13th Feb 2014 13:52
LONDON (Alliance News) - Pharmaceutical company Shire PLC said Thursday that it expects its strong growth to continue in 2014 after reporting a 23% rise in earnings for 2013, driven by double-digit product sales growth.
The company also announced the departure of Chief Financial Officer Graham Hetherington, who will step down from the board March 1. Senior Vice President and Group Financial Controller James Bowling will be appointed as interim financial officer as the company searches for Hetherington's successor.
Speaking on a call Thursday, Hetherington said that he will not be stepping into any executive roles following his departure from Shire, as his main priority will be "spending time with [his] young family."
Shire posted revenues of USD4.93 billion for 2013, up from USD4.53 billion in 2012. Product sales rose to USD4.76 billion, from USD4.25 billion in the previous year, although royalties dropped to USD153.7 million, from USD241.6 million. Royalties were hit by the launch of a new generic version of ADD treatment Adderall XR in the second quarter of 2012.
Royalties from hepatitis b treatments 3TC and Zeffix were lower in 2013 as there was a one-time royalty income of USD38 million in 2012 due to the resolution of a disagreement with GlaxoSmithKline PLC and ViiV Healthcare.
Product sales were driven by strong growth in its attention deficit disorder treatment Vyvanse, which saw sales rise 19% to USD1.23 billion, as well as strong growth from ulcerative colitis treatment Lialda/Mezavent, Gaucher disease treatment Vpriv, ADHD drug Intuniv and hereditary angiodema treatment Firazyr.
The company posted a pretax profit of USD1.69 billion, up from USD1.00 billion in the previous year. Its closely watched operating income and diluted earnings per American Depositary Receipt on a non-GAAP accounting basis came in at USD1.86 billion and USD7.66, respectively, both figures up by 23% on the year.
It raised its total dividend for 2013 to 19.93 cents per share, up from 17.33 cents per share in 2012.
Shire said that it expects non-GAAP earnings to grow at a similar level in 2014. It expects mid-to-high teens product sales growth this year, including product sales from newly acquired ViroPharma.
The company said that it expects 2014 royalties and other revenues to be around 10% to 15% lower than in 2013.
In January late stage trials for Vyvanse as a treatment for Major Depressive Disorder failed, although trials are still ongoing for the treatment of binge eating disorders with Vyvanse. Speaking with journalists Thursday Chief Executive Officer Flemming Ornskov said that the impact of dropping Vyvanse for MDD was minimal, but that data for the treatment of binge eating disorders was "very exciting."
Shire saw positive top-line results from Phase 3 studies of the treatment of binge eating disorder with Vyvanse, where it was shown to be statistically superior to a placebo. It expects to file a Supplemental New Drug Application with the US Food and Drug Administration in the third quarter of 2014.
Ornskov considers there to be a growing opportunity for the treatment of binge eating disorder, and said Shire will continue putting more resources into developing Vyvanse for this treatment.
Shire sold its loss-making Dermagraft living skin substitute assets to US-based Organogenesis Ltd in January this year. Shire has generally retained legacy liabilities relating to the Dermagraft business, including the US Department of Justice's investigation into the sales and marketing practices of Shire Regenerative Medicine Inc, formerly known as Advanced Biohealing Inc.
Shire posted a loss from discontinued operations of USD754.5 million, including a USD636.9 million impairment in respect of assets held for sale and a USD191.8 million goodwill impairment charge relating to the divestment of Dermagraft.
Shire's reports excluded the Dermagraft business as they were categorised as 'discontinued,' however Shire said that including the Dermagraft business its product sales would have risen 10% and its non-GAAP earnings per ADS would have been up 21%.
The divestment decision followed a ruling by Medicare, the US national medical insurance programme, on reimbursement for Dermagraft versus other cheaper alternatives, which Shire said had changed the business environment and reduced the prospects of the product.
Under the ruling a number of regenerative medical products including Dermagraft and Organogenesis' Apligraf would be bundled together and reimbursed at the same rate, meaning hospitals would be reimbursed at a fixed rate regardless of the cost of the product being used.
Shire posted USD88.2 million in reorganisation costs relating to its One Shire strategy, as it integrates and pulls together its businesses into one integrated company. This included costs relating to the closure of its facility in Turnhout, Belgium of USD23.6 million.
Shire recently completed its acquisition of US-based ViroPharma for USD4.2 billion, originally announced at the end of last year, and the company said that it was integrating ViroPharma well.
Although Ornskov would not comment on any specific future merger and acquisition opportunities during a call with journalists Thursday, he said that "M&A is in the DNA of Shire, and will be in Shire's DNA going forward."
Shares in Shire were trading up 1.9% at 3,199.00 pence Thursday afternoon, the third biggest gainer on the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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