It was a nice run, ViroPharma
And what a long run for Vancocin it was.
ViroPharma picked up the antibiotic from Eli Lilly
And it still took three more years for the FDA to approve a generic -- three generics, actually -- from Watson Pharmaceuticals, Akorn
The launch of generic Vancocin will indirectly affect Optimer Pharmaceuticals
ViroPharma was hoping a label expansion would delay the generic launches for three more years. The company has said it will sue, but I think it's best to assume that won't go anywhere and write off the nearly $300 million in sales. Even ViroPharma seems to think so; it established a supply agreement with Prasco Laboratories to launch an authorized generic to compete with the recently approved generics.
The loss of over half of ViroPharma's revenue will hurt the bottom line, but the company looks more appealing as an investment now than it did in the preceding eight years because it's much easier to value. Before, you had a company where investors knew generics would come eventually, but there was no way to know when. Discounting that uncertainty was difficult.
Now you've got a company with one drug, Cinryze, which treats an orphan indication (hereditary angioedema), contributing a vast majority of the revenue. ViroPharma expects sales of Cinryze in the $310 million to $330 million range, a 23% to 31% increase on last year. At a market cap of $1.5 billion, ViroPharma looks fairly valued with upside if ViroPharma can continue increasing sales of Cinryze.
Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy.
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