Shire Delivers Excellent Q2 Performance With Total Revenues Up 35%. Full Year Earnings Expectations Raised

DUBLIN, August 4, 2010/PRNewswire-FirstCall/ -- Shire plc (LSE: SHP, NASDAQ: SHPGY) the global specialty biopharmaceutical company, announces results for the three months to June 30, 2010.
 

    
    Financial Highlights                    Q2 2010(1)
                                               
    Product sales                          $764 million      +37%
                                               
    Product sales from core products(2)    $684 million      +39%
    Product sales from core products on
    a CER basis(3)                                           +42%
                                               
    Total revenues                         $849 million      +35%
                                              
    Non GAAP operating income              $270 million     +134%
                                               
    US GAAP operating income               $224 million     +547%
    Non GAAP diluted earnings per ADS     $1.03              +71%
    US GAAP diluted earnings per ADS      $0.86             +253%

(1) Percentages compare to equivalent 2009 period.
 

(2) Core products represent Shire's products excluding ADDERALL XR.
 

(3) Sales growth at CER is computed by restating 2010 results using average 2009 foreign exchange rates.
 

Angus Russell, Chief Executive Officer, commented:
 

"This was another excellent quarter with strong performance from core product sales, up 39%, driving increases in operating income and earnings per ADS. Shire is performing well on all fronts.
 

In ADHD, sales of VYVANSE are up 30% and clinical trial enrolment has progressed for the European program and for the new indication proof of concept studies. Marketing authorization was recently given for VYVANSE in Brazil, our first approval for this product outside North America, and the launch is being planned for mid 2011. INTUNIV continues to build share with child and adolescent psychiatrists and we recently filed an sNDA for its adjunctive use with long-acting oral stimulants for the treatment of ADHD.
 

Sales of our Fabry treatment, REPLAGAL are up 84%, and we've seen very rapid uptake of VPRIV in the Gaucher market place with approximately 850 patients now treated globally. We received a positive opinion for VPRIV from the Committee for Medicinal Products for Human Use and although we already have sales on a preapproved basis, the anticipated European Commission decision later this year will enable the product's commercial roll out.
 

LIALDA for ulcerative colitis is also performing well with sales up 27% and a US market share approaching 19%. Phase 3 clinical trials investigating the use of the product for the treatment of diverticular disease are progressing.
 

With cash generation of $416 million during the quarter and excellent growth prospects ahead, we continue to invest in our marketed products, our pipeline and our international presence.
 

This year, the pharmaceutical sector has faced the challenges of US healthcare reform, European pricing pressures and fluctuating foreign exchange levels. Shire is, however, well placed to absorb these macro factors. Our strong performance in the second quarter reinforces our confidence in growing both revenue and earnings in the full year 2010 compared to 2009 and we now see Non GAAP earnings trending towards $4.00 per ADS for the full year. This includes the financial effect of the proposed acquisition of Movetis NV. We also re-iterate our aspirational target of mid-teens sales growth on average between 2009 and 2015."
 

FINANCIAL SUMMARY
 

Second Quarter 2010 Unaudited Results
 

    
                             Q2 2010                      Q2 2009
                                                                                    
               US GAAP  Adjustments  Non GAAP US GAAP  Adjustments   Non GAAP
                 $M          $M           $M      $M       $M           $M
    Revenues    849           -          849     630        -          630
    Operating
    income      224          46          270      35       81          116

    Diluted
    earnings
    per ADS   $0.86       $0.17        $1.03   $0.24    $0.36        $0.60

The Non GAAP financial measures included within this release are explained on page 25, and are reconciled to the most directly comparable financial measures prepared in accordance with US GAAP on pages 20 - 23.
 

    
    - Product sales were up 37% to $764 million (2009: $558 million) with
      growth from both core products (up 39% to $684 million) and 
      ADDERALL XR(R)(up 19% to $80 million). On a constant exchange rate 
      ("CER") basis, which is a Non GAAP measure, core product sales were up 
      42%.

    - The continued growth in core product sales was the result of strong
      performance across the portfolio:

           - VYVANSE(R) (up 30% to $148 million, CER: up 29%);
           - ELAPRASE(R) (up 17% to $100 million, CER: up 20%);
           - REPLAGAL(R) (up 84% to $82 million, CER: up 93%);
           - LIALDA(R)/MEZAVANT(R) (up 27% to $70 million, CER: up 27%); and

    - Recently launched INTUNIV(R) ($51 million) and VPRIV(R) ($29 million).

    - Total revenues were up 35% (CER: up 37%) to $849 million (2009: $630
      million), as a result of both increased product sales and higher 
      royalties (up 24% due to higher royalty income on sales of authorized 
      generic ADDERALL XR).

    - Non GAAP operating income increased by $154 million, or 134%, to $270
      million (2009: $116 million) due to the higher total revenues and 
      improved operating expense ratios compared to 2009, despite increased 
      investment in research and development ("R&D") programs and selling, 
      general and administrative ("SG&A") costs in support of recent growth. 
      On a US GAAP basis, operating income increased by $189 million, or 
      547%, to $224 million (2009: $35 million).

    - Cash generation, which is a Non GAAP measure, increased by $224 million
      to $416 million (2009: $192 million) following higher cash receipts 
      from product sales and royalties, cash inflows from forward foreign 
      exchange contracts in 2010 compared to outflows in 2009, partially 
      offset by higher cash payments on the increased investment in R&D 
      and SG&A.

    - Net debt at June 30, 2010 was $398 million (December 31, 2009: $615
      million), a reduction of $217 million in 2010. The reduction in net 
      debt was driven by strong cash generation of $694 million in the first 
      half of 2010, which was partially used in the acquisition of and 
      construction at Lexington Technology Park, cash taxes and the 
      dividend payment.

DIVIDEND
 

Dividend payments will be made in Pounds Sterling to Ordinary shareholders and in US Dollars to holders of American Depositary Shares ("ADS"). A dividend of 1.410 pence per ordinary share (an increase of 8% compared to 2009: 1.302 pence) and 6.750 US cents per ADS (an increase of 5% compared to 2009: 6.441 US cents) will be paid on October 7, 2010 to persons whose names appear on the register of members of the Company at the close of business on September 10, 2010.
 

2010 OUTLOOK
 

Given our strong performance in the second quarter, we now see Non GAAP earnings trending towards $4.00 per ADS, a 15% increase on 2009. This includes the financial effect of the proposed acquisition of Movetis NV.
 

The accelerated growth in the first half has increased our confidence in growing both revenues and earnings for the full year 2010 compared to 2009, despite the backdrop of the cumulative impact of US healthcare reform, pressure on European pricing and increasingly adverse foreign exchange rates.
 

Our core portfolio will continue to deliver strong year on year growth in 2010. The relative growth rate in the second half will start to moderate as we compare against tougher comparatives in 2009 and the rate of sales growth of REPLAGAL will also moderate as the continuing increase in patients being treated by REPLAGAL will be supported, in part, by product shipped in the second quarter.
 

Revenues both from ADDERALL XR product sales and from total royalties are anticipated to be lower in the last two quarters of 2010 compared to their very strong performance in the first half.
 

Given the strong performance in the first half and our confidence in our outlook, we will continue to make targeted increases in 2010 and beyond in investment in our international infrastructure, our recent product launches and in progressing our pipeline to support longer term growth. As a result, combined R&D and SG&A spending in 2010 will be at the top end of our previous guidance of 5-10% growth year on year.
 

PRODUCT LAUNCHES
 

Subject to obtaining the relevant regulatory/governmental approvals, future product launches in the next 12 months include:
 

    
    - VPRIV for the treatment of Type 1 Gaucher disease in the
      European Union ("EU");

    - MEZAVANT for the treatment of ulcerative colitis in certain
      EU and RoW countries;

    - FIRAZYR(R) for the symptomatic treatment of acute attacks of hereditary
      angiodema ("HAE") in certain European and Latin American countries;

    - EQUASYM(R) for the treatment of Attention Deficit
      Hyperactivity Disorder ("ADHD") in certain EU countries; and

    - VYVANSE (VENVANSE) for the treatment of ADHD in children in Brazil.

    PRODUCT AND PIPELINE DEVELOPMENTS

    Products

    VYVANSE - for the treatment of ADHD

    - On May 4, 2010 the US Food and Drug Administration ("FDA")
    approved a change to the prescribing information for the once-daily ADHD
    treatment VYVANSE to include supplemental data demonstrating significant
    improvement in attention in adults with ADHD across all six assessments
    conducted at 2, 4, 8, 10, 12 and 14 hours after administration as 
    measured by average Permanent Product Measure of Performance total 
    scores, as well as at each time point measured. VYVANSE is now the first 
    and only oral ADHD long-acting stimulant treatment to have efficacy data 
    at 14 hours post-dose for adult patients included in its product 
    labeling.

    - On July 5, 2010 ANVISA, the Brazilian health authority, granted 
    approval of the Marketing Authorization Application for the product under 
    the trade name VENVANSE for the treatment of ADHD in children aged 6 to 
    12. This represents the first approval of lisdexamfetamine dimesylate in
    Latin America.

    LIALDA/MEZAVANT - for the treatment of ulcerative colitis

    - On July 8, 2010 Shire announced that it had filed a lawsuit in the 
    U.S. District Court for the District of Delaware against Cadila
    Healthcare Limited, doing business as Zydus Cadila and Zydus 
    Pharmaceuticals (USA), Inc. (collectively, "Zydus") for the infringement 
    of U.S. Patent No. 6,773,720 (the '720 patent). The lawsuit was filed as 
    a result of an Abbreviated New Drug Application ("ANDA") filed by Zydus 
    seeking FDA approval to market and sell generic versions of LIALDA prior 
    to the expiration of the '720 patent.

    DAYTRANA - for the treatment of ADHD

    - On July 6, 2010 Shire announced the FDA approval of DAYTRANA for the 
    treatment of ADHD in adolescents aged 13 to 17 years. DAYTRANA, the
    first and only transdermal ADHD patch, is already an FDA-approved ADHD
    treatment for children aged 6 to 12 years.

    REPLAGAL - for the treatment of Fabry disease

    - REPLAGAL is experiencing significant demand globally and is now the 
    market leader in many key regions, due principally to a competitor's
    ongoing supply disruption. Currently there are approximately 2,000 
    patients worldwide being treated with REPLAGAL and Shire has capacity 
    to add 150-250 more patients in 2010. Shire anticipates that it could 
    add 250-350 more patients phased throughout 2011. Shire's continuing 
    priority is to ensure the long term, uninterrupted supply to patients 
    currently being treated with REPLAGAL and we will continue to monitor 
    demand and manage supply carefully.

    - Shire initiated a rolling submission of a REPLAGAL Biologics License
    Application ("BLA") in March 2010. On August 3, 2010 Shire informed the 
    FDA that it would not complete the rolling submission and withdrew its 
    BLA in order to consider updating the submission with additional clinical 
    data.

    VPRIV - for the treatment of Type 1 Gaucher disease

    - On June 25, 2010 Shire received a positive opinion from the Committee
    for Medicinal Products for Human Use ("CHMP") of the European Medicines
    Agency ("EMA") on the marketing authorization for VPRIV, its enzyme
    replacement therapy ("ERT") for the Treatment of Type 1 Gaucher Disease 
    in the EU. The CHMP positive opinion will now be forwarded to the 
    European Commission for ratification. In addition to the CHMP positive 
    opinion, VPRIV has received orphan drug designation from the Committee 
    for Orphan Medicinal Products. In many European countries patients have 
    been receiving VPRIV on an early access basis, developed in partnership 
    with national and regional authorities.

With the accelerated adoption of VPRIV worldwide, and the earlier than anticipated US approval and EU positive opinion, Shire expects continued high demand and currently has approximately 850 patients on therapy, with capacity to support approximately 1,000 patients in 2010. As a result, Shire is now implementing a program with physicians and patients to monitor demand and manage requests from new patients carefully in order to ensure long-term, uninterrupted treatment with VPRIV.
 

Pipeline
 

HGT-1410 for Sanfilippo Syndrome
 

    
    - HGT-1410 is in development as an ERT for the treatment of Sanfilippo
    Syndrome, a lysosomal storage disorder. The product has been granted 
    orphan drug designation in the US and in the EU. Shire initiated a Phase 
    1/2 clinical trial in August 2010.
 
    Guanfacine CarrierWave (GCW; SPD 547)

    - SPD 547 is in early stage development for the treatment of ADHD. A
    feasibility study in humans using microdosing has been completed and 
    results indicate characteristics suitable for entering formal Phase 1 
    trials. The Phase 1 program is expected to be initiated in Q3 2010 with 
    results throughout 2011. GCW could potentially improve on the current 
    guanfacine profile to minimize known food, gastrointestinal ("GI") and 
    sedation effects.

    OTHER SECOND QUARTER AND RECENT DEVELOPMENTS

    Proposed acquisition of Movetis NV

    - On August 3, 2010 Shire announced that it was launching a voluntary
    public takeover offer for all the shares in Movetis NV ("Movetis"), the
    Belgium-based European specialty GI company, for a fully diluted equity
    purchase price of EUR428 million. Movetis' board unanimously supports the
    transaction and Institutional shareholders holding 38.9% of Movetis' 
    shares have unconditionally agreed to accept the offer. It is anticipated 
    that the takeover offer, which is contingent upon the fulfilment of 
    certain conditions, will open for acceptance in September.

This proposed acquisition will significantly broaden Shire's global GI portfolio and adds growing revenues from RESOLOR(R) (prucalopride), a new chemical entity indicated for the symptomatic treatment of chronic constipation in women in whom laxatives fail to provide adequate relief. Movetis has the rights to RESOLOR in the EU, Iceland, Lichtenstein, Norway and Switzerland and is entitled to royalties on sales of RESOLOR outside of Europe from Johnson & Johnson.
 

The acquisition also brings to Shire world-class research and development talent and a promising GI pipeline.
 

Purchase of Lexington Technology Park
 

    
    - On June 30, 2010 Shire purchased Lexington Technology Park in
    Lexington, Massachusetts for a cash purchase price of $165 million. The
    purchase underlines our investment in the growth of Shire's Human Genetic
    Therapies business, and gives Shire the ownership of an additional 
    570,000 square feet of expansion potential available under the current 
    permit, including 170,000 square feet already under construction.

BOARD CHANGES
 

On June 16, 2010 Dr David Ginsburg and Ms Anne Minto OBE were appointed to Shire's Board of Directors with immediate effect. Dr Ginsburg was also appointed to Shire's Science & Technology Committee. Ms Minto was appointed to Shire's Remuneration Committee and assumed the Chair of that Committee on the retirement of Ms Kate Nealon from the Shire Board at the end of Ms Nealon's term of office on July 26, 2010.
 

ADDITIONAL INFORMATION
 

The following additional information is included in this press release:
 

    
                                       Page
    Overview of Q2 2010 Financial        7
    Results
    Financial Information               11
    Notes to Editors                    24
    Safe Harbor Statement               24
    Explanation of Non GAAP Measures    25
    Trademarks                          26

For further information please contact:
 

    
    Dial in details for the live conference call for investors 14:00 BST/9:00
    EDT on August 4, 2010:

    UK dial in: 0844-800-3850 or 01296-480-180

    US dial in: 1-866-8048688 or 1-718-3541175

    International dial in: +44(0)-1296-480-180

    Password/Conf ID: 523007

    Live Webcast: http://www.shire.com/shireplc/en/investors

OVERVIEW OF Q2 2010 FINANCIAL RESULTS
 

1. Product sales
 

For the three months to June 30, 2010 product sales increased by 37% to $764.3 million (2009: $558.4 million) and represented 90% of total revenues (2009: 89%).
 

Core product sales increased by 39% to $683.9 million (2009: $491.0 million), up 42% on a CER basis.
 

Product Highlights
 

    
                                               Growth                
                                                             
                        Sales                                     Exit Market
    Product                $M       Sales       CER     US Rx(1)    Share(1)
 
    VYVANSE             148.0        +30%      +29%         +29%      14%
    ELAPRASE             99.8        +17%      +20%       n/a(2)   n/a(2)
    REPLAGAL             81.9        +84%      +93%       n/a(3)   n/a(3)
    LIALDA /
    MEZAVANT             69.6        +27%      +27%         +19%      19%
    PENTASA(R)           60.6        +12%      +12%          -5%      15%
    INTUNIV              51.2         n/a       n/a          n/a       2%
    FOSRENOL(R)          45.1         -9%       -7%         -15%       7%
    VPRIV                28.7         n/a       n/a          n/a      n/a
    FIRAZYR               2.6        +73%      +86%       n/a(3)    n/a(3)
    OTHER                96.4        +10%      +13%          n/a      n/a
    Core product
    sales               683.9        +39%      +42%
    ADDERALL XR          80.4        +19%      +18%         -24%       8%
    Total product
    sales               764.3        +37%      +39%

(1) Data provided by IMS Health National Prescription Audit ("IMS NPA"). Exit market share represents the US market share in the week ending June 25, 2010.
 

(2) IMS NPA Data not available.
 

(3) Not sold in the US in Q2 2010.
 

VYVANSE - ADHD
 

The increase in VYVANSE product sales was driven by higher US prescription demand, price increases taken since Q2 2009 and the launch of the product in Canada during 2010, partially offset by higher sales deductions principally due to US Healthcare Reform.
 

ELAPRASE - Hunter syndrome
 

The growth in sales of ELAPRASE was driven by increased volumes across all regions in which ELAPRASE is sold. On a CER basis sales grew by 20% (77% of ELAPRASE sales are made outside of the US).
 

REPLAGAL - Fabry disease
 

The growth in REPLAGAL product sales was driven by an increase in demand due to an acceleration of patients switching to REPLAGAL in the EU, principally due to the disruption to supply of a competitor product. The growth was, in part, attributable to sales of products that will be used for the treatment of patients in the second half of 2010. Sales increased 93% on a CER basis (REPLAGAL is sold primarily in Euros and Pounds sterling).
 

LIALDA/MEZAVANT - Ulcerative colitis
 

Product sales growth for LIALDA/MEZAVANT continued in Q2 2010, driven by increased US prescription demand and price increases, partially offset by higher sales deductions. The US oral mesalamine market was broadly flat year on year.
 

PENTASA - Ulcerative colitis
 

Product sales of PENTASA increased due to price increases taken since Q2 2009, which more than offset lower US prescription demand.
 

INTUNIV - ADHD
 

Product sales of INTUNIV included both revenue from initial stocking shipments in 2009, which were deferred in accordance with Shire's accounting policy, and shipments made during Q2 2010. At June 30, 2010 all initial stocking shipments have been recognised as revenue and no deferred revenue remains.
 

FOSRENOL - Hyperphosphatemia
 

Product sales of FOSRENOL in the EU decreased primarily due to mandatory price reductions taken in 2010. Product sales of FOSRENOL in the US decreased due to lower US prescription demand and higher sales deductions in Q2 2010 compared to 2009, which more than offset the effect of price increases taken since Q2 2009.
 

VPRIV - Gaucher disease
 

Product sales in the US were generated on an approved basis after February 26, 2010 when approval was received from the FDA, and in the EU on a pre-approval basis via patient early access programs.
 

FIRAZYR - HAE
 

The product sales growth was driven by increased volumes across markets in Europe. FIRAZYR is the first new product for HAE in Europe in 30 years and has orphan exclusivity for acute attacks of HAE in adults in the EU until 2018.
 

ADDERALL XR - ADHD
 

Product sales increased despite a decline in US prescription demand due primarily to the effects of product stocking and price increases taken since Q2 2009. Stocking was $33 million (gross sales equivalent) in Q2 2010 compared to the significant destocking in Q2 2009 ($76 million gross sales equivalent) following the launch of an authorized generic version of ADDERALL XR in April 2009.
 

2. Royalties
 

    
                                         
                                    Year on year growth
                     Royalties to
    Product            Shire $M     Royalties       CER
 
    3TC(R) and
    Zeffix(R)            38.1          -3%          -4%
    ADDERALL XR          27.5         102%         102%
    Other                17.1          23%          26%
    Total                82.7          24%          24%

Royalty income increased by 24% due to higher royalties received on sales of authorized generic versions of ADDERALL XR (royalties in Q2 2010 were received from Impax Laboratories Inc. ("Impax"), and in Q2 2009 were received from Teva Pharmaceuticals Industries Ltd) and higher other royalties principally on sales of FOSRENOL in Japan. Royalties received for 3TC and Zeffix from GlaxoSmithKline ("GSK") were lower in 2010 compared to 2009 as 3TC royalties were adversely impacted by increased competition from other treatments.
 

3. Financial details
 

Cost of product sales
 

    
                                        % of
                                     product      Q2   % of product
                           Q2 2010     sales    2009          sales
                                $M                $M
    Cost of product sales
    (US GAAP)               119.1        16%    96.4            17%
    Transfer of
    manufacturing from
    Owings Mills             (7.4)              (3.0)
    Fair value adjustment
    for acquired
    inventories                  -              (1.4)
    Depreciation             (3.8)              (4.9)
    Cost of product sales
    (Non GAAP)              107.9        14%    87.1            16%


 

Non GAAP cost of product sales as a percentage of product sales decreased in Q2 2010 compared to the same period in 2009 as a result of changes in sales mix towards higher margin products.
 

Research and development ("R&D")
 

    
                                                                    % of
                                     % of product                product
                            Q2 2010         sales    Q2 2009       sales
                                 $M                       $M
    R&D (US GAAP)             147.0           19%      158.7         28%
    INTUNIV license payment       -                    (36.9)
    Depreciation               (3.5)                    (3.8)
    R&D (Non GAAP)            143.5           19%      118.0         21%

Non GAAP R&D increased in absolute terms in 2010 compared to 2009 due to continued investment across a number of R&D programs, principally VYVANSE international, INTUNIV, LIALDA and other early stage development programs.
 

Selling, general and administrative ("SG&A")
 

    
                                              % of                   % of
                                           product                product
                               Q2 2010       sales    Q2 2009       sales
                                    $M                     $M
    SG&A (US GAAP)               354.4         46%      334.7         60%
    Intangible asset             (33.8)                 (34.3)
    amortization
    Depreciation                 (16.6)                 (15.9)
    SG&A (Non GAAP)              304.0         40%      284.5         51%

Non GAAP SG&A increased in part due to selling and marketing costs incurred to support recently launched products and growth into new markets.
 

Gain on sale of product rights
 

For the three months to June 30, 2010 Shire recorded a gain of $4.1m (2009: $nil) on the sale of product rights. This gain had been deferred pending the transfer of the relevant consents following the disposal of the products concerned to Laboratorios Almirall S.A. in 2007.
 

Reorganization costs
 

For the three months to June 30, 2010 Shire recorded reorganization costs of $8.6 million (2009: $2.9 million) relating to the transfer of manufacturing from its Owings Mills facility and the establishment of a Swiss commercial hub.
 

Interest expense
 

For the three months to June 30, 2010 the Company incurred interest expense of $8.3 million (2009: $10.1 million). Interest expense principally relates to the coupon and deferred issue costs on Shire's $1,100 million 2.75% convertible bonds due 2014.
 

Taxation
 

The effective rate of tax for the three months to June 30, 2010 was 25% (2009: -78%), and the effective tax rate on Non GAAP income was 25% (2009: 2%).
 

The Non GAAP effective tax rate in the second quarter of 2009 was significantly reduced by the recognition of Massachusetts State tax credits and losses, which reduced the effective tax rate on Non GAAP income by 23 percentage points in Q2 2009.
 

FINANCIAL INFORMATION
 

TABLE OF CONTENTS
 

    
                                                          Page
 
    Unaudited US GAAP Consolidated Balance Sheets           12
 
    Unaudited US GAAP Consolidated Statements of Income     13
 
    Unaudited US GAAP Consolidated Statements of Cash
    Flows                                                   15
 
    Selected Notes to the Unaudited US GAAP Financial
    Statements
    (1) Earnings per share                                  17
    (2) Analysis of revenues                                18
 
    Non GAAP reconciliation                                 20

Unaudited US GAAP results for the three months and six months to June 30, 2010 Consolidated Balance Sheets
 

    
                                                          
                                               June 30, December 31,
                                                   2010        2009
                                                     $M          $M
    ASSETS
    Current assets:
    Cash and cash equivalents                     682.5       498.9
    Restricted cash                                27.1        33.1
    Accounts receivable, net                      612.5       597.5
    Inventories                                   232.7       189.7
    Deferred tax asset                            140.0       135.8
    Prepaid expenses and other current assets     195.1       115.2
 
    Total current assets                        1,889.9     1,570.2
 
    Non-current assets:
    Investments                                    84.0       105.7
    Property, plant and equipment, net            801.1       676.8
    Goodwill                                      355.7       384.7
    Other intangible assets, net                1,653.1     1,790.7
    Deferred tax asset                             76.4        79.0
    Other non-current assets                        8.7        10.4
 
    Total assets                                4,868.9     4,617.5
 
    LIABILITIES AND EQUITY
    Current liabilities:
    Accounts payable and accrued expenses       1,031.9       929.1
    Deferred tax liability                          2.9         2.9
    Other current liabilities                      41.1        88.0
 
    Total current liabilities                   1,075.9     1,020.0
 
    Non-current liabilities:
    Convertible bonds                           1,100.0     1,100.0
    Other long-term debt                            6.8        43.6
    Deferred tax liability                        341.8       294.3
    Other non-current liabilities                 226.0       247.1
 
    Total liabilities                           2,750.5     2,705.0
 
    Shareholders' equity:
    Common stock of 5p par value; 1,000
    million shares authorized; and 562.1
    million shares issued and outstanding
    (2009: 1,000 million shares authorized;
    and 561.5 million shares issued and
    outstanding)                                   55.7        55.6
    Additional paid-in capital                  2,711.8     2,677.6
    Treasury stock: 15.4 million shares (2009:
    17.8 million)                                (308.9)     (347.4)
    Accumulated other comprehensive income         45.8       149.1
    Accumulated deficit                          (386.0)     (622.4)
 
    Total shareholders' equity                  2,118.4     1,912.5
 
    Total liabilities and equity                4,868.9     4,617.5

Unaudited US GAAP results for the three months and six months to June 30, 2010 Consolidated Statements of Income
 

    
                             3 months to 3 months to 6 months to 6 months to
                                June 30,    June 30,    June 30,    June 30,
                                    2010        2009        2010        2009
                                      $M          $M          $M          $M
    Revenues:
    Product sales                  764.3       558.4     1,482.4     1,314.3
    Royalties                       82.7        66.9       178.0       117.5
    Other revenues                   2.4         4.4         5.1        15.6
    Total revenues                 849.4       629.7     1,665.5     1,447.4

    Costs and expenses:
    Cost of product sales(1)       119.1        96.4       221.0       180.0
    Research and development       147.0       158.7       278.0       344.6
    Selling, general and
    administrative(1)              354.4       334.7       714.3       653.3
    Gain on sale of product
    rights                          (4.1)          -        (4.1)          -
    Reorganization costs             8.6         2.9        13.6         5.1
    Integration and
    acquisition costs                  -         2.3         0.6         3.8
    Total operating expenses       625.0       595.0     1,223.4     1,186.8
 
    Operating income               224.4        34.7       442.1       260.6
 
    Interest income                  0.5         0.6         0.8         1.3
    Interest expense                (8.3)      (10.1)      (17.3)      (21.2)
    Other (expenses)/income,
    net                             (2.6)        4.7         8.2        54.9
    Total other
    (expenses)/income, net         (10.4)       (4.8)       (8.3)       35.0
 
    Income from continuing
    operations before income
    taxes and equity in
    earnings of equity method
    investees                      214.0        29.9       433.8       295.6
    Income taxes                   (54.5)       23.4      (108.1)      (26.1)
    Equity in earnings of
    equity method investees,
    net of taxes                     1.0         0.5         0.5         0.4
    Income from continuing
    operations, net of tax         160.5        53.8       326.2       269.9
 
    Loss from discontinued
    operations (net of income
    tax expense of $nil in all
    periods)                           -        (9.8)          -       (12.4)
    Net income                     160.5        44.0       326.2       257.5

    Add: Net loss attributable
    to noncontrolling interest
    in subsidiaries                    -         0.1           -         0.2
    Net income attributable to
    Shire plc                      160.5        44.1       326.2       257.7

(1) Cost of product sales includes amortization of intangible assets relating to favorable manufacturing contracts of $0.4 million for the three months to June 30, 2010 (2009: $0.4 million) and $0.9 million for the six months to June 30, 2010 (2009: $0.9 million). Selling, general and administrative costs include amortization of intangible assets relating to intellectual property rights acquired of $33.8 million for the three months to June 30, 2010 (2009: $34.3 million) and $68.4m for the six months to June 30, 2010 (2009: $66.8 million).
 

Unaudited US GAAP results for the three months and six months to June 30, 2010 Consolidated Statements of Income (continued)
 

    
                             3 months to 3 months to 6 months to 6 months to
                                June 30,    June 30,    June 30,    June 30,
                                   2010        2009        2010        2009
    Earnings per ordinary
    share - basic
    Earnings from continuing
    operations                     29.4c       10.0c       59.8c       50.0c
    Loss from discontinued
    operations                         -       (1.8c)          -       (2.3c)
    Earnings per ordinary
    share - basic                  29.4c        8.2c       59.8c       47.7c
 
    Earnings per ADS - basic       88.2c       24.6c      179.4c      143.1c
 
    Earnings per ordinary
    share - diluted
    Earnings from continuing
    operations                     28.6c        9.9c       58.2c       49.6c
    Loss from discontinued
    operations                         -       (1.8c)          -       (2.3c)
    Earnings per ordinary
    share - diluted                28.6c        8.1c       58.2c       47.3c
 
    Earnings per ADS - diluted     85.8c       24.3c      174.6c      141.9c
 
    Weighted average number of
    shares (millions):
 
    Basic                         546.6       539.9       545.7       539.7
    Diluted                       590.0       543.4       589.1       545.0

Unaudited US GAAP results for the three months and six months to June 30, 2010 Consolidated Statements of Cash Flows
 

    
                                         3 months 3 months 6 months 6 months
                                               to       to       to       to
                                         June 30, June 30, June 30, June 30,
                                             2010     2009     2010     2009
                                               $M       $M       $M       $M
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                              160.5     44.0    326.2    257.5
    Adjustments to reconcile net income
    to net cash provided by operating
    activities:
             Loss from discontinued
             operations                         -      9.8        -     12.4
             Depreciation and amortization   64.9     62.3    129.1    117.7
             Share based compensation        12.6     17.4     26.7     33.2
             Gain on sale of non-current
             investments                        -        -    (11.1)   (55.2)
             Gain on sale of product
             rights                          (4.1)       -     (4.1)       -
             Other                            5.7      2.4     11.0      6.3
    Movement in deferred taxes                6.5   (79.3)     58.8    (45.7)
    Equity in earnings of equity method
    investees                                (1.0)   (0.5)     (0.5)    (0.4)
 
    Changes in operating assets and
    liabilities:
             (Increase)/decrease in
             accounts receivable            (33.1)    108.1   (43.9)   (42.9)
             Increase/(decrease) in sales
             deduction accrual               89.3    (4.4)    154.3    117.5
             Increase in inventory          (25.8)    (3.3)   (50.1)   (12.8)
             Increase in prepayments and
             other current assets           (64.3)   (21.5)   (82.5)   (33.8)
             (Increase)/decrease in other
             assets                          (0.2)      1.0    (0.8)     4.4
             Increase/(decrease) in
             accounts payable and other
             liabilities                     72.8     (60.7)  (43.2)  (101.2)
    Returns on investment from joint
    venture                                     -        -        -      4.9
    Cash flows used in discontinued
    operations                                  -     (3.3)       -     (5.9)
    Net cash provided by operating
    activities(A)                           283.8     72.0    469.9    256.0

Unaudited US GAAP results for the three months and six months to June 30, 2010 Consolidated Statements of Cash Flows (continued)
 

    
                             3 months to 3 months to 6 months to 6 months to
                                June 30,    June 30,    June 30,    June 30,
                                    2010        2009        2010        2009
                                      $M          $M          $M          $M
 
    CASH FLOWS FROM INVESTING
    ACTIVITIES:
    Movements in restricted
    cash                           (0.3)         0.2         6.0       (6.6)
    Purchases of subsidiary
    undertakings and
    businesses, net of cash
    acquired                           -        (1.4)          -      (75.5)
    Purchases of property,
    plant and equipment          (164.6)       (59.8)     (208.1)    (101.8)
    Purchases of intangible
    assets                         (2.7)           -        (2.7)      (6.0)
    Proceeds from disposal of
    non-current investments
    and property plant and
    equipment                          -           -         2.1       19.6
    Proceeds from disposal of
    subsidiary undertakings            -         6.7           -        6.7
    Returns of equity
    investments                        -           -           -        0.2
    Net cash used in investing
    activities(B)                (167.6)      (54.3)      (202.7)    (163.4)
    CASH FLOWS FROM FINANCING
    ACTIVITIES:
    Payment under building
    financing obligation           (0.7)       (2.3)        (1.3)      (3.0)
    Extinguishment of building
    finance obligation            (43.1)           -       (43.1)         -
    Tax benefit of stock based
    compensation                   (0.4)           -         4.4          -
    Proceeds from exercise of
    options                         0.4         0.9          1.8        1.0
    Payment of dividend           (49.8)      (43.0)       (49.8)     (43.0)
    Payments to acquire shares
    by Employee Share
    Ownership Trust ("ESOT")       (1.7)       (1.0)        (1.7)      (1.0)
    Net cash used in financing
    activities(C)                 (95.3)      (45.4)       (89.7)     (46.0)
    Effect of foreign exchange
    rate changes on cash and
    cash equivalents (D)            4.1       (0.1)          6.1       (1.5)
    Net increase/(decrease) in
    cash and cash
    equivalents(A) +(B) +(C)
    +(D)                           25.0      (27.8)        183.6       45.1
    Cash and cash equivalents
    at beginning of period        657.5       291.1        498.9      218.2
    Cash and cash equivalents
    at end of period              682.5       263.3        682.5      263.3

Unaudited US GAAP results for the three months and six months to June 30, 2010
 

Selected Notes to the Financial Statements
 

(1) Earnings per share
 

    
                             3 months to 3 months to 6 months to 6 months to
                                June 30,    June 30,    June 30,    June 30,
                                    2010        2009        2010        2009
                                      $M          $M          $M          $M
 
    Income from continuing
    operations                     160.5        53.8       326.2       269.9
    Loss from discontinued
    operations                         -        (9.8)          -       (12.4)
    Noncontrolling interest in
    subsidiaries                       -         0.1           -         0.2
 
    Numerator for basic EPS        160.5        44.1       326.2       257.7
    Interest on convertible
    bonds, net of tax (1)            8.4           -        16.8           -
 
    Numerator for diluted EPS      168.9        44.1       343.0       257.7
 
    Weighted average number of
    shares:
                                Millions    Millions    Millions    Millions
    Basic(2)                       546.6       539.9       545.7       539.7
    Effect of dilutive shares:
    Stock options(3)                10.2         3.5        10.2         5.3
    Convertible bonds 2.75%
    due 2014(4)                     33.2           -        33.2           -
 
    Diluted                        590.0       543.4       589.1       545.0

(1) For the three and six month periods ended June 30, 2009 interest on the convertible bond has not been added back as the effect would be anti-dilutive.
 

(2) Excludes shares purchased by the ESOT and presented by Shire as treasury stock.
 

(3) Calculated using the treasury stock method.
 

(4) Calculated using the "if converted" method.
 

The share equivalents not included in the calculation of the diluted weighted average number of shares are shown below:
 

    
                             3 months to 3 months to 6 months to 6 months to
                                June 30,    June 30,    June 30,    June 30,
                                    2010        2009        2010        2009
                                          Millions(1)             Millions(1)
                              Millions(1)         (2) Millions(1)         (2)
    Stock options out of the
    money                            8.1        31.3         8.1        18.9
    Convertible bonds 2.75%
    due 2014                           -        32.7           -        32.7

(1) For the three and six month periods ended June 30, 2010 and 2009, certain stock options have been excluded from the calculation of diluted EPS because their exercise prices exceeded Shire plc's average share price during the calculation period.
 

(2) For the three and six month periods ended June 30, 2009 the ordinary shares underlying the convertible bonds have not been included in the calculation of the diluted weighted average number of shares, as the effect of their inclusion would be anti-dilutive.
 

Unaudited US GAAP results for the three months to June 30, 2010
 

Selected Notes to the Financial Statements
 

(2) Analysis of revenues
 

    
    3 months to June 30,              2010    2009   2010       2010
                                                      %     % of total
                                        $M    $M    change     revenue
    Net product sales:
    Specialty Pharmaceuticals
    ("Specialty")
    ADHD
    VYVANSE                          148.0   114.2    30%        18%
    ADDERALL XR                       80.4    67.4    19%         9%
    INTUNIV                           51.2       -    n/a         6%
    DAYTRANA                          16.3    14.9     9%         2%
    EQUASYM                            8.2     4.9    67%        <1%
                                     304.1   201.4    51%        36%
    GI
    LIALDA / MEZAVANT                 69.6    54.6    27%         8%
    PENTASA                           60.6    54.0    12%         7%
                                     130.2   108.6    20%        15%
    General products
    FOSRENOL                          45.1    49.6    -9%         5%
    CARBATROL(R)                      23.0    20.8    11%         3%
    XAGRID(R)                         21.6    20.7     4%         3%
    REMINYL/REMINYL XL(R)             11.5    10.9     6%         1%
    CALCICHEW(R)                      10.4    10.8    -4%         1%
                                     111.6   112.8    -1%        13%
 
    Other product sales                5.4     4.4    23%         1%
    Total Specialty product
    sales                            551.3   427.2    29%        65%
 
    Human Genetic Therapies ("HGT")
    ELAPRASE                          99.8    85.3    17%        12%
    REPLAGAL                          81.9    44.4    84%        10%
    VPRIV                             28.7       -    n/a         3%
    FIRAZYR                            2.6     1.5    73%        <1%
    Total HGT product sales          213.0   131.2    62%        25%
 
    Total product sales              764.3   558.4    37%        90%
 
    Royalties:
    3TC and ZEFFIX                    38.1    39.4    -3%         4%
    ADDERALL XR                       27.5    13.6   102%         3%
    Other                             17.1    13.9    23%         2%
    Total royalties                   82.7    66.9    24%         9%
  
    Other revenues                     2.4     4.4   -45%        <1%
 
    Total Revenues                   849.4   629.7    35%       100%

Unaudited US GAAP results for the six months to June 30, 2010
 

Selected Notes to the Financial Statements
 

(2) Analysis of revenues
 

    
    6 months to June 30,           2010    2009   2010       2010
                                                     %     % of total
                                     $M      $M   change    revenue
    Net product sales:
    Specialty Pharmaceuticals
    ("Specialty")
    ADHD
    VYVANSE                       302.4     230.7    31%       18%
    ADDERALL XR                   172.2     363.3   -53%       10%
    INTUNIV                        85.7         -    n/a        5%
    DAYTRANA                       34.7      34.8   <-1%        2%
    EQUASYM                        10.6       4.9   116%        1%
                                  605.6     633.7    -4%       36%
    GI
    LIALDA / MEZAVANT             133.2     104.0    28%        8%
    PENTASA                       118.8     105.2    13%        7%
                                  252.0     209.2    20%       15%
    General products
    FOSRENOL                       92.1      89.5     3%        6%
    XAGRID                         45.0      40.8    10%        3%
    CARBATROL                      43.1      38.9    11%        3%
    REMINYL/REMINYL XL             23.9      18.3    31%        1%
    CALCICHEW                      19.8      20.4    -3%        1%
                                  223.9     207.9     8%       14%
 
    Other product sales            11.1       8.9    25%        1%
    Total Specialty product
    sales                       1,092.6   1,059.7     3%       66%
 
    Human Genetic Therapies ("HGT")
    ELAPRASE                      200.6     168.0    19%       12%
    REPLAGAL                      149.9      84.6    77%        9%
    VPRIV                          34.5         -    n/a        2%
    FIRAZYR                         4.8       2.0   140%       <1%
    Total HGT product sales       389.8     254.6    53%       23%
 
    Total product sales         1,482.4   1,314.3    13%       89%
 
    Royalties:
    3TC and ZEFFIX                 74.7      78.3    -5%        4%
    ADDERALL XR                    68.3      13.6   402%        4%
    Other                          35.0      25.6    37%        2%
    Total royalties               178.0     117.5    51%       10%
 
    Other revenues                  5.1      15.6   -67%        1%
 
    Total Revenues              1,665.5   1,447.4    15%      100%

Unaudited results for the three months to June 30, 2010
 

Non GAAP reconciliation
 

    
                           US                                             Non
                         GAAP         Adjustments                        GAAP
                                              Divestments,
                         June Amortization reorganizations               June
                          30,      & asset  & discontinued   Reclassify   30,
    3 months to,         2010  impairments      operations depreciation  2010
                                        (a)             (b)         (c)
                           $M           $M              $M         $M    $M
    Total revenues      849.4            -               -          -  849.4
 
    Costs and
    expenses:
    Cost of product
    sales               119.1            -           (7.4)     (3.8)  107.9
    Research and
    development         147.0            -              -      (3.5)  143.5
    Selling, general
    and administrative  354.4        (33.8)             -     (16.6)  304.0
    Gain on sale of
    product rights       (4.1)           -            4.1         -       -
    Reorganization
    costs                 8.6            -           (8.6)        -       -
    Depreciation            -            -              -      23.9    23.9
    Total operating
    expenses            625.0        (33.8)         (11.9)        -   579.3
 
    Operating income    224.4         33.8           11.9         -   270.1
 
    Interest income       0.5            -              -         -     0.5
    Interest expense     (8.3)           -              -         -    (8.3)
    Other
    (expenses)/income,
    net                  (2.6)           -              -         -    (2.6)
    Total other
    expense, net        (10.4)           -              -         -   (10.4)
    Income from
    continuing
    operations before
    income taxes and
    equity in earnings
    of equity method
    investees           214.0         33.8           11.9         -   259.7
    Income taxes        (54.5)        (9.6)          (1.9)        -   (66.0)
    Equity in earnings
    of equity method
    investees, net of
    tax                   1.0            -              -         -     1.0
    Net income
    attributable to
    Shire plc           160.5         24.2           10.0         -   194.7
    Impact of
    convertible debt,
    net of tax            8.4            -              -         -     8.4
    Numerator for
    diluted EPS         168.9         24.2           10.0         -   203.1
    Weighted average
    number of shares
    (millions) -
    diluted             590.0            -              -         -   590.0
    Diluted earnings
    per ADS             85.8c        12.3c           5.1c         -  103.2c

The following items are included in Adjustments:
 

(a) Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($33.8 million) and tax effect of adjustment;
 

(b) Divestments, reorganizations and discontinued operations: Accelerated depreciation ($6.0 million) and dual running costs ($1.4 million) on the transfer of manufacturing from Owings Mills, gain on sale of product rights relating to the disposal of non core products to Laboratorios Almirall S.A. ($4.1 million) and reorganization costs ($8.6 million) on the transfer of manufacturing from Owings Mills and establishment of a Swiss commercial hub, and tax effect of adjustments; and
 

(c) Depreciation: Depreciation of $23.9 million included in Cost of product sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
 

Unaudited results for the three months to June 30, 2009
 

Non GAAP reconciliation
 


 

The following items are included in Adjustments:
 

(a) Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($34.3 million), and tax effect of adjustment;
 

(b) Acquisitions & integration activities: Inventory fair value adjustment related to the acquisition of Jerini AG ($1.4 million); payment on amendment of INTUNIV in-licence agreement ($36.9 million); costs associated with the integration and acquisition of Jerini AG and EQUASYM from UCB ($2.3 million) and tax effect of adjustments;
 

(c) Divestments, reorganizations and discontinued operations: Accelerated depreciation ($3.0 million) and reorganisation costs ($2.9 million) for the transition of manufacturing from Owings Mills; discontinued operations in respect of non-core Jerini AG operations ($9.8 million) and tax effect of adjustments; and
 

(d) Depreciation: Depreciation of $24.6 million included in Cost of Product Sales, R&D costs and SG&A costs for US GAAP separately disclosed for the presentation of Non GAAP earnings.
 

Unaudited results for the six months to June 30, 2010
 

Non GAAP reconciliation
 

    
                             US GAAP                Adjustments
                                                 Acquisitions    Divestments,
                                June Amortization           & reorganizations
                                 30,     & asset  integration  & discontinued
    6 months to,                2010  impairments  activities      operations
                                              (a)          (b)           (c)
                                  $M           $M           $M           $M
    Total revenues           1,665.5            -           -             -
    Costs and expenses:
    Cost of product sales      221.0            -           -         (14.7)
    Research and development   278.0            -           -             -
    Selling, general and
    administrative             714.3        (68.4)          -             -
    Gain on sale of product
    rights                     (4.1)            -           -           4.1
    Reorganization costs        13.6            -           -         (13.6)
    Integration &
    acquisition costs            0.6            -        (0.6)            -
    Depreciation                   -            -           -             -
    Total operating expenses 1,223.4        (68.4)       (0.6)        (24.2)
 
    Operating income           442.1         68.4         0.6          24.2
 
    Interest income              0.8            -           -             -
    Interest expense           (17.3)           -           -             -
    Other income/(expenses),
    net                          8.2            -           -         (11.1)
    Total other expenses,
    net                         (8.3)           -           -         (11.1)
    Income from continuing
    operations before income
    taxes and equity in
    earnings of equity
    method investees           433.8         68.4         0.6          13.1
    Income taxes              (108.1)       (19.3)       (0.1)         (5.0)
    Equity in earnings of
    equity method investees,
    net of tax                   0.5            -           -             -
    Net income attributable
    to Shire plc               326.2         49.1         0.5           8.1
    Impact of convertible
    debt, net of tax            16.8            -           -             -
    Numerator for diluted 
    EPS                        343.0         49.1         0.5           8.1
    Weighted average number
    of shares (millions) -
    diluted                    589.1            -           -            -
    Diluted earnings per ADS  174.6c        25.0c        0.3c          4.1c
    
    (continued...)

    6 months to,                                                Non GAAP
                             Reclassify depreciation       June 30, 2010
                                                 (d)
    Total revenues                                $M                  $M
    Costs and expenses:                            -             1,665.5
    Cost of product sales
    Research and development                   (6.3)               200.0
    Selling, general and
    administrative                             (7.2)               270.8
    Gain on sale of product
    rights                                    (32.9)               613.0
    Reorganization costs                          -                    -
    Integration &
    acquisition costs                             -                    -
    Depreciation                                  -                    -
    Total operating expenses                   46.4                 46.4
                                                  -              1,130.2
    Operating income
                                                  -                535.3
    Interest income 
    Interest expense                              -                  0.8
    Other income/(expenses),
    net                                           -                (17.3)
    Total other expenses,
    net                                           -                 (2.9)
    Income from continuing
    operations before income
    taxes and equity in
    earnings of equity
    method investees                              -                (19.4)
    Income taxes                                  -                515.9
    Equity in earnings of
    equity method investees,
    net of tax                                    -               (132.5)
    Net income attributable
    to Shire plc                                  -                  0.5
    Impact of convertible
    debt, net of tax                              -                383.9
    Numerator for diluted
    EPS                                           -                 16.8
    Weighted average number
    of shares (millions) -
    diluted                                       -                400.7
    Diluted earnings per ADS                      -                589.1
                                                  -                204.0c


 

Unaudited results for the six months to June 30, 2009
 

Non GAAP reconciliation
 

    
                             US GAAP                Adjustments
                                                  Acquisitions  Divestments &
                                June Amortization             reorganizations
                                 30,      & asset  integration & discontinued
    6 months to,                2009  impairments   activities    operations
                                              (a)          (b)           (c)
                                  $M           $M           $M           $M
    Total revenues           1,447.4            -            -            -
 
    Costs and expenses:
    Cost of product sales      180.0            -        (1.4)         (3.0)
    Research and development   344.6            -    

Posted: August 2010


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