Shire plc (SHPGY) recently announced that the US Food and Drug Administration (FDA) approved the use of attention deficit hyperactivity disorder (ADHD) treatment Vyvanse (lisdexamfetamine dimesylate) in adolescents aged 13 to 17 years.
The approval was based on positive results from a four-week study of Vyvanse in 314 adolescent ADHD patients. The trial demonstrated that the 30 mg, 50 mg and 70 mg strengths of the drug when given thrice daily were more effective in improving the symptoms of ADHD when compared with placebo.
The drug is already marketed in the United States in six once-daily dosage strengths of 20 mg, 30 mg, 40 mg, 50 mg, 60 mg, and 70 mg, for the treatment of ADHD in children aged 6 to 12 years and adults.
Additional Study
Earlier, during the third quarter, Shire reported positive mid-stage data on Vyvanse in patients with residual symptoms of depression following treatment with Forest Laboratories Inc.’s (FRX) Lexapro (escitlopram) for major depressive disorder (MDD).
Shire plans to initiate phase III trials with Vyvanse as an adjunctive therapy to primary MDD treatments in mid 2011 following discussions with the regulatory bodies for setting the development program parameters.
Deal Termination
During the third quarter, Shire ended its partnership with GlaxoSmithKline plc (GSK) for the marketing of Vyvanse in the United States. Per the terms of the termination agreement, no payment was made or is due to Glaxo since the agreed-upon sales of the drug were not achieved. The termination of the co-promotion agreement is not expected to affect future US sales of Vyvanse.
Shire and Glaxo had entered into a three-year co-promotion agreement for the commercialization of Vyvanse in March 2009 with the aim of improving the drug’s recognition and efficacy in treating ADHD adult patients. The two companies had agreed to share profits above an agreed-upon, undisclosed baseline figure.
Glaxo filed a lawsuit against Shire demanding compensation following the termination of the deal. Shire views Glaxo‘s demand for compensation frivolous given that the required sales thresholds were not met.
Our Take
We currently have a Neutral recommendation on Shire, which is supported by a Zacks #3 Rank (short-term Hold rating). We view the approval of Vyvanse for adolescents as a positive given that Shire’s ADHD franchise is shifting from Adderall XR to Vyvanse, with third quarter sales of the latter up 17%. Longer term, we believe that Shire needs to expand its pipeline in order to maintain growth beyond 2015, as there are very few projects to be launched thereafter.
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