BASINGSTOKE, England and PHILADELPHIA, February 21
/PRNewswire-FirstCall/ -- Shire plc (LSE: SHP, NASDAQ: SHPGY) the global
specialty biopharmaceutical company announces results for the twelve months
to December 31, 2007 - a year which has seen significant growth in launched
products.
- All $ values are US$
Financial Highlights
2007 Full Year Q4 2007
- Product sales up 41% to $2,170m - Product sales up 55% to $661m
- New product sales $489m, 23% of product - New product sales $210m, 32%
sales(1) of product sales (1)
- Total revenues up 36% to $2,436m - Total revenues up 46% to
$725m
- Non GAAP Earnings per ADS up 38% to - Non GAAP Earnings per ADS up
$2.95 67% to $0.94
- US GAAP Earnings per ADS down 592% to - US GAAP Earnings per ADS up
-$8.06 175% to $1.11
- Dividend up 20% (in US$ terms)
(1) New product sales include VYVANSE, LIALDA/MEZAVANT, DYNEPO,
ELAPRASE, FOSRENOL and DAYTRANA
Matthew Emmens, Chief Executive Officer, commented:
"Shire had an excellent 2007, growing sales from our portfolio of both
new and established products by a total of 41% and raising revenue guidance
throughout the course of the year. We generated substantial cash inflows
from operations of $475 million, after expending $156 million on the
acquisition of new product candidates in both our Human Genetic Therapies
and Specialty Pharmaceutical businesses. Based on these strong results we
were able to bring forward several new R&D programs.
During the year, we undertook three major new product launches -
VYVANSE, LIALDA / MEZAVANT and DYNEPO - which have gone well and also
continued the roll-out of ELAPRASE and FOSRENOL into new geographies. These
products, together with DAYTRANA that was launched last year, represented
32% of our fourth quarter product sales.
The acquisition of New River Pharmaceuticals gave us full ownership and
control of VYVANSE, and this new generation ADHD treatment is establishing
itself in the US, where it has already gained a market share of 6%(i). The
launch of VYVANSE continues to progress well and we are confident about the
medication's future growth supported by new clinical studies and expected
additional indications. Our total ADHD franchise has now grown to 32% of
the total US ADHD market, compared to 28% at the end of 2006, extending our
leadership position in this specialist area.
We've also acquired five pipeline compounds in new technologies and new
markets, by licensing the marketing and co-development rights to a range of
both biological and small molecule products from Renovo, Amicus
Therapeutics and Alba Therapeutics.
Looking forward, we will continue to execute our strategy, which has
provided good returns for shareholders, by building on the success of our
growing specialist drugs portfolio focused on the treatment of symptomatic
diseases. We currently expect 2008 revenue growth to be in the mid to high
teens range and positive revenue growth through 2010."
(i) per IMS weekly prescription data at February 8, 2008
Product Highlights
- VYVANSE(TM) - Attention Deficit and Hyperactivity Disorder ("ADHD").
- Approved by the US Food and Drug Administration ("FDA") for use in
the pediatric population in February 2007 and launched in the US in July
2007 (dosage strengths 30mg, 50mg and 70mg).
- On December 10, 2007 the FDA approved three additional dosage
strengths (20mg, 40mg and 60mg) which will be available in retail
pharmacies in the US in the second quarter of 2008. These additional
strengths are designed to increase dosing flexibility.
- By February 15, 2008 VYVANSE had achieved a US ADHD market share of
6.3% based on daily prescription volume.
- Launch has been tracking in line with other blockbuster Central
Nervous System drug launches.
- Over 900,000 prescriptions since launch.
- Over 50% (23,000) of high volume physicians prescribing.
- Coupons are now less than 15% of total prescriptions.
- ADDERALL XR(R) - ADHD - Sales for 2007 were up 19% to $1,030.9
million (2006: $863.6 million).
- DAYTRANA(TM) - ADHD.
- Sales for 2007 were up 156% to $64.2 million (2006: $25.1 million).
- On January 9, 2008 the FDA issued a Warning Letter to Noven
Pharmaceuticals Inc. ("Noven") which related to Noven's manufacture of
DAYTRANA. Further regulatory action could result if the FDA's concerns are
not satisfied fully. Noven submitted a response to the FDA on January 30,
2008.
- LIALDA(TM)/MEZAVANT(R) - Ulcerative Colitis.
- LIALDA, the only once-daily oral formulation of mesalamine was
approved by the FDA in January 2007 and launched in the US in March 2007,
acquiring 8.0% share of the US oral mesalamine market at December 31, 2007.
Sales for 2007 were $50.5 million.
- Shire's share of the US oral mesalamine market from LIALDA and
PENTASA(R) combined was 26.0% at February 8, 2008.
- The product was launched in the UK in November 2007 as MEZAVANT XL,
with further launches planned in the EU in 2008. It was launched in Canada
on January 28, 2008 as MEZAVANT.
- FOSRENOL(R) - Hyperphosphatemia - International launches continued
and FOSRENOL is now available in 24 countries with worldwide sales in 2007
of $102.2 million (2006: $44.8 million).
- DYNEPO(R) - Anemia associated with chronic kidney disease ("CKD") -
DYNEPO is the first and only erythropoiesis-stimulating agent produced in a
human cell line. The product has been launched in several EU countries and
sales for 2007 were $14.2 million.
- ELAPRASE(R) - Hunter syndrome.
- On February 11, 2008 ELAPRASE was approved for commercial sale by the
Mexican Federal Commission for the Protection against Sanitary Risk.
ELAPRASE is now approved in 37 countries worldwide and sales for the year
to December 31, 2007 were $181.8 million (2006: $23.6 million).
- In October 2007 ELAPRASE was launched in Japan, with sales and
distribution managed by Genzyme Corporation. Shire's gross profit on the
arrangement equates to an effective royalty of approximately 25% to 30%,
but revenues will be recorded within product sales.
- REPLAGAL(R) - Fabry disease.
- REPLAGAL is now approved in 41 countries and sales for 2007 were up
22% to $143.9 million (2006: $117.7 million).
- In February 2007 REPLAGAL was launched in Japan through Shire's
partner Dainippon Sumitomo Pharma Co., Ltd. Similar to ELAPRASE, Shire will
record revenues within product sales.
Pipeline Highlights
Shire has expanded its product pipeline by in-licensing the following
drug compounds and technologies in 2007:
- JUVISTA(R)
- In August 2007 Shire acquired exclusive rights to develop and
commercialize JUVISTA worldwide (with the exception of EU member states)
from Renovo Limited ("Renovo"). JUVISTA, which is being investigated for
the prevention and reduction of scarring in connection with surgery, is in
late Phase 2 development.
- Seven Phase 2 efficacy trials for JUVISTA have now been reported of
which six demonstrated statistically significant efficacy. Phase 2 clinical
trials in multiple other surgery types are ongoing and are expected to
report during 2008 and 2009.
- Pharmacological chaperone compounds for Lysosomal Storage Disorders
("LSDs") - In November 2007 Shire in-licensed from Amicus Therapeutics,
Inc. ("Amicus") the rights to three compounds in markets outside the US:
- AMIGAL(TM) for Fabry disease (Phase 2) received orphan drug
designation by the EMEA, which may provide it with up to ten years market
exclusivity in the EU;
- PLICERA(TM) for Gaucher disease (Phase 2) received orphan drug
designation by the EMEA, which may provide it with up to ten years market
exclusivity in the EU; and
- AT2220 for Pompe disease is currently in Phase 1 clinical trials.
- SPD550 (Larazotide Aceotate) for Gastro Intestinal ("GI") disorders -
In December 2007 Shire licensed rights to SPD550 (also known as AT-1001),
in markets outside of the US and Japan, from Alba Therapeutics Corporation
("Alba"). SPD550 is Alba's lead inhibitor of barrier dysfunction in various
GI disorders and is currently in Phase 2 development for the treatment of
Celiac disease.
- SPD487 (Amphetamine transdermal system ("ATS")) - ADHD - In June 2007
Shire acquired exclusive development rights to ATS following completion of
early development work by Noven.
During 2007 Shire has made $155.9 million of up-front payments for the
in-licensing of the above products comprising $75.0 million to Renovo,
$50.0 million to Amicus, $25.0 million to Alba and $5.9 million to Noven.
Shire also made a $50 million equity investment in Renovo Group plc.
Existing pipeline developments:
- VYVANSE for ADHD in adult patients
- In September 2007, the FDA accepted the filing of a supplemental New
Drug Application for VYVANSE for the treatment of ADHD in adult patients.
The Prescriptions Drug User Fee Act ("PDUFA") action date is April 28,
2008.
- On October 25, 2007 Shire released results from the Phase 3 clinical
trials in adults. In this double-blind, placebo-controlled, four-week study
with dose escalation in 414 adults aged 18 to 55 years, treatment with
VYVANSE at all doses studied (30mg, 50mg, 70mg) was significantly more
effective than placebo.
- Adults represent the largest and fastest growing segment of the ADHD
market with a total of 9.9 million patients, of which 7.5 million are
untreated.
- DAYTRANA - ADHD - Regulatory submissions were filed for approval of
the product with Health Canada on November 29, 2007 and with the
Netherlands, as the reference member state for approval in the EU via the
decentralized procedure, on December 12, 2007.
- INTUNIV(TM) (previously known as SPD503) - ADHD - A non-stimulant
"non-scheduled" medication for the treatment of ADHD. In June 2007 Shire
received an approvable letter from the FDA for INTUNIV. Shire is in
discussions with the FDA regarding additional clinical work which is
designed to enhance the label. While the precise timing of the approval of
INTUNIV is unknown, Shire now anticipates that launch will occur in H2
2009.
- SPD465 - ADHD - In May 2007 Shire received an approvable letter from
the FDA. Shire is not currently taking any steps to move this product
towards approval.
- FOSRENOL - Hyperphosphatemia - On October 16, 2007 the FDA
Cardiovascular and Renal Drugs Advisory Committee recommended by a majority
vote the use of phosphate binders, including FOSRENOL, to treat
hyperphosphatemia in CKD stage 4 patients. Shire is working with the FDA to
explore the regulatory pathway to approval for use in pre-dialysis
patients.
- LIALDA/MEZAVANT - Phase 3 worldwide clinical trials investigating the
use of the product for the treatment of diverticulitis, a colonic disease,
were initiated in 2007.
- ELAPRASE - for Hunter syndrome patients with significant central
nervous system symptoms - In December 2007 Shire completed all pre-clinical
work and filed an Investigational New Drug ("IND") application. The IND was
accepted by the FDA on January 23, 2008.
- Velaglucerase alfa (GA-GCB) - Gaucher disease - A worldwide Phase 3
clinical program was initiated in 2007 and is ongoing. It is anticipated
that this development program will support filing of velaglucerase alfa
from H2 2009.
- Whilst a number of preclinical products are underway in early stage
development, Shire has discontinued the following projects: SPD491 (a pain
product), SPD493 (formerly known as Valrocemide), SPD500 (Tissue protective
cytokine technology) and NRP290 (a pain product acquired with the New River
Pharmaceuticals Inc. ("New river") acquisition).
Business Highlights
- SPD754 (Apricitabine) - HIV - Shire licensed its residual rights (for
the US and Canada) for the investigational HIV compound to Avexa Limited
("Avexa") on January 23, 2007. In return Shire received an upfront cash
payment of $10 million and Avexa shares valued at approximately $3 million.
- In April 2007 Shire completed the acquisition of New River by way of
a short-form merger for $64 per share, or approximately $2.6 billion,
partly funded by a private equity placing of $0.9 billion in February 2007.
- In May 2007 Shire issued $1.1 billion principal amount of convertible
bonds due 2014. The proceeds of the bonds were used by Shire to repay
borrowings under its bank facilities previously drawn to partially fund the
acquisition of New River.
- Product divestments - In December 2007 Shire completed the sale of a
portfolio of non-core products, including SOLARAZE(R) and VANIQA(R) to
Laboratorios Almirall S.A. ("Almirall") for a cash consideration of $209.6
million, net of costs of $2.2 million. During the year Shire also received
cash consideration of $24.8 million from the sale of other non-core
products.
- Legal settlements
- In October 2007, all parties to the 2003 Transkaryotic Therapies,
Inc. class action securities lawsuit relating to REPLAGAL reached an
agreement in principle to resolve the matter, subject to court approval,
for $50 million. Shire will contribute $27 million toward the settlement
(recognized in Q3 2007 within Selling, General and Administration ("SG&A")
costs) and its insurance companies will contribute the remaining $23
million.
- In November 2007 Shire agreed to pay Applied Research Systems Holding
N.V and Serono S.A. ("Serono") $12 million for a fully-paid, worldwide,
non-exclusive license to Serono's patents related to gene-activation,
including the US Patent No. 5,272,071. Serono's infringement suit against
the Company in the Massachusetts's District Court was subsequently
dismissed.
Full Year 2007 Unaudited Results
2007 2006
Non Non
US GAAP Adjustments GAAP(1) US GAAP Adjustments GAAP(1)
$M $M $M $M $M $M
_______ _________ __________ _______ __________ _______
Revenues 2,436.3 - 2,436.3 1,796.5 - 1,796.5
Operating
(loss)/income (1,379.1) 2,083.0 703.9 283.2 170.5 453.7
Net (1,451.8) 2,003.1 551.3 278.2 84.2 362.4
(loss)/income
Diluted
earnings per:
Ordinary (268.7c) 366.9c 98.2c 54.6c 16.4c 71.0c
share
ADS (806.1c) 1,100.7c 294.6c 163.8c 49.2c 213.0c
Q4 2007 Unaudited Results
Q4 2007 Q4 2006
Non Non
US GAAP Adjustments GAAP(1) US GAAP Adjustments GAAP(1)
$M $M $M $M $M $M
Revenues 724.5 - 724.5 497.0 - 497.0
Operating
income 232.2 (8.2) 224.0 80.4 34.7 115.1
Net income 212.1 (32.4) 179.7 68.6 27.0 95.6
Diluted
earnings
per:
Ordinary 36.9c (5.6c) 31.3c 13.4c 5.3c 18.7c
share
ADS 110.7c (16.8c) 93.9c 40.2c 15.9c 56.1c
Note: Average exchange rates for 2007 and 2006 were $2.00:GBP1.00 and
$1.84:GBP1.00 respectively. Average exchange rates for Q4
2007 and Q4 2006 were $2.04:GBP1.00 and $1.92:GBP1.00 respectively.
(1) Non GAAP operating income, Non GAAP net income, Non GAAP diluted
earnings per ordinary share and Non GAAP diluted earnings per ADS exclude
intangible asset amortization charges, the accounting impact of share-based
compensation and other items as described on page 8. For an explanation of
why Shire's management believes that these non GAAP financial measures are
useful to investors, see page 8. For a reconciliation of these non GAAP
financial measures to the most directly comparable financial measures
prepared in accordance with US GAAP, see pages 29-32.
2008 Outlook
R&D pipeline and new product launches in the next two years
Subject to obtaining relevant regulatory/governmental approvals, the
following product launches are planned over the next two years:
- MEZAVANT in the EU and Canada during 2008;
- VYVANSE for use in adult patients in the US in Q2 2008 (PDUFA date
April 28, 2008);
- DAYTRANA in the EU during H1 2009;
- INTUNIV in the US during H2 2009; and
- FOSRENOL in the CKD market in the US during 2009.
Financial Outlook Shire's business continues to perform strongly. We expect 2008 total
revenue growth to be in the mid to high teens range with VYVANSE sales
between $350 to $400 million, assuming that the adult indication is
launched by mid year 2008.
Costs are estimated as follows:
- Phase 3(b) and Phase 4 studies to support existing launches in the
Specialty Pharmaceuticals ("Specialty") business and new product
development in both the Specialty and Human Genetic Therapies ("HGT")
businesses will result in Research and Development ("R&D") spend for 2008
in the range of $450 to $475 million (or $465 to $490 million including
FAS123R charge);
- Existing and planned launches will require additional advertising and
promotional spend resulting in SG&A costs for 2008 in the range of $1,080
to $1,120 million (or $1,125 to $1,165 million including FAS123R charge);
- Business expansion including new and enlarged manufacturing and
research facilities for HGT, the enlargement of other facilities and the
global roll out of new and upgraded IT infrastructures, will see a
significant cash investment in capital projects in 2008 in the range of
$320 to $350million (2007: $110 million);
- Due to the higher capital expenditure, the depreciation charge for
2008 is expected to increase by approximately 50% compared to 2007 (2007:
$59 million);
- The effective tax rate on non GAAP income from ongoing operations for
2008 is expected to be approximately 23%; and
- Fully diluted share capital (inclusive of options and convertible
bonds) will be approximately 590 million shares, with $13 million of
convertible bond interest (after tax) added back to net income for the
purpose of calculating fully diluted EPS.
From 2008, Shire will report its non GAAP earnings based on net
income/(loss) adjusted for the following items, all of which are excluded
from the financial outlook for the full year as stated above:
- Intangible asset amortization charges, which are expected to rise
approximately 25% over the 2007 charge of $95 million primarily due to a
full year's amortization of the VYVANSE pediatric intangible asset;
- Release of deferred gains on the sale of non-core products,
(including Almirall and other non-core product right gains), of $29
million; and
- Upfront payments and milestones in respect of in-licensed products.
In contrast to 2007, no adjustment will be made to exclude FAS123R
charge from non GAAP earnings in 2008.
Dividend
In respect of the six months to December 31, 2007 the Board has
resolved to pay a second interim dividend of 6.4690 US cents per ordinary
share (2006: 5.2455 US cents per share). Together with the first interim
payment of 2.147 US cents per ordinary share (2006: 1.935 US cents per
share), this represents total dividends for 2007 of 8.616 US cents per
share (2006: 7.180 US cents per share), an increase of 20% in US Dollar
terms over 2006.
Dividend payments will be made in Pounds Sterling to Ordinary
Shareholders and US Dollars to American Depositary Share ("ADS") holders. A
dividend of 3.3151 pence per ordinary share and 19.407 US cents per ADS,
respectively, will be paid. The Board has resolved to pay the dividend on
April 3, 2008 to persons whose names appear on the register of members of
the Company at the close of business on March 14, 2008.
Shire intends to pursue a progressive dividend policy.
Redemption of Exchangeable Shares
On February 12, 2008, a subsidiary of Shire exercised a redemption call
right and purchased each exchangeable share of Shire Acquisition Inc.
remaining in public ownership. Exchangeable shareholders received either
three ordinary shares of Shire plc or one ADS (representing three ordinary
shares of Shire plc) for each Exchangeable Share held. Exchangeable Shares
were issued to Canadian resident shareholders of Biochem Pharma Inc. in
2001 as consideration for the acquisition by the Shire group of Biochem
Pharma Inc. The Exchangeable Shares, which were listed on the Toronto Stock
Exchange, have now been de-listed from the Toronto Stock Exchange.
Changes in Executive and Non-Executive Directors
In January 2007 Dr Jeffrey Leiden, MD, PhD joined Shire's Board of
Directors as a Non-Executive Director and has been a member of the
Remuneration and Nominations Committee since July 2007.
In May 2007 the Hon. James Grant, Q.C. retired from the Board following
completion of his term of office.
In October 2007 David Mott joined Shire's Board of Directors as a
Non-Executive Director and was appointed to Shire's Audit, Compliance and
Risk Committee on December 12, 2007. Mr Mott is Chief Executive Officer and
President of MedImmune, Inc, a role he was appointed to in 2000.
In December 2007 Shire announced its Board succession plans. Dr James H
Cavanaugh will retire as Non-Executive Chairman; Matthew Emmens will
succeed him as Non-Executive Chairman; and Angus Russell will be appointed
as Chief Executive Officer. Shire is now working to identify a replacement
Chief Financial Officer to ensure an orderly succession. These Board
changes will become effective at Shire's AGM in June 2008, at which time
David Kappler will be appointed as Deputy Chairman in addition to his
existing role as Senior Independent Director.
Shire would like to thank the Hon. James Grant Q.C. for his
contributions during six years of service.
Changes in Senior Management
In September 2007 Shire appointed Sylvie Gregoire as President of its
HGT business.
Notes to editors
Shire plc
Shire's strategic goal is to become the leading specialty
biopharmaceutical company that focuses on meeting the needs of the
specialist physician. Shire focuses its business on attention deficit and
hyperactivity disorder (ADHD), human genetic therapies (HGT),
gastrointestinal (GI) and renal diseases. The structure is sufficiently
flexible to allow Shire to target new therapeutic areas to the extent
opportunities arise through acquisitions. Shire's in-licensing, merger and
acquisition efforts are focused on products in niche markets with strong
intellectual property protection either in the US or Europe. Shire believes
that a carefully selected portfolio of products with relatively small-scale
sales forces will deliver strong results.
For further information on Shire, please visit the Company's website:
http://www.shire.com
The "Safe Harbor" Statement Under the Private Securities Litigation
Reform Act of 1995
Statements included herein that are not historical facts 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 affected. The risks and uncertainties include, but are not
limited to, risks associated with: the inherent uncertainty of
pharmaceutical research; product development including, but not limited to,
the successful development of JUVISTA(R) (Human TGF beta 3) and
velaglucerase alfa (GA-GCB); manufacturing and commercialization including,
but not limited to, the establishment in the market of
VYVANSE(TM)(lisdexamfetamine dimesylate) (Attention Deficit and
Hyperactivity Disorder ("ADHD")); the impact of competitive products
including, but not limited to, the impact of those on Shire's ADHD
franchise; patents including, but not limited to, legal challenges relating
to Shire's ADHD franchise; government regulation and approval including,
but not limited to, the expected product approval date of INTUNIV(TM)
(guanfacine extended release) (ADHD); Shire's ability to secure new
products for commercialization and/or development; and other risks and
uncertainties detailed from time to time in Shire plc's filings with the
Securities and Exchange Commission, particularly Shire plc's Annual Report
on Form 10-K for the year ended December 31, 2006.
Non GAAP Measures
This press release contains financial measures not prepared in
accordance with US GAAP. These measures are referred to as "non GAAP"
measures and include Non GAAP operating income, Non GAAP net income, Non
GAAP diluted earnings per ordinary share, Non GAAP diluted earnings per
ADS, Non GAAP R&D, Non GAAP SG&A and effective tax rate on Non GAAP income.
These non GAAP measures exclude the effect of certain cash and non-cash
items, both recurring and non-recurring, that Shire's management believes
are not related to the core performance of Shire's business.
These non GAAP financial measures are used by Shire's management to
make operating decisions because they facilitate internal comparisons of
the Company's performance to historical results and to competitors'
results. These measures are also considered by Shire's Remuneration
Committee in assessing the performance and compensation of employees,
including its executive directors.
The non GAAP measures are presented in this press release as the
Company's management believe that they will provide investors with a means
of evaluating, and an understanding of how Shire's management evaluates,
the Company's performance and results on a comparable basis that is not
otherwise apparent on a US GAAP basis, since many one-time, infrequent or
non-cash items that the Company's management believe are not indicative of
the core performance of the business may not be excluded when preparing
financial measures under US GAAP.
These non GAAP measures should not be considered in isolation from, as
substitutes for, or superior to financial measures prepared in accordance
with US GAAP.
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The following are trademarks of Shire or companies within the Shire
Group which are the subject of trademark registrations in certain
territories:
ADDERALL XR(R) (mixed salts of a single-entity amphetamine)
ADDERALL(R) (mixed salts of a single-entity amphetamine)
CALCICHEW(R) range (calcium carbonate with or without vitamin D3)
CARBATROL(R) (carbamazepine) extended-release capsules
DAYTRANA(TM) (methylphenidate transdermal system)
ELAPRASE(R) (idursulfase)
FOSRENOL(R) (lanthanum carbonate)
INTUNIV(TM) (guanfacine) extended release
LIALDA(TM) (mesalamine)
MEZAVANT(R) (mesalazine)
REMINYL(R) (galantamine hydrobromide) (UK and Republic of Ireland)
REMINYL XL(TM) (galantamine hydrobromide) (UK and Republic of Ireland)
REPLAGAL(R) (agalsidase alfa)
VYVANSE(TM) (lisdexamfetamine dimesylate)
XAGRID(R) (anagrelide hydrochloride)
The following are trademarks of third parties referred to in this press
release:
3TC (lamivudine) (trademarks of GlaxoSmithKline (GSK))
AMIGAL (migalastat hydrochloride) (trademark of Amicus)
COMBIVIR (lamivudine) (trademark of GSK)
DYNEPO (epoetin delta) (trademark of Sanofi Aventis)
EPIVIR (lamivudine) (trademark of GSK)
EPZICOM (lamivudine) (trademark of GSK)
JUVISTA (trademark of Renovo)
PENTASA (mesalamine) (trademark of Ferring)
PLICERA (isofagomine tartrate) (trademark of Amicus)
RAZADYNE (galantamine) (trademark of Johnson & Johnson)
RAZADYNE ER (galantamine) (trademark of Johnson & Johnson)
REMINYL (galantamine) (trademark of Johnson & Johnson, excluding UK and
Republic of Ireland)
REMINYL XL (galantamine) (trademark of Johnson & Johnson, excluding UK
and Republic of Ireland)
SOLARAZE (diclofenac sodium (3%w/w)) (trademark of Almirall)
VANIQA (eflornithine hydrochloride) (trademark of Almirall)
ZEFFIX (lamivudine) (trademark of GSK)
Overview of US GAAP Financial Results
1. Introduction
Summary of 2007 Revenues from continuing operations for the year to December 31, 2007
increased by 36% to $2,436.3 million (2006: $1,796.5 million).
Operating loss for the year to December 31, 2007 was $1,379.1 million
(2006: income of $283.2 million). The loss in 2007 primarily arose from the
$1,866.4 million write-off of in-process research and development ("IPR&D")
acquired as part of the $2.6 billion acquisition of New River; this amount
represents the value of the acquired development projects, including
VYVANSE for use in adult patients. Excluding IPR&D, operating income rose
by $204.1 million compared to 2006, primarily due to revenue growth.
Cash inflow from operating activities for the year to December 31, 2007
decreased by 11% to $474.7 million (2006: $531.9 million). Excluding
upfront payments and milestones in respect of in-licensed technology of
$155.9 million in 2007 and $80.5 million in 2006 (see section 4 - R&D below
for details), cash inflow from operating activities for the year to
December 31, 2007 increased by 3% to $630.6 million (2006: $612.4 million).
This increase is lower than the increase in operating income (excluding
IPR&D) of $204.1 million primarily as a result of increased receivables
generated by higher sales in December 2007 over December 2006 and increases
in inventory to support new products.
Cash, cash equivalents and restricted cash at December 31, 2007 totaled
$802.0 million (December 31, 2006: $1,156.7 million). The decrease of
$354.7 million was primarily due to the acquisition of New River in April
2007 being partly funded from Shire's pre-acquisition cash resources.
Summary of Q4 2007
Revenues from continuing operations for the three months to December
31, 2007 increased by 46% to $724.5 million (2006: $497.0 million).
Operating income for the three months to December 31, 2007 was $232.2
million (2006: $80.4 million). The increase primarily resulted from higher
revenues and related earnings in Q4 2007 (compared to Q4 2006) and gains on
disposal of non-core products of $115.7 million (2006: $nil), which were
partially offset by upfront payments for in-licensed technology totaling
$75.0 million (2006: $nil).
Cash inflow from operating activities for the three months to December
31, 2007 decreased by 65% to $66.6 million (2006: $188.8 million).
Excluding upfront payments and milestones in respect of in-licensed
technology of $75.0 million in 2007 (2006: $nil) (see section 4 - R&D below
for details), cash inflow from operating activities for the year to
December 31, 2007 decreased by 25% to $141.6 million (2006: $188.8
million). This decrease was primarily as a result of increased receivables
generated by higher sales in December 2007 over December 2006.
2. Product sales
For the year to December 31, 2007 product sales increased by 41% to
$2,170.2 million (2006: $1,535.8 million) and represented 89% of total
revenues (2006: 86%).
Product Highlights
Sales Sales US Rx US Average
$M Growth (2) Growth (1)(2) Annual Market
Product Share(1)
Specialty
Pharmaceuticals
ADDERALL XR 1,030.9 +19% +3% 25.5%
VYVANSE 76.5 n/a n/a 1.8%
DAYTRANA 64.2 +156% +166% 2.1%
PENTASA 176.4 +28% +3% 17.2%
LIALDA 50.5 n/a n/a 3.9%
FOSRENOL 102.2 +128% +5% 8.6%
DYNEPO 14.2 n/a n/a n/a
CARBATROL 72.3 +6% -5% 41.3%
XAGRID 66.8 +25% n/a n/a
Human Genetic Therapies
REPLAGAL 143.9 +22% n/a n/a
ELAPRASE 181.8 +670% n/a n/a
(1) Product specific prescription data is provided by IMS Health
("IMS"), a leading global provider of business intelligence for the
pharmaceutical and healthcare industries. All other US market share data
stated in the text below is also provided by IMS.
(2) Compared to 2006.
Specialty Pharmaceuticals
ADDERALL XR - ADHD
As a result of the launch of VYVANSE in July 2007 ADDERALL XR's average
share of the US ADHD market for 2007 fell to 25.5% (2006: 26.1%). US
prescriptions for ADDERALL XR for the year to December 31, 2007 increased
by 3% compared to the same period in 2006 due to a 6% growth in the US ADHD
market offset by the 0.6% fall in average market share.
Sales of ADDERALL XR for the year to December 31, 2007 were $1,030.9
million, an increase of 19% compared to the same period in 2006 (2006:
$863.6 million). Product sales growth was higher than prescription growth
due primarily to price increases in January and October 2007.
As previously disclosed, the United States Federal Trade Commission
("FTC") informed Shire on October 3, 2006 that it was reviewing the
ADDERALL XR patent litigation settlement agreement between Shire and Barr
Laboratories, Inc ("Barr"). On June 22, 2007, the Company received a civil
investigative demand requesting that it provides information to the FTC
relating to its settlement with Barr and its earlier settlement with Impax
Laboratories, Inc. The Company is cooperating fully with this investigation
and believes that the settlements are in compliance with all applicable
laws.
Litigation proceedings concerning Shire's ADDERALL XR patents are
ongoing. Further information on this litigation can be found in our filings
with the SEC, including our Annual Report on Form 10-K for the year to
December 31, 2006 and our most recent Quarterly Report on Form 10-Q for the
period to September 30, 2007.
VYVANSE - ADHD
VYVANSE was launched in the US market in July 2007 and at December 31,
2007 its market share had reached 5.2% (average annual market share 1.8%).
Product sales of $76.5 million for the year to December 31, 2007 were net
of $42 million sales deductions, primarily coupons, wholesaler discounts
and rebates, which are expected over time to trend to approximately 28% of
product sales before sales deductions.
All initial launch stocks of VYVANSE totaling $57.8 million were
recognised into revenue during the year to December 31, 2007.
DAYTRANA - ADHD
Product sales for the year to December 31, 2007 were $64.2 million
(2006: $25.1 million). DAYTRANA's average share of the US ADHD market
increased to 2.1% in 2007 compared to 0.8% in 2006 (DAYTRANA was launched
in June 2006). US prescriptions of DAYTRANA for the year to December 31,
2007 over 2006 benefited from a full year of demand, 6% growth in the US
ADHD market and higher market share. For the six month period to December
31, 2007 prescriptions of DAYTRANA were up 31% compared to the same period
in 2006. During September 2007 Shire announced a voluntary market
withdrawal of a limited quantity of DAYTRANA patches following feedback
from patients and caregivers who had experienced difficulty in removing the
release liner. Patches are now being manufactured using an enhanced
process, which Shire believes offers improved ease of use when peeling off
the release liner.
The addition of VYVANSE combined with ADDERALL XR and DAYTRANA's market
share helped Shire grow its total share of the US ADHD market to 31.1% at
December 31, 2007 compared to 28.0% at December 31, 2006. Shire has the
leading portfolio of products in the US ADHD market.
PENTASA - Ulcerative colitis
US prescriptions of PENTASA for the year to December 31, 2007 were up
3% compared to the same period in 2006 primarily due to a 4% increase in
the US oral mesalamine prescription market, offset by a 0.1% decrease in
PENTASA's average market share from 17.3% in 2006 to 17.2% in 2007.
Sales of PENTASA for the year to December 31, 2007 were $176.4 million,
an increase of 28% compared to the same period in 2006 (2006: $137.8
million). Sales growth is higher than prescription growth primarily due to
restocking to normal levels in 2007 and the impact of price increases in
November 2006 and August 2007.
LIALDA/MEZAVANT - Ulcerative colitis
Shire launched LIALDA in the US oral mesalamine market in March 2007,
and by December 31, 2007 LIALDA had reached a market share of 8.0% (average
annual market share 3.9%). LIALDA's product sales for the year to December
31, 2007 were $50.5 million. All initial launch stocks of LIALDA totaling
$34.7 million were recognised into revenue during the year to December 31,
2007.
The product was launched in the UK in November 2007, Canada in January
2008 and further launches are planned in the EU during 2008, subject to the
successful conclusion of pricing and reimbursement negotiations. In the UK
and Ireland the product will be called MEZAVANT XL and Shire plans to
market the product in most other EU countries as MEZAVANT.
Since the launch of LIALDA in March 2007, PENTASA and LIALDA's combined
share of the US oral mesalamine prescription market had grown to 24.9% as
at December 31, 2007, up from 17.6% as at December 31, 2006.
FOSRENOL - Hyperphosphatemia
FOSRENOL is now available in 24 countries and global sales totaled
$102.2 million for the year to December 31, 2007 (2006: $44.8 million).
Outside the US, FOSRENOL has now been launched in Germany, France, UK,
Italy and Spain (in January 2008) and a number of other countries. Sales of
FOSRENOL outside the US for the year ended December 31, 2007 were $40.1
million (2006: $4.6 million).
US sales of FOSRENOL for the year to December 31, 2007 were up 54% to
$62.1 million compared to the same period in 2006 (2006: $40.2 million).
FOSRENOL's average market share of the US phosphate binder market increased
from 8.5% in 2006 to 8.6% in 2007. The increase in product sales is due to
a small wholesaler stocking increase in 2007 compared to significant
wholesaler de-stocking of initial launch stocks in 2006, the continued
shift to the 1 gram strength tablet launched in 2006, partially offset by
higher sales deductions in 2007 compared to the same period in 2006
(relating to a one-off provision made in 2007 for returns of the 750mg
dose).
DYNEPO - Anemia associated with CKD
DYNEPO was launched in March 2007 in Germany and later in the year in
the UK, France, Italy, and Ireland with sales for 2007 reaching $14.2
million.
CARBATROL - Epilepsy
US prescriptions for CARBATROL for the year to December 31, 2007 were
down 5% compared to the same period in 2006. This was primarily due to a
comparable decline in the US extended release carbamazepine prescription
market; CARBATROL's average market share remained constant.
Sales of CARBATROL for the year to December 31, 2007 were $72.3
million, an increase of 6% compared to the same period in 2006 (2006: $68.3
million). Product sales increased despite the decrease in prescriptions,
due to a sales price increase in April 2007 and restocking to normal
levels, partially offset by higher sales deductions.
Patent litigation proceedings relating to CARBATROL are ongoing.
Further information about this litigation can be found in our filings with
the SEC, including our Annual Report on Form 10-K for the year to December
31, 2006 and our most recent Quarterly Report on Form 10-Q for the period
to September 30, 2007.
XAGRID - Thrombocythemia
Sales for the year to December 31, 2007 were $66.8 million, an increase
of 25% compared to the same period in 2006 (2006: $53.3 million). Expressed
in transaction currencies (XAGRID is primarily sold in Euros and Pounds
sterling), sales increased by 15% due to growth in many of Shire's existing
markets, with exchange rate movements against the US dollar accounting for
the remaining 10% increase.
Human Genetic Therapies
REPLAGAL - Fabry disease
Sales for the year to December 31, 2007 were $143.9 million, an
increase of 22% compared to the same period in 2006 (2006: $117.7 million).
Expressed in transaction currencies (REPLAGAL is primarily sold in Euros
and Pounds sterling) sales increased by 13% due to higher unit sales in
Europe and Canada and the continued roll out of REPLAGAL to new countries,
including those in Latin America, with REPLAGAL now approved in 41
countries (including Japan). Exchange rate movements against the US dollar
accounted for the remaining 9% increase in sales.
ELAPRASE - Hunter syndrome
Sales for the year to December 31, 2007 were $181.8 million (2006:
$23.6 million). Sales growth in 2007 was driven primarily by a full year of
sales in the US (ELAPRASE was launched in the US in August 2006), sales in
Europe (ELAPRASE was launched in several European markets in the first half
of 2007), and pre-approval sales in several Latin American markets.
ELAPRASE was approved for sale and marketing in Japan in October 2007 and
is now approved for marketing and commercial distribution in 37 countries
worldwide.
3. Royalties
Royalty revenue increased to $247.2 million for the year ended December
31, 2007 (2006: $242.9 million).
Royalty Highlights
Royalties to Shire Royalty (1) Growth
Product $M %
3TC 145.3 -4
ZEFFIX 41.0 +18
Other 60.9 +6
Total 247.2 +2
(1) Compared with 2006.
3TC - HIV infection and AIDS Royalties from sales of 3TC for the year to December 31, 2007 were
$145.3 million, a decrease of 4% compared to the same period in 2006 (2006:
$150.9 million). Excluding favorable foreign exchange movements of 4%,
there has been a decline of 8% compared to the same period in 2006.
Shire receives royalties from GSK on worldwide 3TC sales. GSK's
worldwide sales of 3TC for the year to December 31, 2007 were $1,110
million, a decrease of 2% compared to the same period in 2006 (2006: $1,138
million), but a decrease of approximately 7% on a constant exchange rate
basis. While the nucleoside analogue market for HIV has continued to grow,
competitive pressures within the market have increased leading to a decline
in 3TC sales.
In 2007 generic drug companies filed Abbreviated New Drug Applications
("ANDA") seeking approval for EPIVIR, COMBIVIR, ZEFFIX and EPZICOM in the
US. Pursuant to the GSK/Shire license for lamivudine products, GSK has the
right to enforce the licensed patents. In November 2007 GSK filed a patent
infringement lawsuit against Teva Pharmaceuticals, Inc. (Teva) in the US
District Court for the District of Delaware for infringement of one of the
patents relating to COMBIVIR. The patent, which covers the combination of
AZT and lamivudine to treat HIV, expires in May 2012. Teva had filed an
ANDA with the FDA with a certification of invalidity, unenforceability and
non-infringement of that combination patent. Teva did not challenge two
other patents relating to COMBIVIR that expire in 2010 and 2016. The case
is in its early stages.
ZEFFIX - Chronic hepatitis B infection
Royalties from sales of ZEFFIX for the year to December 31, 2007 were
$41.0 million, an increase of 18% compared to the same period in 2006
(2006: $34.8 million). The impact of foreign exchange movements has
contributed 8% to the reported growth; excluding favorable foreign exchange
movements there has been an increase of 10% compared to the same period in
2006.
Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK's
worldwide sales of ZEFFIX for the year to December 31, 2007 were $341
million, an increase of 13% compared to the same period in 2006 (2006: $301
million). This increase was mainly due to strong growth in the Chinese
market and favorable foreign exchange rate movements.
Other
Other royalties are primarily in respect of REMINYL and REMINYL XL
(known as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwide
(excluding the UK and the Republic of Ireland) by Janssen Pharmaceutical
N.V. ("Janssen"), an affiliate of Johnson & Johnson. Shire has the
exclusive marketing rights in the UK and the Republic of Ireland.
Barr and other companies have filed ANDA with the FDA for generic
versions of RAZADYNE. Janssen and Synaptech Inc. ("Synaptech") have filed
lawsuits against some of those ANDA filers. A trial was held during the
week of May 21, 2007. No decision from the court has been issued to date.
Janssen and Synaptech filed lawsuits against Barr and Sandoz Inc.
("Sandoz") for infringement of their patent rights relating to RAZADYNE ER
as a result of Barr and Sandoz filing ANDAs with the FDA for generic
versions of RAZADYNE ER. No court dates have been set.
4. Financial details Cost of product sales
For the year to December 31, 2007 the cost of product sales was 14% of
product sales (2006: 16%). The cost of product sales for REPLAGAL in 2006
included a $47.0 million (3% of product sales) adjustment in respect of
inventories acquired through the acquisition of TKT. Excluding the impact
of this fair value adjustment, cost of product sales as a percentage of
product sales in 2006 was 13%. The increase in cost of product sales as a
percentage of products sales in 2007 over 2006 was primarily due to a shift
in product mix resulting from increased sales of launched products, which
had lower margins than existing products, and the write-off of inventory
following the voluntary market withdrawal of a limited quantity of DAYTRANA
patches.
For the year to December 31, 2007 cost of product sales included a charge
of $5.5 million for share based compensation (2006: $3.2 million) which
included a $2.1 million cumulative catch up charge in respect of the 2005
awards, see page 18.
Research and development
% of product % of product
2007 sales 2006 sales
_______ _________ _______ _________
R&D (US GAAP) 566.6 26% 380.5 25%
Upfront and milestone
payments (155.9) (80.5)
FAS123R (1) (17.0) (5.4)
_______ _______
Non GAAP R&D 393.7 18% 294.6 19%
(1) Includes 2005 option catch up charge R&D expenditure increased to $566.6 million for the year to December
31, 2007 (26% of product sales), up from $380.5 million in the year to
December 31, 2006 (25% of product sales). For the year to December 31, 2007
R&D included upfront and milestone payments, totaling $155.9 million(1),
for the in-licensing of pipeline products, (7% of product sales). For the
year to December 31, 2006 R&D included $80.5 million(2) of upfront and
milestone payments (5% of product sales).
Excluding these upfront and milestone payments and share based
compensation costs (see reconciliation table above and share based
compensation costs below) R&D expenditure for the year to December 31, 2007
increased by $99.1 million over the same period in 2006, decreasing as a
percentage of product sales to 18% (2006: 19%). Contributing to the
increased R&D expenditure in 2007 were Phase 3(b) and Phase 4 studies to
support new product launches; the continuation of Phase 3 trials on
velaglucerase alfa (GA-GCB); the development of the Women's Health
franchise and JUVISTA; and the pre-clinical development of three HGT
projects and the newly in-licensed Amicus products.
For the year to December 31, 2007 R&D included a charge of $17.0
million for share based compensation (2006: $5.4 million) which included a
$4.6 million cumulative catch up charge in respect of 2005 awards, see page
18.
1 Upfront and milestone payments in 2007 were made to Renovo $75.0
million, Amicus $50.0 million, Alba $25.0 million and Noven $5.9 million.
2 Upfront and milestone payments in 2006 were made to New River $50.0
million, Duramed Pharmaceuticals Inc. ("Duramed") $25.0 million and Warren
Pharmaceuticals Inc ("Warren") $5.5 million.
Selling, general and administrative
% of product % of product
2007 sales 2006 sales
_________ _________ _________ _________
SG&A (US GAAP) 1,041.7 48% 835.4 54%
Legal settlements (net) (17.0) -
FAS123R (1) (52.7) (34.4)
_________ _________
Non GAAP SG&A 972.0 45% 801.0 52%
(1) Includes 2005 option catch up charge SG&A expenses increased to $1,041.7 million for the year to December
31, 2007 from $835.4 million in the year to December 31, 2006, an increase
of 25% which was substantially less than the product sales increase of 41%.
The increase in SG&A expenses included the impact of the following:
- An increase in the ADHD sales force to promote VYVANSE;
- The cost of the new GI sales force in the US;
- The advertising, promotional and marketing spend to support the
launches of VYVANSE, LIALDA and ELAPRASE; and
- A net charge of $17.0 million in respect of legal settlements, being
a charge of $27.0 million for settlement of the TKT purported securities
fraud class action shareholder suit partially offset by a $10.0 million
release of existing legal provisions.
Excluding the net charge for legal settlements and share based
compensation costs (see reconciliation table above and share based
compensation costs details below) SG&A expenses, for the year to December
2007 increased by $171.0 million over the same period in 2006, decreasing
as a percentage of product sales to 45% (2006: 52%).
For the year to December 31, 2007 SG&A included a charge of $52.7
million for share based compensation (2006: $34.4 million), which included
a $22.5 million cumulative catch up charge in respect of 2005 awards, see
page 18.
Depreciation and amortization
The depreciation charge for the year to December 31, 2007 was $59.3
million (2006: $43.3 million), inclusive of impairment charges of $1.8
million (2006: $0.5 million). The increase in depreciation follows
investment in Shire's infrastructure to support the continuing growth of
the Company.
The amortization charge for the year to December 31, 2007 was $95.0
million (2006: $57.4 million), inclusive of impairment charges of $0.4
million (2006: $1.1 million). The increased charge is primarily due to the
amortization of DAYTRANA, DYNEPO and VYVANSE intangible assets following
the product launches in June 2006, March 2007 and July 2007 respectively.
Integration costs
For the year to December 31, 2007 Shire incurred $1.3 million of costs
associated with the integration of the New River business (2006: $5.6
million relating to the TKT acquisition). New River is now fully integrated
and no further integration costs are anticipated.
Gain on sale of product rights
For the year to December 31, 2007 Shire recognized gains of $127.8
million on the sale of non-core products.
Shire received $209.6 million (net of costs of $2.2 million) from
Almirall for a portfolio of non core products comprising the dermatology
products SOLARAZE and VANIQA and six non-promoted products across a range
of indications, which were sold by Shire primarily in the UK, France,
Germany, Italy, Spain and Ireland. This sale realized a total gain of
$139.2 million, of which $114.8 million was recognized during Q4 2007. The
remaining deferred gain of $24.4 million will be recognized in 2008 after
the transfer of the relevant consents.
Shire received $24.8 million on the sale of other non-core products,
realizing a total gain of $17.2 million, of which $13.0 million was
recognized during 2007. The remaining deferred gain of $4.2 million
relating to these disposals is expected to be recognized in 2008 on the
transfer of marketing authorizations.
During the year to December 31, 2006 Shire recognized a gain of $63.0
million on the disposal of ADDERALL to Duramed.
In-process R&D
During the year to December 31, 2007, as required under US GAAP
(business combination accounting), the Company expensed the portion of the
New River purchase price allocated to IPR&D of $1,866.4 million (2006:
$nil). This amount represents the value of those acquired development
projects which, at the acquisition date, had not been approved by the FDA
or other regulatory authorities, including VYVANSE for use in adult
patients. During Q4 2007 Shire reduced the amount assigned to IPR&D by
$29.6 million as a result of changes to preliminary estimates of deferred
taxes in the purchase price allocation exercise.
Interest income
For the year to December 31, 2007 Shire received interest income of
$50.6 million (2006: $50.5 million). Interest income primarily relates to
interest received on cash balances. Included in 2006 was interest of $6.5
million received from IDB Biomedical Inc. ("IDB") on repayment of
injectable flu development drawings arising on the disposal of the vaccines
business in 2004. Excluding this one-off item, interest income in 2007 is
higher than in 2006 due to slightly higher average cash balances and higher
average US Dollar interest rates.
Interest expense
For the year to December 31, 2007 Shire incurred interest expense of
$70.8 million (2006: $26.4 million). The increase in interest expense
follows the acquisition of New River which was partly funded by $1.3
billion of term loans, utilized under the $2.3 billion Multicurrency Term
and Revolving Facilities Agreement. These term loans were subsequently
partially repaid using the proceeds from Shire's $1.1 billion 2.75%
convertible bond issued in May 2007. The remaining $200 million of the term
loans was also repaid during June 2007. Interest expense for the year to
December 31, 2007 includes a $7.9 million write-off of deferred financing
costs following the repayment of these term loans.
In the years to December 31, 2007 and 2006 interest expense includes a
provision for interest, which may be awarded by the Court in respect of
amounts due to those ex-TKT shareholders who have requested appraisal of
the acquisition consideration payable for their TKT shares. A trial date
for the appraisal rights litigation has been set for May 12, 2008. Further
information about this litigation can be found in our filings with the SEC,
including our Annual Report on Form 10-K for the year to December 31, 2006
and our most recent Quarterly Report on Form 10-Q for the period to
September 30, 2007.
Taxation
The effective tax rate for the year to December 31, 2007 was -4.0%
(2006: 26.8%). Excluding the IPR&D charge of $1,866.4 million, which is not
tax deductible, and the tax effect of items excluded from non-GAAP income
as outlined on page 30, the effective rate of tax on non-GAAP income is
20.7% (2006: 26.8%).
The effective rate of tax under US GAAP in 2007 compared to 2006
benefited from: the tax effect of Shire plc's 2.75% convertible bonds; an
increase in R&D tax credits; favorable permanent differences arising on the
gain on sale of product rights and a net reduction in valuation allowances.
These reductions to the effective rate of tax are partially offset by a net
increase to the provision for uncertain tax benefits and associated
interest and penalties of $38.1 million.
At December 31, 2007 net deferred tax liabilities of $56.7 million
(December 31, 2006: net deferred tax asset of $261.0 million) were
recognized. Shire has moved from a net deferred tax asset to a net deferred
tax liability position primarily because of the recognition of a deferred
tax liability of $394.8 million at acquisition in respect of intangible
assets acquired with New River, offset by deferred tax asset of $46.7
million relating to New River's net operating loss carry forwards.
Equity in earnings of equity method investees
Net earnings of equity method investees of $1.8 million were recorded
for the year to December 31, 2007 (2006: $5.7 million). This comprised
earnings of $6.5 million from the 50% share of the anti-viral
commercialization partnership with GSK in Canada (2006: $6.2 million),
offset by losses of $4.7 million being the Company's share of losses in the
GeneChem, AgeChem and EGS Healthcare Funds (2006: losses of $0.5 million).
FAS123R compensation cost
The total FAS123R charge for the year was $75.2 million (2006: $43.0
million). Excluding a catch-up charge of $29.2 million there was a 7%
increase in the FAS123R charge over 2006.
The catch up charge relates to options issued by Shire in 2005 under
the 2000 Executive Scheme. This charge arises as a result of the strong
growth in revenue and profits which the Company has generated in Q4 2007.
This growth has in turn caused the Company to revise its original
assumptions on which the FAS123R charge was based.
Financial Information
Unaudited US GAAP results for the year to December 31, 2007
Consolidated Balance Sheets
December 31,
December 31,
2007 2006
$M $M
_________ _________
ASSETS
Current assets:
Cash and cash equivalents 762.5 1,126.9
Restricted cash 39.5 29.8
Accounts receivable, net 441.5 310.8
Inventories 174.1 131.1
Assets held for sale 10.6 -
Deferred tax asset 143.3 105.7
Prepaid expenses and other current assets 125.3 106.0
_________ _________
Total current assets 1,696.8 1,810.3
Non current assets:
Investments 110.2 55.8
Property, plant and equipment, net 368.6 292.8
Goodwill 219.4 237.4
Other intangible assets, net 1,764.5 762.4
Deferred tax asset 143.7 155.3
Other non-current assets 26.9 12.4
_________ _________
Total assets 4,330.1 3,326.4
_________ _________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 674.2 566.1
Deferred tax liability 11.3 -
Liability to dissenting shareholders 480.2 452.3
Other current liabilities 96.5 313.6
_________ _________
Total current liabilities 1,262.2 1,332.0
Non-current liabilities:
Convertible bonds 1,100.0 -
Other long term debt 32.9 -
Deferred tax liability 332.4 -
Other non-current liabilities 375.6 52.1
_________ _________
Total non-current liabilities 1,840.9 52.1
_________ _________
Total liabilities 3,103.1 1,384.1
_________ _________
Unaudited US GAAP results for the year to December 31, 2007
Consolidated Balance Sheets (continued)
December December 31,
31, 2007
2006
$M
$M
_________ __________
Shareholders' equity:
Common stock of 5p par value; 750.0 million
shares authorized; and 556.8 million shares
issued and outstanding (2006: 750.0 million
shares authorized; and 506.7 million shares
issued and outstanding) 48.7 43.7
Exchangeable shares: 0.7 million shares
issued and outstanding (2006: 1.3 million) 33.6 59.4
Treasury stock (280.8) (94.8)
Additional paid-in capital 2,509.9 1,493.2
Accumulated other comprehensive income 55.7 87.8
(Accumulated deficit)/retained earnings (1,140.1) 353.0
_________ ________
Total shareholders' equity 1,227.0 1,942.3
_________ ________
Total liabilities and shareholders' equity 4,330.1 3,326.4
_________ ________
Unaudited US GAAP results for the three months and year to December 31,
2007
Consolidated Statements of Operations
3 months 3 months 12 months 12 months
to to to to
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
$M $M $M $M
________ ________ ________ ________
Revenues:
Product sales 661.3 427.6 2,170.2 1,535.8
Royalties 61.8 61.1 247.2 242.9
Other revenues 1.4 8.3 18.9 17.8
_______ _______ ______ _______
Total revenues 724.5 497.0 2,436.3 1,796.5
_______ _______ ________ _______
Costs and expenses:
Cost of product sales(1) (2) 99.6 64.0 312.9 254.1
Research and development(2) 202.9 81.3 566.6 380.5
Selling, general and
administrative 288.2 241.2 1,041.7 835.4
Depreciation and amortization(1) 46.9 28.4 154.3 100.7
Integration costs - 1.7 1.3 5.6
Gain on sale of product rights (115.7) - (127.8) (63.0)
In-process R&D charge (29.6) - 1,866.4 -
________ _______ ________ _______
Total operating expenses 492.3 416.6 3,815.4 1,513.3
________ _______ ________ _______
Operating income/(loss) 232.2 80.4 (1,379.1) 283.2
Interest income 7.9 13.7 50.6 50.5
Interest expense (17.0) (7.3) (70.8) (26.4)
Other income, net 0.5 3.6 1.2 9.5
________ _______ ________ _______
Total other (expense)/income, net (8.6) 10.0 (19.0) 33.6
________ _______ ________ _______
Income/(loss) from continuing
operations before income taxes,
equity in earnings of equity method
investees and discontinued
operations 223.6 90.4 (1,398.1) 316.8
Income taxes (11.6) (22.0) (55.5) (84.9)
Equity in earnings of equity method
investees, net of taxes 0.1 0.2 1.8 5.7
________ _______ ________ _______
Income/(loss) from continuing
operations 212.1 68.6 (1,451.8) 237.6
Gain from discontinued operations
(net of income tax expense of $nil) - - - 40.6
________ _______ ________ ________
Net income/(loss) 212.1 68.6 (1,451.8) 278.2
________ _______ ________ ________
(1) Cost of product sales does not include amortization of intangible
assets relating to intellectual property rights acquired, which is included
in Depreciation and amortization. Amortization of intangible assets in
respect of favorable manufacturing contracts is recorded in cost of product
sales.
(2) Costs, predominately relating to manufacturing set-up costs for new
products, of $1.8 million and $7.2 million for the three and twelve months
to December 31, 2007 respectively, have been reclassified from Research and
development to Cost of product sales ($1.6 million and $6.4 million for the
three and twelve months to December 31, 2006).
Unaudited US GAAP results for the three months and years to December 31,
2007 and 2006
Consolidated Statements of Operations (continued)
3 months 3 months 12 months 12 months
to to to to
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
$M $M $M $M
________ ________ ________ ________
Earnings per share - basic
Income/(loss) from continuing
operations 38.9c 13.7c (268.7c) 47.2c
Gain on disposition of discontinued
operations - - - 8.1c
________ ________ ________ ________
Earnings/(loss) per ordinary share -
basic 38.9c 13.7c (268.7c) 55.3c
________ ________ ________ ________
Earnings per share - diluted
Income/(loss) from continuing
operations 36.9c 13.4c (268.7c) 46.6c
Gain on disposition of discontinued
operations - - - 8.0c
________ ________ ________ ________
Earnings/(loss) per ordinary share -
diluted 36.9c 13.4c (268.7c) 54.6c
________ ________ ________ ________
Earnings/(loss) per ADS - diluted 110.7c 40.2c (806.1c) 163.8c
________ ________ ________ ________
Weighted average number of shares:
Millions Millions Millions Millions
Basic 544.7 502.5 540.3 503.4
Diluted 584.1 510.3 540.3 509.3
________ ________ ________ ________
Unaudited US GAAP results for the three months and years to December 31,
2007 and 2006
Consolidated Statements of Cash Flows
3 months 3 months 12 months 12 months
to to to to
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
$M $M $M $M
________ ________ ________ ________
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income/(loss) 212.1 68.6 (1,451.8) 278.2
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization:
- cost of product sales 1.8 1.3 6.2 4.8
- in other costs and expenses 46.9 26.8 154.3 99.1
Share based compensation 41.1 17.2 75.2 43.0
In-process R&D charge (29.6) - 1,866.4 -
Amortization of deferred
financing charges 1.3 - 11.9 -
Interest on building financing
obligation 0.5 - 0.5 -
Write down of long-term assets 3.0 2.0 3.0 3.8
Gain on sale of product rights (115.7) - (127.8) (63.0)
Loss/(gain) on sale of long-term
assets 0.4 (0.5) 0.3 (0.3)
Movement in deferred taxes 10.4 (147.4) (25.4) (142.4)
Equity in earnings of equity
method investees (0.1) (0.2) (1.8) (5.7)
Gain on disposition of
discontinued operations - - - (40.6)
Changes in operating assets and
liabilities, net of acquisitions:
(Increase)/decrease in accounts
receivable (56.5) 9.0 (120.7) 27.6
Increase in sales deduction
accrual 4.8 7.2 24.1 24.8
Decrease/(increase) in inventory 0.3 (3.5) (45.9) 7.2
(Increase)/decrease in
prepayments and other current
assets (13.0) 4.2 (10.3) (6.2)
(Increase)/decrease in other
assets (0.1) (2.3) 1.2 0.7
(Decrease)/increase in accounts
and notes payable and other
liabilities (0.4) 201.9 103.5 297.0
(Decrease)/increase in deferred
revenue (40.6) 4.5 5.0 (1.9)
Returns on investment from joint
venture - - 6.8 5.8
________ ________ ________ ________
Net cash provided by operating
activities(A) 66.6 188.8 474.7 531.9
________ ________ ________ ________
Unaudited US GAAP results for the three months and years to December 31,
2007 and 2006
Consolidated Statements of Cash Flows
3 months 3 months 12 months 12 months
to to to to
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
$M $M $M $M
________ ________ ________ ________
CASH FLOWS FROM INVESTING
ACTIVITIES:
Movements in short-term investments - - 55.8 6.9
Movements in restricted cash 2.3 (0.3) (9.7) 0.7
Purchases of subsidiary
undertakings, net of cash acquired - - (2,458.6) (0.8)
Expenses related to the New River
acquisition (0.6) - (61.0) -
Purchases of long-term investments (6.4) (0.2) (63.2) (9.8)
Purchases of property, plant and
equipment (48.3) (29.1) (110.4) (100.3)
Purchases of intangible assets (0.8) (6.0) (59.0) (58.8)
Proceeds from sale of long-term
investments 0.4 - 0.5 -
Proceeds from sale of property,
plant and equipment 0.8 - 0.8 0.9
Proceeds/deposits received from
sale of product rights 210.1 0.4 234.4 63.4
Proceeds from loan repaid by IDB - - - 70.6
Returns from equity investments 0.1 - 2.3 0.3
________ ________ ________ _______
Net cash provided by/(used in)
investing activities(B) 157.6 (35.2) (2,468.1) (26.9)
________ ________ ________ _______
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from drawings under bank
facility - - 1,300.0 -
Repayment of drawings under bank
facility - - (1,300.0) -
Proceeds from issue of 2.75%
convertible bonds due 2014 - - 1,100.0 -
Redemption of Shire convertible
bonds due 2011 - - - (0.1)
Redemption of New River convertible
notes - - (279.4) -
Proceeds from exercise of New River
purchased call option - - 141.8 -
Payment of debt arrangement and
issuance costs - - (32.8) -
Proceeds from exercise of options 4.8 48.7 30.4 81.9
Proceeds from issue of common
stock, net - - 877.3 -
Proceeds from exercise of warrants - - 13.0 -
Payments to acquire treasury stock 17.5) (23.6) (186.0) (92.0)
Payment of dividends (11.9) (9.8) (41.3) (32.4)
________ ________ ________ ________
Net cash (used in)/provided by
financing activities(C) (24.6) 15.3 1,623.0 (42.6)
________ ________ ________ ________
Effect of foreign exchange rate
changes on cash and cash
equivalents (D) - 2.8 6.0 8.0
________ ________ ________ _________
Net increase/(decrease) in cash and
cash equivalents(A) +(B) +(C) +(D) 199.6 171.7 (364.4) 470.4
Cash and cash equivalents at
beginning of period 562.9 955.2 1,126.9 656.5
________ ________ ________ ________
Cash and cash equivalents at end of
period 762.5 1,126.9 762.5 1,126.9
________ ________ ________ ________
Unaudited US GAAP results for the three months and years to December
31, 2007 and 2006
Selected Notes to the US GAAP Financial Statements
(1) Earnings/(Loss) per share
3 months 3 months 12 months 12 months
to to to to
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
$M $M $M $M
________ ________ ________ ________
Income/(loss) from continuing
operations 212.1 68.6 (1,451.8) 237.6
Gain on disposition of
discontinued operations - - - 40.6
________ ________ ________ ________
Numerator for basic EPS 212.1 68.6 (1,451.8) 278.2
Interest on convertible bonds,
net of tax(1) 3.4 - - -
________ ________ ________ ________
Numerator for diluted EPS 215.5 68.6 (1,451.8) 278.2
________ ________ ________ ________
Weighted average number of
shares:
Million Million Million Million
Basic (2) 544.7 502.5 540.3 503.4
Effect of dilutive shares:
Stock options(3) 6.7 7.1 - 5.3
Warrants(3) - 0.7 - 0.6
Convertible bonds 2.75% due
2014(1) 32.7 - - -
_______ ________ _______ _______
Diluted 584.1 510.3 540.3 509.3
_______ ________ _______ _______
(1) Calculated using the "if-converted" method. (2) Excludes shares purchased by the Employee Stock Ownership Trust and
presented by the Company as treasury stock.
(3) Calculated using the treasury stock method.
The share equivalents not included in the calculation of the diluted
weighted average number of shares are shown below:
3 months 3 months 12 months 12 months
to December to December to December to December
31, 2007 31, 2006 31, 2007 31, 2006
No. of No. of No. of No. of
shares shares shares shares
Millions(1) Millions(1) Millions(2) Millions(1)
___________ ___________ ___________ __________
Stock options in the money - - 8.4 -
Stock options out of the
money 2.9 2.6 2.9 7.7
Warrants - - 0.3 -
Convertible bonds 2.75%
due 2014 - - 21.2 -
___________ ___________ ___________ __________
2.9 2.6 32.8 7.7
___________ ___________ ___________ __________
(1) For the three months ended December 31, 2007 and the three and
twelve months ended December 31, 2006, certain stock options have been
excluded from the calculation of diluted EPS because their exercise prices
exceeded Shire plc's average share price during the calculation period.
(2) For the twelve months ended December 31, 2007, no share options,
warrants or ordinary shares underlying convertible bonds were included in
the calculation of the diluted weighted average number of shares, because
the Company made a net loss during the calculation period and the inclusion
of these items would be anti-dilutive.
Unaudited US GAAP results for the three months to December 31,
2007 and 2006
Selected Notes to the US GAAP Financial Statements (continued)
3 months 3 months 3 months 3 months
(2) Analysis of to December to December to December to December
revenues 31, 2007 31, 2006 31, 2007 31, 2007
$M $M % change % of total
revenue
Net product sales: ___________ ___________ ___________ ___________
Specialty
Pharmaceuticals
ADHD
ADDERALL XR 277.7 229.2 21% 38%
VYVANSE 65.9 - N/A 9%
DAYTRANA 23.0 15.2 51% 3%
___________ ___________ ___________ __________
366.6 244.4 50% 50%
___________ ___________ ___________ __________
GI
PENTASA 48.7 38.3 27% 7%
LIALDA 29.2 - N/A 4%
___________ ___________ ___________ ___________
77.9 38.3 103% 11%
___________ ___________ ___________ ___________
RENAL
FOSRENOL 26.2 18.7 40% 4%
DYNEPO 7.9 - N/A 1%
___________ ___________ ___________ __________
34.1 18.7 82% 5%
___________ ___________ ___________ __________
General Products
CALCICHEW 15.1 12.3 23% 2%
CARBATROL 19.6 17.6 11% 3%
REMINYL/REMINYL XL 8.4 6.5 29% 1%
XAGRID 18.4 13.8 33% 3%
__________ ___________ ___________ _________
61.5 50.2 23% 9%
__________ ___________ ___________ _________
Other product sales(1) 24.9 25.5 -2% 3%
__________ ___________ ___________ _________
Total SP product sales 565.0 377.1 50% 78%
__________ ___________ ___________ _________
Human Genetic
Therapies
REPLAGAL 38.9 31.2 25% 5%
ELAPRASE 57.4 19.3 197% 8%
__________ ___________ ___________ _________
Total HGT product sales 96.3 50.5 91% 13%
__________ ___________ ___________ _________
Total product sales 661.3 427.6 55% 91%
__________ ___________ ___________ _________
Royalty income:
3TC 34.1 36.6 -7% 5%
ZEFFIX 11.4 9.4 21% 2%
Others 16.3 15.1 8% 2%
_________ ___________ ___________ __________
61.8 61.1 1% 9%
_________ ___________ ___________ __________
Other 1.4 8.3 -83% 0%
_________ ___________ ___________ __________
Total revenues 724.5 497.0 46% 100%
_________ ___________ ___________ __________
(1) Excluding products divested in 2007, other product sales were $10.2
million for Q4 2007 (Q4 2006:$10.3 million)
Unaudited US GAAP results for the years to December 31, 2007 and 2006
Selected Notes to the US GAAP Financial Statements (continued)
3 months 3 months 3 months 3 months
(2) Analysis of to December to December to December to December
revenues 31, 2007 31, 2006 31, 2007 31, 2007
$M $M % change % of total
revenue
Net product sales: ___________ ___________ ___________ ___________
Specialty
Pharmaceuticals
ADHD
ADDERALL XR 1,030.9 863.6 19% 42%
VYVANSE 76.5 - N/A 3%
ADDERALL - 23.6 -100% 0%
DAYTRANA 64.2 25.1 156% 3%
___________ __________ ________ ________
1,171.6 912.3 28% 48%
___________ __________ _________ ________
GI
PENTASA 176.4 137.8 28% 7%
LIALDA 50.5 - N/A 2%
___________ __________ _________ ________
226.9 137.8 65% 9%
___________ __________ _________ ________
RENAL
FOSRENOL 102.2 44.8 128% 4%
DYNEPO 14.2 - N/A 1%
___________ __________ _________ ________
116.4 44.8 160% 5%
___________ __________ _________ ________
General Products
CALCICHEW 54.2 45.5 19% 2%
CARBATROL 72.3 68.3 6% 3%
REMINYL/REMINYL XL 31.2 21.5 45% 1%
XAGRID 66.8 53.3 25% 3%
___________ __________ _________ ________
224.5 188.6 19% 9%
___________ __________ _________ ________
Other product sales (1) 105.1 111.0 -5% 5%
___________ __________ _________ ________
Total SP product
sales 1,844.5 1,394.5 32% 76%
___________ __________ _________ ________
Human Genetic
Therapies
REPLAGAL 143.9 117.7 22% 6%
ELAPRASE 181.8 23.6 670% 7%
___________ __________ _________ ________
Total HGT product
sales 325.7 141.3 131% 13%
___________ __________ _________ ________
Total product sales 2,170.2 1,535.8 41% 89%
___________ __________ _________ ________
Royalty income:
3TC 145.3 150.9 -4% 6%
ZEFFIX 41.0 34.8 18% 2%
Others 60.9 57.2 6% 2%
___________ __________ _________ ________
247.2 242.9 2% 10%
___________ __________ _________ ________
Other 18.9 17.8 6% 1%
___________ __________ _________ ________
Total revenues 2,436.3 1,796.5 36% 100%
___________ __________ _________ ________
(1) Excluding products divested in 2007, other product sales were $40.5
million for 2007 (2006:$41.5 million)
Unaudited US GAAP results for the three months to December 31, 2007
Selected Notes to the US GAAP financial Statements
(3) Non GAAP reconciliation
US GAAP FAS 123R Other Non GAAP Recurring Non
3 months Catch Up Adjustments (including FAS123R GAAP
December (a) FAS123R) Charge December
31, 2007 31, 2007
$M $M $M $M $M
________ ________ ________ _______ ________ ________
Total revenues 724.5 - - 724.5 - 724.5
________ ________ ________ _______ _______ _______
Costs and expenses:
Cost of product
sales 99.6 (2.1) - 97.5 (0.8) 96.7
Research and
development 202.9 (4.6) (75.0) (b) 123.3 (3.6) 119.7
Selling, general
and
administrative 288.2 (22.5) 10.0 (c) 275.7 (7.5) 268.2
Depreciation and
amortization 46.9 - (31.0) (d) 15.9 - 15.9
Gain on sale of
product rights (115.7) - 115.7 (e) - - -
In-process R&D
charge (29.6) - 29.6 (f) - - -
______ ______ ________ _______ _______ _______
Total operating
expenses 492.3 (29.2) 49.3 512.4 (11.9) 500.5
______ ______ ________ _______ _______ _______
Operating income 232.2 29.2 (49.3) 212.1 11.9 224.0
Interest income 7.9 - - 7.9 - 7.9
Interest expense (17.0) - - (17.0) - (17.0)
Other income, net 0.5 - - 0.5 - 0.5
______ ______ _______ _______ _______ _______
Total other
income/(expense),
net (8.6) - - (8.6) - (8.6)
______ ______ _______ _______ _______ _______
Income from
continuing
operations
before income
taxes and equity
in earnings of
equity method
investees 223.6 29.2 (49.3) 203.5 11.9 215.4
Income taxes (11.6) (5.5) (9.7) (g)(26.8) (9.0) (35.8)
Equity in earnings
of equity
method investees 0.1 - - 0.1 - 0.1
Net income 212.1 23.7 (59.0) 176.8 2.9 179.7
______ ______ _______ _______ _______ _______
Interest on
convertible bonds,
net of tax 3.4 3.4 - 3.4
______ ______ _______ _______ _______ _______
Numerator for
Diluted
EPS from
ongoing
operations 215.5 180.2 2.9 183.1
______ ______ _______ _______ _______ _______
Weighted
average number
of shares
(millions) -
diluted 584.1 584.1 584.1
Diluted earnings
per ordinary
share 36.9c 30.9c 31.3c
Diluted earnings
per ADS 110.7c 92.7c 93.9c
______ ______ _______ _______ _______ _______
a) The catch up charge related to options issued by Shire under the
2005 Executive Scheme
The following items are included in Other Adjustments:
b) Upfront payments of $75.0 million in respect of in-licensing
technology from Amicus ($50.0 million) and Alba ($25.0 million);
c) Release of legal provisions ($10.0 million);
d) Amortisation of intangible assets relating to intellectual property
rights acquired ($31.0 million);
e) Gain on the sale of portfolio of non-core products to Almirall
($114.8 million) and other non-core products ($0.9 million);
f) Adjustment to the value ascribed to IPR&D acquired with New River
(see page 17); and
g) Tax effect of adjustments outlined as (b) to (f).
Unaudited US GAAP results for year 2007
Selected Notes to the US GAAP financial Statements
(3) Non GAAP reconciliation
(continued)
US GAAP FAS 123R Other Non GAAP Recurring Non
3 months Catch Up Adjustments (including FAS123R GAAP
December (a) FAS123R) Charge December
31, 2007 31, 2007
$M $M $M $M $M
________ ________ ________ _______ ________ ________
Total revenues 2,436.3 - - 2,436.3 - 2,436.3
Costs and
expenses:
Cost of product
sales 312.9 (2.1) - 310.8 (3.4) 307.4
Research and
development 566.6 (4.6) (155.9) (b) 406.1 (12.4) 393.7
Selling, general
and
administrative 1,041.7 (22.5) (17.0) (c) 1,002.2 (30.2) 972.0
Depreciation
and amortization 154. - (95.0) (d) 59.3 - 59.3
Integration costs 1.3 - (1.3) (e) - - -
Gain on sale of
product rights (127.8) - 127.8 (f) - - -
In-process R&D
charge 1,866.4 - (1,866.4) (g) - - -
Total operating
expenses 3,815.4 (29.2) (2,007.8) 1,778.4 (46.0) 1,732.4
Operating (loss)
/income (1,379.1) 29.2 2,007.8 657.9 46.0 703.9
Interest income 50.6 - - 50.6 - 50.6
Interest expense (70.8) - 7.9 (h) (62.9) - (62.9)
Other income, net 1.2 - - 1.2 - 1.2
Total other
(expense)/income,
net (19.0) - 7.9 (11.1) - (11.1)
(Loss)/income
from continuing
operations before
income taxes
and equity in
earnings of
equity method
investees (1,398.1) 29.2 2,015.7 646.8 46.0 692.8
Income taxes (55.5) (5.5) (56.3) (i) (117.3) (26.0) (143.3)
Equity in earnings
of equity
method investees 1.8 - - 1.8 - 1.8
Net (loss)/
income (1,451.8) 23.7 1,959.4 531.3 20.0 551.3
Interest on
convertible
bonds, net of
tax - 8.9 - 8.9
Numerator for
non GAAP -
diluted EPS
from ongoing
operations (1,451.8) 540.2 20.0 560.2
Weighted
average number
of shares
(millions)(1)
- diluted 540.3 570.2 570.2
Diluted earnings
per ordinary
share (268.7c) 94.7c 98.2c
Diluted earnings
per ADS (806.1c) 284.1c 294.6c
(1) As the Company made a net loss during the calculation period on a
GAAP basis, no share options, warrants or ordinary shares underlying the
convertible bonds were included in the weighted average number of shares
for diluted EPS. These items are included in the denominator for non GAAP
diluted EPS as the Company generated net income on a non GAAP basis.
a) The catch up charge related to options issued by Shire under the
2005 Executive Scheme, (see page 18).
The following items are included in Other Adjustments:
b) Upfront and milestone payments of $155.9 million in respect of
in-licensing technology from Renovo ($75.0 million), Amicus ($50.0
million), Alba ($25.0 million) and Noven ($5.9 million);
c) Provision for the legal settlement of the purported TKT securities
fraud class action shareholder suit ($27.0 million) offset by legal
provision released ($10.0 million);
d) Amortisation of intangible assets relating to intellectual property
rights acquired ($95.0 million);
e) Integration costs in respect of the acquisition of New River ($1.3
million);
f) Gain on the sale of non-core products to Almirall ($114.8 million),
EQUETRO ($7.1 million) and other non-core products ($5.9 million);
g) Write-off of IPR&D acquired as part of the acquisition of New River;
h) Write-off of deferred financing costs following repayment of term
loans drawn down to partly fund the acquisition of New River (see page 17);
and
i) Tax effect of adjustments outlined as (b) to (h).
Unaudited US GAAP results for the three months to December 31, 2006
Selected Notes to the US GAAP financial Statements
(3) Non GAAP reconciliation
(continued)
US GAAP Adjustments Non GAAP FAS123R Non
3 months (including Charge GAAP
to December FAS123R) 3 months
31, 2006 to December
31, 2006
$M $M $M $M
________ ________ ________ ________ ________
Total revenues 497.0 - 497.0 - 497.0
Costs and expenses:
Cost of product
sales 64.0 - 64.0 (0.9) 63.1
Research and
development 81.3 - 81.3 (1.2) 80.1
Selling, general
and administrative 241.2 - 241.2 (15.1) 226.1
Depreciation and
amortization 28.4 (15.8) (a) 12.6 - 12.6
Integration costs 1.7 (1.7) (b) - - -
Total operating
expenses 416.6 (17.5) 399.1 (17.2) 381.9
Operating income 80.4 17.5 97.9 17.2 115.1
Interest income 13.7 - 13.7 - 13.7
Interest expense (7.3) - (7.3) - (7.3)
Other income, net 3.6 - 3.6 - 3.6
Total other income/
(expense), net 10.0 - 10.0 - 10.0
Income from
continuing operations
before income
taxes and equity in
earnings of equity
method investees 90.4 17.5 107.9 17.2 125.1
Income taxes (22.0) (3.1) (c) (25.1) (4.6) (29.7)
Equity in earnings
of equity
method investees 0.2 - 0.2 - 0.2
Net income 68.6 14.4 83.0 12.6 95.6
Weighted average
number of shares
(millions) -
diluted 510.3 510.3 510.3
Diluted earnings
per ordinary
share 13.4c 16.3c 18.7c
Diluted earnings
per ADS 40.2c 48.9c 56.1c
The following items are included in Adjustments:
a) Amortisation of intangible assets relating to intellectual property
rights acquired ($15.8 million);
b) Integration costs in respect of the acquisition of TKT ($1.7
million); and
c) Tax effect of adjustments outlined as (a) - (b) above.
Unaudited US GAAP results for year 2006
Selected Notes to the US GAAP financial Statements
(3) Non GAAP reconciliation (continued)
US GAAP Adjustments Non GAAP FAS123R Non
12 months (including Charge GAAP
to December FAS123R) 12 months
31, 2006 to December
31, 2006
$M $M $M $M
________ ________ ________ ________ ________
Total revenues 1,796.5 - 1,796.5 - 1,796.5
Costs and expenses:
Cost of product
sales 254.1 (47.0) (a) 207.1 (3.2) 203.9
Research and
development 380.5 (80.5) (b) 300.0 (5.4) 294.6
Selling, general
and administrative 835.4 - 835.4 (34.4) 801.0
Depreciation and
amortization 100.7 (57.4) (c) 43.3 - 43.3
Integration costs 5.6 (5.6) (d) - - -
Gain on sale of
product rights (63.0) 63.0 (e) - - -
Total operating
expenses 1,513.3 (127.5) 1,385.8 (43.0) 1,342.8
Operating income 283.2 127.5 410.7 43.0 453.7
Interest income 50.5 - 50.5 - 50.5
Interest expense (26.4) - (26.4) - (26.4)
Other income, net 9.5 - 9.5 - 9.5
Total other
income/(expense),
net 33.6 - 33.6 - 33.6
Income from
continuing
operations before
income taxes,
equity in earnings
of equity method
investees and
discontinued
operations 316.8 127.5 444.3 43.0 487.3
Income taxes (84.9) (34.2) (f) (119.1) (11.5) (130.6)
Equity in earnings
of equity method
investees 5.7 - 5.7 - 5.7
Income from
continuing
operations 237.6 93.3 330.9 31.5 362.4
Gain from
discontinued
operations (net
of income tax
expenses of $nil
and $nil) 40.6 (40.6) (g) - - -
Net income 278.2 52.7 330.9 31.5 362.4
Weighted average
number of shares
(millions) -
diluted 509.3 509.3 509.3
Diluted earnings
per ordinary share 54.6c 65.0c 71.0c
Diluted earnings
per ADS 163.8c 195.0c 213.0c
The following items are included in Adjustments:
a) Fair value adjustment in respect of inventories acquired with TKT
($47.0 million);
b) Upfront and milestone payments of $80.5 million in respect of
in-licensing technology from New River ($50.0 million), Duramed ($25.0
million) and Warren ($5.5 million);
c) Amortisation of intangible assets relating to intellectual property
rights acquired ($57.4 million);
d) Integration costs in respect of the acquisition of TKT ($5.6
million);
e) Gain on the sale of ADDERALL to Duramed ($63.0 million);
f) Tax effect of adjustments outlined as (a) to (e) above; and
g) Gain on disposition of discontinued operations, on repayment of
injectable flu development drawings on disposal of the vaccines business to
IDB ($40.6 million).
SOURCE Shire plc
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CONTACT:
For further information please contact:
Investor Relations, Cléa Rosenfeld (Rest of the World),
+44-1256-894-160; Eric Rojas (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
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