Jefferies has kept its 'buy' rating for pharmaceuticals group Shire saying that it still sees 'attractive growth', but was disappointed by the outcome of clinical trials for the company's major depressive disorder (MDD) treatment, Vyvanse.

Shire said on Friday that it will no longer pursue the development of Vyvanse after top-line results from two pivotal Phase 3 investigational studies evaluating the efficacy and safety of the drug showed it failed to meet objectives.

The company will later in the year file with the US Food and Drug Administration for a new indication for Vyvanse in binge eating disorder (BED) in adults.

"We were more optimistic for expanded use of Vyvanse in MDD than BED, so the setback comes as a negative surprise," said Jefferies analysts Peter Welford and Chris Cooper.

They estimated that Vyvanse in MDD had a 85p-a-share net present value in their sum-of-the-parts valuation, and had forecast a $350m contribution to revenues in 2018, equivalent to 4% of group sales.

"Pipeline focus is now increasingly on rare orphan diseases, potentially putting pressure on management to execute more business development deals and/or M&A, in our view, with ophthalmology and blood cancers possible targets," the broker said.

"We would use likely share price weakness today as a buying opportunity given at least c14% forecast earnings per share compound annual growth rate over 2014-17 and a price-to-earnings ratio of 14 (on 2015 estimates)."

The stock was 0.7% lower at 3,118p by 10:00 on Friday.

BC

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