26th Apr 2018 16:17
LONDON (Alliance News) - Shire PLC delivered a strong first-quarter performance, but the report was overshadowed by the protracted takeover approach by Japan's Takeda Pharmaceutical Co, to which the Irish drugmaker made no reference on Thursday.
Shire said product sales rose during the first quarter of the year, with its Rare Disease division outperforming the Neuroscience unit.
For the first quarter ending March 31, Rare Disease product sales rose 10% at constant exchange rates to USD2.72 billion, while Neuroscience drug sales fell 4% to USD918 million. The figures are reported non-GAAP - US generally accepted accounting principles.
Total product sales came in at USD3.64 billion, a 3% rise at constant exchange rates, with total revenue rising 2% to USD3.77 billion.
In addition, net income rose 47% to USD551.0 million from USD375.0 in the first quarter last year.
"Shire is off to a good start in 2018 delivering on our key priorities of commercial execution, pipeline progression, debt pay down, and portfolio optimization. We generated product sales growth of 7% in the first quarter reaching USD3.60 billion with important contributions from our Immunology franchise, recently-launched products, and international markets. We delivered USD1.00 billion in net operating cash flow allowing us to remain on track towards our debt pay down target," Chief Executive Officer Flemming Ornskov said.
The drugmaker said its 2018 guidance remains unchanged. This guidance includes its Oncology franchise, which it agreed to sell in earlier in April for USD2.40 billion in cash. Guidance will be updated to remove the Oncology franchise upon the close of the pending sale later in the year, Shire said.
"These are good numbers from Shire. Sales of the group's relatively young drug portfolio are expanding rapidly, with growth across a wide range of treatment areas. Accompanying that is an iron grip on costs, which mean profits and cash generation are both going gangbusters. As a result, the millstone-sized debt pile around Shire’s neck continues to shrink," said Hargreaves Lansdown analyst Nicholas Hyett.
Shire said its non-GAAP net debt at the end of the first quarter was USD18.20 billion, down from USD19.07 billion on December 31. The debt resulted mostly from Shire's 2016 acquistion of Chicago-based peer Baxalta for USD32 billion.
However, the stellar earnings performance from Shire was mostly overlooked by investors on Thursday as Shire gave no update on its takeover offer from Japanese peer Takeda Pharmaceutical.
Shire had said late Tuesday that its board is willing to recommend a revised merger proposal worth GBP46 billion made by Takeda to Shire shareholders.
The Irish pharmaceutical company also said that it has agreed, with the consent of the UK Takeover Panel, to extend the deadline for Takeda to make a final decision on its offer to May 8. The deadline had originally been due to expire on Wednesday.
The latest proposal - the fifth one made by Takeda - comprises GBP27.26 in new Takeda shares and GBP21.75 in cash for each Shire ordinary share. Shire shares were up 0.6% at 3,842.00 pence in London Thursday.
"Unfortunately, the numbers aren't going to attract the attention they arguably deserve, because the real focus is on the looming Takeda deal. Although the Japanese pharmaceutical group has yet to make a formal offer, with Shire's board prepared to support the most recent proposal a deal now looks more likely than not," said Hargreaves's Hyett.
"Still with equity likely to play a large part in any merger, Shire shareholders will have an ongoing interest whatever the outcome, and it's good to see the business in rude health," Hyett added.
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