Global Insight Perspective | |
Significance | Shire is attempting to take control of Jerini and its orphan disease drug Firazyr in a voluntary public takeover that is estimated at 328 million euro. |
Implications | If shareholders tender their shares, as expected, Shire will add HAE treatment Firazyr to its portfolio of human therapies. Jerini, on the other hand, has strengthened the commercial prospects for its drug by ensuring the backing of Shire's commercial and regulatory arsenal. |
Outlook | Shire could be sitting on a steady revenue earner as its orphan status guarantees a decade of market exclusivity in Europe and possibly a hefty price tag. The company expects peak sales at an annual US$350–400 million but this will also depend on the drug's regulatory fate in the United States, which at the moment is uncertain. |
U.K. specialty biopharmaceutical company Shire Pharmaceuticals has moved to acquire biotechnology company Jerini in a voluntary public takeover. The U.K. company, which has the full support of the biotech's board of management, has offered to pay 6.25 euro (US$9.90) for all of Jerini's circulating shares. The exercise, which Shire estimates at 328 million euro (US$519.2 million), will be financed through the U.K. company's current cash resources. As part of the deal, Shire has also agreed to invest an additional 21 million euro in Jerini's new stock issue. The offer is anticipated to remain on the table until the end of September.
Jerini's main asset is its injectable first-in-class hereditary angioedema (HAE) drug Firazyr (icatibant), which is currently awaiting European approval but has been deemed not approvable by the U.S. FDA (see Germany: 25 April 2008: European Nod Marred by FDA's Non-Approvable Letter for Jerini's Icatibant). Jerini brings additional assets to the table in the form of Jerini Ophthalmic, a U.S. subsidiary involved in the development of wet age-related macular degeneration (wet AMD) therapies and JPT Peptide Technologies GmbH, a manufacturer of synthetic peptides. Shire has indicated that it may part with those additional assets in the future.
HAE is a genetic disorder characterised by the swelling of the hands, feet, face, larynx, and abdomen caused by a deficiency of the protein C1 inhibitor. The disease prevalence is one in every 50,000 people. The drug has received orphan status in both the United States and Europe. Shire estimates that around 10,000 are affected by the disease in Europe, 7,000 in North America, and 8,000 in the rest of the world. Firazyr is anticipated to receive European regulatory approval by the end of September, with a launch in the geographic area before the end of the year. The U.K. company is confident that it can revive the drug's regulatory fate in the United States as the FDA rejection was based on efficacy rather than on safety concerns. Shire forecasts peak sales of Firazyr in the range of an annual US$350–400 million.
Outlook and Implications
Shire's main motivation to the deal is the potential acquisition of Firazyr as it adds to its portfolio of human genetic therapies, which currently consist of Fabry's disease treatment Replagal (agalsidase alpha) and Hunter's syndrome treatment Elaprase (idursulfase). The drug's orphan status is a near guarantee of hefty premiums for the drug if it reaches the market. Firazyr's orphan status also means that the drug will enjoy seven years of market exclusivity in the United States and 10 years in Europe. The deal also fits in very well with Shire's strategy of serial acquisitions rather than heavy in-house R&D investments. Two years ago, the company snapped up global rights to attention deficit hyperactivity disorder (ADHD) treatment Vyvanse (lisdexamfetamine dimesylate) in order to have a follow up to blockbuster ADHD treatment Adderall XR (mixed salts of a single-entity amphetamine; see United Kingdom: 21 February 2006: Shire Acquires New River Pharmaceuticals). Shire needs new drugs to boost growth as Vyvanse has so far failed to perform in line with expectations (see United Kingdom: 28 April 2008: Shire Posts 37% Increase in Pharmaceutical Sales During Q1, But Challenges Lie Ahead).
Jerini had signalled last month that it was open to the possibility of a takeover. It makes sense for the biotech as it is nearing European regulatory approval for Firazyr. Shire's 21-million-euro payment towards new shares will provide Jerini with enough cash to see over the European launch of its drug if the deal is not closed by then. The takeover also expands Firazyr's commercial prospects as Shire's sales force will put its expertise in promoting the compound and raising disease awareness. Last but not least, Shire's involvement will help Jerini revive the U.S. fate of the drug. Dutch biotech Pharming is also in the process of developing a HAE treatment (see Netherlands: 17 June 2008: Rhucin's Positive Clinical Results Boost Pharming Confidence). Strategically, getting Shire involved, given its regulatory and commercial experience, could help secure the market-leader spot for Firazyr.