Shire: Repositioned for Continued Growth Jefferies Healthcare Conference June 2, 2014 Flemming Ornskov, MD Chief Executive Officer
THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements included in this announcement that are not historical facts are forward-looking statements. 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 materialize, Shire s results could be materially adversely affected. The risks and uncertainties include, but are not limited to, that: Shire s products may not be a commercial success; revenues from ADDERALL XR are subject to generic erosion and revenues from INTUNIV will become subject to generic competition starting in December 2014; the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues, financial condition and results of operations; Shire conducts its own manufacturing operations for certain of its Rare Diseases products and is reliant on third party contractors to manufacture other products and to provide goods and services. Some of Shire s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time. the development, approval and manufacturing of Shire s products is subject to extensive oversight by various regulatory agencies. Submission of an application for regulatory approval of any of our product candidates, such as our planned submission of a New Drug Application to the FDA for Lifitegrast as a treatment for the signs and symptoms of dry eye disease in adults may be delayed for any number of reasons and, once submitted, may be subject to lengthy review an ultimately rejected. Moreover, regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches; the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely impact Shire s revenues, financial conditions or results of operations; investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire s activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines; adverse outcomes in legal matters and other disputes, including Shire s ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire s revenues, financial condition or results of operations; Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives; failure to achieve Shire s strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire s financial condition and results of operations; and other risks and uncertainties detailed from time to time in Shire s filings with the U.S. Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. 2
We have created a platform to deliver sustainable growth and superior patient outcomes Sustainable Growth Operational Efficiency; Commercial Excellence; Scalable Model Superior Patient Outcomes Leading Franchises; Innovative Portfolio; Disciplined M&A Simple Structure and High Performing Management 3
We have accelerated our growth Management actions Improved Rare Diseases competitive performance 1Q 2014 Product sales growth 1 $ Million; Percent growth 1,308 +19% Sharpened Neuroscience customer focus Rare Diseases 1,098 +39% Achieved #1 position in 5-ASA market Neuroscience +16% Added ViroPharma, including CINRYZE in Rare Diseases GI +17% Divested DERMAGRAFT to a more natural owner Internal Medicine Q1 2013 Q1 2014 (11)% 1 Product sales are from continuing operations, and exclude DERMAGRAFT which is treated as a discontinued operation following divestment in January 2014. 4
Q1 2014: Strategy delivers strong results Our refined strategy Serve patients with high unmet needs in select, commercially attractive specialty therapeutic areas Drive optimum performance of our In-line marketed products Build our pipeline of innovative treatments through both R&D and BD activities Ensure efficient use of resources through a simplified corporate structure 2014 Q1 Revenue 19% 2014 Q1 EBITDA 41% 2014 Q1 Cash Generation 29% Full-year 2014 earnings guidance upgraded following Q1 results 5
Rapid transition to simplified structure has increased accountability and agility Organizational transition 1Q 2013 Human Genetic Therapies Current Core components 4x commercially focused business units 1x integrated R&D organization Specialty Pharmaceuticals One Shire 1x international infrastructure with presence in 50+ countries Streamlined supporting functions Regenerative Medicine Significant operating leverage 6
We have created a step change in efficiency Program details Integrating R&D under a single leadership team Created a single, consolidated international structure Significant increase in 1Q EBITDA margin (1) $ Million; Percent of product sales COGS R&D 1,098 1,308 100% Streamlined other corporate functions SG&A Halted programs that did not fit strategy or commercial criteria EBITDA (2) Divested underperforming businesses (DERMAGRAFT) Q1 2013 Q1 2014 (1) Results exclude DERMAGRAFT which is treated as a discontinued operation following divestment in January 2014. (2) Excluding royalties and other revenues. 7
These initiatives have had an immediate impact on share price performance Immediate impact Accelerated growth Driving material share price outperformance Total shareholder return from May 1, 2013 to May 15, 2014 Increased efficiency BioPharma Peers (1) Enhanced pipeline FTSE 100 Disciplined M&A S&P 500 Source: Company reports, Capital IQ as of 15 May 2014 (1) Median of peers including Alexion, Allergan, Amgen, Biogen, BioMarin, Celgene, Gilead, Merck KGaA, Novo Nordisk, UCB, Valeant and Vertex. 8
Leading positions in attractive therapeutic areas $2B in Rare Diseases (1) $1.6B in Neuroscience (2) $0.8B in GI (3) Shire s largest business unit ~$75 billion market size (orphan drug sales) allows for significant headroom (4) Market growth estimated to be 11-12% from 2012-17 (4) #1 position in HAE market (5) $8 billion U.S. ADHD market We expect product sales to double by 2020 through BED, SHP465 and geographic expansion (6) $30 billion global market (7) Market growth estimated to be 5% from 2013-20 (7) #1 position in 5-ASA market (8) #2 sales force as ranked by U.S. GI s (8) Sample Pipeline Programs: Sample Pipeline Programs: Sample Pipeline Programs: SHP611 MLD SHP609 Hunter CNS LDX* BED INTUNIV (EU) ADHD LUM 001 Cholestatic Liver Disease LUM 002 Non-Alcoholic Steatohepatitis VPRIV (Japan) Gaucher CINRYZE IV (low vol) HAE Prophylaxis SHP613 Acute Vascular Repair SHP610 Sanfilippo A INTUNIV (Japan) ADHD SHP465 ADHD * Lisdexamfetamine dimesylate, active ingredient in VYVANSE/ELVANSE. (1) 2013 product sales on a pro-forma basis including CINRYZE (2) 2013 product sales exclude ADDERALL XR sales, which is managed in our Internal Medicine BU (3) 2013 product sales SHP555 (US) Chronic Constipation (4) Kalorama Worldwide Market for Orphan Drugs (5) Seeking Alpha Dyax And ViroPharma: An Overview Of HAE Space (6) Subject to FDA approval for BED and SHP465 (7) Evaluate Pharma (8) IMS 9
Multiple drivers of double digit sales performance Operational Discipline CINRYZE delivered $86m since Jan 24 Over 1,100 patients on therapy in the US FIRAZYR sales +80% Strong US growth continues more than 1,800 patients have used FIRAZYR since launch ELAPRASE sales +13% Driven by continued growth in the number of treated patients LIALDA strong performance continues, +28% Continued market share gains in the US Strong TRx performance continues through 1Q 2014 VYVANSE sales +18% US growth driven by price and volume International sales show strong growth 10
Binge Eating Disorder a significant growth opportunity for VYVANSE Commercial Excellence BED Under diagnosed and undertreated patient population with significant morbidity Approximately 3MM (1) patient in the US suffering with the disorder In a survey of US adults, less than 7% of BED patients reported receiving treatment over a 12 month period (1) Per DSM-5: Condition is characterized by marked distress No FDA approved treatment Targeting 2nd half of 2015 launch - Substantive market analysis is well underway Phase 3 studies complete achieved primary endpoint in both trials On track for a 2nd half of 2014 NDA submission (1) Hudson et al,, 2012, National Comorbidity Survey Replication 2001-2003 11
SHP465: A new product to meet an adult ADHD market need Commercial Excellence SHP465 Demonstrated efficacy at 16 hours post-dosing in registration trials Planning for a launch in the first half of 2015 We expect SHP465 to have 3-years of Hatch-Waxman exclusivity and we expect to have at least two patents listed in the Orange Book expiring as late as May 2023 We believe with SHP465 as part of our portfolio we can add 3%-5% to our existing share of the overall ADHD market 12
Lifitegrast for dry eye disease - next steps Strategy Shift Following FDA meeting, preparing for a Q1 2015 filing Complete remaining chemistry and manufacturing work Assess the need for gathering additional clinical data in support of the US filing and potential international regulatory submissions Build BU / Finalize commercial strategy 2016 Launch (subject to FDA approval) 13
Disciplined M&A strategy focused on acquiring in-line and pipeline assets in core and adjacent TAs Strategy Shift M&A Strategy Rationale Recent examples Reinforce Core TAs Existing infrastructure or expertise creates ownership advantage Generate synergies (revenue, cost, operational) to substantiate control premium and value creation LUM 001 Rare Hepatic Diseases CINRYZE IV (low vol) HAE Prophylaxis LUM002 NASH Expand into high value adjacent TAs Informed entry into adjacent TAs with long-term growth potential where Shire has expertise or can build core competencies SHP606 (lifitegrast) Dry eye disease SHP607 (PREMIPLEX ) Prevention of ROP 14
ViroPharma: integration progressing successfully Operational Discipline 5 key success factors: Drive revenue from marketed products Ensure uninterrupted supply Realize cost and revenue synergies Leverage talent Extract value from pipeline programs Cinryze proforma revenue growth Q1 +16% Sales force in US integrated with minimal turnover; driving strong new patient growth Resolving outstanding manufacturing issues Leveraging Shire s manufacturing expertise Leveraging opportunities in HAE Integration of ViroPharma into One Shire organization Rapid transition of G&A activities; Commercial and R&D over longer-term; on track to deliver $150M in savings in 2015 Leveraging ViroPharma expertise in HAE and strength in patient advocacy area Pipeline programs reviewed and key decisions made 15
FSGS is a rare renal disorder affecting both children and adults and has significant commercial opportunity given high unmet need Strategy Shift FSGS has severe consequences for patients and significant societal costs ~75,000 patients with primary FSGS in the G6 Affects children and adults of all ages and races; increased risk in people of African ancestry In children, it is the second most common cause of nephropathic syndrome and the second leading cause of kidney failure 60-75% of patients are nephrotic at diagnosis and eventually progress to ESRD, typically in about 8 years ~25% of patients relapse after treatment High recurrence rates in patients receiving kidney transplants (30% in adults, up to 80% in children) The human face of FSGS We have a massive unmet medical need, but we are stuck with histological diagnosis and working with steroids - FSGS KOL Sources: KOL interview; http://www.nephcure.org/fsgs-facts - site accessed Jan 11 th 2014 16
Fibrotech: strategic step in strengthening Shire s Rare Disease pipeline Strategy Shift Expands Shire s pipeline with a novel clinical stage anti-fibrotic agent Strengthens our growing and innovative portfolio targeting renal and fibrotic diseases FT011, the lead molecule, targets an innovative, novel and previously undescribed mechanism of action and is currently completing a phase 1b trial in patients with renal impairment A phase 2 trial is planned for 2015 in patients with Focal Segmental Glomerulosclerosis (FSGS), a rare fibrotic kidney disease with high unmet medical need The acquisition also diversifies our pipeline, giving us access to Fibrotech s library of novel molecules that are engineered to target fibrotic mechanisms across multiple indications of high unmet need 17
LUM001 for Cholestatic Liver Disease Strategy Shift Pediatric Alagille Syndrome (ALGS) Present at 3 months No approved therapy ~13% bile diversion surgery, 21-31% liver transplant Very intense pruritus Progressive Familial Intrahepatic Cholestasis (PFIC) Present at 3-6 months No approved therapy ~35% bile diversion surgery, ~50% liver transplant Very intense pruritus Without surgery, fatal by 2 nd decade Adult Primary Biliary Cirrhosis (PBC) >40 years old, 90% female Ursodeoxycholic acid (UDCA) approved for therapy only ~50% patients respond Obeticholic acid (OCA; Intercept) in Ph 3 (but increases pruritus & CV issues have been reported) Slow progression Intense pruritus Primary Sclerosing Cholangitis (PSC) Mean age at diagnosis: 40 years, 70% Male No approved therapy Intense pruritus Aggressive, life expectancy 8-10 years from diagnosis 18
Rationale for an ASBTi in Cholestasis Lowering Bile Acids Results in Significant Clinical Benefit Removing bile acids through surgical intervention: Reduces serum bile acids Improves biochemical markers of liver disease Rapidly reduces itching Slows disease progression x Disfiguring and associated with serious complications Strategy Shift ALGS PFIC Before Surgery (1) After Surgery (1) Before Surgery (2) After Surgery (2) Bile Acids (µmol/l) 115 28 Bile Acids (µmol/l) 337 11 Bilirubin (mg/dl) 2.4 1.6 Bilirubin (mg/dl) 2.4 1.5 Itching (0 no scratching- 4 cutaneous mutilation) 4 1 Itching (0-4) 3 1 Emerick, BMC Gastroenterology (2008), Emeriick, Hepatology (2002), Schukfeh, J Ped Surgery (2012) (1) Mean (2) Median 19
Replenishing our pipeline and pursuing further strategic deals Strategy Shift Acquired first and only protein replacement therapy being investigated for Dystrophic Epidermolysis Bullosa (pre-clinical) Acquired Dry Eye Disease asset (phase 3), which could provide the basis for a larger ophthalmology business Acquired Retinopathy of Prematurity (ROP) asset (phase 2), providing entry point into neonatology Announced deal adds significant scale to rare disease portfolio with on- market hereditary angioedema (HAE) product complementary to FIRAZYR Expands our portfolio with clinical stage anti-fibrotic agent (rare & renal diseases) Well positioned for future M&A Strong cash generation $1.8 billion in 2013 Balance sheet flexibility Net Debt of $1.4 billion Increased corporate debt ceiling to $12 billion Developing integration as a core strength, for rapid realization of synergies Expands GI and Rare Disease portfolio with clinical assets for Cholestatic Liver Diseases Note: Fibrotech & Lumena deals have been signed but are still subject to closure. 20
2014 Priorities: continue to reposition Shire for future growth Strategy Shift Further refine therapeutic area strategy Strengthen our portfolio organically and via M&A Commercial Excellence Explore new opportunities to drive growth from in-line portfolio Maintain commercial focus to deliver continued sales growth Operational Discipline Integrate ViroPharma Maintain discipline and continue One Shire program to drive further operational leverage 21
Q&A Breakout: Broadway Room, 10AM Our purpose We enable people with life-altering conditions to lead better lives.
Investor relations contacts North America: Jeff Poulton T: +1 781 482-0945 E: jpoulton@shire.com Europe: Sarah Elton-Farr Souheil Salah T: +44 1256 894157 T: +44 1256 894160 E: seltonfarr@shire.com E: ssalah@shire.com Our purpose We enable people with life-altering conditions to lead better lives.