Shire plc : Half-yearly report
Half-yearly Report
August 4, 2017 - Shire plc (LSE: SHP, NASDAQ: SHPG), ("Shire" / the "Group") in accordance with the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, is publishing its Half-yearly Report for the six months ended June 30, 2017.
On August 3, 2017, the Group announced its results for the same period.
Stephen Williams
Deputy Company Secretary
For further information please contact:
Investor Relations | |||
Ian Karp | ikarp@shire.com | +1 781 482 9018 | |
Robert Coates | rcoates@shire.com | +44 1256 894874 | |
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Media | |||
Lisa Adler | lisa.adler@shire.com | +1 617 588 8607 | |
Debbi Ford | debbi.ford@shire.com | +1 617 949 9083 |
NOTES TO EDITORS
About Shire
Shire is the leading global biotechnology company focused on serving people with rare diseases. We strive to develop best-in-class products, many of which are available in more than 100 countries, across core therapeutic areas including Hematology, Immunology, Neuroscience, Ophthalmics, Lysosomal Storage Disorders, Gastrointestinal / Internal Medicine / Endocrine and Hereditary Angioedema; and a growing franchise in Oncology.
Our employees come to work every day with a shared mission: to develop and deliver breakthrough therapies for the hundreds of millions of people in the world affected by rare diseases and other high-need conditions, and who lack effective therapies to live their lives to the fullest.
Shire plc
Half-yearly Report 2017
Registered in Jersey, No. 99854, 22 Grenville Street, St Helier, Jersey JE4 8PX
Contents
The "safe harbor" statement under the Private Securities Litigation Reform Act of 1995 | |
Trademarks | |
Chief Executive Officer's review | |
Business overview for the six months to June 30, 2017 | |
Results of operations for the six months to June 30, 2017 and June 30, 2016 | |
Principal risks and uncertainties | |
Directors' responsibility statement | |
Unaudited consolidated balance sheets at June 30, 2017 and December 31, 2016 | |
Unaudited consolidated statements of operations for the six months to June 30, 2017 and June 30, 2016 | |
Unaudited consolidated statements of comprehensive income for the six months to June 30, 2017
and June 30, 2016 | |
Unaudited consolidated statement of changes in equity for the six months to June 30, 2017 | |
Unaudited consolidated statement of cash flows for the six months to June 30, 2017 and
June 30, 2016 | |
Notes to the unaudited consolidated financial statements | |
Independent review report to Shire plc | |
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, 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:
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Shire's products may not be a commercial success;
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increased pricing pressures and limits on patient access as a result of governmental regulations and market developments may affect Shire's future revenues, financial condition and results of operations;
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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;
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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, among other things, significant delays, an increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
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certain of Shire's therapies involve lengthy and complex processes, which may prevent Shire from timely responding to market forces and effectively managing its production capacity;
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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;
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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 conditions or results of operations;
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Shire's products and product candidates face substantial competition in the product markets in which it operates, including competition from generics;
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adverse outcomes in legal matters, tax audits 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 the Group's revenues, financial condition or results of operations;
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inability to successfully compete for highly qualified personnel from other companies and organizations;
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failure to achieve the strategic objectives, including expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits at the time anticipated or at all with respect to Shire's acquisitions, including of NPS Pharmaceuticals Inc. ("NPS"), Dyax Corp. ("Dyax") or Baxalta Incorporated ("Baxalta"), may adversely affect Shire's financial condition and results of operations;
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Shire's growth strategy depends in part upon its ability to expand its product portfolio through external collaborations, which, if unsuccessful, may adversely affect the development and sale of its products;
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a slowdown of global economic growth, or economic instability of countries in which Shire does business, as well as changes in foreign currency exchange rates and interest rates, that adversely impact the availability and cost of credit and customer purchasing and payment patterns, including the collectability of customer accounts receivable;
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failure of a marketed product to work effectively or if such a product is the cause of adverse side effects could result in damage to Shire's reputation, the withdrawal of the product and legal action against Shire;
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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;
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Shire is dependent on information technology and its systems and infrastructure face certain risks, including from service disruptions, the loss of sensitive or confidential information, cyber-attacks and other security breaches or data leakages that could have a material adverse effect on Shire's revenues, financial condition or results of operations;
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Shire incurred substantial additional indebtedness to finance the Baxalta acquisition, which has increased its borrowing costs and may decrease its business flexibility; and
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 the Group or any person acting on its 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, the Group does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
Trademarks
The Group owns or has rights to trademarks, service marks or trade names that are used in connection with the operation of its business. In addition, its names, logos and website names and addresses are owned by the Group or licensed by the Group. The Group also owns or has the rights to copyrights that protect the content of its solutions. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Quarterly Report on Form 10-Q are listed without the ©, ® and (TM) symbols, but the Group will assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensors to these trademarks, service marks, trade names and copyrights.
This Half-yearly Report may include trademarks, service marks or trade names of other companies. The Group's use or display of other parties' trademarks, service marks, trade names or products is not intended to, and does not imply a relationship with, or endorsement or sponsorship of the Group by, the trademark, service mark or trade name.
Chief Executive Officer's review
We are pleased to enclose our financial results for the six-month period ended June 30, 2017. This Half-yearly Report includes condensed consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP").
Flemming Ornskov, M.D., M.P.H. Shire's Chief Executive Officer, commented:
"Shire delivered strong top-line growth and significantly advanced our pipeline during the first half of 2017. We saw significant contributions from our broad and diverse portfolio and further realized cost synergies from our integration with Baxalta, which continued ahead of schedule.
"Total reported product sales in the first half of 2017 were $7.0 billion, up 77% against first half of 2016, primarily due to the inclusion of Baxalta product revenues. We also delivered product sales growth in Shire's legacy business versus first half of 2016: Genetic Diseases up 8% to $1,401 million and Internal Medicine up 12% to $903 million.
"We continued to drive the late-stage clinical pipeline, with milestones achieved in programs across our core therapeutic areas. Most recently, we announced positive topline data from our Phase 3 pivotal trial of SHP643 in Hereditary Angioedema, and anticipate submission of the BLA in late 2017 or early 2018. MYDAYIS, a once-daily treatment for patients with ADHD, received US FDA approval and will be launched in September. In addition, we were granted European Union (EU) Conditional Marketing Authorisation for NATPAR (Parathyroid Hormone) for the treatment of patients with chronic hypoparathyroidism, and received European Medicines Agency (EMA) validation of the VEYVONDI [von Willebrand factor (Recombinant)] Marketing Authorization Application for treatment of von Willebrand Disease (VWD).
"We are at an exciting inflection point, with both our rare disease and neuroscience businesses performing strongly and each having significant growth potential over the coming years. The strength and scale of our business provides us with the opportunity to further optimize our franchise portfolio - one of our key priorities communicated earlier this year. By year end, we expect to complete a formal evaluation of the full range of strategic options for the neuroscience franchise, including the potential for its independent public listing.
"As we enter the second half of 2017, we are focused on generating strong organic growth while continuing to deliver on our key priorities - launching more than 80 products globally by leveraging our expanded commercial platform, progressing our late-stage pipeline, integrating Baxalta, and paying down debt. We remain very confident about Shire's long-term prospects."
Flemming Ornskov, M.D., M.P.H.
Chief Executive Officer
Business overview for the six months to June 30, 2017
The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Half-yearly Report.
Significant Events in the Six Months Ended June 30, 2017 and Recent Developments
Corporate Strategy
Shire to assess strategic options for its Neuroscience franchise
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As part of the Board's ongoing commitment to optimize Shire's portfolio and strategic focus, Shire is assessing strategic options for our Neuroscience franchise. These options may include the independent public listing of the Neuroscience franchise. Shire intends to complete this strategic review by year end.
Business Development
Shire entered into a licensing agreement for SHP659 (formerly known as P-321)
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On May 1, 2017, Shire announced it agreed to license the exclusive worldwide rights to P-321 from Parion Sciences. P-321 is a Phase 2 investigational epithelial sodium channel inhibitor for the potential treatment of dry eye disease in adults. Shire will develop, and if approved, commercialize this compound which would expand our leadership position in ophthalmics and provide another important treatment option for patients with dry eye disease.
Shire entered into a licensing agreement for Novimmune bi-specific antibody
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On July 18, 2017, Shire entered into a licensing agreement with Novimmune S.A. The license grants Shire exclusive worldwide rights to develop and commercialize a bi-specific antibody in pre-clinical development for the treatment of hemophilia A and hemophilia A patients with inhibitors.
Products
FIRAZYR for the treatment of Hereditary Angioedema ("HAE") in Japan
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On July 6, 2017, Shire submitted a Japanese New Drug Application to the Pharmaceutical and Medical Devices Agency in Japan for the treatment of HAE.
VEYVONDI for the treatment of adults affected by Von Willebrand Disease ("VWD")
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On June 22, 2017, Shire announced that the European Medicines Agency ("EMA") validated the Marketing Authorization Application for VEYVONDI to prevent and treat bleeding episodes and peri-operative bleeding in adults (age 18 and older) diagnosed with VWD.
MYDAYIS for the treatment of attention deficit hyperactivity disorder ("ADHD")
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On June 20, 2017, Shire announced that the U.S. Food and Drug Administration ("FDA") approved MYDAYIS (mixed salts of a single-entity amphetamine product), a once-daily treatment comprised of three different types of drug-releasing beads for patients aged 13 years and older with ADHD.
NATPAR for the treatment of chronic hypoparathyroidism
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On April 26, 2017, Shire announced the European Commission (EC) granted Conditional Marketing Authorization for NATPAR (rhPTH[1-84]), the first recombinant human protein with the full length 84-aminoacid sequence of endogenous parathyroid hormone (PTH), as an adjunctive treatment for adult patients with chronic hypoparathyroidism who cannot be adequately controlled with standard therapy alone.
VYVANSE for the treatment of ADHD and Binge Eating Disorder ("BED")
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On April 18, 2017, Shire announced that VYVANSE (lisdexamfetamine dimesylate) CII is now available in the United States in a new chewable tablet formulation, following FDA approval in January 2017.
INTUNIV for the treatment of ADHD in Japan
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On March 30, 2017, Shire's partner in Japan, Shionogi & Co., Ltd, received approval from the Japanese Ministry of Health, Labor and Welfare to manufacture and market INTUNIV for ADHD in Japan.
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On May 29, 2017, Shire's partner in Japan, Shionogi & Co., Ltd, launched INTUNIV for the treatment of ADHD in children and adolescents from six to 17 years old.
CINRYZE for the treatment of HAE
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On March 16, 2017, the EC approved a label extension for CINRYZE (C1 inhibitor [human]), broadening its use to children with HAE. CINRYZE is now the first and only treatment indicated for routine prevention of angioedema attacks in children aged six years or older who have severe and recurrent attacks of HAE and cannot tolerate or are not adequately protected by oral preventative treatments, or who are inadequately managed with repeated acute treatment. CINRYZE is also now approved for acute treatment and pre-procedure prevention of angioedema attacks in children aged two years or older with HAE.
Pipeline
SHP654 for the treatment of hemophilia A
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On July 6, 2017, Shire announced the submission of an Investigational New Drug ("IND") application to the FDA for SHP654, an investigational factor VIII (FVIII) gene therapy for the treatment of hemophilia A.
SHP643 for the treatment of HAE
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On May 18, 2017, Shire announced positive topline Phase 3 results for the HELP Study, which evaluated the efficacy and safety of subcutaneously administered lanadelumab in patients 12 years of age or older with HAE. The study met its primary endpoint and all secondary endpoints.
SHP647 for the treatment of ulcerative colitis
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On May 17, 2017, Shire announced the publication of positive Phase 2 results for the TURANDOT Study. The study met its primary endpoint, demonstrating significantly greater remission rates in patients receiving the anti-MAdCAM antibody. Shire continues to work towards the initiation of a pivotal Phase 3 trial for SHP647 in the second half of 2017.
SHP680 for the treatment of multiple neurological conditions
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Shire is advancing clinical development of SHP680 targetting indications for multiple neurological conditions with high unmet need. SHP680 is a new chemical entity prodrug of d-amphetamine, which has previously been studied in Phase 1 clinical trials, demonstrating a unique PK profile. It belongs to a class of molecules with an established and well understood safety profile.
SHP655 for the treatment of congenital thrombotic thrombocytopenic purpura (cTTP)
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On March 22, 2017, the FDA granted Fast Track Designation for recombinant ADAMTS13 (SHP655) for the treatment of acute episodes of cTTP in patients with a congenital deficiency of the von Willebrand factorcleaving protease ADAMTS13.
SHP640 for the treatment of bacterial and adenoviral conjunctivitis
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The global Phase 3 clinical development program will have clinical sites in over 20 countries. Patient recruitment has started and the first patient visit occurred in March 2017. The topline data is expected in Q2 2018.
SHP639 for the treatment of Glaucoma
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In March 2017, Shire submitted an (IND) application for SHP639. The IND is for the initiation of first in human clinical studies of SHP639 for the reduction of elevated intraocular pressure in patients with primary open-angle glaucoma or ocular hypertension.
Board Changes
In accordance with Shire's normal succession planning, the Group announced that the following Non-Executive Directors will retire from the Board with effect from the conclusion of the 2018 Annual General Meeting ("AGM"):
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William M. Burns, Senior Independent Director
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David Ginsburg, Chairman of the Science & Technology Committee
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Anne Minto, Chairman of the Remuneration Committee
Al Stroucken, Non-Executive Director, assumed the position of Chairman of the Remuneration Committee effective August 3, 2017. Anne Minto will continue to serve as a member of the Remuneration Committee to enable a period of transition until her retirement from the Board. Anne will fully support Al in the shareholder consultation process ahead of the publication of the new Directors' Remuneration Policy that will be put forward for shareholder approval at the 2018 AGM. The Board, supported by the Nomination & Governance Committee, will continue to evaluate Board and committee membership, including succession plans for the roles of Senior Independent Director and Chairman of the Science & Technology Committee, and will announce further changes once finalized.
Dividend
In respect of the six months ended June 30, 2017, the Board resolved to pay an interim dividend of 0.0509 U.S. dollars per ordinary share (2016: 0.0463 U.S. dollars per ordinary share).
Dividend payments will be made in Pounds sterling to holders of ordinary shares and in U.S. dollars to holders of ADSs. A dividend of 0.0385 (1) Pounds sterling per ordinary share (2016: 0.0351 Pounds sterling) and 0.1527 U.S. dollars per ADS (2016: 0.1389 U.S. dollars) will be paid on October 20, 2017, to shareholders on the register as of the close of business on September 8, 2017.
Holders of ordinary shares are notified that, in order to receive UK sourced dividends via Shire's Income Access Share arrangements ("IAS Arrangements"), they need to have submitted a valid IAS Arrangements election form to the Group's Registrar, Equiniti, by no later than 5pm (BST) on September 22, 2017. Holders of ordinary shares are advised that:
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any previous elections made using versions of the IAS Arrangements election form in use prior to February 16, 2016, and any elections deemed to have been made prior to April 28, 2016, are no longer valid; and
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if they do not elect, or have not elected using the newly formatted IAS Arrangements election forms published on or after February 16, 2016, to receive UK sourced dividends via Shire's IAS Arrangements, their dividends will be Irish sourced and therefore incur Irish dividend withholding tax, subject to applicable exemptions.
Internet links to the newly formatted IAS Arrangements election forms can be found at:
http://investors.shire.com/shareholder-information/shareholder-forms.aspx
(1) Translated using a GBP:USD exchange rate of 1.3221.
Going Concern
As stated in Note 1 to the unaudited consolidated financial statements, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the Half-yearly Report.
Results of Operations for the Three and Six Months Ended June 30, 2017 and 2016
Product sales
The following table provides an analysis of the Group's Product sales:
(In millions, except %) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
Product sales: | 2017 | 2016 | Product sales growth | 2017 | 2016 | Product sales growth | |||||||||||||||
HEMOPHILIA | $ | 743.9 | $ | 275.6 | N/M | $ | 1,394.3 | $ | 275.6 | N/M | |||||||||||
INHIBITOR THERAPIES | 220.7 | 74.0 | N/M | 441.2 | 74.0 | N/M | |||||||||||||||
Hematology total | 964.6 | 349.6 | N/M | 1,835.5 | 349.6 | N/M | |||||||||||||||
CINRYZE | 175.9 | 173.0 | 2 | % | 401.8 | 337.2 | 19 | % | |||||||||||||
ELAPRASE | 161.0 | 154.0 | 5 | % | 301.6 | 277.6 | 9 | % | |||||||||||||
FIRAZYR | 137.4 | 136.7 | 1 | % | 265.9 | 265.0 | - | % | |||||||||||||
REPLAGAL | 122.1 | 118.4 | 3 | % | 231.8 | 221.6 | 5 | % | |||||||||||||
VPRIV | 87.9 | 88.0 | - | % | 167.7 | 171.6 | (2 | )% | |||||||||||||
KALBITOR | 20.6 | 17.7 | 16 | % | 32.3 | 28.1 | 15 | % | |||||||||||||
Genetic Diseases total | 704.9 | 687.8 | 2 | % | 1,401.1 | 1,301.1 | 8 | % | |||||||||||||
IMMUNOGLOBULIN THERAPIES | 510.5 | 138.2 | N/M | 1,008.8 | 138.2 | N/M | |||||||||||||||
BIO THERAPEUTICS | 172.2 | 51.3 | N/M | 350.1 | 51.3 | N/M | |||||||||||||||
Immunology total | 682.7 | 189.5 | N/M | 1,358.9 | 189.5 | N/M | |||||||||||||||
VYVANSE | 518.2 | 517.7 | - | % |
By: Nasdaq / GlobeNewswire
- 04 Aug 2017
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