ViroPharma Inc. (VPHM) filed Quarterly Report for the period ended 2009-09-30.
VIROPHARMA is a leader in RNA virology and RNA antiviral drug discovery and development. The company is committed to the commercialization development and discovery of antiviral pharmaceuticals. The company focuses on drug development and discovery activities for viral diseases including viral meningitis viral respiratory infection pneumonia hepatitis C and influenza. Each year a majority of the world's population is afflicted by at least one of these diseases and antiviral therapies are either inadequate or do not exist. Viropharma Inc. has a market cap of $580.8 million; its shares were traded at around $7.5 with a P/E ratio of 11.7 and P/S ratio of 2.5.
Highlight of Business Operations:
Cost of sales increased for the three and nine months ended September 30, 2009 by $7.8 million and $21.5 million, respectively, as compared to the same period in the prior year due to the launch of Cinryze. Included in the Cost of sales for the nine months ended September 30, 2008 was $1.8 million that was previously deferred. Cost of sales during the three and nine months ended September 30, 2008 did not include Cinryze as we acquired Lev Pharmaceuticals in October 2008. Vancocin and Cinryze cost of sales includes the cost of materials and distribution costs and excludes amortization of product rights. As part of our October 2008 purchase of Lev, we acquired Cinryze inventory which was recorded at fair value in purchase accounting. This step-up of inventory value increased the cost of sales during the three and nine months ended September 30, 2009 by $0.7 million and $6.9 million, respectively.
Selling, general and administrative expenses (SG&A) increased for the three and nine months ended September 30, 2009, $5.9 million and $23.8 million, respectively, compared to the same periods in 2008. For the nine month period, the largest contributors to this increase over the nine month period in 2008 were increased compensation costs resulting primarily from the expansion of our Cinryze field force ($11.0 million), increased marketing efforts ($3.3 million), increased professional fees ($2.8 million), and increased medical education activities ($0.4 million). Included in SG&A are legal and consulting costs incurred related to our opposition to the attempt by the OGD regarding the conditions that must be met in order for a generic drug application to request a waiver of in-vivo bioequivalence testing for copies of Vancocin, which were $3.3 million and $2.8 million for the first nine months of 2009 and 2008, respectively. We anticipate that these additional legal and consulting costs will gradually dimish in future periods. We anticipate continued increased spending in selling, general and administrative expenses in future periods as we continue the commercial launch of Cinryze.
Intangible amortization for the three and nine months ended September 30, 2009 were $6.8 million and $21.4 million, respectively, as compared to $1.5 million and $5.3 million, respectively in 2008. Amortization is higher in 2009 as compared to 2008 due to the intangible asset acquired in our acquisition of Lev Pharmaceuticals.
Interest income for three and nine months ended September 30, 2009 was $0.1 million and $0.3 million, respectively, as compared to $3.1 million and $13.5 million, in the respective periods in 2008. Interest income for both periods in 2009 as compared to 2008 decreased due to lower amounts of cash on hand and lower interest rates.
Our income tax expense was $9.6 million and $5.6 million for the three months ended September 30, 2009 and 2008, respectively, which represents effective tax rates of 32.7% and 17.1%, respectively. Our income tax expense was $20.2 million and $19.7 million for the nine months ended September 30, 2009 and 2008, respectively. Our income tax expense includes federal, state and foreign income taxes at statutory rates and the effects of various permanent differences. The income tax expense in the first nine months of 2009 reflects the full impact of our gain on the repurchase of a portion of our convertible notes. In addition, our tax expense for the year includes our current estimate of the impact of the orphan drug credit for maribavir. The increase in the 2009 expense as compared to 2008 is primarily due to the decrease in our orphan drug qualified expenses, offset by the decrease in our taxable income from 2008. We continue to evaluate our orphan drug qualified expenses and, to the extent that actual qualified expenses vary significantly from our estimates; our tax expense will be impacted accordingly.
VPHM is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc..
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