Shire said today it agreed to sell its oncology business to Servier for $2.4 billion, in a deal that advances the buyer’s goal of expanding in cancer treatments—and has led to conflicting speculation about whether Shire would accept a takeover offer from would-be suitor Takeda Pharmaceutical should such a bid emerge later this month.

Shire's oncology business includes two marketed treatments: Oncaspar® (pegaspargase), a component of multiagent treatment for acute lymphoblastic leukemia (ALL), and ex-U.S. rights to Onivyde® (irinotecan pegylated liposomal formulation), a component of multiagent treatment for metastatic pancreatic cancer post gemcitabine-based therapy. 

The portfolio also includes Calaspargase Pegol (Cal-PEG), which is under FDA review for the treatment of ALL and early stage immuno-oncology pipeline collaborations.  

Shire’s Oncology business finished 2017 generating $261.7 million in product sales, up 22% from 2016—yet still just 3.7% of Shire’s total $6.988 billion in product sales last year. Shire’s top two categories of treatments, accounting for nearly-three-fourths of total 2017 sales, were hemophilia ($2.957 billion or 42%), followed by immunoglobin therapies ($2.237 billion or 32%).

“While the Oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy,” Shire CEO Flemming Ornskov, M.D., M.P.H., said in a statement. “We are confident that Servier will continue to invest in this business and our colleagues who are expected to transfer as part of the transaction in order to meet the needs of cancer patients globally.”

Dr. Ornskov said Shire may sell off additional businesses outside of its core focus: “We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets.”

Dr. Ornskov added that the proceeds from the transaction increase optionality and Shire's Board will consider returning the proceeds of the sale to shareholders through a shareholder-approved share buyback after the current offer period regarding Takeda's possible offer for Shire concludes.”

April 25 Deadline

Takeda said in March it is considering making an acquisition bid for Shire. Under U.K. regulations governing mergers and acquisitions, Takeda has until April 25 to make a formal bid or pass on Shire. Such a bid is expected to be in the $50 billion range, since Shire has a market value of about $47 billion.

Takeda told numerous news outlets it had no comment on the Servier–Shire deal.

Citing anonymous sources, Bloomberg News reported earlier this month that Takeda had approached Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, among other lenders, about financing the proposed acquisition. Bloomberg reported that the Servier acquisition of Shire’s oncology business would have the effect of “potentially making it more attractive to Takeda Pharmaceutical Co. as it considers a bid.”

However, Takeda has said that expanding its oncology business was a significant reason why it was considering a bid for Shire, along with the desire to expand in along with gastrointestinal medicine and neuroscience. All three categories are among Takeda’s key therapeutic areas. “The divestment of the cancer business may be a deterrent for Takeda,” Reuters observed.

Servier bolstered its oncology business last year by boosting its cancer-related share of R&D activity over the past two years from 14% to 37% today, with plans to reach 50% within the next two years.

In announcing 2016–2017 results on February 22, Servier said it finished the year with 11 cancer candidates in clinical phases as well as two marketed drugs: Pixuvri® (pixantrone), indicated for adults with multiply relapsed or refractory aggressive non-Hodgkin’s B-cell lymphoma; and Lonsurf® (trifluridine and tipiracil), indicated for metastatic colorectal cancer. Launched in 19 countries, Lonsurf generated €62 million ($76.8 million) in revenue during 2016–2017, according to a Servier announcement that did not furnish revenues for Pixuvri.

Servier would shell out 9.2 times 2017 revenues for Shire’s oncology business.

“The acquisition of Shire's oncology franchise enables Servier to meet its strategic ambitions to become a global key player in oncology,” stated Olivier Laureau, Servier Group president. “As an essential step in the evolution of the Group, this acquisition allows us to establish a direct commercial presence in the United States, the world's leading pharmaceuticals market, and to strengthen our portfolio of marketed products in the territories where Servier is already present.”

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