Shire ($SHPG) CEO Flemming Ornskov, having already promised to double revenue by 2020, is making the rounds on a mission to convince investors that saying no to a $46 billion bid from AbbVie ($ABBV) is the best move for his company's future.
In a series of interviews and conference calls, Ornskov has said Shire is in the midst of becoming "a high-growth, lean-and-mean biotech," pointing to Big Biotechs like Gilead Sciences ($GILD), Celgene ($CELG) and Biogen Idec ($BIIB) as role models for its future. Those companies all faced buyout speculation during their adolescent growth phases, but patience paid off in each case, and Ornskov wants the same opportunity for Shire.
"Would you, as an investor, have been better off selling Biogen, selling Gilead, selling Celgene when they were at $20 (billion), $25 billion market caps?" the CEO said, as quoted by The Wall Street Journal. "I think, from a purist capitalistic perspective, shareholders would have been better off letting management get on with what it has to do."
And what Shire's management has to do is grow the company. Ornskov has laid out an ambitious plan to bring in $10 billion a year by 2010, with $7 billion coming from on-the-market products like the ADHD treatment Vyvanse and rare disease therapy Firazyr and the the remaining $3 billion flowing out of Shire's pipeline. The company believes its in-development drugs are worth a combined $7 billion at their peak, led by lifitegrast, a dry-eye treatment expected to bring in $1 billion a year, and LUM001 and LUM002, two liver treatments picked up in its $260 million deal for Lumena Pharmaceuticals that Shire says can peak at $3 billion total.
Meanwhile, AbbVie CEO Richard Gonzalez has mounted a complementary effort, telling analysts and investors that, by absorbing Shire's pipeline and favorable tax situation, his company will be in a position to ratchet up R&D spending and improve its standing among global biopharmas. AbbVie is said to be retooling for yet another bid after three rejections, and the company has until July 18 to get the deal done.
Both parties are operating under the shadow of Pfizer's ($PFE) now-paused pursuit of AstraZeneca ($AZN), looking to learn from the mistakes and successes of their forbears. Unlike Pfizer, AbbVie hasn't ruled out taking its bid directly to shareholders in a hostile effort, and, taking a page from AstraZeneca, Shire's rosy view of its own pipeline is designed as carrot to convince investors to give it a chance on its own.
"Shire is a jewel and a unique company," Ornskov told the Boston Globe, pointing out that its market cap was $19 billion when he took the reins in 2013 and sits at $44 billion now.
"We're delivering value to shareholders and patients, and we'd like to continue that without this distraction," he said.