Shire's $187.5 mil. purchase of Richwood will bring U.S. marketing presence.

SHIRE TO GAIN U.S. MARKETING ARM THROUGH $185.7 MIL. RICHWOOD PURCHASE if the deal is approved by Shire shareholders Aug. 20, Hampshire, England-based Shire Pharmaceuticals said. The company announced Aug. 4 the proposed acquisition of Florence, Ky.-based Richwood Pharmaceuticals for $145.8 mil. in stock (31% of Shire's equity), $15 mil. in cash, and 7.2 mil. options valued at $24.9 mil. Richwood will be Shire's second acquisition this year: the company acquired the Gaithersburg, Md.-based drug delivery company Pharmavene in February for $90.5 mil.

"Direct access to the U.S. pharmaceutical market" will allow Shire to "market more of its development products itself as opposed to out-licensing them to third parties," Shire stated. "Opportunities to in-license new products and projects will be enhanced" by the purchase, the company added.

Currently, Shire's marketing capabilities are limited to the U.K. and Ireland, where it sells products including Hormonium, a hormone replacement therapy, and Calcichew, and osteoporosis adjunct. The firm also distributes Hoechst Marion Roussel's Calcort oral glucocorticoid for the treatment of rheumatic conditions, and Recordati SpA's Urispas for urinary incontinence in the U.K., Ireland "and certain export territories," Shire stated. The company said it is evaluating potential European acquisitions that would fit with its expertise in the central nervous system treatment field while providing European marketing capabilities.

Richwood will provide Shire with a U.S. sales force of 65 representatives covering eight geographic regions. By September, Richwood expects to augment its sales force by nearly 20% to 77 reps. Richwood also has 10 in-house phone representatives. The Richwood reps' primary focus has been the company's attention deficit/hyperactivity disorder treatments, Adderall (mixed salts of a single amphetamine compound) and Dextrostat (dextroamphetamine sulfate).

Adderall is the "fastest growing ADHD product in the U.S.," Shire maintained, outpacing growth in revenues for the market leader -- Novartis' Ritalin. Adderall sales for 1997 through July 31 totaled $17.1 mil., versus $11.6 mil. for the nine months of 1996 that it was on the market. Richwood re-launched the compound, which it obtained through its 1994 purchase of Rexar, under the Adderall brand name in March 1996. The product, formerly known as Obetrol, was withdrawn from the market following an October 1994 FDA warning letter ("The Pink Sheet" Feb. 26, 1996, T&G-4).

Combined revenues for Adderall and Dextrostat comprised 83% of Richwood's 1996 sales, Shire stated. Unaudited Richwood sales for the six months ended June 30, 1997 "were not less than $18 mil.," according to the company.

Richwood also has interests in development-stage ADHD products. The company recently licensed the development and marketing rights to alpha-2 adrenergic agonists to treat ADHD from physicians connected to Yale University. "Although alpha-2 adrenergic agonists are currently marketed for hypertension," Shire stated, Richwood is investigating their "application in the treatment of ADHD and other CNS indications."

Shire said it intends to divest Richwood's non-ADHD products. Richwood's other offerings include obesity products such as Oby-Cap, anti-spasmodics, urinary antiseptics, vasodilators and Rx cough/cold treatments. Richwood's OTC offerings include caffeine stimulants, nutritionals and internal/external deodorants. "A portion of the cash flow expected to be generated by Richwood may be used to expand Shire's current drug development activities," Shire said.

The Pharmavene acquisition expanded Shire's R&D portfolio but did not add the cash flow from marketing operations that Shire expects from Richwood. According to Shire, Pharmavene (now Shire Laboratories), "has 11 development projects," including five CNS and metabolic bone disease projects. The Pharmavene project closest to approval, sustained-release carbamazepine (Carbatrol), will be marketed by Elan subsidiary Athena Neuroscience. Shire predicted launch of the antiepileptic in early 1998; Carbatrol became "approvable" at FDA March 25 ("The Pink Sheet" March 31, In Brief). The company said it is in the process of addressing some of the manufacturing concerns outlined by FDA.

Shire's R&D subsidiary, Shire Pharmaceutical Development Ltd., is conducting Phase III galantamine (Reminyl) studies for an Alzheimer's disease indication. The company anticipates the launch of Reminyl in the first quarter of 2000. Janssen Pharmaceutica will market Reminyl worldwide and is responsible for "a substantial part of the development costs." Janssen and Shire will share marketing responsibilities for galantamine in the U.K. and Ireland, the firm noted.

A galantamine indication for chronic fatigue syndrome is in Phase II trials ("The Pink Sheet" May 26, T&G-10). The agreement with Janssen "contains the condition that if certain success criteria in development are met, Janssen will acquire the rights and obligations to co-develop the product for CFS," Shire stated. The firm projected a 2001 launch date for the CFS indication. Shire also has patented the rights to galantamine in the treatment of rheumatoid and osteoarthritis "following anecdotal reports from its studies in Alzheimer's."

Following the purchase, Richwood's management structure will remain intact and reductions in staff are not expected, according to Shire. Richwood President Roger Griggs will report to Shire CEO Rolf Stahel. Griggs also joins Shire's board of directors. With the purchase, Shire gains manufacturing and packing facilities in Valley Stream, N.Y. and Indianapolis, as well as a distribution center in Florence, Ky.