99.1
|
Press Release dated May 1, 2014, reporting Shire plc’s financial results for the three month period ended March 31, 2014
|
SHIRE PLC
|
|||
By:
|
/s/ T May
|
||
Name:
|
Tatjana May
|
||
Title:
|
General Counsel
|
EXHIBIT INDEX
|
|
Number
|
Description
|
99.1
|
Press Release dated May 1, 2014
|
Press Release
|
|
www.shire.com
|
Financial Highlights
|
|
Q1 2014
|
Growth(1)
|
Product sales
|
|
$1,308 million
|
+19%
|
Total revenues
|
|
$1,347 million
|
+18%
|
|
|
|
|
Non GAAP operating income
|
|
$591 million
|
+40%
|
US GAAP operating income from continuing operations
|
|
$307 million
|
-15%
|
|
|
|
|
Non GAAP diluted earnings per ADS
|
|
$2.36
|
+38%
|
US GAAP diluted earnings per ADS
|
|
$1.17
|
+218%
|
|
|
|
|
Non GAAP cash generation
|
|
$331 million
|
+29%
|
Non GAAP free cash flow
|
|
$231 million
|
+104%
|
US GAAP net cash provided by operating activities
|
|
$246 million
|
+53%
|
|
|
|
|
|
|
Q1 2014
|
|
|
Q1 2013
|
|
||||||||
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
||||||
|
|
$M
|
|
$M
|
|
$M
|
|
|
$M
|
|
$M
|
|
$M
|
|
Total revenues
|
|
1,347
|
|
-
|
|
1,347
|
|
|
1,143
|
|
-
|
|
1,143
|
|
Operating income
|
|
307
|
|
284
|
|
591
|
|
|
362
|
|
59
|
|
421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ADS
|
|
$1.17
|
|
$1.19
|
|
$2.36
|
|
|
$0.37
|
|
$1.35
|
|
$1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
Product sales grew strongly in Q1 2014 (up 19% to $1,308 million from $1,098 million in Q1 2013). Product sales in Q1 2014 included $93 million for products acquired with ViroPharma Incorporated (“ViroPharma”), including $86 million from CINRYZE®. The inclusion of ViroPharma contributed eight percentage points to our reported product sales growth.
|
|
·
|
Total revenues were up 18% to $1,347 million (Q1 2013: $1,143 million), with the growth in product sales being partially offset by lower royalties and other revenues (down 14%).
|
|
·
|
On a Non GAAP basis:
|
|
·
|
Non GAAP diluted earnings per American Depository Share (“ADS”) increased 38% to $2.36 (Q1 2013: $1.72) primarily due to the higher Non GAAP operating income.
|
|
·
|
Cash generation, a Non GAAP measure, was up 29% to $331 million (Q1 2013: $257 million). Higher cash receipts from product sales were partially offset by higher payments for sales deductions, the One Shire reorganization and the costs related to the acquisition and integration of ViroPharma.
|
2 |
|
·
|
Net debt, also a Non GAAP measure, at March 31, 2014 was $1,413 million (December 31, 2013: net cash of $2,231 million).
|
|
·
|
Full year 2014 product sales growth in the mid-to-high teens.
|
|
·
|
Royalties and other revenues to be 10-15% lower than 2013.
|
|
·
|
Non GAAP gross margin to be approximately 1 percentage point lower than in 2013, due to slight dilution from ViroPharma.
|
|
·
|
Net interest expense to be at a similar level to 2013.
|
|
·
|
Core effective tax rate on Non GAAP income in the range of 18-20%.
|
3 |
|
·
|
On March 27, 2014 Shire announced the acceptance of submission of a Marketing Authorization Application by the European Medicines Agency for its once-daily, non-stimulant guanfacine extended release product for the treatment of ADHD in children/adolescents aged 6-17 years.
|
|
·
|
SHP465 (mixed salts of a single entity amphetamine) capsules provide an extended-release of amphetamines to provide coverage of ADHD symptoms for adults throughout the day. Based on the US Food and Drug Administration (“FDA”) feedback received on April 25, 2014, Shire is planning to resubmit the SHP465 New Drug Application (“NDA”) as a Class 2 resubmission with a six month FDA review time. SHP465, if approved, will be a once daily, product designed to treat ADHD in adults, with statistically significant endpoints at 16 hours post-dose (statistically significant endpoints in clinical trials beginning at the 4-hour time point).
|
|
·
|
Shire continues to evaluate the lifitegrast clinical program in whole, examining the totality of evidence and will engage in a pre-NDA meeting with FDA regarding next steps. The totality of data encompasses all efficacy studies conducted to date, one Phase 2 study and two Phase 3 studies (OPUS-1 and OPUS-2, with top-line results announced in the fourth quarter of 2013).
|
|
·
|
Shire is pursuing additional new formulations of CINRYZE for routine prophylaxis against Hereditary Angioedema (“HAE”) attacks in adolescent and adult patients. Shire plans to initiate discussions with FDA in H2 2014 to determine the appropriate path forward. In addition, Shire is further considering opportunities to pursue additional therapeutic indications that may involve the C1 Inhibitor.
|
|
·
|
Shire is currently conducting two Phase 2 studies in transplant recipients, both of which are fully enrolled. The first is a 160 patient trial in first-line treatment of asymptomatic CMV in transplant recipients. The second is a 120 patient trial for the treatment of resistant/refractory CMV infection/disease in transplant recipients. Preliminary results are expected in the first half of 2015.
|
|
·
|
In March 2014, the SHP602 Phase 2 trial in pediatric and adult patients with transfusion iron overload was placed on clinical hold as Shire evaluates nonclinical toxicology findings. The potential relevance of these findings to humans, if any, is unknown, however this assessment will lead to a delay that will impact the commercial value of this program. Following our decision to put the current trial on clinical hold, an impairment charge relating to the IPR&D intangible asset has been recorded in Q1 2014.
|
4 |
|
·
|
On May 1, 2014 Shire entered into a definitive agreement to acquire Fibrotech, a privately held, biotechnology company focused on the development of small molecules for the treatment of renal diseases and fibrosis. The acquisition of Fibrotech strengthens our growing and innovative portfolio targeting renal and fibrotic diseases, and leverages our existing renal capabilities. Shire will make an upfront payment of $75 million and additional contingent payments based on the achievement of development and regulatory milestones. The closing of the acquisition is subject to customary conditions, including approval of Australia’s Foreign Investment Review Board. FT011, the lead molecule, targets an innovative, novel and previously undescribed mechanism of action, which completed a Phase 1A study in healthy volunteers and is currently in a Phase 1B study in patients with renal impairment. The first Phase 2 study is planned to enroll patients with Focal Segmental Glomerulosclerosis (FSGS), a rare fibrotic kidney disease with high unmet medical need. Shire will also explore the application of this technology in other potential fibrotic conditions. Given recent advancements in the scientific understanding of fibrosis, as well as the development of biomarkers to aid in clinical development, it is an exciting time to expand our interest in anti-fibrotic agents with a clinical stage candidate as well as a library of additional novel molecules.
|
|
·
|
In Q1 2014 Shire transferred the marketing authorizations for the CALCICHEW range of products in the UK and Ireland to Takeda Pharmaceutical Company Limited. From January 1, 2014 Shire no longer recognizes product sales from CALCICHEW. In addition in Q1 2014, Shire sold certain CALCICHEW trade marks to Takeda Nycomed AS (“Takeda”) for cash proceeds of $43.5 million and recognized a gain for the same amount.
|
5 |
|
Page
|
Overview of First Quarter 2014 Financial Results
|
7
|
Financial Information
|
11
|
Non GAAP Reconciliation
|
19
|
Notes to Editors
|
21
|
Safe Harbor Statement
|
22
|
Explanation of Non GAAP Measures
|
22
|
Trade Marks
|
23
|
Investor Relations
|
|
|
|
|
- Eric Rojas
|
erojas@shire.com
|
+1 781 482 0999
|
|
- Sarah Elton-Farr
|
seltonfarr@shire.com
|
+44 1256 894 157
|
|
|
|
|
Media
|
|
|
|
|
- Jessica Mann
|
jmann@shire.com
|
+44 1256 894 280
|
|
- Gwen Fisher
|
gfisher@shire.com
|
+1 484 595 9836
|
UK dial in:
|
0808 237 0030 or 0203 139 4830
|
US dial in:
|
1 866 928 7517 or 1 718 873 9077
|
International Access Numbers:
|
Click here
|
Password/Conf ID:
|
22580956#
|
Live Webcast:
|
Click here
|
6 |
1.
|
Product sales
|
|
|
|
|
|
Year on year growth
|
US Exit
Market
Share(2)
|
|||||||
Product sales
|
|
Sales $M
|
|
|
Sales
|
|
Non GAAP
CER(1)
|
US Rx(2)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
VYVANSE
|
|
351.2
|
|
|
+18%
|
|
+18%
|
|
+3%
|
|
16%
|
||
LIALDA/MEZAVANT
|
|
128.9
|
|
|
+28%
|
|
+29%
|
|
+33%
|
|
30%
|
||
ELAPRASE
|
|
128.6
|
|
|
+13%
|
|
+14%
|
|
n/a(3)
|
|
n/a(3)
|
||
REPLAGAL®
|
|
114.3
|
|
|
+0%
|
|
+2%
|
|
n/a(4)
|
|
n/a(4)
|
||
VPRIV®
|
|
86.9
|
|
|
+6%
|
|
+7%
|
|
n/a(3)
|
|
n/a(3)
|
||
CINRYZE
|
|
85.6
|
|
|
n/a
|
|
n/a
|
|
n/a(3)
|
|
n/a(3)
|
||
ADDERALL XR®
|
|
85.1
|
|
|
-15%
|
|
-14%
|
|
-2%
|
|
5%
|
||
INTUNIV
|
|
82.3
|
|
|
+6%
|
|
+6%
|
|
+3%
|
|
4%
|
||
FIRAZYR
|
|
74.9
|
|
|
+80%
|
|
+79%
|
|
n/a(3)
|
|
n/a(3)
|
||
PENTASA®
|
|
72.3
|
|
|
+2%
|
|
+2%
|
|
-1%
|
|
13%
|
||
OTHER
|
|
98.0
|
|
|
-1%
|
|
-3%
|
|
n/a
|
|
n/a
|
||
Total
|
|
1,308.1
|
|
|
+19%
|
|
+20%
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
On a Constant Exchange Rate (“CER”) basis, which is a Non GAAP measure.
|
(2)
|
Data provided by IMS Health National Prescription Audit (“IMS NPA”) relates solely to US-based prescriptions. Growth rates have been calculated based on the restated 2013 data issued by IMS on February 12, 2014. Exit market share represents the average monthly US market share in the month ended March 31, 2014.
|
(3)
|
IMS NPA Data not available.
|
(4)
|
Not sold in the US in Q1 2014.
|
7 |
2.
|
Royalties
|
|
|
|
|
|
|
Year on year growth
|
|||
Product
|
|
Royalties to
Shire $M
|
|
|
Royalties
|
|
|
CER
|
|
|
|
|
|
|
|
|
|
|
|
FOSRENOL®
|
1.00
|
12.8
|
|
|
+42%
|
|
|
+42%
|
|
ADDERALL XR
|
1.00
|
9.0
|
|
|
+11%
|
|
|
+11%
|
|
3TC® and ZEFFIX®
|
1.00
|
7.5
|
|
|
-40%
|
|
|
-40%
|
|
Other
|
1.00
|
3.0
|
|
|
-66%
|
|
|
-66%
|
|
Total
|
1.00
|
32.3
|
|
|
-16%
|
|
|
-16%
|
|
|
|
|
|
|
|
|
|
|
|
8 |
3.
|
Financial details
|
|
Q1 2014
$M
|
|
% of
product
sales
|
|
Q1 2013
$M
|
|
% of
product
sales
|
Cost of product sales (US GAAP)
|
229.5
|
|
18%
|
|
147.4
|
|
13%
|
Unwind of ViroPharma inventory fair value step-up
|
(38.8)
|
|
|
|
-
|
|
|
Depreciation
|
(10.2)
|
|
|
|
(7.1)
|
|
|
Cost of product sales (Non GAAP)
|
180.5
|
|
14%
|
|
140.3
|
|
13%
|
|
|
|
|
|
|
|
|
|
Q1 2014
$M
|
|
% of
product
sales
|
|
Q1 2013
$M
|
|
% of
product
sales
|
R&D (US GAAP)
|
360.5
|
|
28%
|
|
220.6
|
|
20%
|
Impairment of intangible assets
|
(166.0)
|
|
|
|
-
|
|
|
Depreciation
|
(5.8)
|
|
|
|
(4.6)
|
|
|
R&D (Non GAAP)
|
188.7
|
|
14%
|
|
216.0
|
|
20%
|
|
|
|
|
|
|
|
|
|
Q1 2014
$M
|
|
% of
product
sales
|
|
Q1 2013
$M
|
|
% of
product
sales
|
SG&A (US GAAP)
|
430.3
|
|
33%
|
|
391.7
|
|
36%
|
Intangible asset amortization
|
(57.8)
|
|
|
|
(36.1)
|
|
|
Legal and litigation costs
|
(1.7)
|
|
|
|
(1.6)
|
|
|
Depreciation
|
(20.8)
|
|
|
|
(16.1)
|
|
|
SG&A (Non GAAP)
|
350.0
|
|
27%
|
|
337.9
|
|
31%
|
|
|
|
|
|
|
|
|
9 |
10 |
|
Page
|
|
|
Unaudited US GAAP Consolidated Balance Sheets
|
12
|
|
|
Unaudited US GAAP Consolidated Statements of Income
|
13
|
|
|
Unaudited US GAAP Consolidated Statements of Cash Flows
|
15
|
|
|
Selected Notes to the Unaudited US GAAP Financial Statements
|
|
(1) Earnings per share
|
17
|
(2) Analysis of revenues
|
18
|
|
|
Non GAAP reconciliation
|
19
|
11 |
|
March 31,
|
|
December 31,
|
|
2014
|
|
2013
|
|
$M
|
|
$M
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
139.1
|
|
2,239.4
|
Restricted cash
|
32.3
|
|
22.2
|
Accounts receivable, net
|
1,091.2
|
|
961.2
|
Inventories
|
637.4
|
|
455.3
|
Assets held for sale
|
-
|
|
31.6
|
Deferred tax asset
|
392.1
|
|
315.6
|
Prepaid expenses and other current assets
|
350.3
|
|
263.0
|
|
|
|
|
Total current assets
|
2,642.4
|
|
4,288.3
|
|
|
|
|
Non-current assets:
|
|
|
|
Investments
|
35.2
|
|
31.8
|
Property, plant and equipment ("PP&E"), net
|
884.0
|
|
891.8
|
Goodwill
|
2,070.1
|
|
624.6
|
Other intangible assets, net
|
5,103.4
|
|
2,312.6
|
Deferred tax asset
|
145.5
|
|
141.1
|
Other non-current assets
|
89.7
|
|
32.8
|
|
|
|
|
Total assets
|
10,970.3
|
|
8,323.0
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable and accrued expenses
|
1,765.2
|
|
1,688.4
|
Short term borrowings
|
671.3
|
|
-
|
Other current liabilities
|
83.5
|
|
119.5
|
|
|
|
|
Total current liabilities
|
2,520.0
|
|
1,807.9
|
|
|
|
|
Non-current liabilities:
|
|
|
|
Long term borrowings
|
850.0
|
|
-
|
Deferred tax liability
|
1,295.5
|
|
560.6
|
Other non-current liabilities
|
659.0
|
|
588.5
|
|
|
|
|
Total liabilities
|
5,324.5
|
|
2,957.0
|
|
|
|
|
Equity:
|
|
|
|
Common stock of 5p par value; 1,000 million shares authorized; and 597.9 million shares issued and outstanding (2013: 1,000 million shares authorized; and 597.5 million shares issued and outstanding)
|
58.6
|
|
58.6
|
Additional paid-in capital
|
4,233.0
|
|
4,186.3
|
Treasury stock: 12.0 million shares (2013: 13.4 million)
|
(381.7)
|
|
(450.6)
|
Accumulated other comprehensive income
|
112.8
|
|
110.2
|
Retained earnings
|
1,623.1
|
|
1,461.5
|
|
|
|
|
Total equity
|
5,645.8
|
|
5,366.0
|
|
|
|
|
Total liabilities and equity
|
10,970.3
|
|
8,323.0
|
12 |
3 months to March 31,
|
|
2014
|
|
2013
|
|
|
$M
|
|
$M
|
Revenues:
|
|
|
|
|
Product sales
|
|
1,308.1
|
|
1,098.2
|
Royalties
|
|
32.3
|
|
38.5
|
Other revenues
|
|
6.4
|
|
6.7
|
Total revenues
|
|
1,346.8
|
|
1,143.4
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
Cost of product sales
|
|
229.5
|
|
147.4
|
R&D(1)
|
|
360.5
|
|
220.6
|
SG&A(1)
|
|
430.3
|
|
391.7
|
Goodwill impairment charge
|
|
-
|
|
7.1
|
Gain on sale of product rights
|
|
(36.4)
|
|
(6.5)
|
Reorganization costs
|
|
49.4
|
|
17.5
|
Integration and acquisition costs
|
|
6.6
|
|
4.1
|
Total operating expenses
|
|
1,039.9
|
|
781.9
|
|
|
|
|
|
Operating income from continuing operations
|
|
306.9
|
|
361.5
|
|
|
|
|
|
Interest income
|
|
0.5
|
|
0.7
|
Interest expense
|
|
(7.8)
|
|
(9.2)
|
Other income/(expense), net
|
|
4.7
|
|
(1.0)
|
Total other expense, net
|
|
(2.6)
|
|
(9.5)
|
|
|
|
|
|
Income from continuing operations before income taxes and equity in (losses)/earnings of equity method investees
|
|
304.3
|
|
352.0
|
Income taxes
|
|
(50.6)
|
|
(71.4)
|
Equity in (losses)/earnings of equity method investees, net of taxes
|
|
(0.6)
|
|
0.4
|
Income from continuing operations, net of tax
|
|
253.1
|
|
281.0
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
(22.7)
|
|
(216.2)
|
Net income
|
|
230.4
|
|
64.8
|
(1)
|
R&D costs include impairment of IPR&D intangible asset of $166.0 million for the three months to March 31, 2014 (2013: $nil). SG&A costs include amortization of intangible assets relating to intellectual property rights acquired of $57.8 million for the three months to March 31, 2014 (2013: $36.1 million).
|
13 |
3 months to March 31,
|
2014
|
|
2013
|
|
|
|
|
Earnings per ordinary share – basic
|
|
|
|
Earnings from continuing operations
|
43.3c
|
|
51.0c
|
Loss from discontinued operations
|
(3.9c)
|
|
(39.2c)
|
Earnings per ordinary share – basic
|
39.4c
|
|
11.8c
|
|
|
|
|
Earnings per ADS – basic
|
118.2c
|
|
106.2c
|
|
|
|
|
Earnings per ordinary share – diluted
|
|
|
|
Earnings from continuing operations
|
43.0c
|
|
49.0c
|
Loss from discontinued operations
|
(3.9c)
|
|
(36.7c)
|
Earnings per ordinary share – diluted
|
39.1c
|
|
12.3c
|
|
|
|
|
Earnings per ADS – diluted
|
117.3c
|
|
36.9c
|
|
|
|
|
Weighted average number of shares:
|
|
|
|
|
Millions
|
|
Millions
|
|
|
|
|
Basic
|
584.3
|
|
551.5
|
Diluted
|
588.8
|
|
588.9
|
14 |
3 months to March 31,
|
2014
|
|
2013
|
|
|
|
$M
|
|
$M
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
230.4
|
|
64.8
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
96.5
|
|
75.0
|
|
Share based compensation
|
26.2
|
|
16.6
|
|
Change in fair value of contingent consideration
|
(59.2)
|
|
1.8
|
|
Goodwill impairment charge
|
-
|
|
198.9
|
|
Unwind of ViroPharma inventory fair value step-up
|
38.8
|
|
-
|
|
Impairment of IPR&D intangible assets
|
166.0
|
|
-
|
|
Impairment of Property Plant and Equipment ("PP&E")
|
12.1
|
|
|
|
Gain on sale of product rights
|
(36.4)
|
|
(6.5)
|
|
Other, net
|
(2.2)
|
|
0.1
|
Movement in deferred taxes
|
18.5
|
|
1.4
|
|
Equity in losses/(earnings) of equity method investees
|
0.6
|
|
(0.4)
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Increase in accounts receivable
|
(77.3)
|
|
(51.3)
|
|
Increase in sales deduction accrual
|
70.8
|
|
44.4
|
|
Increase in inventory
|
(18.6)
|
|
(29.1)
|
|
Increase in prepayments and other assets
|
(74.6)
|
|
(61.8)
|
|
Decrease in accounts and notes payable and other liabilities
|
(145.5)
|
|
(93.5)
|
Net cash provided by operating activities(A)
|
246.1
|
|
160.4
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Movements in restricted cash
|
(10.1)
|
|
(2.2)
|
Purchases of subsidiary undertakings and businesses, net of cash acquired
|
(3,764.4)
|
|
(77.2)
|
Purchases of non-current investments and PP&E
|
(15.6)
|
|
(50.1)
|
Proceeds from short-term investments
|
46.8
|
|
-
|
Proceeds received on sale of product rights
|
48.0
|
|
4.8
|
Proceeds from capital expenditure grants
|
-
|
|
2.7
|
Proceeds from disposal of non-current investments and PP&E
|
8.0
|
|
0.7
|
Other, net
|
(2.9)
|
|
-
|
Net cash used in investing activities(B)
|
(3,690.2)
|
|
(121.3)
|
15 |
3 months to March 31,
|
2014
|
|
2013
|
|
$M
|
|
$M
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from revolving line of credit, long term and short term borrowings
|
2,170.0
|
|
-
|
Repayment of revolving line of credit
|
(650.2)
|
|
-
|
Repayment of debt acquired with ViroPharma
|
(533.9)
|
|
-
|
Proceeds from ViroPharma call options
|
346.7
|
|
-
|
Payments to acquire shares under the share buy-back program
|
-
|
|
(70.6)
|
Contingent consideration payments
|
(7.8)
|
|
(6.0)
|
Excess tax benefit associated with exercise of stock options
|
20.5
|
|
4.4
|
Other, net
|
0.2
|
|
(0.7)
|
Net cash provided by/(used in) financing activities(C)
|
1,345.5
|
|
(72.9)
|
|
|
|
|
Effect of foreign exchange rate changes on cash and cash equivalents(D)
|
(1.7)
|
|
2.3
|
|
|
|
|
Net decrease in cash and cash equivalents(A) +(B) +(C) +(D)
|
(2,100.3)
|
|
(31.5)
|
Cash and cash equivalents at beginning of period
|
2,239.4
|
|
1,482.2
|
Cash and cash equivalents at end of period
|
139.1
|
|
1,450.7
|
16 |
3 months to March 31,
|
2014
|
|
2013
|
|
$M
|
|
$M
|
|
|
|
|
Income from continuing operations
|
253.1
|
|
281.0
|
Loss from discontinued operation
|
(22.7)
|
|
(216.2)
|
|
|
|
|
Numerator for basic EPS
|
230.4
|
|
64.8
|
Interest on convertible bonds, net of tax
|
-
|
|
7.6
|
|
|
|
|
Numerator for diluted EPS
|
230.4
|
|
72.4
|
|
|
|
|
|
|
|
|
Weighted average number of shares:
|
|
|
|
|
Millions
|
|
Millions
|
|
|
|
|
Basic(1)
|
584.3
|
|
551.5
|
Effect of dilutive shares:
|
|
|
|
Share based awards to employees(2)
|
4.5
|
|
3.8
|
Convertible bonds 2.75% due 2014(3)
|
-
|
|
33.6
|
|
|
|
|
Diluted
|
588.8
|
|
588.9
|
|
(1)
|
Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.
|
|
(2)
|
Calculated using the treasury stock method.
|
|
(3)
|
Calculated using the “if converted” method.
|
3 months to March 31,
|
2014
|
|
2013
|
|
No. of shares
Millions
|
|
No. of shares
Millions
|
|
|
|
|
Share based awards to employees(1)
|
0.8
|
|
5.6
|
|
(1)
|
Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire’s average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date.
|
17 |
3 months to March 31,
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
|
|
|
|
%
|
|
% of total
|
|
$M
|
|
$M
|
|
change
|
|
revenue
|
Net product sales:
|
|
|
|
|
|
|
|
VYVANSE
|
351.2
|
|
298.4
|
|
18%
|
|
26%
|
LIALDA/MEZAVANT
|
128.9
|
|
100.5
|
|
28%
|
|
10%
|
ELAPRASE
|
128.6
|
|
114.3
|
|
13%
|
|
10%
|
REPLAGAL
|
114.3
|
|
114.0
|
|
0%
|
|
9%
|
VPRIV
|
86.9
|
|
81.6
|
|
6%
|
|
6%
|
CINRYZE
|
85.6
|
|
-
|
|
n/a
|
|
6%
|
ADDERALL XR
|
85.1
|
|
99.8
|
|
-15%
|
|
6%
|
INTUNIV
|
82.3
|
|
77.7
|
|
6%
|
|
6%
|
FIRAZYR
|
74.9
|
|
41.7
|
|
80%
|
|
6%
|
PENTASA
|
72.3
|
|
71.0
|
|
2%
|
|
5%
|
FOSRENOL
|
41.4
|
|
42.3
|
|
-2%
|
|
3%
|
XAGRID®
|
27.1
|
|
23.4
|
|
16%
|
|
2%
|
Other product sales
|
29.5
|
|
33.5
|
|
-12%
|
|
2%
|
Total product sales
|
1,308.1
|
|
1,098.2
|
|
19%
|
|
97%
|
|
|
|
|
|
|
|
|
Royalties:
|
|
|
|
|
|
|
|
FOSRENOL
|
12.8
|
|
9.0
|
|
42%
|
|
<1%
|
ADDERALL XR
|
9.0
|
|
8.1
|
|
11%
|
|
<1%
|
3TC and ZEFFIX
|
7.5
|
|
12.5
|
|
-40%
|
|
<1%
|
Other
|
3.0
|
|
8.9
|
|
-66%
|
|
<1%
|
Total royalties
|
32.3
|
|
38.5
|
|
-16%
|
|
2%
|
|
|
|
|
|
|
|
|
Other revenues
|
6.4
|
|
6.7
|
|
-4%
|
|
<1%
|
|
|
|
|
|
|
|
|
Total revenues
|
1,346.8
|
|
1,143.4
|
|
18%
|
|
100%
|
18 |
3 months to March 31, 2014
|
US GAAP
|
|
Adjustments
|
|
Non GAAP
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
Total revenues
|
1,346.8
|
|
-
|
-
|
-
|
-
|
-
|
|
1,346.8
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
229.5
|
|
-
|
(38.8)
|
-
|
-
|
(10.2)
|
|
180.5
|
R&D
|
360.5
|
|
(166.0)
|
-
|
-
|
-
|
(5.8)
|
|
188.7
|
SG&A
|
430.3
|
|
(57.8)
|
-
|
-
|
(1.7)
|
(20.8)
|
|
350.0
|
Gain on sale of product rights
|
(36.4)
|
|
-
|
-
|
36.4
|
-
|
-
|
|
-
|
Reorganization costs
|
49.4
|
|
-
|
-
|
(49.4)
|
-
|
-
|
|
-
|
Integration and acquisition costs
|
6.6
|
|
-
|
(6.6)
|
-
|
-
|
-
|
|
-
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
36.8
|
|
36.8
|
Total operating expenses
|
1,039.9
|
|
(223.8)
|
(45.4)
|
(13.0)
|
(1.7)
|
-
|
|
756.0
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
306.9
|
|
223.8
|
45.4
|
13.0
|
1.7
|
-
|
|
590.8
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
0.5
|
|
-
|
-
|
-
|
-
|
-
|
|
0.5
|
Interest expense
|
(7.8)
|
|
-
|
-
|
-
|
-
|
-
|
|
(7.8)
|
Other income/(expense), net
|
4.7
|
|
-
|
-
|
(5.0)
|
-
|
-
|
|
(0.3)
|
Total other expense, net
|
(2.6)
|
|
-
|
-
|
(5.0)
|
-
|
-
|
|
(7.6)
|
Income before income taxes and equity in losses of equity method investees
|
304.3
|
|
223.8
|
45.4
|
8.0
|
1.7
|
-
|
|
583.2
|
Income taxes
|
(50.6)
|
|
(44.5)
|
(10.2)
|
(12.7)
|
(0.6)
|
-
|
|
(118.6)
|
Equity in losses of equity method investees, net of tax
|
(0.6)
|
|
-
|
-
|
-
|
-
|
-
|
|
(0.6)
|
Net income from continuing operations
|
253.1
|
|
179.3
|
35.2
|
(4.7)
|
1.1
|
-
|
|
464.0
|
Loss from discontinued operations, net of tax
|
(22.7)
|
|
-
|
-
|
22.7
|
-
|
-
|
|
-
|
Net income
|
230.4
|
|
179.3
|
35.2
|
18.0
|
1.1
|
-
|
|
464.0
|
Weighted average number of shares (millions) – diluted
|
588.8
|
|
-
|
-
|
-
|
-
|
-
|
|
588.8
|
Diluted earnings per ADS
|
117.3c
|
|
91.4c
|
17.9c
|
9.2c
|
0.6c
|
-
|
|
236.4c
|
|
(a)
|
Amortization and asset impairments: Impairment of SHP602 IPR&D intangible asset ($166.0 million), amortization of intangible assets relating to intellectual property rights acquired ($57.8 million), and tax effect of adjustments;
|
|
(b)
|
Acquisition and integration activities: Unwind of ViroPharma inventory fair value adjustments ($38.8 million), costs associated with the acquisition and integration of ViroPharma ($65.8 million), net credit related to the change in fair value of contingent consideration liabilities, primarily relating to the release of contingent consideration liabilities in respect of the acquisition of FerroKin ($59.2 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Net gain on sale of CALCICHEW product rights to Takeda and loss on re-measurement of DAYTRANA contingent consideration to fair value ($36.4 million), costs relating to the One Shire reorganization ($49.4 million), gain on sale of long term investments ($5.0 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($22.7 million);
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($1.7 million), and tax effect of adjustments; and
|
|
(e)
|
Depreciation reclassification: Depreciation of $36.8 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
19 |
3 months to March 31, 2013
|
US GAAP
|
|
Adjustments
|
|
Non GAAP
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
Total revenues
|
1,143.4
|
|
-
|
-
|
-
|
-
|
-
|
|
1,143.4
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
147.4
|
|
-
|
-
|
-
|
-
|
(7.1)
|
|
140.3
|
R&D
|
220.6
|
|
-
|
-
|
-
|
-
|
(4.6)
|
|
216.0
|
SG&A
|
391.7
|
|
(36.1)
|
-
|
-
|
(1.6)
|
(16.1)
|
|
337.9
|
Goodwill impairment charge
|
7.1
|
|
(7.1)
|
-
|
-
|
-
|
-
|
|
-
|
Gain on sale of product rights
|
(6.5)
|
|
-
|
-
|
6.5
|
-
|
-
|
|
-
|
Reorganization costs
|
17.5
|
|
-
|
-
|
(17.5)
|
-
|
-
|
|
-
|
Integration and acquisition costs
|
4.1
|
|
-
|
(4.1)
|
-
|
-
|
-
|
|
-
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
27.8
|
|
27.8
|
Total operating expenses
|
781.9
|
|
(43.2)
|
(4.1)
|
(11.0)
|
(1.6)
|
-
|
|
722.0
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
361.5
|
|
43.2
|
4.1
|
11.0
|
1.6
|
-
|
|
421.4
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
0.7
|
|
-
|
-
|
-
|
-
|
-
|
|
0.7
|
Interest expense
|
(9.2)
|
|
-
|
-
|
-
|
-
|
-
|
|
(9.2)
|
Other expense, net
|
(1.0)
|
|
-
|
-
|
-
|
-
|
-
|
|
(1.0)
|
Total other expense, net
|
(9.5)
|
|
-
|
-
|
-
|
-
|
-
|
|
(9.5)
|
Income before income taxes and equity in earnings of equity method investees
|
352.0
|
|
43.2
|
4.1
|
11.0
|
1.6
|
-
|
|
411.9
|
Income taxes
|
(71.4)
|
|
(11.0)
|
(0.5)
|
-
|
(0.6)
|
-
|
|
(83.5)
|
Equity in earnings of equity method investees, net of tax
|
0.4
|
|
-
|
-
|
-
|
-
|
-
|
|
0.4
|
Income from continuing operations, net of tax
|
281.0
|
|
32.2
|
3.6
|
11.0
|
1.0
|
-
|
|
328.8
|
Loss from discontinued operations, net of tax
|
(216.2)
|
|
-
|
-
|
216.2
|
-
|
-
|
|
-
|
Net income
|
64.8
|
|
32.2
|
3.6
|
227.2
|
1.0
|
-
|
|
328.8
|
Impact of convertible debt, net of tax
|
7.6
|
|
-
|
-
|
-
|
-
|
-
|
|
7.6
|
Numerator for diluted EPS
|
72.4
|
|
32.2
|
3.6
|
227.2
|
1.0
|
-
|
|
336.4
|
Weighted average number of shares (millions) – diluted
|
588.9
|
|
-
|
-
|
-
|
-
|
-
|
|
588.9
|
Diluted earnings per ADS
|
36.9c
|
|
16.4c
|
1.8c
|
115.9c
|
0.6c
|
-
|
|
171.6c
|
|
a)
|
Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($36.1 million), impairment of goodwill relating to Shire’s Regenerative Business relating to continuing operations ($7.1 million), and tax effect of adjustments;
|
|
b)
|
Acquisition and integration activities: Costs primarily associated with the acquisition of Lotus and integration of FerroKin ($2.3 million), charges related to the change in fair values of contingent consideration liabilities ($1.8 million), and tax effect of adjustments;
|
|
c)
|
Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($6.5 million), costs relating to the collective dismissal and closure of Shire’s facility at Turnhout, Belgium ($17.5 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($216.2 million);
|
|
d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($1.6 million), and tax effect of adjustments; and
|
|
e)
|
Depreciation reclassification: Depreciation of $27.8 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
20 |
|
2014
|
|
2013
|
|
$M
|
|
$M
|
Net cash provided by operating activities
|
246.1
|
|
160.4
|
Tax and interest payments, net
|
85.2
|
|
97.1
|
Non GAAP cash generation
|
331.3
|
|
257.5
|
|
2014
|
|
2013
|
|
$M
|
|
$M
|
Net cash provided by operating activities
|
246.1
|
|
160.4
|
Capital expenditure
|
(15.3)
|
|
(47.3)
|
Non GAAP free cash flow
|
230.8
|
|
113.1
|
|
March 31,
|
|
December 31,
|
|
2014
|
|
2013
|
|
$M
|
|
$M
|
Cash and cash equivalents
|
139.1
|
|
2,239.4
|
|
|
|
|
Long term borrowings
|
(850.0)
|
|
-
|
Short term borrowings
|
(671.3)
|
|
-
|
Other debt
|
(30.7)
|
|
(8.9)
|
Non GAAP net (debt)/cash
|
(1,412.9)
|
|
2,230.5
|
21 |
|
·
|
Shire’s products may not be a commercial success;
|
|
·
|
revenues from ADDERALL XR are subject to generic erosion and revenues from INTUNIV will become subject to generic competition starting in December 2014;
|
|
·
|
the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues, financial condition and results of operations;
|
|
·
|
Shire conducts its own manufacturing operations for certain of its Rare Diseases products and is reliant on third party contractors to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time.
|
|
·
|
the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies and regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
|
|
·
|
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 impact Shire’s revenues, financial conditions or results of operations;
|
|
·
|
investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines;
|
|
·
|
adverse outcomes in legal matters and other disputes, including Shire’s ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;
|
|
·
|
Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
|
|
·
|
failure to achieve Shire’s strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire’s financial condition and results of operations;
|
22 |
·
|
Intangible asset amortization and impairment charges; and
|
·
|
Other than temporary impairment of investments.
|
·
|
Up-front payments and milestones in respect of in-licensed and acquired products;
|
·
|
Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
|
·
|
Costs associated with the integration of companies; and
|
·
|
Noncontrolling interests in consolidated variable interest entities.
|
·
|
Gains and losses on the sale of non-core assets;
|
·
|
Costs associated with restructuring and reorganization activities;
|
·
|
Termination costs; and
|
·
|
Income/(losses) from discontinued operations.
|
·
|
Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs).
|
23 |