Baxalta Inks $1.6B Cancer Drug Option Deal

The two drugmakers might announce a deal as soon as this week, the people said, asking not to be identified as the matter isn’t public.

But Baxalta declined to comment on separate reports Monday that it is in advanced talks to be acquired by Irish drugmaker Shire Inc. for $32 billion in cash and stock. Shire stock was down almost 5% at around 195. The Dublin-based company’s stock fell 3.4% to 4,540 pence at 8:09am in London yesterday. The offer is reportedly expected to include a cash component of around $20 apiece, with the rest made up of SHPG stock. Shire has had its eyes set on Baxalta virtually from the moment it spun off from Baxter International last July. The size of that deal led many market watchers to conclude that Baxalta is working to fend off Shire’s interest, not preparing for a multibillion-billion merger.

Baxalta rejected Shire’s initial bid as too low but the latter has insisted it is focused on achieving a deal. USA law requires that tax-free spinoffs not be used as a device to funnel cash to shareholders.

The deal with Symphogen comes as Baxalta approaches the final stages of negotiating a potential sale to rare diseases drugmaker Shire Pharmaceuticals. David Meek, head of oncology at Baxalta, said the Symphogen transaction “allows us to actively advance one of the most innovative areas of this field”.

The combination would yield an effective tax rate of 16-17 per cent, Shire said. On a product-by-product basis, following successful completion of phase 1 clinical trials, Baxalta will have exclusive option rights to complete late-stage development and worldwide commercialization.

Rare drugs specialist Baxalta has agreed to pay up to $1.6bn (£1.09bn) for six early-stage cancer treatments from Danish pharma company Symphogen as it negotiates a multi-billion pound merger deal with Shire.