cliffvb re VPHM:
My approximation of $1.00 per share in earnings for 2005 was real “back of the envelope” stuff, primarily because I think the company itself has been and continues to be (pleasantly) surprised by the performance to date of Vancocin. The company has only owned the product for 6 months, has raised the price twice already without any complaints or pushback, has confirmed that March sales were materially stronger than February sales, and stated on May 18 that its (significantly raised) guidance of May 3 was already looking “conservative.”
That said, the $1.00 per share number assumed that the latest guided range for net product sales did not take into account the recent 26% price increase for Vancocin. If this assumption is correct, and using the mid-ranges of the company’s recent guidance for sales and expenses, I get: $76.5 million sales, less $41.5 million expenses, plus about $15 million for the effect of the price increase, or about $50 net income. Using the diluted share count in the most recent 10-Q (i.e., about 52 million shares), you get $.96 EPS, which is what I meant by “about $1.00.”
Upon further reflection, it is quite possible that the latest guided range for sales did take into account the recent 26% price increase for Vancocin. If so, the rough math above leads to $.67 EPS.
In my own assessment of this stock, I have not attempted to be any more precise, because I don’t know how much reliance to place upon the company’s Vancocin guidance. It’s not a matter of distrust – from what I can tell the company is indeed trying to be “conservative.” It’s just that we are in the first inning here, and, while the company knows it must say something, I get the sense it’s not sure what to say.
But I do like all the insider buying, including the most recent (i.e., 5/19) director purchase at $3.76. It is hard not to like the stock at $3.88, given all of the above. Whether forward PE is 4, 6 or 8, I certainly agree with MSGI that it is unprecedented for a pharmaceutical company, especially one with $100 million market cap and, from what I can tell, an interesting pipeline in development over and above the drug providing a current revenue stream.
All IMHO and FWIW.
Steve
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