With EU blessing, Takeda clears final regulatory hurdle for Shire buyout—on one condition

Following major regulators in the U.S., China and Japan, the European Commission has given Takeda the go-ahead for its $62 billion acquisition of Shire—on one condition that Takeda is willing to fulfill.

As expected, the latest approval is dependent on Takeda selling off Shire’s investigational inflammatory bowel disease (IBD) drug SHP647. EU regulators previously shared concerns over the drug’s potential overlap with Takeda’s blockbuster Entyvio, and in response, Takeda has committed to selling it.

Calling SHP647 "an exciting pipeline compound," Takeda said it expects the drug "to attract interest from a number of potential buyers."

Both Entyvio and SHP647 are anti-integrin monoclonal antibodies intended for IBD. Because they’re expected to compete closely in the same market, EU antitrust officials were worried that innovation would be stymied if both drugs were held in one company’s hands.

Takeda actually already intended to end development of the Shire drug after the merger, the agency noted in a Tuesday announcement. "It would have … prevented a product from reaching the market that could compete with Entyvio and reduce prices for this type of biologic treatment," it said.

Now that the Japanese pharma has willingly agreed to divest the product, it "will preserve innovation in this market and, importantly, increase the choice of treatments for patients," Commissioner Margrethe Vestager, responsible for competition policy, said.

As the "cornerstone" of Takeda’s gastrointestinal portfolio, Entyvio has been a major growth driver lately. Its sales increased by more than 40% in the previous fiscal year, to $1.84 billion, and it’s also on track to deliver another 30%-plus jump this year. In comparison, SHP647 could be a much smaller asset, as GlobalData experts have projected sales of less than $100 million by 2023.

SHP647 might not be the only drug Takeda is selling to enable the gigantic Shire deal. Rumor has it that the company is scouting buyers for eye drop Xiidra and hypoparathyroidism therapy Natpara, which could drum up about $5 billion in total. Some European OTC assets potentially worth about $1 billion are also reportedly on the for-sale list.

While winning European clearance represents the transaction's final regulatory green light, Takeda has yet another hurdle to overcome to seal the deal: approval from its shareholders.

Despite management’s repeated emphasis on the importance of growing Takeda’s pipeline and global footprint, a group of rebel investors, led by some members of Takeda’s founding family, are still making every effort to fight the acquisition. These dissidents control about 1% of the company’s stock, but they're looking to persuade 25% of Takeda shareholders to oppose the deal ahead of the planned vote on Dec. 5, according to the Financial Times.

CEO Christophe Weber, though, appears confident that he can win two-thirds of shareholder support to issue new shares to finance the transaction.

"After several months of constructive dialogue, we are optimistic that our shareholders recognize the significant long-term value creation potential of this powerful combination," he said in a statement.

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