam [as hydrochloride]) for seizures in children and adolescents; and Plenadren® (hydrocortisone, modified-release tablet) for adrenal insufficiency in adults.
By acquiring ViroPharma, Shire said it expects to generate about $150 million in annual cost savings by 2015 through synergies beyond those the company says it is achieving through its ongoing “One shire” reorganization.
At $50 per share, Shire will pay a 27% premium to to ViroPharma’s closing share price on Friday, the last trading day before the acquisition announcement—and a 64% premium to ViroPharma’s share price of $30.47 on September 12, before speculation surfaced about the deal.
The deal is expected to close in the fourth quarter of this year, the first quarter of 2014, “or as soon as possible thereafter,” Shire said, subject to customary closing conditions that include regulatory approvals and tender of a majority of outstanding ViroPharma shares.
Shire secured a $2.6 billion fully underwritten short-term bank facility, which it will combine with an existing $1.2 billion revolving credit facility, as well as cash and cash equivalents, to fund the deal. The company said the combined funds will also be used to pay fees and expenses related to the acquisition, and repay an existing $1.1 billion convertible bond at its May 2014 maturity if required to do so. Shire will issue new debt and use ViroPharma cash and short-term investments to repay part of the short-term bank facility.