ViroPharma Incorporated (VPHM)

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ViroPharma Incorporated Reports Second Quarter 2011 Financial Results
- Quarter Highlighted by Record Net Product Sales and European Approval of Cinryze® (C1 Inhibitor [human]) -

Press Release Source: ViroPharma Incorporated On Thursday July 28, 2011, 7:30 am EDT

EXTON, Pa., July 28, 2011 /PRNewswire/ -- ViroPharma Incorporated (Nasdaq:VPHM - News) reported today its financial results for the second quarter ended June 30, 2011.

In the second quarter of 2011, we:

Achieved a record $129 million in net product sales, including $62.5 million in net sales of Cinryze® (C1 esterase inhibitor [human]) representing Cinryze growth of 55 percent over the same period in 2010;
Realized non-GAAP adjusted net income of $36 million; GAAP net income reached $23 million;
Delivered positive cash flows from operations of $29 million;
Improved working capital to $585 million as of June 30, 2011, including cash, cash equivalents and short-term investments of $518 million;
Attained centralized European approval for Cinryze in adults, and adolescents with HAE for routine prevention, pre-procedure prevention and acute treatment of angioedema attacks;
Entered into a collaboration with Halozyme initially focused on a novel subcutaneous formulation of Cinryze, resulting in a charge of $9 million; and
Received positive CHMP opinion recommending approval of Buccolam® (midazolam, oromucosal solution) for treatment of prolonged, acute, convulsive seizures in infants, toddlers, children and adolescents.


"Execution and achievement are the terms that best describe our second quarter," stated Vincent Milano, ViroPharma's president and chief executive officer. "Our team continues to design and execute new ways to meet patient needs, which are generating significant growth opportunities. For example, almost half of our new patient adds during the first half of the year formerly used steroids for their HAE. Also we have achieved our goal of having a commercial organization in Europe, as we launch Cinryze, our first product in Europe, and approach the European Commission decision regarding Buccolam, following the positive CHMP opinion we received last month."

Milano continued, "And while we can look back on the second quarter as a period of great execution and achievement, our focus remains on the future and on continuously meeting the evolving needs of our patients. Looking forward to the upcoming months and quarters, we are very excited about our clinical development efforts to advance our various C1 esterase inhibitor programs as well as our novel approach to addressing recurrence of C. difficile through VP-20621."

Net sales were $128.8 million and $255.8 million for the three and six months ended June 30, 2011, compared to $109.0 million and $199.6 million in the comparative periods of 2010, respectively. This represents an 18 percent increase for the three month period and 28 percent increase for the six month period.

Our GAAP net income was $22.8 million in the second quarter of 2011 compared to $28.5 million in the 2010 quarter. For the six month period in 2011, GAAP net income was $59.2 million, a 19 percent increase over the $49.8 million of GAAP net income during the first six months in 2010.

Non-GAAP adjusted net income for the three and six months ended June 30, 2011 was $36.2 million and $81.3 million, respectively, compared to $36.0 million and $64.6 million for the same periods in 2010.

Operating Highlights

Our net sales of Cinryze during the three and six months ended June 30, 2011 increased to $62.5 million and $119.1 million, respectively, from sales of $40.3 million and $75.2 million, respectively, during the same periods in the prior year due to the increase in the number of patients receiving commercial product. During the three months ended June 30, 2011, net sales of Vancocin were $65.2 million which is a decrease from $68.4 million in the same period in 2010 due to reduced volumes partly offset by the effect by net realized price growth. During the six months ended June 30, 2011, net sales of Vancocin increased to $134.5 million from $124.1 million in the same period in 2010 primarily due to net realized price growth.

Research and development costs increased in the both the three and six month period of 2011 compared to the same period in 2010 primarily due to the $9.0 million upfront payment made to Halozyme. The increase in selling, general and administrative expenses in both periods of 2011 compared to the same period of 2010 is driven by higher spending related to our European commercialization efforts and new Cinryze marketing programs.

We also incurred other operating expenses of approximately $5.5 million and $6.0 million during the three and six months ended June 30, 2011 respectively, including costs to expand Cinryze manufacturing capacity at Sanquin and the increase in the fair value of the contingent consideration related to the acquisition of Buccolam.

Working Capital Highlights

At June 30, 2011 our working capital was $585.3 million compared to $561.0 million at the end of 2010 as we generated $68.5 million in cash flow from operations during the first six months of 2011, offset by the $50 million cash outlay associated with the accelerated share repurchase agreement under which we repurchased 2.7 million shares.

Looking ahead in 2011

ViroPharma is updating its guidance for the year 2011 as a convenience to investors. The following guidance provided by ViroPharma are projections, based upon numerous assumptions, all of which are subject to certain risks and uncertainties. For a discussion of the risks and uncertainties associated with these forward looking statements, please see the Disclosure Notice below.

For the year 2011, ViroPharma expects the following:

Net Cinryze sales are expected to be between $250 and $260 million.


Research and development (R&D) and selling, general and administrative (SG&A) expenses are expected to be between $180 and $190 million.


Non-GAAP Disclosures

The Company is reporting both GAAP net income and non-GAAP adjusted results for the three and six month periods ending June 30, 2011. Non-GAAP adjusted net income is GAAP net income excluding (1) non-cash interest expense, (2) amortization related intangible assets acquired, (3) stock compensation expenses, and (4) certain non-recurring events. A reconciliation between GAAP and non-GAAP adjusted net income is provided in the Selected Financial Information - Reconciliation of GAAP Net Income to Adjusted Net Income table included with this release.

The Company believes it is important to share these non-GAAP financial measures with shareholders as they better represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors' understanding of the Company's financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP adjusted net income should not be viewed in isolation, or as a substitute for or superior to reported GAAP net income. ViroPharma's definition of non-GAAP financial measures may differ from others.

Conference Call and Webcast

ViroPharma is hosting a live teleconference and webcast with senior management to discuss the financial announcement, guidance, and other business results on July 28, 2011 at 9:00 a.m. Eastern. To participate in the conference call, please dial [phone] (domestic) and [phone] (international). After placing the call, please tell the operator you wish to join the ViroPharma investor conference call.

Alternatively, the live webcast of the conference call can be accessed via ViroPharma's website at http://www.viropharma.com. Windows Media or Real Player will be needed to access the webcast. An audio archive will be available at the same address until August 18, 2011.