Shire to Buy Eye-Drug Maker SARcode for $160 MillionKristen Hallam
Shire Plc, a maker of medicines for rare genetic diseases, agreed to buy closely held SARcode Bioscience Inc. for at least $160 million to expand in drugs for eye conditions.
SARcode’s experimental treatment Lifitegrast for dry eye disease may reach the market in the U.S. as early as 2016, Dublin-based Shire said today in a statement. Shire will pay $160 million to shareholders of Brisbane, California-based SARcode, and they’ll be eligible for additional payments if the drug meets clinical, regulatory and sales goals, according to the statement.
Shire this month purchased Sweden’s Premacure AB, bringing in an experimental treatment against a blindness-causing disorder in babies born prematurely. Incoming Chief Executive Officer Flemming Ornskov’s focus on eye diseases will help the company expand beyond products for attention deficit hyperactivity disorder and rare illnesses, which accounted for 38 percent and 31 percent of last year’s sales, respectively.
“Ophthalmology is of great interest to me,” Ornskov, who takes over from Angus Russell as Shire’s chief executive officer on April 30, said today in an interview, adding he’s “very confident” that the company can compete in certain parts that market.
Ornskov said he knows ophthalmology well after overseeing eye-care businesses at Bausch & Lomb Inc. and Novartis AG as well as Bayer AG’s pharmaceuticals unit. About 25 million people have dry eye disease in the U.S., where there is only one prescription product available, Ornskov said. Shire will focus on the U.S. market first, and then consider other countries, he said.
“Ophthalmology has been a hot area for a number of years now, so it’s a logical next step for Shire,” said Peter Welford, an analyst at Jefferies International Ltd. in London. “It’s definitely a growing area that has medical need.”
Shire gained 0.3 percent to 1,983 pence in London, giving the company a market value of 11.1 billion pounds ($16.9 billion). The shares have returned 5.6 percent this year, compared with a 14 percent gain in the Bloomberg Europe Pharmaceutical Index.
Lifitegrast met the main goal of reducing signs of dry eye in a late-stage study dubbed Opus 1, though it missed the other goal of reducing symptoms, Shire said. Two other trials, known as Opus 2 and Sonata, are in progress.
“We are optimistic that we will have excellent results,” Ornskov said. “We think still that we have a very good chance of coming to market and getting the full indication” approved by U.S. regulators.
Ornskov told analysts last month that the company was working on two to three deals that were in advanced talks, according to a person who was at a meeting with analysts in London and asked not to be identified because the event was private. The CEO declined today to specify the number of deals the company may announce this year, or how much Shire would spend on acquisitions.
“We’re very active all the time,” Ornskov said. “Three deals in a CEO transition speaks to a rather smooth transition. I also add some flavor to Shire,” said Ornskov, who joins the company from Bayer.
Barclays Plc advised Shire, while JPMorgan Chase & Co. advised SARcode. Investors in SARcode include the venture capital firms Alta Partners, Clarus Ventures, Sofinnova Ventures and Rho Ventures, according to the company’s website.