ViroPharma Inc. Reports Operating Results (10-Q)
Viropharma Inc. has a market cap of $886.4 million; its shares were traded at around $11.39 with a P/E ratio of 10.7 and P/S ratio of 2.9. VPHM is in the portfolios of Bruce Kovner of Caxton Associates, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: The $53.1 million in operating income for the three month period ended June 30, 2010 increased $28.8 million as compared to the same period in 2009. This increase is primarily the result of increased net sales ($27.1 million), and a decrease in our research and development expense due to the wind-down of our CMV program ($3.2 million). The $91.5 million in operating income for the six months ended June 30, 2010 increased as compared to the same period in 2009. The primary drivers of this increase are the impairment of goodwill in the first quarter of 2009 ($65.1 million) for which no impairment occurred in 2010, increased net sales ($57.5 million), and a decrease in our research and development expense due to the wind-down of our CMV program ($13.2 million). These were offset from increased cost of sales ($9.5 million) due to the increase in Cinryze volume.
Cost of sales decreased for the three months ended June 30, 2010 as compared to the prior year by $0.5 million due to the effect of the step up in inventory recorded in 2009 from our purchase of Lev ($5.0 million), partially offset from increased Cinryze volume. Cost of sales increased for the six months ended June 30, 2010 by $9.5 million as compared to the same period in the prior year due to the increase in Cinryze units sold, partially offset by the impact of the step-up on 2009 cost of sales related to the acquisition of Lev ($6.2 million). We have utilized all inventory that was recorded at fair value as part of the Lev purchase during 2009. Additionally, included in the cost of sales for the six months ended June 30, 2010 are expenses of $1.5 million related to non-refundable start up costs paid to our new plasma supplier. Vancocin and Cinryze cost of sales includes the cost of materials and distribution costs and excludes amortization of product rights.
Selling, general and administrative expenses (SG&A) increased for the three months ended June 30, 2010 by $1.8 million due to increases in compensation expense ($0.7 million) and marketing activities ($0.6 million), offset by lower medical education costs ($0.6 million). For the six months ended June 30, 2010, SG&A decreased $1.7 million compared to the same period in 2009. The decrease for the six month period was driven by decreased compensation expense ($0.9 million) and decreased medical education expenses ($2.7 million), offset by increased marketing expenses ($1.1 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 $2.9 million and $2.6 million for the first half of 2010 and 2009, respectively. We anticipate that these additional legal and consulting costs will continue at the current level, or possibly higher, in future periods as we continue this opposition. 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 six months ended June 30, 2010 were $7.6 million and $15.2 million, respectively, as compared to $7.4 million and $14.7 million, respectively in 2009.
Interest income for three and six months ended June 30, 2010 was $0.1 million and $0.1 million, respectively, as compared to $0.1 million and $0.3 million, in the respective periods in 2009. Interest income for both periods in 2010 as compared to 2009 decreased due to lower interest rates.
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