99.1
|
Press Release dated April 30, 2015
|
SHIRE PLC
|
||
By:
|
/s/ F Ornskov
|
|
Name:
|
Flemming Ornskov
|
|
Title:
|
Chief Executive Officer
|
EXHIBIT INDEX
|
|
Number
|
Description
|
99.1
|
Press Release dated April 30, 2015
|
Press Release
|
Financial Highlights
|
Q1 2015
|
Growth(1)
|
CER(2)
|
|
Product sales
|
$1,423 million
|
+9%
|
+13%
|
|
Total revenues
|
$1,488 million
|
+11%
|
+15%
|
|
|
|
|
|
|
Non GAAP operating income
|
$683 million
|
+16%
|
+19%
|
|
US GAAP operating income from continuing operations
|
$475 million
|
+55%
|
|
|
|
|
|
|
|
Non GAAP EBITDA margin (excluding royalties & other revenues)(3)
|
46%
|
+1pps(4)
|
|
|
US GAAP net income margin(5)
|
28%
|
+11pps
|
|
|
|
|
|
|
|
Non GAAP diluted earnings per ADS
|
$2.84
|
+20%
|
+24%
|
|
US GAAP diluted earnings per ADS
|
$2.08
|
+77%
|
|
|
|
|
|
|
|
Non GAAP cash generation
|
$516 million
|
+56%
|
|
|
Non GAAP free cash flow
|
$542 million
|
+135%
|
|
|
US GAAP net cash provided by operating activities
|
$562 million
|
+128%
|
|
|
|
|
|
|
·
|
Strong product sales growth of 9% (13% on a CER basis) to $1.4 billion, driven by performance of VYVANSE®, CINRYZE®, FIRAZYR® and LIALDA®/MEZAVANT®.
|
·
|
Non GAAP earnings per ADS up 20% (up 24% on a CER basis).
|
·
|
Acquisition of NPS Pharmaceuticals, Inc. (“NPS”) completed and integration progressing according to plan.
|
·
|
Commercial portfolio strengthened through the addition of GATTEX®/REVESTIVE® and NATPARA® from NPS and the launch of VYVANSE for Binge Eating Disorder in adults.
|
·
|
Pipeline progressed, with the most significant developments being Priority Review for lifitegrast and agreement with the FDA on the regulatory path for SHP465. Shire now has its broadest and deepest pipeline in its history.
|
|
|
Q1 2015
|
|
|
Q1 2014
|
|
||||||||
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
||||||
|
|
$M
|
|
$M
|
|
$M
|
|
|
$M
|
|
$M
|
|
$M
|
|
Total revenues
|
|
1,488
|
|
-
|
|
1,488
|
|
|
1,347
|
|
-
|
|
1,347
|
|
Operating income
|
|
475
|
|
208
|
|
683
|
|
|
307
|
|
284
|
|
591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ADS
|
|
$2.08
|
|
$0.76
|
|
$2.84
|
|
|
$1.17
|
|
$1.19
|
|
$2.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
Product sales in Q1 2015 were up 9% (up 13% on a CER basis) to $1,423 million (Q1 2014: $1,308 million) even after the effect of significantly lower INTUNIV® sales (down 79% to $17 million) following the introduction of generic competition in December 2014.
|
|
·
|
Total revenues were up 11% to $1,488 million (Q1 2014: $1,347 million), as Q1 2015 benefited from higher royalties and other revenues, principally INTUNIV royalties and the inclusion of SENSIPAR® royalties acquired with NPS.
|
|
·
|
On a Non GAAP basis:
|
|
·
|
Non GAAP diluted earnings per American Depository Share (“ADS”) increased 20% to $2.84 (2014: $2.36) primarily due to the higher Non GAAP operating income and a lower effective tax rate on Non GAAP income.
|
|
·
|
Cash generation, a Non GAAP measure, was 56% higher at $516 million (Q1 2014: $331 million), due to strong cash receipts from higher sales and the benefit in Q1 2015 from the timing of rebate payments.
|
2 |
|
·
|
Net debt (a Non GAAP measure) at March 31, 2015 was $2,588 million (December 31, 2014: Net cash of $2,119 million) reflecting the use of cash and cash equivalents and borrowings incurred to fund the acquisition of NPS.
|
3 |
|
·
|
On January 30, 2015 Shire launched VYVANSE for the treatment of adults with moderate to severe BED.
|
|
·
|
On January 23, 2015 it was announced that the U.S. Food and Drug Administration (“FDA”) had approved NATPARA as an adjunct to calcium and vitamin D to control hypocalcemia in patients with hypoparathyroidism. Hypoparathyroidism is a rare endocrine disorder characterized by insufficient levels of parathyroid hormone, or PTH. NATPARA is a bioengineered replica of human PTH. NATPARA was launched on April 1, 2015.
|
|
·
|
On March 23, 2015 Shire announced VYVANSE was available in a 10mg strength capsule. This new titration dose, which was approved by the FDA on October 30, 2014, is the seventh VYVANSE dosage strength available in addition to the 20mg, 30mg, 40mg, 50mg, 60mg, and 70mg capsule strengths. On April 7, 2015 Health Canada approved the 10mg dose strength for incremental titration adjustments.
|
|
·
|
On April 9, 2015 Shire announced that the FDA accepted the New Drug Application for lifitegrast and granted a Priority Review designation. The FDA has set an action date of October 25, 2015, based on the Prescription Drug User Fee Act V.
|
·
|
On January 26, 2015 Shire announced that the FDA has granted Fast Track designation for SHP609 for the treatment of neurocognitive decline associated with Hunter syndrome (mucopolysaccharidosis II).
|
|
·
|
On April 7, 2015 Shire announced that it had reached an agreement with the FDA on a clear regulatory path for SHP465 (triple-bead mixed amphetamine salts), an investigational oral stimulant medication being evaluated as a potential treatment for ADHD in adults.
|
·
|
SHP611 is in development as recombinant human arylsulfatase A (rASA) delivered intrathecally every other week for the treatment of the late infantile form of MLD. This product has been granted orphan drug designation in the US and the EU. The Company initiated a 24 patient Phase 1/2 clinical trial in August 2012. The primary endpoint of this trial is to determine the safety of ascending doses (10mg, 30mg, and 100 mg) of rASA over 40 weeks. Secondary and exploratory endpoints focused on efficacy and include decline in motor function as defined by change in baseline Gross Motor Function Measure (GMFM-88). Based upon interim data for the first 18 patients, SHP611 was safe and well tolerated at all doses. In addition, while not statistically significant and despite a decline in GMFM-88 score across all doses, the 100mg dose caused a slower decline over the 40 week study period compared to the other two treatment groups, most notably for those patients with GMFM-88 > 40-50 at baseline. Analysis of other exploratory efficacy measures were also encouraging. We will continue to analyze these interim results and determine an optimal path forward in this development program.
|
4 |
·
|
On April 9, 2015 Shire announced that the small 13-week Phase 2 IMAGO trial of its investigational compound SHP625 did not meet the primary or secondary endpoints in the study of 20 pediatric patients with Alagille syndrome. Given the topline results from the IMAGO study of SHP625 in pediatric patients with Alagille syndrome, we plan to analyze the totality of data to better understand the results we have seen. Data for this and other indications will be important to fully understand the safety and efficacy of SHP625 in patients with cholestatic liver disease.
|
·
|
On February 21, 2015 Shire completed the acquisition of NPS. Shire plans to accelerate the growth of NPS’s innovative portfolio through its market expertise in gastrointestinal (“GI”) disorders, core capabilities in rare disease patient management, and global footprint. The integration is progressing according to plan.
|
·
|
On February 24, 2015 Shire announced that it had acquired Meritage Pharma, Inc., a privately-held company, for an upfront payment of $75 million and additional contingent payments based on the achievement of development and regulatory milestones. With the acquisition, Shire has acquired the global rights to Meritage’s Phase 3-ready compound, Oral Budesonide Suspension (SHP621), for the treatment of adolescents and adults with eosinophilic esophagitis, a rare, chronic inflammatory GI disease. This acquisition further enhances Shire’s late-stage pipeline and leverages the Company’s rare disease and GI commercial infrastructure and expertise.
|
5 |
|
Page
|
Overview of First Quarter 2015 Financial Results
|
7
|
Financial Information
|
11
|
Non GAAP Reconciliation
|
19
|
Notes to Editors
|
23
|
Forward-Looking Statements
|
24
|
Non GAAP Measures
|
25
|
Trade Marks
|
26
|
Investor Relations
|
|
|
|
|
- Sarah Elton-Farr
|
seltonfarr@shire.com
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+44 1256 894 157
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|
|
|
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Media
|
|
|
|
|
- Michele Galen
|
mgalen@shire.com
|
+1 781 482 1867
|
|
- Brooke Clarke
|
brclarke@shire.com
|
+44 1256 894 829
|
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:
|
54094197#
|
Live Webcast:
|
Click here
|
6 |
|
|
|
|
Year on year growth
|
US Exit Market Share(2)
|
||||||
Product sales
|
|
Sales $M
|
|
|
Sales
|
|
Non GAAP CER(1)
|
US Rx(2)
|
|||
|
|
|
|
|
|
|
|
||||
VYVANSE
|
|
416.8
|
|
|
+19%
|
|
+20%
|
|
+6%
|
|
17%
|
LIALDA/MEZAVANT
|
|
148.5
|
|
|
+15%
|
|
+17%
|
|
+12%
|
|
34%
|
CINRYZE
|
|
148.1
|
|
|
+73%
|
|
+74%
|
|
n/a(3)
|
|
n/a(3)
|
ELAPRASE
|
|
125.0
|
|
|
-3%
|
|
+7%
|
|
n/a(3)
|
|
n/a(3)
|
REPLAGAL
|
|
97.5
|
|
|
-15%
|
|
-3%
|
|
n/a(4)
|
|
n/a(4)
|
ADDERALL XR®
|
|
95.7
|
|
|
+12%
|
|
+14%
|
|
+15%
|
|
5%
|
FIRAZYR
|
|
92.5
|
|
|
+23%
|
|
+26%
|
|
n/a(3)
|
|
n/a(3)
|
VPRIV
|
|
86.4
|
|
|
-1%
|
|
+6%
|
|
n/a(3)
|
|
n/a(3)
|
PENTASA®
|
|
78.7
|
|
|
+9%
|
|
+9%
|
|
-7%
|
|
13%
|
INTUNIV
|
|
17.4
|
|
|
-79%
|
|
-78%
|
|
-64%
|
|
1%
|
GATTEX/REVESTIVE®
|
|
14.9
|
|
|
n/a
|
|
n/a
|
|
n/a(3)
|
|
n/a(3)
|
OTHER
|
|
101.7
|
|
|
+4%
|
|
+14%
|
|
n/a
|
|
n/a
|
Total
|
|
1,423.2
|
|
|
+9%
|
|
+13%
|
|
|
||
|
|
|
|
|
|
|
|
(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”). Exit market share represents the average US market share in the month ended March 31, 2015.
|
(3)
|
IMS NPA Data not available.
|
(4)
|
Not sold in the US in Q1 2015.
|
7 |
|
|
|
|
|
Year on year growth
|
||||
Product
|
|
Royalties to Shire $M
|
|
|
Royalties
|
|
|
CER
|
|
|
|
|
|
|
|
|
|
|
|
INTUNIV
|
|
|
21.7
|
|
|
n/a
|
|
|
n/a
|
SENSIPAR®
|
|
10.4
|
|
|
n/a
|
|
|
n/a
|
|
ADDERALL XR
|
1.00
|
8.5
|
|
|
-6%
|
|
|
-6%
|
|
FOSRENOL®
|
1.00
|
8.4
|
|
|
-34%
|
|
|
-24%
|
|
3TC® and ZEFFIX®
|
1.00
|
7.5
|
|
|
+0%
|
|
|
+0%
|
|
Other
|
1.00
|
6.3
|
|
|
+110%
|
|
|
+113%
|
|
Total
|
1.00
|
62.8
|
|
|
+94%
|
|
|
+99%
|
|
|
|
|
|
|
|
|
|
|
8 |
3.
|
Financial details
|
|
Q1 2015
|
|
% of product sales
|
|
Q1 2014
|
|
% of product sales
|
|
$M
|
|
|
$M
|
|
||
Cost of product sales (US GAAP)
|
227.8
|
|
16%
|
|
229.5
|
|
18%
|
Unwind of inventory fair value step-up
|
(11.2)
|
|
|
|
(38.8)
|
|
|
Costs of employee retention awards following AbbVie's terminated offer for Shire
|
(2.7)
|
|
|
|
-
|
|
|
Depreciation
|
(11.7)
|
|
|
|
(10.2)
|
|
|
Cost of product sales (Non GAAP)
|
202.2
|
|
14%
|
|
180.5
|
|
14%
|
|
|
|
|
|
|
|
|
|
Q1 2015
|
|
% of product sales
|
|
Q1 2014
|
|
% of product sales
|
|
$M
|
|
|
$M
|
|
||
R&D (US GAAP)
|
193.7
|
|
14%
|
|
360.5
|
|
28%
|
Impairment of intangible assets
|
-
|
|
|
|
(166.0)
|
|
|
Costs of employee retention awards following AbbVie's terminated offer for Shire
|
(5.8)
|
|
|
|
-
|
|
|
Depreciation
|
(2.8)
|
|
|
|
(5.8)
|
|
|
R&D (Non GAAP)
|
185.1
|
|
13%
|
|
188.7
|
|
14%
|
|
|
|
|
|
|
|
|
Q1 2015
|
|
% of product sales
|
|
Q1 2014
|
|
% of product sales
|
|
$M
|
|
|
$M
|
|
|||
SG&A (US GAAP)
|
506.6
|
|
36%
|
|
430.3
|
|
33%
|
Intangible asset amortization
|
(88.3)
|
|
|
|
(57.8)
|
|
|
Legal and litigation costs
|
(0.8)
|
|
|
|
(1.7)
|
|
|
Costs incurred in connection with AbbVie’s terminated offer for Shire (including employee retention awards)
|
(13.5)
|
|
|
|
-
|
|
|
Depreciation
|
(17.8)
|
|
|
|
(20.8)
|
|
|
SG&A (Non GAAP)
|
386.2
|
|
27%
|
|
350.0
|
|
27%
|
|
|
|
|
|
|
|
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,
|
||||||
|
2015
|
2014
|
||||||
|
$M | $M | ||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
74.3 | 2,982.4 | ||||||
Restricted cash
|
68.9 | 54.6 | ||||||
Accounts receivable, net
|
1,116.3 | 1,035.1 | ||||||
Inventories
|
588.7 | 544.8 | ||||||
Deferred tax asset
|
461.8 | 344.7 | ||||||
Prepaid expenses and other current assets
|
216.6 | 221.5 | ||||||
|
||||||||
Total current assets
|
2,526.6 | 5,183.1 | ||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
45.7 | 43.7 | ||||||
Property, plant and equipment ("PP&E"), net
|
821.9 | 837.5 | ||||||
Goodwill
|
4,178.7 | 2,474.9 | ||||||
Other intangible assets, net
|
9,980.0 | 4,934.4 | ||||||
Deferred tax asset
|
102.7 | 112.1 | ||||||
Other non-current assets
|
22.7 | 46.4 | ||||||
|
||||||||
Total assets
|
17,678.3 | 13,632.1 | ||||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
1,991.6 | 1,909.4 | ||||||
Short term borrowings
|
2,570.2 | 850.0 | ||||||
Other current liabilities
|
303.2 | 262.5 | ||||||
|
||||||||
Total current liabilities
|
4,865.0 | 3,021.9 | ||||||
|
||||||||
Non-current liabilities:
|
||||||||
Long term borrowings
|
78.7 | - | ||||||
Deferred tax liability
|
2,909.9 | 1,210.6 | ||||||
Other non-current liabilities
|
844.0 | 736.7 | ||||||
|
||||||||
Total liabilities
|
8,697.6 | 4,969.2 | ||||||
|
||||||||
Equity:
|
||||||||
Common stock of 5p par value; 1,000 million shares authorized; and 600.2 million shares issued and outstanding (2014: 1,000 million shares authorized; and 599.1 million shares issued and outstanding)
|
58.9 | 58.7 | ||||||
Additional paid-in capital
|
4,373.2 | 4,338.0 | ||||||
Treasury stock: 10.0 million shares (2014: 10.6 million)
|
(330.1 | ) | (345.9 | ) | ||||
Accumulated other comprehensive loss
|
(160.3 | ) | (31.5 | ) | ||||
Retained earnings
|
5,039.0 | 4,643.6 | ||||||
|
||||||||
Total equity
|
8,980.7 | 8,662.9 | ||||||
|
||||||||
Total liabilities and equity
|
17,678.3 | 13,632.1 |
12 |
3 months to March 31,
|
2015
|
2014
|
||||||
$M | $M | |||||||
Revenues:
|
||||||||
Product sales
|
1,423.2 | 1,308.1 | ||||||
Royalties
|
62.8 | 32.3 | ||||||
Other revenues
|
2.4 | 6.4 | ||||||
Total revenues
|
1,488.4 | 1,346.8 | ||||||
Costs and expenses:
|
||||||||
Cost of product sales
|
227.8 | 229.5 | ||||||
R&D(1)
|
193.7 | 360.5 | ||||||
SG&A(2)
|
506.6 | 430.3 | ||||||
Gain on sale of product rights
|
(5.2 | ) | (36.4 | ) | ||||
Reorganization costs
|
15.2 | 49.4 | ||||||
Integration and acquisition costs
|
75.7 | 6.6 | ||||||
Total operating expenses
|
1,013.8 | 1,039.9 | ||||||
Operating income from continuing operations
|
474.6 | 306.9 | ||||||
Interest income
|
2.0 | 0.5 | ||||||
Interest expense
|
(9.6 | ) | (7.8 | ) | ||||
Other income/(expense), net
|
4.3 | 4.7 | ||||||
Total other expense, net
|
(3.3 | ) | (2.6 | ) | ||||
Income from continuing operations before income taxes and equity in losses of equity method investees
|
471.3 | 304.3 | ||||||
Income taxes
|
(57.4 | ) | (50.6 | ) | ||||
Equity in losses of equity method investees, net of taxes
|
(1.0 | ) | (0.6 | ) | ||||
Income from continuing operations, net of tax
|
412.9 | 253.1 | ||||||
Loss from discontinued operations, net of tax
|
(2.5 | ) | (22.7 | ) | ||||
Net income
|
410.4 | 230.4 | ||||||
(1)
|
R&D costs include impairments of IPR&D intangible asset of $nil for the three months to March 31, 2015 (2014: $166 million).
|
(2)
|
SG&A costs include amortization of intangible assets relating to intellectual property rights acquired of $88.3 million for the three months to March 31, 2015 (2014: $57.8 million).
|
13 |
3 months to March 31,
|
2015
|
2014
|
||||||
|
|
|||||||
Earnings per ordinary share – basic
|
|
|
||||||
Earnings from continuing operations
|
70.1 | c | 43.3 | c | ||||
Loss from discontinued operations
|
(0.4c | ) | (3.9c | ) | ||||
Earnings per ordinary share – basic
|
69.7 | c | 39.4 | c | ||||
Earnings per ADS – basic
|
209.1 | c | 118.2 | c | ||||
Earnings per ordinary share – diluted
|
||||||||
Earnings from continuing operations
|
69.7 | c | 43.0 | c | ||||
Loss from discontinued operations
|
(0.4c | ) | (3.9c | ) | ||||
Earnings per ordinary share – diluted
|
69.3 | c | 39.1 | c | ||||
Earnings per ADS – diluted
|
207.9 | c | 117.3 | c | ||||
Weighted average number of shares:
|
||||||||
|
Millions
|
Millions
|
||||||
Basic
|
589.1 | 584.3 | ||||||
Diluted
|
592.7 | 588.8 |
14 |
3 months to March 31,
|
2015
|
2014
|
||||||
$M | $M | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
410.4 | 230.4 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
120.6 | 94.6 | ||||||
Share based compensation
|
15.3 | 26.2 | ||||||
Change in fair value of contingent consideration
|
2.4 | (59.2 | ) | |||||
Unwind of inventory fair value step-up
|
11.2 | 38.8 | ||||||
Impairment of IPR&D intangible assets
|
- | 166.0 | ||||||
Impairment of PP&E
|
- | 12.1 | ||||||
Gain on sale of product rights
|
(5.2 | ) | (36.4 | ) | ||||
Other, net
|
1.1 | (0.3 | ) | |||||
Movement in deferred taxes
|
16.6 | 18.5 | ||||||
Equity in losses of equity method investees
|
1.0 | 0.6 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in accounts receivable
|
(85.1 | ) | (77.3 | ) | ||||
(Decrease)/increase in sales deduction accrual
|
(24.6 | ) | 70.8 | |||||
Increase in inventory
|
(22.0 | ) | (18.6 | ) | ||||
Decrease/(increase) in prepayments and other assets
|
42.4 | (74.6 | ) | |||||
Increase/(decrease) in accounts payable and other liabilities
|
77.5 | (145.5 | ) | |||||
Net cash provided by operating activities(A)
|
561.6 | 246.1 |
|
|
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
||||||
Movements in restricted cash
|
(14.5 | ) | (10.1 | ) | ||||
Purchases of subsidiary undertakings and businesses, net of cash acquired
|
(5,199.7 | ) | (3,764.4 | ) | ||||
Purchases of non-current investments and PP&E
|
(22.3 | ) | (15.6 | ) | ||||
Proceeds from short-term investments
|
54.5 | 46.8 | ||||||
Proceeds received on sale of product rights
|
3.9 | 48.0 | ||||||
Proceeds from disposal of non-current investments and PP&E
|
0.9 | 8.0 | ||||||
Other, net
|
- | (2.9 | ) | |||||
Net cash used in investing activities(B)
|
(5,177.2 | ) | (3,690.2 | ) |
15 |
3 months to March 31,
|
2015
|
2014
|
||||||
$M | $M | |||||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from revolving line of credit, long term and short term borrowings
|
2,230.0 | 2,170.0 | ||||||
Repayment of revolving line of credit
|
(535.2 | ) | (650.2 | ) | ||||
Repayment of debt acquired with ViroPharma
|
- | (533.9 | ) | |||||
Proceeds from ViroPharma call options
|
- | 346.7 | ||||||
Contingent consideration payments
|
(2.4 | ) | (7.8 | ) | ||||
Excess tax benefit associated with exercise of stock options
|
19.9 | 20.5 | ||||||
Other, net
|
(3.2 | ) | 0.2 | |||||
Net cash provided by financing activities(C)
|
1,709.1 | 1,345.5 | ||||||
Effect of foreign exchange rate changes on cash and cash equivalents(D)
|
(1.6 | ) | (1.7 | ) | ||||
Net decrease in cash and cash equivalents(A) +(B) +(C) +(D)
|
(2,908.1 | ) | (2,100.3 | ) | ||||
Cash and cash equivalents at beginning of period
|
2,982.4 | 2,239.4 | ||||||
Cash and cash equivalents at end of period
|
74.3 | 139.1 |
16 |
3 months to March 31,
|
2015
|
2014
|
||||||
$M | $M | |||||||
Income from continuing operations
|
412.9 | 253.1 | ||||||
Loss from discontinued operation
|
(2.5 | ) | (22.7 | ) | ||||
Numerator for basic and diluted EPS
|
410.4 | 230.4 | ||||||
|
||||||||
Weighted average number of shares:
|
||||||||
|
Millions
|
Millions
|
||||||
Basic(1)
|
589.1 | 584.3 | ||||||
Effect of dilutive shares:
|
||||||||
Share based awards to employees(2)
|
3.6 | 4.5 | ||||||
Diluted
|
592.7 | 588.8 |
|
(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 months to March 31,
|
2015
|
2014
|
||||||
No. of shares Millions
|
No. of shares Millions
|
|||||||
|
|
|||||||
Share based awards to employees(1)
|
1.4 | 0.8 |
|
(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,
|
2015
|
2014
|
2015
|
2015
|
||||||||||||
|
|
%
|
% of total
|
|||||||||||||
$M | $M |
change
|
revenue
|
|||||||||||||
Net product sales:
|
|
|
||||||||||||||
VYVANSE
|
416.8 | 351.2 | 19 | % | 28 | % | ||||||||||
LIALDA/MEZAVANT
|
148.5 | 128.9 | 15 | % | 10 | % | ||||||||||
CINRYZE
|
148.1 | 85.6 | 73 | % | 10 | % | ||||||||||
ELAPRASE
|
125.0 | 128.6 | -3 | % | 8 | % | ||||||||||
REPLAGAL
|
97.5 | 114.3 | -15 | % | 7 | % | ||||||||||
ADDERALL XR
|
95.7 | 85.1 | 12 | % | 6 | % | ||||||||||
FIRAZYR
|
92.5 | 74.9 | 23 | % | 6 | % | ||||||||||
VPRIV
|
86.4 | 86.9 | -1 | % | 6 | % | ||||||||||
PENTASA
|
78.7 | 72.3 | 9 | % | 5 | % | ||||||||||
FOSRENOL
|
44.1 | 41.4 | 7 | % | 3 | % | ||||||||||
XAGRID
|
25.3 | 27.1 | -7 | % | 2 | % | ||||||||||
INTUNIV
|
17.4 | 82.3 | -79 | % | 1 | % | ||||||||||
GATTEX/REVESTIVE
|
14.9 | - | n/a | 1 | % | |||||||||||
Other product sales
|
32.3 | 29.5 | 9 | % | 2 | % | ||||||||||
Total product sales
|
1,423.2 | 1,308.1 | 9 | % | 96 | % | ||||||||||
Royalties:
|
||||||||||||||||
INTUNIV
|
21.7 | - | n/a | 1 | % | |||||||||||
SENSIPAR
|
10.4 | - | n/a |
<1
|
% | |||||||||||
ADDERALL XR
|
8.5 | 9.0 | -6 | % |
<1
|
% | ||||||||||
FOSRENOL
|
8.4 | 12.8 | -34 | % |
<1
|
% | ||||||||||
3TC and ZEFFIX
|
7.5 | 7.5 | 0 | % |
<1
|
% | ||||||||||
Other
|
6.3 | 3.0 | 110 | % |
<1
|
% | ||||||||||
Total royalties
|
62.8 | 32.3 | 94 | % | 4 | % | ||||||||||
Other revenues
|
2.4 | 6.4 | -63 | % |
<1
|
% | ||||||||||
Total revenues
|
1,488.4 | 1,346.8 | 11 | % | 100 | % |
18 |
3 months to March 31, 2015
|
US GAAP
|
Adjustments
|
Non GAAP
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
||||||||||||||||||||||||
$M | $M | $M | $M | $M | $M | $M | $M | |||||||||||||||||||||||||
Total revenues
|
1,488.4 | - | - | - | - | - | - | 1,488.4 | ||||||||||||||||||||||||
Costs and expenses:
|
||||||||||||||||||||||||||||||||
Cost of product sales
|
227.8 | - | (11.2 | ) | - | - | (2.7 | ) | (11.7 | ) | 202.2 | |||||||||||||||||||||
R&D
|
193.7 | - | - | - | - | (5.8 | ) | (2.8 | ) | 185.1 | ||||||||||||||||||||||
SG&A
|
506.6 | (88.3 | ) | - | - | (0.8 | ) | (13.5 | ) | (17.8 | ) | 386.2 | ||||||||||||||||||||
Gain on sale of product rights
|
(5.2 | ) | - | - | 5.2 | - | - | - | - | |||||||||||||||||||||||
Reorganization costs
|
15.2 | - | - | (15.2 | ) | - | - | - | - | |||||||||||||||||||||||
Integration and acquisition costs
|
75.7 | - | (75.7 | ) | - | - | - | - | - | |||||||||||||||||||||||
Depreciation
|
- | - | - | - | - | - | 32.3 | 32.3 | ||||||||||||||||||||||||
Total operating expenses
|
1,013.8 | (88.3 | ) | (86.9 | ) | (10.0 | ) | (0.8 | ) | (22.0 | ) | - | 805.8 | |||||||||||||||||||
Operating income
|
474.6 | 88.3 | 86.9 | 10.0 | 0.8 | 22.0 | - | 682.6 | ||||||||||||||||||||||||
Interest income
|
2.0 | - | - | - | - | (1.1 | ) | - | 0.9 | |||||||||||||||||||||||
Interest expense
|
(9.6 | ) | - | - | - | - | - | - | (9.6 | ) | ||||||||||||||||||||||
Other income, net
|
4.3 | - | - | - | - | - | - | 4.3 | ||||||||||||||||||||||||
Total other expense, net
|
(3.3 | ) | - | - | - | - | (1.1 | ) | - | (4.4 | ) | |||||||||||||||||||||
Income before income taxes and equity in losses of equity method investees
|
471.3 | 88.3 | 86.9 | 10.0 | 0.8 | 20.9 | - | 678.2 | ||||||||||||||||||||||||
Income taxes
|
(57.4 | ) | (33.1 | ) | (13.6 | ) | (4.4 | ) | (0.4 | ) | (7.8 | ) | - | (116.7 | ) | |||||||||||||||||
Equity in losses of equity method investees, net of tax
|
(1.0 | ) | - | - | - | - | - | - | (1.0 | ) | ||||||||||||||||||||||
Net income from continuing operations
|
412.9 | 55.2 | 73.3 | 5.6 | 0.4 | 13.1 | - | 560.5 | ||||||||||||||||||||||||
Loss from discontinued operations, net of tax
|
(2.5 | ) | - | - | 2.5 | - | - | - | - | |||||||||||||||||||||||
Net income
|
410.4 | 55.2 | 73.3 | 8.1 | 0.4 | 13.1 | - | 560.5 | ||||||||||||||||||||||||
Weighted average number of shares (millions) – diluted
|
592.7 | - | - | - | - | - | - | 592.7 | ||||||||||||||||||||||||
Diluted earnings per ADS
|
207.9 | c | 27.8 | c | 37.1 | c | 4.1 | c | 0.3 | c | 6.6 | c | - | 283.8 | c |
|
(a)
|
Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($88.3 million), and tax effect of adjustments;
|
|
(b)
|
Acquisition and integration activities: Unwind of NPS inventory fair value adjustments ($9.9 million), unwind of ViroPharma inventory fair value adjustments ($1.3 million), costs primarily associated with the acquisition and integration of NPS ($69.9 million), costs associated with the integration of ViroPharma ($3.4 million), net charge related to the change in fair value of contingent consideration liabilities ($2.4 million), and tax effect of adjustments;
|
|
(c)
|
Divestments, reorganizations and discontinued operations: Gain on re-measurement of DAYTRANA contingent consideration to fair value ($5.2 million), costs relating to the One Shire reorganization, including costs relating to the relocation of staff from Chesterbrook to Lexington ($15.2 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($2.5 million);
|
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($0.8 million), and tax effect of adjustments;
|
|
(e)
|
Other: Costs associated with AbbVie’s terminated offer for Shire ($ 22.0 million), interest income received in respect of cash deposited with the Canadian revenue authorities ($1.1 million), and tax effect of adjustments; and
|
|
(f)
|
Depreciation reclassification: Depreciation of $32.3 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, 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 | ) | |||||||||||||||||||
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
|
117.3 | c | 91.4 | c | 17.9 | c | 9.2 | c | 0.6 | c | - | 236.4 | c |
|
(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 values 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 the 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.
|
20 |
3 months to March 31,
|
||||||||
2015
|
2014
|
|||||||
$M | $M | |||||||
US GAAP Net Income
|
410.4 | 230.4 | ||||||
Add back/(deduct):
|
||||||||
Loss from discontinued operations, net of tax
|
2.5 | 22.7 | ||||||
Equity in losses of equity method investees, net of taxes
|
1.0 | 0.6 | ||||||
Income taxes
|
57.4 | 50.6 | ||||||
Other expense/ (income), net
|
(4.3 | ) | (4.7 | ) | ||||
Interest expense
|
9.6 | 7.8 | ||||||
Interest income
|
(2.0 | ) | (0.5 | ) | ||||
US GAAP Operating income from continuing operations
|
474.6 | 306.9 | ||||||
Amortization
|
88.3 | 57.8 | ||||||
Depreciation
|
32.3 | 36.8 | ||||||
Asset impairments
|
- | 166.0 | ||||||
Acquisition and integration activities
|
86.9 | 45.4 | ||||||
Divestments, reorganizations and discontinued operations
|
10.0 | 13.0 | ||||||
Legal and litigation costs
|
0.8 | 1.7 | ||||||
Other
|
22.0 | - | ||||||
Non GAAP EBITDA
|
714.9 | 627.6 | ||||||
Depreciation
|
(32.3 | ) | (36.8 | ) | ||||
Non GAAP Operating income from continuing operations
|
682.6 | 590.8 | ||||||
Net income margin(1)
|
28 | % | 17 | % | ||||
Non GAAP EBITDA margin(2)
|
46 | % | 45 | % | ||||
(1) Net income as a percentage of total revenues
|
||||||||
(2) Non GAAP EBITDA as a percentage of product sales, excluding royalties and other revenues
|
21 |
|
2015
|
2014
|
||||||
|
$M | $M | ||||||
US GAAP Product Sales
|
1,423.2 | 1,308.1 | ||||||
(Deduct) / add back:
|
||||||||
Cost of product sales (US GAAP)
|
(227.8 | ) | (229.5 | ) | ||||
Unwind of inventory fair value step-up
|
11.2 | 38.8 | ||||||
Costs of employee retention awards following AbbVie's terminated offer for Shire
|
2.7 | - | ||||||
Depreciation
|
11.7 | 10.2 | ||||||
Non GAAP Gross Margin
|
1,221.0 | 1,127.6 | ||||||
|
||||||||
Non GAAP Gross Margin % (1)
|
85.8 | % | 86.2 | % | ||||
|
||||||||
|
||||||||
(1) Gross Product Margin as a percentage of product sales
|
|
3 months to March 31,
|
|||||||
|
2015
|
2014
|
||||||
|
$M | $M | ||||||
Net cash provided by operating activities
|
561.6 | 246.1 | ||||||
Tax and interest (receipts)/payments, net
|
(45.8 | ) | 85.2 | |||||
Non GAAP cash generation
|
515.8 | 331.3 |
|
3 months to March 31,
|
|||||||
|
2015
|
2014
|
||||||
|
$M | $M | ||||||
Net cash provided by operating activities
|
561.6 | 246.1 | ||||||
Capital expenditure
|
(19.8 | ) | (15.3 | ) | ||||
Non GAAP free cash flow
|
541.8 | 230.8 |
|
March 31,
|
|
December 31,
|
|
2015
|
|
2014
|
|
$M
|
|
$M
|
Cash and cash equivalents
|
74.3
|
|
2,982.4
|
|
|
|
|
Long term borrowings
|
(78.7)
|
|
-
|
Short term borrowings
|
(2,570.2)
|
|
(850.0)
|
Other debt
|
(13.0)
|
|
(13.7)
|
Non GAAP net (debt)/cash
|
(2,587.6)
|
|
2,118.7
|
22 |
23 |
|
·
|
Shire’s products may not be a commercial success;
|
|
·
|
product sales from ADDERALL XR and INTUNIV are subject to generic competition;
|
|
·
|
the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payers in a timely manner for Shire's products may affect future revenues, financial condition and results of operations;
|
|
·
|
Shire conducts its own manufacturing operations for certain of its products and is reliant on third party contract manufacturers to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time;
|
|
·
|
the manufacture of Shire’s products is subject to extensive oversight by various regulatory agencies. Regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, an increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
|
|
·
|
Shire has a portfolio of products in various stages of research and development. The successful development of these products is highly uncertain and requires significant expenditures and time, and there is no guarantee that these products will receive regulatory approval;
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·
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the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely affect Shire’s revenues, financial condition or results of operations;
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·
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investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in significant legal costs and the payment of substantial compensation or fines;
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·
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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;
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·
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Shire faces intense competition for highly qualified personnel from other companies and organizations. Shire is undergoing a corporate reorganization and was the subject of an unsuccessful acquisition proposal and the consequent uncertainty could adversely affect Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
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·
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failure to achieve Shire’s strategic objectives with respect to the acquisition of NPS Pharmaceuticals Inc. may adversely affect Shire’s financial condition and results of operations; and
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24 |
·
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Intangible asset amortization and impairment charges; and
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·
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Other than temporary impairment of investments.
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·
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Up-front payments and milestones in respect of in-licensed and acquired products;
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Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
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Costs associated with the integration of companies; and
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Noncontrolling interests in consolidated variable interest entities.
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Gains and losses on the sale of non-core assets;
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Costs associated with restructuring and reorganization activities;
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Termination costs; and
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Income/(losses) from discontinued operations.
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Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs).
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Net income tax credit (being income tax, interest and estimated penalties) related to the settlement of certain tax positions with the Canadian revenue authorities;
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Costs associated with AbbVie’s terminated offer for Shire, including costs of employee retention awards; and
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·
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Break fee received in relation to AbbVie’s terminated offer for Shire.
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25 |
26 |