Shire Acquires New River

The British drugmaker Shire is paying $2.6 billion to gain control over Vyvanse, a new drug for treating attention deficit and hyperactivity disorder (ADHD). By acquiring Radford, Va.-based New River Pharmaceuticals, its development partner of two years, Shire believes it will gain a new flagship product with anticipated annual sales of $1 billion. Shire's revenues totaled $1.8 billion in 2006.

Vyvanse, or lisdexamfetamine dimesylate, is a lysine-derivative of d-amphetamine that is patent protected until 2023. FDA already has called the drug approvable and was scheduled to act on it by Feb. 24. If approved, Vyvanse will be positioned to supplant Shire's existing ADHD product, Adderall, which had $864 million in 2006 sales but faces generic competition in 2009.

"We have confidence in a positive FDA outcome," said Shire CEO Matthew Emmens in a Feb. 20 conference call with stock analysts. The acquisition is a logical move for Shire in the ADHD market, he added, giving the firm control over Vyvanse's future development and commercialization, as well as the full economic benefit.

Shire is paying a sizable premium to acquire New River and is funding the deal through debt and $800 million in equity financing from institutional investors. Besides Vyvanse, Shire gets two other products it may or may not divest: a hydrocodone derivative in Phase II studies for treating pain and a triiodothyronine hormone in preclinical development for treating hypothyroidism.

Shire also gains New River's Carrierwave technology for making what New River scientists call conditionally bioreversible derivatives. The technology, used to develop Vyvanse, involves covalently attaching an adjuvant to an active pharmaceutical ingredient, such as an amphetamine or opioid. The resulting pharmacologically inactive form is released in restricted amounts only at targeted sites in the body where enzymatic action reactivates the drug. Nevertheless, the U.S. Drug Enforcement Agency must weigh in on Vyvanse's classification as a controlled substance before Shire can launch it.

As part of a $25 million cost-savings initiative, Shire Chief Financial Officer Angus Russell said that Shire will use spare capacity at its Owings Mills, Md., plant for a substantial portion of Vyvanse's final production. In July 2006, New River signed a long-term agreement with contract manufacturer Albany Molecular Research for production of the drug's active ingredient.