Shire plc (LON: SHP, NASDAQ: SHPG), the leading global biotech company focused on rare diseases, today announced unaudited results for the three months ended September 30, 2018.
Flemming Ornskov, M.D., M.P.H., Shire Chief Executive Officer, commented:
“We continue to deliver solid growth and pay down our debt while advancing our late-stage pipeline. Our focus on commercial execution led to 6% growth in product sales to $3.8 billion in the third quarter overcoming foreign exchange headwinds. Our growth was once again driven by our Immunology franchise, recently-launched products, and expansion in international markets. Proceeds from the sale of our Oncology franchise coupled with strong free cash flow allowed us to reduce net debt by $3.9 billion year to date.
“We recently launched TAKHZYRO, the first monoclonal antibody to prevent hereditary angioedema (HAE) attacks, in the U.S. We also gained approval for this innovative treatment in Canada and received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) recommending marketing authorization in Europe.
“Takeda’s proposed acquisition of Shire remains on track to close in H1 2019, subject to shareholder approval of both companies and additional regulatory approvals. While integration planning is ongoing, our solid performance through the third quarter of 2018 demonstrates our continued focus on delivering for patients and executing against our key priorities.”
Financial Highlights
| Q3 2018(1) | Reported Growth(1) | Non GAAP CER(1)(2) | |||||
| Product sales | $3,753 million | +6 | % | +7 | % | ||
| Total revenues | $3,872 million | +5 | % | +6 | % | ||
| Operating income from continuing operations | $956 million | +35 | % | ||||
| Non GAAP operating income(2) | $1,475 million | -2 | % | -1 | % | ||
| Net income margin(3)(4) | 14 | % | -1ppc | ||||
| Non GAAP EBITDA margin(2)(3)(4) | 42 | % | -2ppc | ||||
| Net income | $537 million | -2 | % | ||||
| Non GAAP net income(2) | $1,119 million | -3 | % | ||||
| Diluted earnings per ADS(5) | $ | 1.75 | -3 | % | |||
| Non GAAP diluted earnings per ADS(2)(5) | $ | 3.64 | -4 | % | -4 | % | |
| Net cash provided by operating activities | $858 million | -19 | % | ||||
| Non GAAP free cash flow(2) | $971 million | +8 | % | ||||
(1)Results include the Oncology franchise until the date of its sale on August 31, 2018.
(2) The Non GAAP financial measures included within this release are explained on pages 27 – 28, and are reconciled to the most directly comparable financial measures prepared in accordance with U.S. GAAP on pages 19 – 22.
(3) Percentage point change (ppc).
(4) Calculated as a percentage of total revenues.
(5) Diluted weighted average number of ordinary shares of 921.1 million.
Product sales growth
All franchises demonstrated product sales growth on a Non GAAP constant exchange rate basis, excluding Oncology which was sold during the quarter.
Encouraging early trajectory of TAKHZYRO since U.S. launch on August 23, 2018 with $51 million in initial launch stocking.
Growth of recently-launched products of 45%, primarily due to TAKHZYRO, ADYNOVATE, CUVITRU, and XIIDRA.
Operating performance
Generated Non GAAP diluted earnings per ADS of $3.64, a decrease of 4%, as product sales growth and operating expense discipline were offset by unfavourable foreign exchange, lower gross margins, and unrealized losses on equity investments.
Reported Non GAAP EBITDA margin of 42%, a slight decline from Q3 2017, primarily due to lower gross margins, as Q3 2017 reflected favorability from the timing of changes in the costs to manufacture certain products, partially offset by ongoing cost discipline and operating expense synergies.
Cash flow
Proceeds from the sale of our Oncology franchise and strong free cash flow during the year enabled a $3,915 million reduction in Non GAAP net debt since December 31, 2017.
