Buyout chatter pushed shares of Shire plc (FTSE:SHP) up nearly 2% in London yesterday and added 1.4% on Wall Street.
Rumors of a £16 billion (~$25.1 billion) or £30-per-share (~$47.10) cash offer from Bayer AG (PINK:BAYRY) and Pfizer (NYSE:PFE) spurred the high-volume trading, driven by the additive value of Shire’s May 2011 buyout of Advanced BioHealing.
Shire, based in Dublin and Lexington, Mass., shelled out $750 million for the company and its DermaGraft skin substitute for diabetic foot ulcers, which boasts an 80% profit margin and a potential $3 billion market, according to the ThisIsMoney website.
That’s because the deal made Shire one of the first large biopharms to get into the regenerative medicine game.
But the much-ballyhooed transformative value of the Advanced BioHealing buyout took a hit when Shire abandoned its pursuit of a leg ulcer indication for DermaGraft shortly after closing the acquisition. That decision was prompted by the failure of a Phase III clinical trial examining Dermagraft in treating venous leg ulcers failed to meet its primary endpoint of complete healing after 16 weeks.
In London, SHP shares began yesterday at £22.05 apiece before the buyout buzz drove them up 2.4% to an intra-day high of £22.58 ahead of a £22.48 close, for a 2.0% gain on the day. Shares opened today at £22.59 and hit a high of £22.62 before closing at £22.33, down 0.7%.
On The Street, SHPGY shares began yesterday at $105.02, pushing to a high of $106.10 (up 1.0%) before closing at $105.43, for a daily gain of 0.4%. Shares were trading at $104.40 today as of about 1:45 p.m., down 1.0% on the day.
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