3SOF

updated intraday chart, looking more positive now

anal-ists up to their old tricks I see.

now this is interesting,I think I'll hold --   

http://thomson.finance.lycos.com/lycos/iwatch/cgi-bin/iw_ticker?t=VPHM&range=7&mgp=0&i=2&hdate=&x=22&y=8

Hi Terlisa and Oliver

Well it is difficult to hate a stock that has been so generous to you but I have to admit that I hate myself for not having a stop loss on VPHM. I was obviously overconfident in the fundamentals of this stock.

Lesson learned and I am now busy putting stop loss on all the stocks in the 3SOV portfolio.

The FDA decision to allow approval of generic competition without requiring clinical trials is a fundamental change in the outlook for the company and a sharp drop in the stock price is justified.

We will now have to find a new basis to valuate the company and for that we need answers to the following questions:

• How likely is it that a generic drug will be developed?
• When will it be introduced to the US market?
• What market share will VPHM have after the introduction of a generic version?

Vancocin lost its patent protection long time ago and it is first recently that a small pharmaceutical company; Akorn together with an Indian drug company Cipla decided to embark on the development of a generic version. The main reason is that it is very difficult to produce a generic version of Vancocin. I think the best proof of that is if you look at the stock price of AKN and VPHM. AKN has gained approximately $20 million in market value after the FDA decision and VPHM has lost approximately $560 million. And please remember here that the Akorn/Cipla generic version has the whole world as potential market and not only US.

We all know the market is right but here is the question: is it right when it cut $560 million of VPHM's market cap or is it right when it only add $20 million to Akorn's?

It seems like most analyst expect that approval of a generic version of Vancocin will happen at earliest in the beginning of 2008 or 2 years from now. From the approval to actually get the drug on the market takes time and even after that history shows that the owner of the original drug will still have a significant market share. I am not saying that generic competition is not going to hurt VPHM. It certainly will both in form of market share and margins. But VPHM will continue selling the drug with a profit for years to come.

So is VPHM a buy today? Well I think it is. We still have at least 2 to 3 years with approximately $100 million free cash flow per year. The market cap today is around 700 million and the book value per share is 4.77.

I have deliberately not mentioned VPHM's pipeline. At this point in time I don't think it has any influence on the stock price. Obviously that will change in the future.

I think the reaction to the FDA decision is way overdone. I am buying VPHM today. I do not expect it to go back to 20 in the near future but I could see it 20% to 40% higher from here.

It looks like VPHM wants to close green! If it does I think we could see a 2-3 day rally to the $13 level.

Thanks for your analysis Michael. Glad you're back! VPHM took a bite out of my ass too. I'm trying to get back some of it back. My ass that is. I don't want to be called half-assed  

At $10.50 now. Looks like a good entry point.

[D] Investor, why not consider other actively gaining stocks like GNBT, NVAX, HEB, etc. short-term instead of shorting VPHM.

After such a large drop, a rebound is always a possibility once the "panic" wears off.

I bought 4000 yesterday,
VPHM dropped more than 40% in two days for concerns over generic rival to its antibiotic Vancocin could enter the market earlier than expected.

In response to the FDA's changed condition, ViroPharma said it has filed a petition for a stay of action with the FDA and said it plans to make additional filings in support of its "vigorous opposition to any approach that does not require rigorous scientific methods to demonstrate a rate and extent of drug release to the site of action consistent with good medicine and science."
The company has $233 million in cash, no debt, and is trading at a little over two times its book value per share. It has a trailing P/E of only 5 and a forward P/E of just 8, and the company was finally able to become profitable in 2005, on the strength of Vancocin. Vancocin is the only approved drug for VPHM for now. However, VPHM still has two other drugs in the  in the Clinical Trial Phase.
VPHM is oversold in my opinion. The market is over-reacting on the generic drugs version of Vancocin. The generic drugs won't be out in the market in the mid-2008 earliest. VPHM will increase the price on Vancocin by 6.8 effectively this month. VPHM is very attractive at the current price.

Yesterday at the stock hit the support from last year at 9.74 and made about 85 cent gain so decent trade but who knows if it is done. It is also the 62% retrace so it may hold. I only did the day trade in case there was another shoe to drop. Will likely re enter again

see chart

http://tinyurl.com/qxwtd

11.05, I think this is good for 25-30% gain in the short term.

nice move today 

VPHM: Volume Spike; 24% > 20-adsv, Stock +6.90%
Tuesday , March 21, 2006 11:46 ET

This is the 3rd VOLUME alert for VPHM in the past 7 calendar days.

Trading for Viropharma, Incorporated (NASDAQ NM: VPHM) has been heavier than usual in today's session. By 11:45 ET, the stock had already traded 7,911,500 shares via 15,327 trades. The cumulative volume is 23.80% above its 20-day average of 6,390,515. Normally the stock experiences around 6,715 individual trades per session.

So far, today's volume surge has caused a net rise in VPHM's stock price. At the time of this alert, the stock was trading at $11.310, up $0.730 (+6.90%).

One year ago, the Company's shares closed at $2.390. The price has gained more than 373 percent since then.

Over the last 10 trading session VPHM has traded in a range between $9.700 and $19.750 and is currently trading 53.57% below its 52-week high of $24.360 set on November 07,2005 and 577.25% above its 52-week low of $1.670 from May 02,2005.

I agree. Margin call selling is done. I think it will move up from here.

I got stopped out at 10.68 today on the shares I bought Monday at 10.68. VPHM may want to retest its Monday low. I still expect a DIET-like bounce so I will probably take a new position soon. Just want to make sure it's done with going lower first.

"GO IN THAT HOUSE OF PAIN THAT YOU SEEM TO WANT TO BE IN, BUT GET AWAY FROM ME.  I'M TRYING TO WORK, DAMMIT."  (Melf Elf, "Need a Diet" thread)

board quotation:
Quick Conference Call Recap
by: equitylongshort
Long-Term Sentiment: Strong Buy    03/23/06 07:46 pm
Msg: 109490 of 109591

For those of you who missed it, you can hear a replay of the Goldman Sachs conference this morning at: 800-332-6854 (US) or 973-528-0005 (Int'l), Passcode: 33154.


ViroPharma stated at the beginning of the call that it would not disclose anything new, however, it did elaborate on a few key points and confirmed some prior statements. Most importantly:

1) FDA wrongly classified Vancocin as a type 1 drug when it is in fact a type 3 (no permeability). This means that Vancocin cannot easily enter the bloodstream and so a bioequivalence waver does not apply for generic candidates.

2) FDA "decision" is actually a recommendation only, and was made by a low level employee without consulting the appropriate staff at the FDA responsible for classification, and without consulting published FDA guidelines

3) Viropharma is heavily working behind the scenes to cancel the recommendation and will not disclose these details until the plan is complete. VPHM has a strong game plan which is in motion now.

4) Maribavir Phase II is complete (last enrollment November '05) and results will be announced by the end of March (next week!!!)

5) Maribavir Phase III will begin as scheduled mid year in stem cells, and end of year in organs, indicating that all is clear in Phase II!!

6) Viropharma is in a strong cash position with no debt, solid prospects in the pipeline, and has revenue from SGP from it's licensing of a common cold treatment (there is nothing on the market right now to treat the common cold)

All in all, listening to the call has more than ever convinced me to hold VPHM no matter how low it goes, and to buy more on any weakness. There are a lot of false ideas out there and when the dust settles, VPHM will be back to the 20ies. You may only have to wait until the next earnings release, but don't doubt for a second that when the FDA does a mea culpa, VPHM is going up 3-5 dollars in one pop.

I am holding my shares for the long term 

I have already sold off all my VPHM for some small gains. LiveLife is right, there are other much better plays than VPHM at this moment. I agree that the sell-off for VPHM should be done for the meanwhile but remember that the big tank was due to speculative news about the generic competitor for Vancocin and FDA's possibility of putting the generic on fast track.

While VPHM might be recovering now, I think it has a good chance of tanking again if news comes out CONFIRMING that the generic drug is really the same thing as Vancocin and that FDA has decicided to go forward with the fast track policy despite VPHM's petition.

So there's still risk involved (which technical analysis cannot predict) and as an investor I'd like to play it safe.

On the other hand, I am currently shorting NVAX and looking to re-enter long once the recent correction is complete. What do you think LiveLife?

GNBT is REALLY on fire. Unfortunately I already dumped my GNBT a week or two ago to secure my profits.  It's got to correct sometime soon and I'll be looking forward to that!

5) Maribavir Phase III will begin as scheduled mid year in stem cells, and end of year in organs, indicating that all is clear in Phase II!!

If this is true - then Maribavir results should be positive next week??

Why is this stock in such a tight trading range - any thoughts on entering some buys at this point?

In case you haven't been trolling the yahoo board on this all week as I have... some other pieces of information that I've gleaned and believe to be meritorious:
The FDA OGD (office of generic drugs) working group floated the notion of fast-tracking generics for VETERINARIAN use.  It appears that this was mis-quoted by what's-his-name at Cowen (who conveniently went on a weeklong vacation this week). P/J picked up on it - and the two were the only ones who issued any statement to the negative on VPHM's behalf.  Cramer picked that up - the rest is history in progress.  If you check the S&P 'Street Consensus' you will notice that the BUY and BUY/HOLD directives are supported by both Cowen and Piper-Jaffrey... which leads me to speculate that their public downgrade was yet another move on behalf of hedge funds and insiders to pick up millions of shares at retail investor's expense mostly on margin calls, shorting the price to below stop-loss orders, collectively inducing panic at a company whose fundamentals are incredibly solid - especially for a biotech.
Another aspect of the introduction of generic competition is that even if AKRN could bring one to market, the soonest that would happen is only 18 months off the planned patent expiration - and nowhere near the devaluation of the company to the degree this selloff has demonstrated.  Generics have a long road ahead in simply manufacturing this drug - the process of which will continue to be protected by patent.  As also stated by others on the Y! board, providing a less-reliable generic is inviting more political backlash at FDA on the heels of Phen-phen and Vioxx... are they prepared for a devaluation of THEIR credibility?

Daytraders still seem to be all over it, but it does appear that the $9.70 low will not be seen again, looking for more pre-open institutional buys - and possibly some positive news on maribavir entering it's P3 trials to get this thing chugging uphill again.
There was a CC yesterday for Institutionals only - some Y! folks managed to fake their way into that, even if for only a few minutes and report that not much was stated definitively in the hour; but what was said is that marivabir was on track to enter P3 trials which would strongly suggest that it succeeded in P2 trials - exactly the good news that people would be hanging on their seats at this moment to hear.
Again, I am paraphrasing what others have posted; but some things just sound far more credible on those boards than others (and I'm referring to the 10% of posts that are worth reading).
I'm long VPHM - wanted to get in a bit sooner, I had a strong sense that 10.70 was a reasonable low but managed to buy in at 10.86 after chasing it upwards Thursday afternoon in what looked to be a solid climb (har!).  It amazes me that daily volume reflects turning over the float 2 and 3x's!
Market skeptics (or realists, depending on your view - I tend to agree with some of this) could imply that creating negative news out of nothing was part of a plan to quadruple the value of holdings by insiders/institutionals.  Why would FDA step up to clarify their statements when it didn't even apply to VPHM?  That way, news - even if misquoted to create bad news - won't have any statement to the contrary - good strategy!  If Cramer had actually answered the caller Monday night - he 'could' have provided clarification - so read into that what you may (I don't watch TV).
A huge transfer of wealth is in progress here and it gives me cause to reflect that whether one is long or short on stocks - ALL retail investors are in the same boat... at war with the big money and MMs.  This is one of those instances where I would give more credit to fundamental analysis over technicals; because I fear that the folks who rely on TA only just gave up their shares for a song.  Lemmings!  I'm a contrarian in so many aspects, it seems securities are a natural fit for me.  I also loath buying things on credit, which makes for a less-leveraged portfolio - but one I can hold on to as long as I want; just what I need so I can sleep over weekends during turbulence :-)
Good luck dear readers!
bohemian2k