Shire plc (NASDAQ:SHPG) Q2 2018 Earnings Conference Call - Final Transcript

Jul 31, 2018 • 09:00 am ET

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Shire plc (NASDAQ:SHPG) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Flemming Ornskov

financial performance later in this presentation.

So now please turn to Slide number 6. I would like to discuss our three areas of growth. First, our immunology franchise delivered 13% year-over-year product sales growth, fueled by the strong performances of our immunoglobulin business. Second, our recently launched brands contributed over $600 million in product sales in the quarter, up 67% versus the prior year, and continue to build positive momentum as we launch them in additional markets. Finally, we delivered solid 12% growth in international markets due to volume demand growth and a benefit from foreign exchange movements.

Please turn to Slide number 7. We continue to advance our innovative late-stage pipeline with 16 programs in Phase III and VII in registration. We achieved important milestones, including the initiation of our Phase III studies for SHP647 in Crohn's disease and the label expansion of CINRYZE to pediatric patients in the U.S. I would note that the potential EU approval for XIIDRA will be delayed as we withdrew from the decentralized procedure for XIIDRA's European marketing authorization application, and are instead targeting the fourth quarter of 2018 for resubmission through a so-called centralized procedure.

Looking ahead, we have several key pipeline milestones in the second half of this year, including the August PDUFA date for lanadelumab for hereditary angioedema and the December PDUFA date for prucalopride for chronic idiopathic constipation, both occurring in the U.S.

Now please turn to Slide 8. We're pleased that the FDA approved our new state-of-the-art plasma manufacturing facility near Covington in Georgia for the production of GAMMAGARD LIQUID. This supports our long-term commitment to the immunology business by increasing our plasma manufacturing capacity. We commenced shipments with commercial shortly after receiving approval, and also expect to file a second submission to the FDA later this year or early next year for the production of albumin in the same facility.

Let me now hand it over to Thomas, who will discuss our financials in more detail.

Executive
Thomas Dittrich

Thank you, Flemming. Turning to Slide 10. Our strong focus on the business drove solid product sales performance in the second quarter. Product sales grew 6% year-over-year, with 3% growth in the U.S., 6% international growth at constant exchange rates and a 2% point benefit from foreign exchange. We delivered a solid performance despite the loss of roughly half of LIALDA sales or about $100 million due to U.S. generic competition. Excluding the impact of generic LIALDA, product sales growth was 9% or 7% at constant exchange rates. We did see an approximate $100 million benefit from inventory stocking in the quarter, which we would expect to impact sales in the third quarter.

Moving to Slide 11, now our sales by franchise. As you may recall, in the first quarter of 2018, we introduced our new divisional structure and reporting as an initial output from our strategic review of the Neuroscience business. We also indicated that we would report on the next phase of our strategic review in the second half