Shire CEO Sees Dry-Eye Medicine Helping Its Offer for Baxalta

  • Opus-3 trial data on lifitegrast sends Shire shares up 7.4%
  • Higher stock price gives Shire more leverage in deal, CEO says

Shire Plc’s positive study for a dry-eye disease drug will help boost the company’s attempt to buy Baxalta Inc., Chief Executive Officer Flemming Ornskov said in an interview.

The trial, dubbed Opus-3, met its primary goal of reducing symptoms of dry eye disease, Shire said Tuesday. That paves the way for a refiling of lifitegrast with U.S. regulators next quarter. Analysts expect sales of the drug to exceed $700 million by 2020.

Flemming Ornskov

Photographer: Chris Ratcliffe/Bloomberg

Shire shares rose as much as 7.4 percent in London, and were up 5.8 percent to 4,866 pence at 12:43 p.m. That will give Shire more strength to negotiate its all-stock offer for Baxalta.

“A potential deal with Baxalta will involve equity,” Ornskov said in a phone interview. “I would imagine this strengthens the equity story and the equity value of Shire.”

Shire has sought to acquire Baxalta, a business spun off in July by Baxter International Inc., in a quest to become the world’s biggest maker of so-called orphan drugs to treat diseases that don’t have an effective therapy. Baxalta rejected the offer, which at that time reflected a 36 percent premium over its share price, as being too low.

Even with today’s gain, Shires’s shares are down 15 percent since the day the bid for Baxalta was made public on Aug. 4. They’ve been pushed down by a sell-off in biotechnology stocks and pressure from U.S. policymakers on the price drug companies charge for their treatments. Baxalta shares have gained 2.1 percent in that time period.

Ornskov said last week the company is still “totally committed” to pursuing Baxalta, while saying the process will “take some time.”

Shire has made a string of acquisitions focused on companies with treatments for rare diseases, including February’s purchase of NPS Pharmaceuticals Inc., which developed drugs for short bowel syndrome and low blood calcium levels. The company’s fast-paced deal-making has followed a failed $52 billion buyout by AbbVie Inc. last year.

Before it's here, it's on the Bloomberg Terminal.