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Executives

Graham Hetherington - Chief Financial Officer, Principal Accounting Officer and Director

Angus Russell - Chief Executive Officer and Executive Director

Sylvie Gregoire - Member of Management Committee and President of Human Genetic Therapies Business

Eric Rojas - Director of Investor Relations - North America

Michael Cola - President of Specialty Pharmaceuticals, Member of Senior Staff Committee and Member of Management Committee

Analysts

Florent Cespedes - Exane BNP Paribas

William Tanner - Lazard Capital Markets LLC

David Steinberg - Deutsche Bank AG

Ken Cacciatore - Cowen and Company, LLC

Brian Bourdot - Barclays Capital

Peter Verdult - Morgan Stanley

Brian White - Shore Capital Group plc

Timothy Chiang - CRT Capital Group LLC

David Buck - Buckingham Research Group, Inc.

Justin Smith - MF Global UK Limited

Keyur Parekh - Goldman Sachs Group Inc.

Gary Nachman - Susquehanna Financial Group, LLLP

Shire plc (SHPGY) Q2 2011 Earnings Call July 28, 2011 9:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Shire's 2011 Second Quarter Results Call, hosted by Angus Russell. My name is Phoebe, and I'm your event manager. [Operator Instructions] I'd like to advise all parties this conference is being recorded for replay purposes, and I'd like to hand it over to Eric Rojas. Please go ahead, Eric.

Eric Rojas

Thanks, Phoebe. Good morning and good afternoon, everyone. Thank you for joining us today for Shire's Second Quarter 2011 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 website, please contact Souheil Salah in our U.K. Investor Relations department on +44 1256 894 160, as he will be happy to assist you.

Our speakers today are Angus Russell; and Graham Hetherington. Mike Cola and Sylvie Grégoire will be available for Q&A as well.

Before we begin, I would refer you to Slide 2 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 on Slide 3. Angus will comment on Shire's Q2 performance and recent highlights, including the acquisition of Advanced BioHealing. Graham will continue with the financial review and update Shire's full year outlook. Angus will conclude by summarizing near-term key events and opening up the call for your questions.

[Operator Instructions] Sarah Elton-Farr and I will be more than happy to follow up off-line for any subsequent questions.

I'll now hand the call over to Angus.

Angus Russell

Thanks so much, Eric, and good afternoon or good morning to everyone. So turning to Slide 5, which summarizes the revenue performance this quarter. Once again, revenues were up very strongly, 25% overall and, again, significantly driven by product sales growth. Product sales were actually up 30% in the quarter. Also, for us this quarter, it's a significant new milestone, we exceeded $1 billion of revenues in a quarter for the first time in our history.

Turning to the next slide, Slide 6. Product sales growth, therefore, is the major factor which is driving also a very good bottom line performance. So when we look at the non-GAAP earnings on this slide, you can see earnings per ADS, fully diluted, were up 29%. Non-GAAP earnings at $1.33, and we believe that was significantly ahead of the expectations in this quarter.

Operating income also up very strongly. So good consistent progression from the top line through to the bottom line. Operating income was also up 26% to $342 million in the quarter.

We turn to the next slide and start to take a look at some of the major business highlights in the quarter and starting with the HGT portfolio. FIRAZYR. Many of you know, that there was an FDA Advisory Committee during this quarter to consider FIRAZYR in the U.S. market. And we're very pleased to see that strong majority of the members of that Advisory Committee recommended not only the approval of FIRAZYR but the approval with self-administration, which, of course, is one of the key distinguishing features of our product versus some of the competitor products.

FIRAZYR, as you know, is to treat acute attacks of hereditary angioedema. PDUFA Date now is our next target milestone towards launching the product, and that's set for August 25. And we now hope, armed with that outcome from the Advisory Committee, that we get a positive decision on PDUFA Date, and our plans are to advance to a full product launch in the U.S. market by the end of the year.

In regard now to REPLAGAL. Also very pleased with another regulatory decision this quarter was the European approval by the EMEA, was received for the purification of REPLAGAL in our new Lexington manufacturing facility. And this now gives us, of course, a lot more manufacturing flexibility in regard to REPLAGAL. The product performance during the quarter was also again very strong. We saw 46% growth in revenues versus the same period last year.

Moving down to VPRIV for Gaucher. Our process validation runs in the new manufacturing facility also well on track and are now nearing completion, and that will allow us to submit those, we hope, according to our plans, by the end of this year. And then again, we look forward to talking to both the FDA and the EMEA in regards to their inspection of facility. And we hope, in due course, sometime next -- early next year, to receive approval to manufacture and release product from that new facility for VPRIV. As a result of that, our FDA, EMEA filings are fully on track as well for submission by the end of the year. And in the quarter, you can see a really strong product performance here, growth of 121% in revenues versus the same period last year.

Now turning to the next slide, Slide 8, and looking at our Specialty Pharma performance and starting with the ADHD portfolio. VYVANSE recorded another strong increase in the quarter. You can see VYVANSE prescription growth increased 21% over the same period last year, and that's almost double the currently strong growth in the market overall, which was 11% in volume terms during the quarter.

We're on track also with our EU pivotal clinical programs. They're progressing as planned, and we still anticipate to be able to make our first MAA filings by Q4 in this year. Potential non-ADH [non-ADHD] indications are also continuing to progress well, and I'll return to those again on a subsequent slide.

In regard to INTUNIV, also continuing to do very well in the market. Prescription growth here in the quarter was up 14% over the same period (sic) [over Q1 2011] and 88% over the same period last year. We had a favorable increase in market share. The trends really being driven by new consumer marketing campaigns, and also obviously, the approval in February this year of the use of INTUNIV as adjunctive therapy with stimulants.

We're also enrolling, remember, EU pivotal programs, given we told you before that the regulator in Europe minded to offer us 10 years data exclusivity on launch of this product, and so that's enabling us to move forward. And we are now under enrollment with those EU pivotal programs in Europe.

Looking at MEZAVANT and LIALDA for ulcerative colitis. Our U.S. market share, in prescription terms, increased again, up now to 20.4%. And the FDA recently approved LIALDA for a label change, which is to add a maintenance of remission claim, and that, again, offers further upside to the ongoing growth of LIALDA in the ulcerative colitis market.

And now we can add to the list, DERMAGRAFT. We recently obviously acquired, as you know, Advanced BioHealing, a significant and valuable platform in the promising new field of regenerative medicine. And again, I'll return to talk a little bit more about prospects for Advanced BioHealing on the next slide.

So let's look at that, turning to Slide 9. ABH's current biologic treatment approved in the U.S. market is for diabetic foot ulcers, and this addresses a very significant patient need. It was very interesting during our diligence, and many of you may be aware of this, but the current incidents of diabetes in the U.S., in people over 60 years of age, is now 29% of the population of people over that age.

DERMAGRAFT is actually FDA approved. It's a human dermal replacement, which results in the generation of native human tissue and, therefore, wound healing. It's a very scalable proprietary human fibroblasts cell line in the manufacturing process.

And this is real synergy for Shire. I would argue today that as a result of the growth of our HGT business over time and our investment in manufacturing, we have now become one, if not, "the" world leader in fibroblast expression of human cells and the manufacture of those kinds of products. So this is tremendous synergy to take that expertise in our HGT business and now apply it to help to continue to invest in manufacturing and grow our ABH business as the products continue to grow there.

Already, as I said, the market drug in the U.S. DERMAGRAFT is producing revenues in 2010 of $147 million, and we expect to see good growth off that base during the current year. Obviously, not much of that revenue has been recorded in the current quarter, given that the transaction only closed at the end of the June, but this will start to contribute to revenues quite strongly in the second half of the year.

Looking at the next slide. I just said a moment ago, on Slide 10, the deal closed only on June 28. And behind the current marketed product, DERMAGRAFT, there are a whole range of further, we believe, exciting growth opportunities. The first of those is the first bullet here, DERMAGRAFT in the development for venous leg ulcers. And we now have a Phase III trial fully enrolled, and we expect to see the first results of that data by the end of this year.

This will obviously help leverage the DFU commercial and manufacturing infrastructure, leading not only to further efficiency gains but obviously new sales growth opportunities, too. It also allows for the business to expand outside of the current U.S. opportunities, so we see the opportunity in VLU as potentially a global opportunity.

And on -- in addition to that, we actually believe that we can leverage ABH expertise for additional regenerative medicine products. So since the deal closed, our R&D teams are now doing a lot of brainstorming around further opportunities in the earlier stages. And hopefully, in due course, we'll be able to share those ideas with you.

We're also reviewing plans for additional manufacturing capacity, as I mentioned a moment ago, applying our in-house expertise here in Shire to the challenges of further efficiency improvements and also scale-up to meet what we expect will be an increasing demand for DERMAGRAFT and the further pipeline opportunities in the next few years.

Turning to Slide 11 now, and just looking at some of the other Specialty Pharma pipeline highlights and returning again to the new uses of VYVANSE. So we're making, as I said before, continued progress here. We expect to begin a Phase III study now in the second half of the year for MDD. That study now is starting to enroll and should be, we hope, fully enrolled before the end of the year.

We're also continuing our discussions with the regulatory authorities on things like negative symptoms of schizophrenia, and that will help inform how we shape potentially some later-stage development programs. So we will hopefully have some further news on that later this year to update you with.

Turning now to Guanfacine Carrier Wave. And I'm pleased to say that having had several compounds in development to look at, we've now selected what we believe is an improved lead candidate, which meets our target product profile. And that's now being put into development, and a Phase I program has initiated for that new improved lead candidate. The Phase I program will be supportive of not only ADHD, but potentially 3 different indications. So ADHD primarily, but also, potentially, hyperactivity and autism spectrum disorder and pediatric anxiety.

And finally, SPD 535, which is, I think, many of you are aware, is the platelet lowering agent. Data from our Phase I clinical trial has been reviewed now and has demonstrated a positive proof of principle with no safety concerns. Additional Phase I studies are ongoing, and now we're exploring the indication for use in the prevention of thrombotic complications associated with arteriovenous access in hemodialysis patients.

Turning now to Slide 12, and bringing you all of that really together in a schematic chart here for you in a visual sense. What you see here is that we're not only delivering, to the far right of this chart in the blue bubbles, very strong growth, which is very evident in this quarter's results and what I believe will be the performance for the year as a whole, but we're also investing, at the same time, in a lot of rich pipeline opportunities and adding new bolt-on acquisitions, like ABH, which will help us also to sustain that growth into the future.

What you see already is a growing series of projects in the late-stage pipeline. We've already talked about FIRAZYR for the U.S., the VYVANSE EU pivotal programs and INTUNIV EU pivotal programs, but also to remind you of LIALDA for diverticulitis, where we expect to get those results of a very big Phase III program, reading out early next year. And that will give us some insights into whether we have significant upsides to LIALDA in the treatment of diverticulitis.

And then, as already mentioned again, VYVANSE new uses and DERMAGRAFT, now VLU, adds to what I say is, I believe, a very rich late-stage pipeline that should see us launching many new products in the period of 2015 and onwards. And behind that in the early stages, some equally exciting opportunities, talked about Carrier Wave Guanfacine and SPD 535.

But not to lose sight in the other green bubble here on this chart, of the intrathecal programs, where, again, we continue to make good progress. I'll just remind you of a couple of things. One is that patients continue to do well on those drugs, and actually, we'll be in a position, we believe, early next year to start to draw some conclusions as to whether it's having a disease-modifying capability, as many of those patients will then have been receiving the drug for 18 months to 2 years.

And if that is the case, this is a very exciting new platform for Shire. It would represent a proprietary platform. I don't believe anybody else is looking at the administration intrathecally of these kinds of products. And that would not only bring new treatments potentially for our existing patients, but also open up the ability to treat diseases that simply aren't treated today. So a lot happening here at Shire, not only in delivering strong growth in the quarter but also investing, as I said, in the pipeline for the future.

So with those remarks, let me hand over to Graham to take you through the financials in a bit more detail.

Graham Hetherington

Thank you, Angus, and good morning, good afternoon, everyone. You've already seen this quarter's results continuing the strong growth we've achieved recently. I'm going to focus on, first, an overview of our strong performance this quarter. Second, a quick look at royalties to explain both this quarter's numbers and our expectations for the rest of the year. Third, I'll talk about the continued growth in our product sales and how that's contributing to our operating leverage, at the same time as we're investing for future growth. And finally, I'll reinforce our updated guidance for the full year.

On Slide 14, we can take a closer look at the impressive revenue and earnings growth we've achieved this quarter. Product sales were up 30% year-on-year. This includes a favorable impact to the weaker dollar this quarter. Using constant exchange rates, product sales were up 26%.

Total revenues are up 25% or 21% on a constant currency basis and, for the first time exceed $1 billion for the quarter. As we expected, growth in total revenues has been held back by declining 3TC and Zeffix royalties. And I'll talk a bit more in detail about our royalties in a moment.

EBITDA is up 26% year-on-year and, critically, to reinforce, is up 25% on a constant currency basis, a near 1% point difference between the reported number and constant currency. As a percentage of product sales, which excludes royalties and other revenues, our underlying operating margin has increased by 3 percentage points to 30% in the quarter. Our revenue growth and operating leverage has driven non-GAAP earnings for ADS up 29% to $1.33, and we generated $440 million of cash.

As I mentioned earlier, I'd like to highlight some specifics in relation to royalties, which you can see on Slide 15. And here, you can see that our 3TC and Zeffix royalties are down considerably in this quarter, down 70% compared to last year. This is down to 2 factors. Firstly, we've continued to see the impact of increased competition in this market, and this will continue. Secondly, in this quarter, we have not recognize 3TC royalties in some territories, and we've also reversed the 3TC royalty income recognized for these particular territories in the last 2 quarters.

This reflects the difference of legal opinion between GSK and Shire about how the relevant royalty rate should be applied, given the expired data of some patents. The impact of these adjustments in the second quarter was $22 million. When dialogue with GSK to try and resolve this issue and it's successful, we'll recognize these revenues at that time.

This dynamic has been partly offset by stronger royalties from our partner sales of FOSRENOL in Japan, where demand has increased due to supply issues in the market following the earthquake earlier this year. Overall, I'm still expecting combined royalties and other revenues to be about 10% lower for the full year compared to 2010.

Turning now to Slide 16, focusing on our product sales. Our ADHD franchise continues to deliver impressive growth, helped by a market that grew by 11% in the quarter, but more importantly, by our products capturing a growing share of that market. VYVANSE's global revenues were up 26% or $38 million with U.S. prescriptions growing at 21%, well in excess of the underlying market growth.

Sales deductions in the quarter were higher than we expect to see for the remainder of the year. This is due to a one-time adjustment to our estimate of the inventory in the retail pipeline. This resulted in higher rebate provisions in the quarter. This adjustment increased our gross-to-net deductions by 6 percentage points or $19 million. Without this, the underlying gross-to-net deduction percentage would have been nearer 38%, and we expect it to be near that level for the rest of the year.

Prescriptions of INTUNIV increased by 88% in the quarter compared to last year. Product sales increased less than this underlying growth rate at just 16%, primarily due to $19 million of launch stock revenue that was recorded in the second quarter of last year.

ADDERALL XR had an exceptionally strong performance compared to the very weak quarter last year. We benefited from the growth of the ADHD market, marginally higher stocking in the quarter than last year and, in particular, from lower sales deductions compared to last year. These were 59% this quarter, compared to an unusually high level of 74% in the second quarter last year. And this year, this is due to the mix of customer sales affecting the rebate calculation. Critically, we expect ADDERALL XR sales deductions to be closer to the 65% to 70% range for the remainder of the year, which compares to the 65% we saw for the total year last year.

In our GI franchise, LIALDA/MEZAVANT continues to perform well, up $29 million or 43%, as we continue to achieve market shares in the U.S. -- share gains in the U.S. We also saw some modest stocking this quarter, around $6 million of net sales, compared to some small destocking last year.

At HGT we saw continuing growth in the quarter. REPLAGAL was up 46%, driven by new naïve patients and patients switching from Fabrazyme. ELAPRASE is up 28% due to increased volumes. And as I indicated in April's call, we've benefited from some shipments that slipped from the first quarter to the second quarter this year. And sales of VPRIV increased by 121%, driven by momentum from the U.S. and EU launches last year.

It's probably worth reinforcing that approximately 75% of HGT's product sales are earned outside of the U.S., and the reported growth rates all benefited from currency movements, particularly a stronger euro in the quarter.

Overall, total revenues are up 25% or $214 million, and that's even after the divestments of DAYTRANA last year, which contributed $16 million for the second quarter in 2010; also, after a declining CARBATROL this quarter, as we started to experience generic competition, and the $15-million decline in royalties and other revenues.

As you can see, our young portfolio continues to deliver strong growth. With the portfolio now being further enhanced by the addition of DERMAGRAFT from ABH and the exciting progress we're making in our pipeline, I'm confident in our prospects for growth in the future.

Turning to Slide 17 now. Year-to-date, our operating margins increased by 2 percentage points, as our product sales growth exceeded our planned increases in R&D and SG&A spend. As I mentioned on the first quarter call, in the first half, we're absorbing the operating costs of Movetis and our Swiss Hub, both of which came into effect in the second half of last year. This is on top of the ongoing investment we're making in our pipeline and ensuring the sustainability of our growing business.

It's also worth highlighting that the weaker dollar, which is favorable for reported sales, has an unfavorable impact on our operating costs. We estimate that in the second quarter, approximately $27 million of the year-on-year increase in R&D and SG&A was due to exchange rates.

Let's look at our cash flow on Slide 18. As I mentioned earlier, this quarter, we generated $440 million of cash. The comparison to the second quarter last year is complicated by the favorable timing of sales rebate payments in the second quarter last year. But overall it's another excellent performance, which supports free cash flow which, after taking accounts of marginally higher capital expenditure, tax and interest payments, was $235 million.

After completing the acquisition of ABH, the dividend and the recent share purchases to cover stock options, we finished the quarter with cash of $167 million, and as a result, net debt of $972 million. We continue to have a strong and flexible funding position, supported by access to our 5-year $1.2 billion bank facility, which is currently undrawn.

Finally, let's look at our full year outlook for 2011 on Slide 19. During the year, we've seen market consensus for 2011 earnings increase against the backdrop of us progressively increasing our investment behind future growth. I'm pleased to say that the strong start to the year enables us to be confident in our ability to make these increased expectations. And critically, this updated outlook includes the marginal dilution from the ABH acquisition, the dynamics I've described around our royalties and the impacts of generic competition for 2 legacy products, CARBATROL and, now today, REMINYL, in the second half of the year.

So looking at the individual lines of the income statement, product sales continue to grow well and will be enhanced by a full 6 months of DERMAGRAFT sales. As I mentioned earlier, I continue to expect royalties and other revenues for the full year to be down by about 10% compared to 2010. In terms of total revenues, as we saw last year, I'm expecting to continue to see good year-on-year growth of total revenues in the second half of this year only marginally lower than the growth rate we achieved in the first half of this year of 22%.

I'm expecting that our product gross margins for the second half year will be marginally diluted by the addition of DERMAGRAFT, but the full year growth margin percentage will still be in line with our previous guidance, at a similar level to that recorded into -- for the full year of 2010.

I indicated last quarter that our targeted investment plans and low-risk late-stage pipeline opportunities would contribute to a combined R&D and SG&A increase of 13% compared to 2010. I now expect this to be about 20%. The primary driver of this incremental increase is the inclusion of ABH's cost base, and it is also impacted by a recent assessment of the full year impact of foreign exchange on our costs.

My expectation for our full year tax rate remains between 22% and 24%. And taking these dynamics all together and with the excellent performance we've seen in the first half, I'm confident that 2011 will be another very strong year for Shire.

And with that, over to Angus to wrap up.

Angus Russell

Thanks, Graham. And just a couple of slides here to make up -- just to wind up with.

So Slide 21. Just to remind you of some of the upcoming key events in the second half of this year. Firstly, LIALDA or MEZAVANT, we will be launching that based on the recent approval, the indication for maintenance of remission in the U.S. market. As I said with VYVANSE, significant for us, the filing of our pivotal outcomes on clinical 3 and filing of those studies with the MAA in Europe and the beginning of our Phase III study for moving VYVANSE beyond ADHD into major depressive disorder. FIRAZYR, the PDUFA Date upcoming on August 25, and subsequent to that, we hope a U.S. launch before the end of the year. And on VPRIV again, Lexington manufacturing plant, we believe we'll finish the validation batches and have those submitted to both the EMEA and the FDA.

So moving to the final slide. What does all this mean? Well, I believe it really does clearly demonstrate that the strategy Shire continues to pursue is delivering, delivering strong results, which again you've seen in the current quarter in what is we all know a very globally challenging economic environment, but also a challenging industry environment. But at the same time, we're investing in promising pipeline opportunities. And many of those I highlighted for you earlier in the call, including now our new and exciting platform in regenerative medicine.

And all of that with the aim of continuing to deliver meaningful therapies to enable our patients to lead better lives. And at the same time, we're increasingly collaborating with patients, physicians, payers and policymakers to deliver real tangible value to the world's healthcare systems.

So with that, we hand back to the operator and invite you to ask your questions.

Question-and-Answer Session

Operator

[Operator Instructions] We do have a question, and it comes from the line of Mr. Brian Bourdot.

Brian Bourdot - Barclays Capital

It's Brian Bourdot from Barclays Capital. Two questions, please. The first on INTUNIV Carrier Wave or Guanfacine Carrier Wave, and second question on some of the dates when some studies will report. So the first question on Guanfacine Carrier Wave. It sounds like you've changed horses in terms of picking a preferred candidate in the clinic. Now correct me if I'm wrong, I think you already had a program ongoing here. I was just wondering when you will be in a position to file this, if there is some delay to this program, and also what, in particular, you liked about this candidate compared with some of the others. And the second question relates to some upcoming news flow. Could you repeat for us, please, when you expect to report headline results from the study of LIALDA in diverticulitis and Hunter CNS, please? As it sounds like these could be potentially quite interesting events.

Angus Russell

Okay. So, Mike, do you want to take the Guanfacine Carrier Wave and the LIALDA questions? So it was Carrier Wave, what was the rationale behind -- what was line, changing horses?

Michael Cola

Yes. Maybe get back to where we've been consistently with the Street. We took 3 molecules forward, 3 Guanfacine Carrier Wave molecules forward. Two of them made to the clinic. Of those 2, we chose one like we said we would do this summer. To see that second one come through and be tested in man, we probably added a few months to our timeline. But I don't really feel that much has changed at all. Why did we choose it? It had a superior PK profile for us. Remember, the key to success here isn't just the timing of when a Guanfacine Carrier Wave compound comes forward, it's also the ability to differentiate it from the existing molecule. And the 2 things we've talked about as far as differentiation are, one, food effect in high-fat meals and, two, potentially the ability to reduce somnolence and sedation over this first 2 weeks as you titrate the patient. So those are the real keys. So we may have lost a little bit of time, but I don't feel like we've changed horses or changed strategy. We also have potentially gained some time. We've had a pediatric written request in. We're in the midst of discussing with the agency, what is the trial that will end up getting us as a 6 months -- 6-month extension off of our September 2015 date. We feel like that has a good possibility of happening, which gives us obviously a little more runway. But I just want to come back to the keys to success for ADHD are around differentiation. Timing is important, but we also have to differentiate the product. I think a couple of other changes since we've talked about the Guanfacine franchise for Shire, we have moved forward in Europe. With the European program, we think we'll have 8 plus 2 or 10 years exclusivity, because Guanfacine was never approved in Europe. Obviously, as a non-stimulant, we think that's an attractive market opportunity for, that -- the Guanfacine -- I'm sorry, yes, for the Guanfacine franchise. The other 2 indications that we are pursuing, I think are at least as attractive as ADHD, one, being pediatric anxiety and the other being hyperactivity in autism. So we've expanded our ways of winning with these additional programs. And although we may have lost a little bit of time choosing a more optimized molecule, I feel that we've also potentially gained a good bit of time, at the end, another 6 months.

Angus Russell

Does that answer your question, Brian?

Brian Bourdot - Barclays Capital

Yes, very clear.

Angus Russell

So I think the other question, LIALDA, Mike, [indiscernible] further if you want to add. So what I said we'll get the studies finishing beginning in next year or early next year. But I don't think, as usual, Brian, we don't know how long it'll take to analyze the data. It is a really big study. It's been ongoing for about 2 years by the time it's finished, so.

Michael Cola

Yes. We're looking at the first half of '12 for headline data. Obviously, that's a big opportunity, and we'll try to get that data out there as quickly as possible.

Angus Russell

And then, Sylvie, similar question. I said it would be into next year before we can start to draw any -- these conclusions on Hunter CNS on the IT platform. Anything you want to say further?

Sylvie Gregoire

Yes. It looks like it's -- the trial that's ongoing is the first time in Hunter CNS patients that are already receiving ELAPRASE for the chronic treatment. The 12 patients were a little over halfway through in that trial, and we'll probably have the full results of that trial sometime next year and be able to -- that will allow us to guide us relative to the what are the endpoints in the pivotal trial, the next trial would be the final trial, and which dose would be the ideal dose in the next trial. So just to remind you, so this program is about -- in terms of time and the same timing of the sense of the Sanfilippo program, which is also ongoing, enrolling well. And we should have results from the Sanfilippo intrathecal trial also sometime next year, then we'll be able to say when we would start the pivotal trial for that, some time again when we have the results, which we would share with you, of course, the top line at that time. The Metachromatic Leukodystrophy program, the MLD program, which is another program where we used the intrathecal administration of an enzyme to treat this disease should start the first patient in by the end of this year as we've submitted for a clinical trial approvals in Europe just recently.

Operator

The next question comes from the line of Ken Cacciatore. [Cowen and Company]

Ken Cacciatore - Cowen and Company, LLC

Question on ADDERALL XR. I was wondering maybe, Angus, you could take us through a little bit of a description of your new expectations, if you have any new expectations for that product, and maybe discuss the IP. I think that's been long forgotten since the settlements, but with Watson's refiling, maybe you could give your thoughts on the IP position there. And then maybe for -- Sylvie, if you could talk about the FIRAZYR anticipated ramp, kind of what lessons learned over in Europe and what our expectation should be in the states, if hopefully you get an approval in August.

Angus Russell

Okay, so AXR, I mean, probably not a lot new to say. I mean, I can reiterate some of the points that we think about, but I wouldn't say there's any dramatically new information out there. So starting off with -- I think it's actually today from some of you probably have noticed, there is an FDA meeting today, I think it is, 27th of July or is it -- yesterday, sorry, okay. It was yesterday, I'm being told. So there was a meeting yesterday, looking at controlled released product. Interestingly, ADDERALL wasn't listed. But we sent people along, I haven't had the feedback yet. So I'll be talking to them, I guess, in the next few days, our enhance people, but basically that was the debate around the controlled release. And that is related, at least, in some way to these because it's addressing the same issue. And you know that is the FDA talked in regard to these controlled-release kind of compounds about partial area under the curve. That's kind of all they said, what everybody's been waiting for, including ourselves I guess, is to get more granularity around what do they mean by that, how does it translate into any studies or how would that translate into people trying to gain approvals. And that's what -- to say I haven't heard the feedback, many of you probably have about that. But, Mike, I don't know if you got anything you want to add to that.

Michael Cola

Yes. There's a little bit out there, Ken. Again, they took that -- their commentary, the white paper from a year or so ago. And they split that critically dosed drugs into 2 categories, narrow therapeutic index and multiphase, modified release. We're in the latter category, so we really were not discussed yesterday. The MPMR will be discussed in October. And again, it -- to Angus's point, I think what we've seen so far or heard so far validates where our CP is around partial AUC.

Angus Russell

As regard to the filers, as you said, the only thing we'd ever seen any really public statements on this regards to Watson, who were one of the original filers that we settled with. But as you know, they basically put in a fresh ANDA. They confirmed it's a new ANDA. That's what everybody understands the status to be. And obviously, what that does is obviously reset the clock, in the sense it sets aside the agreement that we had with them in regard to -- that we would've grant them a license if they got that first ANDA approved. Given this a new ANDA, that will no longer be the case. And obviously, they will have to go through, I guess, a fresh review process with the agency, and the whole thing will start over again in regard to us looking at their product and moving forward legally with that. So that's where we are. As regard to the other filers, we haven't heard anything more. And obviously, the other filers we settled with, and they have to get those ANDAs approved. But all those ANDAs, I remind you, were filed before the current debate around partial area under the curve began. So -- and that's why obviously, I guess, we're all interested to see what the FDA starts to move forward with, in regard to this further granularity, and that, I guess, will determine for those filers what they do with their ANDAs. So I wouldn't expect, as I said, any significant changes in the short term. But I guess, we all will continue to watch any pronouncements or discussion that comes into the public domain from FDA. Other than that, I'd say there's not a lot more really to say. FIRAZYR, Sylvie, you want to say something about FIRAZYR and the launch? Sorry, Graham, you wanted to...

Graham Hetherington

I'm just going to add that there have been 2 new reissued patents with -- dated 2019. So that is an update on IP.

Angus Russell

Absolutely, yes. Thanks, Graham. So that was another question you had, Ken, and Graham's right. We've had 2 passion -- patents reissued. So just to spell that out there, the significant point being here is that if people refile new ANDAs and basically -- everything that sets the clock all over again. And this new Paragraph IV filings, obviously we have fresh patents. So we have more patent at stake than we have the first time around. So that becomes a new feature in any new litigation, let's put it that way, that would ensue if people were to file fresh ANDAs. So I hope that gives some greater clarity. So Sylvie, on FIRAZYR in the U.S.?

Graham Hetherington

Could I just add a bit? I mean, Ken, the macro is, 20,000-foot version, is that our view is that ADDERALL XR will continue to generate revenues at a level significantly higher than the Street is, on average, modeling at the moment. That's in virtually all scenarios.

Angus Russell

Okay. I see that's financially, right? Thanks. FIRAZYR?

Sylvie Gregoire

Yes. Ken, you had a question about our lessons learned in Europe regarding FIRAZYR. Well, FIRAZYR continues to do, is being received well in Europe, especially now that we have the self-administration approval in the label, and that we have seen some uptick in countries where the product has been well received already. So we see some momentum over there. But the ramp-up, well, we expect will be quite different in the U.S., and the reason for that is that the U.S. opportunity has several advantages over the Europe opportunity. First, the competitors have entered only in the last few years. There were no treatments for HAE, and so therefore, the competition was certainly, I would call it, less entrenched than it is -- was in Europe with Berinert. Second, the competitors have established a higher price point in the U.S. compared to Europe. And then lastly, the ability to launch FIRAZYR with self-administration in the U.S. label allows physicians and patients to take immediate and full advantage of the 2 differentiating benefits of FIRAZYR. So out of the estimated diagnosed U.S. patients, it's about 3,000 out of a prevalence of 8,000. We hope to be able to see a nice entry of FIRAZYR into the U.S. market.

Operator

And the next question comes from the line of David Steinberg. [Deutsche Bank]

David Steinberg - Deutsche Bank AG

First question, just picking up on Ken's ADDERALL XR question, kind of looking at things near and longer term. It looks like you may -- you're actually gaining some share in that marketplace. Could you talk about why that's happening, and do you think that will continue? And then longer term, given the discussion of the reissued patents, the challenge by Watson, et cetera, I think you've disclosed before that in 2014 you could get 100% of the rights back under the terms of your settlement with Teva and Impax. It's a long way down the road, but what's -- there must be some increased probability, and what probability would you place on the ability to retain 100% of that product in 2014? And then this morning it looks like you've got some news from your old friends at Genzyme and your new friend at Sanofi, and there's a further delay in their ability to supply the market with Fabrazyme. I was wondering if you could comment on how many new REPLAGAL patients you got. And then given the several-month delay, how many additional patients you may pick up as a result of this further delay.

Angus Russell

Yes. Okay, Dave, so let me deal with the ceiling, if you like, between your 3-question sandwich. So the middle bit was patents and what do we expect in 2014. I mean, you kind of, I think, answered it for yourself. It -- I see that as some way off, given, as I said, that this is an ongoing debate and one where we watch kind of any pronouncements and all of that affects the landscape of litigation, patents and the market itself, then I think it's way too early to start drawing conclusions. I can confirm what you said, and I think that's widely known, that the agreement was struck for 5 years. So in April 2014, Teva have no agreement in place with us beyond that, and similarly, Impax have no agreement beyond October 2014 with us. So that -- those are facts. But at the moment, I think it's -- it would be just wild speculation and not helpful, given, as I said, that this is an ongoing and kind of changing landscape. So with that, let me hand back to Mike in terms of market share and in terms of what's happening in the market generally.

Michael Cola

Hi, David. We do have some fluctuations in the market, and it's usually based on contract wins or losses. Again, I don't see big shifts going forward. It's been relatively stable for quite a while. I can't see the drivers that would change that market dynamic going forward.

Angus Russell

I agree, Mike. You obviously put a lot of faith on IMS data too much, and the movements point to the decimal place, I think, is what we're kind of talking about here rather than any major significant changes. So -- and the final piece then, yes, new and old friends, Sylvie, whichever you want to address.

Sylvie Gregoire

Yes. So you're basing your comments on Sanofi's report this morning. However, in the market, your questions relative to REPLAGAL and how much we grew. Well, we grew well, obviously, and in Q2, we added about 200 net new patients, half of them about coming from switches and half new. So I think the dynamics of us expecting that since the Fabrazyme is not available in large quantities for a while to come, then the new patients are the ones that we would expect to continue to come on to REPLAGAL over the next quarter. And then the switches depends a little bit on the inventory and what happens on the other side of the equation with Fabrazyme. So we, to date, have about 2,600 patients who are being treated with REPLAGAL and about 77% of the x U.S. market at this stage.

Operator

And the next question comes from the line of Bill Tanner. [Lazard Capital Markets]

William Tanner - Lazard Capital Markets LLC

A couple, Angus, on -- related to Advanced BioHealing. Just on the VLU, I'm looking on clinicaltrials.gov and there's, I guess, a single trial. So is it your anticipation or thought that the FDA would approve that expanded indication with that one trial?

Angus Russell

That's the hope, yes.

William Tanner - Lazard Capital Markets LLC

Okay. And then as it relates to -- you mentioned about maybe expanding the manufacturing. Wondering if you could give sort of a rough ballpark in terms of what the CapEx investment might be, and if there's any kind of stab at what may be the product volumes -- dollar volume could be coming out of that as it relates to the new business segment?

Angus Russell

Yes, Bill. I think you know, in fairness, it's early days. I mean, clearly we did our diligence. We're very well aware of the state of our existing manufacturing, and we're well into those discussions with the team. But I made the point, the deal only closed on June 28. So I think it's a bit premature for us to start discussing publicly any kind of definitive plans or investments. We're going through that. We had our view obviously, as I said, coming out to diligence. We feel very confident in 2 things, I would say. One is the ability for us to actually continue to meet the ongoing market demand in the short, medium term. In the longer term, as you said, there will be a need considering that the prospects for growth of product like DERMAGRAFT. Particularly if we subsequently do get an expanded indication in VLU, then down the road, we will need increased manufacturing capacity. And along with that goes all the normal decisions about where is the best place to make that investment, where's the most efficient place. I come back to the point of many people in the world, we've got some of the best expertise here between Shire and ABH now. So you know we are, I would say, in my introduction remarks, one of the world leaders, if not the world leader in fibroblast technology of this nature, and that's what we're bring to bear now with Kevin Rakin and his team. And as soon as we have those plans finalized, we'll obviously communicate that, but I expect it's going to take a little while for us to make those determinations.

Operator

And the next question comes from the line of Keyur Parekh.

Keyur Parekh - Goldman Sachs Group Inc.

It is Keyur Parekh from Goldman Sachs. Two questions for Graham, if I may, please. Graham, just in terms of the guidance for 2011. The first one, do you still expect margin expansion? And if so, kind of what should we think about it? Is it likely to be in the 50 to 100 basis points range?

Graham Hetherington

I -- on a -- as a EBITDA as a percentage of product sales, we started the year saying that we believe that our guidance probably indicated margin expansion from last year's 26%, by the tune of 100 to 200 basis points. We've seen in the first half, 300 basis points, like -- we're going to see some contraction of that during the second half. But I can still see something towards the top end of that range: 200 basis points expansion on top of the 26% last year, embedded in the guidance that we've put out to date. So yes, continued operating leverage based on product sales.

Keyur Parekh - Goldman Sachs Group Inc.

Okay. And then secondly, if I look at the new guidance issued today, if I think about kind of what you're implying in the sense of the full year total revenue growth, so second half likely to be kind of marginally lower than the 22%. So full year will be somewhere in that range, plus margin expansion. So is it fair to assume that you will be guiding to EPS growth of at least kind of 25%, 26% for the year? Is that a fair way to think about it?

Graham Hetherington

I think -- yes, it's going to be very strong double-digit growth. I'm afraid I'm not going to be drawn beyond what we've said already. You can see that market consensus, as captured on our website, is $5.06. We've given you a good indication that we're confident in beating that, and that the detailed guidance that we've given you gets to a very strong double-digit growth.

Operator

And the next question comes from the line of Justin Smith. [MF Global]

Justin Smith - MF Global UK Limited

Just very quickly on ABH. I think, so historically, certainly in the U.S., there's been a sort of lack of trained nurses with using these kind of products. So I just wondered if you agree with that view, and if so, how you would look to address that going forward to maximize the opportunity with DERMAGRAFT.

Angus Russell

Mike, do you want to speak to him?

Michael Cola

Sure, Justin. I think that's a big part of the business model, is the services that we can help them with, train them on. Today, I think ABH is doing a good job of making sure that the people who administer these services are well trained and can use the device as it should be used. It's a little different than our core business, in that it's obviously not a pill. There's a procedure that goes with this, and that training is absolutely core to the success of the product. So they're in the midst of that today, and I think you'll see us continue to expand that - those capabilities.

Justin Smith - MF Global UK Limited

Okay. Can you also just talk a bit about how much of the distribution of the product you'll be controlling, and how that will change or doesn't change? I just want to get a sense, because clearly, the problem with the product in the past was distribution was an issue. So can you just give some color there as well?

Angus Russell

Wow. When you say distribution, I mean, there's a lot of that. I mean, let me walk through it and see if we answers it. I mean, as we just said, the supply chain is good. We can meet the growing demand for the product. I said that a moment ago. If you start to that point, then reimbursement. I mean, one of the things -- I pay a lot of tribute to Kevin Rakin and his team is that they did a very good job on making it clear for the doctors to understand how to code for this, how to get access to the product and all that's there. And then in terms of commercialization, I mean, there is a sales force in place in the U.S., and we believe that's of an adequate size to cope with both the current demand and the growth.

Michael Cola

Yes, and I think it's different than the other iterations of the past of this product. This is a direct selling force. This is not being done through a third party or a distributor. Again, that's one of the ways they get the training out there. It's a more holistic selling model than maybe has been applied in the past.

Angus Russell

Does that address your concern, Justin? I wasn't sure what.

Justin Smith - MF Global UK Limited

No, that's perfect.

Operator

The next question comes from the line of Brian White. [Shore Capital]

Brian White - Shore Capital Group plc

Yes. I -- a question on Guanfacine. I note the new indications, but have not really had a chance to have a look at them. But I just wondered why those new indications were specific to INTUNIV and not perhaps some of the more stimulant-based therapies. And then secondly, on the U.S. ADHD market. And I guess reflecting Shire's sole share of voice in that market, is there perhaps a potential to reduce the promotional efforts behind VYVANSE back to levels pre the launch of VYVANSE, more in line with where you were with ADDERALL XR?

Angus Russell

Okay. Mike, the first one's a -- if I understand it, Brian, the first one was why we're only putting Carrier Wave against Guanfacine, why are we not thinking about other Carrier Wave products, particularly the stimulant class and using Carrier Wave there.

Michael Cola

For the 2 additional indications, pediatric anxiety and hyperactivity in autism. And then the second question, I didn't quite get, but we can come back to that. But if you look at the history of Guanfacine, it's a molecule that's been around for a long time. And given the mechanism of action and a body of literature that we think supports these 2 areas, we think it's worth the investment to study Carrier Wave Guanfacine in both pediatric anxiety and hyperactivity associated with autism. We -- when we make these kinds of decisions, it is based on, I'll say, the existing data. We're obviously going to do signal funding studies to derisk our programs going forward. If we get a big enough signal, as we have done with VYVANSE, we will go forward with them. There is no body of literature, any mechanistic view as to why a stimulant would work in these 2 indication areas.

Angus Russell

The other question, if I understand, then let me try. And, Brian, come back if I don't say it right. But I think Brian's point was we're strong growth, 11% in the quarter in the ADHD market. There's no other promotional spend from any of the competitors, because they're being genericized or having authorized generics. So we're the only -- we've got pretty much 100% share of voice. Does that mean -- what's the implication? Does that mean we can take the promotional spend down, given that that's the situation?

Michael Cola

Yes. I think the beauty over the last 3 years is that we have taken the promotional spend down significantly. I don't know that we've given exact numbers. But we've taken it down about 40% to 45% over the last 3 years, and we continue to get good results. I agree with you, some of that is related to the fact that there's a lessened competition. I think it's also to our credit we have really focused our promotional messages, our channels. We look at this, these channels, every 12 to 18 months. We do a sensitivity analysis as to where we're getting our greatest return on investment, and it really has allowed us to bring our spend down significantly and continue to get good results in the marketplace. And actually the levels we're at now on VYVANSE are actually below where we were on XR 6 years ago.

Operator

The next question comes from the line of Peter Verdult.

Peter Verdult - Morgan Stanley

Pete Verdult from Morgan Stanley. Just one, Angus, one for you. You've traditionally been very -- been able to get very healthy price increases through across the portfolio. I'm assuming the same holds true. So I want to get your thoughts on that given that -- because it's sticking out like a sore thumb, given the current environment in the U.S. and Europe. And then getting a bit persnickety. Just on your gross margin expectations for ABH. Are we to assume there to be 80% flat margin going forward? Of course, there is scope for that to increase, but is it really realistic to think that ABH can get to a group gross margin over the medium to long term? And then a real quick one. I realized it's not exactly a big driver at the moment, but RESOLOR, what's the sort of scorecard at the moment for that product? Is it -- are you still working on getting the sales and marketing pitch right, or is it disappointing expectations? Just some commentary there'll be helpful.

Angus Russell

Okay. So yes, we've been able to see good price increases. I mean, the one thing I would say that's on the Specialty Pharma portfolio, mostly, I mean, in the area of rare diseases, it's not really associated with price increases as such over time. So -- but in the area of Specialty Pharma, clearly in those kinds of markets, there is scope, and we have been able to do, obviously, annual price increases. I would hope that, that would continue. I mean, I think we all have to be very mindful of the kind of pressures that the world faces. In other words, healthcare budgets are very stretched, and the U.S. is looking now very difficult deficit as we all know overall. So I imagine the world isn't going to get any easier. The good thing for me, Peter, actually is we're watching these strong volume growth rates. I mean, when you're looking at 11% script growth coming up from 9% last year and 6%, 7% in prior years and a long-range forecast of 4% or 5%, that's what excites me more. It's seeing the good volume opportunities. So I think that's the great underpinning. It's nice if there's some opportunity to raise some prices in the -- at an appropriate time, that's fine. But I'm not -- we're not certainly planning on that as part of our major thesis. We're looking for good volume opportunities in this continued drive for volume growth. I say, HGT today doesn't really live in a world of significant price increase, and it's now a third of our business. So you need to think of it in those terms, too.

Peter Verdult - Morgan Stanley

Have you taken any price increases midyear yet or not?

Angus Russell

I don't think so, no. So as regards to ABH, I mean, I think there are number of features there. You've obviously got potential for volume growth over time. As we said a moment ago, we will bring our expertise to bear in both potential of scaling up manufacturing. Sometimes you can improve, obviously, percentage gross margins through that. But I think the point here is that -- is looking at the operating margin. I mean, I think it's making a healthy operating margin. And whilst we will look for efficiencies certainly through the manufacturing route, to me, it's already a good margin business.

Michael Cola

Yes. We've seen their cost of goods really be quite consistent and give them that -- I'll say, the underpinnings for us to believe that 80% is the right number going forward.

Angus Russell

Yes. And we'll look to see, as I said, through scaling up, through growth of the business, maybe there's a little bit more to play for. And I think we've had a good track record of making steady improvements in gross margin over time through gaining efficiency and scale and in process. And we'll look to do the same and bring that, as I said earlier, expertise to bear on ABH's business too. RESOLOR, Mike, progress report on RESOLOR?

Graham Hetherington

Yes. RESOLOR continues to move forward in Europe. As you know, we are currently launched in the U.K., Belgium and Germany. This is a product we took over. It had already been launched in Germany. We have spent, I think, better part of the last year figuring out the German market. And just over the last 2 months, we've seen an inflection point based on a different approach and a more focused way of talking to the physician. I think the environment in Europe though is extremely difficult. We continue to push forward on pricing and reimbursement. Given the issues that are currently hampering the European economy, we're finding it difficult, to be honest with you. We are probably going to go back through the loop on a number of countries with a second iteration. But we still have faith in the product. The market research we have back from physicians and patients is excellent. We think, over time, it will be a very nice product for us.

Operator

And the next question comes from the line of David Buck. [Buckingham Research]

David Buck - Buckingham Research Group, Inc.

Can you -- first question is if you could just give us a reminder on the VYVANSE program for adjunctive MDD? How many trials you're going to be pursuing to get to successful Phase III 3s, and what potential best case filing date might be for that? And secondly, on ABH, can you talk a little bit about what the full quarter sales were for the product? It was obviously up about 50% in the first quarter, $44 million. Can you disclose what that number was for June quarter? And what are you thinking about in terms of potential for peak sales, or peak-type sales for a diabetic foot ulcers? And then what would VLU add in your view? And then just finally, on DERMAGRAFT, what's the current sales force base dedicated to that, and what's the expansion plan?

Angus Russell

So let me start with your first of 24 questions, David. VYVANSE for MDD -- no, it's fine. VYVANSE for MDD. As we said, we're just kicking off the studies and enrolling them. I imagine we'll be in a position to talk about this publicly better in probably the next quarter. So we've only just sort of agreed that program with FDA. So I've got the protocol sorted and now we're moving forward towards beginning enrollment. So we chose not to include it this time. So I think it'd be better that we focus time and attention on that, because we may have some more updates as well by then on the other new uses. And so I think let's leave it till the next quarter, when we can give a full kind of review of what does the Phase III program look like overall for new uses of VYVANSE. That was what our mindset is. ABH, you said it correctly, $44 million was up significantly in the first quarter. We're not disclosing at this stage. Because I keep coming back to you now, this thing for us has happened very quickly, and we've only just closed the transaction right at the end of the quarter. And so we will incorporate this into our reporting, obviously, on an ongoing basis in the second quarter. Clearly, from the growth rates you're looking at, the product's going to show very good growth this year, and we're certainly going to be in a range, I would say, of $170 million to $200 million by -- for the full year. So the product is growing very nicely and steadily. And that's really because of the statistics I mentioned earlier, go back to mentioning that 29% of all Americans over the age of 60 now have diabetes. And foot ulcers is sadly an increasing problem of both aging populations and this -- and obesity, which are the 2 drivers that caused these statistics about the growth in secondary diabetes. As regards -- peak sales estimate, it's a big market, you know that, in terms of, say, diabetes and the impact here. And certainly, I believe this product certainly has the potential to be, let's say, a $500-million drug and could probably go on to do more. But I don't want to get ahead of ourselves until we've looked at all the opportunities, and again, get real traction about the underlying growth of the market.

Graham Hetherington

Could I just clarify that the $170 million to $200 million, that is for the full year, not -- that not what would be reported for Shire?

Angus Russell

Yes, yes, that's right. Yes, that a good point. So whilst I said that's the full year, I see where Graham's coming from. Just clarify, we won't -- that basically...

Graham Hetherington

That would be ABH's full calendar year revenues.

Angus Russell

That's their full calendar. And obviously, we'll consolidate from the ownership from the 28th of June onwards. That's the point Graham is making. Good. VLU, obviously, drives the product. So implicit in my saying, this could be $500 million. And I say, we don't want to get ahead of ourselves, because we have her only just -- going to conclude the VLU study by the end of the year. But VLU is the further kind of expansion potential, and we'll see if there is any other implications for down the road, anything to do with expansion outside of the U.S. footprint. VLU offers that opportunity. It's being looked at as a potential global program. So clearly this is what could drive a bigger upside potential, in time, on DERMAGRAFT. So great opportunities for the future. Behind that, we're already discussing a number of other early programs. Again, too early to perhaps talk about that publicly, but I hope in the not too distant future, we can talk about other pipeline opportunities, which we believe are both a good fit with other Shire capabilities and would provide further upside in the space for ABH.

David Buck - Buckingham Research Group, Inc.

And just for final piece, I guess the sales force currently and the opportunity to expand that.

Angus Russell

Yes. Sales force numbers at the moment might be 150, yes. So 150 currently. And as I said, we think that's -- talked to Kevin about that, and we think that's adequate to handle the current sales growth that we're enjoying. But clearly, with the kind of potential projections, we'll revisit that house, and when it's appropriate, if we think we need more, but I would think it'd be incremental layering on. We certainly have adequate coverage now to meet the current kind of growth targets and growth -- delivery of growth we're looking at.

Operator

And the next question come from the line is Gary Nachman. [Susquehanna Financial]

Gary Nachman - Susquehanna Financial Group, LLLP

First, on ELAPRASE benefited from the timing of orders in the second quarter. So does that mean it'll reverse somewhat in the third quarter? It was a very big jump from a couple of quarters ago. So I'm curious, how much more of the market were you able to penetrate? You're already up pretty high to begin with.

Sylvie Gregoire

Hi, this is Sylvie with -- on ELAPRASE. We did see a nice jump in -- on ELAPRASE in this quarter, and it was driven by a few things. I think Graham mentioned already the shipment timing, and you talked about that. There's also an effect of foreign exchange that Graham referred to. But there are 2 significant really underpinning growth drivers in the market, and they come from the emerging markets where we've seen some new patients diagnoses and new patients starting. Remember that -- the drug is well penetrated in the Western world and -- but less so in the emerging markets, in Latin America and Eastern Europe. So the growth mainly comes from these countries. Also, remember this product launched in 2006, and patients were about, I would say, 4 to 6 or 8 years old and -- when they started therapy. And the vial utilization for patients in these -- in the more established markets, in the Western world, increased as a result of this periodic reevaluation of how much you dose the patients and as the patients grow and wait. So some of this is -- can -- is driving the growth of the product going forward. So I think you can see although this might have been a slightly more growth in this quarter, you'll continue to see for this year, I think, some mid-teens sort of type growth for that product from year-over-year.

Gary Nachman - Susquehanna Financial Group, LLLP

Okay, that's helpful. And then second question, just the higher spending levels for 2011, especially in SG&A. Those were a lot higher than I expected in the quarter. What's most of that going towards outside of ABH? Maybe you can just speak qualitatively around that?

Graham Hetherington

Well, in the quarter, we -- ABH isn't in there. I mean, it's only nominally. And the real drivers in the second quarter of SG&A are -- in terms of the year-on-year increase, was last year, the SG&A was actually relatively low. The second is, as I described earlier, we have got the inclusion of Movetis in there, we've the full impact of operating the Swiss Hub, which wasn't in Q2 last year. And we've got significantly more presence around the world, which we've invested in having sustained presence there. So -- but those are the key drivers, along with the foreign exchange driver. That -- if you go and take combined R&D and SG&A, I think the percentage increase in the second quarter year-on-year was, I think, 25%, 26%. If you strip out that $27 million of foreign exchange that I was talking about earlier, then the year-on-year increase, it reduces to 19%. They're the key -- that's key shape of it.

Angus Russell

And simply put, when you drive in a business as fast as Shire's been driving in the last few years, you have to start investing behind that. So as Graham says, when you talk about Swiss Hub, that's majority of that -- the people there are to do with the international sales and marketing. Now that's our full international sales and marketing hub now supporting all this growth in these expanding geographies and then the small sales teams and presence in each of the countries. But simply put, when you're delivering like we just did in the quarter, 30% product sales growth, you got to invest behind that occasionally.

Operator

The next question comes from the line of Tim Chiang.[CRT Capital]

Timothy Chiang - CRT Capital Group LLC

I wanted to get some more clarification on REPLAGAL and the opportunity, potentially, in the U.S. market. Certainly, you've dominated in the European market in Fabry disease, and I think you had been looking at a switching study. Could you provide an update to that?

Angus Russell

Sylvie?

Sylvie Gregoire

Yes. So in these, we're doing well in the x U.S. market, where our market share is very high and as of course, that might perdure for a while as the Fabrazyme is entering its third year of supply challenges in around the world. In the U.S., however, we've decided to -- look, remember we have lots of patients that have switched already from Fabrazyme to REPLAGAL. That's in the U.S. and all over the world. But there are few studies that are ongoing, where we're collecting the data in order to assess it and see if this would satisfy the agency's view of -- for a -- for filing of a BLA in the U.S. So we intend to meet with the authorities. Look at this data, this number and meet the authorities in the fall, and we'll be able to be in a position to see if this data would satisfy on submissions of the product into the west.

Timothy Chiang - CRT Capital Group LLC

And maybe just one quick follow-up on LIALDA and this maintenance of remission indication approval. How does this additional indication help you grow LIALDA in the ulcerative colitis market?

Angus Russell

Yes, Mike?

Michael Cola

Yes. I think it helps, but it doesn't help a lot. I mean, today, the product is probably used in that way to start with. We have a claim, obviously, for induction of remission, and this just builds on it.

Timothy Chiang - CRT Capital Group LLC

Okay. And then just one last question -- sorry, for all these questions. But on FIRAZYR, you talked a little bit about the potential for a lower price for the product. What sort of analysis have you done in the hereditary angioedema market? And also what size sales force do you really need to have to build market share in this population?

Angus Russell

Hey, Sylvie, I'm not sure you did actually say that, a lower price.

Sylvie Gregoire

No. I actually said that in the U.S. as opposed to Europe the price point that was established by the products that have already entered the market is quite high. And so therefore, we will obviously have done our own market research, and we're just ahead of launch. So we're not going to reveal obviously what that is. But there's a -- we'll base our pricing based on what the opportunity represents in the U.S. and what payers' research has revealed to us in terms of the their view of that. And in terms of the launch, I mean, obviously we received that -- an opportunity though very quickly in that market.

Timothy Chiang - CRT Capital Group LLC

Sales force size was the question. What sort of sales force?

Sylvie Gregoire

Oh, I'm sorry. For sales force size ,well, as you know, it's obviously a rare disease, and it's still treated by very few allergists in the U.S. And so we have a sales force size of probably less than 20 that can cover this market, the U.S. market.

Angus Russell

World of rare diseases. I'll take one more question. I'm conscious we've been on the call now an hour and a quarter, so. And it's a busy day for all of us, so I'll take one more question and then I think we should wrap up.

Operator

The next question comes from the line of Florent Cespedes.

Florent Cespedes - Exane BNP Paribas

Florent Cespedes from Exane BNP Paribas. Three quick ones. First, on DERMAGRAFT. What is the potential of the product in Europe, knowing that the big issue is price or is definitely not where you see the big potential for this drug? Secondly, on ADHD Europe. When will you disclose your strategy for the European market for VYVANSE and INTUNIV? And the last one, clarification on the guidance. You now anticipated 20% growth for R&D and SG&A. This year is a different versus Q1 guidance, mainly due to ForEx and BioHealing, or will you have additional resources for the second half? If yes, which -- in which area will you add this additional resources?

Angus Russell

Okay. Let me deal with the first 2. And then I think I understand the third, I'll refer that to Graham, but I'll try and rephrase that if I can as well, the third one. But -- I mean, DERMAGRAFT, as you said, approved in the U.S., was interesting. I mean, originally approved as a device. I think in Europe, it's pretty clear it would be a biological product. I mean, it's an interesting time in regenerative medicine, as you know. Many of these products when they came out or any of them were around a few years ago, regulates I don't think we're entirely clear on which was -- what was the appropriate, put it that way, regulatory pathway for approval. But that kind of clarity is emerging as more of these products obviously start to appear now. And so that was the reason, historically, that the product wasn't brought to Europe. As we said, we're looking at all of these things again. We're revisiting all of these, but we don't have anything more to say. I did say that VLU, it's very clear on 2 fronts. One is that it's going to be approved. If it's approved as a biological product and is global program, so that would include, obviously, European opportunity. VYVANSE EU, I'm not sure we want to say anything more at this stage. I mean, like any product, it'll -- our positioning of it all will be very much determined by the programs in Phase III and the data that we generate, and those are winding up as we said in the second half of this year. And we are on track with our original plan, which is to file with the MMA (sic) [EMEA] at the end of the -- before the end of this year or at the end of this year. So, Mike, I don't know if you want to say anything more than that?

Michael Cola

No. I think at the end of the year is more appropriate. I don't think anything has changed though, since we've talked about this over the last few years. The strategy was to establish our footprint with EQUASYM, come in with VYVANSE as the standard of care and then augment that with INTUNIV as a non-stimulant, very similar to the U.S. Obviously, to Angus's point, the trials are different for a European submission. We'll have additional data in that dossier that'll help direct us and fine-tune the positioning.

Angus Russell

Okay. And then Graham, I think the question at the end was your guidance was 20% SG&A and R&D combined. So the costs going up 20%, of which you said, in the second half, 5% will be ABH. That was on the slides, but I don't know if you have anything else. So I think that was the question. It was kind of picking up, are there any one-time items that increased that so significantly and what's...

Graham Hetherington

No. I think the buildup is we started the year with plans for R&D and SG&A combined to increase in the range of 10% of 13%. And then as we went through the first quarter, we had very positive news on the pipeline, which took that up to 13%. That 13% was pretty broadly made up of the inclusion of Movetis during 2011, the Swiss Hub in 2011, other international infrastructure and R&D progression. As we've announced these results, we've changed, moved that guidance up from 13% to 20%, which is an increase of 7 percentage points. Five percentage points of that are relate entirely to the inclusion of ABH's cost base, and the final 2 percentage points relates to the impact of foreign exchange that we're seeing in the full year.

Angus Russell

Okay, very clear, thanks. Okay. So with that, I thank you again, all of you, for your attendance on today's call. I know I said it's a busy day in the sector for you all again.

So overall, as I said, very pleased with the strong first-half performance. We believe, as Graham has indicated in the guidance, that we can sustain that through the second half of the year, and then that will result, we anticipate, in another very good year for Shire.

So overall, Shire continues to perform very strongly and very healthfully in what, I'm afraid, for all of us at the moment is some days a gloomy and depressing world of the economic environment. But Shire's in great shape, investment in the future continues, and we look forward to speaking to you all again soon. Thank you very much.

Operator

Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining, and have a very good day.

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