Shire Beats Estimates as ADHD, Rare Disease Medicines Surge

Shire Plc reported first-quarter earnings that beat analysts’ estimates as it cut research spending and sold more drugs for attention deficit hyperactivity disorder and rare diseases.

Earnings excluding some items climbed 16 percent to $683 million, the Dublin-based company said in a statement Thursday. The average analyst estimate was $604 million.

The drugmaker expanded its portfolio of rare-disease treatments in February with the purchase of NPS Pharmaceuticals Inc. Shire is seeking to boost growth after a proposed $52 billion sale to AbbVie Inc. collapsed last year and has said it will continue buying companies to become a leader in the biotech industry.

Sales of Vyvanse, for ADHD and binge-eating disorder, rose 19 percent to $417 million in the quarter and sales of Cinryze, for an immune-system disorder, jumped 73 percent. Total revenue rose 11 percent to $1.49 billion.

The gain in earnings was “largely driven” by a reduction in research and development spending, Peter Welford, an analyst at Jefferies Group LLC, wrote in a note. R&D spending fell 2 percent from a year earlier, Shire said.

Share Performance

Shire rose 1 percent to 53.50 pounds in London trading. Through yesterday, the stock had gained about 63 percent in the past year including reinvested dividends, compared with a 34 percent return for the Bloomberg index that tracks 19 European drugmakers.

The U.S. Food and Drug Administration said this month that lifitegrast, an experimental drug for dry-eye disease, would be granted a priority review. Lifitegrast will be key to helping Shire meet its goal of $10 billion in revenue by 2020. If approved, the medicine may reach about $700 million in sales by then, according to the average of estimates from three analysts surveyed by Bloomberg.

Shire also benefited in the quarter from more prescriptions for Cinryze and raising the price of the drug by 5 percent from last year, Ornskov said on a conference call. Cinryze, taken for hereditary angioedema, was brought into Shire’s portfolio through its $4.2-billion purchase of ViroPharma in 2013.

The company has “blown through” its initial projections for Cinryze, Ornskov said.

The market is only half-penetrated and continues to expand, with competitors such as Dyax Inc. developing new drugs that are “very very encouraging and interesting for patients,” he added.

NPS Benefits

Shire’s $5.2 billion purchase of NPS has also started to bear fruit with the drugmaker winning U.S. approval in January for Natpara, a medicine to control low blood calcium levels related to hypoparathyroidism.

Growth will also come from Shire’s best-selling ADHD drug Vyvanse, which was approved in the U.S. on Jan. 30 to treat binge-eating disorder. The additional use may add as much as $300 million to annual sales of Vyvanse, Ornskov has said. The ADHD broader business is also growing, with the market shifting to adult patients.

While Ornskov and most other top executives have offices in Lexington, Massachusetts, Shire is registered in Jersey, in the Channel Islands, and based for tax purposes in Ireland. Its primary stock listing is in London.

The company named Jeff Poulton as chief financial officer on Thursday, after he spent several months doing the job on an interim basis.

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