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Shire signs Dyax deal

It's still keen on a mammoth merger with US group Baxalta, but Shire will buy Dyax for $5.9bn first
November 5, 2015

This time last year, Shire (SHP) was being taken over by Chicago-based AbbVie (US:ABBV) for a colossal $52bn. Twelve months on, that thwarted deal is just a distant memory. Shire has worked hard to re-establish itself as a buyer, not a target. The speciality pharma group has announced its latest takeover - this time of US biotech Dyax (US:DYAX) for $5.9bn (£3.8bn) - following the $5.2bn takeover of NPS Pharmaceuticals (US:NPS) in January and the $300m acquisition of an eyecare specialist in August. Chief executive Flemming Ornskov said he wouldn't rule out a potential $30bn all-stock takeover of US group Baxalta (US:BXLT) either - negotiations for which were revealed over the summer - saying Shire had "enough financial firepower" to complete "a portfolio of deals". Shire will pay Dyax shareholders $37.30 per share in cash and an additional $4 in cash per share if the company's main drug in development is given the green light by regulators. A $5.6bn loan will help finance the deal.

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That main drug - known only as DX2930 - is why Shire went after Dyax. Alex Schlich at investment manager Sanlam FOUR called the deal "defensive" as the product - aimed at patients suffering from the rare blood disorder known as hereditary angioedema - would directly compete with existing Shire medications Firazyr and Cinryze, if approved. The patent protection on Firazyr is due to expire in 2020, but DX2930 could receive exclusivity rights up until 2030, once approved. Sales from Cinryze - which was only acquired by Shire as part of the 2014 ViroPharma deal - are likely to be cannibalised by DX2930 too, but higher margins on the latter would be "beneficial", according to Mr Ornskov.

Given the inevitable competition issues, the deal will be subject to a rigorous review by antitrust regulators, a process Shire is "already preparing" for. In reaction to the deal news, shares in Dyax leapt more than a third - close to $37 a pop - while Shire stock slipped nearly 1 per cent to £48.85.

Rumours still swirl about Baxalta, but Mr Schlich said the two were "completely different deals". Baxalta would transform Shire into the world's largest rare disease drugmaker by sales, but biotech valuations remain under immense scrutiny after several stocks suffered sharp de-ratings over the summer.