Shire Plc (LON:SHP) has agreed to sell off its oncology division to French pharma group Servier for US$2.4bn, raising doubts over the likelihood of a bid from Japanese drugmaker Takeda. Buying Shire would be transformational for Takeda but would be a huge financial stretch, since the company is now worth around $10 billion more than the Japanese group.
The Oncology business consists of in-market products ONCASPAR, or pegaspargase, a component of multi-agent treatment for acute lymphoblastic leukaemia and ex-US rights to ONIVYDE, a component for the treatment of metastatic pancreatic cancer.
The divestment of the cancer business may be a deterrent for Takeda, since oncology was one of the areas it had highlighted as driving the case for a Shire deal, along with gastrointestinal medicine and neuroscience. The Japanese drugmaker announced in March that it was considering a bid for Shire and has until April 25 to make a formal offer or walk away under United Kingdom takeover rules.
Shire said it was considering returning proceeds of the sale to investors through a share buyback programme after the current offer period - during which Takeda could launch a formal bid - expires.
Shire's chief executive Flemming Ornskov called the deal a "key milestone" for the firm, which clearly demonstrates the value embedded in its portfolio. The portfolio also includes Calaspargase Pegol (Cal-PEG), which is under FDA review for the treatment of ALL, and early stage immuno-oncology pipeline collaborations. Its oncology business had sales of $262 million past year, putting the divestment on a respectable revenue multiple of 9.2 times.
Ornskov said: "We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets". The process identified multiple potential strategic buyers across the U.S., Europe and Japan, Shire said.
Shares in Shire (LON:SHP) have advanced in London this morning as the London-listed rare disease specialist offloaded its oncology business for $2.4 billion.