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With Baxalta (BXLT) Boosting Rare Drugs, Shire (SHPG) May Spin Off ADHD Drugs Business



8/3/2017 7:26:48 AM

With Baxalta Boosting Rare Drugs, Shire May Spin Off ADHD Drugs Business August 3, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Dublin, Ireland – At its second-quarter financial report, Shire (SHPGY) suggested it is considering spinning off its neuroscience division, notable for its drugs for attention deficit hyperactivity disorder (ADHD).


For the quarter, Shire reported $3.6 billion in product sales, and total revenues of $3.7 billion. Flemming Ornskov, the company’s chief executive officer, said in a statement, “We are at an exciting inflection point, with both our rare disease and neuroscience businesses performing strongly and each having significant growth potential over the coming years. The strength and scale of our business provides us with the opportunity to further optimize our franchise portfolio—one of our key priorities communicated earlier this year. By year end, we expect to complete a formal evaluation of the full range of strategic options for the neuroscience franchise, including the potential for its independent public listing.”

Shire recently received approval from the U.S. Food and Drug Administration (FDA) for a long-acting version of Adderal for ADHD, called Mydayis. It is designed to last over 16 hours per day.

In the past, there has been speculation that Shire would spin off its ADHD business, but its remaining product lines weren’t considered strong enough by most analysts. However, since its acquisition of Baxalta (BXLT) last year for $32 billion, the company has made a major transition into rare diseases. In addition, the Mydayis approval extends the company’s ADHD portfolio beyond patent expirations for Vyvanse in 2023 through 2024.

Reuters writes, “Shire, which is based in Ireland but generates most of its revenue from the United States, reported second-quarter revenue of $3.75 billion and non GAAP earnings per ADS of $3.73, up 11 percent and beating a market forecast of $3.60. It upgraded the midpoint of its full-year EPS forecast by 10 cents to $15, reflecting its performance in the first half and stronger-than-expected costs savings from the Baxalta deal.”
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In a statement, Ornskov said, “As we enter the second half of 2017, we are focused on generating strong organic growth while continuing to deliver on our key priorities—launching more than 80 products globally by leveraging our expanded commercial platform, progressing our late-stage pipeline, integrating Baxalta, and paying down debt. We have updated our 2017 full year guidance and remain very confident about Shire’s long-term prospects.”

TheStreet noted, “Synergies achieved from the integration of biotechnology firm Baxalta reached a run-rate of $400 million during the quarter. This was ahead of the company’s internal target of $300 million and places it ahead of schedule to achieve the $700 million of annual savings it promised to deliver to investors by the end of its third year of ownership.”

In addition, the company noted that its angioedema drug Lanadelumab did well in Phase III clinical trials and expects to file for approval in late 2017 or early 2018. Shire acquired the drug when it bought Dyax Corp. (DYAX) in January 2016 for $5.9 billion.

James Skinner, writing for TheStreet, noted, “Shire’s approach to M&A came in for criticism over its deal to buy Baxalta, with some expressing concerns over the price it paid following a lengthy pursuit of the target, but Thursday’s earnings report adds credence to recent analyst claims that the company could now be about to put these concerns behind it.”

The company noted that it expects to complete its strategic review by the end of the year.

Read at BioSpace.com


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