VPHM - Sector: Healthcare---Industry: Biotechnology & Drugs

[stocky]

wont play the earnings, but goodluck for all those braved selloff and held on VPHM. Great trade.

[rk4283]

Great stock pick here.  I'm not playing the earnings either.  I wanted to highlight for everyone a message board that is focused on quality and even gives away cash prizes.  It is where I first heard of the stock from.  It is called the Stock Arena.  I encourage everyone to check it out.  Life Time Membership is just 1 dollar.

www.stockarena.com?r=529

[Michael]

So the big question today is whether or not to hold over the earnings. As the earnings are due today it might be worthwhile to take a look at what we can expect:

We know that they will have some significant one time cost in connection with the convertible bonds, which will lower the earnings this quarter. Earnings are therefore most likely going to be below last quarter's earnings. This is already included in the forecast (Q1: 0.36, Q2 est.: 0.10).

We also know that they probably are going to increase the forecasted revenue for 2005. They previously guidance was revenue in the $74 million to $79 million range. This would mean that the revenue in the last 3 quarters would be lower than Q1. I am pretty sure that Q2, which is normally a weak quarter, will exceed Q1.

We also know that VPHM are not paying royalties to Ely Lilly for sales exceeding $65 million so any increase in sales above the previous announced range will almost completely be reflected in the net profit. I would therefore expect that they guide net profit before extraordinary items up. Most likely not directly but it should be pretty clear from the reported figures.

WPHM has been very silent about their pipeline for a long time. I don't expect them to make an announcement in connection with the earnings but any news about the trials or milestone payments could really put the stock on fire.

Piper Jaffray has upgraded the stock ahead of earnings and Lazard Freres made a point of initiating their coverage before earnings. Based on my experience with analysts I don't think they would have done so if they weren't pretty sure Q2 would surprise to the upside.

All in all a pretty bullish picture so I am holding over earnings.

Mike

[la-onda]

Press Release Source: ViroPharma Incorporated

ViroPharma Incorporated Reports Second Quarter and Six-Month 2005 Financial Results
Tuesday August 2, 5:04 pm ET
Company Reports Record Revenue; Increases Guidance for 2005


EXTON, Pa., Aug. 2, 2005 (PRIMEZONE) -- ViroPharma Incorporated (NasdaqNM:VPHM - News) reported today its financial results for the second quarter and six-months ended June 30, 2005.
Net sales of Vancocin(r) were a record $28.8 million for the second quarter of 2005 and $49.9 million for the first six months of 2005. Operating income in the second quarter and six months of 2005 was $18.7 million and $36.1 million, respectively, compared to operating losses in the second quarter and six months of 2004 of $3.6 million and $18.5 million, respectively. The increases in operating results from 2004 to 2005 were driven primarily by sales of Vancocin and the related cost of sales.

Net income improved over the second quarter and six-months of 2004 to $5.0 million and $22.4 million, respectively, compared to a net loss of $5.4 million and $22.0 million for the same periods in 2004. Net income per share for the quarter ended June 30, 2005 was $0.15 per share, basic, and $0.11 per share, diluted, compared to a net loss of $0.20 per share, basic and diluted, for the same period in 2004. Net income per share for the six-months ended June 30, 2005 was $0.75 per share, basic, and $0.44 per share, diluted, compared to a net loss of $0.83 per share, basic and diluted, for the same period in 2004. The primary drivers of the change from net loss in 2004 to net income in 2005 were the effects of improved operating income , partially offset by debt-related costs and income tax expense in 2005.

``We are very proud of our financial endeavors during the second quarter of 2005, particularly as it relates to the continued performance of Vancocin; prescriptions for the product were up 39% over the same period last year, and up 30% over the first quarter of 2005,'' commented Michel de Rosen, ViroPharma's chief executive officer. ``During the quarter, thanks to the performance of Vancocin, we were able to improve our operating income over the first quarter of 2005, and make significant improvements to our capital structure, as we reduced the principal amount of our debt by $97.6 million through the end of June 2005. Following the end of the quarter, we have reduced our debt even further, and as of today have only $86.7 million in outstanding debt. In addition to our operating momentum, we are also proud of our continued progress in our clinical programs.''

Operating Highlights

Net sales of Vancocin were $28.8 million and $49.9 million for the first three and six-months of 2005, driven by prescription demand and price increases. Prescriptions increased 31% for the first six months of 2005 compared to the first six months of 2004. Additionally, net sales of Vancocin increased 37% over the first quarter of 2005, primarily resulting from the increase in prescriptions and the effect of the price increase realized beginning in April 2005. There were no comparable net sales in the 2004 periods, as the company acquired Vancocin from Eli Lilly and Company in November 2004.

The six-month 2005 period also included $6.0 million in revenue from the sale of inventory to Schering-Plough pursuant to the license agreement between the companies.

The gross margin rate (net product sales less cost of sales as a percent of net product sales) for Vancocin increased in the second quarter of 2005 to 85% from 83% in the first quarter of 2005, primarily due to the April 2005 price increase. The gross margin rate was 84% for the six-months ended June 30, 2005.

The total costs and expenses associated with operating income (loss) were $10.3 million and $5.4 million, for the second quarter of 2005 and 2004, respectively, and $20.1 million and $22.0 million, for the six-months of 2005 and 2004, respectively. These changes reflect the net effect of increases related to the Vancocin cost of sales and intangible amortization and decreases related to research and development and marketing, general and administration expenses. These changes primarily resulted from the Company's purchase of Vancocin and the results of the Company's January 2004 restructuring, which included $9.3 million of costs recorded in the six months ended June 30, 2004.

For the first time since inception, the Company recorded a $3.8 million income tax expense in the second quarter of 2005, which is based on a combined federal and state estimated annual effective tax rate of 15%. This resulted from the Company's preliminary study on the availability of net operating loss carryforwards, which indicates that, assuming the Company is profitable, it should be able to utilize all carryforwards over future years, but with annual limitations. As such, the Company believes that taxable income will exceed available carryforwards for 2005.

Regarding additional payments due to Lilly in connection with the Vancocin acquisition, net sales as of June 30, 2005 exceeded the minimum net sales threshold of $44.0 million by approximately $6.0 million and the Company recorded additional purchase price of $2.9 million to intangible assets in June 2005 and established a corresponding liability to be paid in the third quarter of 2005.

Debt Highlights

During the second quarter of 2005, the Company recorded a charge of $7.6 million for the change in fair value of derivative liability that relates to the make-whole provision on the senior convertible notes, which are no longer outstanding. This change in the second quarter resulted in a charge of $4.0 million for the first six-months of 2005.

The Company recorded a $1.2 million net gain related to the repurchase of $41.2 million of subordinated convertible notes for $39.8 million in the second quarter of 2005. The net gain is comprised of the gross gain of $1.4 million less the write-off of $0.2 million of deferred finance costs.

The increases in both periods for interest expense were due to the interest, amortization of financing costs, and debt discount from the senior convertible notes, issued in January and April 2005. Interest expense also includes the $0.6 million related to the beneficial conversion feature for the auto-conversion of the senior convertible notes in June 2005.

During the second quarter of 2005, the initial investors in the senior notes exercised their purchase option and acquired an additional $12.5 million of the senior convertible notes. In addition, the Company reduced the debt principal by $97.6 million through $41.2 million of purchases of convertible subordinated notes and by $56.4 million as a result of conversions of senior convertible notes. The Company had $102.1 million in principal amount of notes outstanding as of June 30, 2005, which was further reduced by $15.4 million in July 2005 as a result of the Company affecting an auto-conversion on the remaining senior convertible notes. As of July 12, 2005, the senior convertible notes were no longer outstanding.

Cash Highlights

As of June 30, 2005, ViroPharma assets included approximately $39.9 million in cash, cash equivalents and short-term investments, which represents a $4.3 million decrease from December 31, 2004. This decrease is primarily the net result of cash used of $46.6 million on repurchases of convertible subordinated notes and make-whole payments on the senior convertible notes and cash received for the $12.5 million related to the exercise of the purchase option by the holders of the senior convertible notes in April 2005. In addition, Vancocin sales increased net cash.

Looking ahead in 2005

ViroPharma is updating its previously announced guidance for the year 2005 as a convenience to investors. The following guidance provided by ViroPharma are projections, based upon numerous assumptions, all of which are subject to certain risks and uncertainties. For a complete discussion and disclosure of the risks and uncertainties associated with these forward looking statements, please see the Disclosure Notice below. The Company's guidance does not include non-operating expenses or income.

For the year 2005, ViroPharma expects the following:



  --  Net product sales:  $100 to $105 million, representing growth
      of 85% to 94% over unaudited net product sales of Vancocin
      in 2004;

  --  Cost of sales:  $15 to $17 million;

  --  Research and Development:  $11.5 to $14.5 million;

  --  Marketing, General and Administrative:  $10 to $13 million;

  --  Net cash flows provided by operations:  At least $40 million.

Conference Call and Webcast

ViroPharma is hosting a live teleconference and webcast with senior management to discuss the financial announcement, guidance, and other business results on August 3, 2005 at 10:00 a.m. Eastern Time. To participate in the conference call, please dial (800) 391-2548 (domestic) and (302) 709-8328 (international). After placing the call, please tell the operator you wish to join the ViroPharma investor conference call.

Alternatively, the live webcast of the conference call can be accessed via ViroPharma's website at http://www.viropharma.com. Windows Media or Real Player will be needed to access the webcast. An audio archive will be available at the same address until August 17, 2005.

Link:
http://biz.yahoo.com/pz/050802/83192.html?printer=1

[basanlas]

From news release


For the year 2005, ViroPharma expects the following:



 --  Net product sales:  $100 to $105 million, representing growth
     of 85% to 94% over unaudited net product sales of Vancocin
     in 2004;

 --  Cost of sales:  $15 to $17 million;

 --  Research and Development:  $11.5 to $14.5 million;

 --  Marketing, General and Administrative:  $10 to $13 million;

 --  Net cash flows provided by operations:  At least $40 million.

Conference Call and Webcast

[la-onda]

 

quick analysis from my side:

net sales higher as expected average estimation:
28.8 Mio$ vs. 26.6 Mio$

average estimation higher as expected:
0.11 $ per share vs. 0.10$ per share

VPHM rises outlook for 2005 net product sales:
Net product sales :  $100 to $105 million, representing growth of 85% to 94% over unaudited net product sales of Vancocin in 2004


Michael & David,

your analysis  is appreciated !

Summarization Link:
http://www.knobias.com/individual/public/news.htm?eid=3.1.22040515d4a28d7d5ae66872868c4fbf15ebc1fadccdd1043dd9ad5b9e8168b0

VPHM: Q2 Results 11c vs (20c); Beats 9c Est; Provides Guidance
Tuesday , August 02, 2005 17:07 ET

QUARTER RESULTS
Viropharma Incorporated (VPHM) reported Q2 results ended June 2005. Q2 Revenues were $28.97M; +1,536.44% vs yr-ago; BEATING revenue consensus by +8.93%. Q2 EPS was 11c; +155.00% vs yr-ago; BEATING earnings consensus by +22.22%.

Q2 RESULTS      Reported      Year-Ago     Y/Y Chg      Estimate    SURPRISE
----------  ------------  ------------  ----------  ------------  ----------
Revenues:        $28.97M        $1.77M  +1,536.44%       $26.59M      +8.93%
----------  ------------  ------------  ----------  ------------  ----------
EPS:                 11c         (20c)    +155.00%            9c     +22.22%
----------  ------------  ------------  ----------  ------------  ----------

QUARTERLY GUIDANCE:
Company provided NO Revenue guidance for next quarter.

Company provided NO EPS guidance for next quarter.

ANNUAL GUIDANCE:
Company provided the following guidance for Coming-YR Revenue: "Net product sales of $100 to $105 million"

Company provided NO EPS guidance for coming year.

ADDITIONAL COMMENTARY:
VPHM expects net cash flows provided by operations of at least $40 million for 2005.

[Michael]

Hi Oliver,

Excellent result from Viropharma as expected. Now we can wait for the analysts to upgrade their EPS estimates and hopefully price targets.

The Average forecasted EPS for this year is 0.47, which obviously is too low after Q2.

The EPS for H1 is 0.44 diluted. Based on the guidance for the full year I estimate the 2005 EPS at 0.85 diluted with a cash flow per share of 0.89. The resulting PE is 14.7.

Is that cheap for a profitable fast growing Biotech company? You bet it is cheap! VPHM should trade at a PE of at least 30 or a PPS 25.5

It is worth to note that the forecasted revenue for Q3 and Q4 is lower than revenue in Q2. That is highly unlikely having in mind the trend in the spread of C.difficile and that Q2 normally is a seasonal weak quarter. I understand why the company would like to be conservative but expect the revenue to be higher than the guidance. I estimates approximately 109 million which will result in an EPS of 0.96

Please also remember that the management is looking into a non-dilution approach to cancel the outstanding convertible notes. This will obviously increase the diluted EPS even further.

It seems to me that Piper has been controlling the share price since around May with excellent timing of their recommendations. We will most likely see this continue with an "orderly" up trend for the rest of the year.

Will VPHM hit 25.5? Of course it will. It will also exceed 25.5 that is only a matter of time.

It might happen this year but to be honest I don't have a clue! Sometimes a share can only go up at a certain speed and it seems to me like VPHM is cruising at that speed.

I don't expect anything drastically to happen during the coming days unless we have some activity from the analysts.

Let me finally add that there will be a neat stream of announcements during Q3 and Q4 about the different trials they are running. I haven't taken this into account when I look at PPS target. Any positive announcement on any of the three drugs they have in the pipeline might have an explosive effect on the price.

[David Randolph]

I agree with Michael, spectacular results from VPHM. I want to thank Michael for sharing with us his fundamental analysis, great, great info 

Now let me give you my humble general market knowledge and technical input:

1) Buy the rumor, sell the fact. The rumor was this company was growing a lot, and that Q2 results would be higher than expected. That's why the stock came from $1.7 to $13 in just 3 months. Now the news is out, time to take profits I believe ...

2) I want to buy this stock, whenever I have a chance to buy at support. The ascending trendline today will stand at $9.10.

3) Perhaps I won't be able to buy at support, when a stock is really bullish it doesn't let you do that ... then I'll have to chase this higher, no problem with that.

But my thinking for today is that it's possible VPHM gets sold off on the news, I'll buy the stock if it touches $9.10 (I don't believe this, though support rises everyday, so it is possible I'll buy at support but at a higher level)

Good morning and good luck for those holding VPHM, a stellar performer 

[tommyt]

Excellent Michael (applaud), if it falls to David's target I'll add more. My present cost basis is 8.00. Looking forward to the CC.

[Michael]

Thanks tommyt!

While we wait for the CC to start I thought I would show a picture of David chasing VPHM:

but David might be right. The stock could be volatile in the coming days. For those unlucky members that are still not holding VPHM there might be some good buying opportunities.

With all respect for David's skills (which is indisputable!) I would not wait to 9.10 before buying in.

[LJT2]

After hours trading was all over the place. Tried to sell half my position early yesterday and Ameritrade did not respond, a first. So I took that as an omen to hold. I think my first instincts were probably correct.

[Michael]

Volatility seems to be the right word. The stock went up and down 10% within minutes offering a lot of buying opportunities.

Now the upgrades start to come in. Piper has upgraded their target to 16 and reiterated their strong buy recommendation.

David you might consider to increase your bid a bit 

[Michael]

Piper raises EPS from .47 to .85.

Hmmmm........ Does Piper steal from 3SOF:

The EPS for H1 is 0.44 diluted. Based on the guidance for the full year I estimate the 2005 EPS at 0.85 diluted with a cash flow per share of 0.89. The resulting PE is 14.7.

What Surprises me is that they only raise the target to 16 when they almost double the EPS estimate but I guess that a 30% increase will do for now. They will still have time to make yet another upgrade 

[tommyt]

Nice comeback with VPHM today, almost fell out of chair when that bad tick of 11.60 went through. Its bounced back and extended itself nicely. It's the least watched stock in my portifolio.
What bothered me today was Cramer's Mad Money. A caller asked about VPHM and Cramer says "I don't know...., VPHM, these guys are good guys, they're from my neighborhood...., but I don't know this whole viro, antiviro thing..., maybe...., why not go with the big players, best of breed..., they are a small company, why not go with DNA?"
If he doesn't know, why not just end with that? Probably see a pullback/buy opprotunity tomorrow.
This guy is conflicted.

[snowcat]

his answer to any stock query is:

Why don't you buy: MOT, ECA, CHK, VLO etc..............

I should call him up and ask if any pharm companies are working on a cure for his baldness!

BUY DNA!!!  BOOOYA

I normally get chills whenever he mentions one of my stocks - so I bt some MOT so I can play along at home.