Shire shares shoot up as earnings surge 20%

LONDON (ShareCast) - Earnings at Shire (Xetra: S7E.DE - news) surged 20% in the first quarter as sales at the Dublin-headquartered drug company overcame a sharp drop in its Intuniv attention deficit disorder drug and dollar headwinds. Revenues grew 15% to $1.49bn thanks to 13% growth in product sales as other drugs stepped up to replace a 79% fall in Intuitiv due to competition from generic rivals. Foreign exchange headwinds from the strengthening US dollar held back product sales by 4 percentage points.

Income from continuing operations rose 63% to $412.9m, or 69.7 cents per share as research and development (R&D) and marketing costs rose at a slower rate than revenues, with Jefferies noting the profit was a 9%-10% beat of analyst expectations.

Broker The strongest product growth came from Vyvanse for binge-eating, which was up 19%, Cinryze and Firazyr for rare swelling disorders up 73% and 23% respetively, and Lialda/Mezavant for ulcerative colitis rising 15%.

Earnings rose 20%, or 24% at constant exchange rates, to $2.84 and cash generated from operations swelled 56% to $516m, with free cash flow up 135% to $542m.

The company, which last year deflected a $52bn takeover by US rival AbbVie (Xetra: 4AB.DE - news) , admitted product sales growth was likely to be lower through the remainder of 2015 than in the first quarter, principally due to stronger comparatives.

But chief executive Flemming Ornskov expressed management's continuing confidence in delivering adjusted EPS growth in the mid-single digits, on projected low-to-mid single digit product sales growth.

When excluding Intuitiv and on a constant exchange rate basis, the company expects product sales growth in the mid-to-high single digits, and low double digit product sales growth.

"During the first quarter, Shire continued to exemplify the characteristics of a leading biotechnology company, delivering strong revenue growth and cash generation, while materially advancing our innovative pipeline and boosting our future growth profile through the acquisition of NPS." "Our continued financial performance driven by the strength of our commercial operations, focus on efficiency, and breadth of our innovative pipeline are indicators of our bright future." Shire shares, which have recently been boosted by renewed merger and acquisition speculation lifting the sector, were almost 3% higher by 14:30 London time.