March 30, 2015 / 10:40 AM / 5 years ago

Ireland's Horizon to buy U.S. drugmaker Hyperion for $1.1 billion

(Reuters) - Ireland’s Horizon Pharma Plc struck a deal to buy U.S. drugmaker Hyperion Therapeutics Inc for about $1.1 billion to boost its rare-disease drug business.

Horizon’s shares rose about 14.3 percent to $24.94 in early trading on Monday, while Hyperion’s stock, which has nearly doubled in the last three months, gained 7.8 percent to $46.09.

Hyperion has two drugs on the market that are used to treat urea cycle disorders (UCD), inherited metabolic disorders that affect about 2,100 people in the United States.

The first few months of the year have been the busiest for deal-making in the drug sector since 2009, pushing up shares of companies that are seen as potential takeover targets.

Makers of drugs that treat rare diseases tend to be especially attractive because they are typically able to charge hefty premiums for their products.

Hyperion’s drugs had combined U.S. sales of about $114 million in 2014, even though only about 675 people are being treated.

With the acquisition, Horizon itself could be an attractive target, said Debjit Chattopadhyay at Roth Capital Partners.

But Horizon CEO Timothy Walbert said his company was not for sale. “My goal is to turn this into a 10-20 billion dollar company, and I have no intention of selling before that goal is achieved,” he told Reuters.

Horizon and Hyperion had combined sales of $410.5 million in 2014.

Ravicti is liquid form of sodium phenylbutyrate and requires less frequent dosing than Buphenyl, which comes in a tablet or powder form.

Ravicti is the only FDA-approved liquid formulation for UCB. It is expected to win European approval by early 2016.

Walbert said Horizon would stop developing Ravicti to treat hepatic encephalopathy, a serious neurological disorder, given the cost of conducting a trial and strong competition from existing drugs.

Horizon will pay $46 per share for Hyperion, 7.6 percent above Hyperion’s closing price of on Friday.

The small premium can partly be explained by the halt in development of Ravicti for hepatic encephalopathy, Chattopadhyay said.

Horizon said Ravicti and Buphenyl are expected to add $100 million to adjusted EBITDA in 2016 and result in savings of more than $50 million.

Jefferies, Citigroup Global Markets Inc and Cowen and Co were Horizon’s financial advisers. Legal advisers were Cooley LLP and McCann FitzGerald.

Centerview Partners and Houlihan Lokey Capital Inc were financial advisers to Hyperion. Shearman & Sterling was its legal adviser.

Reporting by Natalie Grover in Bengaluru; Editing by Savio D'Souza and Ted Kerr

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