Shire plc : 3rd Quarter Results

"We are reiterating our 2017 full year guidance, and I look forward to updating you on the Neuroscience strategic review by year end. I continue to be highly confident in the strength and durability of our business."

Financial Highlights

⁽¹⁾ Results include Baxalta Inc. (Baxalta) (acquired on June 3, 2016), unless otherwise noted. Percentages compare to equivalent 2016 period. ⁽²⁾ The Non GAAP financial measures included within this release are explained on pages 27 - 28, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 21 - 23. ⁽³⁾ US GAAP net income as a percentage of total revenues. ⁽⁴⁾ Percentage point change (ppc). ⁽⁵⁾ Diluted weighted average number of ordinary shares of 912 million.

Product sales growth
·     Delivered product sales growth of 7%, including robust demand for our Immunology franchise, up 32%.
·     Successful early trajectory of MYDAYIS since U.S. launch on August 28, 2017, with over 3,000 physicians prescribing to over 11,000 patients as of October 17, 2017.
·       Genetic Diseases was impacted by lower product sales for CINRYZE due to a product shortage resulting from a manufacturing interruption. The manufacturing issue has been addressed and production of CINRYZE resumed. Approximately $100 million of product was shipped to customers in early October.
·       Increasing demand for XIIDRA; 9% script growth since Q2 2017.

Earnings growth

• Generated Non GAAP earnings per ADS of $3.81, underscoring continued focus on commercial excellence and operating efficiency.
• Reported Non GAAP EBITDA margin of 44% for the quarter; on-track to achieve at least $700 million in synergies by Year 3 as we continued to progress the Baxalta integration.
• Completed manufacturing network review; identified more than $100 million in projected additional annual savings beginning in 2019. Expected to increase to $300 million annually by 2023.

Strong cash flow

• Strong operating cash flow enabled $920 million reduction in Non GAAP net debt since June 30, 2017; remain on-track to achieve our year-end debt target.

Product and Pipeline Highlights

Regulatory updates
·       Submitted an application to the U.S. Food and Drug Administration (FDA) to enable a second source of CINRYZE production at an in-house manufacturing facility to enhance reliability of supply.
·       Submitted lifitegrast Marketing Authorization Application for treatment of dry eye disease in Europe; Canadian approval anticipated by Q1 2018.
·       Received FDA Fast Track Designation for SHP607 for the prevention of chronic lung disease in extremely premature infants.
·       Positive opinion from Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommending the marketing authorization for lyophilized ONCASPAR (pegaspargase), as a component of antineoplastic combination therapy in acute lymphoblastic leukemia (ALL) in all ages.
·      Received FDA Orphan Drug Designation and Investigational New Drug (IND) status for SHP654 for the treatment of hemophilia A.
·      Granted a label extension for FIRAZYR in Europe by the European Commission (EC), broadening its use to the treatment of acute attacks of HAE in adolescents and children aged 2 years and older.
·      On track to file a Biologics License Application (BLA) for SHP643 in late 2017 or early 2018.
·      On track to file a New Drug Application (NDA) for SHP555 in late Q4 2017.

Clinical and business development updates
·      Strategic review of Neuroscience franchise on track; update planned for year end.
·      Reported positive topline Phase 3 results for subcutaneous SHP616 Liquid in patients 12 years of age or older with symptomatic Hereditary Angioedema (HAE).
·      Reported positive topline results for INTUNIV in Japan, evaluated in Phase 3 clinical trial in adults with ADHD.

FINANCIAL SUMMARY - THIRD QUARTER 2017 COMPARED TO THIRD QUARTER 2016

Revenues

• Product sales increased 7% to $3,534 million (Q3 2016: $3,315 million), primarily due to strong growth from our Immunology franchise, up 32%, Neuroscience franchise, up 12% and our Hematology franchise, up 4%. Product sales also benefited from a full quarter of Ophthalmics product sales. Growth was held back by the launch of generic competition for LIALDA and a supply constraint related to CINRYZE, which negatively impacted our Internal Medicine and Genetic Diseases franchises, down 24% and 7%, respectively.
   
• Royalties and other revenues increased 20% to $164 million, primarily due to an increase in royalty streams acquired with Dyax and SENSIPAR royalties.

Operating results

• Operating income was $709 million (Q3 2016: operating loss of $406 million). The increase was primarily due to lower expense relating to the unwind of inventory fair value adjustments and costs related to licensing arrangements, combined with higher revenues, partially offset by higher amortization of acquired intangible assets.
   
• Non GAAP operating income increased 19% to $1,498 million (Q3 2016: $1,254 million), primarily due to higher revenues and lower expenses as a percentage of total revenues driven by operating efficiencies which were impacted by the realization of Baxalta operating expense synergies.
   
• Non GAAP EBITDA margin as a percentage of total revenues increased to 44% (Q3 2016: 39%), primarily due to higher revenues and lower expenses as a percentage of total revenues, driven by operating efficiencies which were impacted by the realization of Baxalta operating expense synergies.

Earnings per share (EPS)

• Diluted earnings per American Depositary Shares (ADS) were $1.81 (Q3 2016: diluted losses per ADS of $1.29). The increase is primarily due to higher operating income from lower expenses relating to the unwind of inventory fair value adjustments and costs related to licensing arrangements, combined with higher revenues.
   
• Non GAAP diluted earnings per ADS increased 20% to $3.81 (Q3 2016: $3.17), due to higher Non GAAP operating income primarily related to higher revenues and higher gross margin.

Cash flows

• Net cash provided by operating activities increased 101% to $1,055 million (Q3 2016: $526 million), primarily due to strong cash receipts from higher sales and operating profitability, and lower Baxalta acquisition and integration payments. Also, Q3 2016 net cash provided by operating activities was negatively impacted by a payment associated with the termination of a biosimilar collaboration acquired with Baxalta.
   
• Non GAAP free cash flow increased 128% to $901 million (Q3 2016: $395 million), driven by the growth in net cash provided by operating activities noted above, combined with a decrease in capital expenditures of $46 million.

Debt

• Non GAAP net debt at September 30, 2017 decreased $2,063 million since December 31, 2016, to $20,376 million (December 31, 2016: $22,439 million). The decrease was primarily due to a $2,403 million net cash repayment of debt, partially offset by a lower cash balance. Non GAAP net debt represents aggregate long and short term borrowings of $20,236 million, and capital leases of $349 million, partially offset by cash and cash equivalents of $209 million.

OUTLOOK

We are reiterating our guidance from Q2 2017.

The guidance incorporates accelerated synergy capture as well as the impact of LIALDA generic competition. Our depreciation estimate for the year is $450 - $500 million, and we anticipate capital expenditures of $800 - $900 million.

The diluted earnings per ADS forecast assumes a weighted average number of 914 million fully diluted ordinary shares outstanding for 2017.

⁽¹⁾ For a list of items excluded from Non GAAP Outlook, refer to pages 27 - 28 of this release.
⁽²⁾ Gross margin as a percentage of total revenues excludes amortization of acquired intangible assets.
⁽³⁾ See page 23 for a reconciliation between US GAAP diluted earnings per ADS and Non GAAP diluted earnings per ADS.

RECENT DEVELOPMENTS

Products

FIRAZYR for the treatment of HAE in Europe
·         On October 26, 2017, Shire announced that the EC has approved a label extension for FIRAZYR, broadening its use to the treatment of acute attacks of HAE in adolescents and children aged 2 years and older.

INTUNIV for the treatment of attention deficit hyperactivity disorder (ADHD) in Japan

• On September 20, 2017, Shire and its partner in Japan, Shionogi & Co., Ltd, announced positive topline results for a Phase 3 study evaluating INTUNIV in adult patients with ADHD in Japan.

MYDAYIS for the treatment of ADHD

• On August 28, 2017, Shire announced that MYDAYIS was available by prescription in the United States. The FDA approved MYDAYIS on June 20, 2017 for patients 13 years and older with ADHD.

Lifitegrast for the treatment of dry eye disease (DED) in Europe

• On August 15, 2017, Shire announced that the Marketing Authorization Application for lifitegrast, submitted on August 7, 2017, was validated by the UK as the Reference Member State involved in the Decentralized Procedure.

Pipeline

SHP654 for the treatment of hemophilia A

• On October 25, 2017, Shire announced that the FDA awarded Orphan Drug Designation to SHP654 (also designated as BAX 888), an investigational factor VIII (FVIII) gene therapy for the treatment of hemophilia A. The FDA also granted Shire IND status for SHP654.

SHP674 (ONCASPAR) for the treatment of acute lymphoblastic leukemia

• On October 12, 2017, Shire received a positive opinion from the CHMP recommending marketing authorization for Lyophilized ONCASPAR for use as a component of antineoplastic combination therapy in acute lymphoblastic leukemia (ALL) in all ages.

SHP607 for the treatment of complications of prematurity

• On September 12, 2017, Shire announced that the FDA has granted Fast Track designation for SHP607 for the prevention of chronic lung disease in extremely premature infants. SHP607 is currently in Phase 2 clinical development.

SHP616 for the treatment of HAE

• On September 11, 2017, Shire announced positive topline Phase 3 results for the SAHARA study that evaluated the efficacy and safety of subcutaneously administered C1 esterase inhibitor [human] Liquid for Injection in patients 12 years of age or older with symptomatic HAE.

Board Changes

On August 21, 2017, Shire announced that Jeff Poulton, Chief Financial Officer, will be leaving Shire. The Board has commenced a formal search for a successor and Jeff will continue to serve in his current role as this search progresses. During this transition period, Jeff will remain on the Executive Committee and on the Board of Directors of Shire plc until the end of the year.

In addition, and following the announcement that Dominic Blakemore will be appointed Group Chief Executive of Compass Group PLC on April 1, 2018, the Board has approved the appointment of Sara Mathew as Chair of the Audit Compliance & Risk Committee to take place with immediate effect. Dominic Blakemore will remain a member of the Audit Compliance & Risk Committee.

ADDITIONAL INFORMATION

The following additional information is included in this press release:

For further information please contact:

Dial in details for the live conference call for investors at 14:00 BST / 9:00 EDT on October 27, 2017:

The quarterly earnings presentation will be available today at 13:00 BST / 8:00 EDT on:

- Shire.com Investors section

- Shire's IR Briefcase in the iTunes Store

OVERVIEW OF THIRD QUARTER 2017 FINANCIAL RESULTS COMPARED TO THIRD QUARTER 2016

1. Product sales

Product sales increased 7% to $3,534 million (Q3 2016: $3,315 million).

Hematology
Hematology product sales increased 4%, with growth in both our hemophilia and inhibitor therapies products.

Growth across the portfolio was driven by underlying demand in our international markets, which also benefited from the timing of large orders. U.S. sales were flat year over year, as increased demand, primarily related to our FVIII products, was offset by the impact of destocking in Q3 2017 compared to stocking in Q3 2016.

Immunology
Immunology product sales increased 32% with strong growth from both our immunoglobulin therapies and bio therapeutics products.

The U.S. benefited from growth in demand and stocking for GAMMAGARD liquid, and increasing demand for our subcutaneous portfolio. International growth was primarily due to the timing of large orders and strong underlying performance in all regions.

Neuroscience
Neuroscience product sales increased 12%, primarily driven by VYVANSE and ADDERALL XR.

VYVANSE sales increased 5%, primarily due to the benefit of a price increase taken since Q3 2016, increased demand resulting from U.S. ADHD market growth and solid performance in our international markets. ADDERALL XR sales increased 32%, primarily due to stocking in Q3 2017 compared to destocking in the prior year.

MYDAYIS, which was made available to patients on August 28, 2017, contributed $10 million of product sales.

Genetic Diseases
Genetic Diseases product sales decreased 7%, primarily due to the impact of a CINRYZE supply constraint, which was partially offset by FIRAZYR growth.

CINRYZE sales decreased 66% due to supply constraints caused by a manufacturing interruption that was experienced during the quarter. The issue has been addressed, and production has resumed. Approximately $100 million of product was shipped to customers in early October. We continue to work to stabilize CINRYZE manufacturing, however supply constraints may continue until we secure a second source of production.  Subject to FDA approval, we expect to add CINRYZE in-house production capabilities in early Q1 2018.

FIRAZYR sales increased 34%, due to increased patient demand and stocking, in part due to the CINRYZE supply constraints.

Internal Medicine
Internal Medicine product sales decreased 24%, as the impact of LIALDA generic competition was partially offset by growth from GATTEX/REVESTIVE and NATPARA.

LIALDA/MEZAVANT sales decreased 58%, due to the impact of generic competition in Q3 2017. An authorized generic was launched in the second half of Q3 2017.

GATTEX/REVESTIVE and NATPARA continued to perform well with sales increasing 46% and 68%, respectively, primarily due to an increase in the numbers of patients on therapy.

Ophthalmics
Ophthalmics product sales relate to XIIDRA, which was made available to patients starting on August 29, 2016. XIIDRA contributed $77 million of product sales with 9% prescription growth since Q2 2017.

Oncology
Oncology product sales increased 24%. Growth was driven by sales of ONCASPAR and ONIVYDE, the latter of which was approved in the EU on October 18, 2016.

2. Royalties and other revenues

Royalties and other Revenues increased 20%, primarily due to an increase in royalty streams acquired with Dyax and SENSIPAR royalties.

3. Financial details

Cost of sales

Cost of sales as a percentage of total revenues decreased to 27%, primarily due to lower expense related to the unwind of inventory fair value adjustments.

Non GAAP cost of sales as a percentage of total revenues decreased to 23%, primarily driven by operating efficiencies and the realization of synergies from the acquisition of Baxalta.

R&D

R&D expenditure decreased by $108 million, or 21%, primarily due to lower costs relating to license arrangements.

Non GAAP R&D expenditure, and expense as a percentage of total revenues, remained consistent with Q3 2016, as an increase in costs relating to our late stage pipeline was offset by savings on discontinued programs.
SG&A

SG&A expenditure decreased by $16 million, or 2%, primarily due to the realization of synergies from the acquisition of Baxalta and lower XIIDRA marketing spend, which was partially offset by MYDAYIS launch costs and increased depreciation expense.

Non GAAP SG&A expenditure decreased by $27 million, or 3%, primarily due to the realization of synergies from the acquisition of Baxalta and lower XIIDRA marketing spend, which was partially offset by MYDAYIS launch costs. Non GAAP SG&A as a percentage of total revenues decreased 3 percentage points.

Amortization of acquired intangible assets

Shire recorded amortization of acquired intangible assets of $482 million (Q3 2016: $355 million), primarily related to intangible assets acquired with Baxalta and the acceleration of CINRYZE amortization following positive SHP643 Phase 3 results.

Integration and acquisition costs

In Q3 2017, Shire recorded integration and acquisition costs of $237 million, primarily relating to the Baxalta transaction. Costs included asset impairment charges, employee severance, the acceleration of stock compensation, third-party professional fees and expenses associated with facility consolidations.

In Q3 2016, Shire recorded integration and acquisition costs of $285 million, primarily relating to the Baxalta and Dyax transactions. Costs included employee severance, the acceleration of stock compensation, third-party professional fees, contract terminations and other transaction-related fees.

Reorganization costs

In Q3 2017, Shire recorded reorganization costs of $5 million. In Q3 2016, Shire recorded reorganization costs of $101 million, primarily related to the closure of a facility at the Los Angeles manufacturing site.

Other expense, net

Other expense, net decreased by $51 million, primarily due to lower amortization of one-time upfront borrowing costs for Baxalta and Dyax.

Non GAAP Other expense, net decreased by $10 million.

Taxation

The effective tax rate on US GAAP income in Q3 2017 was 2% (Q3 2016: -38%) and on a Non GAAP basis was 15% (Q3 2016: 13%).

The effective rate in Q3 2017 on US GAAP income from continuing operations is low, primarily due to the combined impact of the relative quantum of profit before tax for the period by jurisdiction as well as significant acquisition and integration costs. Additionally, certain discrete events occurred during Q3 2017 which contributed to the low effective tax rate, including a tax benefit associated with filing of the US tax returns and the reversal of prior period income tax reserves.

Discontinued operations

The loss from discontinued operations in Q3 2017 was less than $1 million, net of taxes. The loss in Q3 2016 was $18 million, net of taxes, primarily due to the establishment of legal contingencies related to the divested DERMAGRAFT business.

FINANCIAL INFORMATION

TABLE OF CONTENTS

Unaudited US GAAP Consolidated Balance Sheets
(in millions, except par value of shares)

Unaudited US GAAP Consolidated Statements of Operations
(in millions)

Unaudited US GAAP Consolidated Statements of Operations (continued)
(in millions, except per share amounts)

Unaudited US GAAP Consolidated Statements of Cash Flows
(in millions)

Unaudited US GAAP Consolidated Statements of Cash Flows (continued)
(in millions)

Selected Notes to the Unaudited US GAAP Financial Statements

1. Earnings Per Share (EPS)

(in millions)

E-Mail-Adresse

Bitte überprüfe deine die E-Mail-Adresse.

Benachrichtigungen von ARIVA.DE
(Mit der Bestellung akzeptierst du die Datenschutzhinweise)

-1

Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink.

Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte.

Andere Nutzer interessierten sich auch für folgende News

19.04.24 - PR Newswire

Capital Gearing Trust Plc - Transaction in Own Shares

19.04.24 - PR Newswire

Samson Rock Capital LLP - Form 8.3 - TClarke Plc

19.04.24 - PR Newswire

Samson Rock Capital LLP - Form 8.3 - Accrol Group Holdings plc