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Shire Set to Acquire SARcode

Zacks Equity Research

Shire plc (SHPG) recently announced its intention to acquire privately held biopharma company, SARcode Bioscience Inc.

Financial terms of the deal include an upfront payment of $160 million along with clinical, regulatory, and/or commercial milestone payments to SARcode shareholders. The acquisition is expected to be completed in the second quarter of 2013.

With this acquisition, Shire will gain a phase III candidate, Lifitegrast, which is being developed for the treatment of dry eye disease. The phase III program includes three studies – OPUS-1, OPUS-2 and SONATA. Provided the development and regulatory process goes smoothly, Shire could be in a position to launch this candidate in the US as early as 2016. The global rights to Lifitegrast will remain with Shire – the company intends to explore a suitable filing strategy for the candidate in ex-US markets. According to information provided by Shire, dry eye disease is estimated to affect 25 million people in the US.

Our Take

Shire has been working on growing its presence in the ophthalmology market. The SARcode deal is the second ophthalmology-related deal to be announced by the company this month. Earlier this month, the company had announced the acquisition of Premacure, which added a protein replacement therapy for the prevention of retinopathy of prematurity (ROP) to Shire’s pipeline.

The ophthalmic pharmaceutical market was valued at $13 billion worldwide in 2012.

Shire currently carries a Zacks Rank #3 (Hold). Currently, companies like Lannett Company, Inc. (LCI), UCB (UCBJF) and WuXi Pharma Tech (Cayman) Inc. (WX) look more attractive with a Zacks Rank #1 (Strong Buy).

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