BASINGSTOKE, England, March 25 /PRNewswire-FirstCall/ -- Shire plc the global specialty biopharmaceutical company announces its preliminary results prepared under International Financial Reporting Standards (“IFRS”) for the twelve months to December 31, 2007.
On February 21, 2008 Shire announced its results for the same period under US GAAP.
Notes to Editors
Shire plc
Shire’s strategic goal is to become the leading specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on attention deficit and hyperactivity disorder (ADHD), human genetic therapies (HGT), gastrointestinal (GI) and renal diseases. The structure is sufficiently flexible to allow Shire to target new therapeutic areas to the extent opportunities arise through acquisitions. Shire’s in-licensing, merger and acquisition efforts are focused on products in niche markets with strong intellectual property protection either in the US or Europe. Shire believes that a carefully selected portfolio of products with relatively small-scale sales forces will deliver strong results.
For further information on Shire, please visit the Company’s website: http://www.shire.com
The “Safe Harbor” Statement Under The Private Securities Litigation Reform Act of 1995
Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialise, Shire’s results could be materially affected. The risks and uncertainties include, but are not limited to, risks associated with: the inherent uncertainty of pharmaceutical research; product development including, but not limited to, the successful development of JUVISTA(R) (Human TGFbeta3) and velaglucerase alfa (GA-GCB); manufacturing and commercialisation including, but not limited to, the establishment in the market of VYVANSE(TM)(lisdexamfetamine dimesylate) (Attention Deficit and Hyperactivity Disorder (“ADHD”)); the impact of competitive products including, but not limited to, the impact of those on Shire’s ADHD franchise; patents including, but not limited to, legal challenges relating to Shire’s ADHD franchise; government regulation and approval including, but not limited to, the expected product approval date of INTUNIV(TM) (guanfacine extended release) (ADHD); Shire’s ability to secure new products for commercialisation and/or development; and other risks and uncertainties detailed from time to time in Shire plc’s filings with the Securities and Exchange Commission, particularly Shire plc’s Annual Report on Form 10-K for the year ended December 31, 2007.
The following are trademarks of Shire or companies within the Shire Group which are the subject of trademark registrations in certain territories:
The following are trademarks of third parties referred to in this press release:
Results of operations under IFRS
For the year to December 31, 2007 the Group’s total revenues increased by 36% to US$2,436.3 million, compared to US$1,796.5 million in 2006. Net income for the year to December 31, 2007 was US$82.4 million compared to US$56.2 million in 2006. The results for 2007 include impairment charges in respect of goodwill and other intangible assets totaling US$390.5 million (2006: US$273.0 million) and gains on the sale of product rights of US$102.9 million (2006: US$63.0 million).
Total revenues
The following discussion includes references to US prescription and US market share data for key products. The source of this data is IMS Health, December 2007.
Specialty Pharmaceuticals
ADDERALL XR - ADHD
As a result of the launch of VYVANSE in July 2007 ADDERALL XR’s average share of the US ADHD market for 2007 fell to 25.5% (2006: 26.1%). US prescriptions for ADDERALL XR for the year to December 31, 2007 increased by 3% compared to the same period in 2006 due to a 6% growth in the US ADHD market offset by the 0.6% fall in average market share.
Sales of ADDERALL XR for the year to December 31, 2007 were US$1,030.9 million, an increase of 19% compared to the same period in 2006 (2006: US$863.6 million). Product sales growth was higher than prescription growth due primarily to price increases in January and October 2007.
As previously disclosed, the United States Federal Trade Commission (“FTC”) informed Shire on October 3, 2006 that it was reviewing the ADDERALL XR patent litigation settlement agreement between Shire and Barr Laboratories, Inc. (“Barr”). On June 22, 2007, the Group received a civil investigative demand requesting that it provides information to the FTC relating to its settlement with Barr and its earlier settlement with Impax Laboratories, Inc. The Group is cooperating fully with this investigation and believes that the settlements are in compliance with all applicable laws.
Patent litigation proceedings relating to ADDERALL XR are on-going. Further information can be found in our filings with the SEC, including our Annual Report on Form 10-K for the year to December 31, 2007.
VYVANSE - ADHD
VYVANSE was launched in the US market in July 2007 and at December 31, 2007 its market share had reached 5.2% (average annual market share 1.8%). Product sales of US$76.5 million for the year to December 31, 2007 were net of US$42.2 million sales deductions, primarily coupons, wholesaler discounts and rebates, which are expected over time to be approximately 28% of product sales before sales deductions.
All initial launch stocks of VYVANSE totaling US$57.8 million were recognised into revenue during the year to December 31, 2007.
DAYTRANA - ADHD
Product sales for the year to December 31, 2007 were US$64.2 million (2006: US$25.1 million). DAYTRANA’s average share of the US ADHD market increased to 2.1% in 2007 compared to 0.8% in 2006 (DAYTRANA was launched in June 2006). US prescriptions of DAYTRANA for the year to December 31, 2007 over 2006 benefited from a full year of demand, 6% growth in the US ADHD market and higher market share. For the six month period to December 31, 2007 prescriptions of DAYTRANA were up 31% compared to the same period in 2006. During September 2007 Shire announced a voluntary market withdrawal of a limited quantity of DAYTRANA patches following feedback from patients and caregivers who had experienced difficulty in removing the release liner. Patches are now being manufactured using an enhanced process, which Shire believes offers improved ease of use when peeling off the release liner.
On January 9, 2008 the US Food and Drug Administration (“FDA”) issued a warning letter to Noven Pharmaceuticals Inc. (“Noven”), which related to Noven’s manufacture of DAYTRANA. Further regulatory action could result if the FDA’s concerns are not satisfied fully. Noven submitted a response to the FDA on January 30, 2008 and the FDA responded on March 14, 2008 indicating that Noven’s responses appear to be satisfactory. It is expected that the FDA will perform a follow-up FDA inspection of Noven’s manufacturing plant to ensure compliance.
The addition of VYVANSE combined with ADDERALL XR and DAYTRANA’s market share helped Shire grow its total share of the US ADHD market to 31.1% at December 31, 2007 compared to 28.0% at December 31, 2006. Shire has the leading portfolio of products in the US ADHD market.
PENTASA - Ulcerative colitis
US prescriptions of PENTASA for the year to December 31, 2007 were up 3% compared to the same period in 2006 primarily due to a 4% increase in the US oral mesalamine prescription market, offset by a 0.1% decrease in PENTASA’s average market share from 17.3% in 2006 to 17.2% in 2007.
Sales of PENTASA for the year to December 31, 2007 were US$176.4 million, an increase of 28% compared to the same period in 2006 (2006: US$137.8 million). Sales growth is higher than prescription growth primarily due to restocking to normal levels in 2007 and the impact of price increases in November 2006 and August 2007.
LIALDA/MEZAVANT - Ulcerative colitis
Shire launched LIALDA in the US oral mesalamine market in March 2007, and by December 31, 2007 LIALDA had reached a market share of 8.0% (average annual market share 3.9%). LIALDA’s product sales for the year to December 31, 2007 were US$50.5 million. All initial launch stocks of LIALDA totaling US$34.3 million were recognised into revenue during the year to December 31, 2007.
The product was launched in the UK in November 2007, Canada in January 2008 and further launches are planned in the EU during 2008, subject to the successful conclusion of pricing and reimbursement negotiations. In the UK and Ireland the product will be called MEZAVANT XL and Shire plans to market the product in most other EU countries as MEZAVANT.
Since the launch of LIALDA in March 2007, PENTASA and LIALDA’s combined share of the US oral mesalamine prescription market had grown to 24.9% as at December 31, 2007, up from 17.6% as at December 31, 2006.
FOSRENOL - Hyperphosphatemia
FOSRENOL is now available in 25 countries and global sales totalled US$102.2 million for the year to December 31, 2007 (2006: US$44.8 million). Outside the US, FOSRENOL has now been launched in Germany, France, UK, Italy and Spain (in January 2008) and a number of other countries. Sales of FOSRENOL outside the US for the year ended December 31, 2007 were US$40.1 million compared to the same period in 2006 (2006: US$4.6 million).
US sales of FOSRENOL for the year to December 31, 2007 were up 54% to US$62.1 million compared to the same period in 2006 (2006: US$40.2 million). FOSRENOL’s average market share of the US phosphate binder market increased from 8.5% in 2006 to 8.6% in 2007. The increase in product sales is due to a small wholesaler stocking increase in 2007 compared to significant wholesaler de-stocking of initial launch stocks in 2006, the continued shift to the 1 gram strength tablet launched in 2006, partially offset by higher sales deductions in 2007 compared to the same period in 2006 (relating to a one-off provision made in 2007 for returns of the 750 gram dose).
DYNEPO - Anaemia associated with Chronic Kidney Disease (“CKD”)
DYNEPO was launched in March 2007 in Germany and later in the year in the UK, France, Italy and Ireland with sales for 2007 reaching US$14.2 million.
CARBATROL - Epilepsy
US prescriptions for CARBATROL for the year to December 31, 2007 were down 5% compared to the same period in 2006. This was primarily due to a comparable decline in the US extended release carbamazepine prescription market; CARBATROL’s average market share remained constant.
Sales of CARBATROL for the year to December 31, 2007 were US$72.3 million, an increase of 6% compared to the same period in 2006 (2006: US$68.3 million). Product sales increased despite the decrease in prescriptions, due to a sales price increase in April 2007 and restocking to normal levels, partially offset by higher sales deductions.
Patent litigation proceedings relating to CARBATROL are ongoing. Further information can be found in our filings with the SEC, including our Annual Report on Form 10-K for the year to December 31, 2007.
XAGRID - Thrombocythemia
Sales for the year to December 31, 2007 were US$66.8 million, an increase of 25% compared to the same period in 2006 (2006: US$53.3 million). Expressed in transaction currencies (XAGRID is primarily sold in Euros and Pounds sterling), sales increased by 15% due to growth in many of Shire’s existing markets, with exchange rate movements against the US dollar accounting for the remaining 10% increase.
Human Genetic Therapies
REPLAGAL - Fabry disease
Sales for the year to December 31, 2007 were US$143.9 million, an increase of 22% compared to the same period in 2006 (2006: US$117.7 million). Expressed in transaction currencies (REPLAGAL is primarily sold in Euros and Pounds sterling) sales increased by 13% due to higher unit sales in Europe and Canada and the continued roll out of REPLAGAL to new countries, including those in Latin America, with REPLAGAL now approved in 41 countries (including Japan). Exchange rate movements against the US dollar accounted for the remaining 9% increase in sales.
ELAPRASE - Hunter syndrome
Sales for the year to December 31, 2007 were US$181.8 million (2006: US$23.6 million). Sales growth in 2007 was driven primarily by a full year of sales in the US (ELAPRASE was launched in the US in August 2006), sales in Europe (ELAPRASE was launched in several European markets in the first half of 2007), and pre-approval sales in several Latin American markets. ELAPRASE was approved for sale and marketing in Japan in October 2007 and is now approved for marketing and commercial distribution in 38 countries worldwide.
Royalties
Royalty revenue increased by 2% to US$247.2 million for the year to December 31, 2007 (2006: US$242.9 million).
3TC
Royalties from sales of 3TC for the year to December 31, 2007 were US$145.3 million, a decrease of 4% compared to the same period in 2006 (2006: US$150.9 million). Excluding favourable foreign exchange movements of 4%, there has been a decline of 8% compared to the same period in 2006.
Shire receives royalties from GSK on worldwide 3TC sales. GSK’s worldwide sales of 3TC for the year to December 31, 2007 were US$1,110 million, a decrease of 2% compared to the same period in 2006 (2006: US$1,138 million), but a decrease of approximately 7% on a constant exchange rate basis. While the nucleoside analogue market for HIV has continued to grow, competitive pressures such as new entrants to the market and products in competing markets have increased leading to a decline in 3TC sales.
In 2007 generic drug companies filed Abbreviated New Drug Applications (“ANDA”) seeking approval for Epivir, Combivir, Zeffix and Epzicom in the US. Pursuant to the GSK/Shire license for lamivudine products, GSK has the right to enforce the licensed patents. In November 2007 GSK filed a patent infringement lawsuit against Teva Pharmaceuticals, Inc. (“Teva”) in the US District Court for the District of Delaware for infringement of one of the patents relating to Combivir. The patent, which covers the combination of AZT and lamivudine to treat HIV, expires in May 2012. Teva had filed an ANDA with the FDA with a certification of invalidity, unenforceability and non-infringement of that combination patent. Teva did not challenge two other patents relating to Combivir that expire in 2010 and 2016. The case is in its early stages.
ZEFFIX
Royalties from sales of ZEFFIX for the year to December 31, 2007 were US$41.0 million, an increase of 18% compared to the same period in 2006 (2006: US$34.8 million). The impact of foreign exchange movements has contributed 8% to the reported growth; excluding favourable foreign exchange movements there has been an increase of 10% compared to the same period in 2006.
Shire receives royalties from GSK on worldwide ZEFFIX sales. GSK’s worldwide sales of ZEFFIX for the year to December 31, 2007 were US$341 million, an increase of 13% compared to the same period in 2006 (2006: US$301 million). This increase was mainly due to strong growth in the Chinese market and favourable foreign exchange rate movements.
Other
Other royalties are primarily in respect of REMINYL and REMINYL XL (known as RAZADYNE and RAZADYNE ER in the US), a product marketed worldwide (excluding the UK and the Republic of Ireland) by Janssen Pharmaceutical N.V. (“Janssen”), an affiliate of Johnson & Johnson. Shire has the exclusive marketing rights in the UK and the Republic of Ireland.
Barr and other companies have filed ANDA with the FDA for generic versions of RAZADYNE. Janssen and Synaptech Inc. (“Synaptech”) have filed lawsuits against some of those ANDA filers. A trial was held during the week of May 21, 2007. No decision from the court has been issued to date.
Janssen and Synaptech filed lawsuits against Barr and Sandoz Inc. (“Sandoz”) for infringement of their patent rights relating to RAZADYNE ER as a result of Barr and Sandoz filing ANDAs with the FDA for generic versions of RAZADYNE ER. No court dates have been set.
Cost of sales
For the year to December 31, 2007 the cost of sales was 14% of product sales (2006: 16%). The cost of sales for REPLAGAL in 2006 included a US$47.0 million (3% of product sales) adjustment in respect of inventories acquired through the acquisition of Transkaryotic Therapies Inc. (“TKT”). Excluding the impact of this fair value adjustment, cost of sales as a percentage of product sales in 2006 was 13% in 2006. The increase in cost of sales as a percentage of product sales in 2007 over 2006 was primarily due to a shift in product mix resulting from increased sales of launched products, which had lower margins than existing products, and the write-off of inventory following the voluntary market withdrawal of a limited quantity of DAYTRANA patches.
For the year to December 31, 2007 cost of sales included a charge of US$5.3 million for share based compensation (2006: US$2.0 million) which included a US$2.1 million cumulative catch up charge (2006: US$nil) in respect of the 2005 option awards, for further information see SG&A below.
Research and development (R&D)
R&D expenditure increased to US$775.2 million for the year to December 31, 2007 (36% of product sales), up from US$295.8 million in the year to December 31, 2006 (19% of product sales).
The increase in R&D expenditure during the year to December 31, 2007 primarily relates to the following:
(i) a non-cash charge of US$100.0 million recognised on the effective settlement of Shire’s pre-existing relationship with New River Pharmaceuticals Inc. (“New River”). This charge represents the write-off of capitalised up-front and milestone payments made by Shire prior to the acquisition of New River. This charge is presented within R&D as at the time of the New River acquisition VYVANSE, although approved by the FDA, had not yet received the final scheduling classification from the Drug Enforcement Agency (“DEA”) and was therefore not available for commercial sale. Further details in respect of this charge are included in Note 3 of the Financial Statements; and
(ii) an intangible asset impairment charge for the year to December 31, 2007 of US$256.4 million (2006: US$nil) of which US$205.0 million (2006: US$nil) relates to capitalised in-process R&D (“IPR&D”) for DYNEPO (primarily the oncology indication), as the Group considers it unlikely that it will pursue the indication for commercialisation. See Note 7 for further details.
Excluding these intangible impairment charges of US$256.4 million and the US$100.0 million charge on the effective settlement of the pre-existing relationship with New River, R&D expenditure in the year to December 31, 2007 was US$418.8 million or 19% of product sales (2006: US$295.8 million) an increase of US$123.0 million.
The increase in R&D expenditure in 2007 was due to Phase 3(b) and Phase 4 studies to support new product launches; the continuation of Phase 3 trials on velaglucerase alfa (GA-GCB); the development of the Women’s Health franchise and JUVISTA; the pre-clinical development of three HGT projects and the newly in-licensed products from Amicus Therapeutics, Inc. (“Amicus”) and Alba Therapeutics Corporation (“Alba”).
For the year to December 31, 2007 R&D included a charge of US$16.6 million (2006: US$3.9 million) for share based compensation which included a US$4.6 million (2006: US$nil) cumulative catch up charge in respect of 2005 option awards, for further information see SG&A below.
Selling, general and administrative (SG&A) expenses
(1) Excludes (i) depreciation from manufacturing plants of US$5.0 million (2006: US$4.8 million) and amortisation of favourable supply contracts of US$1.2 million (2006: US$nil) which is included in cost of sales and (ii) other intangible assets impairment charges in respect of products under development of US$256.4 million (2006: US$nil) included in R&D.
Excluding depreciation, amortisation and impairment charges, SG&A costs increased by 26% to US$1,041.4 million (2006: US$829.4 million), and represented 48% of product sales (2006: 54%). The increase in SG&A expenses was expected, with additional expenditure required for:
- An increase in the ADHD sales force to promote VYVANSE;
- The cost of the new GI sales force in the US;
- The advertising, promotional and marketing spend to support the launches of VYVANSE, LIALDA and ELAPRASE; and
- A net charge of US$17.0 million in respect of legal settlements, being a charge of US$27.0 million for settlement of the TKT purported securities fraud class action shareholder suit relating to REPLAGAL, partially offset by a US$10.0 million release of existing legal provisions (1% of product sales).
The depreciation charge within SG&A for the year to December 31, 2007 was US$47.3 million (2006: US$36.0 million), which in 2007 included property, plant and equipment write-downs of US$1.8 million (2006: US$0.5 million). Amortisation charges, including the amortisation on acquired products, were US$147.3 million for the year to December 31, 2007 (2006: US$81.5 million), the increased charge is primarily due to the amortisation of DAYTRANA, ELAPRASE, DYNEPO and VYVANSE intangible assets following the product launches in June 2006, August 2006, March 2007 and July 2007 respectively.
Intangible asset impairment charges within SG&A for the year to December 31, 2007 were US$0.4 million (2006: US$1.1 million). Impairment charges relating to goodwill for the year to December 31, 2007 were US$133.7 million (2006: US$271.9 million) related to the goodwill arising on the acquisition of BioChem Pharma Inc. Depreciation, amortisation and impairment charges also include an adjustment to goodwill of US$11.0 million (2006: US$nil) in respect of the prior year acquisition of TKT.
For the year to December 31, 2007 SG&A included a charge of US$51.7 million for share based compensation (2006: US$14.6 million), which included a US$22.5 million cumulative catch up charge (2006: US$nil) in respect of 2005 option awards.
The catch-up charge relates to options issued by Shire in 2005 under the 2000 Executive Scheme. This charge arises as a result of the strong growth in revenue and profits (as determined under US GAAP) which the Group generated in the fourth quarter of 2007. This growth has in turn caused the Group to revise its original assumptions on which the IFRS 2 charge was based.
Gain on sale of product rights
For the year to December 31, 2007 Shire recognised gains of US$102.9 million on the sale of non-core products.
Shire received US$209.6 million (net of transaction costs of US$2.2 million) from Laboratorios Almirall S.A. (“Almirall”) for a portfolio of non core products comprising the dermatology products SOLARAZE and VANIQA and six non-promoted products across a range of indications, which were sold by Shire primarily in the UK, France, Germany, Italy, Spain and Ireland. This sale will realise a total gain of US$109.7 million, of which US$89.9 million was recognised during Q4 2007. The remaining deferred gain of US$19.8 million will be recognised in 2008 after the transfer of the relevant consents.
Shire received US$24.8 million on the sale of other non-core products, realising a total gain of US$17.2 million, of which US$13.0 million was recognised during 2007. (The remaining deferred gain of US$4.2 million relating to these disposals is expected to be recognised in 2008 on the transfer of marketing authorisations.)
During the year to December 31, 2006 Shire recognised a gain of US$63.0 million on the disposal of ADDERALL to Duramed.
Investment revenues
For the year to December 31, 2007 Shire received investment revenues of US$50.6 million (2006: US$50.5 million). Investment revenues primarily relate to interest received on cash balances. Included in 2006 was interest of US$6.5 million received from IDB Biomedical Inc. (“IDB”) on repayment of injectable flu development drawings arising on the disposal of the vaccines business in 2004. Excluding this one-off item, investment revenues in 2007 are higher than in 2006 due to slightly higher average cash balances and higher average US Dollar interest rates.
Finance costs
For the year to December 31, 2007 the Group incurred finance costs of US$93.1 million (2006: US$27.0 million). The increase in finance costs in 2007 over 2006 follows the acquisition of New River which was partly funded by US$1.3 billion of term loans, utilised under Shire’s US$2.3 billion banking facility (see Note 8). These term loans were subsequently partially repaid using the proceeds from Shire’s 2.75% convertible bond issued in May 2007. The remaining US$200 million of the term loans was also repaid during the year to December 31, 2007. Finance costs for the year to December 31, 2007 included an US$11.9 million write-off of deferred financing costs following the repayment of these term loans. Finance costs relating to the convertible bonds, representing interest expense based upon the stated coupon of the bonds, amortised discount and issue costs totalled US$43.6 million for the year to December 31, 2007.
In the year to December 31, 2007 and 2006 finance costs included a provision for interest, which may be awarded by the Court in respect of amounts due to those ex-TKT shareholders who have requested appraisal of the acquisition consideration payable for their TKT shares. A trial date for the appraisal rights litigation has been set for May 12, 2008. Further information can be found in our filings with the SEC, including our Annual Report on Form 10-K for the year to December 31, 2007.
Share of post tax profit from associates and joint ventures
The Group’s share of profit from its associates and joint ventures totalled US$1.8 million for the year to December 31, 2007 (2006: US$5.8 million). This comprised earnings of US$6.5 million from the 50% share of the anti-viral commercialisation partnership with GSK in Canada (2006: US$6.3 million), offset by losses of US$4.7 million being the Group’s share of losses in the GeneChem, AgeChem and EGS Healthcare Funds (2006: losses of US$0.5 million).
Taxation
The effective tax rate for the year to December 31, 2007 was -162% (2006: 88%).
In 2007 and 2006 the Group recorded impairment charges in respect of goodwill relating to the acquisition of BioChem Pharma Inc. of US$133.7 million (2006: US$271.9 million): no tax deduction is available on this goodwill impairment. Excluding the goodwill impairment the effective tax rate is -31%, (2006: 28%).
This negative tax rate in the year to December 31, 2007 of 31% has resulted from the release of deferred tax liabilities following other intangible asset impairment charges recognised in 2007 and the variation in the mix of profits from the jurisdictions in which the Group operates. Additionally, the tax rate in 2007 compared to 2006 has benefited from a reduced charge in respect of tax contingencies of US$34.0 million (2006: US$187.0 million) and an increase in favourable permanent differences, relating to R&D tax credits and the tax effect of the gain on disposal of product rights. These benefits were partially offset by the adverse impact of the movement in deferred taxes not recognised of US$7.0 million (2006: US$91.0 million favourable).
Principal Differences: IFRS and US GAAP Net Income for the year to December 31, 2007 and 2006.
The primary differences between net (loss) / income as reported under US GAAP and net income as reported under IFRS for the years ended December 31, 2007 and 2006 related to:
(a) In-process research and development (“IPR&D”)
IPR&D arising on the acquisition of New River relating to VYVANSE for non-paediatric patients in the US and VYVANSE in the rest of the world (“RoW”), which has been capitalised as an intangible asset under IFRS. As required under US GAAP the value ascribed to these IPR&D projects of US$1,866.4 million (2006: US$nil) has been expensed as research and development costs as of the acquisition date.
(b) Goodwill impairment
The impairment of goodwill of US$133.7 million (2006: US$271.9 million) under IFRS, not recorded under US GAAP. The impairment principally relates to the goodwill recognised under IFRS in respect of the acquisition of BioChem Pharma Inc: this goodwill was not recorded under US GAAP as the treatment of the combination as a pooling of interests under US GAAP resulted in no goodwill arising.
(c) Intangible asset impairment
An impairment charge of US$256.8 million (2006: US$1.1 million) was recorded under IFRS, primarily relating to the impairment of IPR&D in respect of the oncology indication of DYNEPO. These assets are not recognised on the US GAAP balance sheet as they were expensed as research and development costs at the time of their acquisition.
(d) Intangible assets capitalised
Up-front and milestone payments in respect of in-licensed technology of US$147.8 million (2006: US$80.5 million) have been capitalised under IFRS: these payments have been expensed as research and development costs as incurred under US GAAP.
(e) Effective settlement of the pre-existing relationship with New River
A non-cash charge under IFRS of US$100.0 million arose on effective settlement of the Group’s pre-existing relationship with New River, in respect of the write-off of up-front and milestone payments capitalised under IFRS as intangible assets; no loss was recorded under US GAAP as these payments had been expensed as a research and development cost as incurred.
(f) Finance costs in respect of convertible bonds
Finance costs recognised in respect of the US$1,100.0 million 2.75% convertible bonds due 2014 are US$21.9 million (2006: US$nil) higher under IFRS compared to US GAAP.
Under both US GAAP and IFRS finance costs include the stated coupon on the bonds, together with amortisation of the direct costs of issue. However, under IFRS, finance costs also include amortisation of the discount arising from separately accounting for the equity conversion feature at inception; this equity conversion feature is not separately accounted for under US GAAP. Finance costs are higher under IFRS as compared to US GAAP as a result of the amortisation of this discount.
(g) Other differences
Other differences include goodwill allocated to the gain on disposal of product rights; adjustments to goodwill relating to prior years acquisitions; the amortisation of intangible assets capitalised under IFRS and not US GAAP; accruals for payroll taxes on share options; and share based payment charges.
The accompanying notes are an integral part of these consolidated financial statements.
The profit for the year is all attributable to the equity holders of the parent.
The accompanying notes are an integral part of these consolidated financial statements. The total recognised income for the year is attributable to equity holders of the parent.
The accompanying notes are an integral part of these consolidated financial statements.
Shire plc (“the Company”) and its subsidiaries (collectively referred to as the “Group” or “Shire”) develop and market products for specialty physicians. The Group focuses on four therapeutic areas: ADHD, gastro-intestinal, human genetic therapies and renal.
The Company is a public limited company incorporated under the Companies Act 1985 and domiciled in the United Kingdom. The address of its registered office is Hampshire International Busines
