It's not news that Shire (SHPGY) is a takeover target, as reported by Bloomberg (I guessed it was on the M&A hit list last month, for instance), but the reason why it's looking so attractive is. Shire CEO Angus Russell believes his new ADHD drug Vyvanse has as many as four other unapproved, off-label uses ranging from schizophrenia to depression:
"Each one is a $1 or $2 billion opportunity, something in that range certainly, and we've said there are three or four indications."Shire has promised 15 percent annual growth on the back of Vyvanse and its other drugs, such as Adderall XR.
It is illegal for a drug company to promote off-label uses for its drugs. Russell has not been accused of that. But back in 2009, Shire president Mike Cola had an extended discussion of Vyvanse's off-label uses with Wall Street analysts. Shire has also advertised Vyvanse as a marriage aid, a divorce preventative and an antidepressant add-on therapy.
For a company that isn't promoting Vyvanse off-label -- right? -- it sure is talking about it a lot. Any potential acquirer of Shire might want to figure out what portion of Vyvanse's sales are on-label and whether the off-label portion is large enough to attract the attention of federal prosecutors.
Even if that were not to happen, buyers might want to take a look at Vyvanse's current official "prescribing information," which lists the drug's side effects and risks. They include:
- High potential for abuse (it's an addictive amphetamine and therefore a controlled substance).
- Psychotic or manic symptoms in patients with no prior history, or exacerbation of symptoms in patients with pre-existing psychosis.
- Clinical evaluation for bipolar disorder is recommended prior to stimulant use.
- Fatigue, irritability, anorexia, decreased appetite, anxiety, and insomnia.
Shire's evidence for Vyvanse efficacy in other patients isn't that compelling. Its schizophrenia study had only 161 patients in it and they only took Vyvanse as an add-on therapy to their existing anti-psychotic. It didn't do anything for the primary symptoms like hearing voices but it did help with some of the secondary ones like apathy.
Shire's depression study had just 246 patients and again was only used as an add-on therapy to an actual antidepressant, Lexapro. The results were not statistically significant.
A test on excessive daytime sleepiness -- hey, it's a stimulant so why not? -- was done on just 135 patients.
It seems like only a matter of time before Shire becomes curious as to whether Vyvanse's amphetamine aspect carries some kind of weight-loss benefit. (Imagine how popular that would be among college students who also want to use it as a study aid!)
So, sure, Shire has the growth to make a transaction attractive and is small enough to be gobbled up by a larger player. Some meals are followed by indigestion, however.