...any accountants out there?? If so how would Shire's numbers look in 2004 with a 50% reduction in adderall and no fosrenol. Very much worst case but Shire is no GSK or AZ -we have a binary option here at the moment based around Fosrenol. Sure they can survive through the worst case but boy will those numbers look ugly without massive cost cutting.
Methypatch is a goner. Since receiving a non-approvable later there has been no official response or definitive action taken regarding the patch.
If you are holding the shortest straw, waiting for the methypatch to rescue you I wouldnt hold my breath.
Loss of revenue from adderall has already been priced into the stock. That's why it is so cheap.
What about methypatch? That should help right?
Fosrenal will probably reach the market. I think the market is anticipating that so if it doesn't we could see a 10-15% drop.
We have other products to deal with the pentasa market.
What about our other products and pipeline?
7x at present. There is a lot of risk and a very real liklihood of a cash flow squeeze over the next one/two years-
1. fosorenol delay/unapproved-US Europe;
2. adderall XR-generic/strattera hit;
3. pentasa,proamatine,agrylin genericsin the uS( and thats a new one to me as of 20 minutes ago)
4. no real short term up side from within Shire as far as I can see other than perhaps fosrenol;
Its up to Shire to give us a steer on these risks-and that is the fundamental problem for the smaller investor -we are not getting the info.
discounting their pipeline to zero would seem slightly overly pessimistic to me, but what do I know...
2 years ago they did not have $900 million net cash. They generate approximately $1M per day in net cash now... back off two years of that and you can see where they were then.
I can't predict the future, but given that the stock is priced at roughly 7x free cash flow, I would argue many of your concerns are baked into the current price.
They have $900 Million in net cash. They will have approximately $1.4 Billion when Adderall comes off patent. They can buy another product line or even company to offset the loss of Adderall... I wouldn't focus on what happens when Adderall goes away. I would instead concern yourself with what management does with the cash. If they manage it properly, the stock will be worth a lot more than it is now.
Net Cash-is that less the $400 million to repay in convertible debt.
I guess the question is if we halve the adderall revenue to say $450 million which is pretty optimistic given generics can take anywhere between 50-90% of market share (and Barr are pretty vicious)how do the earnings look?
Any purchase of a good company or a product with a solid and growing revenue base will be very expensive.
Even $1.4 billion will not neccessarily plug a $450 million revenue gap.