On November 2, 2015 Shire plc (LSE: SHP, NASDAQ: SHPG) and Dyax Corp. (NASDAQ: DYAX) reported that Shire will acquire Dyax for $37.30 in cash per Dyax share, for aggregate upfront consideration of approximately $5.9 billion (Press release, Shire, NOV 2, 2015, View Source [SID1234517236]). Dyax shareholders may receive additional value through a non-tradable contingent value right (CVR) that will pay $4.00 in cash per Dyax share upon approval of DX-2930 in HAE, representing a potential additional $646 million in aggregate contingent consideration.
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Dyax is a publicly traded, Massachusetts-based biotechnology company primarily focused on the development of plasma kallikrein (pKal) inhibitors for the treatment of HAE, a debilitating and sometimes life-threatening rare genetic disease. Dyax has already successfully developed and commercialized KALBITOR, which is approved for HAE acute treatment in patients 12 years of age and older, and represented an early innovation in HAE treatment.
Dyax’s most advanced clinical program is DX-2930, a Phase 3-ready, fully humanized monoclonal antibody targeting pKal with proof-of-concept Phase 1B efficacy data. This data demonstrate a > 90% reduction in HAE attacks compared to placebo in the 300mg/400mg arms in patients with > 2 attacks in the 3 months prior to study entry.
DX-2930 has received Fast Track, Breakthrough Therapy, and Orphan Drug designations by the FDA and has also received Orphan Drug status in the EU. It is expected to enter Phase 3 clinical trials by year-end 2015. If approved for the prevention of Type 1 and Type 2 HAE, DX-2930 could generate estimated annual global sales of up to $2.0 billion.
Transaction Highlights
DX-2930
Adds Dyax’s DX-2930, a Phase 3-ready, long-acting injectable monoclonal antibody for HAE prophylaxis, with the potential to lower rates of HAE attacks and significantly improve patient convenience based on clinical trial data reported to date
Offers patent protection and anticipated regulatory exclusivity beyond 2030
Adds to Shire’s best-in-class therapies addressing significant unmet patient need
Shire and Dyax Combination
Combines Dyax’s HAE commercial and research and development expertise with Shire’s HAE leadership and proven ability to advance rare disease assets through development to commercialization
Provides additional early-stage antibody pipeline programs for the treatment of autoimmune diseases, diabetic macular edema and thrombosis
Adds Dyax’s well-established proprietary phage display antibody generation technology to Shire’s rare diseases discovery capabilities, as well as partnering revenue associated with Dyax’s Licensing and Funded Research Portfolio (LFRP)
Shire
Expands and extends Shire’s industry-leading HAE portfolio (FIRAZYR and CINRYZE), advancing its leadership position in rare diseases and enhancing an already robust growth profile
Brings potential for substantial value creation to Shire’s shareholders, with significant earnings accretion expected assuming FDA approval and anticipated DX-2930 launch in 2018
Furthers Shire’s transformation to a leading global biotech and world leader in rare diseases
Shire Chief Executive Officer Flemming Ornskov, M.D., commented:
"This highly complementary transaction aligns with and accelerates our strategy to build a global leading biotechnology company focused on rare diseases and specialty conditions. It adds to our portfolio of best-in-class therapies addressing unmet needs in our core therapeutic areas, expanding and extending our leadership position in HAE. We have closely followed DX-2930’s progress in the evolving HAE landscape for some time, and we admire the work of the Dyax team in moving this next-generation therapy forward. Through compelling proof of concept clinical data, this potentially transformative therapy has been shown to be both highly efficacious and convenient, two key product attributes desired by both physicians and patients."
Dr. Ornskov continued, "DX-2930 is a strategic fit within our HAE domain expertise, and we are well-positioned to advance the development, registration, and commercialization of DX-2930 for the benefit of HAE patients. This transaction also offers other potential upside opportunities, including Dyax’s early-stage pipeline. Following the close of this transaction, we look forward to welcoming Dyax employees, who will bring to Shire substantial clinical and commercial expertise in HAE. Dyax is to be commended for the world class organization they have built focused on HAE."
"I am also confident that our M&A expertise and the ongoing strength of our business will enable rapid and effective integration following the closing, as demonstrated by the success of our NPS and ViroPharma acquisitions. Even with this transaction, we will continue to have the financial firepower to pursue other value-added strategic acquisitions, including Baxalta."
Dyax President and Chief Executive Officer Gustav A. Christensen said:
"We believe this transaction will deliver substantial value to our shareholders and highlights our shared commitment to bringing innovative medicines to patients who suffer from the devastating effects of HAE. Our approved product, KALBITOR, was an important first step to bringing a range of HAE medicines to patients. Shire’s expertise and proven rare disease patient identification and management capabilities make it the ideal partner to efficiently bring DX-2930 to HAE patients worldwide. I’m proud of the company that our team has built, and I’m confident that Dyax’s important mission and focus on improving the lives of patients will continue as part of the Shire family."
About HAE
HAE is a rare, debilitating genetic inflammatory condition, which causes episodes of swelling in the face, extremities, and GI tract and can be life threatening. It is estimated that 30-40% of patients afflicted by HAE in the U.S. and EU remain undiagnosed, creating a significant growth opportunity in this area. Further, prophylactic treatment is likely underutilized with roughly 40% of patients only treating their attacks acutely on an as-needed basis.
Information on DX-2930
Through the transaction, Shire will acquire DX-2930, a Phase 3-ready novel long-acting highly potent human monoclonal antibody inhibitor of pKal, which has patent protection and anticipated regulatory exclusivity beyond 2030. Proof of concept was demonstrated in a multi-center, randomized, double-blind, placebo-controlled, multiple ascending dose Phase 1B study in HAE patients, based on patients in 300mg, 400mg and placebo groups, who reported having at least two HAE attacks in the three months prior to study entry. Each patient received two treatments of DX-2930 separated by 14 days. During the pre-specified, primary efficacy interval of six weeks (Day 8 to 50), the HAE attack rate was reduced by over 90% in the DX-2930 combined 300mg and 400mg arms, with 0 attacks in the 300mg group (n=4; p < 0.0001) and 0.045 attacks per week in the 400 mg group (n=11; p =0.005), compared to 0.37 attacks per week in the placebo group (n=11). DX-2930 was well tolerated at all dose levels with no evidence of dose-limiting toxicity up to 400 mg. The most common adverse events were HAE attacks, injection site pain, and headache, which were not appreciably higher in the DX-2930 arms compared with placebo. In the study, a total of 37 patients were randomized to active drug or placebo in a 2:1 ratio across 4 dosing groups of 30, 100, 300, or 400mg. Each patient received two doses of DX-2930 or placebo, separated by 14 days, and was followed for 15 weeks after the second dose.
A post hoc analysis of a subgroup of four patients who participated in the Phase 1B study from the 300mg (1) and 400mg (3) cohorts with severe HAE (9-36 attacks in the prior 3 months) had no breakthrough attacks on DX-2930 during the observation period (Day 8 to 50).
There were no deaths or patient discontinuations due to an adverse event, no serious adverse events in patients treated with DX-2930 and no evidence of dose-limiting toxicity was observed. There was no safety signal in treatment-emergent adverse events, clinical laboratory results, vital signs, or electrocardiograms. Subcutaneous injection was well tolerated.
With a novel mechanism of action, the potential for more convenient dosing in an every other week or once monthly subcutaneous injectable form and the ability to significantly reduce HAE attacks, DX-2930 has the potential to expand the market to patients currently not treated with prophylaxis therapy.
DX-2930 has received Fast Track, Breakthrough Therapy, and Orphan Drug designations by the FDA and received Orphan Drug status in the EU. It is expected to enter Phase 3 clinical trials by year-end 2015.
Additional Value from Dyax Pipeline and Phage Display Technology
In addition to DX-2930 for HAE, Dyax brings other early-stage, pre-clinical, antibody pipeline programs, including exploration of DX-2930 for diabetic macular edema; DX-2507, an anti-FcRN for the treatment of antibody-mediated autoimmune diseases, and DX-4012, an anti-factor Xlla antibody for thrombosis.
Dyax has a proven track record of bringing products to market through its phage display discovery platform, a patented antibody generation technology used to improve the speed and cost-effectiveness of internal and partner drug discovery, which produced DX-2930. Through the acquisition, Shire will also acquire an extensive LFRP, which includes the approved product CYRAMZA (ramucirumab), marketed by Eli Lilly & Co. The LFRP includes additional product candidates by licensees in various clinical development stages for which Shire would receive royalties or milestone payments post-approval.
Transaction Details
Under the agreement, Shire has agreed to acquire Dyax for $37.30 per Dyax share, for aggregate upfront cash consideration of $5.9 billion and a non-tradable contingent value right (CVR) that will pay an additional $4.00 in cash per Dyax share upon FDA approval of DX-2930 for the prevention of type 1 and type 2 HAE, if approved prior to December 31, 2019, representing a potential additional $646 million in aggregate contingent consideration.
The proposed transaction is expected to enhance Shire’s long-term top and bottom line growth profile, and is expected to be slightly dilutive to earnings in 2016 and 2017, and accretive in 2018 and beyond, assuming U.S. approval of DX-2930 in 2018.
Related to the transaction, Shire anticipates that it will realize operating synergies of $50 million starting in 2017 and growing to at least $100 million in 2019 and thereafter when comparing to the Street’s consensus forecast of Dyax’s standalone future operating cost base.
Shire’s significant M&A and rare diseases development and commercial expertise is expected to enable rapid and effective integration and deliver operating synergies.
Financing
Shire has secured a $5.6 billion fully underwritten term loan bank facility, which, in addition to the amount undrawn under its $2.1 billion revolving credit facility, is available to finance the transaction. The transaction is not subject to any financing contingency.
Closing
This transaction constitutes a Class 2 transaction for the purposes of the U.K. listing rules and, as such, Shire shareholder approval is not required. The transaction has been unanimously approved by the Boards of Directors of both Shire and Dyax and is expected to close in the first half of 2016. The transaction is subject to approval by Dyax shareholders and customary closing conditions and regulatory approvals.
Deutsche Bank, Evercore and Morgan Stanley are acting as financial advisers to Shire. Centerview Partners is acting as exclusive financial adviser to Dyax. Ropes & Gray, Davis Polk & Wardwell and Slaughter & May are acting as legal advisers to Shire and Sullivan & Cromwell are acting as legal adviser to Dyax.
Deutsche Bank and Morgan Stanley are also providing financing for the transaction.