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Shire finds new niche for Vyvanse

BROKERS' VIEWS: Positive clinical trial results help to diversify potential of Shire's portfolio
January 14, 2011

What's new:

■ Positive data for Vyvanse

■ Opportunity to offset generic erosion

■ Firazyr gets a boost

IC TIP: Buy at 1,640p

Shire's share price rose 3 per cent to an all-time high after the speciality pharmaceutical company produced encouraging data for a new indication for its attention deficit disorder drug (ADHD) Vyvanse in treating excessive daytime sleepiness disorder (EDSM). The news gives Shire the opportunity to make in-roads into the $1bn (£635m) market currently dominated by Cephalon's Nuvigil drug.

The main condition to benefit from Vyvanse treatment is narcolepsy and it would have the advantage of a lower, more potent dose; Vyvanse seems to be most affective at a dose of 70 mg, compared with Nuvigil's 250mg. The next step for Shire is to be able to repeat the results to satisfy the regulators. The need to expand the indications for ADHD drugs is necessary as the threat of generic competition is always a pressing concern, especially for sales of Adderall XR. The drive to offset this generic erosion was further strengthened at the end of last year by positive trial results for Firazyr, a treatment for hereditary angiodema (sudden skin swelling). Although the drug is approved in nearly 40 countries, the US Food and Drug Administration demanded an extra late phase clinical trial before it would consider approving it and the so-called FAST-3 trial is Shire's attempt to get Firazyr into the US market.

Charles Stanley says...

Accumulate. The anecdotal evidence over the Christmas period is that Vyvanse has potential in a variety of new indications and Shire has certainly been talking this up. Obviously, the company will need to present more tangible evidence before it can be factored into the valuation. But what is becoming apparent is that Shire's human genetic therapy business (HGT) does have real potential for growth; the company is confident that it can retain market share it won as a result of Genzyme's manufacturing problems with Cerezyme, especially as patients tend not to risk switching medicines as soon as a reliable supply has been established. The risk for the year is that the market became accustomed to upgrades to 2010 and a lack of these might lead some investors to lock in profits.

Barclays Capital says...

Overweight. Plenty of further work is needed, but this is an attractive opportunity for Shire. Cephalon's Provigil/Nuvigil franchise generates $1bn in annual revenues, a significant potential opportunity for Shire given our forecasts for group revenues are around $4.5bn by 2014. We currently do not include any contribution for Vyvanse in excessive daytime sleepiness. However, it is too early to include revenues for this indication or for a major depressive disorder, for which Vyvanse showed positive Phase II results towards the end of last year. As with depression, Shire will need to conduct further, significant studies of Vyvanse in daytime sleepiness and show positive results.