“Shaping Shire’s Future”
Matthew EmmensChief Executive Officer
September 8, 2003
A Strategic Review
THE “SAFE HARBOR” STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements included herein that are not historical facts, are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialise, Shire’s results could be materially affected. The risks and uncertainties include, but are not limited to, risks associated with the inherent uncertainty of pharmaceutical research, product development manufacturing and commercialisation, the impact of competitive products, including, but not limited to, the impact on Shire’s Attention Deficit Hyperactivity Disorder (ADHD) franchise, patents, including but not limited to, legal challenges relating to Shire’s ADHD franchise, government regulation and approval, including but not limited to the expected product approval date of lanthanum carbonate (FOSRENOL®) and METHYPATCH®, and other risks and uncertainties detailed from time to time in our filings, including the Annual Report filed on Form 10-K by Shire with the Securities and Exchange Commission.
Trade mark Information:The following are trade marks of Shire or companies within the Shire Group, which are the subject of trade mark registrations in certain territories.ADDERALL XR® (mixed amphetamine salts), ADDERALL® (mixed amphetamine salts), AGRYLIN® (anagrelide hydrochloride), AMATINE® (midodrine hydrochloride), CALCICHEW® (calcium carbonate), CARBATROL® (carbamazepine), COLAZIDE® (balsalazide), DEXTROSTAT® (dextroamphetamine salt), EMUTROL™, ENSOTROL®, FARESTON™ (toremifene)FLUVIRAL® S/F (split-virion influenza vaccine), FOSRENOL® (lanthanum carbonate), METHYPATCH® (methylphenidate), MICROTROL®, MICROTROL DR™, MICROTROL PR™, MICROTROL XR™, OPTISCREEN®, PROAMATINE® (midodrine hydrochloride), PROSCREEN™, RAPITROL™, SOLARAZE® (diclofenac sodium 3%), SOLUTROL™, TROXATYL® (troxacitabine), XAGRID® (anagrelide hydrochloride).The following are trade marks of third parties: 3TC (lamivudine) (trade mark of GlaxoSmithKline (GSK)), ADEPT (4% icodextrin solution) (trade mark of ML Laboratories plc), AZT (trade mark of GSK), BIO-HEP B (trade mark of Berna Biotech AG), COMBIVIR (trade mark of GSK), EPIVIR (trade mark of GSK), HEPAVAX GENE (trade mark of Berna Biotech AG), NEISVAC-C (trade mark of Baxter International Inc.), PENTASA (trade mark of Baxter International Inc.), REMINYL (galantamine hydrobromide) (trade mark of Johnson & Johnson), TRIZIVIR (trade mark of GSK), ZEFFIX (lamivudine) (trade mark of GSK), Concerta (trade mark of Johnson & Johnson), Metadate CD (trade mark of Celltech), Ritalin LA (trade mark of Novartis), Strattera (trade mark of Eli Lilly), Focalin (trade mark of Novartis), ASACOL (trade mark of Procter & Gamble).
Overview
A highly-focused, $BN+ specialty pharmaceutical company
Central Nervous SystemGastrointestinal disordersRenal Disease
Growth through acquisition and mergersSix major deals completed in eight years
Dynamic growth in sales and earnings (2000-2002)*Revenue Growth: +26%EPS Growth: +26%
*EPS and Revenue results include revenue from discontinued operations but exclude stock option compensation expense and exceptional charges in relation to BioChem merger in 2001
Strategic Review
OpportunitiesProven effective specialty physician modelAttractive late stage projects – CNS, GI, and renalStrong balance sheet – cashExperience and success in M&A
ChallengesLoss of marketing exclusivity and generic challengesR&D budget demands for the broad portfolioRelatively complex infrastructure
The Strategic Plan
Focus the business
Build the therapeutic franchises
Launch aggressive business development program
Increase efficiency / re-direct savings to support major growth opportunities
Focus R&D
Close early stage research (lead optimization)$15 million annual savings
Actions - July 31, 2003
Spin off vaccine business (H1 2004)Includes four Phase I projects and revenue stream (Fluviral)Maximize shareholder value
Exit oncology Out-license Troxatyl®
Seek partner for anti-infective Seek partner for SPD754 - HIV
Rationalize technology effortsMaintain focus on advanced drug delivery platforms
R&D Portfolio FocusP/C and Phase I Phase II / III / Reg In Market R&D Support
Troxatyl AMLTroxatyl Pancreatic
Xagrid Agrylin
SPD473SPD483SPD465
SPD503Methypatch
Carbatrol Bipolar
ReminylAdderall XR
Carbatrol
SPD476SPD480
Pentasa 500mg
PentasaColazide
Fosrenol ProAmatineAdept
SPD756 (HIV) SPD754 (HIV) 3TC
SPD707 (Flu T-) Fluviral SPD701 (Flu)
SPD703 (S.pneu)SPD704 (N.menin)SPD705 (P.aeru)
Haematology
CNS
GI
Other
Anti-viral
SPD451
Continue R&D
Out-license / Exit
Legend:
Haematology
CNS
GI
Other
Anti-viral
Oncology
Vaccines
RegistrationPhase 3Phase 2
R&D Key Project Progressions 2003/2004
XAGRID (EU)FOSRENOL
SPD503 (ADHD) 2005
METHYPATCH (ADHD)ADDERALL XR (adult)
CARBATROL (bipolar) H1 2004
Pentasa 500mg (UC) H1 2004
SPD476 (UC) H2 2003 2005SPD480 (UC) 2006H1 2004
SPD473 (ADHD) H2 2003 2007
SPD754 (HIV) 2006
Total Revenue: $1.037 BillionTotal Revenue: $1.037 Billion
AdderallAdderall®®11%11%
ProAmatineProAmatine®®
5%5%
PentasaPentasa®®
8%8%
CarbatrolCarbatrol®®4%4%
AntiviralsAntivirals16%16%
OthersOthers13%13%
AgrylinAgrylin®®
12%12%
Adderall XRAdderall XR®®
31%31%
2002 Product Sales & Royalties2002 Product Sales & Royalties
Building the franchise: Adderall XR
Near-term
Successful conversion and defense of Adderall XR®
Highly effective marketing and sales program aimed at high-prescribing specialists
ExclusivityHatch-Waxman to October 2004Potential Pediatric extension: April 2005 Drug product patent to 2018Additional patent issued August 12 2003
Building the franchise: ADHD
Prevalence Diagnosed TreatedPrevalence Diagnosed Treated
US Pediatric Patients*
Million
US Adult Patients*
8.2
4.8
.37
1.5
.36
1.4
*National Institute for Mental Health, 1999
US ADHD
33%$ GrowthJuly 2002-July 2003
16%Growth in TRxJuly 2002-July 2003
$1.7 Billion$ MarketJune 2002-June 2003
*source IMS data
Building the franchise: ADHD
sNDA for adult indication filed - Action date: October 20033 year exclusivity plus possible pediatric extension
SPD503Novel formulation of a non-scheduled compoundPhase III trials (pediatric) initiated Q1 2003NDA registration target: H1 2005Patent protection through 2015
MethyPatch ®First transdermal drug delivery product for ADHD Non-approvable – discussing needs for resubmissionPartners currently addressing outstanding issues
SPD473Phase I proof of concept study ADHDDecision on further progression H2 2003
Building the franchise: Carbatrol®
Prevalence Diagnosed TreatedPrevalence Diagnosed Treated
Epilepsy*
Million
2.3 2.3
1.6
Bipolar Mood Disorder*
1.5
.75 .65
*Epilepsy Foundation of America
Bipolar Mood Disorder
Billion
June 2002-2003 2007 L.E.
$1.9
$2.4
$ Market*
* Decision Resources Report on Bipolar Mood Disorder: February 2003
Building the franchise: Carbatrol®
Phase III trials in bipolar patients well advanced
Benefits:Excellent mood stabilizerUnique formulation with smooth response
sNDA registration target: H1 2004
Eligible for 3 year exclusivity under Hatch-Waxman
Drug product patent valid until 2011
Paragraph IV letter received in July 2003
Meeting the Challenge: GIInflammatory Bowel Disease*
500,000
600,000
Ulcerative Colitis Crohn’s Disease
Prevalence Treated
500,000500,000
*Crohn’s and Colitis Foundation of America, 2001
Inflammatory Bowel Disease
13%$ GrowthJuly 2002-July 2003
$658 Million$ MarketJune 2002-June 2003
Building the franchise: GI
Pentasa® (ulcerative colitis) – Near-term
Phase II development under way: 500 mg / double-strengthGreater convenience and compliancesNDA filing H1 2004
SPD476: Ulcerative colitis – mesalamine
High strength to improve compliance in long-term therapyNDA filing 2005Patent protection through 2020
Establishing a franchise: Fosrenol®
Approvable letter received from FDA
Discussions ongoing with FDA and EU
No new issues raised by regulatorsGenerating data requested (submission H2 2003)
Continued confidence in safety
No CNS toxicity seen in animal and clinical studiesNot found to cross blood brain barrier
Patent protection through 2016
Global opportunity
sevelamersevelamer calcium calcium acetateacetate
Establishing a franchise: Fosrenol®
455,000410,000
End Stage Renal DiseaseUS Market Profile
Diagnosed Treated
US Renal Data System, 2002
$223 Million(June 2002-2003)
OTC calcium OTC calcium formulationsformulations
Enhanced Business Development
Primary ScreensProducts targeted at the specialist physicianPrefer those aligned with / complementary to current therapeutictargets but will consider attractive new areaPatent protectedProvide revenue growth
Both “incremental” and “transformational”
Opportunities most prevalent in US
Strong cash position plus debt capacity provide flexibility
Enhanced Business Development
Commitment to R&D / late-stage focus
Skilled registration/regulatory group
Expert commercialization
Reputation/access to high-Rx specialist MDs
Sales force productivity
“Big enough, but not too big”
Shire: A Partner of Choice
Increase efficiency
Restructure for growth
Ongoing review of operating sites
Ongoing review of organizational structure
Providing greater efficiency in global operations
Improve communications and team work
Financial Performance – Q2 2003
+10%38 centsADS
+10%$65.5 millionNet Income
+25%$94.2 millionOperating Income
+21%$299 millionRevenue
Growth overGrowth overQ2 2002Q2 2002
Balance Sheet - $ Millions
1,185Gross Cash*
807Net Cash
1,713Net Assets
As of 6/30/03
*Cash, cash equivalents and marketable securities
Financial Outlook – 2003 Guidance
Mid to high teensRevenue Growth
High single to low double digit*EPS Growth (per ADS)
30% rangeOperating Margin
*Excludes closure of Lead Optimization Business: Impact approx. $.03
Shaping Shire’s Future
Clear Strategy
Focus R&D on late-stage development / key franchisesProtect and grow major franchisesSupplement growth through licensing/M&A
Clear Strengths
Proven, highly successful business modelFranchise life cycle opportunitiesStrong pipeline – CNS, GI, RenalManagement commitment to sharpen focus/reduce costs
“Shaping Shire’s Future”
Matthew EmmensChief Executive Officer
September 8, 2003
A Strategic Review