Shire Shares Fall on Concerns on Vyvanse Sales Growth
By Trista Kelley
Sept. 14 (Bloomberg) -- Shire Plc, the U.K.'s third-largest drugmaker, fell the most in two years in London trading after analysts said sales of its new Vyvanse hyperactivity medicine missed their estimates.
Shire declined as much as 7.5 percent, the biggest drop since April 2005, after JPMorgan said sales growth of Vyvanse has been ``disappointing'' since the Basingstoke, England-based company introduced the product in June.
The drugmaker needs to switch patients to Vyvanse from its Adderall XR treatment, which contributes to about half of Shire's sales and loses patent protection in two years. Shire paid $2.6 billion earlier this year for New River Pharmaceuticals Inc. to get full rights to Vyvanse, saying the medicine causes fewer side effects and shows less potential for abuse than current amphetamine-based therapies for attention deficit hyperactivity disorder.
``If Vyvanse share stalls in coming months, we will have serious doubts over our forecasts,'' JPMorgan analysts Alistair Campbell and Craig Maxwell said in a note yesterday. ``The Vyvanse share of the combined Adderall XR/Vyvanse volume has been disappointing at just over 10 percent after 12 weeks.''
Shire declined to give a sales forecast for Vyvanse, spokeswoman Jessica Mann said today.
``This note has chosen to highlight very short-term data with a very narrow focus,'' Chief Financial Officer Angus Russell said by phone. ``We certainly don't think this is any indication of a long-term trend. We're quite comfortable that things are going extremely well.''
Shire shares fell 88 pence, or 7.1 percent, to 1,158 pence as of 1:23 p.m., trimming this year's gain to 9.4 percent.
Attention-deficit disorder affects an estimated 5 million children, who struggle to focus and control their impulses. Adderall XR has about 25 percent of the market for medicines to treat the disorder. Other treatments include Novartis AG's Ritalin.
You have had some interesting perspectives so far. Great questions to ponder and good discussion. However with your increasing posts its becoming apparent you and your "drinking buddy" are stock shorters. I dispense with the parables you like to talk in and keep it simple.
Sorry if I seem long winded, but I have an obsession with trying to thoroughly back-up my theories and comments. Perhaps it's an subconscious reaction to our age of bumper sticker slogans and 10-second sound bites.
I will address the issue that you raised: I am individual investor with modest assets and don't have the luxury of betting with other people's money. Because it is my money, I don't have the cojones to short stocks. No way. The reason for my cowardice is simple: when you go short, your liability is unlimited. Unlimited. If you buy a $10 stock and it falls to zero, you lose only your $10 per share. If you short a $10 stock, it could theoretically zoom to $1 million per share. You would have to replace those shares at that higher price.
My drinking buddy works for a old fashioned firm where it's against their company policy to go short. Simply put, he describes his firm as in the Warren Buffett School of Investing.
Some people verbally malign hedge funds and the shorts as if they are evil and that they have the power to move the markets over the long term. They don't. They take their chances just like everyone else, except for the fact that they deal with the possibility of unlimited liability. I can't operate at the altitude.
Aside from that, nothing that anyone posts here will have an impact on the stock price. Anyone includes me.
If the shorts want to bang a stock price down for a brief interval, they wouldn't be doing it by posting comments to this message board. They would do it by circulating views, rumors and news through the market. They would probably start with a disclaimer such as: "Hey! I heard a rumor that (fill in the blank)."
If you haven't done so already, rent the movie "Wall Street." A lot of people in the investment business found it entertaining and reasonably accurate in a Big Picture sense. The drawbacks are that it's slightly dated and presents Hollywood's cartoon-like portrayal of life, but it provides some insights.
As for the purpose of this board, it's education and fun. By sharing ideas, we can all try to make money and avoid pitfalls as we go along for the ride in the market. Actually, our role, as individual investors, in the market is a lot like surfing. The market, like the ocean, will do what it does. We have to try to ride the waves and survive.
Sorry for all the metaphors. I hope that my response wasn't too verbose.
Now if anyone else is looking for a stock to short, or buy some puts, I think MSFT is a prime candidate. Given yesterday's announcement by IBM that it plans to offer free software to challenge Microsoft Office, MSFT seems to be in trouble. First Google, now IBM will be offering free software. The days of uberdominant software companies may be over.