Shire's pushing its growth potential, but investors aren't sold
- Shire plc beat analysts' expectations for full-year 2017 revenue and product sales, yet its stock took a small dip Wednesday as company leaders detailed headwinds coming down the pike.
- The Irish pharma recorded product sales of $14.4 billion, a year-over-year increase of 8% on a pro forma basis and 33% when taking into account Baxalta products. The greatest gains came from its immunology portfolio, which grew 14% to $4.37 billion thanks in part to greater demand for injectable immunoglobin therapies Cuvitru and HyQvia.
- Contrasting those positive results, Shire predicted that greater competition in the non-inhibitor hemophilia market — particularly from Roche AG's recently approved Hemlibra — would erode Advate and Adynovate sales about 30% by 2022. Hemophilia drugs are responsible for about a quarter of Shire's overall product sales.
Shire shaved a couple billion dollars off its 2020 revenue guidance last month, resulting in a new estimate of $17 billion to $18 billion. Meeting that smaller goal may still prove challenging, however, as market dynamics and competition in core therapeutic areas take their toll.
In August, for instance, manufacturing snafus caused a shortage of the company's hereditary angioedema (HAE) drug Cinryze (C1 esterase inhibitor [human]). Shire has since gained the Food and Drug Administration's blessing to bring Cinryze production in-house, but the shortage restricted the product's growth, which clocked in at 3% while sales for fellow HAE treatment Firazyr (icatibant) rose 15% year over year.
Furthermore, it offered an easier entry for rival CSL Behring LLC's Haegarda (C1 esterase inhibitor [human]).
"HAE was a bit of a rollercoaster for us in 2017," Shire CEO Flemming Ornskov said during a fourth quarter earnings call on Feb. 14. "We were basically out of the market for three months with Cinryze which happened unfortunately right at the time that Haegada was being launched."
Ornskov noted, however, that Haegada's impact hasn't been as detrimental as he initially thought.
That's more difficult to argue in other parts of Shire's business. Its hemophilia products look to take a beating as Hemlibra and other longer-acting therapies steal market share. And in attention deficit hyperactivity disorder (ADHD) — the cornerstone of Shire's neuroscience unit — Ornskov said the U.S. market has slowed from double-digit growth to mid-single-digit growth.
Those challenges may have dampened investor moral. Shire stock was down more than 2% to $129.84 per share at market's open Wednesday, though it rebounded to be essentially flat later that morning.
Shire acknowledged that new product launches will be integral moving forward. The company achieved a successful launch of ADHD medication Mydayis (mixed salts of a single-entity amphetamine product) and eye drug Xiidra (lifitegrast) last year, and is hoping for a similar scenario with its investigational HAE treatment SHP643. An approval decision on the candidate is expected in the back half of 2018.
It is quite clear when we talk to physicians and when we talk to patient associations that there is a very high level of interest in '643, so in addition to mitigating any short term loss of new patients to Haegada in the U.S., we're clearly focused on accelerating as much as we can the timelines for '643 and [preparing] for launch," Ornskov said.
In addition to SHP643, Shire expects new approvals for Adynovi (antihemophilic factor (recombinant), PEGylated) and Xiidra in Europe, as well as for Vyvanse (lisdexamfetamine dimesylate) in Japan later this year. Whether those advances can offset the looming threats to the drugmaker's bottom lines is yet to be seen.
For 2018, Shire expects $14.9 billion to $15.3 billion in product sales and another $500 million to $600 million in royalties and other revenues.
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