Armed with earnings beat, defiant Shire to persist in Baxalta bid
- Dublin-based Shire Plc announced Q3 earnings on Friday that beat analysts' profit forecasts.
- According to the company, profits rose 1% on non-GAAP operating income on a constant currency basis to $725 million (about a 5% beat) and sales rose 4% to $1.66 billion.
- Shire CEO Flemming Ornskov used the strong report to justify his company's pursuit of Baxter spinoff Baxalta, and said that Shire would continue to bid for the firm.
What a difference an earnings report can make—at least from a strategic positioning and PR perspective.
Earlier this week, it seemed that Shire's prospects for buying out Baxalta had dimmed considerably after the firm received a Complete Response Letter from the FDA in response to its submission for a lead eye drug and crucial pipeline product, lifitegrast. "We were disappointed, but will soon have data from the Phase 3 study, OPUS 3," said Shire CEO Flemming Ornskov in a statement at the time.
Fast-forward to Friday and Ornskov is pushing a very different tone. "We are totally committed to pursuing this transaction, but as we’ve also shown this quarter, we aren’t obsessed," he said during an earnings call. Shire's sales rose in Q3 on the strength of Vyvanse sales (the popular ADHD drug was recently approved for a "binge eating disorder" indication) and higher drug prices.
Baxalta, for its part, has not been very open to the takeover bid of $30 billion, saying it undervalues the fairly new company. Shire believes that acquiring Baxalta would boost its sales in 2020 by $20 billion.