24th Oct 2014 12:11
LONDON (Alliance News) - Shire PLC Friday increased its full year earnings guidance for the third time this year as it reported a profit rise in its third quarter that was much better than analysts expected, and reiterated its target of doubling its product sales to USD10 billion by 2020.
In its first results since its deal to be bought by US-based AbbVie Inc fell through earlier this week, the pharmaceutical company raised its non GAAP earnings per American depositary share growth guidance to the high 30% range. At the time of its interim results the company had guided in the low-to-mid 30% range.
The company posted a pretax profit of USD575.6 million for the third quarter, up from USD374.8 million in the previous year, as revenue rose to USD1.55 billion, from USD1.17 billion. Selling, general and administrative costs rose 32%, due to the incorporation of ViroPharma Inc, higher amortisation of intangible assets it acquired with ViroPharma, and costs incurred in connection with AbbVie's terminated offer.
The company continues to expect its non GAAP research and development, and selling, general and administrative costs to grow 2-4% compared to the previous year, with slightly higher operating costs in the fourth quarter as it continues to invest in its pipeline. The company will also increase commercial spending in the fourth quarter as it ramps up ahead of the anticipated launch of Vyvanse for the treatment of binge eating disorder.
In September the US Food and Drug Administration accepted a priority review filing for Vyvanse in this area, and is expected to provide a decision in February 2015.
Product sales were up 33% to USD1.55 billion, boosted by its acquisition of ViroPharma in January . Excluding sales from ViroPharma products, product sales rose 19%. The company also raised its full year expectations for product sales, expecting growth in the low 20% range having previously guided high teens growth.
It expects product sales growth in the fourth quarter to be lower than it has delivered so far, as the third quarter benefited from rare diseases sales to customers who order less frequently.
Revenue growth was boosted by a strong performance from its hereditary angiodema attack treatment Cinryze, which it acquired with ViroPharma, and sales of Firazyr, which were up 57%. The biggest seller was attention deficit hyperactivity disorder Vyvanse, with sales up 19% to USD354.9 million from USD299.2 million a year before.
Shire expects royalties and other revenue for the year to be 0-5% lower than in 2013 as it now expects to see additional milestone income in its fourth quarter. Previously, the company had guided that it expected royalties and other revenue to be 10-15% lower than in 2013.
The company has been keen to show its progress after its proposed GBP32 billion takeover by US based AbbVie Inc officially collapsed earlier this week, the first casualty of new US Treasury measures seeking to curb so-called "tax inversion" deals. Although the collapse of the deal hit Shire's share price, it confirmed it has received a USD1.64 billion break free from AbbVie.
On Tuesday, Shire said it was "disappointed" that the takeover offer had fallen through but said that it had maintained momentum throughout the offer period. The company said Friday it is "confident that Shire, as an independent company, will deliver long-term value to shareholders and improved outcomes for patients."
In terms of making acquisitions of its own now that the AbbVie deal has fallen through, Chief Executive Flemming Ornskov told journalists that the company has "significant" merger and acquisition fire-power. Ornksov noted that deals has been an "integral part" of Shire's growth, but the company was more focused on finding "the right opportunity than a fast opportunity."
However, if another deal such as that with AbbVie were to emerge, Shire will follow the same process it did with AbbVie, Ornskov said. Ornskov noted that if the deal had gone through it would've been "excellent for shareholders", but now that it hasn't, Shire will continue to focus on delivering value to shareholders through its own strategy.
Jefferies reiterated its Buy rating for the company, noting that there was "no obvious signs of disruption from the now terminated AbbVie deal." It said that increased pipeline focus is on rare orphan diseases, which potentially puts pressure on management to execute more deals, mergers and acquisitions.
Jefferies said that "despite the somewhat disappointing US ADHD trends, we remain bullish given the clear evidence of cost control, plus the outstanding potential for pipeline news, which together could accelerate EPS growth and justify multiple expansion. The substantial cash flows also facilitate possible accretive company or product acquisitions."
Shire shares rose after the results were released, and are trading up 3.1% at 4,015.00 pence in London, the best-performing stock on the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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