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Shire is 'firing on all cylinders' says CEO as he mulls ADHD spinoff

Shire plc CEO Flemming Ørnskov announced he may float the group's flagship neuroscience business, which is built on its attention deficit hyperactivity disorder franchise, as the Dublin-based pharma reported second-quarter results ahead of analyst expectations and said the integration of Baxalta is ahead of schedule.

"We are at an exciting inflection point with both our rare disease and our neuroscience businesses," Ørnskov told reporters on a call after the group announced second quarter results. "The critical strategic decision before us is to determine how best to manage and optimize these two businesses," he said. The move is an "absolutely natural evolution" given the fact that both businesses are strong, profitable and have excellent pipelines but are very distinct, he added. Reiterating his commitment to innovation in attention deficit and hyperactivity disorders, Ørnskov said a decision on whether to IPO the business will be taken by year-end.

In the meantime, Shire will launch its newest once-a-day ADHD drug in September. Mydayis, which received U.S. Food and Drug Administration approval June 20, is for young adults of 13 years and over. It is also continuing research on SHP68, a new compound for multiple neurological conditions.

Sales of its Adderall XR medication fell 30% from the prior-year quarter due to the introduction of generic competition, while sales in hematology came in at $965 million for the quarter, boosted by a strong hemophilia franchise gained from the acquisition of Baxalta last year.

Ørnskov said he still considers hemophilia a "growth market" despite recent positive data from Roche Holding AG's experimental hemophilia treatment ACE910, which he acknowledged will take market share should it gain regulatory approval in the inhibitor market, which is worth $800 million to Shire.

"It's clear that if ACE910 gets approved, there is significant unmet need in this market," Ørnskov said. "If the product pans out and it is approved then it will take share away from us," he said, adding that the inhibitor market accounts for 5% of the group's overall turnover, with 65% of that business outside of the U.S. where there is a different dynamic. "But it's also important to realize that outside the U.S., globally this is still a significant growth market and there are many patients that don't receive optimal treatment either on demand or as prophylaxis, so we see it as a continued growth opportunity."

The Baxalta acquisition introduced medicines in immunology and cancer, as well as hematology to the biotechnology company, which had been best-known for its rare diseases and ADHD portfolio. The CEO said Shire is confident of attaining cost synergies of at least $700 million by the third year after the deal, after achieving $400 million in the quarter compared with the company's own estimate of $300 million.

"Shire is firing on all cylinders and is in robust health," Ørnskov said.

Analysts at Jefferies reiterated a "buy" recommendation on the company following the results.