Analysts: Shire must go shopping to stay independent

Rumors that Shire ($SHPG) is preparing a 10-figure bid for NPS Pharma ($NPSP) may have been overblown, but analysts say the Irish drugmaker should take a hard look at M&A if it wants to avoid becoming a target in its own right.

As Piper Jaffray's David Amsellem told Bloomberg, Shire's combination of an attractive pipeline and potential for an en vogue tax inversion make it a prime candidate for a buyout. "If they want to stay independent, then going on a bit of a shopping spree makes it harder for another entity to go after them," Amsellem told the news service.

And Shire may be well aware of that. In April, Reuters reported that Allergan ($AGN), itself the target of some unwanted M&A attention, approached the drugmaker about a deal. Shire shook off that offer, according to Reuters' sources, and now Allergan is in the midst of a protracted squabble with serial acquirer Valeant Pharmaceuticals ($VRX), which, along with activist investor Pershing Square, is looking to take its $53 billion bid hostile.

So how can Shire avoid the same fate? NPS, with its complementary focus on rare diseases, would be a cozy fit, according to Leerink, but, after CEO Francois Nader's no-uncertain-terms statement that the two companies weren't speaking, a deal seems unlikely. 

Now, Cenkos Securities analyst Navid Malik suggests Shire look toward a different rare disease, telling Bloomberg that Sarepta Therapeutics ($SRPT) and Prosensa ($RNA), two biotechs toiling in the volatile field of Duchenne muscular dystrophy, could be worthy targets. Both are planning to file FDA applications for their exon-skipping drugs this year. The company may also look to ThromboGenics, maker of the eye drug Jetrea, which announced earlier this year that it was looking into strategic alternatives.

A deal would fit in with both the character and strategy of Shire under sophomore CEO Flemming Ornskov, who has presided over at least 6 acquisitions since taking the reins. Shire's last major overture into M&A came with its $4.2 billion acquisition of ViroPharma last year, paying a heavy premium to complement its Firazyr franchise, and the company most recently signed a $260 million deal for Lumena Pharmaceuticals and its stable of liver treatments.

And time is tight. A record $139 billion in biopharma deals have been announced this quarter, according to Bloomberg, and with the likes of Allergan, Sanofi ($SNY) and AstraZeneca ($AZN) prowling for takeouts, Shire needs to work fast to maximize value, Amsellem said.

"Put it this way: We're in an environment where anything really is possible," he told Bloomberg.

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