second quarter results ended 30 june 2004investors.shire.com/~/media/files/s/shire-ir/... ·...
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Second Quarter Resultsended 30 June 2004
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 materialize, 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 commercialization, 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 dates of lanthanum carbonate (FOSRENOL®), methylphenidate (METHYPATCH®), anagrelide hydrochloride (XAGRID®), carbamazepine(BIPOTROL®) and the adult indication for extended release mixed amphetamine salts (ADDERALL XR®), the implementation of the planned reorganization and other risks and uncertainties detailed from time to time in Shire’s filings with the Securities and Exchange Commission.
The following are trademarks of Shire or companies within the Shire Group, which are the subject of trademark registrations in certain territories: ADDERALL XR® (mixed amphetamine salts), AGRYLIN® (anagrelide hydrochloride), BIPOTROL® (carbamazepine), CARBATROL® (carbamazepine), FOSRENOL® (lanthanum carbonate), METHYPATCH®
(methylphenidate), PROAMATINE® (midodrine hydrochloride),TROXATYL® (troxacitabine), XAGRID® (anagrelide hydrochloride).
The following are trademarks of third parties: 3TC® (trademark of GlaxoSmithKline (GSK)), PENTASA® (trademark of Ferring AS), REMINYL® (trademark of Johnson & Johnson), ZEFFIX® (trademark of GSK).
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Agenda
Second Quarter 2004 - Business & R&D Highlights Matthew EmmensFinancial Review Angus RussellConclusion Matthew EmmensQuestions & Answers All
Matthew Emmens Chief Executive Officer
Second Quarter 2004Business and R&D Highlights
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Financial Highlights – Q2 2004
1.8246cInterim dividend:Cents (one pence) per ordinary share
55.2cADS
Non GAAP EPS (diluted)*:
+30%18.4cOrdinary shares
+23%89.5Income from continuing operations
(55.5)Loss from discontinued operations
+27%126.6Income from continuing operations before taxes
20.4cADS6.8c
34.0
110.2321.0
Q2 2004
+7%+ 8%
EPS (diluted):Ordinary shares
Net Income
Operating incomeRevenues
Millions of US$, except per share amounts
*This is a non-GAAP financial measure. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Shire’s underlying performance as the costs associated with the reorganization, the gain on the sale of an investment and the impact of the discontinued operations are not part of the Company’s ongoing operations. A reconciliation of this non-GAAP financial measure to the US GAAP financial measure can be found later in this presentation.
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Business Highlights
Strong second quarter:upgrade earnings for continuing operations growth in excess of 20% for 2004*
FOSRENOL US PDUFA date extended to 26 October 2004No safety and efficacy issue raised in FDA letterPre-launch preparation underwayUS launch planned for December 2004EU: further approvals are expected by end of 2004Strong composition of matter patent coverage until 2016
PENTASA 500mg anticipated launch Q3 2004TROXATYL global research, development and marketing rights out-licensed to Structural GenomiX Inc.Vaccines development costs transferred to ID BiomedicalFive projects in development, two in Phase III and two in Phase II and five in registration
*This is a non-GAAP financial measure. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Shire’s underlying performance as the costs associated with the reorganization, the gain on the sale of an investment and the impact of the discontinued operations are not part of the Company’s ongoing operations.
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R&D Activities – Central Nervous System
CNSADDERALL XR
Adult indication US - Next action date 13 August 2004Adult indication Canada - sNDS submitted April 2004Pediatric Written Request - activities on-track in support of response – if approved a further 6-month Hatch-Waxman exclusivity will be granted (April 2005)
SPD503 - 2nd Phase III study initiated April 2004
METHYPATCH - Clinical program agreed with FDA, initiated in May 2004
SPD473 - Criteria for continued development in ADHD not met in the Proof of Concept study
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Development Activities – GI
GI
PENTASA 500mg launch planned for Q3 2004
SPD476 – Studies well underway, filing remains on track for 2005
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Development Activities – General Products
AGRYLIN/XAGRID6-month pediatric exclusivity extension granted through to mid-September 2004 in USCommittee for Medicinal Products for Human Use (CHMP) expected to re-confirm their positive opinion following completion of external data review
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Key Projects Flow
2005SPD465 (ADHD)
TBDSPD480 (UC)
2005SPD476 (UC)
2005SPD503 (ADHD)
BIPOTROL (Bipolar)
METHYPATCH (ADHD)
ADDERALL XR (adult)
XAGRID (EU)
FOSRENOL (US)
RegPIIIPII
Angus Russell Chief Financial Officer
Financial Review
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Financial Highlights – Q2 2004
-1.8246cInterim dividend:Cents (one pence) per ordinary share
42.6c55.2cADS
Non GAAP EPS (diluted)*:
+30%14.2c18.4cOrdinary shares
+23%72.789.5Income from continuing operations
(7.2)(55.5)Loss from discontinued operations
+27%99.4126.6Income from continuing operations before taxes
38.4c20.4cADS6.8c
34.0
110.2321.0
Q2 2004
+7%+ 8%
12.8c
65.5
102.6298.2
Q2 2003
EPS (diluted):Ordinary shares
Net Income
Operating incomeRevenues
Millions of US$, except per share amounts
*This is a non-GAAP financial measure. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Shire’s underlying performance as the costs associated with the reorganization, the gain on the sale of an investment and the impact of the discontinued operations are not part of the Company’s ongoing operations. A reconciliation of this non-GAAP financial measure to the US GAAP financial measure can be found later in this presentation.
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Non-GAAP measures – Q2 2004
Reconciliation of reported EPS excluding certain transactions:
55.2c
7.8c
26.4c6.9c (6.3c)
20.4c
Per ADS
Q2 2004
18.4c
2.6c
8.8c2.3c
(2.1c)
6.8c
Per ORDS
Q2 2004
91.9c
Diluted EPS excluding reorganization costs, discontinued operations and gain on sale investment
13.1c
44.2c11.3c
(10.7c)
Reorganization costs, net of taxDiscontinued operations- loss on disposal- operational loss for Q2 2004
Gain on sale of investment, net of tax
Add back:
34.0cDiluted EPS (as reported)
$mQ2 2004
NB: 1 ORD = 3 ADS
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Non-GAAP measures – 6 months to June 30, 2004Reconciliation of reported EPS excluding certain transactions:
180.8c
15.9c
44.2c20.1c
(10.7c)
111.2c
$mH1 2004
104.7c
9.3c
25.5c11.7c (6.3c)
64.5c
Per ADS
H1 2004
34.9c
3.1c
8.5c 3.9c
(2.1c)
21.5c
Per ORDS
H1 2004
175c
Diluted EPS excluding reorganization costs,discontinued operations and gain on sale ofinvestment
-
-12c
-
Reorganization costs (net of tax)Discontinued operations- loss on disposal- operational loss for H1 2004
Gain on sale of investment (net of tax)
Add back:
163c Diluted EPS (as reported)
Per ADS
FY 2003
NB: 1 ORD = 3 ADS
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Major Product Sales – Q2 2004
Millions of US$
* Source: IMS Data
+2+724.826.4PENTASA
+14-1513.911.9CARBATROL
-7
+40
Growth (%)
+336.634.0AGRYLIN
+20102.4143.5ADDERALL XR
US Rx Growth (%)*
Q2 03Q2 04
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Other International Product Sales – Q2 2004
Millions of US$
86%0.71.3Adept
69%1.32.2Solaraze
43%1.42.0Colazide
17%1.82.1Lodine
12%2.52.8Reminyl
42%
Growth (%)
6.49.1Calciums
Q2 03Q2 04
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Royalty Income – Q2 2004
* Foreign exchange movements have contributed +4% to reported growth** Foreign exchange movements have contributed +5% to reported growth*** Includes REMINYL
Millions of US$
+11
+31
+19**
+6*
Reported Growth (%)
8.611.3Other ***
Q2 03 Royalties
Q2 04 Royalties
51.857.7Total
5.76.8ZEFFIX
37.539.63TC
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Financial Ratios for continuing operations
40
41
15
89
11
Q2 04
3534Operating margin
37
16
86
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FY03Q2 03
15R&D : Revenues
41S,G&A (excl. D&A) : Product sales
85Gross margin
15COGS : Product sales
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Cash Flow – Q2 2004
Millions of US$
Net cash surplus for Q2 2004 : $93 million
Cash generation + $137
Tax / interest- $36
Fixed assets + $2
+ $3Financing
Product acquisitions - $12
Discontinued operations - $23
Investment + $22
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Balance Sheet
* Cash and cash equivalents, restricted cash and marketable securities
Millions of US$
1,534
1,158
2,004
31.03.04
1,628
1,251
2,022
30.06.04
1,414
1,038
1,923
31.12.03
Gross cash*
Net cash
Net assets
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Outlook
Revenue growth upgrade for 2004: high single digit range*Earnings for continuing operations upgraded to growth in excess of 20% for 2004**
Excludes internal re-organization / restructuring costs (approx 23 cents per ADS)
Q1 2004 include $3.8 million Q2 2004 include $18.2 million
Excludes $14.8 million gain on the sale of a portfolio investmentExcludes the vaccines business reported separately as “discontinued operation”
Beyond 2004EPS growth on average in mid teens rangeAim to maintain consistent operating margins
* Despite loss of exclusivity on PROAMATINE in Q3 2003 and AGRYLIN in the US in Q4 2004**This is a non-GAAP financial measure. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Shire’s underlying performance as the costs associated with the reorganization, the gain on the sale of an investment and the impact of the discontinued operations are not part of the Company’s ongoing operations.
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Dividend
Dividend to be paid semi annually set in US cents per share / ADSFor 2004 approx one third / two third split of total annual dividend between the first and second interim dividend1.8246 cents (one pence) per ordinary share for six months ended 30 June 2004First Interim dividend to be paid on 14 October 2004Dividend will be paid based on exchange rates taken on or immediately before the date of resolution to:
ORD holders to receive payment in UK£ADS holders to receive an equivalent US$ dividend Exchangeable share holders to receive an equivalent C$ dividend
The Company intends to grow this dividend progressively
Matthew Emmens Chief Executive Officer
Concluding remarks
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Strong second quarterupgrade earnings for continuing operations to growth in excess of 20% for 2004*
FOSRENOLUS PDUFA date 26 October 2004Under treated disease, very attractive productGlobal launch plans underway
PENTASA 500mg anticipated launch Q3 2004TROXATYL global research, development and marketing rights out-licensed to Structural GenomiX Inc.
Vaccines development costs transferred to ID Biomedical
Five projects in development, two in Phase III and two in Phase II and five in registration
Concluding remarks
*This is a non-GAAP financial measure. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors regarding Shire’s underlying performance as the costs associated with the reorganization, the gain on the sale of an investment and the impact of the discontinued operations are not part of the Company’s ongoing operations.
Questions and Answers