Shire
BioChem Pharma
Deutsche Bank Health Care
Conference
9 May 2001
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Shire Q1 Results
Proposed merger with BioChem
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Comment on "Forward-Looking Statements"
The statements made during today's presentation, or in response to questions
during the Question & Answer period, that are not historical facts, are
forward-looking statements that involve risks and uncertainties, including but
not limited to, risks associated with the inherent uncertainty of pharmaceutical
research, product development and commercialisation, the impact of competitive
products, patents, and other risks and uncertainties, including those detailed
from time to time in periodic reports including the Annual Report filed on Form
10K by Shire with the Securities and Exchange Commission.
2
Section 57 Financial Services Act
This presentation does not constitute an offer to sell or issue, or a
solicitation of any offer to purchase or subscribe for, any ordinary shares in
Shire Pharmaceuticals Group plc (the "Company" or "Shire"), nor shall it form
the basis of, or be relied upon in connection with, any contract for such
purchase or subscription. No representation or warranty, express or implied,
is made or given by the Company as to the accuracy or completeness of the
information or the opinions contained in this presentation and no liability is
accepted for any such information or opinions.
This document has been issued by, and is the sole responsibility of, the
Company. This document has been approved by Deutsche Bank AG London ("Deutsche
Bank") solely for the purposes of section 57 of the UK Financial Services Act
1986.
Deutsch Bank, which is regulated in the United Kingdom by the Securities and
Futures Authority Limited, is acting for Shire and no one else in connection
with the Merger and will not be responsible to anyone other than Shire for
providing the protections afforded to customers of Deutsche Bank nor for
providing advice in relation to the Merger. Persons viewing this document are
directed to the Shire press announcement dated 11 December 2000 (the "Press
Release"), which contains addiitonal details and information relating to the
Merger.
3
In connection with the proposed Merger with Shire and BioChem, Shire previously
filed a Proxy Statement with the US Securities and Exchange Commission ("SEC")
and mailed the Proxy Statement and a UK Circular and listing particulars (the
"Circular") to its shareholders. Other materials relating to the Merger have
also be filed with the SEC. Investors are urged to read the Proxy Statement,
Circular, and other relevant documents filed with the SEC, including Shire's
Annual Report on form 10-K, which include important information.
The Proxy Statement and the Circular should not be distributed, forwarded or
transmitted to, in or into Australia or Japan.
4
Q1 Financial Highlights
(before APB 25 charge)
o Revenues $155.6m +31%
o Operating income $ 42.0m +44%
o Income before tax $ 40.1m +50%
o EPS (diluted)
o Ordinary shares 10.7 cents)
)
) +46%
o ADS 32.1 cents)
5
Key Product Sales
Q1 01 vs Q1 00
Q1 01 Q1 00 Sales Scrip*
$m $m Growth % Growth %
-------- -------- --------- --------
Adderall 70.1 54.5 +29 +20
Agrylin 17.1 11.0 +56 +42
Pentasa 14.4 10.3 +39 +10
Carbatrol 9.6 5.6 +72 +43
ProAmatine 7.6 3.6 +112 +31
* IMS Data
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Balance Sheet
31.3.01 31.3.00 31.12.00
$m $m $m
Net Assets 762 631 753
Net Cash 97 (8) 58
Gearing Nil 1% Nil
7
AdderallTM
o Adderall(TM)
o One tier pricing since 1 May 2001
o Adderall XR* (SLI 381)
o Novel, once a day formulation of Adderall(TM)
o First results presented in October 2000
o Phase III data presented at the APA on 9 May 2001
o NDA submitted early - 3 October 2000
o Anticipated launch in Q4 2001(1)
(1) Subject to regulatory approval
* Trade Mark under registration
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Agrylin(R)
(anagrelide)
o European Commission granted orphan drug designation for anagrelide in
treatment of essential thrombocythaemia
o Orphan drug status already granted in US and Japan
o USPs:
o Selectively reduces platelets
o Offers a new therapy for avoiding potential risks of "pan-marrow"
treatments
o Extensive US marketing
o Extensive safety database >4000 patients with myeloproliferative
disorders (MPD's) Reminyl(TM)
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Reminyl(TM)
o UK NICE* endorsements**
o US launch May 2001 by Janssen Pharmaceutica and Ortho McNeil
o USPs:
o Reminyl delays the emergence of behavioural symptoms
o Has been shown to have a positive effect on four domains of AD:
o Cognition
o Activity of Daily Living
o Delays the emergence of behavioural symptoms
o Reduction in Caregiver Burden
o European label states Reminyl's unique Dual Mechanism of Action
* National Institute for Clinical Excellence
** on 19 January 2001 recommends that treatments for Alzheimer's disease
should be made available as part of the management of the disease in the
UK, Reminyl being such a treatment
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Foznol*
o Lanthanum carbonate
o First European filing submitted on 13 March 2001
o US filing expected by late Q4 2001
o USPs:
o Offers advantages in effectiveness and side-effect profile
o Non Calcium based - toxicity advantages
o User friendly formulation (chewable tablets)
o
* Trade Mark under registration
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Shire - BioChem merger
Key messages:
o Similar strategies
o Track record of high profitability
o Above industry growth1
o More products and projects
1 based on pro forma 2000 combined company revenue
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Combined company strategy
Business Innovation, specialty pharma
Function Search & development plus marketing
Geography Direct marketing in 7 of the 8 key markets
Major Therapeutic CNS, Oncology, Antivirals,
Areas Vaccines
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Dr. T. Yamada
Chairman - R&D, GlaxoSmithKline
o "The middle - going from hits and leads to drugs with proof of concept - is
where industry fails. There, you need agility, focus and speed. You need
autonomy and accountable entrepreneurial spirit that maximises scientific
interaction and internal competition for resources.
o .... These units, of no more than 400-500 scientists, will work on the drug
leads that have been discovered in the huge screening processes conducted
at corporate level."
Source: Financial Times: 2nd April 2001, David Pilling
(emphasis added)
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Enhanced R&D capability
Complementary skills
Shire strengths
--------------------------------------------------
Lead Clinical/
optimisation Preclinical Regulatory Marketing
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BioChem strengths
In complementary therapeutic areas
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Shire BioChem R&D portfolio
10 Years Planned years to launch 0 Years
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BioChem
BCH-10618 BCH-3963
Influenza Troxatyl
vaccine
BCH-13520
N. meningitides
vaccine
P.aeruginosa
vaccine
S.pneumoniae
vaccine
High risk--------------------------------------------------------- Low risk
Shire BioChem R&D portfolio
10 Years Planned years to launch 0 Years
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Shire
Reminyl
Pentasa 500mg
SLI 381
Dirame
N.meningitides
SPD 503 SPD 417 Anagrelide
SPD 420 Emitasol
SPD 418 SPD 424
SPD 427 SPD 421 Foznol
Balsalazide
SPD 451 SPD 502
High risk--------------------------------------------------------- Low risk
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Financial dimensions
2000 pro forma combined
excluding CliniChem
o US$ 675m revenues(1) up 26%
o US$ 200m operating income(1) (2)
o Operating margin: 30%(2)
o US$ 155m R&D (23% of revenues)(4)
o US$ 8.5bn market capitalisation(3)
(1) Source: Shire press release of 14 February 2001
(2) Pre APB25 charge and gain on sale of long term investments
(3) As at December 8th 2000 on a fully diluted basis
(4) Pro forma 2000 figures as per US Proxy Statement
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Industry profitability - a comparison*
Operating Margin
Operating Margin % R&D/Revenue % Pre R&D %
------------------ ------------- ----------------
Amgen 42.5 23.3 65.8
Shire BioChem** 29.8 23.0 52.8
Eli Lilly 32.8 18.6 51.4
Shire Standalone 27.9 20.5 48.4
Alza 27.1 19.3 46.4
Pfizer 30.6 15.0 45.6
Elan 24.0 21.2 45.2
GSK 29.3 13.9 43.2
BM 32.0 10.6 42.6
AZ 25.2 16.6 41.8
Novartis 22.0 13.0 35.0
J&J 22.2 10.0 32.2
Allergan 18.8 12.5 31.4
Pharmacia 14.7 15.2 29.9
Merck 23.3 5.8 29.1
Watson 19.2 8.3 27.5
IVAX 17.8 8.2 26.0
*2000 Analysis -- unaudited ** Proforma subject to completion of the merger
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Key drivers of revenue growth(1)
2001 - 2003
Adderall(TM)/SLI 381(2) Zeffix(TM)(3)
3TC(TM)/Combivir(TM)/Trizivir(TM)(3) Second Look(TM) (CADx)
Agrylin(R) Reminyl(TM)
Carbatrol(TM) Foznol*
(1) Ranked by LTM sales
(2) *Trade Mark under registration
(3) 3TC, Combivir, Trizivir and Zeffix are trademarks of GlaxoSmithKline
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3TC Franchise:
Epivir/Combivir/Trizivir(1)
o Foundation for HIV/AIDS therapy - primary component of many combination
therapies
o US$129.9 million FY2000 revenues(2)
o 8% growth Q1 at CER(4)
o Double digit royalties from GlaxoSmithKline
o Introduction of a once-a-day dosage and encouraging data on resistance
profile could sustain future growth
o Patent protection through 2010(3)
(1) 3TC, Epivir, Combivir and Trizivir are trademarks of GlaxoSmithKline
(2) Royalty income and Canadian product sales, full year 2000
(3) Further protection on combinations until 2018
(4) Source BioChem Pharma Q1 01 results
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ZeffixTM(3)
o Only approved oral treatment for Hepatitis B
o Key markets PacRim, Italy and Spain
o US$13.2 million FY2000 revenues(1)
o Q1 01 sales up 73% on Q1 00(2)
o Double digit royalties from GlaxoSmithKline
o Launched in Japan November 2000
o Patent protection through 2013
(1) Royalty income and Canadian product sales
(2) Source GlaxoSmithKline Q1 01 results
(3) 3TC, Epivir, Combivir and Trizivir are trademarks fo GlaxoSmithKline
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Q1 2001 & Merger Summary
o Shire Revenue growth 31%
o Shire EPS growth 46%
o ReminylTM US May 2001 Launch by Janssen Pharmaceutica and Ortho McNeil
o Merger* is strategically and financially compelling
o Merger* review period extended by Industry Canada**
*Proposed merger with BioChem
**Review period extended to 11 May 2001, or such other date as the parties may
agree to.
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SHIRE
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Headline merger terms
o Fixed price offer of US$37, subject to cap and floor
o premium of 39.6% over BioChem's closing price on December 8, 2000
o Values BioChem(1) at approximately US$4.0 billion
o Cap and floor set:
Shire ADS ($) Terms
$47.20 - $70.80 Fixed price of US$37
< $47.20 Fixed exchange ratio of 0.7839
> $70.80 Fixed exchange ratio of 0.5226
o Merger agreement contains termination clauses and 19.9% option
o Closing expected Q2 2001(2)
o Pro forma market capitalisation of US$8.5 billion(3)
(1) Fully diluted share capital
(2) Subject to required approvals
(3) As of December 8, 2000 on a fully diluted basis
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Development Pipeline
Therapeutic PC/Phase I Phase II and beyond Total
Area
- ---------------- ------------------------------------------------------------
CNS 6 5 11
Antiviral 2 0 2
Oncology 1 3 4
Vaccines 4 0 4
Metabolic/GI 0 4 4
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Total 13 12 25
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13 early stage projects, 12 late stage
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Phase II and beyond Pipeline
Product Indication Phase II Phase III Registration Marketed
Central Nervous System
Reminyl (galantamine)
Alzheimer's disease -------------------------------------------------
Adderall XR (SLI 381) ADHD ----------------------------------
Dirame Moderate to
severe pain ---------------------------
Frakefamide Moderate to
severe pain(1) --------------
SPD 417 Bipolar disorder ------------------------
Oncology/Haematology
Agrylin Thrombocythemia ---------------------------------------------------
Troxatyl leukemia -------------------
SPD 424 Prostate cancer --------------------------
Metabolic disease
Foznol (Lambda)
Hyperphosphatemia ------------------------------
Gastroenterology
Balsalazide Ulcerative colitis------------------------------------------------
Emitasol Diabetic gastroparesis-----------------------
Pentasa 500mg Ulcerative colitis----------------------
(1) Frakefamide acts peripherally
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