For the three months to September 30, 2007 cost of product sales included a charge of $0.9 million for share based compensation (2006: $0.8 million).
Research and development (R&D)
R&D expenditure increased to $180.7 million in the three months to September 30, 2007 (33% of product sales) from $104.0 million in the three months to September 30, 2006 (27% of product sales). For the three months to September 30, 2007 R&D included an up-front payment to Renovo of $75.0 million for the in-licensing of JUVISTA (14% of product sales). For the three months to September 30, 2006 R&D included $30.5 million of up-front payments (8% of product sales), comprising a $25.0 million payment to Duramed Pharmaceuticals Inc ("Duramed") (in-licensing of women's health products) and a $5.5 million payment to Warren Pharmaceuticals Inc (in-licensing of the Tissue Protective Cytokine technology).
Excluding these up-front milestones, R&D expenditure for the three months to September 30, 2007 increased by $32.2 million over the same period in 2006, while remaining broadly similar as a percentage of product sales. Contributing to the increased R&D expenditure in 2007 were Phase 3(b) and Phase 4 studies to support new product launches; the continuation of Phase 3 trials on GA-GCB (velaglucerase alfa); the development of the Women's Health and New River franchises; pre-clinical development of three HGT projects; two new Phase 1 projects; and two further pre-clinical projects.
For the three months to September 30, 2007 R&D included a charge of $3.3 million for share based compensation (2006: $1.4 million).
Selling, general and administrative (SG&A)
SG&A expenses increased to $286.7 million in the three months to
September 30, 2007 from $214.9 million in the three months to September
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