Why ViroPharma Shares Skyrocketed

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 ViroPharma Inc. , a biopharmaceutical company that develops and commercializes therapies to treat serious and often rare diseases, jumped as much as 30% after a report from Bloomberg hinted that there may be interest from two suitors in acquiring ViroPharma.

So what: According to Bloomberg and people familiar with the matter, ViroPharma has hired Goldman Sachs as its adviser to seek out potential suitors for the company. The report names Sanofi and Shire as the two most interested suitors. Representative from all four companies declined to comment on the rumors.

Now what: Although today's move is most certainly welcome by optimists, it isn't likely to change your long-term investing thesis of ViroPharma. The future of ViroPharma relies on the continued success of its ultra-rare hereditary angioedema drug Cinryze, and the potential that trials for maribavir -- its anti-cytomegalovirus drug for bone marrow and liver transplant patients -- will produce positive results. This also isn't the first time ViroPharma was supposedly put on the auction block. Back in June, shares rallied after Reuters noted preliminary interest in the company, only to see those gains whittled away over the coming weeks as no new rumors surfaced. My suggestion would be to stick to what we know about ViroPharma (i.e. its FDA-approved and developing drugs) and let these rumors be white noise until we get some confirmation from the companies in question.

While rumors of a stock buyout can sometimes work in your favor, there's nothing that can replace the strategy of finding solid companies that are selling at depressed prices. The reason is solid, long-term oriented companies have consistently helped generations of the world's most successful investors preserve capital, minimize risk, and achieve market-trampling returns. For one such company, read our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.

The article Why ViroPharma Shares Skyrocketed originally appeared on Fool.com.

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.The Motley Fool recommends Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story