) gained 1.43% following the news of an acquisition agreement with
) as well as better-than-expected second quarter results.
Thereafter, shares lost 1.6%. Overall, shares are down 0.2% since
the company released second quarter results.
Shire reported second quarter 2014 earnings (excluding special
items and amortization) of $2.67 per American Depositary Share
(ADS), up from $1.88 per ADS in the year-ago quarter and beating
the Zacks Consensus Estimate of $2.41.
Quarterly revenues increased 20% to $1.5 billion, beating the
Zacks Consensus Estimate. The increase in revenues was driven by a
robust growth in product sales.
Quarter in Detail
Product sales went up 22% y/y to $1.5 billion. Growth was driven
by attention deficit hyperactivity disorder (ADHD) drug Vyvanse (up
20% to $360 million), hereditary angioedema (HAE) drug Firazyr (up
80% to $89 million) and Fabry disease drug Replagal (up 14% to $131
The addition of Cinryze from the erstwhile ViroPharma
contributed $130 million to product sales. In total, sales of
products from ViroPharma contributed $141 million to the total. We
remind investors that Shire acquired all of the outstanding shares
of erstwhile ViroPharma in Jan 2014 for $50 per share in cash or
approximately $4.23 billion.
Royalties declined 20% to $29.2 million in the second quarter.
Adjusted research & development (R&D) costs declined 10.0%
to $209.1 million in the reported quarter. Selling, general &
administrative (SG&A) expenses increased 10.0% to $392.6
2014 Outlook Updated
Shire expects product sales growth in high teens in 2014
compared to the previous guidance of mid-to-high teens growth.
Royalties and other revenues are expected to decline 10%-15% in
2014 from 2013 levels. Shire now expects earnings in 2014 to grow
at a low-to-mid 30% range as compared to the previous guidance of a
mid-to-high 20% range.
In Jun 2014, Shire agreed to conduct pediatric clinical studies
following FDA's request to investigate the potential use of Vyvanse
for the treatment of ADHD in children aged between 4 and 5
Shire also plans to submit a New Drug Application (NDA) for
pipeline candidate lifitegrast in the first quarter of 2015,
following a meeting with FDA in May 2014.
During the quarter, Shire decided to discontinue further
development of Vascugel for the treatment of acute vascular repair
in patients undergoing hemodialysis.
Shire completed the acquisition of biopharmaceutical company,
Lumena Pharmaceuticals in the second quarter thereby adding two
candidates, SHP625 and SHP626, to Shire's pipeline. Earlier in the
month, Shire acquired privately-held, biotechnology company,
Fibrotech which focuses on the development of small molecules for
the treatment of renal diseases and fibrosis. The acquisition of
Fibrotech has added another candidate, SHP627 (formerly FT011), to
Shire's pipeline, which is being developed for patients suffering
from renal impairment.
Shire Agrees to be Acquired by AbbVie
Concurrent with the second quarter results, Shire announced that
it finally agreed to AbbVie's acquisition proposal. Under the terms
of the offer, shareholders of Shire will receive £53.19 for per
Shire share (£24.44 in cash and 0.8960 ordinary shares of the
merged company for each Shire share held).
Shire currently carries a Zacks Rank #3 (Hold). We view the
acquisition by AbbVie as positive given the price offered. AbbVie's
proposal of £53.19 per Shire share represents a significant premium
of 53% over the unaffected stock price of Shire of £34.67, before
the merger talks surfaced on May 2, 2014. Moreover, Shire
shareholders will have a 25% stake in the merged company.
Investors looking for better-ranked stocks may consider
). Both carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
SHIRE PLC-ADR (SHPG): Free Stock Analysis
ABBVIE INC (ABBV): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
ALLERGAN INC (AGN): Free Stock Analysis Report
To read this article on Zacks.com click here.