Shire completes ‘robust’ deal in $5.2 billion NPS Pharmaceuticals acquisition, says GlobalData Analyst

Despite a lofty premium of more than 50% of NPS Pharmaceuticals’ (NPS) unaffected share price, Shire’s recent $5.2 billion acquisition of the company represents a fairly robust deal, says an analyst with research and consulting firm GlobalData.

According to GlobalData’s net present value (NPV) analysis, the combined discounted cash flow contribution from NPS’ lead assets alone is $4.9 billion, and Shire will also earn royalties of $300 million.

Chloe Thornton, MSc, Company Analyst for GlobalData, states that the move, which is intended to increase Shire’s rapidly-expanding rare disease drug portfolio, relies on two key assets, namely Gattex and Natpara.

Thornton explains: “Gattex was approved in the US in 2012 for short bowel syndrome in adults, and garnered sales totaling $54 million in 2013.

“GlobalData estimates that Gattex will reach the $1 billion milestone in 2021, with a total revenue contribution nearing $8 billion through 2029. In terms of contribution, Gattex has an NPV of $2.8 billion, assuming generic competition from 2022 onwards.”

Natpara, the other key asset that Shire will gain from acquiring NPS, is a promising drug candidate currently in pre-registration in both the US and Europe for the treatment of rare disease, hypoparathyroidism.

Thornton continues: “While Natpara showed promising results in Phase III clinical studies, the accompanying regulatory risk remains a threat to the value that Shire can accrue from the deal.

“However, if approval is granted, Shire will be well-positioned to employ its US resources to maximize Natpara’s uptake.”

GlobalData estimates peak sales for Natpara of approximately $760 million in 2024, contributing total revenues of $5.7 billion over the next 15 years, and an NPV of $2.1 billion for the drug.

The analyst concludes: “The deal clearly indicates that Shire is intent on remaining a major player in the biotechnology space, despite the collapse of its $54 billion deal with AbbVie last October, and is actively investing in external assets to meet its growth target.”