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Shire to expand Kendall Square research outpost acquired in Baxalta buyout

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Shire's manufacturing facility in Lexington. The company plans to expand operations in Massachusetts, notably in Cambridge’s Kendall Square.REUTERS

With its $32 billion purchase of Baxalta Inc. taking effect Friday, Shire PLC said it plans to retain and expand Baxalta's drug research outpost in Kendall Square.

The takeover, one of the largest life sciences deals of 2016, leave Shires — based in Ireland for tax purposes but run out of Lexington — with more than 3,000 workers in Massachusetts, making it the state's second largest biopharma employer, after Sanofi Genzyme.

Shire chief executive Flemming Ornskov said in an interview that his company plans to expand Baxalta's 400-person research center at 650 E. Kendall St. by 100 to 200 jobs. He said he would also keep an office at the research center as a window on the entrepreneurial activity in the area.


"We're increasing our activity in the Massachusetts area," said Ornskov, a Danish doctor-turned-dealmaker who has become one of the industry's most aggressive acquirers in recent years. "This is de facto one of the world's premier hubs for biotech research. It's great for Shire now to be in the flow of a place that's one of the world's centers for innovation."

Baxalta, formed last summer when health care conglomerate Baxter International spun off its biosciences business, is focusing on hemophilia, immunology, and cancer drug development in Cambridge. The company opened the research center in Kendall Square last December.

It has also forged a partnership with Cambridge cancer drug maker Merrimack Pharmaceuticals Inc. It also manufactures a hemophilia drug, Obizur, at a 75-person site in Milford, competing in the hemophilia drug market with another Cambridge biotech, Biogen Inc.

Shire first got its foothold in Massachusetts in 2005 with the $1.6 billion acquisition of Cambridge's Tranksaryotic Therapies Inc. It currently has a large campus of corporate offices, research and development labs, and manufacturing space in Lexington, where Ornskov is based, and sites in several other Massachusetts communities, including Cambridge. In 2014, after Ornskov took over as chief executive, Shire moved 500 jobs to Massachusetts from outside Philadelphia.


When the Baxalta deal is completed, Shire will have more than 1.8 million square feet of office, research, and manufacturing space in Massachusetts, Ornskov said.

Shire is among the top makers of drugs to treat rare genetic disorders and vies with Sanofi Genzyme in the market for treatments of enzyme deficiencies such as Gaucher and Fabry diseases. US regulators are scheduled to rule by July 22 on Shire's application for approval of Lifitegrast, an experimental dry eye disease treatment that could become a major product.

The takeover of Baxalta could mark "the dawn of a transformative merger" as Shire adds the Baxalta hemophilia franchise to its growing product line, Mickael Chane Du, biotech analyst for London-based investment bank Bryan, Garnier & Co., wrote in a recent note to investors.

"We want to be the leading biotech in the world focusing on rare diseases and specialized conditions," said Ornskov, who estimated rare disease drugs currently represent nearly two-thirds of the company's total revenues. "This is a company with north of $12 billion in sales annually and we'll be growing to $20 billion [in sales] by 2020."

Ornskov said Shire would keep its rare disease research and development in Lexington. He said a team of Shire and Baxalta executives will manage the transition, and he will personally have an office in Cambridge.

"I will be spending a lot of time there because my style has always been to stay close to the research," he said, adding, "We'll certainly have the Shire logo in Kendall Square."


Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.