UPDATE 2-Shire cuts sales forecast as drugs miss Q1 targets
* Reduces full-year product forecast to high single-digits
* Q1 beats on earnings, although revenue misses
* New CEO reorganizes company to drive revenue growth
* Shares down 4.75 pct
By Paul Sandle
LONDON, May 2 (Reuters) - Cost controls helped UK drugs group Shire beat first-quarter earnings estimates, but its cut in full year sales expectations on Thursday knocked the shares 6.3 percent lower.
In the first set of results under new chief executive Flemming Ornskov, the London-listed firm said it expected full-year product sales to grow in the high single digits, trimming its previous forecast of low double-digit growth.
But Ornskov said Shire, which makes hyperactivity drugs, rare disease medicine Replagal and ulcer treatment Dermagraft, still expected to deliver full-year non-GAAP earnings per ADS in line with analyst expectations, which stand at $6.67.
Ornskov, who has been in the job for two days, is reorganising Shire into five divisions - rare diseases, neuroscience, gastrointestinal, regenerative medicine and internal medicine - with a "laser focus on commercial execution".
"I hope with relevant focus we can return all businesses to clear growth," he said.
Early stage R&D is also being scaled back. "Our research and development and business development activities will largely rebalance to focus on later stage assets that are closer to the market or in the market," he said.
"The exception to this will be our rare disease business where early investment, in my opinion, is still justified."
Shares in the group were trading 129 pence lower at 1,891 pence by 1511 GMT, by far the biggest faller in the FTSE 100 index, after the sales downgrade.
Analysts at Morgan Stanley said the cut in the product sales growth target implied an up to 5 percent downgrade to consensus, but they noted that comparisons would get easier through the year, so an acceleration from product sales growth of 1 percent in the first quarter was achievable.
The company posted total revenue in the quarter of $1,162 million, down 1 percent and short of analyst forecasts of $1,221 million. Non-GAAP earnings per ADS of $1.63 rose 10 percent, beating analyst forecasts of $1.59.
Misses came from Replagal, a treatment for Fabry's disease, which is facing renewed competition from Sanofi-owned Genzyme. Sales of the drug fell 15 percent to $114 million.
Chief Financial Officer Graham Hetherington told reporters that a wave of patients had switched from the drug early in the year, but the defections had now slowed.
Drugs for rare diseases sell for hundreds of thousands of dollars, but patient populations are small. Shire has a market share, outside of the United States, in excess of 70 percent for Fabry's disease.
Dermagraft, a treatment for diabetes-related ulcers, also disappointed, with a 62 percent drop in sales, he said.
One programme being culled in the new regime is the development of Vyvanse, one of Shire's amphetamines approved to treat ADHD (attention deficit hyperactivity disorder), in negative symptom schizophrenia.