Shares of Shire plc SHPG were more or less static after the company reported first-quarter 2015 results. Shire reported earnings (excluding special items and amortization) of $2.84 per American Depositary Share (ADS), up from $2.36 per ADS earned in the year-ago quarter and easily beat the Zacks Consensus Estimate of $2.56.
Quarterly revenues increased 11% to $1.5 billion, roughly in- line with the Zacks Consensus Estimate.
Quarter in Detail
Product sales went up 9% y/y to $1.4 billion. Growth was driven by attention deficit hyperactivity disorder (ADHD) drug Vyvanse (+19% to $417 million), Lialda (+15% to $148 million), Cinryze (+73% to $148 million) and Firazyr (+23% to $92 million).
However, sales growth was impacted by lower Intuniv sales (-79% to $17 million) due to generic competition while sales of Elaprase, Vpriv and Replagal were impacted by currency headwinds.
Royalties were up 94% to $62.8 million in the reported quarter due to the inclusion of royalties’ receivable on generic sales of Intuniv, and the first time inclusion of royalty income receivable on Sensipar following the NPS Pharmaceuticals in Feb 2015. The acquisition added Gattex for short bowel syndrome and Natpara for hypoparathyroidism to Shire’s portfolio (Natpara received FDA approval in Jan 2015 as a hormone replacement therapy for use in the treatment of hyperparathyroidism).
Adjusted research & development costs declined 1.9% to $185.1 million in the reported quarter. Selling, general & administrative expenses increased 10.3% to $386.2 million.
2015 Outlook
Shire continues to expect low-to-mid single single-digit product sales growth in 2015. Intuniv sales are projected to decline due to the loss of patent exclusivity in Dec 2014. Product sales will also be impacted by headwinds in the form of currency exchange rates due to the strengthening dollar, which primarily impacts impacted sales of Elaprase, Replagal, and Vpriv. Shire expects earnings to grow in mid-single digits in 2015.
Pipeline Update
Natpara received FDA approval in Jan 2015 as a hormone replacement therapy for use in the treatment of hyperparathyroidism.
In Jan 2015, the FDA granted Fast Track designation to SHP609 for the treatment of neurocognitive decline associated with Hunter syndrome (mucopolysaccharidosis II).
The FDA also accepted Shire’s new drug application for ophthalmology candidate lifitegrast in Apr 2015 and granted priority review designation. The candidate is being evaluated for dry eye disease in adults. The FDA will provide a final decision by Oct 25, 2015.
Shire also reached an agreement with the FDA on a clear regulatory path for candidate SHP465. The candidate is being evaluated for the treatment of ADHD in adults. Shire will now conduct a short-term efficacy and safety study in pediatric patients suffering from ADHD (age group 6-17) as per the agreement with the FDA.
Meanwhile, Shire announced disappointing results from the phase II trial IMAGO on pipeline candidate SHP625 (formerly LUM001). IMAGO failed to meet either of its primary or secondary endpoints. The study was conducted among 20 pediatric patients suffering from Alagille syndrome.
Our Take
Shire currently carries a Zacks Rank #3 (Hold). The company’s first-quarter results were impressive. The label expansion of Vyvanse will further boost sales. We are upbeat on the NPS Pharma acquisition, which will further boost the company’s rare disease portfolio. Shire’s effort to strengthen its pipeline is also commendable.
Some better-ranked stocks in the health care sector include ArQule, Inc. ARQL, Valeant Pharmaceuticals VRX and Pharmacyclics Inc. PCYC. All three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment