Shire says still pursuing Baxalta; Q3 earnings rise

* Q3 earnings comfortably beat market expectations

* Says still focused on Baxalta (Berlin: 9BX.BE - news) bid

* Shares (Berlin: DI6.BE - news) up 3.6 pct (Adds CEO comments, share price)

By Paul Sandle

LONDON, Oct (HKSE: 3366-OL.HK - news) 23 (Reuters) - Pharmaceutical firm Shire (Amsterdam: QB8.AS - news) said it was still pursuing its attempt to buy U.S (Other OTC: UBGXF - news) . company Baxalta, as it posted a better-than-expected 11 percent rise in third-quarter earnings on Friday.

Shire (Xetra: S7E.DE - news) went public with its proposal to buy Baxalta, recently spun out of Baxter, in August, after it failed to generate much excitement among Baxalta's board for its plan to forge a global specialist in rare diseases.

Since then, a 24 percent drop in Shire's share price has made its all-share proposal much less appealing to Baxalta's shareholders.

"We continue to believe the proposed acquisition of Baxalta represents a highly strategic combination, delivering an expected $20 billion in sales by 2020 and a world-leading rare diseases portfolio," Chief Executive Flemming Ornskov said.

Ornskov declined to say whether Shire was considering sweetening its bid for Baxalta.

He said biotech stocks had come down by about 19 percent on average since Shire revealed its approach, and it would take time for shareholder expectations of value to adjust, on the part of both Shire and Baxalta investors.

"This is an attractive opportunity, but it's going to take some time," he said.

"We are totally committed to continuing to pursue this transaction, but as we've also shown this quarter, we are not obsessed: we're disciplined and we continue to deliver on our commercial execution and on our pipeline execution."

Shire comfortably beat market expectations for earnings, helped by a low tax rate and slightly better than expected sales of Vyvanse, its hyperactivity blockbuster which is now also prescribed to treat binge eating disorder.

Sales of the drug rose 20 percent to $427 million.

Analysts at Jefferies, who have a "buy" rating on the stock, said it was a strong quarter, with earnings per share of $3.24 coming in well head of both its and consensus expectations of $2.91 and $2.88 respectively.

Revenue rose 4 percent to $1.66 billion.

Shares in Shire were trading up 3.6 percent at 4,602 pence at 1338 GMT. (Editing by Jason Neely and Mark Potter)