Shire Plc (LON:SHP), Britain’s third drugs major, has received the sign off from the American regulator for a dry disease drug with blockbuster potential.
Shares in the company rose 4% in early trade, adding £1.3bn to the company’s value, after it said its twice-a-day treatment, Xiidra, would launch in the US at some point in the current quarter.
This follows the green light from the US Food & Drug administration overnight.
As many as 16mln people in the States suffer dry eye disease, but the current treatments, including steroids, are slow to act and are uncomfortable to administer.
Liberum, in a brief note to clients Tuesday, said analysts were forecasting sales of Xiidra to hit US$1bn in five years, adding a further 8-9% to earnings.
“We think the market was expecting approval but nevertheless this will clearly be seen positively,” the broker said.
It certainly was. At 8.30am, the stock was changing hands for £49.82, for a rise of 164p, valuing the business art £44.5bn.
City firm Cantor Fiztgerald repeated its ‘buy’ on the stock, which it reckons is worth £59.
“Having entered the field of ophthalmology just over two years ago this marks the first product approval in this nascent franchise,” said analyst Brian White.
“With the current mainstay therapy in this market Restasis generating some $1.5bn in revenue last year, we see this as a good proxy for the opportunity on offer, particularly given what we believe a superior label to Restasis.”