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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Shire    SHP   JE00B2QKY057

SHIRE (SHP)
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Shire plc Shire Plc : Shire Reports Strong Q2 2017 Operating Results And Cash Flow

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08/03/2017 | 01:16pm CEST
TIDMSHP 
 
 
   Shire reports strong Q2 2017 operating results and cash flow; updates 
full year guidance 
 
   Q2 product sales growth of 7% on a combined pro forma basis; generated 
$1.2 billion operating cash flow 
 
   Over-delivered Year 1 Baxalta integration cost synergies, recognizing 
$400 million vs $300 million target 
 
 
 
   Exploring strategic review of Neuroscience franchise, including 
potential of independent public listing 
 
   Significant pipeline progress with SHP643 (lanadelumab); Phase 3 topline 
data demonstrates potential to change treatment paradigm for patients 
with HAE; U.S. approval of MYDAYIS for patients with ADHD; September 
launch planned 
 
 
 
   August 3, 2017 - Shire plc (Shire) (LSE: SHP, NASDAQ: SHPG) announces 
unaudited results for the three months ended June 30, 2017. 
 
 
 
   Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, 
commented: 
 
   "During the second quarter, we delivered strong top-line growth of 7% on 
a pro forma basis, generating product sales of $3.6 billion. Our 
Immunology franchise grew by 18%, and we saw significant contributions 
across our broad and diverse portfolio. Shire remains ahead of schedule 
to deliver at least $700 million in cost synergies from the Baxalta 
integration by Year 3. The Q2 performance resulted in strong operating 
cash flow of $1.2 billion and enabled us to reduce Non GAAP net debt by 
$880 million in the quarter. 
 
   "We also continue to drive the late-stage clinical pipeline. In Q2 we 
announced positive topline data from our Phase 3 pivotal trial of SHP643 
in HAE, and anticipate submission of the BLA in late 2017 or early 2018. 
MYDAYIS, a once-daily treatment for patients with ADHD, received US FDA 
approval and will be launched in September. 
 
   "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. 
 
   "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." 
 
   Financial Highlights 
 
 
 
 
                                   Q2 2017(1)    Growth(1)  Non GAAP CER(1)(2) 
Product sales                    $3,592 million       +55%                +56% 
Product sales excluding legacy 
 Baxalta                         $1,882 million        +7% 
Total revenues                   $3,746 million       +54%                +56% 
 
Operating income from 
 continuing operations             $399 million      +315% 
Non GAAP operating income(2)     $1,492 million       +53%                +54% 
 
Net income margin(3)(4)                      6%      13ppc 
Non GAAP EBITDA margin(2)(4)                43%       1ppc 
 
Net income                         $240 million        N/M 
Non GAAP net income(2)           $1,135 million       +47% 
 
Diluted earnings per ADS(5)               $0.79        N/M 
Non GAAP diluted earnings per 
 ADS(2)(5)                                $3.73       +10%                +11% 
 
Net cash provided by operating 
 activities                      $1,223 million      +107% 
Non GAAP free cash flow(2)       $1,064 million      +130% 
 
 
   (1) Results include Baxalta Inc. (Baxalta) (acquired on June 3, 2016), 
unless otherwise noted. Percentages compare to equivalent 2016 period. 
(2) The Non GAAP financial measures included within this release are 
explained on pages 28 - 29, and are reconciled to the most directly 
comparable financial measures prepared in accordance with US GAAP on 
pages 22 - 24. (3) US GAAP net income as a percentage of total revenues. 
(4) Percentage point change (ppc). (5) Diluted weighted average number 
of ordinary shares 913 million. 
 
   Product sales growth 
 
 
   -- Delivered product sales growth of 55% with the inclusion of legacy 
      Baxalta sales. 
 
   -- Achieved combined pro forma product sales growth of 7%; legacy Shire 
      product sales growth of 7% and legacy Baxalta pro forma product sales 
      growth of 8%. 
 
   -- Strong demand for our immunology products delivered 18% pro forma sales 
      growth, with significant contributions from our subcutaneous 
      immunoglobulin portfolio as well as GAMMAGARD LIQUID and our albumin 
      products. 
 
   Earnings growth 
 
   --     Generated Non GAAP earnings per ADS of $3.73, underscoring 
continued focus on commercial excellence and operating efficiency. 
 
   --       Continued to progress Baxalta integration, while delivering 
$400 million in cost synergies in year 1 - exceeding our target of $300 
million - which contributed to a Non GAAP EBITDA margin of 43% for the 
quarter; on-track to achieve at least $700 million in synergies by year 
3. 
 
   Strong cash flow 
 
   --       Strong operating cash flow enabled $880 million reduction in 
Non GAAP net debt since March 31, 2017; remain on-track to achieve our 
year-end debt target. 
 
   Product and Pipeline Highlights 
 
   Regulatory updates 
 
   --       Received U.S. Food and Drug Administration (FDA) approval of 
MYDAYIS, a new once-daily treatment option for symptom control in 
Attention Deficit Hyperactivity Disorder (>> Alcobra Ltd) patients 13 years and 
older. 
 
   --       Granted European Union (EU) Conditional Marketing Authorization 
for NATPAR (Parathyroid Hormone) for the treatment of patients with 
Chronic Hypoparathyroidism. 
 
   --       Received European Medicines Agency (EMA) validation of VEYVONDI 
[von Willebrand factor (Recombinant)] Marketing Authorization 
Application for treatment of von Willebrand Disease (VWD). 
 
   --       Submitted Investigational New Drug (IND) application to FDA for 
gene therapy candidate SHP654 for the treatment of hemophilia A. 
 
   Clinical and business development updates 
 
   --     Reported positive topline data for SHP643 (lanadelumab), which 
was acquired with Dyax Corp. (Dyax), an investigational treatment that 
reduced Hereditary Angioedema (>> Haemonetics Corporation) monthly attack rate by 87% versus 
placebo in a Phase 3 26-week pivotal trial. 
 
   --     Entered into an agreement with Parion Sciences to develop and 
commercialize SHP659 (formerly known as P-321), an investigational 
epithelial sodium channel (ENaC) inhibitor for the potential treatment 
of Dry Eye Disease in adults. 
 
   --       Expanded broad antibody research platform through license 
agreement with Novimmune S.A. to develop and commercialize an innovative, 
differentiated bi-specific antibody in pre-clinical development for the 
treatment of hemophilia A and hemophilia A patients with inhibitors. 
 
   FINANCIAL SUMMARY - SECOND QUARTER 2017 COMPARED TO SECOND QUARTER 2016 
 
   Revenues 
 
 
   -- Product sales increased 55% to $3,592 million (Q2 2016: $2,322 million), 
      primarily due to the inclusion of a full quarter of legacy Baxalta sales 
      of $1,710 million in Q2 2017. 
 
   -- Product sales excluding legacy Baxalta increased 7% primarily due to 
      growth from our Internal Medicine franchise, up 15%, as well as sales 
      from our Ophthalmology franchise of $57 million. 
 
   -- Royalties and other revenues increased 44% to $154 million, as Q2 2017 
      benefited from a full quarter of additional revenue acquired with Baxalta, 
      primarily related to contract manufacturing activities. 
 
 
   Operating results 
 
 
   -- Operating income increased 315% to $399 million (Q2 2016: $96 million), 
      primarily due to the inclusion of a full quarter of Baxalta operating 
      income and higher revenue from our Internal Medicine franchise, partially 
      offset by higher amortization of acquired intangible assets and higher 
      costs relating to licensing arrangements. 
 
   -- Non GAAP operating income increased 53% to $1,492 million (Q2 2016: $972 
      million), primarily due to the inclusion of a full quarter of Baxalta 
      operating income and higher revenue from legacy Shire products. 
 
   -- Non GAAP EBITDA margin as a percentage of total revenues increased to 43% 
      (Q2 2016: 42%), primarily due to lower research and development (R&D) and 
      selling, general and administrative (SG&A) expenditures as a percentage 
      of revenues, partially offset by a lower Non GAAP gross margin, primarily 
      due to the inclusion of a full quarter of lower margin product franchises 
      acquired with Baxalta. 
 
 
   Earnings per share (EPS) 
 
 
   -- Diluted earnings per American Depositary Shares (>> Alliance Data Systems Corporation) increased to $0.79 
      (Q2 2016: diluted losses per ADS of $0.71), primarily due to higher 
      operating income due to the inclusion of a full quarter of Baxalta income 
      and the impact of lower losses from discontinued operations related to 
      the divested Dermagraft business. 
 
   -- Non GAAP diluted earnings per ADS increased 10% to $3.73 (Q2 2016: $3.38), 
      as higher Non GAAP operating income more than offset the impact of 
      additional shares issued as consideration for the Baxalta transaction. 
 
 
   Cash flows 
 
 
   -- Net cash provided by operating activities increased 107% to $1,223 
      million (Q2 2016: $591 million), primarily due to strong cash receipts 
      from higher sales and operating profitability, partially offset by the 
      timing of payments of accounts payable and other accruals. 
 
   -- Non GAAP free cash flow increased 130% to $1,064 million (Q2 2016: $463 
      million), driven by the growth in net cash provided by operating 

(MORE TO FOLLOW) Dow Jones Newswires

08-03-17 0715ET

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Financials ($)
Sales 2017 14 974 M
EBIT 2017 5 586 M
Net income 2017 2 580 M
Debt 2017 19 245 M
Yield 2017 0,70%
P/E ratio 2017 17,36
P/E ratio 2018 12,47
EV / Sales 2017 4,39x
EV / Sales 2018 3,96x
Capitalization 46 440 M
Chart SHIRE
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Shire Technical Analysis Chart | SHP | JE00B2QKY057 | 4-Traders
Technical analysis trends SHIRE
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 69,0 $
Spread / Average Target 35%
EPS Revisions
Managers
NameTitle
Flemming Ornskov Chief Executive Officer & Executive Director
Susan Saltzbart Kilsby Non-Executive Chairman
Jeffrey Poulton Chief Financial Officer & Executive Director
Philip J. Vickers Global Head-Research & Development
Matt Walker Head-Technical Operations
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