Horizon Pays $1.1 Billion for Hyperion’s Rare Disease Drugs

For years, orphan drugs have attracted buyers and licensing deals in spite of small patient populations. High prices on the treatments more than make up for potential low sales numbers.

Horizon Pharma (NASDAQ:HZNP) announced Monday it is purchasing Hyperion Therapeutics for $1.1 billion, or $46 per share. At heart of the deal is Brisbane, CA-based Hyperion’s (NASDAQ:HPTX) treatments for a rare genetic disease, called urea cycle disorder, that leads to a buildup of ammonia in the blood.

Hyperion’s two therapies, Ravicti and Buphenyl, earned Hyperion $113.6 million in net sales in 2014. Ravicti, the oral liquid version of a treatment that has historically been given only in pill or powdered form such as Buphenyl, garnered most of it: $95.4 million. Hyperion has been attempting to attract new patients who haven’t been treated, and convert patients who used the powdered or pill form.

Hyperion, founded in 2007, spent six years seeking FDA approval of the Ravicti before receiving it in 2013. It costs as much as $290,000 a year, depending on the amount of the treatment a person needs to take.

Ravicti was developed as an alternative to earlier versions of the therapy—including Buphenyl (sodium phenylbutyrate tablets), which Ravicti eventually acquired, and a generic version of Buphenyl. Buphenyl and its generic version required patients to take a pill as many as 40 times a day and tasted bad. The liquid Ravicti, the company says, avoids both problems.

There are 1,100 people in the U.S. diagnosed with urea cycle disorder, which is inherited and caused when patients’ bodies aren’t able to clear nitrogen from proteins. Of that group, 675 are treated with some form of FDA-approved medication, including Ravicti or sodium phenylbutyrate, Hyperion said in a regulatory filing. The company believes there are 2,100 cases in total. Hyperion has filed an application to market Ravicti in Europe, Horizon said in a statement.

Horizon, which is based in Dublin, is financing the deal with $900 million of debt and cash. The company has a portfolio of drugs in arthritis, inflammation, and orphan diseases that helped it make almost $297 million in sales in 2014, the company said in a filing.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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