Dublin, Ireland – January 8, 2018 – Shire plc (LSE: SHP, NASDAQ: SHPG) (‘Shire’ or the ‘Company’), continues to progress its strategy as the leading global biotech company focused on rare diseases. Shire expects continued revenue growth driven by a diverse portfolio of leading brands including those within its Immunology franchise, which grew 21% in the first three quarters of 2017 on a pro forma basis. In addition, Shire continues to have a promising late stage pipeline with fifteen programs currently in Phase 3. The Company projects total revenues to reach $17-18 billion by 2020.
In August 2017, Shire announced that it was conducting a strategic review of its neuroscience business. Following the first stage of this review, the Board has concluded that the neuroscience business warrants additional focus and investment and that there is a strong business rationale for creating two distinct business divisions within Shire: a Rare Disease Division and a Neuroscience Division. Each division will benefit from sharper management focus, greater strategic clarity, and an increased ability to deploy resources to key growth priorities. The Board believes this will be an important first step in enabling both divisions to maximize mid- to long-term product sales, cash generation, and innovation.
Shire expects to report the operational performance metrics of each division separately beginning with the first quarter of 2018. The second stage of the review will include continuing to evaluate all strategic alternatives, including the merits of an independent listing for each of the two divisions. The Company will give an update on the second stage of the review in the second half of 2018.
In addition, the Company confirms that its debt repayment schedule remains on track and announces a target Non GAAP Net Debt to EBITDA ratio of below 2.5x by the end of 2018, excluding the effect of any bolt-on acquisitions or licensing transactions.
Flemming Ornskov, M.D., M.P.H., Chief Executive Officer, Shire said: “Shire has undergone a significant transformation over the last five years creating two market-leading businesses with distinct profiles and future needs. Simultaneously, Shire has established a strong track record of growth and execution. Our new Rare Disease and Neuroscience Divisions will be well positioned for growth, profitability, innovation, and serving the needs of patients. We are also pleased with our continued progress on delevering and will now be targeting a Non GAAP Net Debt to EBITDA* ratio of below 2.5x by the end of 2018.”
Rationale for Divisional Structure
The rare disease and neuroscience businesses have distinct strategic priorities. Following the creation of the two divisions, Rare Disease and Neuroscience will be better positioned to deliver their full potential, enabling them to maximize mid- to long-term product sales, innovation, and profitability. Shire will use 2018 to optimize the portfolio for each of these two divisions, which may include business development activities such as partnerships, licensing agreements, and bolt-on acquisitions.
Shire has remained highly cash generative in 2017 and made good progress with its plans to reduce its Non GAAP Net Debt* following the acquisition of Baxalta in 2016. With continued strong cash generation, Shire anticipates its Non GAAP Net Debt* to further decline during the course of 2018 and today announces a target Non GAAP Net Debt to EBITDA* ratio of below 2.5x by the end of 2018, excluding the effect of any bolt-on acquisitions or licensing transactions. Shire also reiterates that its 2018 capital allocation priorities remain unchanged—investing in organic growth, reducing leverage, maintaining a progressive dividend policy, and in the event of surplus capital the consideration of selective in-licensing and bolt-on business development opportunities, as well as the consideration of share buybacks.
* Non GAAP EBITDA consists of Operating Income from Continuing Operations less Amortization, Depreciation and certain Non GAAP adjustments. Non GAAP net debt represents cash and cash equivalents less short- and long-term borrowings, capital leases and other debt.
Live audio webcast:
A live audio webcast of Dr. Ornskov’s J.P. Morgan Healthcare Conference presentation and the questions & answers session will be available on Shire's Investor website at http://investors.shire.com/presentations-and-reports today at 10:30am PST / 1:30pm EST / 6:30pm GMT. Subsequently, a replay of the webcast will be available on this same website for approximately 90 days.
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Stephen Williams, Deputy Company Secretary, is responsible for arranging the release of this announcement.
This announcement contains inside information.
Shire is the global leader in serving patients with rare diseases. We strive to develop best-in-class therapies across a core of rare disease areas including hematology, immunology, genetic diseases, neuroscience, and internal medicine with growing therapeutic areas in ophthalmics and oncology. Our diversified capabilities enable us to reach patients in more than 100 countries who are struggling to live their lives to the fullest.
We feel a strong sense of urgency to address unmet medical needs and work tirelessly to improve people’s lives with medicines that have a meaningful impact on patients and all who support them on their journey.
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 Shire’s 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.