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

[Melf Elf]

The 14.60 close is a technical breakout of the Rising Wedge (pattern in blue). 

fyi, wonderful update  :
Update On VPHM From Piper Jaffray Healthcare Conference

Thomas Wei, Senior Research Analyst

PRICE TARGET AND JUSTIFICATION:
Our current $16 price target is based on sum-of-the-parts analysis:
$6 for Vancocin + $3 for cash + $7 for pipeline.

Oliver,

Thomas Wei was on Squawk yesterday morning.  He liked AUXL, GILD and AMLN.  He didn't mention VPHM.

I suspect that his $16 target is at least partially based on the fact that we've got 6½ months worth of bagholders at 15.50-ish on up to the high of 24.36, pre-St. Paddy's Day Massacre (see chart from that time-frame, posted above on November 18).

We're heading into year-end, so if we get to the 15.50s before then, which looks doable based on yesterday's nice white candle, we likely will have to contend with some tax loss selling.

[la-onda]

fyi:
ZACKS Target Upped at VPHM    
Posted Wed Nov 29, 03:36 pm ET

Summary:
The near-term future of ViroPharma is heavily dependant on sales of
Vancocin Capsules. Reported sales in the third quarter were far above expectations based on approximately two weeks (or $8 million) in wholesaler stocking. Sales of $55.1 million exceeded our $45.7 million forecast handily. According to IMS Health, prescription demand increased 20% over the same period in 2005. Several generic manufacturers, including Strides and Akorn, have announced their intent to bring a generic Vancocin (oral vancomycin) to the market. Recent guideline changes at the Office of Generic Drugs (OGD) have seemingly facilitated the application process for a locally acting GI drug such as Vancocin, removing the
necessity for human clinical trials before approval. This could allow for ANDA filings for generic oral vancomycin at any time, with an approval in 2008 two years earlier than previously expected given the old guidelines. This caused a 45% sell-off in the stock in March 2006.
The company has filed a Citizen s Petition to the OGD with two formal letters outlining the legal protocol and scientific merits to halt an early generic alternative on May 31, 2006 and June 30, 2006, respectively.
ViroPharma will now wait for OGD responses to the two letters hopefully within the next several months.  Last quarter ViroPharma presented very impressive phase II data on CMV
candidate Maribavir and strong phase Ib data on HCV-796. We believe the company is making great progress with the pipeline and both HCV-796 and Maribavir offer the next wave of growth for shareholders. Our Buy Call: Backing out the wholesaler build of two weeks in the
third quarter and results were largely as expected. Prescription growth for Vancocin of 20% remains very strong. We are also very excited about the potential for Maribavir. Impressive phase II data in late March was essentially ignored because investors are focused on generic Vancocin. Maribavir is significantly under-appreciated in our view. Finally, as far as the
legal and scientific petition to the FDA-OGD, we believe that ViroPharma s position is strong. The risk of a generic product before 2009 is unlikely in our view.

"We believe the shares are vastly undervalued. Our target is $20."

[Melf Elf]

We're heading into year-end, so if we get to the 15.50s before then, which looks doable based on yesterday's nice white candle, we likely will have to contend with some tax loss selling.

How about the 15.50s this afternoon?  

Sold another 25% at 15.55, at the bottom of resistance.  Gain: 23.6%

[ScottishTrader]

well I've been following you guys on VPHM from the sidelines, but it looked so good, I had to get me a little this morning at 14.75 - as usual a day (or a week) late, but whaddya know.  Anyway, its probably in a bit of a dangerous spot right now with significant overhead resistance and $16 analyst targets so this could be a very quick trade, but I want to see whether it still has some strength in the morning.

Great trades guys 

[Melf Elf]

In light of these Bullish factors, it would seem that VPHM wants to return to the battlefield, where it met it's Waterloo, exactly at 15.55-15.56.

When 15.55-15.56 got taken out in early trading at the St. Paddy's Day Massacre, VPHM crashed, on tremendous volume.  Watching the intraday chart, it looked like "they pulled the plug on it."

The low was 10.35.  The close was 10.855.  UGH. 

It was interesting watching trading in VPHM after I sold some yesterday afternoon at 15.55-15.56 resistance.

VPHM had rallied from 13.07 over the course of three days, for a nice 19.1% gain, but when it hit that resistance area, you could see the "head banging" starting between the Bulls and Bears.

Sorry for this sloppy chart, but I don't want to lose all of my work, so it looks like I threw a pizza pie at it.  The important thing is the thick red line in the middle of the chart.  That represents the 15.55-15.56 low end of resistance. 

Everyone who bought VPHM from late August, 2005 to the St. Paddy's Day Massacre paid 15.55 or more for the stock, so think of all of the candles above that thick red line as players for the Bears, who have been holding long, and who would like to dump VPHM for a break even, or for a smaller loss than they've had during the decline to 7.07.

Not all of them will be sellers, of course.  Many of them will be willing to hold their positions, and much of that will be determined by whether or not there is good price action in the stock (gains on good volume, that are sustained), and whether or not there is good news on the fundamental front.

Anyway, its probably in a bit of a dangerous spot right now with significant overhead resistance and $16 analyst targets so this could be a very quick trade, but I want to see whether it still has some strength in the morning.

Yeah, and we've got some targets higher than that, e.g., Lazard came out with a $21 target the other morning. 

In my view, as I've discussed with Oliver, it doesn't matter much what target the analysts put on it (or put on any other stock) because, in the case of VPHM, they can't possibly know the outcome of court rulings on the generics for Vancocin, or future results for Marabavir (spelling?).  No better example than last winter, when the analysts were falling all over themselves raising the target almost on a daily basis, some of them into the $30s, I think.  Cramer was giving VPHM the BOOYAH...

Who could have known that VPHM was headed for 7.07, in July, 2006?   

What we did know last winter, despite all of the analysts upgrades and the Cramer BOOYAH, was that the chart started to look terrible, with numerous sell signals, prior to the St. Paddy's Day Massacre, which tells us that...

"Analyst upgrades and downgrades aren't what's important.  It's the market's response to them that is important."

Remember last winter...

"Gap to Crap #1 on 'good' news"

"Gap to Crap on the Cramer BOOYAH"

When the market responds to "good news" in that manner, it generally is a WARNING. 

Same with earnings, as we've seen many, many times.  Companies report outstanding earnings, then the stock TANKS.

"It's the market's response to earnings that's important, not the earnings per se."

In the current time-frame, VPHM has been getting some analyst upgrades again.  What has the response to the upgrades been?

VPHM has rallied.

That's very different behavior from last winter, when the market sold the good news . Technically, the chart has been acting bullish, and VPHM was able to capitalize on the good news.

In a manner of speaking, the technicals and the fundamentals agreed on a rally at least to the 15.55 - 15.56 breakdown/resistance.

We're now at "the bottom rung" of resistance, but if the chart continues to act this bullish, VPHM should be able to climb higher, end-of-year tax loss selling/normal pullbacks notwithstanding.

[la-onda]

1)
Briefing.com
Live In Play
01-Dec-06
10:37 VPHM ViroPharma downgraded to Neutral from Buy at Janney on
valuation; tgt $15 (15.12 -0.29)

2)
Zacks update 


cheers
O.

[la-onda]

"the return of the jedi"
6 months chart 

[Melf Elf]

More head banging, pushing and shoving at Key Resistance, 15.55-15.56 on up, which we expected.  Yesterday's high: 15.53 .

What would be nice to see on any further selloff, would be for the top of the Rising Wedge (pattern in blue) to become support, then have another assault on Key Resistance.

Support below that:

1. The 13.84 high

2. The 13.63 high of the Bull Flag

3. Green up trendline

4. Blue up trendline

[Melf Elf]

More head banging, pushing and shoving at Key Resistance, 15.55-15.56 on up, which we expected.  Yesterday's high: 15.53 .

That's still key resistance.  There are three weeks of tax loss selling remaining, but if VPHM continues to act this well, we could get a Santy Surprise Rally above that level.

What would be nice to see on any further selloff, would be for the top of the Rising Wedge (pattern in blue) to become support, then have another assault on Key Resistance.

The top of the Rising Wedge came in on Friday at 14.703.  Friday's low was 14.75, then VPHM bounced and closed at 15.10, a penny off the 15.11 high of the session.

That's nice technical action: there's been selling at Key Resistance, but Bulls are stepping in at the first area of support.

Support below that:

1. The 13.84 high

2. The 13.63 high of the Bull Flag

3. Green up trendline

4. Blue up trendline

We've still got plenty of support levels below there, if the top of the Rising Wedge fails to hold, as support.

On my remaining ½ position long from 12.58, I've raised my stop to below 13.01,  I'll probably use 12.98, below the "psychological" round number stop of 13.00. 

1. 13.17 is the 50DMA

2. 13.02 is the bottom of the little Bull Flag (pattern in green)

3. 13.01 is the bottom of the Rising Wedge (pattern in blue).

If all of that support should get taken down, I won't want the stock, and I'll sell.

[la-onda]

wonderful Maribavir update 


21:50 VPHM ViroPharma announces presentation of additional
Maribavir Data at American Society of Hematology meeting (15.02 -
0.08)

Co announced additional supportive results from the coy's Phase 2
evaluation of maribavir, an oral antiviral drug candidate in Phase 3
development to prevent cytomegalovirus (CMV) disease in transplant
patients, at the 48th Annual Meeting of the American Society of
Hematology (ASH), held in Orlando, Florida. Data from the Phase 2
study of maribavir presented at the meeting elaborates previously
presented data on the antiviral activity and tolerability of the
compound, and new data including the results of analyses of the
rates of graft versus host disease (GvHD) in patients receiving
maribavir compared to placebo. Additional data from a
pharmacokinetic study in subjects with renal impairment were also
presented.
"These data show that maribavir appears to be well-
tolerated and had impressive anti-CMV activity in stem cell
transplant patients," stated study lead author Drew Winston M.D.,
UCLA Medical Center. "This marks an exciting advancement for
preventing this serious infection." "This is the first presentation
of a more extensive Phase 2 data set at a scientific meeting. These
data clearly demonstrate, among other outcomes, that prophylaxis
with maribavir significantly reduces the incidence of CMV infection
in this population," remarked Stephen Villano, M.D., ViroPharma's
vice president of clinical research and development.

[la-onda]

chart & analyst update 

[la-onda]

update 

Business & Insurance Update
Value Visible at ViroPharma
By Marc Lichtenfeld
Senior Columnist
12/19/2006 11:02 AM EST
URL: http://www.thestreet.com/newsanalysis/businessinsurance/10328689.html

Shareholders of ViroPharma (VPHM) will be glad to see 2006 go.

The stock is down 19% year to date and 36% from its peak, mainly because of a decision by the Office of Generic Drugs that may make it easier for drugmakers to launch a generic version of Vancocin, which combats Clostridium difficile-associated disease, or CDAD. The disease causes diarrhea, but can be fatal in more severe forms.

The OGD ruling doesn't require generic-drug makers to include clinical trials as part of the scientific evidence in their applications. ViroPharma has appealed the OGD's ruling, but it's anyone's guess as to whether the decision will be reversed.
The prospects of generic Vancocin, however, may already be priced into ViroPharma's stock, and the upside to investing could be significantly greater than the risk.
The company has a small but promising pipeline and a reasonable valuation, and shares likely would bounce higher should the OGD reverse its decision and side with ViroPharma.
If the government rules against ViroPharma, there could be a short-term hit to the stock. But likely, the longer-term fundamentals will remain unchanged, since Wall Street already is anticipating the introduction of generic drugs in 2008.

Generic Questions

At the heart of the issue is the OGD's decision to allow generic-drug makers to prove bioequivalence with an in vitro approach. In other words, drugmakers would test the generic to see how it dissolves. However, it wouldn't be tested in humans for efficacy.
Dr. Dale Gerding, professor of medicine at Loyola University and chief of research at Hines VA Hospital, outside of Chicago, says he wouldn't use a generic version of Vancocin in patients until it was proven safe and effective.
"There's a big difference between what happens in a beaker and what happens in the human body," he says. Gerding has a business relationship with ViroPharma. Dr. David Mushatt, chief of adult infectious diseases at Tulane University, concurs. "They can take the tablet and drop it in a beaker to study its physical characteristics. If it's similar to Vancocin, it's reassuring," he says.

"But it has an indirect relationship to what happens in the gastrointestinal tract when you have to deal with all of the enzymes and other issues that I think would be almost impossible to recreate in a test tube." Mushatt doesn't have a relationship with ViroPharma.
Upset Stomach

CDAD is a bacterium that yields toxins in the digestive tract. The incidents of CDAD have doubled in the past four or five years, according to Gerding, due to a particularly virulent new strain.
That has helped ViroPharma increase Vancocin sales from roughly $40 million when it acquired the drug from Eli Lilly (LLY) in 2004 to the company's projection of $160 million to $170 million in sales this year.

Vancocin sales also have been helped by a price increase. Although he believes Vancocin is "a little more effective" than metronidazole, the current standard of care for mild to moderate CDAD, Mushatt calls the drug "prohibitively expensive." He says he would be excited about a cheaper generic alternative.
Patients can expect to pay roughly $90 per day for Vancocin, with a full course of treatment typically lasting 10 days. That compares to about $10 a day for metronidazole. Because of its price, Vancocin is usually used for the more severe CDAD cases or when metronidazole doesn't work.
But the current environment plays into Vancocin's strength, because it is effective against the severe (and now more prevalent) forms of the disease.
ViroPharma CEO Michel de Rosen points out that with the new severe strain there are a larger number of patients getting sick and dying faster. "So for the physician or hospital, it is very important to treat the patient with the right drug, quickly," he says.

Strong Pipeline

ViroPharma has two key compounds in its pipeline: Maribavir, which treats a disease called cytomegalovirus in stem cell transplant patients, and HCV-796 for hepatitis C. Maribavir is in phase III trials, and ViroPharma presented positive phase II data at the American Society of Hematology conference last week. Cowen & Co. believes Maribavir could become the standard of care and a $200 million drug. Cowen co-managed an offering for ViroPharma in the past three years.
Although the hepatitis C space is crowded, ViroPharma's de Rosen expects room for several players. He believes hepatitis C will be treated with a "cocktail" of drugs, similar to treatment for HIV. He calls his drug "the best in class of the polymerase inhibitors."
De Rosen envisions polymerase inhibitors combining with protease inhibitors, such as ones being researched by Schering Plough (SGP) and Vertex Pharmaceuticals (VRTX) , in the cocktail to attack the virus from different angles.

Additionally, de Rosen expects to acquire another compound in 2007. The company originally planned to make a purchase this year, but the CEO couldn't find the right opportunity. "We're not going to do a deal just to do it," he says. "It has to be of the highest quality and at the right price."

Value Stock?

ViroPharma is that rare breed of biotech company that makes money and is cash flow positive. Earnings next year are expected to be $1.07 a share, according to Thomson First Call. The forecast gives the stock, currently trading around $15, a forward price-to-earnings ratio of just 14. That's value stock territory in most sectors.
However, for 2008, Wall Street has priced in generic Vancocin and forecasts earnings per share of just 74 cents. The long-term growth rate is 21.5, giving the stock a price/earnings to growth ratio of just 0.65.
It's important to realize that the FDA isn't required to reach a decision until a drug company files an application for the generic version. The patent on Vancocin expired in 1995, and no one has come forward yet with an alternative.
If the FDA remains silent, that could keep an overhang on the stock, even while the company maintains its monopoly in a growing market.


But with bad news priced into an already cheap stock, investors who wait it out could see a big reward.

[Melf Elf]

Last week, VPHM broke below the up trendline (green) off the 7.07 low, but bounced off its 50DMA on both Wednesday and Thursday, and held well above the bottom of the Rising Wedge (blue).  That looked pretty good.

VPHM could make another low here, but I'm going to stop it out if it does.

On my remaining ½ position long from 12.58, I've raised my stop to below 13.01,  I'll probably use 12.98, below the "psychological" round number stop of 13.00. 

I'm raising the stop on my remaining ½ position, to 13.89, below last week's low.  I've been holding VPHM for two months and want a nice profit.  That would give me 15% gain on the trade.

[la-onda]

awesome 
Michael, it´s time to enter VPHM again (if you are not invested already)
cheers
Oliver

ViroPharma Provides Financial Outlook for 2007

2007 Net Product Sales Expected to Grow to $195 to $205 Million; Company to
Increase Expenses to Advance Clinical Programs and Support Vancocin Growth

EXTON, Pa., Jan. 8 /PRNewswire-FirstCall/ -- ViroPharma Incorporated (Nasdaq: VPHM) today announced Michel de Rosen, ViroPharma's president and chief executive officer, will present a financial update and provide an overview of the company's business during the 25th Annual JPMorgan Healthcare Conference. As previously announced, this presentation will be webcast live at 1:30 P.M. Pacific Time on Thursday, January 11, 2007 and may be accessed via the company's website at http://www.viropharma.com. The company expects to release full-year 2006 financial results and further discuss 2007 guidance later in the first quarter of 2007.

"2006 was a year of tremendous execution and advancement throughout the company, including the commercial and clinical organizations," commented Mr. de Rosen. "I can confirm that our 2006 net Vancocin(R) sales will be within our guidance range of $162 to $170 million, representing strong growth of 27 percent to 35 percent over that of 2005. In addition, we believe that wholesalers lowered their inventory levels as we ended the year. Importantly, cash flows from Vancocin sales again more than fully funded our clinical pipeline. Patient dosing started during the fourth quarter of 2006 for each of our late stage clinical compounds: maribavir, our Phase 3 compound in development to prevent cytomegalovirus disease in transplant patients, and our Phase 2 compound HCV-796, the leading non-nucleoside polymerase inhibitor of hepatitis C, which we are developing with our partners at Wyeth."

"2007 will be another important and exciting year for ViroPharma as we focus on advancing our late stage clinical pipeline," continued Mr. de Rosen. "We do expect continued growth in Vancocin sales; we are today providing our 2007 net Vancocin sales guidance of $195 to $205 million. In 2007, we expect that the cash flows provided by our growing revenue will not only fully fund our pipeline, but also will keep the company in an excellent position to execute on business development initiatives as we continue our commitment to bring solutions to physicians treating patients facing life-threatening diseases. Our 2007 operational expenses will grow as well, as we advance maribavir in its pivotal Phase 3 clinical trials and HCV-796 through Phase 2 evaluation, and make new investments into our CDAD educational efforts and the Vancocin business generally."

Looking ahead in 2007

ViroPharma is commenting upon future guidance for the year 2007 as a convenience to investors. The following elements of guidance provided by ViroPharma are projections, based upon numerous assumptions, all of which are subject to certain risks and uncertainties. For a discussion of the risks and uncertainties associated with these forward-looking statements, please see the Disclosure Notice below.

- Net product sales are expected to be $195 to $205 million;

- Gross margin rate for Vancocin is expected to exceed 90 percent;

- Research and development (R&D) and marketing, general and administrative (MG&A) expenses, excluding the impact of SFAS 123R, are expected to be $60 to $72 million.

The company's projected R&D and MG&A expenses have been presented excluding the effect of stock option expense resulting from SFAS 123R and as such are financial measures that are not prepared in accordance with U.S. generally accepted accounting principles (GAAP). Further discussion of 2007 guidance, including the impact of SFAS 123R, will be provided along with the full-year 2006 financial results later in the first quarter of 2007. The company is unable to provide a quantitative reconciliation because the items that would be excluded are primarily dependent on additional inputs which have not been determined.

[buddjas1]

Looks very inticing on the surface.  The trouble with VPHM has always been valuation.  Because vanco is unpatented and the FDA is, as of today, willing to permit a showing of equivalence without clinical trials, VPHM could easily drop to single digits in one day again, if the FDA denies VPHM's "appeal."  Too much risk here for me.