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ViroPharma Inc. Reports Operating Results (10-Q)

August 09, 2012 | About:
10qk

10qk

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ViroPharma Inc. (VPHM) filed Quarterly Report for the period ended 2012-06-30.

Viropharma Inc has a market cap of $1.39 billion; its shares were traded at around $23.12 with a P/E ratio of 13 and P/S ratio of 2.6. Viropharma Inc had an annual average earning growth of 20.2% over the past 5 years.

Highlight of Business Operations:

The $2.8 million in operating income for the three months ended June 30, 2012 decreased $39.5 million as compared to the same period in 2011. The decrease in operating income is driven primarily by the following: a decrease in net sales of $34.2 million period over period due to lower Vancocin revenues as a result of the entrance of generic vancomycin and the relative increase in the sales of our branded Vancocin into lower priced governmental programs; an increase of $3.4 million in cost of sales due to the mix effect of increased Cinryze volume coupled with reduced Vancocin volume and the royalty due to Genzyme for sales of Vancocin (including branded and authorized generic sales) and reduced margins from authorized generic vancomycin sales; and, an increase of $8.8 million in selling, general and administrative expenses primarily related to the growth of our global organization and our European commercialization efforts. Operating income in the prior period was impacted by the payment of a $9.0 million upfront fee related to our license arrangement with Halozyme paid in the second quarter of 2011, partially offset by increased spending associated with our Cinryze programs, our Phase 2 study of subcutaneous administration of Cinryze in combination with rHuPH20, our VP20621 development and the costs associated with a Phase 2 program to evaluate maribavir for the treatment of CMV infections in transplant recipients during the second quarter of 2012. As a result, research and development expenses were $3.8 million less in the second quarter of 2012 as compared to the same period in 2011.

The $42.9 million in operating income for the six months ended June 30, 2012 decreased $59.5 million compared to the same period in 2011. The primary drivers of this were lower net sales of $25.4 million due to lower Vancocin revenues; increased cost of sales of $16.6 million due to increased Cinryze volume; and increased selling, general and administrative expenses of $18.7 million due to our European commercialization efforts and the growth of our global organization.

Our net sales of Cinryze during the three and six months ended June 30, 2012 increased 22.7% and 21.6%, respectively, over the same periods in the prior year due to increased volume arising from an increased number of patients treated with Cinryze in the U.S. Also affecting the increase was approximately $1.2 million and $1.7 million of the Cinryze revenue in the EU during the three and six months ended June 30, 2012, respectively. We had no European Cinryze revenue during the three and six months ended June 30, 2011.

During the three month period ended June 30, 2012, net sales of Vancocin decreased 75.6% compared to the same period in 2011 due to the introduction of authorized generic vancomycin. During the six months ended June 30, 2012, net sales of Vancocin decreased 39.0% compared to the same period in 2011 due to the introduction of authorized generic vancomycin.

Cost of sales increased for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011 by $3.4 million and increased for the six months ended June 30, 2012 by $16.6 million compared to the six months ended June 30, 2011. These increases are primarily due to the effect of the shift in product mix from decreased sales of higher margin Vancocin to increased sales of lower margin Cinryze, and the royalty due to Genzyme for Vancocin sales which was not payable in 2011. We anticipate that our cost of sales will remain higher than historical levels due to the introduction of generic vancomycin and the reduction of our sales of Vancocin relative to our Cinryze sales along with the royalty due to Genzyme.

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