Ornskov FT July 201710 Aug 2017 20:39
I wonder what he thinks of the SP now!
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Shire boss says share price at odds with drugs pipeline
Ornskov questions investors’ valuation of company after merger with Baxalta
JULY 16, 2017 by: Sarah Neville and Jonathan Guthrie
The chief executive of Shire has questioned investors’ valuation of his company, arguing the potential of a number of promising drugs has yet to be factored into its share price.
Flemming Ornskov also told the Financial Times that the company’s merger last year with US-based biotech Baxalta, had gone “better than I anticipated”, confirming the company was on track to secure $700m in annual cost synergies.
Dublin-based Shire, which focuses on rare diseases and specialised conditions such as attention deficit hyperactivity disorder, ADHD, has seen extensive growth since Mr Ornskov took the helm four years ago. Its market capitalisation has risen from £18bn to about £40bn.
However, its stock has fallen by more than 11 per cent since the start of the year, amid investor concerns about whether the debt-financed Baxalta takeover will prove successful. Some analysts have suggested the company is being undervalued.
Broker Cantor Fitzgerald recently said the durability of Shire’s commercial products, as well as the peak sales potential of its pipeline, were “under-appreciated”.
Mr Ornskov said that he “made it a principle not to comment on the share price because my judgment is a biased judgment . . . but if I look at the growth, the profitability, the improving margin, the history of the company and the pipeline, it’s certainly a question I would ask.”
He cited a string of drugs, either already marketed, or under development, whose value, he suggested, had yet to be fully grasped.
Among the new drugs, is a medication to treat ADHD, a condition characterised by inattentiveness, hyperactivity and impulsiveness.
The new medication, called Mydayis, was approved last month by US regulators and aimed specifically at adult sufferers, the fastest growing segment of the market. Unlike most rival products, it has to be taken only once a day.
“People have not fully understood that a product you can take once a day, that covers you up to 16 hours for adult related ADHD, is probably significantly more attractive than taking several products a day at different times,” he said. As a result, it may not have been accorded “appropriate” value by investors.
He added: “So it’s not a theoretical valuation gap, it’s a real gap.”
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