ViroPharma Inc. Reports Operating Results (10-Q)
Viropharma Inc. has a market cap of $1.21 billion; its shares were traded at around $15.46 with a P/E ratio of 13 and P/S ratio of 3.9. VPHM is in the portfolios of Bruce Kovner of Caxton Associates, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations: which no impairment occurred in 2010, increased net sales ($94.8 million), and a decrease in our research and development expense ($14.0 million) primarily due to the wind-down of our CMV program. These were partly offset from increased cost of sales ($15.1 million) due to the increase in Cinryze volume and a $3.2 million increase in selling, general and administrative expense.
Cost of sales increased for the three months ended September 30, 2010 as compared to the prior year by $5.5 million due to the increased Cinryze volume. Cost of sales increased for the nine months ended September 30, 2010 by $15.1 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 ($6.9 million). We utilized all the inventory that was recorded at fair value as part of the Lev purchase during 2009. Additionally, included in the cost of sales for the nine months ended September 30, 2010 are expenses of $1.5 million related to non-refundable start up costs paid to a 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 September 30, 2010 by $4.8 million due to increases in compensation expense ($1.8 million), marketing activities ($1.0 million), legal costs ($0.7 million) and medical education expenses ($0.3 million). For the nine months ended September 30, 2010, SG&A increased $3.2 million compared to the same period in 2009. The increase for the nine month period was driven by increased marketing expenses ($2.1 million), compensation expense ($0.9 million), FDA filing fees ($1.1 million) and legal costs ($1.4 million) partly offset by decreased medical education expenses ($2.3 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 $4.7 million and $3.3 million for the nine month period 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 nine months ended September 30, 2010 were $7.1 million and $22.3 million, respectively, as compared to $6.8 million and $21.4 million, respectively in 2009.
Interest income for three and nine months ended September 30, 2010 was $0.1 million and $0.2 million, respectively, is relatively flat compared to $0.1 million and $0.3 million, in the respective periods in 2009.
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