Bio-pharmaceutical company Shire plc (SHPGY), Friday reported a profit for the third quarter from a loss last year, helped by lower expenses and the absence of heavy litigation and lease-related charges that impacted year-ago results. Though sales declined 14% mainly on generic competition, revenues beat street expectations. The company also reaffirmed its 2009 earnings guidance.
UK- based Shire reported third-quarter net income attributable to the company of US$59.6 million, compared to a loss of US$34.9 million in last year. Earnings per ADS for the quarter were US$0.33 versus loss of US$0.20 per ADS in the year ago quarter.
Excluding items, non-GAAP net income attributable to the company declined to US$89.2 million or US$0.49 per ADS from US$216.0 million or US$1.17 per ADS in the year-ago quarter. On average, 12 analysts polled by Thomson Reuters expected the company to earn US$0.50 per ADS. Analysts' estimates typically exclude special items.
Revenues for the quarter declined to US$667.0 million from US$778.6 million in the prior-year quarter, however, ahead of market estimates of US$650.44 million.
Net sales suffered the pinch of generic competition, as Teva Pharmaceuticals (TEVA) launched its generic version of Shire's psycho-stimulant Adderall XR, leading to a 74% decline in the drug's branded sales.
The company noted that its core product sales, excluding Adderall, increased by 20% year-on-year to US$531.6 million for the three-month period. Leading the portfolio was Vyvanse, Shire's ADHD or Attention-Deficit Hyperactivity Disorder drug, which contributed 34% higher sales at US$129 million for the period. Ulcerative colitis drug Lialda sales also grew 62% to US$65.4 million.
Third quarter operating expenses offset the decline in revenues, decreasing to US$575.2 million from US$655.7 million last year, led by the absence of US$120.5 million in In-Process Research and Development charges that the company incurred last year. Operating income, however, was down at US$91.8 million, compared with US$122.9 million a year ago.
One-time charges favored the recently ended quarter's results, as total other expenses declined to US$2.2 million from US$141.1 million, led by the absence charges related to Transkaryotic Therapies, Inc. rights litigation in interest expenses and other lease modification-related charges that the company had to bear last year.
Shire also indicated higher R&D costs in the future on a research collaboration with RNA-based therapeutics maker Santaris Pharma to develop its proprietary Locked Nucleic Acid technology in a range of rare diseases.
The company's 'to-be-launched' portfolio includes yet another ADHD cure Intuniv for children to be available in the US in November 2009, Gaucher's disease drug Velaglucerase alfa from 2010 in the EU and U.S., and also the launch of Vyvanse in other markets starting 2010.
For the nine months ended September 30, net income attributable to the company was US$317.3 million or US$1.74 per ADS, compared with US$14.7 million or US$0.08 per ADS last year. Non-GAAP net income was lower at US$435.2 million or US$2.37 per ADS, versus US$543.7 million or US$2.85 per ADS year-ago.
Revenues for the nine-month period declined to US$2.11 billion from US$2.26 billion last year.
Looking forward, the company reaffirmed its non-GAAP earnings estimate in the range of US$3.00 - US$3.40 per ADS for the fiscal 2009. Analysts currently expect the company to report earnings of US$2.95 per share for fiscal 2009.
Shire also announced the induction of David Stout to its Board as a non executive director from October 31, 2009. Stout had previously served as president of Pharmaceutical Operations at Glaxo SmithKline (GSK). Also David Mott will be stepping down from the Board on the expiry of his term of office on October 30, 2009.
SHPGY is currently up 4.27% or US$2.18, at US$53.21 on a volume of 1.83 million shares.
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