UPDATE 1-Shire buys Lumena Pharma for at least $260 mln

Mon May 12, 2014 2:09pm EDT

* Shire says deal boosts rare diseases portfolio

* Lumena received multiple approaches

* Says Shire will help it take liver drugs to market (Adds detail, Lumena CEO comments)

By Paul Sandle

LONDON, May 12 (Reuters) - London-listed drugmaker Shire has bought San Diego-based biopharmaceuticals company Lumena Pharmaceuticals for at least $260 million in a deal that gives it promising drugs that could be used to treat rare liver diseases.

In the latest in a wave of pharmaceuticals sector consolidation, Shire, which itself has reportedly attracted the interest of Allergan Inc, said the Lumina deal would add to its rare diseases portfolio and strengthen its gastrointestinal business.

Lumena CEO Mike Grey, meanwhile, said that Shire would help his company take its two liver drugs through the final stages of development and into the market.

The company acquired the drugs three years ago from Pfizer and Sanofi, which were devloping them for different applications before putting them on the shelf.

"We identified some new biology that showed some potential applications for these compounds in treating liver disease," Grey said in a telephone interview on Monday.

The first compound was in seven Phase II studies in four different diseases caused by the accumulation of high levels of bile acids that ultimately result in liver failure, he said.

The four diseases have a prevalence between one person in 100,000 and 30 people in 100,000, he said.

The second compound was in development for the treatment of nonalcoholic steatohepatitis (NASH), a common and often "silent" liver disease characterised by fat deposits in the liver and inflammation that can progress to significant fibrosis, the company said.

Grey said the company had received a number of approaches and was also considering an initial public offering before accepting Shire's offer.

He said the group's team of 17 researchers would continue working on the development of the drugs and would share in some of the proceeds of the deal, along with the company's other backers, including founder Pappas Ventures and Alta Partners, RiverVest Venture Partners, New Enterprise Associates, Adage Capital Management and RA Capital Management

Shire said it would make an upfront payment of $260 million in cash, plus a payment for net cash at closing, as well as near-term contingent milestone payments related to ongoing clinical trials.

The company added that does not expect the acquisition to result in a change to its previously stated earnings guidance for 2014. (Editing by David Goodman)

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