Angus Russell - CEO
Graham Hetherington - CFO
Sylvie Gregoire - President, Human Genetic Therapies
Mike Cola - President, Specialty Pharmaceuticals
Florent Cespedes - Exane BNP Paribas
Good morning and good afternoon everyone, thank you for joining us today for Shire’s second quarter 2010 financial results. By now you should have all received our press release, and should be viewing our presentation via our website on shire.com. If for some reason you have not received the press release or are unable to access our web site, please contact Souheil Salah in the UK Investor Relations department on +44-125-689-4160, as he will be happy to assist you.
Our speakers today are Angus Russell, Graham Hetherington, Sylvie Gregoire, and Mike Cola.
Before we begin, I would refer you to slide two of our presentation and remind you that any statements made during this call which are not historical statements, will be forward-looking statements, and as such will be subject to risks and uncertainties, which if they materialize could materially affect our results.
Today’s agenda is as follows on slide 3. We begin with opening remarks of Shire’s performance and highlights from Angus. Then Graham will continue with the financial review. Mike will follow with a review of our Specialty Pharma business performance, and Sylvie Gregoire will update you on the latest developments in our HGT business. Angus will then summarize the key points for this presentation, and we’ll then open up for your Questions.
As always, we are requesting that you a maximum of two questions per person, so that everyone gets a chance to ask their questions. I will be more than happy to follow-up offline for any subsequent questions or clarifications. Thank you much for your understanding, and now I’ll pass it on to, Angus.
Okay thanks Eric, and hello everyone, lets turn to the opening slide which is number five. As you can see from the title, I believe these results and what you’ll hear throughout this conference call will demonstrate that Shire is performing really well on all fronts. These financial results I believe are truly excellent, and you can see that with the revenues up 35% to $849 million in the quarter. As you can see from the sample I point here, revenues are now ahead of pre-ADDERALL XR authorized generic levels just after 15 months.
That’s a remarkable achievement and one that I don’t think I have ever seen in this industry, if you remember ADDERALL XR was almost 50% still of our revenues just over two year ago. So to be back so quickly to sales in excess of that level and with a tremendous growth platform ahead for many years to come, truly a remarkable performance.
Core product sales and those are the ones excluding ADDERALL XR were up 39% to $684 million. Non-GAAP diluted earnings per ADS were $1.03, well ahead, I believe of market expectations and that’s up 71%, versus the same quarter last year, and the strong cash generation has also been very strong this quarter at $416 million. And on the basis of all of these results I’m happy to say the board has authorized an increase in the first interim dividend of 5% in US dollar terms.
Let me turn to the next slide now and talk a little bit broader about the strategy, which again I believe from these results, is showing clear evidence of delivering. We have now eight global products driving growth, and they’re all very much focused on specialist prescribers meeting customers’ very high unmet medical needs. We continue to extend our geographic reach, and the proposed acquisition of Movetis NV adds to our core GI business in this respect, and hopefully will soon allow us to say that we have nine global products driving growth well into the future.
We’ve got a lot of pipeline progress on key development programs, and both Mike and Sylvia make some comments on that in their presentation. I believe we are very well placed to absorb industry macro challenges, and these have been quiet numerous in the year-to-date. We’ve had US healthcare reform proposals; we’ve had some adverse pricing impact in Europe, not to mention other macro economic effects moving against us, such as exchange rates. And despite all of that we’ve not only been able to just maintain the guidance you’ve seen from these results, so we’ve actually upgraded our guidance while taking onboard all those adverse changes.
Full year earnings, therefore, we believe and are trending towards $4.00 per ADS. If we had hit that $4.00 mark, it will indeed represent a 15% increase on our 2009 earnings. And I believe that gives us a great platform to achieve our inspirational target which remains the midteen’s sales growth on average between 2009, and 2015.
So having made those opening remarks, let me now handover to Graham who will take you through these financial results in a little bit more detail.
Thank you Angus, good morning, good afternoon. I’ll be covering three things today, the first, the drivers of another very strong earnings performance that Angus has just described. Second, reinforcing how these results represent a real breakthrough in Shire’s journey as the growth of core portfolio is now fully visibly in our total results. Third I reinforce what Angus has just been saying, but despite some external headwinds why we are able to increase our expectations for earnings in 2010.
But first on slide 8, an overview of our reported performance. In the first clean quarter since losing exclusivity of ADDERALL XR, it’s an outstanding result. Total revenues are up 35%, EBITDA up over 100% demonstrating value enhancing operating leverage, and EPS increasing by over 70% despite an unusually low tax charge last year. Significantly, we’ve doubled cash generation compared to the last year.
The next chart nine breaks out our revenue growth in more detail. The big story is the growth of our core portfolio generating nearly $200 million more sales compared to last year, with growth at 39%. You can see that the impact of foreign exchange on our revenues has started to move into negative territory in the second quarter, this is a trend we are seeing continue into the second half.
ADDERALL XR has benefited from its sustained market share. Sales deductions were high, at 74%, offset by some stocking compared to last year when we saw significant fee stocking following the launch of the authorize generics. I expect the contribution from ADDERALL XR to reduce in the second half, and we’ll give you more specifics later in the presentation.
We benefited from another healthy contribution from royalties. The Royalty we now receive from Impax is higher than the receipts from Teva last year. Again, I’ll touch more on the dynamics for the balance of 2010 later.
So moving to chart 10, where you can see the sources of our growth. It’s broadly based both by product and geography. We now have six products with annualized sales of over $200 million. From the ADHD franchise, which Mike will expand on, we saw further market share gains from VYVANSE.
Sales deduction for VYVANSE spiked at 37% in the quarter, I expect them to return to nearer 35% for the balance of the year. We achieved significant gains from the successful launch of INTUNIV. Prescription demand allowed us to recognize the last $19 million of deferred launch sales, and demand also pulled through an additional $29 million of pipeline inventory.
In GI LIALDA continued to gain market share, and we saw significant growth from our HGT franchise. Sylvie will be expanding on this, but looking at this chart here, ELAPRASE continued to deliver double-digit growth, despite foreign exchange headwinds. REPLAGAL is clearly benefiting from the significant patient switches we’ve supported.
In the second quarter specifically, we also saw accelerated sales of product the physicians were securing for their patients. Some of this will be used for treatments in the second half, so we’ll see a reduced rate of growth for the rest of the year. VPRIV is now generating accelerated revenues from commercialization, following the approval in the U.S. and pre-approval reimbursement in other parts of the world. Our young portfolio represents an exceptionally strong foundation, and now visible demonstration of our future growth prospects.
Turning to next chart 11. Our actual dollar spend on R&D and SG&A increased compared to last year when we were managing down expenditure as we faced authorized generic competition from ADDERALL XR. You can now see operating leverage from the total business, and critically this reinforces Shire’s breakthrough this quarter.
Both R&D and SG&A percentages are now starting to reduce as a percentage of total product sales, as well as a percentage of core product sales. Given the strong performance of the business and the opportunities we see for future growth, we are continuing to make investments in 2010 and beyond. And even with this investment we’ll continue to generate operational leverage from the growth of our core portfolio, coupled with solid cost management.
Let’s look at our cash generation on Chart 12. Again this is a reinforcement of this breakthrough quarter for Shire, $0.4 billion of cash generated in the quarter which compares with $0.2 million last year. The key drivers of this increase, is the additional $200 million of core product sales this year. This cash generation has funded the acquisition of our HGT site in Lexington; with this we’ve secured a significant strategic asset while creating significant value from the use of our cash resources. Even with this investment, we saw a further reduction of our net debt, which is now less than $400 million. We continue to have a strong and flexible funding position to manage future refinancing and support investment to further enhance the quality of our business as we demonstrated yesterday with the proposed acquisition of Movetis for cash.
Turning now to the balance of 2010 and the dynamics that will support the growth in full year earnings. On Chart 13, I am focusing on ADDERALL XR. Sales in the second quarter reflect high sales deductions offset by increased inventories pulled through following supply shortages were experienced in the first quarter when inventories fell to 15 days. With 27 days of inventory at the end of the second quarter, we are now inside our normal range of 20 to 30 days. As we move forward, there are a number of dynamics over which we have limited influence. These include the continued potential to some brand erosion and constant de-stocking, and our reliance on sufficient DA quotas to support supply to the brand, and the two authorized generics. My working assumption now is the ADDERALL XR product sales and related royalties, together will be around $400 million in 2010.
Looking out beyond 2010, we increasingly believe that it is more likely than not that there will only be two authorized generics. The ADDERALL XR franchise is likely to generate significantly greater value over time than the market is currently forecasting.
Finally, let’s look at the dynamics of the total business on Chart 14 that support our increased earnings expectations. We now see as Angus said, EPS per ADS trending towards $4 which represents 15% growth compared to last year. And just to reinforce, this guidance includes (inaudible) to the proposed acquisition of Movetis. It’s important to reinforce that we’ve been able to increase our guidance, despite a number of external dynamics that have emerged in the last six months. These are highlighted at the top of the chart.
Firstly, US healthcare reform, which I covered in some detail on the first quarter call. Secondly, European pricing, where austerity measures are putting pressure on reimbursement and pricing in the EU. Shire’s exposure is limited, since only a quarter of our product sales are into Europe, and nearly two thirds of these sales are often drugs, which in most cases are excluded from the measures being taken. We are dropping between a $15 million and $20 million impact in 2010. And thirdly, foreign exchange rates, Shire remains a dollar reporting company with 70% of our revenues generated in dollars. So our exposure is limited. You can see from the updated ready reckoner at the bottom of the page that our most significant exposure is the movement from the Euro to the Dollar. It’s worth reinforcing that our guidance assumes the current depreciated stock rates of around 1.30 euros to $1 for the second half, which is lower than the average rates we experienced in the second half last year and the first half of this year.
Despite of all of these factors, the broad-based underlying strength of the business is allowing us to increase earnings expectations for the year. We’ll continue to see significant growth from our core product portfolio, but the rates of quarterly year-on-year growth will moderate compared to the strengthening comparatives in 2009. And as I said, the sales trajectory of REPLAGAL will moderate in the second half. Royalties will benefit from the continued Impax royalty. As said, we expect the level of royalties from Impax are likely to be lower in the second half, as we will no longer benefit from the Impax launch shipments of their authorized generic. The net result is that we expect full year total royalties to be slightly up from last year.
I still expect our full year gross margins to be in line with the end of 2009, at approximately 86%. You’ve seen our R&D expense start to increase year-on-year, and you’ll see the SG&A doing the same in the second half. Our strong performance is enabling us to increase investments in 2010 and beyond, in the long term growth of the business. And as a result, in 2010, the aggregate dollar increase in R&D and SG&A will be around 10%; at the top end of our previous guidance range is between 5% and 10%.
Finally, our tax rate. We are still looking to rates in 2010, broadly in line with last year’s 25% rate. So another great quarter that has given us the confidence to increase the expectations for earnings in 2010. It also demonstrates that Shire has already broken out from the impacts of losing exclusivity on ADDERALL XR, and reinforces the sustained growth potential of the business going forward. I’ll now hand you over to Mike. Mike?
Thank you Graham. Good morning and good afternoon to everyone. In light of our proposed acquisition of Movetis, we thought now would be a good time to step back and take a look at the strategic imperatives that we faced in specialty only 5 years ago. And take a look at how we’ve progressed against those challenges.
If you think back to 2005, the specialty business was primarily a one product ADDERALL XR, one market US and really one patient type, mostly pediatric focused organization. Obviously there is tremendous risk there, we had multiple generic filers at that time, and we knew we needed to broaden our remit in order to be successful. As Graham has discussed, we have been able to protect the XR franchise to some extent. But really today’s performance is driven by three major areas, and they are multiple products that are growing rapidly in a very dynamic ADHD market, our globalization efforts to bring our products to more patients outside of the US, and investments we’ve made in new uses for our existing products, coupled with the current new pipeline candidates which I will discuss in more detail today.
First let’s look at our ADHD portfolio, obviously the cornerstone of that portfolio is VYVANSE, continues to grow quite nicely with net sales and TRX volume up almost 30%. It’s in a very dynamic market, year-over-year growth of 12%, year-to-date growth of 10% and I’d like to think that Shire gets most of the credit for that market growth. Good progress in an extremely fast growing market, particularly the adult ADHD market.
To move on to INTUNIV, our launch continues to make progress and meet our expectations. Our national share has gone up almost a full point since we last talked to 2.6. We have a significantly higher percentage of the market in the very important child and adolescent psych area with over 18,000 physicians having now prescribed INTUNIV.
Early in the year we had lot of questions about where is that source of business coming from. Will it hurt VYVANSE? Are you going to pull mainly from Strattera? And until the data settled down a bit, we thought it would be best not to share that, and now we feel confident based on the last few months that in fact it’s relatively stable and worth discussing. About 10% of our patients are new starts to INTUNIV, they are new to the market patients, I think that’s good, it helps us grow the market, 37% are switches, and I’ll talk a little bit more about the source of those switches, and 53% roughly have our add-on therapy, so used in combination with another product. 40% of our switches come from Strattera, which is not surprising, although we are not directly targeting Strattera. The others come from the short-acting Alpha 2s and the atypical antipsychotics. So we are pulling very broadly from all parts of the market, and in fact we are being used in concert with many other products in this market. I think that bodes very well for INTUNIV long term. I will come back at the end and give you a bit of an update on our co-administration data, which I think is important to the future.
Finally, EQUASYM continues to provide an excellent footprint for the European ADHD business that expands as it expands. Globalization is important to us at SP, and I think we are actually starting to execute against our globalization plans. VYVANSE is off to an extremely strong start in Canada with a four share after 5 months, just a great job by the Canadian team. VYVANSE which will be known as VENVANSE in Brazil was approved in July, and we are looking for a first half of 2011 launch. Although it’s a relatively small market and it’s growing rapidly, it really is a major milestone for the ADHD franchise as it’s our first VYVANSE approval outside of North America.
VYVANSE European trials are now more than 50% enrolled and on target for a second half of 2011 submission. That’s going as planned, and we will advance a guanfacine-based product in the EU for ADHD. And that will either be INTUNIV as we think we will get 10 years data exclusivity for INTUNIV, or one of the CarrierWave guanfacine programs, which I will discuss at the end of this presentation.
And lastly, we don’t talk much about it but in fact we have the rights for XAGRID back in Japan. We think there is a real market opportunity, and we continue to progress our Phase III efforts. We are looking at potential partners to take that Phase III forward, since we are now terminated with Kirin, our former partner.
I’d like to move to slide 19 of the proposed Movetis acquisition, which we feel is an extremely strong fit with our core GI business. If you think back just 5 years ago, GI at Shire was a relatively small nascent business. It was little over $100 million, it was based on PENTASA. It was completely US focused. Spinning off a reasonable amount of cash, but again no real direction. Since the formation of the GI business unit and the addition of LIALDA, we’ve grown that business five fold last year. LIALDA was our fastest growing product at 68%, and in fact we felt that we needed to invest in this business in a way that filled in some of the gaps that they had in their business. They were the pipeline, not really having a pipeline besides diverticulitis, organizational capabilities around discovering and developing new products, or licensing in new products, and finally creating a much more global footprint outside of the US.
Movetis ticks most of those boxes. It’s a Belgian GI specialty company created in 2006 as a spin off of J&J, this group has tremendous pedigree. They are the foremost experts on motility disorders than they got in the world today. And their lead product is RESOLOR, which is an exciting addition for us. RESOLOR is for meeting the symptomatic unmet need for chronic idiopathic constipation. It has a unique MOA. It’s a selective 5HT4. It doesn’t appear have any of the cardiovascular issues that have plagued this class of drugs. And it has a patent that will protect it through 2020. We think there is significant upside potential for RESOLOR in new populations, peds and males, and other indications, opioid-induced constipation.
Also there is a substantial library of both new chemical energies and potential new products for us that are I’ll say early stage but still exciting. We have MV002, MV003 and then a whole library of new products that we will be working with Movetis to evaluate over the coming months. So very exciting for us, was very happy to get this, it fills in a great strategic need for the GI business unit.
Moving on to slide 20, the R&D pipeline, we are going to focus on new indications first. As you know over the last 12 to 18 months we’ve had many signal finding studies underway for VYVANSE. With a long patent life we can invest in VYVANSE in a way that we haven’t been able to invest in old 505B2s in the past. We haven’t discussed it very much, but we have a pending indication for VYVANSE in the adolescent area, which is 13 to 17 that we think, is important and will launch in the first half of next year.
Why is it important? We know that we’ll lose a significant number of patients in the late teen years, early 20s, if they kind of fall out of the system, based on the fact that they no longer go to a pediatrician, they move on to a primary care physician, and in fact we don’t see those patients show up again until their mid to late 20s. So this is exciting for us. We think it’s a way for us to promote directly to those patients, and keep them in the system. We will have top-line results for depression augmentation. The second half of this year, I hope to be able to discuss them in October, on our next quarterly call. And then we have a number of signal finding studies underway, which actually headline in 2011. Those are negative symptoms of schizophrenia, cognitive impairment and depression, and excessive daytime sleepiness.
As I spoke about earlier, we have some very exciting results with INTUNIV in the co-administration study. It met all its primary and secondary endpoints, and we submitted an sNDA to seek approval as adjunctive therapy along with all comers long-acting stimulants. We hope to get this thing approved first half of next year and launched.
Why is it important to us? Well stimulants and non-stimulants consist of about 12% of the market today as they are co-administered. And that segment of the market is growing 20% annually, which is significant. We think we can be the player in that co-administration market. When you look at the data, it looks as if the co-administered product INTUNIV and long-acting stimulants out perform stimulants alone, or INTUNIV alone. So very exciting data. Look for the first half of next year to launch that.
Finally, diverticulitis with LIALDA, the trial is fully enrolled, and we expect to have headline data in 2012 for a 2013 launch. On to the early stage products and I think the program we’ve had the most questions about is known as SPD 547. This is Guanfacine CarrierWave, obviously important to us as we have 2015 exclusivity on INTUNIV. We’ve had a number of people asking how are you going to continue that franchise, that non-stimulant franchise. And obviously this is an important part of that strategy.
We have completed a feasibility study in humans using micro doses under an experimental IND. These are very small doses. But they are generally predictive of how a product will perform under normal dosing conditions. The results indicate characteristics suitable for entering formal Phase I studies, and really a product that we think can be successful in the marketplace. Those studies will initiate this quarter, and we’ll have more detailed results throughout 2011.
The premise for Guanfacine CarrierWave product is that we could actually improve on the INTUNIV profile. We think we can minimize the known food effect, which is high fat meals causing inconsistent dosing. Inconsistency and the delivery due to PDH and transit time in the gut, very similar for what we did for amphetamine with VYVANSE. And then the hope is that we could possibly reduce the somnolence and sedation side effects. Obviously our target is back-to-school 2014. We think we can go a little beyond that if we have to.
Finally, I’d like to end with SPD 535; it’s a novel platelet lowering agent. The initial proof of concept program targets thrombotic complications from AV graphs and hemodialysis patients. We have the proof of principle data, and we are looking at it as potentially a much broader and equivalent. We hope to review that data with you in October.
With that I will turn it over to Sylvie.
Good morning everybody, good afternoon. It’s been a very successful quarter obviously at HGT, and today what I will do is I’ll first provide you, and perhaps exceptionally with a fair amount of details regarding our products so that we can be as clear as possible with what we expect with these products from a supply and demand perspective going forward. And so let’s turn on page 23 with VPRIV.
VPRIV has had a really strong market uptake since it’s been available to patients, and we have now about 850 patients that are currently on therapy. So you have the bar charts that represents, if I can guide you to it for a moment. In the fourth quarter of last year was when the product was made available pre-approval, and we’ve received approval in the U.S. in February of this year, and we have received the positive CHMP opinion in the EU in June.
So these 850 patients represent close to 20% of the market in for the Gaucher disease in the EUROPE, and over 20% of the markets in the U.S. We do have capacity to support approximately a thousand patients with VPRIV patients in 2010. And the potential to add more patients is linked really to the ability to use material made in the new plant at Lexington. So what we have done is since we see continued strong demand for the product, we have implemented a program to monitor and manage requests for new patients, and are managing our supply and demand in that fashion from new patients.
The next page is 24. We will now discuss the REPLAGAL. We’ve seen again substantial increase in the number of Fabry patients treated with REPLAGAL this quarter. And over 320 patients have either initiated therapy, and about 25% of these patients are new patients, new to enzyme replacement therapy. So on the graph what we have tried to illustrate for you is again the progression of new added patients by quarters since the fourth quarter of 2009. And the dark portion represents really the switches from Fabrazyme and then the light colored blue represents a new patient.
So from that graph you can see that we have as of today, I should say about 2,000 patients currently on therapy. Again, the demand was very strong in July. And then REPLAGAL these patients represent patients that are either on therapy that is reimbursement of patients where the product is commercially available or IND or clinical trial patients. Shire can support about another 150 to 250 patients between now and the end of this year 2010.
We saw the strong demand in July, so we anticipate really reaching that maximum number of patients sometime in early full fall. Our primary goal is to ensure the long term and uninterrupted supply of REPLAGAL to patients on therapy. So we are carefully monitoring the demand relative to our inventory, and we implemented a wait list system once we have reached that maximum number of patients this year.
Now next year, based on our current inventory consumptions and our manufacturing schedule, we will be able to offer REPLAGAL to about 250 to 350 more patients over the course of 2011. And again our ability to substantially increase manufacturing capacity for REPLAGAL is linked to our ability to shift to manufacturing for some of our enzymes to our new facility in Lexington.
Process validation runs for REPLAGAL are scheduled for September of 2010. And we are of course exploring avenues with authorities; several regulatory authorities to determine whether the timeline is going to be accelerated ahead of the currency forecasted early 2012 plant approval. So recall that we filed at the request of the agency about a year ago and our treatment IND for the product in the US that led to the filing of the BLA at that time or in the October timeframe. At that time, we filed with the data that we had, and I think we’ve explained to you before that this data represented the control trial data that existed from the original data and observational longitudinal data on REPLAGAL. The situation has changed quiet significantly as we stand today.
The prolonged and severe shortage of the Fabrazyme has provided really an opportunity for Shire to consider gathering additional from the dynamic and clinical data for REPLAGAL beyond what was original provided to the FDA at the time of the filing of the BLA. So we’ve therefore decided to withdraw the current rolling application and not complete the application at this stage of the BLA, to allow us to gather this data, in addition to the pharmacokinetic data that was required by the agency, in order to really enhance the clinical portion of the application for review, and enhance our competitive position in the marketplace with potentially a better label. We really see now in this market dynamics allowing us to have an opportunity to develop a more robust and standardized package of clinical data for review by the agency, as well as a really better labeling outcome. The timing of additional clinical data would be based on the timing of the accumulation of this data, and the discussions with the FDA regarding their willingness or intent on how long they would like the observations to occur.
In the meantime in the US, we will continue to provide REPLAGAL to patients who’ve been enrolled in the treatment IND and who have obtained REPLAGAL under emergencies. So in conclusion, the strong demand for REPLAGAL worldwide is anticipated to continue for several months, and is also ensuring that patients who are receiving therapy have no interruptions in their treatment, we will manage supply and demand to approximately 2,200 patients this year, and 250 to 350 more throughout the 2011 timeframe. In the current market conditions for the product being prolonged for several months, we will take advantage of this time to collect additional clinical data, in order to bolster the clinical portion of the BLA, and enhance our ability to compete in the marketplace.
Alright, let me switch my queue to switch to page 25 and talk a little bit, and then give you an overview of ELAPRASE. ELAPRASE continues to grow nicely, has grown 17% year-over-year and 20% at constant exchange rate. And that’s mainly driven by increased penetration in new markets, and due to geographic expansion. The bar chart actually is intended to show you that if you focus on the dark portion of the chart, that explains or shows the proportion of patients coming from patients such as Eastern Europe, the Middle Eastern and Latin America.
We now have over a 1,000 patients on therapy, in a disease where is there’s about a 1,500 patients diagnosed. And the revenues were therefore about $100 million this quarter. You’ll recall that we had the rollerball manufacturing capacity in Lexington, and that facility has been approved in Europe thee months ago, and it was also approved by the FDA in this quarter. And in the future we continue to see the growth of the product being driven by these products, by these territories where the product is less well penetrated.
There are other things we can highlight in the second quarter, and those will be discussed on page 26, relative to our pipeline products. Our pipeline is progressing well, and here some of the milestones that occurred in this quarter. FIRAZYR, by the way, has launched now in 18 countries, including the five largest European countries. But importantly, the self administration study has now been completed. You recall this is a study that we are performing, and that will allow the patients to have the drugs and then carry the drugs with themselves and administer them when they have the first symptoms of HAE. And therefore, this is an important competitive advantage over the existing therapies in that market.
So this will lead us to be able to file for a labeling change in the EU in the fourth quarter. And we expect about a six months review for this indication. In the U.S., the fast free trial is continuing to enroll, and is expected to be completed at the end of the year for a targeted complete filing of a complete response at the FDA in the first half of 2011.
In addition to the enzyme replacement therapy that we have, that trial is ongoing for the central nervous systems aspect of Hunter syndrome; we’ve initiated this quarter and the trial has another enzyme replacement therapy for the treatment of another rare disease that has no treatment available and that is Sanfilippo A. Sanfilippo syndrome is, or MPS III is a severe progressive neuro-degenerative disease that is caused by a missing enzymes just like our other enzyme replacement diseases. The treatment here will be administered intrathecally using the same port that is being used for the Hunter syndrome. So Sanfilippo A is the most prevalent of four different forms of Sanfilippo, and it occurs at a rate of about 1 in 115,000 miles.
You’ll probably be interested in knowing where we stand on our manufacturing facility in Lexington. We have therefore started as I said the, REPLAGAL batches, engineering batches on the purification side and the validation batches will be produced in the fall. We have also initiated the engineering batches on the cell culture side of the facility, and we expect to start the validation batches also for the cell culture part of the facility in the fall. And as I’ve mentioned, we’re looking to work with regulatory authorities to see if the material produced from these branches can be accelerated for use into the various markets around the world.
So at this point, I think I’ll hand over to Angus who will give you some concluding remarks.
Thanks very much Sylvie. So turning to slide 28, just wanted to highlight a number of key events to lookout for in the second half of this year. You’ve heard from both Mike and Sylvie that there is tremendous progress with our pipeline, we are hitting a number of milestones within the pipeline. And this is very important obviously in providing great opportunities that will start kick in towards the end of our current envisioned strategy target period of 2015. This will provide us, we believe, with a great platform to sustain and grow our business well beyond 2015.
So the things to look out for are listed on this slide. Mike already mentioned, VYVANSE will be an update from the Phase II non ADHD trials in depression. Also the novel platelet lowering agent he highlighted, where he said that began work on proof of concept studies, SPD-535, will be a further update in the second half of the year as that goes through its proof of concept.
Sylvie mentioned VPRIV. We expect to get the final approval from the EU commission, and go to a full launch situation across the EU with VPRIV. And then with FIRAZYR, obviously self-administrations, Sylvie highlighted a key to continuing to grow that product over the coming years.
So turning to the final slide in the deck, 29, just wanted to pull this together and say that I hope by now, the end of our formal presentation, you clearly see that we are not only delivering great growth now, but we have the platform to deliver and sustain that growth well into the future. We’re delivering excellent results I believe, total revenues are up 35% in this market with a number of adverse challenges and companies within our sector facing even greater challenges of their own. 35% stands out as a tremendous top quarter half performance.
2010 full year earnings therefore, are now being raised and this, Graham and I have both highlighted, we believe their trending that towards $4. And as Graham highlighted in his presentation if we achieve that mark, it will already put us well on the road to achieving our aspiration target, well that represents 15% growth over 2009.
In terms of executing on our strategy, I believe now that there is very, very clear evidence of our ability to now drive growth from this balance portfolio of eight global products. The proposed acquisition of Movetis NV, we are looking forward to completing that deal and brining those people onboard to join Shire. And as Mike highlighted, that will give us a ninth product. So soon hopefully we will be able to talk about nine global products driving growth into the future.
We continue, as I said earlier, to develop and progress our pipeline and hit many key milestone dates. At the same time, we are increasing our global reach you know that’s a key target for us over the next three to five year period. We have offices now in 28 different countries, and all of these products are now being rolled out across those areas markets. And as I said a moment ago, I believe that where we are today coming back so quickly from the loss of ADDERALL XR exclusivity and having this tremendous portfolio of new drugs with good strong exclusivity gives us obviously a very strong platform to achieve future growth. And with that in mind we still feel tremendously confident about achieving our aspirational growth target of growing this company around the mid-teens on average between 2009 and 2015.
So with those formal remarks, let me now hand it back to Graham and I’ll have him coordinate the Q&A session.
Shire Plc. (SHPGY) Q2 2010 Earnings Call August 4, 2010 9:00 AM ET
We do have our first phase of questions comings through now; our first one comes from the line of David Amsellem. Please go ahead.
Just a couple. On VYVANSE maybe you can shed some light on why you saw a spike in sales deductions, and was this a function of negotiations of contracts with managed care organizations, or is there something else we should be thinking about?
One of the primary driver of that is the fact that we announced a price increase on July 1. And that spike was driven by us having to accrue higher rebates relating to that price increase in the second quarter. And that’s why I think it will return to nearer 35% for the balance of the year.
Okay. That is helpful. And then the second quarter, I’m a little surprised that you would see a big ADDERALL XR stocking number going into the summer season. So maybe you can explain what drove the stocking in the quarter.
Well what we saw was de-stocking taking place in the first quarter. And as I highlighted earlier, that de-stocking resulted from supply shortages, and as a result our wholesale inventories dropped to 15 days. We actually experienced some stock-outs as a result of that. And with a sustained prescription demand, the supply has returned and we have been able to move the wholesale inventories is back to more normal levels. And they ended up at the end of the second quarter at 27 days, which is in the normal range of 27 days. So de-stocking frankly, is as much a function of the fact that we were short of products in the first quarter, and we just had to reestablish the supply chain.
Our next question comes from the line of Brian White. Please go ahead.
I’ve got a couple of questions. Firstly, one for Sylvie with regard to REPLAGAL manufactured. Just if it was possible to accelerate REPLAGAL availability from the Lexington plant, I just wonder how many additional patients that would mean in 2011? And the second question is, could you just remind us where we are with respect to the first and second detail on VYVANSE and INTUNIV, just given that there were [indications] moving towards the back-to-school season?
As soon as we you can use material from the manufacturing plant in Lexington that bottlenecks actually our ability to produce REPLAGAL. So we could supply then several hundred more patients as soon as we can ramp up and utilize the manufacturing facility in [Elwhite] where REPLAGAL is being made. So in fact for both products the underpinning of our ability to increase capacity is linked to our ability to use material that is made in Lexington.
So maybe Sylvie it is just worth clarifying so there is no misunderstanding the numbers you gave out about 2011 next year, the range that you gave out to 250 to 350 extra, does that assume this, or would there be (inaudible)?.
The numbers I provided are with our current manufacturing capacity.
As we move from the slower pediatric summer season, its back-to-school, we obviously ramp up our VYVANSE back-to-school initiatives on the ped side. Mix of business as far as mix of detailing remains about the same I don’t think we see any substantial changes going forward. It is just the focus turns from that adult population to the peds as we get into the July-August-September timeframe.
Okay. And just finally, in terms of we don’t hear much on the GSK co-promote, is that still adding substantially to the other indication?
I don’t know that it has added substantially. It has definitely added. Obviously they are going through a whole set of changes, we are trying to work with them through those changes to figure out the best course. They continue to make effort against the original deal and to monitor it.
Our next question comes from the line of Bill Tanner. Please go ahead.
Sylvie, a couple of questions for you, number one on VPRIV. What is the earliest that you might have an idea from the FDA about the ability to release data that are being manufactured in the Lexington plant? Then as it relates to REPLAGAL, just if you could comment on what kind of differential data you would like to try to tease out in clinical trials and if there is any comment on the PK comparability study?
Your question on VPRIV, I think it maybe it relates at what point do we expect to do mix manufacturer really VPRIV at the Lexington facility. So, as I indicated, we have started the engineering runs, and in this fall we expect to do the engineering and validation runs for VPRIV. And So through the fall the material would be sort of made and available early next year, but it needs to be released and then generally the stability of these data needs to be accumulated, and then there is filing of the agency. So that’s all if all had gone with the normal timelines that would lead us to an early 2012 approval for the plant for this kind of material.
Sorry, but if it could be released more on a compassionate basis, the potential for that and the timeline along that?
Well there are many sort of ways to accelerate to try to negotiate with agencies regarding acceleration of the use of the material, and one is compassionate use but it really has to do with the availability of the material. And so as I mentioned it will be available sometime in the first quarter next year with some release data. And be able to sneak sales and hopefully then use it somewhere.
So your second question related to REPLAGAL, and so basically since we filed the originally hundreds of patients have switched on to from Fabrazyme to REPLAGAL, giving us really the opportunity to gather a lot of clinical data of that demeanor into switch. We also have a number of new patients that were naïve to therapy that came on to REPLAGAL.
So this really affords us an ability to bolster significantly the clinical data that was relative to what was filed at the time of a year ago, we’ve doubled the number stations found on REPLAGAL. We want to take advantage of this in order to be able to really create a better (inaudible) if you will for the product, and enhance or reduce the uncertainties of regulatory approval also for the product. The PK study is not complete, but would be part of course of the filing also at that time.
But this does not suggest that there is an increased concern about the success of the PK study, I guess?
No it isn’t linked to the PK study. It is linked to the fact that we see this opportunity to gather a significant more clinical data, and provide to the agency in a way a more standard package, and certainly an enhanced number of patients treated experience in the package. And therefore that’s the reason to withdraw and really refile with a clinical section that is rewritten with this information contained in the filing.
Thank you for your question, our next question comes from the line of Florent Cespedes. Please go ahead.
Good afternoon, Florent Cespedes from Exane BNP Paribas, thank you for taking my questions. First of all, to come back on VYVANSE, could you maybe give more color on the adult market? Do we have to anticipate some acceleration of the sales growth due to the contribution of this market and how do you stand compared to the roadmap with the GlaxoSmithKline agreement on that? Secondly, on the stocking effect, could you confirm that about REPLAGAL and ADDERALL XR there is no significant stocking impact in Q2 and could you quantify the REPLAGAL stocking impact in Q2? Thank you.
I think we have answered some of those questions already, but maybe we will do a quick recap, so Mike do you want to say something about the adult growth?
Yes, I can just briefly talk about the adult growth. I don’t have anything really new to report for let’s say maybe four quarters now. It has averaged between 18% and 20% growth, which is remarkable. Does that go on forever? Maybe not forever, but it could go on for a long time, because in fact that the market is still less than 30% penetrated. So I think we have created a lot of awareness there, and we’re reaping the benefit. VYVANSE continues to make progress. We’re about 11% market share in adult. Remember, it launch a year after the peds indication. Starting to catch up, but its going to catch up slowly because the market’s growing so much faster than peds. Again, I don’t have much else to say about PK.
Just to come back on VYVANSE, my point was to ask, how does this compare to your initial expectation of the penetration of the product?
I think its absolutely on target. I think we all are a little surprised that the market growth, if you look at it year-over-year is 12%, that’s above our internal expectations. If you think about where market was trending a year ago, it was closer to that 6% to 8%. So it does look like the ADHD market is accelerating in the U.S. And again, I think that has a lot to do with Shire’s efforts to educate people.
Unidentified Company Speaker
So GSK, and I think you are about to say you have nothing to add, really to what you said earlier, you just said your back in discussing with them. And our feeling is that majority of what we are achieving is down to Shire, and helping us in a little bit, but your discussing all that kind of stuff with them right now again?
Yes and its particularly sensitive time. We are going through a lot of changes. I don’t really think it’s my place to talk about their changes.
Okay. So then stocking, Graham I guess it’s back in your court.
I described how we saw de-stocking in the first quarter, that equates it to about $22 million worth of de-stocking in the first quarter and that took us down to 15, an unsustainable 15 days of wholesale inventory. I’m taking it back up to 27 days of wholesale inventory meant that there was a $33 million worth of increased inventory being drawn into the channel.
I think Graham as you were stressing earlier, I mean the point here is that sometimes people worry that we are out way beyond normal levels and your point is that 27 days was slap bang in the middle of the normal 25 to 30 is more Q1 fell to outside that range on the downside.
And with REPLAGAL, is there any color that you can provide on the effect in Q2?
There is generally not a lot of stocking of these products because they are like their introduction to drop shift upon demand. However, there is being some ordering patterns in the second quarter that’s just occurred, where hospitals have called on some products to cover the new patients that have been coming on, and I think Graham referred to the fact that therefore these products in order will be used in the third quarter on these patients. We’ll be monitoring because the supply and demand situation is so tight for these products, we are going to monitor carefully to make sure that there is no stocking in the channel anywhere actually, so that from an equity perspective, patients can receive products as efficiently as possible and fairly.
Our next comes from the line of Ken Cacciatore. Please go ahead.
Question on FIRAZYR, do you talk about the timing of releasing maybe even top line results you indicated when you are planning on making your regulatory filing but may be would you be releasing the results a little bit early? Second question on Sanfilippo, Sylvie, is it possible this is a pivotal study or is this do we have to wait for the initial small results here before moving in to pivotal and maybe talk about timing of a potential launch maybe I am getting way ahead of myself and size of that opportunity?
Yes, on Sanfilippo certainly I can answer that this is the Phase I, II trials of first time in patients that the dose ranging study in a very small number of patients. So it’s unlikely that it would be pivotal trial at all based on fact that we would to establish a right dose and before we move on to another large trial obviously, but a pivotal trial nevertheless for second time. So from the timing perspective I think we had a closet for the prior period after 2015 sometime after that. However, it is an important product for us in a sense that it represents another disease where there is no therapy at all. And therefore an interesting opportunity for us, and of course for patients, it’s an important step for them. The self administration data is really safety trial, so there is not a lot of information to publish other than to say that patients have been monitored from having administrations from the healthcare professionals to themselves having administrated the product. I suppose that the product wouldn’t have been able to be published somewhere, but certainly it maybe that we will file the data before it is presented, as if it is not a lot of clinical data enough for safety trial.
And I guess just following up on a lot of the questions concerning your capacity, just to make sure I understand this correctly. It is theoretically possible that you could be supplying additional product from Lexington in Q1. And I know we are all going to the most optimistic point here and you’re not bringing us there, but is that what you are saying, is that we could, in fact, see the kind of guidance you have given on patient starts here increase if the regulatory agencies are willing to accept that product?
The guidance I have given on number of products we can add represent patients that we can add this year and next year have to deal with our existing current manufacturing facility, and the standard timelines of approval for the facility in Lexington. I am just pointing out that of course, based on the supply situation on these products we will be trying to negotiate and see if authorities are willing to take less data or different kind of data in order to allow us to use these products. But I think it’d be rather premature before we even had some of these discussions with agency at length, to be able to put a prediction on that. And indeed you are jumping to the optimistic view that we could, and as patients for both in perhaps VPRIV than REPLAGAL if it did happen, but indeed if it did happen we would be able to add the number of patients treated for both of these processes.
Our next question comes from the line of Peter Welford. Please go ahead.
I have got two questions. First the financial one I guess which is on the Movetis acquisition. Have you looked into whether or not you can keep the rather attraction Belgian tax rate for that, and have you also got any sort of insights in early stage into what the annual amortization charge could be for that acquisition? Then secondly, on REPLAGAL, can you just give us some idea into what sort of the timeline of the endpoints you are looking at for this BLA package? So when you say the FDA you’re reviewing with them what sort of data would they want? Are we looking here at the standard timelines for Fabry disease, or are these more short-term endpoints than typically used?
The first one I guess is in Graham’s court in regards to a couple financials around Movetis.
The first question was regarding the low Belgium tax rate which Movetis transferred from Lexington plant. And the simple answer to that question is yes, we will be able to benefit from Movetis’ tax ate. In terms of amortization frankly, it’s too early for us to be able to work with that really as soon as we’ve completed the transaction, then we’ll be able to talk it in the amortization at that point.
Next on is REPLAGAL, I think Peter is clarifying to the fact we’re withdrawing which is what it said for BLA, so she was talking about collecting fresh clinical data, and going for something which would be tantamount to a normal filing package. So just to clarify, you said what additional base points, and unless I misunderstand because you are saying what additional clearance could it take to support with the L.A. or whatever?
I guess what I was asking, when you say you’re talking and getting the FDA views on this, I realize you are refiling this. So I’m wondering if when you are trying to bolster the package with these switch and naive patients, will this be the traditional endpoint type data you’re going to bolster the package with or will this be sort of shorter-term type data points from those patients that you are adding to the tri-clinical trial set?
Right, look so this is precisely what we have to discuss with FDA is how long of an observation period would they like to see for a pharmacodynamic and clinical parameters on these patients. And so once we know that, we feel we will be in a position to establish the timing for the refiling.
Thank you for your question there, our next question comes from the line of John Newman. Please go ahead.
Good morning, thanks for taking the question. I actually have two questions. The first one is, given VP’s approval is coming in the EU most likely, do you see an opportunity for maybe a differential view from the FDA versus the EMEA in terms of the type of data they would need to see to be comfortable with the material from the Lexington facility? And then the second question is actually a follow-up to the last question that was asked. When do you see yourself potentially being able to submit additional data on REPLAGAL to the FDA?
Yes, I’ll take the second question first because I think I’ve just said, we do have to discuss with the FDA relative to the observation period that they would like to see in order to make it, the best possible package for them to review. And so that will determine, of course the timing of when we would provide the data to the agency or refile. Regarding REPLAGAL, regarding DPRIV do I see any differences in the authority’s view relative to the amount of data that would be required to accelerate the approval of the facility, and at this stage, I wouldn’t want to comment. We do know that in the past, they have had different views on what data was required, and only good at that until such times that we can provide more detail. It is useful to have the data when you have these discussions with the agencies.
Thank you for your question there, our next question comes from the line of Kevin Wilson. Please go ahead.
Thanks very much. At the risk of being really boring, I wanted ask a longer term strategic question of you, Angus, and thinking of the evolution of the business model in the medium term. I propose some comments I have read that you made in an interview. So thinking about your strategic investment group where you’re talking about making 10 to 15 investments over the next couple of years, questions would be, how early stage will you go? What impact might that have on your R&D spending and can you tell me or tell us how a business model which involves an interest in genetics might work?
Yes, okay Kevin well nice to get kind of slightly different question on the strategy on the call but, yes so, we call it the SIG as you say not the STIG and it’s the SIG, Strategic Investment Group. And it’s what it infers, so first point which picks up one of your points probably is that, and what we see this thing is largely small and as I said, 10-15 that’s kind of a normal portfolio to de risk a kind of portfolio of investments with this nature, that would be the normal range of the number of individual investments you make. And then it infers by the words investment what it is which is that we see the most being equity investments where we sit alongside co investors. The concept came out of two or three lines of thought that myself and the leadership team here, as we had discussed in the past year and that is we are seeing as you know a world where VCs have been very burned there, walking away from a lot of investments in this sector, other traditional funders are also walking and big pharma, indeed themselves seems to have left appetite to serve some very early risky stage assets. And that’s leaving many of these companies who have potentially good quality ideas with no funding, no capabilities to bring these ideas forward.
So we see a kind of, window of opportunity there at the time when actually Shire has this great platform of growth for the next few years, and we need to be working on things that will kick in probably as we start to approach 2020, because we can see a lot of growth coming out of our existing business and our existing pipeline between now and then. But therefore, you need to reinvent, state the blinding yield, obviously the pharma business every ten years or so, 10-15 years. So that’s what we are focused on. So again, by that would infer these are very early stage ideas. We are always looking at new technologies, new ideas since you know we have no blue sky discovery of our own, and we have certainly still no ambition. We have tested that again to build blue sky discovery in the sense we are investing in infrastructure. I see that world in a sense going away, and I see a lot of people doing what I think they should do, which is divest themselves of only infrastructure in that early stage of the business model.
So our concept is something different. Its one where we make these investments, and we get to see new ideas, breaking ideas because of our areas of interest, it would stand to reason that genetics would be of interest to me. And I think we all know in this industry again, that genetics could represent the major next break through, rather like biotechnology 20 years ago, genetics we are on the cusp I would say again. As ever liked by our technology, one can never exactly predict when it will start to have a significant impact, but rather like Shire did practice with the acquisition of TKT over five years ago now. We were one of the earlier adopters of commercializing biotechnology products. We would like to again try and be not early group in terms of genetics. So this gives us something which will be limited in terms of size. So I will just tell you the total size of fund we are thinking is probably the order of $50 million. 10 to 15 investments would imply a range of $3 million to $5 million for each of those investments, that’ll be purely equity. So there will be no impact on R&D spend in terms of earnings in that period. This is really the site to give us an early insight some things that could then be of interest and could represent acquisition targets down the road for us. And by then we hopefully would understand a lot more about them having been a co-investor.
Our next question comes from the line of Jon Stephenson.
Follow-up on REPLAGAL. I was wondering if you might be able to comment on what proportion of the patients are really in the expanded access program in the US? Then also, I don’t know if I’ve missed this on the call, but if you could quantify the impact or the estimated impact of that kind of buying pattern fluctuation?
So, Jon the extended access for about a 120 patients in the US, a little over 120 patients that are in the extended access program in the US. You will recall that in the US the potential for the products in the US has always been limited. And so, we will manage now going forward as opposed to, of course, the great strides that the products have made in the markets where it has actually approved. So we are going to continue to provide products to these patients in the US, and those are the outdoor extent. It is a product through the emergency use program. And then you have heard about how many we can add on throughout the rest of the year, and then we will manage that on based on the demand and supply that we have forecasted.
Buying times, I am not sure in regards to what other product you are thinking about when you said buying time?
Well, you had mentioned some buy-in at the hospital over the center level for REPLAGAL that might have basically taken some sales from Q3, and you talked a little bit about that, but I don’t think you gave a dollar estimate.
This market is very difficult to have a precise number but it’s nothing like the scale of numbers that we have been talking of, this got to be single digit.
Okay. So net-net is you guys had pretty strong sequential growth, so a lot of that growth is really end market demand and not stocking on that?
Absolutely, you should look in the charts Sylvie showed. It told you that Jon we have just under 200 patient staff at which three quarters were switched in last quarter. This one it was over 320, it was over a 50% increase in your patient staffs on REPLAGAL in this key compared to last. So I think that tells you this is just huge underlying market demand improved through it.
Just long-term, what proportion of that do you expect to ultimately keep?
Well it’s hard to know, but, of course, those patients, they are on therapy whether they are trying to REPLAGAL for long period time and we are satisfied that this therapy is the number of patients that are likely to switch, probably less overtime because it’s all about being satisfied on the therapy that you have offered for these patients. It’s not a small deal switch from one therapy to another. It’s a very big deal, and so if they are satisfied, again the likelihood of switching is minimized.
So, I am conscious we have been on the 9 in the quarter and I really would like to answer your question, but I am conscious seems some of the questions are little repetitive now. So I will take one more question and then hopefully be able to follow up with (inaudible) on the phone afterwards. So can we just take operator one last question.
Our final question comes from the line of Martin Wales. Please go ahead.
The Movetis acquisition obviously brings you some pipeline products away from RESOLOR. Is there anything in there that particularly interests or intrigues you, and how should we think about having any impact on your social development model given, I guess, it brings you some slightly earlier stage R&D than you have in your organization at the moment? I guess my second question would simply be, what proportion of patients on VPRIV and REPLAGAL do you expect to be paying for the drug by year-end?
I can talk about Movetis a little bit; obviously we have focused primarily on RESOLOR in this proposed acquisition. MV002 for ascites which is a vasopressin looks interesting. And then MV003 looks very interesting to me, that’s an upper GI 5HT4. For motility it would probably be used for gastroparesis and GERD or GORD in Europe. The company has not been able to invest in these programs the way they would like to, because of the fact they’ve had to focus all their resources, both money and people on RESOLOR, and the additional indications, and the post approval commitments. So we will go, we will evaluate the programs with Movetis, and then we will decide how to go forward.
I do think when I look at the MV00 3 it has a lot of potential. I mean there have been some pretty big products in this area if you think back to this sense of price, but we are long way from that. They had one failed proof of concept studies a few years back, and we didn’t even have look into why that study failed and figure out how to move forward. But overall we are very encouraged by what see. We like the early stage pipeline. And again, these are folks that have been bringing products forward to the GI area for many, many years. We think we can continue that tradition under Shire. We hope to recapitalize and give them access to more resources somewhere to what we were able to do from TKT in ‘05.
Unidentified Company Speaker
So they have time sheets at the end of the year?
That’s right. So lets start with VPRIV, perhaps as you know as we have said we can support about a 1,000 patients between now and the of the year we will have those patients. And we’ve shown you a chart of the proportion that are paying and non paying patients. And the proportion of patients in the US again slightly above the market share above 20% might be around 25% to 26%. But I think you can make your calculation relative to the amount of revenues that we might get or from in the U.S where the products just continued switching from patients that were in the trial launch to the therapy.
In Europe, the product is of course being sold pre-approval in many of the countries. And then there will be some gradual increase in revenues coming from Europe for the products where we will gain formal pricing and reimbursement. But the vast majority of the patients in Europe are also currently paying for the product.
In terms of REPLAGAL, we tapped the treatment IND in the U.S. to the number of patients that I have indicated are already being treated. And so the vast majority of the patients coming on of course will be all patients coming on are likely to be paying patients. We are reserving small amounts of reserves for emergency stations in the US. But it will small after patients between now and one of these.
Unidentified Company Speaker
So I thought in line of all the sales or we’re getting to is the large proportion of what we’re seeing in patient numbers that you have quoted they are paying patients
Paying patients and gradually for weaker, there will be an increase in this proportion that you see today about 70% of the patients are being reimbursed without imparity, and that should increase gradually between now and the end of the year probably not to a 100%, but certainly gradually.
Okay folks, I’m going to call it a wrap at that. So we thank you very much for your participation today, and for all your questions. I said Eric will be available on phone to answer any follow-ups you have. In conclusion, I would just like to say again that I believe these are tremendous results. I think they demonstrate that we really have bounced back from the loss of ADDERALL XR exclusivity. quicker than pretty much anything I’ve ever seen before in the industry, and now we have a tremendous platform as you know for future growth, not only up to 2015 but with the evolution of this pipeline. And you’ll be hearing a lot more about that over the next 12 and 18 months. We believe they are already building a tremendous platform for sustaining that growth beyond 2015. And this year of course, we are very pleased on this call to have raised earnings guidance as we said which we now believe is trending towards the $4 ADS level.
So, with those closing remarks, again thanks very much, have a great day and we’ll speak to you all again soon.
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