Takeda unveils profit surprise on Shire integration—and no U.S. Natpara supply till 2021

Takeda had expected to report an operating loss this fiscal year. But thanks to faster integration with Shire, it’s now looking at a possible profit.

Don't expect any contribution from Natpara in the U.S., though, Takeda's chief financial officer said. The rare disease med, recalled in September, won't be available in the States until March 2021 at the earliest.

The Japanese pharma now expects to report operating profit of 10 billion yen ($92 million) for the fiscal year ending in March versus its previous forecast of a loss of 110 billion yen, the company said. It’s also dialing up its core operating profit guidance by 2.2% to 950 billion yen.

Strong performance from 14 key global drug products and faster cost savings from the Shire takeover contributed to the sunnier outlook, Takeda CFO Costa Saroukos told investors during a call Tuesday. “We have also completed the purchase price allocation for the Shire acquisition, resulting in a positive impact to the reported P&L,” he said.

But not all unexpected developments were positive for Takeda. The company has not recorded any U.S. sales of hypoparathyroidism drug Natpara in the U.S. since a recall launched in September, and, according to Saroukos, it may not be able to for at least another year.

The recall was caused by the risk of rubber particles from the cartridge entering the drug solution. As Takeda works to remedy the problem, it has launched a special use program that provides the med to at-risk patients for free, Saroukos said.

But rather than the usual protocol that allows 14 injections for each cartridge, those patients are advised to only use it once. That means a supply that typically lasts a year would be used up in just one month.

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Takeda has said it’s working closely with the FDA to resume supply. “However, based on recent discussions, we expect a delay,” Saroukos told investors. “As a result, we no longer expect to record any U.S. Natpara revenue in fiscal year 2020.”

That means there will be no normal Natpara supply in the U.S. for at least another year, before March 2021. Approved by the FDA in early 2015, Natpara racked up JPY 7.1 billion in U.S. sales in Takeda’s first quarter. 

No thanks to that Natpara void, Takeda’s rare disease franchise continues to suffer, with underlying revenues down 11% year over year for the nine months ended in December. But the main drag came from the hemophilia business it inherited from Shire and its hereditary angioedema (HAE) portfolio.

Sales of hemophilia A drug Advate dropped 26% in Takeda’s third quarter ended in December to JPY 39.9 billion ($370 million), probably thanks to competitive pressure from Roche’s Hemlibra. While newly launched HAE drug Takhzyro delivered JPY 18.2 billion sales during the three months, its predecessor Firazyr, which has gone generic, only snagged JPY 7.5 billion, down nearly 70%.

RELATED: Takeda to sell nearly new Shire plant with 200 employees

At least one blockbuster grew; sales from inflammatory bowel disease drug Entyvio leapt 38% at constant currencies, reaching JPY 95.1 billion in Takeda’s third quarter. However, Takeda’s plan to introduce a more convenient subcutaneous version of the drug recently hit a setback in the form of an FDA complete response letter.

Takeda is still working with the FDA to resolve that problem, Saroukos said, and expects to update investors by June. Without giving out any further details, Saroukos said the rejection is not related to the drug’s safety or efficacy data.

A top priority at Takeda for the years to come is to pare down the huge mountain of debt it picked up for the $59 billion Shire buyout. To do that, it’s focused on driving growth from 14 key drugs and selling assets outside its five core therapeutic areas.

As of December, Takeda’s net debt/EBITDA ratio has come to 4.1x versus 4.7x at the end of March, though it’s slightly up from 3.9x in September. Saroukos said that was expected as the company has paid the full-year dividend and tax on proceeds on the selloff of Xiidra to Novartis.