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12:00 AM
Aug 09, 2010
 |  BioCentury  |  Strategy

Shire Early and Late

Shire's Movetis acquisition, new venture fund underpin two-armed growth strategy

Shire plc's proposed acquisition of Movetis N.V. fits one arm of the company's growth strategy by acquiring near-to-market or marketed products for specialty indications.

At the same time, Shire is looking to underpin its second arm, which has used acquisitions to build a platform of earlier stage niche products, by putting some $50 million into a new venture vehicle that will make small equity investments in early stage biotechs that could provide growth opportunities in the long term.

The proposed acquisition of Movetis, announced last week, adds a product to Shire's gastrointestinal business that can affect the top line from day one: Resolor prucalopride is approved in Europe and Switzerland to treat chronic constipation in women for whom laxatives fail to provide adequate relief.

The serotonin (5-HT4) receptor agonist was part of the GI portfolio that Johnson & Johnson spun out into Movetis in 2006. The biotech received European rights.

Shire will acquire Movetis for €19 per share in cash, or €428 million ($559.5 million), which is a 74% premium to Movetis' close of €10.90 on Aug. 2, and a 55% premium to its IPO price of €12.25 last December.

The newco raised €49 million in a single venture round in 2007 and then €97.7 million ($146 million) in the IPO, and still had €100 million in cash at March 31 (see "Moving On," A17).

Shire's GI portfolio includes two drugs for ulcerative colitis: Lialda mesalamine, a 5-aminosalicylate (5-ASA) mesalazine that uses delayed release Multi-Matrix system (MMX) technology from Cosmo Pharmaceuticals S.p.A., and Pentasa mesalamine. For the first six months of 2010, Shire posted GI sales of $252 million, up 20% from 1H09.

"What I see of Movetis is not an atypical transaction," CEO Angus Russell told BioCentury. He described the strategy as one of "bolt-on" acquisitions, "where we see subgroups of patients around the world where there is good data being brought with a new treatment to treat these very tight subgroups of patients."

Russell noted Resolor's label fits that description, which the company anticipates will support the case for premium pricing.

"You have real pharmacoeconomic data that you can take to the pricing authority or regulator. And you can say to them, 'I'm not asking to treat all people with severe constipation, I just want the ones that you've tried on cheap laxatives that have failed, and you know there is no other alternative,'" Russell said.

The argument seems to have resonated with NICE in the U.K., which last week issued a preliminary appraisal recommend-ing Resolor as an option on the NHS for women with chronic constipation in whom laxatives have failed to provide adequate relief.

Platform success

Shire recognized 10 years ago that growth through internal R&D would become more and more difficult, which led it to focus on M&A to acquire marketed products, and to invest R&D on line extensions, particularly in its core ADHD franchise.

However, some of...

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