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Shares of Shire plc-ADR [NASDAQ:SHPG] jumped 7.73% to close at $227.71 a share on Tuesday, after the company announced its successful topline results from the OPUS-3 Phase 3 trial for its dry eye disease
(DED) drug lifitegrast. The company said it is looking forward to resubmitting the results to U.S. Food and Drug Administration (FDA) in the first quarter of 2016. On October 19, the FDA declined to approve lifitegrast and requested an additional clinical study as part of a complete response letter to the company’s new drug application for
lifitegrast.
Lifitegrast is a novel small-molecule integrin inhibitor. It binds to the integrin LFA-1 (lymphocyte function-associated antigen-1), a cell surface protein found on leukocytes, and blocks the interaction of LFA-1 with its cognate ligand ICAM-1 (intercellular adhesion molecule-1). ICAM-1 is over-expressed in corneal and conjunctival tissues in dry eye disease. LFA-1/ICAM-1 interaction contributes to the formation of immunological synapses resulting in T-cell activation and migration to target tissues.
Dry eye is a multifactorial disease of the tears and ocular surface that results in symptoms of discomfort, visual disturbance, and tear film instability with potential damage to the ocular surface. It is accompanied by increased osmolarity of the tear film and inflammation of the ocular surface.
If approved by the FDA, Shire is planning for a potential U.S. launch next year. Lifitegrast is expected to generate sales of $1 billion by 2020. Liftigrast will be competing with Allergan [NYSE:AGN]’s Restasis (cyclosporine ophthalmic emulsion), which now dominates the dry eye pharmaceutical market. In the second-quarter 2015, revenues from Restasis were $325 million.
On Friday, Shire reported third-quarter 2015 total revenues of $1.655 billion, compared to $1.597 billion in 2014, up 4% year-on-year, and non-GAAP diluted earnings per American Depository Share (ADS) of $3.24 in 2015, compared to $2.93 in 2014, up 11% year-over-year. Wall Street expected non-GAAP diluted earnings per ADS of $2.87 on revenues of $1.64 billion.
Sales during the quarter of Vyvanse (lisdexamfetamine) for treatment of attention deficit hyperactivity disorder were $427 million, up 20% year-on-year. Sales of Cinryze (C1 esterase inhibitor [human]), an injectable drug used to help prevent swelling and/or painful attacks in teenagers and adults with Hereditary Angioedema (HAE), were $187.5 million, up 29% in the same period last year.
Sales of Lialda/Mezavant, anti-inflammatory drugs used to treat inflammatory bowel diseases, such as ulcerative colitis and mild-to-moderate Crohn's disease, were $176 million, unchanged year-over-year. Sales of Elaprase (idursulfase), for treatment of patients with Hunter syndrome, were $134 million, down 21% year-over-year. Sales of Firazyr (icatibant), for treatment of acute attacks of HAE, were $123 million, up 25% during the same quarter last year.
In early April, Hayman Capital Management hedge fund manager Kyle Bass filed petitions for Inter Partes Review (IPR), challenging patents on Shire’s Lialda and Gattex. Shire acquired Gattex through its acquisition of NPS Pharmaceuticals in February this year. Sales of Gattex, for the long-term treatment of Short Bowel Syndrome, were $48 million in the third-quarter of 2015. On October 7, the U.S. Patent Trial and Appeal Board (PTAB), part of the U.S. Patent and Trademark Office, said it will allow the IPR petition on Lialda to go to trial.
The Inter Partes Review procedure was initially created as a quick and relatively inexpensive way for technology companies and retailers to deal with so-called patent trolls. Biopharmaceutical and biotechnology companies say Kyle Bass abuses the patent review process by short-selling pharmaceutical shares that drop when a patent review challenge is filed.
Shire said that the company continues to pursue their acquisition of Baxalta Inc.
[NYSE:BXLT]. In early August, the company announced an unsolicited $30 billion bid for
Baxalta, in an all-stock offer, worth $45.23 a share at August 3 market prices, to create the world's leading rare diseases specialist with combined product sales of $20 billion by 2020. If the deal is approved, Baxalta shareholders would receive 0.1687 Shire American Depository Receipt, or
ADR, for each Baxalta share.
Shares of SHPG are up 4.22%, recovering along with the biotech and healthcare sectors, since September 21 when U.S. presidential candidate Hillary Clinton sent the sectors tumbling when she went on a Twitter frenzy and sent out a tweet about “outrageous” price gouging by a pharmaceutical CEO and that she would reveal her own drug affordability plan. Many believe that Clinton's plan will not go anywhere since several items in her proposal would be very difficult to pass in Congress.
Technically, SHPG has run up 16.17% from the October low of $196.01 a share. There is a 100-day SMA head resistance at $236.55 a share. Overall, the stock is moving in an ascending wedge, with the top of the trading range at about $280 a share.
The 12-month target price for SHPG on Yahoo Finance is $275.38 per share. Shire will report its fourth-quarter 2015 earnings in January 2016. Analysts are expecting earnings per ADS of $2.95, up 12.2% compared to the same period last year, on revenues of $1.7 billion, up 7.8% year-over-year. The full-year 2015 estimate is $11.51 per share, up 8.6% year-on-year, on revenues of $6.41 billion, up 6.4% year-over-year.
Disclosure: Long positions in SHPG and AGN with no recommendations. No positions in other companies mentioned. |
