Product sales grew to $3.8 billion driven by Immunology, recently launched products, and international expansion
Innovative pipeline continued to advance with 7 programs in registration and 16 in Phase 3
U.S. Food and Drug Administration (FDA) approval received for state-of-the-art plasma manufacturing facility
$0.9 billion in net operating cash flow enabled continued debt pay-down
July 31, 2018 – Shire plc (Shire) (LSE: SHP, NASDAQ: SHPG), the leading global biotech company focused on rare diseases, announces unaudited results for the three months ended June 30, 2018.
Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, commented:
“Shire continued to deliver on its key priorities of commercial execution, pipeline advancement, debt pay-down, and portfolio optimization during the second quarter. We drove product sales growth of 6% over the prior year period led by the strong performance of our Immunology franchise, continued uptake of our recently launched products, and expansion in international markets.
“During the quarter, our Board reached an agreement with the Takeda Board on the terms of a recommended offer for Takeda to acquire Shire. The acquisition is expected to close in H1 2019, subject to shareholder approval of both companies and additional regulatory approvals. In the meantime, we remain resolutely focused on execution as these results demonstrate.
“We also achieved important regulatory milestones and continued to advance our robust late stage pipeline. We received U.S. FDA approval for CINRYZE for pediatric use and a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) recommending marketing authorization for VEYVONDI in Europe. In addition, we gained U.S. FDA approval for our state-of-the-art plasma manufacturing facility near Covington, Georgia supporting the continued growth of our immunoglobulin portfolio."
|Financial Highlights||Q2 2018||Reported Growth||Non GAAP CER(1)|
|Product sales(2)||$3,809 million||+6%||+4%|
|Total revenues(2)||$3,920 million||+5%||+3%|
|Operating income from continuing operations||$830 million||+108%|
|Non GAAP operating income(1)||$1,492 million||+0%||-1%|
|Net income margin(3)(4)||16%||+10ppc|
|Non GAAP EBITDA margin(1)(3)(4)||42%||-1ppc|
|Net income||$616 million||+156%|
|Non GAAP net income(1)||$1,186 million||+4%|
|Diluted earnings per ADS(5)||$2.01||+154%|
|Non GAAP diluted earnings per ADS(1)(5)||$3.88||+4%||+2%|
|Net cash provided by operating activities||$940 million||-23%|
|Non GAAP free cash flow(1)||$756 million||-29%|
(1) The Non GAAP financial measures included within this release are explained on pages 27 – 28, and are reconciled to the most directly comparable financial measures prepared in accordance with U.S. GAAP on pages 20 – 23.
(2) In Q2 2018, we returned to a single segment approach to managing our business. This decision was precipitated by our Board's acceptance of Takeda's offer to acquire Shire and reflects our focus on the performance of the entire business as it operates in this current environment.
(3) Percentage point change (ppc).
(4) Calculated as a percentage of total revenues.
(5) Diluted weighted average number of ordinary shares of 917.5 million.
Product sales growth
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The quarterly earnings presentation will be available today at 13:00 BST / 8:00 EDT on:
Stephen Williams, Deputy Company Secretary, is responsible for arranging the release of this announcement.
This announcement contains inside information.
Shire is the global biotechnology leader serving patients with rare diseases and specialized conditions. We seek to push boundaries through discovering and delivering new possibilities for patient communities who often have few or no other champions. Relentlessly on the edge of what’s next, we are serial innovators with a diverse pipeline offering fresh thinking and new hope. Serving patients and partnering with healthcare communities in over 100 countries, we strive to be part of the entire patient journey to enable earlier diagnosis, raise standards of care, accelerate access to treatment, and support patients. Our diverse portfolio of therapeutic areas includes Immunology, Hematology, Genetic Diseases, Neuroscience, Internal Medicine, Ophthalmics, and Oncology.
Championing patients is our call to action - it brings the opportunity - and responsibility - to change people’s lives.
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 future strategy, plans, objectives, expectations and intentions, projected revenues, the anticipated timing of clinical trials and approvals for, and the commercial potential of, inline or pipeline products, 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, the following:
a further list and description of risks, uncertainties and other matters can be found in Shire’s most recent Annual Report on Form 10-K and in Shire’s subsequent Quarterly Reports on Form 10-Q, in each case including those risks outlined in “ITEM 1A: Risk Factors”, and in subsequent reports on Form 8-K and other Securities and Exchange Commission filings, all of which are available on Shire’s website.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by applicable law, we do not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
In its FY 2017 results announcement on February 14, 2018 (FY 2017 Announcement), Shire published its full year 2018 outlook for total revenue(1) of $15.4-$15.9 billion, GAAP diluted EPS of $7.30-$7.90, and non-GAAP diluted EPS of $14.90-$15.50 (Full Year 2018 Outlook). Shire also announced “We are committed to achieving our projected revenue target of $17-$18 billion in 2020” and “With the already disclosed manufacturing and SG&A cost reduction initiatives, we are on track to achieve mid-forties Non-GAAP EBITDA margin by 2020” (Mid-Term Outlook).
Certain of the statements on pages 4 and 23 of this announcement include a “profit forecast” for the purposes of Rule 28 of the City Code on Takeovers and Mergers (the “Code”) which was first contained in the FY 2017 Announcement.
In accordance with Rule 28.1(c) of the Code, the directors of Shire confirm that: (i) each of the Full Year 2018 Outlook and the Mid-Term Outlook remains valid and has been properly compiled on the basis of the assumptions stated in the FY 2017 Announcement; and (ii) the basis of accounting used for each of the Full Year 2018 Outlook and the Mid-Term Outlook is consistent with Shire’s accounting policies.
The Full Year 2018 Outlook and the Mid-Term Outlook do not take into account, and exclude the impact of, the anticipated completion of the sale of the Oncology franchise to Servier S.A.S. (as announced by Shire on April 16, 2018).
(1) Management is providing guidance for total revenue. Total revenue is comprised of total product sales and royalties & other revenues. Pursuant to a change in U.S. GAAP related to accounting for revenue, certain revenue formerly classified as royalties are now recorded as product sales.
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