Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



ViroPharma Cut in Half

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Investing in biotech companies can be either exciting or scary. Sometimes they double overnight, as Indevus Pharmaceuticals (Nasdaq: IDEV  ) did last year. And sometimes, they get taken behind the woodshed, where a very large man is waiting with a barber's smock and an axe. As ViroPharma (Nasdaq: VPHM  ) did today.

Yeah, I'd call today's 50% drop a major haircut.

The issue? ViroPharma's phase 3 drug, maribavir, failed to show an effect in reducing cytomegalovirus (CMV) disease in stem cell transplant patients. The virus infects a lot of people, but isn't really a problem -- except when the immune system is compromised by something like a stem cell transplant or AIDS. (AstraZeneca's (NYSE: AZN  ) Foscavir and Gilead Sciences' (Nasdaq: GILD  ) Vistide are both used for treating CMV in AIDS patients.) Then, like its virus family member herpes, the virus comes out of hiding, but unlike the cold sores and genital warts that herpes causes, CMV infection can lead to death.

As is often the case, one drug company's loss is another drug company's gain. Roche's Cytovene is currently approved for treatment of CMV, and ViroPharma hoped that maribavir would work as well as the currently available drug, with fewer side effects. Maribavir is also in a head-to-head trial against Cytovene to prevent CMV in liver transplant patients. Roche has to be feeling pretty good about its chances in that study right about now.

Tiny Vical's future is also looking a little brighter. It has a drug farther back in the clinic that won't have to compete with maribavir, should it get past the FDA.

ViroPharma licensed maribavir from GlaxoSmithKline (NYSE: GSK  ) in 2003, but unlike other biotech companies, it didn't need the drug to be successful. It already sells the antibiotic Vancocin, and last year it purchased Lev Pharmaceuticals, which gave it recently approved Cinryze, a treatment for hereditary angioedema (HAE), a rare swelling disorder. There's still the risk of generic competition for Vancocin, but with a (new) market cap of less than $500 million, that seems well priced-in.

Maribavir is probably dead, but that doesn't mean that ViroPharma is.

Further Foolishness on faltering stocks:

Rule Breakers is always on the hunt for hot drug stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. GlaxoSmithKline is a Motley Fool Income Investor pick. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (10)

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 827851, ~/Articles/ArticleHandler.aspx, 10/26/2016 9:53:46 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,076.75 -92.52 -0.51%
S&P 500 2,135.86 -7.30 -0.34%
NASD 5,250.71 -32.69 -0.62%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
VPHM.DL $0.00 Down +0.00 +0.00%
ViroPharma CAPS Rating: ***
AZN $29.44 Down -0.35 -1.17%
AstraZeneca CAPS Rating: ****
GILD $74.66 Up +0.25 +0.34%
Gilead Sciences CAPS Rating: *****
GSK $39.68 Down -0.64 -1.59%
GlaxoSmithKline CAPS Rating: ***
IDEV $5.60 Down +0.00 +0.00%
Indevus Pharmaceut… CAPS Rating: ***