Rumors swirled today that Shire plc (NASDAQ: SHPG) is pondering a roughly $4 billion offer for NPS Pharmaceuticals (NASDAQ: NPSP). The stock closed today up 13% on the rumored news. Given that both companies are orphan drug makers, the rumored transaction would make a lot of sense. NPS has some interesting pipeline candidates, and Natpara for hypoparathyroidism may generate growth if approved (it goes in front of the FDA Adivsory Panel in July, and then has its PDUFA date on October 24th), in addition to strong royalty-related revenue and increased uptake for its drug Gattex.
But even with all of that potential growth, what a price! At 10 times 2015's consensus revenue estimates, it would be a pretty expensive deal. If the rumors are true, is Shire overpaying?
In the video below, from Friday's Market Checkup, the Motley Fool's health care-focused investing show, health care analysts Michael Douglass and David Williamson give their take.
