Shire announces second quarter earnings and increases full year Non GAAP diluted EPS guidance to mid-to-high single digit growth

Shire (LSE: SHP, NASDAQ: SHPG) announces unaudited results for the three months to June 30, 2015.

Financial Highlights	Q2 2015	Growth(1)	Non GAAP CER(1)(2)
Product sales	$1,476 million	+0%	+6%
Product sales excluding INTUNIV®	$1,467 million	+7%	+12%
Total revenues	$1,558 million	+4%	+9%
Non GAAP operating income	$614 million	-3%	+0%
US GAAP operating income from continuing operations	$133 million	-61%(3)
Non GAAP EBITDA margin (excluding royalties & other revenues)(4)	39%	-5pps(5)
US GAAP net income margin(6)	10%	-25pps(3)
Non GAAP diluted earnings per ADS	$2.63	-2%	+3%
US GAAP diluted earnings per ADS	$0.81	-70%
Non GAAP cash generation	$505 million	-23%
Non GAAP free cash flow	$432 million	-48%
US GAAP net cash provided by operating activities	$452 million	-46%

 

⁽¹⁾ Percentages compare to equivalent 2014 period.
⁽²⁾ On a Constant Exchange Rate (“CER”) basis, which is a Non GAAP measure.
⁽³⁾ Q2 2015 includes a net charge of $243 million related to impairment of SHP625 & SHP608. Impairment charges of $523 million are partially offset by the associated credits of $280 million relating to a change in the fair value of contingent consideration liabilities.
⁽⁴⁾ Non GAAP earnings before interest, tax, depreciation and amortization (“EBITDA”) as a percentage of product sales, excluding royalties and other revenues.
⁽⁵⁾ Percentage point change (“PPS”).
⁽⁶⁾ US GAAP net income as a percentage of total revenues.

The Non GAAP financial measures included within this release are explained on pages 29 - 30 of the full release, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 21 - 26 of the full release.

Highlights:

• Q2 product sales growth of 7% excluding INTUNIV (12% on a Non GAAP CER basis); first half product sales excluding INTUNIV up 11% (16% on a Non GAAP CER basis)
• Product sales this quarter driven by strong performance from  VYVANSE^®,  FIRAZYR^®, LIALDA^®/MEZAVANT^®
• Early positive momentum from NPS Pharmaceuticals (“NPS”) products, NATPARA^® and GATTEX^®/REVESTIVE^®; NPS commercial integration complete
• Significant Q2 investment in future growth drivers including the launch of the Binge Eating Disorder (“BED”) adult indication, market expansion of VYVANSE in adults and behind GATTEX/REVESTIVE and NATPARA acquired with NPS
• Innovative pipeline advancing, with SHP465 pediatric Phase 3 initiated ahead of schedule, favorable FDA feedback on path forward for Maribavir Phase 3, and OPUS 3 for lifitegrast fully enrolled
• SHP625 Phase 2 studies in two rare cholestatic liver indications (PBC, PFIC) did not meet primary endpoints; totality of data under review to determine path forward
• Non-cash impairments for SHP625 and SHP608 affect US GAAP operating income; payments related to purchase of NPS impact cash generation⁽¹⁾
• Non GAAP diluted earnings per ADS growth guidance increased to mid-to-high single digit percent range for the full year (2015)

Flemming Ornskov, M.D. Chief Executive Officer, commented:

Alongside our strong performance in the first half of 2015, we are progressing our transformation to becoming a leading global biotech company and are confident in delivering on our 10x20 ambitions. During the second quarter, we delivered 7% product sales growth on a reported basis and 12% on a Non GAAP CER basis, in both cases excluding INTUNIV. This is a solid performance, achieved amid continued investment in future innovation and growth drivers. I am especially pleased with the performance of VYVANSE both in the adult ADHD market and with the launch of the new adult indication for moderate to severe Binge Eating Disorder. The early performance of the products we gained from NPS underscores our ability to acquire and integrate assets and deliver value. Given our first half performance and confidence in the underlying business, we are increasing our full-year earnings guidance, and now expect Non GAAP diluted earnings per ADS growth to be in the mid-to-high single digit percent range for 2015. Additionally, we expect to meet our 10x20 target of $6.5 billion of product sales in 2016, and exceed it with the contribution from our recent acquisition of NPS.

Download the PDF for the full release

For further information please contact:

Investor Relations
- Sarah Elton-Farr	[email protected]	+44 1256 894 157
Media
- Michele Galen	[email protected]	+1 781 482 1867
- Brooke Clarke	[email protected]	+44 1256 894 829

 

Dial in details for the live conference call for investors at 14:00 BST / 09:00 EDT on July 23, 2015:

UK dial in:	0808 237 0030 or 020 3139 4830
US dial in:	1 866 928 7517 or 1 718 873 9077
International Access Numbers:	Click here
Password/Conf ID:	25841912#
Live Webcast:	Click here

 

⁽¹⁾ Q2 2015 includes a net charge of $243 million related to impairment of SHP625 & SHP608. Impairment charges of $523 million are partially offset by the associated credits of $280 million relating to a change in the fair value of contingent consideration liabilities.

The quarterly earnings presentation will be available today at 13:00 BST / 08:00 EDT on:
- Shire.com Investors section
- Shire's IR Briefcase in the iTunes Store

NOTES TO EDITORS

Shire enables people with life-altering conditions to lead better lives.

Our strategy is to focus on developing and marketing innovative specialty medicines to meet significant unmet patient needs.

We focus on providing treatments in Rare Diseases, Neuroscience, Gastrointestinal and Internal Medicine and are developing treatments for symptomatic conditions treated by specialist physicians in other targeted therapeutic areas, such as Ophthalmics.

www.shire.com

THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

 

Statements included herein that are not historical facts, including without limitation statements concerning our 10x20 ambitions and targets, are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially adversely affected. The risks and uncertainties include, but are not limited to, that:

• Shire’s products may not be a commercial success;
• product sales from ADDERALL XR and INTUNIV are subject to generic competition;
• the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payers in a timely manner for Shire's products may affect future revenues, financial condition and results of operations;
• Shire conducts its own manufacturing operations for certain of its products and is reliant on third party contract manufacturers to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time;
• the manufacture of Shire’s products is subject to extensive oversight by various regulatory agencies. Regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, an increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
• Shire has a portfolio of products in various stages of research and development. The successful development of these products is highly uncertain and requires significant expenditures and time, and there is no guarantee that these products will receive regulatory approval;
• the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely affect Shire’s revenues, financial condition or results of operations;
• investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in significant legal costs and the payment of substantial compensation or fines;
• adverse outcomes in legal matters and other disputes, including Shire’s ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;
• Shire faces intense competition for highly qualified personnel from other companies and organizations. Shire is undergoing a corporate reorganization and was the subject of an unsuccessful acquisition proposal and the consequent uncertainty could adversely affect Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
• failure to achieve Shire’s strategic objectives with respect to the acquisition of NPS Pharmaceuticals Inc. may adversely affect Shire’s financial condition and results of operations; and

other risks and uncertainties detailed from time to time in Shire’s filings with the Securities and Exchange Commission, including those risks outlined in “Item 1A: Risk Factors” in Shire’s Annual Report on Form 10-K for the year ended December 31, 2014.