Shire's $32bn Baxalta acq to create largest rare diseases biopharma

By Dan Stanton

- Last updated on GMT

Image: iStock
Image: iStock

Related tags Antibody Immune system Shire

Shire has struck a deal to acquire Baxalts but transitioning to a major in-house manufacturer could prove difficult , according to analysts.

After a failed acquisition attempt back in August​ and months of discussions, the board of directors at Baxalta have accepted a $32bn (€30bn) bid from Shire in a deal which the firms say will create the leading biopharma entity focused on rare diseases with annual revenues of over $20bn by 2020.

“Together, we will have leadership positions in multiple, high-value franchises and become the clear partner of choice in rare diseases,”​ Shire’s CEO Flemming Ornskov said this week, while his equivalent at Baxalta, Ludwig Nantson, added his company brings Shire “a strong portfolio and pipeline of market-leading products, high-quality manufacturing capabilities and a talented global workforce.”

The acquisition – which is expected to close mid-2016 depending on approval from shareholders and regulators – leaves Shire’s “valuation [looking] compelling whatever the deal outcome and exact magnitude of deal accretion,”​ noted JP Morgan analyst James Gordon.

Credit Suisse’s Rebekah Harper praised the proposed acquisition, saying “the deal provides a solid strategic fit,” ​for Shire, but noted that for the blood fractionation businesses, transitioning from an outsourcing reliant biopharma firm with 6,000 heads to a major manufacturer with 22,000 plus employees could be a major risk.

“Baxalta has a vast network of plasma collection and fractionation manufacturing infrastructure. In contrast, Shire only manufactures its enzyme replacement therapies in house. All other manufacturing and fill-finish is outsourced to third parties,”​ she said.

However, she added there could be “indirect savings within plasma fractionation coming from the potential for Baxalta's infrastructure to provide a second-source supply for Shire's Cinryze,”​ after Shire inked a license agreement with Belgian contract manufacturer Sanquin last year​ to support a Cinryze manufacturing tech transfer to a second source supplier.

Baxalta had been looking to shift to a manufacturing outsourcing model, recently offloading a Minnesota mammalian cell culture plant​ bought in 2013 to Takeda.

Shire has said the acquisition provides $500m of cost-saving synergies, about 20% of which comes from manufacturing.

Symphogen deal

The announcement comes days after Baxalta – which span-out from Baxter last year – signed a strategic partnership deal with Danish biopharmaceutical company Symphogen, to advance a number of potential immuno-oncology recombinant antibodies and antibody mixtures.

The agreement could see Baxalta pay up to €1.4bn to Symphogen in option fees and milestones - following an initial €160m upfront payment – which is advancing advance therapeutics against six checkpoint targets, with the first program to enter clinical studies in 2017.

Symphogen uses two proprietary technology platforms for developing and manufacturing antibodies. The Symplex technology uses direct isolation of antibody genes from the immune system to identify antibodies from plasma cells for targeted, while the Smypress technology is a manufacturing process used todeliver recombinant polyclonal antibodies in high yield.

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