27th Oct 2006 12:00
Excellent third quarter with execution plan on track - upgrading 2006 revenueguidanceBasingstoke, UK and Philadelphia, US - October 27, 2006 - Shire plc (LSE: SHP,NASDAQ: SHPGY, TSX: SHQ) announces results for the third quarter 2006.Matthew Emmens, Chief Executive Officer, commented:"It's been an excellent quarter across all areas of our business. We havecontinued to make good progress. Our execution plan is well on track andtherefore we are upgrading our revenue guidance for the full year."Our leading Attention Deficit Hyperactivity Disorder (ADHD) franchisecontinues to grow, capturing over 29% of the US market in Q3 2006 following thesuccess of our newly launched patch DAYTRANA¢â€ž¢ and the continued strongperformance of ADDERALL XR‚®. We are well positioned to build on our strengths -this month, the Food and Drug Administration (FDA) issued an approvable letterfor our latest ADHD treatment, NRP104 that we expect to launch in Q2 2007. Wefiled for US regulatory approval of SPD465 and SPD503, demonstrating ourcommitment to provide patients and physicians with the broadest range of ADHDtreatment choices. In addition, in August, we settled all pending litigationwith Barr Laboratories Inc. (Barr) in connection with ADDERALL XR."We are also making good progress in other areas of our portfolio. In July, wereceived approval for ELAPRASE¢â€ž¢ in the US, for the treatment of Hunter syndromeand last week the Committee for Medicinal Products for Human Use (CHMP)recommended approval in the EU. We already have 127 patients worldwide on thistreatment."We expect a response from the European Authorities for our ulcerative colitisproduct, MESAVANCE¢â€ž¢ by the end of this year and from the FDA in the US inJanuary; this product remains on track for launch in Q1 2007."Earlier this year we gave revenue guidance of low double digit growth. As weapproach the year end we now anticipate this will be in the range of 12-14%.Total costs are expected to be in line with previous guidance. As 2007approaches, we remain focused on implementing our strategy and we are on trackto deliver several more new products to market."Q3 2006 Financial highlights * Product sales of $386.2 million - up 25% versus Q3 2005 (19% growth YTD). * Total revenues of $449.4 million - up 19% versus Q3 2005 (15% growth in YTD). Product highlights and recent eventsNRP104 - ADHD * Shire's collaborative partner, New River Pharmaceuticals Inc. (New River), received an approvable letter from the FDA for NRP104 for the treatment of pediatric ADHD. No additional studies were requested by the FDA as a condition for full approval. Shire and New River are preparing for a product launch in Q2 2007, pending final labeling and scheduling discussions. DAYTRANA - ADHD * DAYTRANA captured 1.7% of the total US ADHD market after only three months. ELAPRASE - Hunter syndrome. * On October 19, the CHMP of the European Medicines Agency (EMEA) issued a positive opinion recommending approval of ELAPRASE for the long-term treatment of patients with Hunter syndrome. The EU Marketing Authorisation is expected early in 2007 and will result in unified labeling that will be valid in the 25 current EU member states as well as in Iceland and Norway. * The FDA granted approval for ELAPRASE in July this year and to date there are 67 patients on this treatment in the US. Early access has been granted to patients with Hunter syndrome in a number of European countries including Italy, Germany, Spain, France, Sweden, Norway and Denmark. Demand from patients' families and clinicians has been high and 60 patients have already been infused with the treatment in these countries. REPLAGAL‚® - Fabry disease * In September 2006, Shire agreed to partner with the Canadian government to support a Fabry post-marketing study that will monitor all Fabry patients. As a result of the agreement, Fabry patients currently or previously on enzyme replacement therapy and new Fabry patients who meet the guidelines will be eligible for funded enzyme replacement therapy. * During the quarter, the European Commission approved a variation to update sections of the product information to include data on the treatment of children with REPLAGAL. A beneficial effect of treatment was seen in a small number of children aged 7-18 years with no unexpected safety issues. FOSRENOL‚® - Hyperphosphatemia * On October 18, Health Canada granted a marketing license application for FOSRENOL. Launch is now planned for Q2 2007. * The roll-out of FOSRENOL continues in the European markets. Earlier this year, the product was launched both in Sweden and Ireland. According to wholesaler data, FOSRENOL captured 15% of the Swedish and 10% of the Irish total phosphate binder End Stage Renal Disease (ESRD) market. Pipeline HighlightsSPD465 - ADHD * A new drug application (NDA) was submitted to the FDA for SPD465 on July 21, for the treatment of ADHD in the adult population. The Prescription Drug User Fee Act (PDUFA) date is May 21, 2007 for this application. SPD465 has the same active ingredient as ADDERALL XR, but is designed to provide ADHD symptom control for up to 16 hours. SPD503 (guanfacine) - ADHD * An NDA was submitted to the FDA on August 24, for investigational compound SPD503 extended release, which, if approved, would be the first once daily selective alpha-2A-adrenoceptor agonist for the treatment of ADHD in children aged 6 to 17 years. The PDUFA date for this application is June 24, 2007. MESAVANCE - Ulcerative Colitis * The FDA has extended by 90 days the review period for the NDA for MESAVANCE. This extension has been sought by the FDA to allow additional time to review supplemental Phase 1 data which Shire had agreed with the FDA to submit during the review process. The PDUFA date for the application is January 21, 2007. Human Genetic Therapies (HGT) * HGT has completed proof of concept studies on three projects and has advanced them into pre-clinical development; namely enzyme replacement therapies for Sanfilippo (Mucopolysaccharidosis IIIA), Metachromatic Leukodystrophy and intrathecal delivery of ELAPRASE for Hunter syndrome patients with significant central nervous system symptoms. Details of these programs will be available during Shire's third quarter conference call presentation. Business highlightsBarr Laboratories Inc. (Barr) * Shire has settled all pending litigation with Barr, in connection with Barr's Abbreviated New Drug Application ("ANDA") and its attempt to market generic versions of Shire's ADDERALL XR for the treatment of ADHD. Barr will not be permitted to market a generic version of ADDERALL XR in the US until April 1, 2009, except for certain limited circumstances, such as the launch of another party's generic version of ADDERALL XR. * Shire and Duramed Pharmaceuticals, Inc. ("Duramed"), a subsidiary of Barr have entered into an agreement related to Duramed's transvaginal ring technology that will be applied to at least five women's health products, as well as a license to Duramed's currently marketed oral contraceptive, SEASONIQUE‚® (levonorgestrel/ethinyl estradiol tablets 0.15 mg/0.03 mg and ethinyl estradiol tablets 0.01 mg). Under this agreement, Shire made an initial payment of $25 million to Duramed for previously incurred product development expenses, and will reimburse Duramed for development expenses incurred going forward up to a maximum of $140 million over eight years, with an amount capped at $30 million per annum. Shire has exclusive rights to market these products in the five major European markets of the UK, Germany, France, Italy and Spain and other areas, excluding North America, and to the subsequent sales they will generate on a royalty-free basis. * Duramed has purchased Shire's ADDERALL‚® (immediate-release mixed amphetamine salts) product for $63 million. This transaction was completed at the end of the third quarter. Warren Pharmaceuticals, Inc. (Warren) * Shire has in-licensed rights to tissue protective cytokine (TPC) technology under an agreement with Warren. The agreement gives Shire exclusive worldwide rights to develop TPCs in non-Nervous System indications, including renal and genetic disease areas. An upfront payment of $6 million was payable to Warren, of which $0.5 million was satisfied by a payment made and expensed to R&D in the three months ended June 30, 2006 and the remaining $5.5 million was paid and expensed to R&D in the three months ended September 30, 2006. Q3 2006 Unaudited Results Q3 2006 Q3 2005 US Non US Non GAAP Adjustments GAAP(1) GAAP Adjustments GAAP(1) $M $M $M $M $M $M _______ ___________ _________ _______ ____________ _______ Revenues 449.4 - 449.4 376.1 - 376.1 Income/(loss) 119.1 (25.8) 93.3 (613.6) 704.7 91.1from ongoing operations (2) Net income/ 87.2 (18.7) 68.5 (630.7) 694.8 64.1(loss) Diluted earnings per: Ordinary Share 17.1c (3.7c) 13.4c (126.0c) 138.8c 12.8c ADS 51.3c (11.1c) 40.2c (378.0c) 416.4c 38.3cNote: Average exchange rates for Q3 2006 and 2005 were $1.87: ‚£1.00 and $1.78:‚£1.00 respectively. 1. Non GAAP These are non GAAP financial measures.For Q3 2006, this measure for net income excludes a net gain of $18.7 millionas follows: * Cost of product sales fair value adjustment following acquisition of Transkaryotic Therapies Inc (TKT): $6.7 million * Upfront payments to Warren : $5.5 million * Upfront payments to Duramed : $25.0 million * Gain on sale of ADDERALL product rights to Duramed: $63.0 million * Net tax charges on above adjustments: $7.1 million. For Q3 2005, this measure for net income excludes net expenses of $694.8million as follows: * Costs associated with the write-off of in-process R&D following the acquisition of TKT: $673.0 million * Cost of product sales fair value adjustment following the acquisition of TKT: $17.2 million * TKT integration costs: $3.5 million * Reorganization costs resulting from Shire's North American site consolidation: $6.5 million * New listed holding company costs: $4.5 million * Impact of the gain on the disposition of discontinued operations: $1.0 million * Net tax benefit on above adjustments: $8.9 million. On a pre-tax basis, the above non GAAP adjustments relating to ongoingoperations total net gains of $25.8 million for 2006 and expenses of $704.7million for 2005.The non-GAAP financial measures presented in the above table are used by Shiremanagement to gain an understanding of the comparative performance of theCompany. These measures are presented in order to provide supplementalinformation regarding the operational performance of the Company to enhanceinvestors' understanding of core financial performance. A reconciliation ofthese non GAAP financial measures to the most directly comparable US GAAPfinancial measure can be found on pages 24 to 25. 2. Income/(loss) from continuing operations before income taxes and equity in earnings/(losses) of equity method investees. 2006 OutlookR&D pipeline and new product launchesShire has a strong product pipeline to support the medium and long-term futuregrowth of the Company. In Q4 2006 and H1 2007 Shire anticipates that it will: * Launch ELAPRASE in Europe; * Launch MESAVANCE in the US and in Europe; * Launch NRP104 in the US; * Launch DYNEPO in Europe; * Continue the roll out of FOSRENOL in Europe; and * Continue the roll out of DAYTRANA and ELAPRASE in the US. Timings of launches are subject to the regulatory/governmental approvalsprocess.Financial OutlookWe are upgrading the previous guidance given as part of the Q2 2006 results, asfollows:We now anticipate 2006 revenue growth to be in the range of 12% to 14% (priorguidance: low double-digit range).As previously announced, earnings for 2006 will be impacted by the costsassociated with the continued development and launch of five new products in2006 and H1 2007, including DAYTRANA and ELAPRASE, in addition to the roll-outof FOSRENOL across Europe and the new higher strengths of FOSRENOL in the US. * These launches require additional advertising and promotional spend and, in some cases, additional sales representatives. Also, Shire has been seeking in 2006 to maximize ADDERALL XR's market share. As a result, SG&A costs are expected to be at the top end of the original guidance range ($770-800 million); * 2006 activities include regulatory filings for ELAPRASE, SPD465, SPD503 and MESAVANCE, Phase 3(b) and Phase 4 studies to support new product launches, the transfer of three HGT projects into pre-clinical development and the commencement of Phase 3 trials on Gene Activated Glucocerebrosidase (GA-GCB). R&D spend for the full year is expected to be at the lower end of the original guidance range ($310-330 million); * The depreciation and amortization charge for the year will be approximately 30% higher than the 2005 charge reflecting the acquisition of TKT and the amortization of milestone payments for DAYTRANA (prior guidance: 50% higher); and * The tax rate for the full year is expected to remain at a rate of approximately 28%. The financial outlook for the full year stated above excludes the accountingimpact under US GAAP of the following items: * The milestone payment of $50 million paid to New River in February 2006 following the FDA's acceptance of the filing of NRP104. This increased R&D expense in Q1 2006; * Upfront payments totaling $30.5 million paid to Duramed ($25 million) and Warren ($5.5 million). These increased the R&D expense in Q3 2006; * The gain of $63 million made on disposal of ADDERALL product rights to Duramed; * A US GAAP adjustment to cost of product sales of $47 million (prior guidance: $50 million) to reflect the difference between the accounting fair value and book value of acquired REPLAGAL inventory, all of which has now been charged; * Shire HGT integration costs estimated at $6 million in 2006 (prior guidance: $7 million), of which $3.9 million was incurred to the end of Q3 2006; and * The adoption from January 1, 2006 of US GAAP accounting standard SFAS 123R for share based compensation. This is expected to give rise to additional charges estimated at approximately $45 million, which will be split between costs of product sales, R&D and SG&A in approximate ratios of 10%, 15% and 75% respectively. $25.8 million was charged across these categories for the nine months ending September 30, 2006 (2005: $20.6 million adjusted retrospectively). Including these items would result, under US GAAP, in an estimated increase incost of product sales of $50 million, R&D spend in the range of $395-415million and SG&A and integration costs between $805-835 million.New Accounting Standard - SFAS 123RShire's primary basis of financial reporting is US GAAP. From January 1, 2006Shire has been required to adopt SFAS 123R in accounting for share-basedcompensation. This accounting standard applies a fair value methodology inquantifying the accounting charge associated with share-based compensation.The Company has adopted SFAS 123R according to the modified retrospectivemethod. As a result, comparatives, including accounting periods in 2005, havebeen retrospectively adjusted.For further information please contact:Investor Relations Clƒ©a Rosenfeld (Rest of the World) +44 1256 894 160 Brian Piper (North America) +1 484 595 8252 Media Jessica Mann (Rest of the World) +44 1256 894 280 Matthew Cabrey (North America) +1 484 595 8248 Notes to editorsSHIRE PLCShire's strategic goal is to become the leading specialty pharmaceuticalcompany that focuses on meeting the needs of the specialist physician. Shirefocuses its business on attention deficit and hyperactivity disorder (ADHD),human genetic therapies (HGT), gastrointestinal (GI) and renal diseases. Thestructure is sufficiently flexible to allow Shire to target new therapeuticareas to the extent opportunities arise through acquisitions. Shire believesthat a carefully selected portfolio of products with a strategically alignedand relatively small-scale sales force will deliver strong results.Shire's focused strategy is to develop and market products for specialtyphysicians. Shire's in-licensing, merger and acquisition efforts are focused onproducts in niche markets with strong intellectual property protection eitherin the US or Europe.For further information on Shire, please visit the Company's website: www.shire.com."SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF1995Statements included herein that are not historical facts are forward-lookingstatements. Such forward-looking statements involve a number of risks anduncertainties and are subject to change at any time. In the event such risks oruncertainties materialize, Shire's results could be materially affected. Therisks and uncertainties include, but are not limited to, risks associated with:the inherent uncertainty of pharmaceutical research, product development,manufacturing and commercialization; the impact of competitive products,including, but not limited to the impact of those on Shire's Attention Deficitand Hyperactivity Disorder (ADHD) franchise; patents, including but not limitedto, legal challenges relating to Shire's ADHD franchise; government regulationand approval, including but not limited to the expected product approval datesof SPD503 (guanfacine extended release) (ADHD), SPD465 (extended release ofmixed amphetamine salts) (ADHD), MESAVANCE (mesalamine) with MMX technology(SPD476) (ulcerative colitis), ELAPRASE (idursulfase) (Hunter Syndrome) andNRP104 (lisdexamfetamine dimesylate) (ADHD), including its schedulingclassification by the Drug Enforcement Administration in the United States;Shire's ability to secure new products for commercialization and/ordevelopment; and other risks and uncertainties detailed from time to time inShire's and its predecessor registrant Shire Pharmaceuticals Group plc'sfilings with the Securities and Exchange Commission, particularly Shire plc'sAnnual Report on Form 10-K for the year ended December 31, 2005.The following are trademarks of Shire or companies within the Shire Group,which are the subject of trademark registrations in certain territories:ADDERALL XR‚® (mixed salts of a single-entity amphetamine)ADDERALL‚® (mixed salts of a single-entity amphetamine)AGRYLIN‚® (anagrelide hydrochloride)CALCICHEW‚® range (calcium carbonate with or without vitamin D3)CARBATROL‚® (carbamazepine extended-release capsules)COLAZIDE‚® (balsalazide)DAYTRANA¢â€ž¢ (methylphenidate transdermal system)ELAPRASE¢â€ž¢ (idursulfase)EQUETRO¢â€ž¢ (carbamazepine extended-release capsules)FOSRENOL‚® (lanthanum carbonate)LODINE ‚® (etodolac)MESAVANCE¢â€ž¢ (mesalamine)REMINYL‚® (galantamine hydrobromide) (UK and Republic of Ireland)REMINYL XL¢â€ž¢ (galantamine hydrobromide) (UK and Republic of Ireland)REPLAGAL‚® (agalsidase alfa)SOLARAZE‚® (3%, gel diclofenac sodium (3%w/w))VANIQA‚® (eflornithine hydrochloride)XAGRID‚® (anagrelide hydrochloride)The following are trademarks of third parties referred to in this press issue:3TC (lamivudine) (trademark of GlaxoSmithKline (GSK))DYNEPO (trademark of Sanofi Aventis)MMX Multi Matrix Systems (trademark of Cosmo Technologies Limited)PENTASA (trademark of Ferring AS)RAZADYNE (trademark of Johnson & Johnson)RAZADYNE ER (trademark of Johnson & Johnson)REMINYL (trademark of Johnson & Johnson, excluding UK and Republic of Ireland)REMINYL XL (trademark of Johnson & Johnson, excluding UK and Republic ofIreland)SEASONIQUE (trademark of Duramed Pharmaceuticals Inc.)ZEFFIX (lamivudine) (trademark of GSK)OVERVIEW OF US GAAP FINANCIAL RESULTS 1. Introduction Summary of Q3 2006Revenues from continuing operations for the three months to September 30, 2006increased by 19% to $449.4 million (2005: $376.1 million).Income from continuing operations (before income taxes and equity methodinvestees) for the three months to September 30, 2006 was $119.1 million (2005loss of: $613.6 million). The difference is primarily due to the write-off ofin-process R&D of $673.0 million in Q3 2005 following the TKT acquisition, andthe gain on the sale of ADDERALL of $63.0 million in Q3 2006. The increasedrevenues in the period were broadly offset by increased costs in fundingShire's new product launches.Cash inflow from operating activities for the three months to September 30,2006 was $82.1 million (2005: $39.1 million). This increase primarily resultedfrom favorable movements in working capital. Cash and cash equivalents,restricted cash and short-term investments at September 30, 2006 totaled $984.8million (December 31, 2005: $694.0 million). 2. Product sales For the three months to September 30, 2006 product sales increased by 25% to$386.2 million (2005: $309.2 million) and represented 86% of total revenues(2005: 82%).Product HighlightsProduct Sales Sales Growth US Rx Growth US Market $M (2) (2) Share (1) ADDERALL XR 207.6 +25% +9% 26% DAYTRANA 9.9 n/a n/a 2% CARBATROL 20.4 +27% -7% 42% PENTASA 36.9 +1% +4% 18% REPLAGAL (3) 32.4 n/a n/a n/a ELAPRASE 4.3 n/a n/a n/a XAGRID (4) 13.3 +11% n/a n/a FOSRENOL 12.2 +26% +12% 9% 1. IMS Prescription Data-Product specific (September 2006) 2. Compared to Q3 2005 3. REPLAGAL was acquired as part of the TKT acquisition, which completed on July 27, 2005. Total sales for REPLEGAL, including pre acquisition sales, for the 3 months ended September 30, 2005 were $24.1 million with total growth for the 3 months, including pre-acquisition sales, of 34%. In Q3 2005 total post acquisition sales were $16.0 million 4. Worldwide sales excluding US and Canada ADDERALL XR for the treatment of ADHDADDERALL XR is the leading brand in the US ADHD market with a market share of26% in September 2006 (2005: 25%). The US ADHD market growth of 4% and theincrease in market share contributed to a 9% increase in US prescriptions forADDERALL XR for the three months to September 30, 2006 compared to the sameperiod in 2005.Sales of ADDERALL XR for the three months to September 30, 2006 were $207.6million, an increase of 25% compared to the same period in 2005 (2005: $165.9million). Product sales growth was significantly more than prescription growth,due to price increases in August 2005 and April 2006 and lower levels ofpipeline de-stocking compared with Q3 2005.During October 2005 Shire filed a Citizen Petition with the FDA requesting thatthe FDA require more rigorous bioequivalence testing or additional clinicaltesting for generic or follow-on drug products that reference ADDERALL XRbefore they can be approved. Shire received correspondence from the FDA inApril 2006 stating that, due to the complex issues raised requiring extensivereview and analysis by the FDA's officials, a decision cannot yet be reached bythe FDA. The FDA did not provide any guidance as to when that decision may bereached.On August 14, 2006, Shire and Barr announced that all pending litigation inconnection with Barr's Abbreviated New Drug Application (ANDA) and its attemptto market generic versions of Shire's ADDERALL XR had been settled. As part ofthe settlement, Barr entered into consent judgments and agreed to permanentinjunctions confirming the validity and enforceability of Shire's US PatentsNos. 6,322,819 (the "`819 Patent"), 6,601,300 (the "`300 Patent") and 6,913,768(the "`768 Patent"). Barr has also admitted that any generic product made underits ANDA would infringe the `768 patent.Under the terms of the settlement, Barr will not be permitted to market ageneric version of ADDERALL XR in the US until April 1, 2009, except in certainlimited circumstances, such as the launch of another party's generic version ofADDERALL XR. No payments to Barr are involved in the settlement agreement.Further information about the litigation proceedings relating to the Company'sADDERALL XR patents can be found in our filings with the US Securities andExchange Commission, including our Annual Report on Form 10-K for the year toDecember 31, 2005 and our most recent Quarterly Report on Form 10-Q for theperiod ended June 30, 2006.DAYTRANA for the treatment of ADHDFollowing its launch in June 2006, DAYTRANA achieved a 1.7% share of the ADHDmarket by the end of Q3 2006. Sales in this period were $9.9 million. Theaddition of DAYTRANA combined with growth in ADDERALL XR share has helped Shiregrow its total share of the ADHD market to 29% in the quarter ending September30, 2006 compared to 26% in the quarter ending September 30, 2005.CARBATROL for the treatment of EpilepsyUS prescriptions for the three months to September 30, 2006 were down 7%compared to the same period in 2005. This was primarily due to a 5% decline inthe US extended release carbamazepine prescription market. CARBATROL's marketshare remained constant at 42%.Sales of CARBATROL for the three months to September 30, 2006 were $20.4million, an increase of 27% compared to the same period in 2005 (2005: $16.1million). The difference between the increase in sales and decrease inprescriptions is due to price increases in October 2005 and July 2006, lowerlevels of pipeline de-stocking compared with Q3 2005 and reduced salesdeductions.In July 2006 Impax Laboratories, Inc. (Impax) deployed a sales force to beginpromotion of CARBATROL under a promotional services agreement for the US marketsigned in January 2006.Patent litigation proceedings with Nostrum Pharmaceuticals, Inc. (Nostrum)relating to CARBATROL are ongoing. On July 17, 2006 the Court entered an orderstaying discovery in this case until and through September 15, 2006. Theparties have requested and the Court has granted a stay of discovery until andthrough December 29, 2006. No trial date has been set. Nostrum's 30-month stayunder the Hatch-Waxman Act expired on February 6, 2006. Accordingly, the FDAmay approve Nostrum's ANDA, once it meets all regulatory requirements.On March 30, 2006 the Company was notified that Corepharma LLC (Corepharma) hadfiled an ANDA under the Hatch-Waxman Act seeking permission to market itsgeneric version of carbamazepine extended release products in 100mg, 200mg and300mg strengths. Shire Laboratories, Inc. filed suit against Corepharma for theinfringement of US Patent No. 5,326,570 (the `570 Patent) in the District Courtof New Jersey. The lawsuit triggered a stay of FDA approval of Corepharma'sgeneric products for 30 months from the date of Shire's receipt of Corepharma'snotice of ANDA filing. No discovery schedule or trial date has been set.Further information about the litigation proceedings relating to the Company'sCARBATROL patents can be found in our filings with the US Securities andExchange Commission, including our Annual Report on Form 10-K for the periodended December 31, 2005 and our most recent Quarterly Report on Form 10-Q forthe period ended June 30, 2006.PENTASA for the treatment of Ulcerative ColitisUS prescriptions for the three months to September 30, 2006 were up 4% comparedto the same period in 2005 primarily due to a 4% increase in the US oralmesalamine prescription market. PENTASA's market share remained constant at18%.Sales of PENTASA for the three months to September 30, 2006 were $36.9 million,an increase of 1% compared to the same period in 2005 (2005: $36.6 million).Sales growth is lower than prescription growth due to the lower levels ofpipeline stocking in Q3 2006 partly offset by the impact of the January 2006price increase.REPLAGAL for the treatment of Fabry DiseaseREPLAGAL was acquired by Shire as part of the TKT acquisition, which wascompleted on July 27, 2005. Product sales for the three months to September 30,2006 were $32.4 million, the majority of which were in Europe. Total sales forREPLAGAL, including pre-acquisition sales ($8.1m), for the three months toSeptember 30, 2005 were $24.1 million. This represents a like-for-like increasein sales of 34% which was due to greater European coverage by an increasednumber of sales representatives, and strong growth in the Rest of the Worldmarket.ELAPRASE for the treatment of Hunter DiseaseELAPRASE was launched at the end of July 2006 and has had a strong start withsales reaching $4.3 million by the end of Q3 2006.XAGRID for the treatment of ThrombocythemiaRest of the World (outside North America) sales were up by 11% to $13.3 million(2005: $12.0 million). Sales increased by 7% as expressed in the transactioncurrencies (XAGRID is primarily sold in Euros), due mainly to strong growth inFrance and Spain and benefited by 4% from favorable exchange rate movementsagainst the US$.FOSRENOL for the treatment of HyperphosphatemiaUS prescriptions for the three months to September 30, 2006 were up 12%compared to the same period in 2005. This was primarily due to FOSRENOLincreasing its share of the total US phosphate binding market, which inSeptember 2006 was 9% (2005: 8.5%), in a market that had itself grown 8% overthe same period. FOSRENOL was launched in the US in January 2005.US sales of FOSRENOL for the three months to September 30, 2006 were up 18% to$11.4 million (2005: $9.7 million). The increase in net sales compared toprescription growth is due to price increases in January 2006 and July 2006,larger prescription sizes due to the addition of the 1g and 750mg units andlower sales deductions, partially offset by destocking in Q3 2006.European sales of FOSRENOL for the 3 months to September 30, 2006 were $0.8million, giving total FOSRENOL sales worldwide of $12.2 million.FOSRENOL was launched in Austria, Ireland, Sweden and Denmark in December 2005and in South Korea in June 2006. On July 11, 2006 Shire received confirmationthat FOSRENOL had been recommended for approval through the Mutual RecognitionProcedure in 11 markets in Europe. On September 8, 2006 FOSRENOL was approvedin Germany and on September 21, 2006 it was approved in the UK. In Europe,FOSRENOL has also been approved in Sweden, Portugal, Italy, Poland, Austria,Finland, Czech Republic, Denmark, France, Belgium, Cyprus, Greece, Luxembourg,Netherlands, Ireland, Iceland, Malta and Estonia. Launches will continuethroughout Q4 2006 and 2007 in the EU, subject to finalization of nationallicensing and conclusion of pricing re-imbursement negotiations.On October 18, Health Canada granted a marketing license application forFOSRENOL. Launch is now planned for Q2 2007. 3. Royalties Royalty revenues increased to $60.4 million for the three months to September30, 2006 (2005: $60.2 million).Royalty HighlightsProduct Royalties to Shire Royalty growth1 Worldwide $M % in-market sales by licensee2 in Q3 2006 $M 3TC 36.5 -8%* 275 ZEFFIX 9.3 +21%** 80 Other*** 14.6 +13% n/a Total 60.4 0% n/a * The impact of foreign exchange movements has contributed +1% to the reportedgrowth** The impact of foreign exchange movements has contributed +2% to the reportedgrowth*** Includes REMINYL/RAZADYNE1 Compared to Q3 2005 * GlaxoSmithKline (GSK) 3TCRoyalties from sales of 3TC for the three months to September 30, 2006 were$36.5 million (2005: $39.6 million).Shire receives royalties from GSK on worldwide 3TC sales. GSK's worldwide salesof 3TC for the three months to September 30, 2006 were $275 million, a decreaseof 9% compared to the same period in 2005 (2005: $301 million). The nucleosideanalogue market for HIV has continued to grow, however competitive pressureswithin the market have increased, leading to a decline in 3TC sales.ZEFFIXRoyalties from sales of ZEFFIX for the three months to September 30, 2006 were$9.3 million (2005: $7.7 million).Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK's worldwidesales of ZEFFIX for the three months to September 30, 2006 were $80 million, anincrease of 19% compared to the same period in 2005 (2005: $67 million). Thisincrease was primarily due to strong growth in the Korean, Japanese and Chinesemarkets.OTHEROther royalties are primarily in respect of REMINYL and REMINYL XL (nowmarketed as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwideby Janssen Pharmaceutical N.V. (Janssen), an affiliate of Johnson & Johnson,with the exception of the United Kingdom and the Republic of Ireland whereShire has the exclusive marketing rights.Sales of the REMINYL/RAZADYNE range, for the symptomatic treatment of mild tomoderately severe dementia of the Alzheimer's type, continue to grow in theAlzheimer's market. Revenue in Q3 2006 was higher than in the same period in2005, partly due to the impact of wholesalers destocking in Q3 2005 followingthe launch of RAZADYNE ER in the US in Q2 2005.In June 2006 Janssen and Synaptech, Inc.(Synaptech) filed suit against Barr forinfringement of their patent rights relating to RAZADYNE ER as a result of Barrfiling an ANDA with the FDA for RAZADYNE ER. No court date has been set.Barr and other generics have filed ANDAs with the FDA as regards RAZADYNE andJanssen and Synaptech have filed suit against some of those ANDA filers. Thecourt date for these proceedings is June 2007. 4. Financial details Cost of product salesFor the three months to September 30, 2006 the cost of product sales amountedto 16% of product sales (2005: 20%). The increase in gross margin is primarilydue to the lower fair value adjustment for REPLAGAL acquired inventory in Q32006 versus Q3 2005. REPLAGAL's cost of product sales includes acquiredinventories, which in accordance with US GAAP have been accounted for at fairvalue. For the three months to September 30, 2006 the cost of product sales forREPLAGAL included a $6.7 million adjustment in respect of the acquiredinventory (2005: $17.2 million). This fair value adjustment increased Shire'scost of product sales as a percentage of product sales in Q3 2006 by 2% (2005:6%). All REPLAGAL inventories acquired as part of the TKT acquisition have nowbeen consumed.Research and Development (R&D)R&D expenditure increased from $75.1 million in the three months to September30, 2005 to $104.0 million for the three months to September 30, 2006. Theincrease was primarily due to upfront payments made to Duramed and Warren of$25 million and $5.5 million respectively.Expressed as a percentage of total revenues, R&D expenditure was 23% for thethree months to September 30, 2006 (2005: 20%). The upfront payments increasedShire's R&D expenditure as a percentage of total revenues in Q3 2006 by 7%.Selling, general and administrative (SG&A)SG&A expenses increased from $161.3 million in the three months to September30, 2005 to $214.9 million in the three months to September 30, 2006, anincrease of 33%. This increase is primarily related to the promotion and launchof DAYTRANA (including an increase in the ADHD sales force) and the recruitmentof new US and European sales forces to launch MESAVANCE and new US and Europeansales forces to launch Elaprase.As a percentage of product sales, SG&A expenses were 56% (2005: 52%),reflecting the recruitment of the new US sales forces prior to the launch oftheir associated products. This ratio of SG&A to product sales should reducefor Q4 2006 as sales from these launches increase.Depreciation and amortizationThe depreciation charge for the three months to September 30, 2006 was $11.0million (2005: $4.6 million). Amortization charges were $14.6 million for thethree months to September 30, 2006 (2005: $11.8 million). The increase in bothdepreciation and amortization is primarily due to the increase in the assetbase as a result of the TKT acquisition, together with the amortization ofcapitalized milestone payments for DAYTRANA.Integration costsFor the three months to September 30, 2006 the Company did not record any costsfor the integration of the TKT business into Shire (2005: $3.5 million).Gain on sale of product rightsFor the three months to September 30, 2006, the Company recognized a pre-taxgain of $63.0 million (2005: nil), on the disposal of ADDERALL to Duramed for$63.0 million in cash.Interest incomeFor the three months to September 30, 2006 the Company received interest incomeof $12.6 million (2005: $6.9 million). For both periods this income primarilyrelated to interest received on Shire's cash balances. Interest income for Q32006 is higher than Q3 2005 as a result of increased cash balances andincreases in US dollar interest rates.Interest expenseFor the three months to September 30, 2006 the Company incurred interestexpense of $7.0 million (2005: $3.5 million). In 2006 and 2005 this expenseprimarily relates to a provision for interest, which may be awarded by theCourt in respect of amounts due to those ex-TKT shareholders who have requestedappraisal of the acquisition consideration payable for their TKT shares.The trial date for the appraisal rights litigation has been set for April 23,2007.TaxationThe effective rate of tax for the three months to September 30, 2006 was 28%(2005: 29%, after excluding the in-process R&D write-off in respect of the TKTacquisition from the loss from continuing operations before income taxes). AtSeptember 30, 2006 net deferred tax assets of $107.4 million were recognized(December 31, 2005: $116.2 million).Equity in earnings/(losses) of equity method investeesNet earnings of $1.2 million were recorded for the three months to September30, 2006 (2005: net losses of $0.6 million). This comprised earnings of $1.6million from the 50% share of the antiviral commercialization partnership withGSK in Canada (2005: $1.2 million), offset by losses of $0.4 million being theCompany's share of losses in the GeneChem and EGS Healthcare Funds (2005:losses of $1.8 million).FINANCIAL INFORMATIONUnaudited US GAAP results for the 9 months to September 30, 2006Consolidated Balance Sheets ‚¹ Adjusted September 30, December 31, 2006 2005 $M $M ASSETS Current assets: Cash and cash equivalents 955.2 656.5 Restricted cash 29.6 30.6 Short-term investments - 6.9 Accounts receivable, net 308.5 329.9 Inventories 122.8 136.0 Deferred tax asset 63.9 54.2 Prepaid expenses and other current 106.6 98.1assets Total current assets 1,586.6 1,312.2 Investments 56.8 50.2 Property, plant and equipment, net 275.9 234.0 Goodwill 381.8 367.6 Other intangible assets, net 748.9 729.3 Deferred tax asset 43.5 62.0 Other non-current assets 9.9 42.9 Total assets 3,103.4 2,798.2 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 473.1 431.8 Liability to dissenting shareholders 445.8 427.6 Other current liabilities 147.8 106.0 Total current liabilities 1,066.7 965.4 Long-term debt, excluding current - 0.1installments Other non-current liabilities 46.3 43.4 Total liabilities 1,113.0 1,008.9 ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Unaudited US GAAP results for the 9 months to September 30, 2006Consolidated Balance Sheets (continued) ‚¹ Adjusted September 30, December 31, 2006 2005 $M $M Shareholders' equity: Common stock of 5p par value: 18,314.0 43.2 42.7million shares authorized; and 502.1 million shares issued and outstanding (2005: 495.7 million) Exchangeable shares: 1.5 million shares 69.6 101.2issued and outstanding (2005: 2.2 million) Treasury stock (71.1) (2.8) Additional paid-in capital 1,417.7 1,327.5 Accumulated other comprehensive income 94.8 71.5 Retained earnings 436.2 249.2 Total shareholders' equity 1,990.4 1,789.3 Total liabilities and shareholders' equity 3,103.4 2,798.2 ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Unaudited USGAAP results for the 3 months and 9 months to September 30, 2006Consolidated Statements of Operations ‚¹ Adjusted ‚¹ Adjusted 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2006 2005 2006 2005 $M $M $M $M Revenues: Product sales 386.2 309.2 1,108.2 930.2 Royalties 60.4 60.2 181.8 181.1 Other revenues 2.8 6.7 9.5 23.1 Total revenues 449.4 376.1 1,299.5 1,134.4 Costs and expenses: Cost of product sales 61.7 60.5 185.3 136.4 Research and development 104.0 75.1 304.0 253.2 Selling, general and 214.9 161.3 594.2 483.6administration Depreciation and 25.6 16.4 72.3 50.1amortization Intangible asset impairment - - - 3.0 Integration costs - 3.5 3.9 3.5 Reorganization costs - 6.5 - 9.4 In-process R&D write-off - 673.0 - 673.0 Gain on sale of product (63.0) - (63.0) -rights Total operating expenses 343.2 996.3 1,096.7 1,612.2 Operating income/(loss) 106.2 (620.2) 202.8 (477.8) Interest income 12.6 6.9 36.8 27.9 Interest expenses (7.0) (3.5) (19.1) (4.7) Other income, net 7.3 3.2 5.9 3.9 Total other income, net 12.9 6.6 23.6 27.1 Income/(loss) from 119.1 (613.6) 226.4 (450.7)continuing operations before income taxes and equity in earnings/(losses) of equity method investees Income taxes (33.1) (17.5) (62.9) (58.9) Equity in earnings/(losses) 1.2 (0.6) 5.5 0.1of equity method investees Income/(loss) from 87.2 (631.7) 169.0 (509.5)continuing operations Gain on disposition of - 1.0 40.6 4.1discontinued operations (net of income tax expense of $nil and $nil) Net income/(loss) 87.2 (630.7) 209.6 (505.4) ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Unaudited US GAAP results for the 3 months and 9 months to September 30, 2006Consolidated Statements of Operations (continued) 3 months to ‚¹ Adjusted 9 months to ‚¹ Adjusted September 3 months to September 9 months to 30, September 30, September 2006 30, 2006 30, 2005 2005 Earnings per share - basic Income/(loss) from 17.3c (126.2c) 33.5c (101.9c)continuing operations Gain on disposition of - 0.2c 8.1c 0.8cdiscontinued operations Earning/(loss) per ordinary 17.3c (126.0c) 41.6c (101.1c)share - basic Earnings per share - diluted Income/(loss) from 17.1c (126.2c) 33.2c (101.9c)continuing operations Gain on disposition of - 0.2c 8.0c 0.8cdiscontinued operations Earnings/(loss) per 17.1c (126.0c) 41.2c (101.1c)ordinary share - diluted Earning/(loss) per ADS - 51.3c (378.0c) 123.6c (303.3c)diluted Weighted average number of shares (millions): Basic 504.0 500.5 503.6 499.7 Diluted 509.1 500.5 508.7 499.7 ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Unaudited US GAAP results for the 3 months and 9 months to September 30, 2006Consolidated Statements of Cash Flows ‚¹ Adjusted ‚¹ Adjusted 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2006 2005 2006 2005 $M $M $M $M CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) 87.2 (630.7) 209.6 (505.4) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization - In cost of product sales 1.4 1.0 3.5 2.7 - In other costs and expenses 25.6 16.3 72.3 44.1 Share based compensation 9.1 7.8 25.8 20.8 In-process R&D write-off - 673.0 - 673.0 Movement in deferred taxes 6.0 42.6 5.0 31.6 Write-down of long term assets - 0.5 1.8 11.0 (Gain)/loss on sale of - (3.9) 0.2 (3.9)long-term assets Equity in (earnings)/losses of (1.2) 0.7 (5.5) (0.1)equity method investees Gain on sale of product rights (63.0) - (63.0) - Gain on disposition of - (1.1) (40.6) (4.2)discontinued operations Changes in operating assets and liabilities, net of acquisitions: Decrease/(increase) in 4.8 (6.1) 18.6 (33.9)accounts receivable Increase/(decrease) in sales 4.6 (6.0) 17.6 14.4deductions accrual Decrease/(increase) in 2.4 5.2 10.7 (1.3)inventory Increase in prepayments and (28.5) (32.8) (10.4) (24.4)other current assets Decrease/(increase) in other 0.2 (0.1) 3.0 (0.8)assets Increase/(decrease) in 40.1 (30.4) 94.9 8.1accounts payable and other liabilities Decrease in deferred revenue (12.4) (2.7) (6.4) (10.5) Returns on investment from 5.8 4.7 5.8 4.7joint venture Cash flow from discontinued - 1.1 - 0.7operations Net cash provided by operating 82.1 39.1 342.9 226.6activities (A) ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Unaudited US GAAP results for the 3 months and 9 months to September 30, 2006Consolidated Statements of Cash Flows (continued) ‚¹ Adjusted ‚¹ Adjusted 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2006 2005 2006 2005 $M $M $M $M CASH FLOWS FROM INVESTING ACTIVITIES: Movement in short-term 1.4 107.3 6.9 351.3investments Movement in restricted cash (0.1) - 1.0 (0.3) Purchase of subsidiary - (1,099.6) (0.8) (1,099.6)undertaking, net of cash acquired Expense of acquisitions - (24.1) - (24.1) Purchase of long-term (0.3) (0.2) (9.6) (7.7)investments Purchase of property, plant (20.6) (13.5) (71.2) (57.6)and equipment Purchase of intangible (2.6) (0.1) (52.8) (20.1)assets Proceeds from sale of 0.1 10.1 0.9 10.1long-term investments Proceeds from sale of - - - 0.1property, plant and equipment Proceeds on sale of product 63.0 - 63.0 -rights Proceeds from loan repaid by - - 70.6 -IDB Loans made to IDB - (13.3) - (43.2) Proceeds from sale of the - 30.0 - 92.2vaccines business Returns of investments from - 1.4 0.3 3.8equity investments Net cash provided by/(used in) 40.9 (1,002.0) 8.3 (795.1)investing activities (B) CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of 2% convertible - - (0.1) -loan Proceeds from exercise of 15.6 11.9 33.3 30.4options Excess tax benefit of share (2.0) 1.1 - 2.5based compensation, charged directly to equity Payment of dividend - - (22.6) (19.1) Payments to acquire treasury (66.3) - (68.3) -stock Net cash (used in)/provided (52.7) 13.0 (57.7) 13.8by financing activities (C ) Effect of foreign exchange (0.2) (2.5) 5.2 (7.0)rate changes on cash and cash equivalents (D) Net increase/(decrease) in 70.1 (952.4) 298.7 (561.7)cash and cash equivalents (A+B+C+D) Cash and cash equivalents at 885.1 1,502.2 656.5 1,111.5beginning of period Cash and cash equivalents at 955.2 549.8 955.2 549.8end of period ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.US GAAP results for the 3 months and 9 months to September 30, 2006Selected notes to the Unaudited US GAAP Financial Statements(1) Earnings per share ‚¹ Adjusted ‚¹ Adjusted 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2005 2006 2005 2006 $M $M $M $M Income/(loss) from 87.2 (631.7) 169.0 (509.5)continuing operations Gain on disposition of - 1.0 40.6 4.1discontinued operations Numerator for basic and 87.2 (630.7) 209.6 (505.4)diluted EPS ‚¹ Retrospectively adjusted following the adoption of SFAS 123R.Weighted average number of No of shares No of shares No of shares No of sharesshares: Millions Millions Millions Millions Basic 504.0 500.5 503.6 499.7 Effect of dilutive shares: Stock options 4.5 - 4.5 - Warrants 0.6 - 0.6 - Diluted 509.1 500.5 508.7 499.7 The share options and warrants not included in the calculation of the dilutedweighted average number of shares because the exercise prices exceeded Shire'saverage share price during the calculation period, are shown below: 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2005 2006 2005 2006 No of shares No of shares No of shares No of shares Millions Millions Millions Millions Share options 10.1 23.1 10.1 20.3 Warrants - 1.3 - 1.3 10.1 24.4 10.1 21.6 Unaudited US GAAP results for the 3 months to September 30, 2006Selected notes to the US GAAP Financial Statements (continued)(2) Analysis of revenues 3 months to 3 months to 3 months to 3 months to September 30, September 30 September 30, September 2006 2006 2005 30, % of total $M $M 2006 revenue % change Net product sales: CNS ADDERALL XR 207.6 165.9 +25% 46% ADDERALL 6.3 9.6 -34% 1% CARBATROL 20.4 16.1 +27% 5% DAYTRANA 9.9 - n/a 2% 244.2 191.6 +27% 54% GI PENTASA 36.9 36.6 +1% 8% COLAZIDE 2.2 2.3 -4% 1% 39.1 38.9 +1% 9% HGT REPLAGAL* 32.4 16.0 n/a 7% ELAPRASE 4.3 - n/a 1% 36.7 16.0 129% 8% GP XAGRID 13.3 12.0 +11% 3% FOSRENOL 12.2 9.7 +26% 3% CALCICHEW 11.1 10.1 +10% 2% REMINYL/REMINYL XL 5.7 3.3 +72% 1% SOLARAZE 2.9 3.3 -12% 1% VANIQA 1.7 1.8 -6% 0% LODINE 3.1 3.2 -3% 1% 50.0 43.4 +15% 11% Other product sales 16.2 19.3 -16% 4% Total product sales 386.2 309.2 +25% 86% Royalty income: 3TC 36.5 39.6 -8% 8% ZEFFIX 9.3 7.7 +21% 2% Others 14.6 12.9 +13% 3% 60.4 60.2 +0% 13% Other revenues 2.8 6.7 -58% 1% Total revenues 449.4 376.1 +19% 100% * REPLAGAL was acquired in the acquisition of TKT which was completed on July27, 2005. Total sales for REPLAGAL, including pre-acquisition sales for the 3months ended September 30, 2005 were $24.1 million. Including pre-acquisitionsales for the 3 months ended September 30, 2005, product sales growth was 34%for REPLAGAL.Unaudited US GAAP results for the 9 months to September 30, 2006Selected notes to the US GAAP Financial Statements (continued)(2) Analysis of revenues 9 months to 9 months to 9 months to 9 months to September 30, September 30 September 30, September 2006 2006 2005 30, % of total $M $M 2006 revenue % change Net product sales: CNS ADDERALL XR 634.4 516.8 +23% 48% ADDERALL 25.2 31.0 -19% 2% CARBATROL 50.7 54.8 -7% 4% DAYTRANA 9.9 - n/a 1% 720.2 602.6 +20% 55% GI PENTASA 99.5 93.8 +6% 8% COLAZIDE 6.8 6.5 +5% 0% 106.3 100.3 +6% 8% HGT REPLAGAL 86.5 16.0 n/a 7% ELAPRASE 4.3 - - 0% 90.8 16.0 468% 7% GP XAGRID 39.5 36.4 +9% 3% FOSRENOL 26.1 24.5 +7% 2% CALCICHEW 33.2 28.4 +17% 3% REMINYL/REMINYL XL 15.0 9.4 +60% 1% SOLARAZE 9.8 8.8 +11% 1% VANIQA 5.7 4.3 +33% 0% LODINE 9.5 9.5 0% 1% 138.8 121.3 +14% 11% Other product sales 52.1 90.0 -42% 4% Total product sales 1,108.2 930.2 +19% 85% Royalty income: 3TC 114.3 119.5 -4% 9% ZEFFIX 25.4 22.0 +15% 2% Others 42.1 39.6 +6% 3% 181.8 181.1 +0% 14% Other revenues 9.5 23.1 -59% 1% Total revenues 1,299.5 1,134.4 +15% 100% * REPLAGAL was acquired in the acquisition of TKT which was completed on July27, 2005. Total sales for REPLAGAL, including pre-acquisition sales for the 9months ended September 30, 2005 were $69.2 million. Including pre-acquisitionsales for the 9 months ended September 30, 2005, product sales growth was 25%for REPLAGAL.Non GAAP reconciliation of numerator for diluted EPSfor the 3 months and 9 months to September 30, 2006 ‚¹ Adjusted ‚¹ Adjusted 3 months to 3 months to 9 months to 9 months to September September September September 30, 30, 30, 30, 2006 2005 2006 2005 $M $M $M $M Net income/(loss) for basic 87.2 (630.7) 209.6 (505.4)EPS Add back: TKT in-process R&D write-off - 673.0 - 673.0 TKT cost of product sales 6.7 17.2 47.0 17.2fair value adjustment New River milestone payment - - 50.0 - New River upfront payment - - - 50.0 Warren upfront payment 5.5 - 5.5 - Duramed upfront payment 25.0 - 25.0 - New listed holding company - 4.5 - 4.5costs TKT integration costs - 3.5 3.9 3.5 Reorganization costs - 6.5 - 9.4 Gain on sale of product (63.0) - (63.0) -rights Taxes on above adjustments 7.1 (8.9) (19.1) (23.7) Gain on disposition of - (1.0) (40.6) (4.1)discontinued operations Total non GAAP adjustment (18.7) 694.8 8.7 729.8 Numerator for non GAAP - 68.5 64.1 218.3 224.4diluted EPS Non GAAP reconciliation of reported EPSfor the 3 months and 9 months to September 30, 2006 3 months to ‚¹ Adjusted 9 months to ‚¹ Adjusted September 3 months to September 9 months to 30, September 30, September 2006 30, 2006 30, 2005 2005 Earnings/(loss) per ordinary 17.1c (126.0c) 41.2c (101.1c)share-diluted Add back: Gain on disposition of - (0.2c) (8.0c) (0.8c)discontinued operations Diluted EPS from continuing 17.1c (126.2c) 33.2c (101.9c)operations Change in denominator due to - 1.6c - 0.2ceffect on dilution of non GAAP adjustments* 17.1c (124.6c) 33.2c (101.7c) Add back: TKT in-process R&D write-off - 132.7c - 134.3c TKT cost of product sales 1.3c 3.4c 9.3c 3.4cfair value adjustment New River milestone payment - - 9.8c - New River upfront payment - - - 10.0c Warren upfront payment 1.1c - 1.1c - Duramed upfront payment 4.9c - 4.9c - New listed holding company - 0.9c - 0.9ccosts TKT integration costs - 0.7c 0.8c 0.7c Reorganization costs - 1.3c - 1.9c Gain on sale of product (12.4c) - (12.4c) -rights Taxes on above adjustments 1.4c (1.6c) (3.8c) (4.7c) Non GAAP - diluted EPS per 13.4c 12.8c 42.9c 44.8cordinary share Non GAAP - diluted EPS per 40.2c 38.3c 128.7c 134.4cADS Total non GAAP adjustments - (3.7c) 138.8c 9.7c 145.9cdiluted EPS per ordinary share (*) Since the items added back result in positive non GAAP net income for Q3 2005 and the year to December 31, 2005, the options, warrants and convertible debt become dilutive under this measure and are therefore included in the calculation of the denominator for the non GAAP EPS. Registered in England 5492592Registered Office as aboveENDSHIRE PLCRelated Shares:
Shire