VPHM Viropharma Incorporated (MM)

ViroPharma Inc.’s (VPHM) fourth quarter 2012 adjusted earnings (including stock-based compensation) of 3 cents per share were above the Zacks Consensus Estimate of a penny but significantly lower than the year-ago earnings of 51 cents.

The year-over-year earnings decline was primarily due to lower revenues.

Quarterly revenues, which decreased 26.8% year over year to $106.5 million, beat the Zacks Consensus Estimate of $104 million. The decline in revenues was primarily due to decreased Vancocin sales in the face of generic competition, which was partially offset by growth in Cinryze sales.

For 2012, revenues came in at $427.9 million, down 21.4% from 2011 and in line with Zacks Consensus Estimate. Cinryze accounted for $327.1 million of total sales in 2012. Cinryze sales came in line with management expectations.

Approximately $311 million of total Cinryze sales was attributed to actual patient demand while an increase in channel inventories accounted for the remainder.

Adjusted earnings of 16 cents per share in 2012 were a penny short of the Zacks Consensus Estimate.

Quarterly Highlights

Cinryze sales increased 45% from the prior-year quarter to $97.0 million during the final quarter of 2012, driven by higher demand.

On the other hand, Vancocin net sales plummeted 93.4% in the quarter to $5.0 million, down from $77.8 in the year-ago quarter. The decline was attributable to the presence of generic vancomycin capsules in the US market.

Research and development (R&D) expenses increased 50.6% during the quarter to $19.1 million.

Selling, general and administrative (SG&A) expenses amounted to $50.9 million, up 41.5% from the prior-year quarter due to costs related to the launch of Cinryze, Buccolam and Plenadren in the EU and additional Cinryze commercialization costs in the U.S.

During 2012, ViroPharma repurchased 6.9 million shares for $180.3 million.

Outlook

ViroPharma provided its guidance for 2013. The company expects net product sales in a range of $450 – $475 million. The company maintained its US Cinryze sales guidance of $390–$400 million.

Further, ViroPharma continues to expect combined R&D and SG&A expenses in the range of $240 – $260 million.

ViroPharma is also upbeat about its pipeline. The company and partner Halozyme Therapeutics (HALO) initiated a phase IIb study in late December 2012 to evaluate the safety and efficacy of a subcutaneous administration of Cinryze in combination with Halozyme's Enhanze technology.

ViroPharma carries a Zacks Rank #3 (Hold). Currently, Avanir Pharmaceuticals Inc (AVNR) and Bayer (BAYRY) look well placed with a Zacks Rank #2. (Buy).

 
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