Shire shines as a post-AbbVie solo act

It is striking how quickly Shire’s stock has returned to the highs of last October, when it was still being bid for by AbbVie. The recovery is all the more remarkable when you consider the mixed news on developments designed to counteract the expected 2023 patent expiry on its biggest-seller, Vyvanse.

In the past two days one key asset looks set to be launched a year early, but two others are in doubt. With investors rewarding Shire with a 5% rise this morning the group’s chief executive, Flemming Ornskov, can comfortably shrug off the AbbVie deal’s collapse, which had caused a 30% share price crash.

Armed with a $1.6bn AbbVie break-up fee Shire went shopping and snared NPS Pharmaceuticals in January. Now the focus has fallen on several critical 2015 pipeline assets whose development weighs heavily as Shire moves to reduce its reliance on Vyvanse, which is expected to sell $1.5bn this year.

Mixed data

The best news came yesterday with the US FDA granting priority review to lifitegrast, a dry eye project Shire had insisted on filing despite some decidedly mixed data.

One lifitegrast phase III trial had yielded a positive effect on signs but not symptoms of dry eye, while a second hit the tougher symptom endpoint but missed on signs. The most important result of the FDA’s action is that the agency seems willing to evaluate these data without waiting for readout from a third study, Opus-3.

This puts potential approval at the end of this year, Bernstein analysis said – roughly a year before consensus expectations, as compiled by EvaluatePharma. Before yesterday’s development the sellside expected lifitegrast to achieve $560m of 2020 sales in a market currently dominated by Actavis’s Restasis.

Another vital Shire project, SHP625/LUM001, had a major setback, however, missing primary and secondary endpoints in a small phase II study in Alagille syndrome, a rare liver disease. Shire had acquired the molecule as part of the purchase of Lumena (With an eye on Allergan and Valeant, Shire bulks up, 13 May 2014).

Jefferies analysts played down the failure, saying expectations had been low. Nevertheless, consensus forecasts put 2020 sales at $372m, and some analysts expect SHP625 to become a blockbuster; still, sales expectations include three other liver disease indications, such as primary biliary cirrhosis, that remain in play.

Also still active is SHP626/LUM002, a phase I NASH asset that was an important part of Shire’s rationale in the Lumena acquisition.

Attention deficit

With Vyvanse nearing its patent expiry Shire needs to look beyond ADHD to maintain its aggressive growth plan, but has had mixed fortunes with a franchise extension plan – Vyvanse added binge eating as a new indication, but failed in depression.

This is not to say that ADHD itself is being de-emphasised, as shown by Shire’s pursuit of SHP 465, a mixed amphetamine project in development for adult ADHD. While this is a quite separate use from the childhood condition the FDA has mandated an additional paediatric study to understand the effect should SHP 465 be used outside its targeted indication.

The project has a long and tortured history: it had first been filed in 2006, was slapped with an approvable letter the year after and was slated for re-filing in 2014. Formalisation of the paediatric trial puts launch back by another year to late 2017 and probably makes 2020 revenue forecasts of $254m unattainable, but does at least show a way forward.

Assuming 88% chance of success SHP 425 carries a $653m NPV, while SHP625 and lifitegrast contribute $1.3bn and $1.6bn respectively to the combined NPV of Shire’s R&D and marketed assets, which EvaluatePharma calculates to be $29.5bn.

This in itself should give some biotech bulls pause for thought, given how far the group’s market cap has run in the wake of AbbVie’s approach: Shire is presently valued at $47.6bn. With such backing from the markets Shire should look forward to a continued solo existence, which as EP Vantage has repeatedly argued is no bad thing.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobPlieth on Twitter

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