strong quarter
Strong Quarter for ViroPharma
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ViroPharma Inc..
Zacks Equity Research,
ViroPharma Inc. (NasdaqGS: VPHM - News) posted third-quarter earnings of 48 cents per share, beating the Zacks Consensus Estimate by 17 cents and the year-ago figure by 20 cents. Increased product sales helped boost third quarter 2010 earnings.
Revenues
Quarterly revenue of $117.8 million was well above the Zacks Consensus Estimate of $106 million and 46% above the year-ago revenue of $80.6 million. Revenues were spurred by higher sales of Cinryze and Vancocin.
While Cinryze sales increased 69% to $49.1 million, Vancocin sales came in at $67.6 million, up 31%.
Sales of Cinryze increased during the quarter due to higher patient demand, while sales of Vancocin went up due to price increases.
Expenses
Selling, general and administrative (SG&A) expenses and research and development (R&D) expenses, taken together, increased during the quarter to $35.2 million from $31.2 million in the year-ago period.
Quarterly SG&A expenses increased 24.0% year over year as a result of a rise in compensation expense and marketing activities related to Cinryze, while quarterly R&D expenses declined 7.4% due to the discontinuation of the maribavir prophylactic program.
Outlook
For fiscal 2010, ViroPharma raised its Cinryze sales guidance to $170–$180 million from $165–$175 million.
Expenses, both R&D and SG&A taken together, are expected to range from $140–$145 million, up from the previous guidance range of $135–$145 million.
Our View
We currently have a Neutral recommendation on ViroPharma, which is supported by a Zacks #3 Rank (short-term Hold rating). We are pleased with the company’s third quarter results. ViroPharma expects the European approval and launch of Cinryze to take place in the first half of 2011.
However, Vancocin, which is one of the primary revenue contributors at ViroPharma, is not protected by any patent. Vancocin generics are yet to hit the market with the FDA requiring generic companies to conduct a bioequivalence study to gain approval for their versions. We note that a proposed bioequivalence method for Vancocin is filed for approval with the FDA. If the method gets the regulatory body’s nod, the time required for a generic manufacturer to get a copycat version of Vancocin approved will be reduced and multiple generics may enter the market, thereby leading to significant sales erosion of the drug.
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