Shire has put into place another plank of its strategy to survive the onset of competition for its biggest-selling drug, saying US regulators have indicated they will approve a new medicine for hyperactive children.
Shares in the pharmaceutical company soared 15 per cent to a five-year high yesterday, as investors shrugged off some disappointments in the minutiae of the ruling from the Food and Drug Administration.
The new amphetamine-based drug, codenamed NRP104, has been deemed "approvable" rather than approved, and will consequently be on the market three months later than had been expected next year.
The FDA also refused to accept that NRP104 be treated as a less dangerous medicine than other amphetamine-based drugs for attention deficit hyperactivity disorder (ADHD).
Half of Shire's revenue and an even greater proportion of its profit comes from a single drug, Adderall XR, which has sales of $70m (£38m) a month. The company has been fighting to keep copycat products off the market until it can switch users to a new ADHD medicine, and in August it announced a deal with Barr Laboratories, which will hold off the launch of the first copycat Adderall until 2009.
Investors breathed a sigh of relief that NRP104 will be on the market by the middle of next year, giving Shire almost two years to persuade doctors to prescribe the new drug instead of Adderall. The company believes doctors will back the switch because NRP104 is less prone to abuse than other amphetamine-based ADHD medicines. The dealing or misuse of drugs such as Adderall and Ritalin has become a significant concern in the US.
However, the FDA ruled that NRP104 will be classed as a Schedule II drug, like most prescription medicines with a high potential for misuse and addiction. It threw out a request for classification as a Schedule III or IV medicine, which would make it easier for parents to get repeat prescriptions and help with the marketing of the drug.
Final approval will come in the next few months after Shire and its US partner, New River Pharmaceuticals, agree safety labelling and a brand name with the FDA. Shares in Shire closed up 131p at 1,008p, their best level since November 2001.
Jeff Holford, pharmaceuticals analysts at Credit Suisse, was among those suggesting to clients that the news was a good reason to buy into Shire. "The FDA request that NRP104 initially be launched with a Schedule II status is in line with our expectations but could be a disappointment to some," he said. "However, shares in Shire and New River have been under pressure recently, based on fears a serious delay or 'not approvable' letter may be issued."
Shire is set to share profits from the sale of NRP104 with New River, but the exact details of the split have yet to be revealed. The failure to achieve a Schedule III or IV classification means Shire will not have to make a $300m milestone payment to New River.
Matthew Emmens, the Shire chief executive, said NRP104 would be an important new treatment for hyperactivity.Reuse content