DEAL SPREE: Shire adds PhIII eye drug in $160M SARcode buyout

Fast-changing Shire ($SHPG) is on a deal spree. This morning the biotech announced it is buying Brisbane, CA-based SARcode Bioscience for $160 million upfront and an unspecified slate of milestones. The buyout lands another ophthalmology asset for Shire, which closed on Sweden's Premacure just days ago as it's CEO-in-waiting launches a new pipeline in a field he has deep R&D experience in.

The jewel in this crown is Lifitegrast (SAR 1118), a Phase III therapy for dry eye disease. If all goes according to plan, Shire says that it will file for U.S. approval in 2016. The drug will be added to a growing new pipeline at Shire for ophthalmology following its acquisition of Premacure and its Phase II protein replacement therapy designed to combat a disease that causes blindness in premature infants.

But the new pipeline may cost other programs in Shire's diversified operation. In its release today the company says it will begin a prioritization review as it squeezes this new work into the system.

Flemming Ornskov

The latest acquisition, though, does help spell out Flemming Ornskov's business strategy as he prepares to take the reins at Shire in a matter of weeks. Ornskov is poised to take over the CEO's job from the widely respected Angus Russell, a move that was quickly followed by the news that Shire HGT chief Sylvie Gregoire is leaving the company at the end of this month. He intrigued and confused a number of analysts at a recent gathering, who came away with different accounts of the deals Shire had in the works. It appears clear now that he was talking about more bolt-on programs that can be added to the company's extensive pipeline.

These two new acquisitions reflect Ornskov's lengthy experience in ophthalmology. He headed Novartis's ($NVS) eye drug operation before moving to Bausch + Lomb ($BOL). And now he's clearly establishing a beachhead in an area of drug research he's very familiar with.

SARcode Bioscience rounded up a sizeable $44 million B round from some A-list venture backers back in the summer of 2011, giving the developer the bankroll it needed to push its lead program into a late-stage study for dry eye syndrome. Sofinnova Ventures led the round, which was augmented by Rho Ventures and included its existing investors Alta Partners and Clarus Venture Partners.

Garheng Kong, a general partner at Sofinnova Ventures, tells FierceBiotech the company raised a total of about $70 million to $75 million, leaving the venture alliance with a solid return on the upfront and a much better multiple if the late-stage drug does as well as Shire hopes it will.

"Shire has made a corporate decision to move into ophthalmology," says Kong. "That's one of the reason we found them to be such an attractive partner. They're fully committed to building an ophthalmology program. And there's no question the CEO-designate was highly instrumental in both driving the deal from their end and giving us comfort on our end."

Another plus: The SARcode team of about 10 will stay involved with the work, which should also be helpful in driving a successful conclusion to the clinical program. And analysts appeared pleased by the recent buyouts as well.

"Ophthalmology has been a hot area for a number of years now, so it's a logical next step for Shire," Jefferies' analyst Peter Welford tells Bloomberg. "It's definitely a growing area that has medical need."

"The acquisition of SARcode is a demonstration of Shire's focus on continuing to build our research and development pipeline with innovative, well-differentiated assets that address significant unmet patient need," said CEO designate Ornskov. "This acquisition and our recent acquisition of Premacure have the potential to provide the basis for an attractive ophthalmology business for our company, given the significant growth opportunities in this therapeutic area as well as Shire's proven expertise in specialist markets."

- here's the press release
- here's the Bloomberg report

Special Reports: Flemming Ornskov - The 25 most influential people in biopharma today - 2013 | Sylvie Gregoire - Women in Biotech 2012

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