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ViroPharma Inc. Reports Operating Results (10-Q)

October 25, 2012 | About:
10qk

10qk

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ViroPharma Inc. (VPHM) filed Quarterly Report for the period ended 2012-09-30.

Viropharma Inc has a market cap of $1.92 billion; its shares were traded at around $27.28 with a P/E ratio of 21.3 and P/S ratio of 3.5. Viropharma Inc had an annual average earning growth of 20.2% over the past 5 years.

Highlight of Business Operations:

We incurred an operating loss of $4.2 million for the three months ended September 30, 2012 compared to operating income of $50.5 million during the same period in 2011. The decrease in operating income is driven primarily by the following: a decrease in net sales of $52.0 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 $1.4 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 $12.9 million in selling, general and administrative expenses primarily related to the growth of our global organization and our European commercialization efforts. Research and development expenses decreased $6.4 million in the three month period ended September 30, 2012 compared to the three month period in 2011 as increased spending associated with our CMV program and Plenadren was offset by a $3.0 million charge related to the achievement of a development milestone under our license arrangement with Halozyme and a $6.5 million upfront fee related to our license agreement with INS paid during the three month period ended September 30, 2011. Other operating expense in the three month periods ended September 30, 2012 and 2011 includes the expense associated with change in the fair value of the contingent consideration related to our acquisitions and $2.0 million in the three months ended September 30, 2012 related to non-refundable start up costs with no alternative future use paid to suppliers. Additionally, Other operating expense in the three months ended September 30, 2011 includes an $8.5 million impairment charge.

The $38.7 million in operating income for the nine months ended September 30, 2012 decreased $114.1 million compared to the same period in 2011. The primary drivers of this were lower net sales of $77.3 million due to lower Vancocin revenues; increased cost of sales of $18.1 million due to increased Cinryze sales volume; and increased selling, general and administrative expenses of $31.6 million due to our European commercialization efforts and the growth of our global organization. Research and development expenses decreased $5.2 million during the nine month period in 2012 as compared to the same period in 2011. Increased spending related to our Phase 2 study of subcutaneous administration of Cinryze in combination with rHuPH20 and increased spending in our CMV program during the nine months in 2012 was offset by a $9.0 million upfront fee related to our license arrangement with Halozyme, a $3.0 million charge related to the achievement of a development milestone under our license arrangement with Halozyme and a $6.5 million upfront fee related to our license agreement with INS paid during the nine months ended September 30, 2011. Other operating expenses in the nine month periods ended September 30, 2012 and 2011 includes the expense associated with change in the fair value of the contingent consideration related to our acquisitions and $2.0 million in 2012 related to non-refundable start up costs with no alternative future use paid to suppliers. Also included in Other operating expenses for the nine months ended September 30, 2011 are approximately $3.4 million of costs associated with the funding of Cinryze manufacturing enhancements at Sanquin and an $8.5 million impairment charge.

Our net sales of Cinryze during the three and nine months ended September 30, 2012 increased 30.3% and 24.7%, 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. Included in this increase was approximately $1.6 million and $4.5 million of the Cinryze revenue in the EU during the three and nine months ended September 30, 2012, respectively. We had no European Cinryze revenue during the three and nine months ended September 30, 2011.

During the three month period ended September 30, 2012, net sales of Vancocin decreased 95.2% compared to the same period in 2011 due to the introduction of authorized generic vancomycin. During the nine months ended September 30, 2012, net sales of Vancocin decreased 59.4% compared to the same period in 2011 due to the introduction of authorized generic vancomycin.

Cost of sales increased for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011 by $1.4 million and increased for the nine months ended September 30, 2012 by $18.1 million compared to the nine months ended September 30, 2011. These increases are primarily due to the effect of the shift in product mix from decreased sales of higher margin

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