Shire’s recent stockprice falls seem to be over and appear to have been a blip as analysts note that worries about the speed of the switch of attention deficit hyperactivity disorder medications from Adderall XR to Vyvanse are exaggerated.
Vyvanse (lisdexamfetamine dimesylate) was launched in July in the USA and the company is looking to switch children to Vyvanse from its current top-selling ADHD blockbuster Adderall XR (mixed amphetamine salts), which becomes genericised in 2009. However early sales data has not been eye-catching and caused analysts at JPMorgan to issue a note saying that they may have to lower their forecasts and this led to Shire shares falling 11% in just a couple of days.
However not all analysts share JPMorgan’s fears and David Steinberg at Deutsche Bank said that although the launch to date has not met the expectations of some observers, “we believe that it is far too early to conclude that Vyvanse’s rollout will not be successful”. He noted that the ‘back-to-school’ season has only just begun, and “many parent-teacher, parent-physician conferences will not even take place until October”, therefore a “reasonable measuring stick for success will likely be in mid-November”.
Mr Steinberg’s view was echoed by Navid Malik at Collins Stewart who said that Shire currently has a 30% share of the ADHD market, up from 28% around the second quarter. Moreover as children return to school, “we expect the Vyvanse switching strategy to swing into action more aggressively – and believe that market fears over the switch are unfounded”.
Mr Malik also noted the US Food and Drug Administration’s announcement that it is to analyse data from 500,000 patients who took ADHD drugs between 1998 and 2005 following concerns over cardiovascular risks. He said that one of the central issues related to this is that a number of children who are prescribed ADHD drugs can accidentally take overdoses and “in this respect we believe that Vyvanse will offer a timely solution”.
He added that Vyvanse “has a number of highly attractive features”, namely that the amphetamine salt cannot easily be extracted, a patient is less likely to overdose on the drug and it appears to have a good cardiovascular safety profile. “Given the current concerns, these are outstanding features to drive a strong switching strategy,” Mr Malik added.
Shire noted that Vyvanse is the first ADHD stimulant to have the results of abuse liability studies reflected in its FDA-approved product label. However the firm has also noted that all such medications, including Shire’s product, have been classified as Schedule II Controlled Substances by the US Drug Enforcement Administration (DEA) and this recognises that there is potential for abuse. As such, Vyvanse therefore must be prescribed under the same controls and restrictions as similar drugs.
Mr Malik concluded by reiterating his view that Shire is “an excellent strategic fit for a mid- or large-cap pharma company”, saying that given the recent M&A deals in the biologicals sector, “there is a significant degree of appetite for companies in the specialty space with a biologicals focus”.
