Why ViroPharma Shares Got Pummeled
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biotechnology company ViroPharma (NAS: VPHM) were beaten down as much as 12% this morning after the company reported worse-than-expected first-quarter results.
So what: The maker of Cinryze and now off-patent antibiotic Vancocin reported a 7% rise in sales to $135.8 million and a 45% drop in earnings to $0.26 as general and administrative expenses ballooned 70%. These results widely missed Wall Street's expectations for a profit of $0.40 on sales of $149 million. Even worse, ViroPharma significantly cut its full-year revenue forecast to a range of $450 million to $500 million from its previous guidance of $600 million to $660 million. The move wasn't a surprise to analysts, but it is nonetheless below the consensus estimate of $502 million.
Now what: Considering that Vancocin made up a majority of sales for ViroPharma last year and that it's now off patent, the pain could be just getting started for shareholders. Without question, Cinryze, which is used to prevent and treat attacks of hereditary angioedema, is the growth force behind ViroPharma going forward, but it's highly unlikely that Cinryze alone will replace the lost sales from Vancocin anytime soon. As for me, I'm writing myself a prescription to avoid ViroPharma for the immediate future.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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