Shire's (SHP) success in phase 3 trials of hereditary angioedema drug Lanadelumab may mean it has also found a cure for a damaged track record in M&A, according to analysts, while the drug itself could eventually take a majority share of the market for treatment of the rare disease.
The drugmaker said Thursday that Lanadelumab SHP643 showed an 87% reduction in attacks, compared to a placebo, when tested in sufferers of hereditary angioedema, a rare disease that results in swelling of the face, gastrointestinal tract, and upper airways.
It picked up Lanadelumab from the $5.9 billion acquisition of Dyax Corp, which completed in Jan 2016, around the same time it agreed a costly $32 billion deal for rare disease specialist, Baxalta.
Shire was criticized by some for having made a poor purchase with Baxalta given competitive risks to the target's haemophilia portfolio. It also suffers from a reputation for generally overpaying for assets.
"These strong data should boost sentiment regarding the quality of Shire's acquisition targets and general M&A strategy, which was dented following the Baxalta acquisition," said Klara Fernandes, an analyst at German bank Berenberg.
Shire stock rose more than 6% during the opening hours of trading on Thursday, to change hands at a peak of 5,021.0 pence in London, before paring gains. The shares led the pharmaceuticals sector higher in London Friday, with a gain of 1.2%, to change hands at an intraday high to 4,902.0 pence.
Fernandes has said Shire will probably file for approval from the Food & Drug Administration in the final quarter and that it may receive the go ahead as early as the second half of 2018.
"The risk/reward in the run-up to the phase III data release was skewed to the negative, given high consensus expectations. With this event out of the way, we expect shares to re-rate as Shire continues to demonstrate its ability to deliver on its long-term targets," added Fernandes.
Shire's angioedema portfolio, which contains three drugs including Lanadelumab, could generate as much as $2.4 billion in annual sales for the drugmaker by 2025 according to Fernandes' estimates.
Lanadelumab could contribute as much as $1.8 billion to this number and, along the way, take as much as a 60% share of the prophylactic treatment market for hereditary angioedema.
"The risk/reward in the run-up to the phase III data release was skewed to the negative, given high consensus expectations. With this event out of the way, we expect shares to re-rate as Shire continues to demonstrate its ability to deliver on its long-term targets," Fernandes said.
Berenberg has a buy rating and a 6,100 pence price target on Shire stock, which implies upside of more than 20% from current levels.