Shire's ADHD Drug Gets Conditional FDA OK

U.K. pharmaceutical company Shire PLC (SHPGY) has gained conditional approval from U.S. regulators to market its new hyperactivity drug NRP104, which is expected to replace older treatment Adderall XR as its main growth driver.

The U.S. Food and Drug Administration gave its approval for the drug Friday, the deadline.

Shire, the U.K.'s third largest drugmaker by market capitalization, said it will launch NRP104 in the second quarter of 2007, pending discussions with the regulators to finalize the prescribing information and the trade name.

No additional studies have been requested by the FDA as a condition for approval of NRP104.

Analysts said the conditional approval for NRP104 was a benign outcome for Shire.

"NRP104 will replace Adderall XR and as such this news is extremely positive, removing a major concern for investors," Goldman Sachs analysts said in a note.

NRP104 was discovered by U.S. drugmaker New River Pharmaceuticals Inc (NRPH) and licensed to Shire in January 2005, as the U.K. company was facing questions about its strategy once Adderall XR, its key drug, succumbed to generic competition.

Unlike Adderall XR - currently the market-leading hyperactivity drug in the U.S., with a 26% market share - NRP104 doesn't become active until it's digested, offering fewer chances of abuse and overdose.

Both drugs are amphetamines, stimulants widely used to treat hyperactivity.

The FDA has proposed that NRP104 should be placed in the so-called Schedule II of the Controlled Substance Act, which includes drugs that have potential for abuse, but have accepted medical use in the U.S.

As a result, the distribution of Schedule II drugs is controlled and monitored by the Drug Enforcement Administration, a government agency.

Shire would have paid New River $300 million if a more favorable scheduling was secured, for example as a substance with low potential for abuse.

Under the proposed scheduling, Shire won't pay any milestone payments to its U.S. partner. The profit payable to New River would be at least 25% in the first two years.

New River will release further details about the division of profits in a planned filing with the U.S. Securities and Exchange Commission.

In August, Shire settled a long-standing patent battle with Barr Pharmaceutical Inc. (BRL) over Barr's attempt to market a generic version of Adderall XR. The arrangement between the two companies means Barr won't be permitted to market generic Adderall XR in the U.S. until April 1, 2009 - giving Shire ample time to switch existing patients to NRP104.