ViroPharma Inc. (VPHM) posted fourth quarter 2011 adjusted earnings of 57 cents per share, surpassing the Zacks Consensus Estimate of 42 cents and the year-ago earnings of 47 cents. Full year 2011 earnings of $1.93 per share also beat the Zacks Consensus Estimate of $1.47 and year-ago earnings of $1.64 per share. Higher revenues and lower share count boosted earnings.
Higher sales of Cinryze and Vancocin helped improve fourth-quarter and full-year revenues, which came in at $145.6 million and $544.4 million, respectively. Both figures surpassed the Zacks Consensus Estimate of $145 million and $524 million, respectively. Revenues also increased from the year-ago figures of $121.6 million and $439.0 million, respectively.
Cinryze sales increased 27% to $66.7 million during the reported quarter, and Vancocin sales came in at $77.8 million, reflecting an increase of 15%. While the increase in Cinryze sales was due to higher patient demand, Vancocin sales were positively impacted by a price rise.
Research and development (R&D) expenses soared 21.5% during the quarter to $12.7 million, given the upfront payments made related to the Halozyme Therapeutics, Inc. (HALO) and Intellect Neurosciences, Inc. (ILNS) licensing agreements.
Selling, general and administrative (SG&A) expenses amounted to $36.0 million, up 48.0% year over year. The jump was primarily due to increased expenses related to the ongoing Cinryze marketing program and the company’s European infrastructure and commercialization efforts.
During 2011, ViroPharma repurchased 9.2 million shares for $170 million.
Forecast for 2012
For 2012, ViroPharma expects net product sales to amount to $600 - $660 million. Of this, US Cinryze sales will contribute $330 - $360 million and sales from Vancocin are expected in the range of $260 - $310 million.
Further, combined R&D and SG&A expenses are forecasted in the range of $230 - $260 million.
We currently have an Outperform recommendation on ViroPharma. We are pleased with Cinryze’s (approved for the treatment of hereditary angioedema) uptake in the US and expect investors to keep a close watch on the performance of the drug in the European Union (EU). Moreover, the label update of Vancocin (approved for the treatment of clostridium difficile infection) has brought three years of marketing exclusivity (until the end of 2014) to the drug.
However, we are concerned about the competitive threat that Vancocin faces from Optimer Pharmaceuticals Inc.’s (OPTR) Dificid (fidaxomicin), which is approved in the US and EU for the same indication. Thus, we have a Zacks #3 Rank (Hold rating) in the short-run.
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