Second Quarter Results ended 30 June 2003 and strategic...
Transcript of Second Quarter Results ended 30 June 2003 and strategic...
Second Quarter Resultsended 30 June 2003and strategic review
Shire Pharmaceuticals Group plc
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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 manufacturing and commercialisation, the impact of competitive products, including, but not limited to, the impact on Shire’s Attention Deficit Hyperactivity Disorder (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 lanthanum carbonate (FOSRENOL®) and METHYPATCH®, and other risks and uncertainties detailed from time to time in our filings, including the Annual Report filed on Form 10-K by Shire with the Securities and Exchange Commission.
Trade mark Information:The following are trade marks of Shire or companies within the Shire Group, which are the subject of trade mark registrations in certain territories.ADDERALL XR® (mixed amphetamine salts), ADDERALL® (mixed amphetamine salts), AGRYLIN® (anagrelide hydrochloride), AMATINE® (midodrine hydrochloride), CALCICHEW® (calcium carbonate), CARBATROL® (carbamazepine), COLAZIDE® (balsalazide), DEXTROSTAT® (dextroamphetamine salt), EMUTROL™, ENSOTROL®, FARESTON™ (toremifene)FLUVIRAL® S/F (split-virion influenza vaccine), FOSRENOL® (lanthanum carbonate), METHYPATCH® (methylphenidate), MICROTROL®, MICROTROL DR™, MICROTROL PR™, MICROTROL XR™, OPTISCREEN®, PROAMATINE® (midodrine hydrochloride), PROSCREEN™, RAPITROL™, SOLARAZE® (diclofenac sodium 3%), SOLUTROL™, TROXATYL® (troxacitabine), XAGRID® (anagrelide hydrochloride).The following are trade marks of third parties: 3TC (lamivudine) (trade mark of GlaxoSmithKline (GSK)), ADEPT (4% icodextrin solution) (trade mark of ML Laboratories plc), AZT (trade mark of GSK), BIO-HEP B (trade mark of Berna Biotech AG), COMBIVIR (trade mark of GSK), EPIVIR (trade mark of GSK), HEPAVAX GENE (trade mark of Berna Biotech AG), NEISVAC-C (trade mark of Baxter International Inc.), PENTASA (trade mark of Baxter International Inc.), REMINYL (galantamine hydrobromide) (trade mark of Johnson & Johnson), TRIZIVIR (trade mark of GSK), ZEFFIX (lamivudine) (trade mark of GSK), Concerta (trade mark of Johnson & Johnson), Metadate CD (trade mark of Celltech), Ritalin LA (trade mark of Novartis), Strattera (trade mark of Eli Lilly), Focalin (trade mark of Novartis), ASACOL (trade mark of Procter & Gamble).
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Agenda
Overview Matthew EmmensQ2 Financial highlights
Strategic review and actions
Financial Review Angus RussellR&D Review Wilson TottenSummary Matthew EmmensQuestions & Answers All
Shire Pharmaceuticals Group plc
Matthew Emmens – Chief ExecutiveOverview: Q2 highlightsStrategic review and actions
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Millions of USD, except per share amounts
Q2 2003Q2 2003
RevenuesRevenues 299.0299.0Operating incomeOperating income 94.294.2Income before taxIncome before tax 92.192.1Net incomeNet income 65.565.5
EPS (diluted):EPS (diluted):Ordinary sharesOrdinary shares 1313ADSADS 3838
+ 21%
Financial Highlights – Q2 2003
+ 10%
+ 25%
Growth overGrowth overQ2 2002Q2 2002
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Strategic Review
Opportunities:Effective specialty physician model
Attractive late stage projects – CNS, GI, and renal
Strong balance sheet – cash
Experience in M&A
ChallengesLoss of marketing exclusivity and generic challenges
R&D budget demands for the broad portfolio
Relatively complex infrastructure
Comprehensive review of the challenges and opportunities:
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Strategy
Key components:Target customers – specialty physicians in US, Canada and Europe
Focus R&D activity – enable fuller funding of fewer, later stage, lower risk projects in CNS, GI and renal disease
Enhanced M&A effort (US emphasis and larger scale transactions)
Site rationalization / operational improvements
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Immediate Actions
High level M&A team
Intention to spin off the vaccines business
Close early stage R&D
Exit oncology R&D, out-license TROXATYL
Seek partnership for SPD754 (HIV) – continue development
Shire Pharmaceuticals Group plc
Angus Russell – Group Finance DirectorSecond Quarter 2003 Financial Review
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Millions of USD, except per share amounts
Financial Highlights – Q2 2003
Q2 2003
Revenues 299.0Operating income 94.2Income before tax 92.1Net income 65.5
EPS (diluted):Ordinary shares 13ADS 38
+ 21%
+ 10%
+ 25%+ 19%+ 10%
Differential growth rates influenced by:
Investment write-downs, fx
Discontinued operations, tax,and equity method investees
R&D spend
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30
41
19
86
14
Q2 02(%)
32
42
17
84
16
Q2 03(%)
29
43
18
85
15
Q1 03(%)
32Operating margin
38
18
84
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FY 02(%)
R&D : Revenues
S,G&A (excl. D&A) : Product sales
Gross margin
COGS : Product sales
Financial Ratios
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+1+1112.613.9Carbatrol
+8+2429.436.6Agrylin
-3+1521.524.8Pentasa
+12+6810.918.3ProAmatine
+17
-32
+35
Growth (%)
+16104.1121.6Adderall Brand
-5928.319.2Adderall
+6275.8102.4Adderall XR
US Rx Growth (%)*
Q2 02Q2 03
Millions of USD
Product Sales – Q2 2003
* Source: IMS Data
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* Underlying sales growth expressed in constant exchange rates** Includes Reminyl
--
--
+ 15
+ 10
Underlying Growth (%)*
+ 628.6Other**
Reported Growth (%)
Q2 03 Royalties
+ 2851.8Total
+ 275.7Zeffix
+ 2237.53TC
Millions of USD
Royalty Income – Q2 2003
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Cash Flow – Q2 2003
Millions of USD
Net cash deficit for Q2 2003 : - $89M
Cash generation + $25
Tax / interest- $24
Products- $25
Fixed assets - $14
Financing- $51
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* Cash, cash equivalents, and marketable securities
1,290
896
1,647
31.03.03
1,185
807
1,713
30.06.03
1,214
806
1,573
31.12.02
Gross cash*
Net cash
Net assets
Balance Sheet
Millions of USD
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Strategic Review Financial Impact
Close down of Lead OptimisationClosure during Q3 2003Around 120 jobs affectedClosure charge of approx. $12 million, mainly in Q3 2003Closure costs net of savings around $7 million in FY 2003 (3 cents/ADS)Ongoing savings approx. $15 million per annum
Intention to spin-off the vaccines businessBy end H1 2004Deal structure to be finalized during Q3 2003First half 2003 operating loss of $14.5 million, inclusive of R&D costs of $7.8 million
Troxatyl To be out-licensedSavings to be re-invested in other late stage (Phase III) projects
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Full year 2003 Guidance
Revenue growth Mid to high teens
Operating margin Circa 30%
EPS growth (per ADS) High single to low double digit*
FY 2003 Financial Outlook
* Excludes closure of Lead Optimisation Business - impact of approximately 3 cents
Shire Pharmaceuticals Group plc
Wilson Totten – Group R&D DirectorR&D Overview
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R&D Portfolio FocusP/C and Phase I Phase II / III / Reg In Market R&D Support
Troxatyl AMLTroxatyl Pancreatic
Xagrid Agrylin
SPD473SPD483SPD465
SPD503Methypatch
Carbatrol Bipolar
ReminylAdderall XR
Carbatrol
SPD476SPD480
Pentasa 500mg
PentasaColazide
Fosrenol ProAmatineAdept
SPD756 (HIV) SPD754 (HIV) 3TC
SPD707 (Flu T-) Fluviral SPD701 (Flu)
SPD703 (S.pneu)SPD704 (N.menin)SPD705 (P.aeru)
Haematology
CNS
GI
Other
Anti-viral
SPD451
Continue R&D
Out-license / Exit
Legend:
Haematology
CNS
GI
Other
Anti-viral
Oncology
Vaccines
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Adderall XRFormulation patent to 2018Hatch-Waxman to Oct 2004Paediatric Extension programme agreed with FDA
Should extend Hatch-Waxman to April 2005Adult ADHD indication, on approval, qualifies for 3 year Hatch-Waxman
CarbatrolFormulation patents to 2011 and 2016Bipolar programme progressing well, filing H1 2004On approval, 3 years Hatch-WaxmanPlanning approach to strengthen protection of Bipolar indication
Exclusivity position for marketed drugs
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Agrylin / XagridUS orphan status expires March 2004Paediatric exclusivity programme agreedShould extend exclusivity to Sept 200410 year orphan status in EU from approval (2003)
ProAmatineOrphan status expires Sept 2003
PentasaPatent expiredGenericisation complex (topical Rx)High strength 500mg to be filed 2004Bridge to SPD476 (File 2005)
Exclusivity position for marketed drugs
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Key project updates
Fosrenol3 year clinical data recently presented – good efficacy and safetyWork ongoing to address remaining regulatory questionsNo new issues
Adderall XR AdultReview underwayFDA PDUFA date end Oct 2003
MethyPatchIn collaboration with Noven, addressing outstanding questions
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Key project updates (contd)
Xagrid EUPositive CPMP opinion receivedEU - wide approvals to follow
SPD476 (Ulcerative Colitis)Good clinical results presented previously (Q1 results)On schedule for Phase III H2 2003
SPD754 (HIV)Proof of Concept study recently presentedLog reduction in viral load up to 1.65 with 10 days therapyHighly effective, combined with excellent resistance profile
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RegistrationPhase 3Phase 2
R&D Key Project Progressions 2003/2004
XAGRID (EU)FOSRENOL
SPD503 (ADHD) 2005
METHYPATCH (ADHD)ADDERALL XR (adult)
CARBATROL (bipolar) H1 2004
Pentasa 500mg (UC) H1 2004
SPD476 (UC) H2 2003 2005
SPD480 (UC) 2006H1 2004
SPD473 (ADHD) H2 2003 2007
SPD754 (HIV) 2006
Shire Pharmaceuticals Group plc
Matthew Emmens – Chief ExecutiveSummary
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Summary
Strong quarterly resultsStrategy recognizes challenges aheadStrong balance sheet and substantial cashEnhanced M&A effort Refocused R&DOperating efficienciesPositioned for continued growth
Shire Pharmaceuticals Group plc