Another rare disease drug developer is back in the headlines as a rumored takeover target. This time it's ViroPharma ($VPHM), which Bloomberg sources say has drawn the "interest" of Sanofi ($SNY) and Shire ($SHPG).
ViroPharma brought in Goldman Sachs to possibly guide the company through an auction, according to the business news service, after an unsolicited offer arrived. That's all investors had to hear, driving up the company stock 28% in a fetid M&A environment following Amgen's buyout of Onyx for $10.4 billion.
The story has all the elements needed for a Wall Street wildfire: Big company names, market sources, rare diseases and the prospect of a bidding war--even though Onyx was never able to solicit more than a slightly sweetened offer from a single bidder.
This is not the first time--this season--that ViroPharma has been named as a potential takeover target. About 6 weeks ago Reuters reported that its sources were saying that "several" possible suitors were circling the company. And the main lure: Cinryze, a therapy for hereditary angioedema with a market of 6,000 patients in the U.S. for a drug that costs $350,000.
That kind of profile has earned the company a market cap of $2.5 billion this afternoon. And Deutsche Bank analysts say this afternoon it could be worth up to $52 a share in a buyout. It's currently trading at a little less than $39. It's still too early to say if that's just an over-excited view of the upside for current investors--or silly hype building around an unconfirmed rumor.
Deutsche Bank analysts don't know whether Shire is really thinking about pulling the trigger, but as The Guardian reports, they hope the company aims to acquire ViroPharma. According to Deutsche Bank:
"First, ViroPharma's rare disease focus with a fast-growing flagship prophylaxis hereditary angioedema (HAE) product Cinryze (annualized sales approaching $400m) would be highly complementary to Shire's acute-HAE drug Firazyr (estimated 2013 US sales of $196m). Second, given nearly a complete overlap in sales and marketing, we would expect very significant cost synergies (read: layoffs). Third, it would help mitigate a potential "revenue gap" in 2015 due to Intuniv generics entering the market in late 2014. And fourth, given a more efficient tax structure, Shire (current 18%-20% tax rate) potentially could further extract enhanced profitability as ViroPharma has a tax rate of nearly 40% given that it is a US domiciled company."
The ViroPharma story is reaching a fever pitch as another persistent rumor about Roche's ($RHHBY) interest in Alexion ($ALXN)--which sells the rare disease drug Soliris--appears to be cooling. The market is never far away from the next big takeover story.