The year 2005 was pivotal for Shire. With a breakthrough acquisition, a key collaboration agreement, several product launches and continuing advancement of our pipeline, we have made excellent progress in setting the stage for continued growth. We are seeing the results of our focused business strategy through a significant increase in the number of late-stage product candidates. Today Shire has one of the richest product pipelines in the specialty pharmaceutical industry. Simultaneously, we have put in place a strengthened organization to deliver on the opportunities in key markets.
Our strong competitive position is the result of the hard work of all 2,400 Shire employees. We have made good on our strategic commitment to grow our underlying business while expanding our portfolio of new products. We have continued to evolve our manufacturing capabilities both in small molecules and proteins to mitigate supply chain risk.
The acquisition of TKT in July is an excellent strategic fit and will bring significant value to the Company over time. It broadens our revenue base while building our pipeline in the relatively low-risk area of Enzyme Replacement Therapy (ERT). Historically, enzyme replacement drugs have had a high success rate in reaching the market. Now called Shire Human Genetic Therapies (Shire HGT), this dedicated team is working on disease areas where there is high unmet medical need. In addition to near-term products, it provides Shire with important intellectual property and discovery capabilities that will provide value over the long term. Shire HGT already has one approved product in Europe - REPLAGAL for the treatment of Fabry Disease, a lipid storage disorder. At the end of 2005, we submitted a New Drug Application (NDA) to the Food and Drug Administration (FDA) for idursulfase, the first human ERT treatment for Hunter Syndrome, under the trade name ELAPRASE, as well as submitting Marketing Authorization Application (MAA) in Europe for this product. Our GA-GCB compound for Gaucher Disease will enter Phase 3 trials this year and there are several other very promising compounds in the pipeline.
Another major milestone in 2005 was our collaboration with New River Pharmaceuticals ('New River') to develop and commercialize NRP104. NRP104 is a very promising investigational compound for the treatment of ADHD, an area of leadership for us. New River made excellent progress during the year, filing a NDA for NRP104 with the FDA in early December and we are looking forward to launching this product in early 2007.
The year saw a number of other exciting advances in our pipeline:
ADDERALL XR, our once-daily treatment for ADHD, continued to perform extremely well during the year, reaching an all-time high market share of 26%** in the US. In the interest of patient safety, during 2005 we filed a Citizen Petition with the FDA requesting that they ask companies seeking approval for generic ADDERALL XR or any follow-on of ADDERALL XR to undertake more rigorous bioequivalence testing or additional clinical trials. This petition is currently under review and to date, no approvals for follow-on generic versions of ADDERALL XR have been granted. On January 19, 2006 we announced that we settled all pending litigations relating to ADDERALL XR with Impax Laboratories Inc. ('Impax'). Impax confirmed that all Shire patents covering ADDERALL XR are valid and enforceable and that their proposed version of ADDERALL XR did infringe those patents. The agreement states that Impax will be permitted to market their generic version of ADDERALL XR no later than January 1, 2010. In certain situations, such as the entry of another generic before 2010, Impax may be permitted to market Shire's ADDERALL XR in the US as Shire's authorized generic. Shire will receive royalties from Impax on these sales. This latest development is excellent news for Shire as it removes some of the uncertainty that surrounded ADDERALL XR. Shire continues to vigorously defend its intellectual property rights relating to ADDERALL XR in the ongoing patent litigations with Barr Laboratories Inc. and Teva Pharmaceuticals USA Inc.
Product launches in 2005
FOSRENOL, for the treatment of hyperphosphatemia in end-stage renal disease, and Shire's first global product, was successfully launched in the US in 2005 and performed in line with its major competitor when launch periods are compared. We also launched FOSRENOL into the first four countries in Europe and it will be rolled out to more European countries in 2006. In addition, we launched higher dose formulations in the US. XAGRID, our treatment for a rare platelet disorder known as Essential Thrombocythemia (ET), was very successfully launched in Europe, achieving sales of $46.8 million in 2005. EQUETRO, the first ever carbamazepine treatment approved for manic phase of Bipolar Disorder, was launched in the US.
Five launches in 2006 and the first half of 2007
In 2006 and during the first half of 2007, we are planning no fewer than five new product launches, this is a record breaking achievement in this industry. These will require additional spending on advertising and promotion, and in some cases additional sales representatives. As a result, our Selling, General and Administration (SG&A) costs are expected to rise in order to support the success of these launches.
In February 2006, we submitted a MAA for MESAVANCE to both European and Canadian Regulatory Agencies. During 2006 and the first half of 2007 we also expect to:*
Strengthened management team
Shire continued to build its senior management team in 2005 and we added proven talent across all areas of the organization and to our leadership team. I am particularly pleased to welcome David Pendergast, former CEO of TKT, as Executive Vice President Shire HGT, and Michael Cola, formerly President of the Life Sciences division of Safeguard Scientifics Inc., as Executive Vice President for Global Therapeutic Areas. Both bring a wealth of experience in the pharmaceutical industry and are welcome additions to our Executive Committee. With the acquisition of TKT and the strengthening of our organization on both sides of the Atlantic, we increased our staff numbers by 570, bringing our total staff numbers to over 2,400 highly-skilled people by the end of 2005. I would like to take this opportunity to extend a warm welcome to them, as well as to thank all members of our team around the world for their exceptional efforts and dedication in helping us achieve our business goals.
A few years ago, we imagined a new Shire. Since then we've transformed Shire to deepen our product pipeline, enhance our responsiveness, and capitalize on opportunities in the global specialty pharmaceutical market. We are driven by a common objective: to make the most out of science and technology to increase the number of projects we are undertaking so that we can help many more people lead healthier, less impaired lives. We are delivering on that goal, and can all be proud of our achievements.
Just imagine what we can achieve in the future.
*All products in development and registration are subject to regulatory approvals.
**Source: IMS Data 2005.
What the analysts say
'We believe the Company has one of the best, if not the best pipelines, in the entire sector - as we project it will launch at least seven new products over the next three years.'
'The closure of the acquisition of TKT on July 27, marks the completion of the major strategic changes undertaken by Shire since the appointment of Matt Emmens as CEO in 2003.'
'We believe that the operational performance of the Company over