European Approval for Shire Drug

Recently, Shire Plc. (SHPGY) received a boost when the European Commission approved its Gaucher disease product Vpriv (velaglucerase alfa) for marketing in 30 European countries. The decision to approve the product does not come as a surprise as the drug’s approval for the long-term treatment of type I Gaucher disease was recommended by the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) in June 2010.

Vpriv, an enzyme replacement therapy, enjoys orphan drug status from the Committee for Orphan Medical Products. Vpriv is already available in the US where it received approval from the US Food and Drug Administration in March 2010.

Gaucher disease, a genetically transmitted disease, has an incidence of approximately 1 in a population of 50,000. The disorder mainly leads to the enlargement of the spleen and liver among other symptoms and can also prove to be fatal.

Vpriv Could Eat into Cerezyme’s Market Share

We believe that any further delay in resuming full supply of Cerezyme will lead to increased market share for Shire’s Vpriv. We expect competition in the Gaucher disease market, where the patient population is not very large, to intensify further with the potential approval of Protalix BioTherapeutics’ (PLX) Uplyso in February 2011.

Protalix has a marketing agreement with Pfizer Inc. (PFE) for Uplyso. We note that both Vpriv and Uplyso were made available to patients under the FDA’s expanded access program due to the shortage in supply of Cerezyme.

We believe that a delay in resuming full supply of Cerezyme will lead to increased market share for to Shire’s Vpriv. We also expect competition in the Gaucher disease market, where the patient population is not very large, to intensify further with the potential approval of Protalix BioTherapeutics’ Uplyso in February 2011. Protalix has a marketing agreement with Pfizer Inc. for Uplyso. We note that both Vpriv and Uplyso were made available to patients under the FDA’s expanded access program due to the shortage in supply of Cerezyme.

Our Recommendation

Shire is a Zacks #3 Rank (Hold) company, which indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1 to 3 months. Our long-term Neutral recommendation on the company indicates that the stock is expected to replicate its short-term performance over 6+ months.

SHIRE PLC-ADR (SHPGY): Free Stock Analysis Report

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