UK group Shire Pharmaceuticals saw its performance dive into the red during the third quarter of 2005, reporting losses of $625.2 million dollars compared to earnings of $77 million for the year-ago period.
The dramatic turnaround was mainly the result of incorporating $673.0 million write-off of in-process research and development acquired with the group’s $1.6 billion purchase of Transkaryotic Therapies [[22/04/05d]] [[28/07/05g]], as is required under US generally accepted accounting principles.
However, the substantial loss masks a comfortable increase in sales during the period, which rose 9% to $376.1 million, representing 82% of total revenues, as well as a 7% hike in royalty revenues to $60.2 million (16% of total sales).
Growth was driven by a strong performance by the firm’s attention-deficit hyperactivity disorder drug Adderall XR (mixed amphetamine salts extended-release), jumping 18% to $165.9 million, its turnover helped by a US Food and Drug Administration nod for use in adolescents earlier this year [[25/07/05e]]. In addition, TKT’s Fabry disease therapy Replagal (agalsidase alfa) added $16 million to sales, while epilepsy treatment Carbatrol (carbamazepine) leapt 44% at $16.1 million.
But quarterly performance was also hampered by rising expenses, as selling, general and administration costs soared to $154.9 million from $104.8 million for the third quarter of 2004, propelled by four product launches during 2005, incremental costs associated with sales forces, $7.0 million related to TKT and $4.5 million on setting up the new listed holding company for the Shire group, the company said. This was magnified by a 28% increase in R&D costs leapt to $74.3 million, on the addition of two projects following the TKT buy.
Commenting on the results, chief executive officer Matthew Emmens said: “Our achievements during this quarter reflect a commitment to grow our underlying business while expanding our portfolio of new products. The successful acquisition of TKT expands our therapeutic offerings into the promising area of human genetic diseases, and brings us closer to achieving our objective of rolling out six new products in the US and Europe by the end of 2006.”
Summing up the firm’s potential, Emmens remarked: “Shire has the products and execution capabilities to look ahead to a promising future.” And investors seemed to agree, as the group’s Nasdaq-traded shares were exchanging hands up 2.9% at $37.72 at close of play yesterday, only to rise a further 3.13% to 38.13 in after-hours trading.