* 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 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
"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
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.