DUBLIN, Ireland, February 9, 2012 /PRNewswire/ --
Shire plc (LSE: SHP, NASDAQ: SHPGY), the global specialty biopharmaceutical company, announces results for the year to December 31, 2011.
Financial Highlights Full Year 2011(1)
Product sales $3,950 million +26%
Total revenues $4,263 million +23%
Non GAAP operating income $1,357 million +27%
US GAAP operating income $1,109 million +40%
Non GAAP diluted earnings per ADS $5.34 +26%
US GAAP diluted earnings per ADS $4.53 +43%
Non GAAP cash generation $1,391 million +3%
Non GAAP free cash flow $879 million +11%
US GAAP net cash provided by operating activities $1,074 million +12%
(1) Percentages compare to the full financial year 2010.
The Non GAAP financial measures included within this release are explained on page 27, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 22 - 26.
Angus Russell, Chief Executive Officer, commented:
"Shire has had another strong year - our strategy of focusing on meeting the needs of patients, physicians and payors to deliver value to the healthcare system has led to growing sales across our balanced portfolio of differentiated products. In 2011 our total revenues topped $4 billion for the first time.
In ADHD, sales of both VYVANSE and INTUNIV significantly outpaced the 10% growth of the US ADHD market. Our geographic expansion is progressing well, with the launch of VENVANSE in Brazil, an agreement with Shionogi to co-develop ADHD medicines in Japan, and our recent filing of VENVANSE in Europe.
Our sales of VPRIV for Gaucher disease were up 79%, REPLAGAL for Fabry disease was up 35% and ELAPRASE for Hunter Syndrome was up 15%. FIRAZYR for HAE has progressed well following its US launch. In addition, the regulatory processes are progressing well at our new biologics manufacturing facility in Lexington, Massachusetts which will soon enable us to significantly increase capacity to meet growing global demand.
In our Regenerative Medicine business, DERMAGRAFT, for diabetic foot ulcers, has performed strongly, generating sales of $105 million since we acquired Advanced BioHealing Inc. in late June.
We also saw good progress in our pipeline. New uses for VYVANSE, a diverticular disease indication for LIALDA, and a new intrathecal mode of protein delivery for rare genetic CNS diseases are some of the novel and exciting treatments we're developing and hope to bring to patients in the coming years.
Supported by our strong cash generation, we will continue to invest in growth prospects that will further leverage our established infrastructure. We expect 2012 to be a year of good earnings growth, as we aim to deliver increasing value to all our stakeholders."
FINANCIAL SUMMARY
Full Year 2011 Unaudited Results
Full Year 2011 Full Year 2010
Non Non
US GAAP Adjustments GAAP US GAAP Adjustments GAAP
$M $M $M $M $M $M
Total
revenues 4,263 - 4,263 3,471 - 3,471
Operating
income 1,109 248 1,357 794 278 1,072
Diluted
earnings
per ADS $4.53 $0.81 $5.34 $3.16 $1.07 $4.23
- Product sales in 2011 were up 26% to $3,950 million (2010: $3,128 million). On a constant exchange rate ("CER") basis, which is a Non GAAP measure, product sales were up 24%.
Product sales growth was generated from across the portfolio, particularly VYVANSE® (up 27% to $805 million), ADDERALL XR® (up 48% to $533 million), REPLAGAL® (up 35% to $475 million), ELAPRASE® (up 15% to $465 million), LIALDA®/MEZAVANT® (up 27% to $372 million) and VPRIV® (up 79% to $256 million). Product sales in 2011 also benefited from $105 million of DERMAGRAFT® sales made subsequent to the acquisition of Advanced BioHealing Inc. ("ABH").
- Total revenues in 2011 exceeded $4 billion for the first time, increasing by 23% (CER: up 21%) to $4,263 million (2010: $3,471 million). The strong product sales growth more than offset decreased royalties and other revenues, down 9% due to lower 3TC® and ZEFFIX® royalties.
- Non GAAP operating income was up 27% to $1,357 million (2010: $1,072 million), as total revenues grew at a faster rate than Research and Development ("R&D") and Selling, General and Administrative ("SG&A") expenditure.
Combined Non GAAP R&D and SG&A expenditure increased by 19% in 2011, as we increased investment in a number of early and late stage development programs, absorbed the operating costs from our recent acquisitions of ABH and Movetis N.V. ("Movetis"), and supported our product launches and continued growth.
Non GAAP diluted earnings per American Depositary Share ("ADS") were up 26% to $5.34 (2010: $4.23), due to higher Non GAAP operating income and a lower Non GAAP effective tax rate of 22% in 2011 (2010: 23%).
- On a US GAAP basis, operating income was up 40% to $1,109 million (2010: $794 million), as total revenues grew at a faster rate than R&D and SG&A expenditure. US GAAP operating income in 2010 included impairment charges recorded on the divestment of DAYTRANA and an up-front payment of $45 million to Acceleron Pharma Inc. ("Acceleron").
US GAAP diluted earnings per ADS were up 43% to $4.53 (2010: $3.16) due to higher US GAAP operating income and a lower US GAAP effective tax rate in 2011 of 21% (2010: 24%).
- Cash generation, a Non GAAP measure, was up 3% to $1,391 million (2010: $1,353 million). Cash generation in 2011 was adversely affected by the timing and quantum of both sales deduction and operating expenditure payments and lower royalty receipts, which offset higher cash receipts from higher gross product sales.
- Free cash flow, a Non GAAP measure, was up 11% to $879 million (2010: $795 million) due to higher cash generation and lower cash tax payments in 2011 compared to 2010. On a US GAAP basis, net cash provided by operating activities was up 12% to $1,074 million (2010: $955 million).
- Net debt at December 31, 2011 was $468 million (December 31, 2010: $531 million), a reduction of $63 million. Free cash flow and receipts from the divestments of non-core investments has reduced net debt and funded the acquisition of ABH, the acquisition of shares by the Employee Share Ownership Trust ("ESOT") and dividend payments.
Net debt includes Shire's $1,100 million convertible bonds (the "Bonds"), which are due in 2014, or redeemable at the option of the Bond holder in May 2012 (the "Put Option"). Shire does not consider it likely that the Put Option will be exercised. However, if the Bonds were redeemed in full in 2012, Shire's existing cash, its $1,200 million credit facility and free cashflow would be sufficient to fund repayment.
2012 OUTLOOK
We enter 2012 with good momentum following a strong performance in 2011. We believe that our product portfolio will continue to deliver sales growth in the low to mid teens range, despite the expected decline in sales of CARBATROL and REMINYL following their loss of exclusivity. Combining this with royalties and other revenues, which are expected to be 15%-25% lower year on year, we are still forecasting good revenue growth.
We anticipate that gross margins will be marginally lower in 2012 reflecting the full year impact of our acquisition of ABH.
In 2012 we will continue to advance our promising pipeline of early and late stage programs and invest behind the continued international expansion of our commercial activities. As we support this investment and also absorb a full year of ABH's operating costs, we expect combined Non GAAP R&D and SG&A spending to increase by 10-12% compared to 2011.
We expect our tax rate for 2012 to be in the range of 20 to 22%.
Overall, we look forward to good earnings growth in 2012.
In recent weeks we have seen continuing foreign exchange volatility. Our 2012 Outlook is based on exchange rates as at January 31, 2012 (Euro:$1.31, £:$1.58, CHF:$1.09). The impact on our revenue and earnings of a 10% appreciation of the US Dollar against these and other major currencies would be:
Revenue Earnings
Euro (1.5%) (2.2%)
Sterling (0.4%) 1.0%
Swiss Franc 0.0% 1.8%
Other Currencies (0.7%) (1.3%)
FINANCIAL SUMMARY
Fourth Quarter 2011 Unaudited Results
Financial Highlights Fourth Quarter 2011(1)
Product sales $1,049 million +23%
Total revenues $1,142 million +23%
Non GAAP operating income $369 million +54%
US GAAP operating income $304 million +55%
Non GAAP diluted earnings per ADS $1.51 +47%
US GAAP diluted earnings per ADS $1.33 +51%
Non GAAP cash generation $447 million +13%
Non GAAP free cash flow $351 million +26%
US GAAP net cash provided by operating activities $409 million +19%
(1) Percentages compare to equivalent 2010 period.
- Product sales in Q4 2011 were up 23% (CER: up 24%) to $1,049 million (Q4 2010: $851 million).
Product sales growth was experienced across the portfolio, particularly VYVANSE (up 20% to $217 million), ADDERALL XR (up 40% to $125 million), ELAPRASE(up 17% to $124 million) and INTUNIV® (up 52% to $65 million). Product sales of DERMAGRAFT totaled $53 million and represented six percentage points of our reported product sales growth in Q4 2011.
- Total revenues were up 23%, to $1,142 million (Q4 2010: $931 million), due to higher product sales and higher royalties and other revenues (up 17%). Higher royalties on ADDERALL XR and FOSRENOL® in Q4 2011 more than offset the continued decline in 3TC and ZEFFIX royalties.
- Non GAAP operating income was up 54% to $369 million (Q4 2010: $239 million), due to higher total revenues and lower Non GAAP operating expense ratios in Q4 2011 compared to the relatively higher ratios seen in Q4 2010.
Combined Non GAAP R&D and SG&A increased 9% in Q4 2011 as we continued to increase investment in our development programs (particularly for VYVANSE new uses and Sanfilippo), absorbed ABH's operating costs and supported our product launches and continued growth.
On a US GAAP basis, operating income in Q4 2011 was up 55% to $304 million (Q4 2010: $196 million).
- Non GAAP diluted earnings per ADS were up 47% to $1.51 (Q4 2010: $1.03), due to the higher Non GAAP operating income, partially offset by a higher Non GAAP effective tax rate of 19% for Q4 2011 (Q4 2010: 16%) as the favorable effect of certain tax credits in Q4 2010 were not repeated in Q4 2011. On a US GAAP basis diluted earnings per ADS were up 51% to $1.33 (Q4 2010: $0.88).
- Cash generation, a Non GAAP measure, was up 13% to $447 million (Q4 2010: $394 million). Higher cash receipts from gross product sales were partially offset by the timing and quantum of cash payments on operating expenditure and sales deduction payments in Q4 2011.
- Free cash flow, also a Non GAAP measure, was up 26% to $351 million (Q4 2010: $278 million) due to higher cash generation and lower cash tax payments in Q4 2011.
On a US GAAP basis, net cash provided by operating activities was up 19% to $409 million (Q4 2010: $343 million).
FOURTH QUARTER 2011 AND RECENT PRODUCT AND PIPELINE DEVELOPMENTS
Products
VPRIV and REPLAGAL Manufacturing Update
- On November 22, 2011 Shire announced that it had submitted regulatory filings with both the European Medicines Agency and the US Food and Drug Administration ("FDA") for the production of VPRIV in its new manufacturing facility in Lexington, Massachusetts. Required inspections have been completed. Subject to regulatory approval, which is anticipated in early 2012, Shire expects the new plant to increase manufacturing capacity significantly and allow for increased global supply of VPRIV. These approvals will also make available further capacity for the manufacture of REPLAGAL at Shire's Alewife facility, where both VPRIV and REPLAGAL are currently manufactured.
Shire is committed to providing current patients with uninterrupted long-term access to treatment at the dose and frequency prescribed by their physician.
RESOLOR® - for the symptomatic treatment of chronic constipation
- On January 10, 2012 Shire announced that it had acquired the rights to develop and market RESOLOR in the US in an agreement with Janssen Pharmaceutica N.V., part of the Johnson & Johnson Group.
VYVANSE - for the treatment of Attention Deficit Hyperactivity Disorder ("ADHD") in adults
- On January 31, 2012, the FDA approved VYVANSE for the maintenance treatment of ADHD in adults. VYVANSE is the first product in its class with this indication.
Pipeline
HGT - 3010 for Sanfilippo B Syndrome (Mucopolysaccharidosis IIIB)
- Shire has initiated early development of a product for the treatment of Sanfilippo B Syndrome, a severe, progressive, neurodegenerative disorder with no current treatment. The HGT-3010 program is entering preclinical studies for an enzyme replacement therapy delivered intrathecally, and a natural history study will be conducted.
REPLAGAL - for the treatment of Fabry disease
- In November 2011, Shire completed a rolling Biologics License Application ("BLA") for REPLAGAL in the US. The FDA has accepted the BLA under Priority Review and assigned an action date of May 17, 2012. Currently there are over 2,800 patients receiving REPLAGAL worldwide.
Lisdexamfetamine dimesylate ("LDX", currently marketed as VYVANSE in the US for the treatment of ADHD) - for the treatment of inadequate response in Major Depressive Disorder ("MDD")
- On December 8, 2011 Shire announced positive Phase 2 results in a clinical study to assess the efficacy of VYVANSE as adjunctive therapy to primary antidepressant treatment in improving executive functioning in adults with partial or full remission of recurrent MDD and significant, persistent cognitive impairments. Improvements were seen in both subjective and objective measures of cognitive dysfunction, and noted by all involved in treatment: patients, their caregivers, and physicians. There are no approved treatments for the residual, yet clinically impairing symptoms of cognitive impairment in MDD.
- A Phase 3 program to assess the efficacy and safety of VYVANSE as adjunctive therapy in patients with MDD was initiated in the fourth quarter of 2011.
VENVANSE® - for the treatment of ADHD in Europe in children and adolescents (6 - 17 years old)
- On January 5, 2012 Shire announced the acceptance for review by the UK Medicines Healthcare products Regulatory Agency ("MHRA"), of the once-daily ADHD medicinal product VENVANSE. VENVANSE is currently approved in the US as VYVANSE for the treatment of ADHD. The MHRA has agreed to act as the Reference Member State for this Decentralised Procedure which will initially include eight European countries. This application follows the successful completion of the European Phase 3 study of VENVANSE in children and adolescents with ADHD in 2011.
INTUNIV - for the treatment of ADHD in children and adolescents (6 - 17 years old) in Canada
- On December 23, 2011, a New Drug Submission for INTUNIV was accepted for screening by Health Canada seeking approval for use as monotherapy or co-administered with a stimulant in children and adolescents with ADHD. This is the first regulatory submission for approval of INTUNIV outside of the US.
OTHER FOURTH QUARTER AND RECENT DEVELOPMENTS
Strategic Partnership with Shionogi & Co Ltd ("Shionogi") for ADHD Medicines in Japan
On November 18, 2011 Shire announced that it had entered into an agreement with Shionogi to co-develop and co-commercialize certain of Shire's ADHD medicines in Japan. Shionogi paid Shire an up front fee and will share costs with Shire in exchange for rights to jointly co-develop and co-commercialize the products upon approval for the Japanese market. Shionogi is a leading Japanese pharmaceutical company with an expertise in developing medicines for the central nervous system, among other therapeutic areas. Working together with the Shionogi team, Shire believes the path to regulatory approval, market development and commercialization for ADHD medicines will be more effective and efficient.
Collaboration and license agreement with Sangamo BioSciences, Inc ("Sangamo") to develop therapeutics for hemophilia
On February 1, 2012 Shire and Sangamo announced that they have entered into a collaboration and license agreement to develop therapeutics for hemophilia and other monogenic diseases based on Sangamo's zinc finger DNA-binding protein ("ZFP") technology. Shire will receive exclusive world-wide rights to ZFP Therapeutics® designed to target four genes in hemophilia and will also receive the right to designate three additional gene targets. Sangamo is responsible for all activities through submission of Investigational New Drug Applications and European Clinical Trial Applications for each product and Shire will reimburse Sangamo for its internal and external research program-related costs. Shire is responsible for clinical development and commercialization of products arising from the alliance. Shire will pay Sangamo an upfront fee followed by research, regulatory, development and commercial milestone payments, and royalties on product sales.
BOARD AND COMMITTEE CHANGES
- Dr Jeffrey Leiden stepped down from the Shire Board and its Board Committees on January 31, 2012. Dr Leiden previously chaired Shire's Science & Technology Committee and was a member of Shire's Remuneration and Nomination Committees. Dr Leiden had been a non executive director of Shire since January 2007.
- Mr William Burns has been appointed as a member of the Science & Technology Committee with effect from February 8, 2012.
- Ms Anne Minto has been appointed as a member of the Nomination Committee with effect from February 8, 2012.
DIVIDEND
For the six months to December 31, 2011 the Board has resolved to pay an interim dividend of 12.59 US cents per ordinary share (2010: 10.85 US cents per ordinary share).
Dividend payments will be made in Pounds Sterling to ordinary shareholders and in US Dollars to holders of ADSs. A dividend of 7.96 pence per ordinary share (2010: 6.73 pence) and 37.77 US cents per ADS (2010: 32.55 US cents) will be paid on April 12, 2012 to shareholders on the register as at the close of business on March 9, 2012.
Together with the first interim payment of 2.48 US cents per ordinary share (2010: 2.25 US cents per ordinary share), this represents total dividends for 2011 of 15.07 US cents per ordinary share (2010: 13.10 US cents per ordinary share), an increase of 15% in US Dollar terms.
