Shore Capital maintained its "buy" stance on Shire (SHP) ahead of the US Food and Drug Administration's ruling on Protalix Biotherapeutics' Ulypso treatment for Gaucher's disease, on 1st May. While the drug would be a competitor to the pharmaceutical company's VPRIV VPRIV treatment, the broker noted that approval for Ulypso has been delayed on a number of occasions, having originally been scheduled for approval in February 2011. Additionally, Shore pointed out that even if the new drug is approved patients may be reluctant to switch treatments. Shares in Shire slipped by 3p to 2,010p.
Positive Points: Management predicted that 2012 will be a year of good earnings growth. Shire's growth in product sales was driven by Vyvanse (up 29% to $260 million), Replagal (up 28% to $134 million), Elaprase (up 21% to $126 million), Vpriv (up 22% to $72 million), Firazyr (up272% to $20 million) and Intuniv (up 63% to $69 million). Shire's lead ADHD treatments, Vyvanse and Intuniv both increased market share versus the prior year. In a growing US market, the group anticipates Vyvanse sales of over $1 billion for the full year.
Negative Points: The successful roll out of Vyvanse is seen as crucial to maintain Shire's ADHD franchise. Any significant shortfall in the long term performance of Vyvanse may be detrimental to Shire. Litigation risk remains in a number of potential products associated within the group's Human Genetic Therapies (HGT) business. Continuing execution with respect to pipeline drug approvals is required to support longer-term performance forecasts.
Financial Highlights: Product sales increased by 24%. Total revenues grew to $1.17 billion surpassing market expectations. Net debt at 31 March 31 was $214 million (31December 31, 2011: $468 million), a reduction of$254 million, principally due to the strong free cash flow generated created in Q1 2012
Interim results: Biopharmaceutical company Shire Plc saw first quarter net income grow to $238.4 million from $211.3 million in the same quarter a year earlier. Total revenues rose to $1.17 billion from $972.2 million last year, exceeding analyst projections. Recent acquisitions included the US biotech firm FerroKin BioSciences, which develops treatments for patients with iron overload, which Shire bought for approximately $325 million in March. This followed the purchase of the assets from vascular technology firm Pervasis Therapeutics. Vyvanse, Shire's top performing attention-deficit and hyperactivity drug revealed sales of $260 million in the first quarter, up 17% from the same period last year. Adderall, the group's attention-deficit-disorder drug, saw a 7% increase in sales to $111.4 million. Elsewhere, Shire also said research and development costs would grow by between 12% and 14% over the year with a minor dilution of gross margins to continue throughout the year, reflecting the impact of the group's $750million purchase of Advanced BioHealing last month. Management reiterated its expectation of good earnings growth in 2012.
Shire plc is an international specialist pharmaceutical company which in-licenses and develops early stage projects for its own marketing in the major markets around the world. Registered in Jersey, headquartered in Ireland, it has a large operational base in the United Kingdom. Brands and products include Adderall XR, Carbatrol, Fosrenol, and the recently released Vyvanse.
Shire, the pharmaceutical company is also given the once over by Tempus. Quite a busy day for the company. It pulled out of an application to sell its Fabry disease treatment, Replagal, in the US after a misunderstanding with the Food and Drug Administration. It then announced a $100m purchase of FerroKin BioSciences, a company which makes treatments for excess iron following blood transfusions. The company had a storming 2011 and Tempus thinks despite a turbulent Thursday, the stock is worth buying on any weakness.
Shire's Specialty Pharmaceuticals Senior Vice President, Hematology, Ross Murdoch says:
"There remains a significant unmet need for a once-a-day, oral iron chelator in a convenient dosage form for the treatment of transfusional iron overload with a better safety profile than currently available treatments(2). We believe FBS0701 has the potential to meet that need. We hope to use our expertise in hematology coupled with our proven ability to progress products through the development pipeline to bring FBS0701 to the global marketplace. This acquisition marks an important step for Shire in building a business that serves the growing needs of specialty hematologists and their patients."
FerroKin BioSciences' key employees, including Founder and CEO, Dr. Hugh Young Rienhoff, Jr. will provide consulting services to Shire during the transition period. "An important factor for FerroKin BioSciences in agreeing to this transaction was Shire's drive, capability and vision to bring new products to the hematology market that promise to raise the standard of care for patients. In Shire's hands, FBS0701 has greater potential to fulfill that promise," said Dr. Rienhoff.
The closing of the acquisition is subject to customary conditions, including (i) adoption of the Merger Agreement by a required proportion of FerroKin's equityholders; (ii) holders of no more than 2% of FerroKin's capital stock having exercised or being entitled to exercise appraisal rights under Delaware law and (iii) the absence of a material adverse effect on FerroKin BioSciences
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