The cloud of uncertainty that's been hanging over ViroPharma
Vancocin, which fights C. difficile, a potentially deadly hospital-acquired infection, has been approved for sale since 1986. All the patents have expired, but Vancocin doesn't have any generic competition in the U.S. because the FDA hasn't allowed generic-drug companies to use laboratory tests to prove that their knockoffs are equivalent. Instead the agency has required generic-drug companies to run an expensive clinical trial to prove equivalency, which might not be financially feasible, given the lower margins on generic drugs. Three years ago the FDA signaled that it was thinking about lifting the clinical trial requirement, but ViroPharma has been fighting that the entire way.
A similar issue has plagued Momenta Pharmaceuticals and Novartis
Antibiotics have become big business as bacteria have become more resistant to drugs. Last year Cubist Pharmaceuticals'
ViroPharma is trading at about twice its trailing-twelve-months sales, which is a pretty steep discount considering that its newest drug, Cinryze, just hit the market and should ramp up from here. Investors apparently are discounting sales of Vancocin until the uncertainty is over. Whether that'll happen in August or in three more years remains to be seen.
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