ViroPharma Incorporated Reports Third Quarter 2012 Financial Results
EXTON, Pa., Oct. 25, 2012 /PRNewswire/ -- ViroPharma Incorporated (Nasdaq: VPHM) reported today its financial results for the third quarter ended September 30, 2012.
Since June 30, 2012, we:
- Achieved $91 million in quarterly net product sales, including $85 million in worldwide net sales of Cinryze;
- Received FDA approval of the Prior Approval Supplement (PAS) for industrial scale manufacturing for Cinryze;
- Repurchased an additional 3.1 million shares of our common stock at a cost of approximately $80 million during the third quarter;
- Announced $200 million extension of stock repurchase authorization;
- Ended the third quarter with cash, cash equivalents and short term investments of $304 million;
- Recorded GAAP net loss of $4.6 million, non-GAAP adjusted net income for the quarter was $7.5 million;
- Presented interim data from current Phase 2 clinical evaluations of maribavir in treatment of asymptomatic acute CMV infections and VP-20621 for the prevention of recurrent C. difficile infections; and
- Announced that the FDA has removed the temporary clinical hold of development of Cinryze subcutaneous administration with Halozyme's rHuPH20 technology.
Net sales were $91 million for the third quarter ended September 30, 2012, as compared to $143 million in the same three months of 2011. The decrease was the direct result of the impact of generic oral vancomycin entries into the market. Regarding Cinryze, during the quarter the U.S. channel inventory increased by approximately $2 million. Net sales were $321 million for the nine months ended September 30, 2012, as compared to $399 million in the comparative period of 2011.
"The third quarter of 2012 was a period of tremendous fundamental execution for ViroPharma," stated Vincent Milano, ViroPharma's chief executive officer.
"Despite several early challenges in 2012, the progress and achievements that have been made across our entire organization in the first nine months have rapidly shifted the focus towards the promise of what ViroPharma can deliver for both our patients and our shareholders alike in the years ahead. We are seeing remarkable growth with Cinryze here in the United States, our product launches in Europe are beginning to gain ground and the pipeline is the most robust and promising it has ever been in our history."
Our GAAP net loss was $4.6 million in the third quarter of 2012 compared to GAAP net income of $28.2 million in the third quarter of 2011. For the nine month period in 2012, GAAP net income was $11.2 million compared to $87.5 million of GAAP net income during the first nine months in 2011.
Non-GAAP adjusted net income for the three and nine months ended September 30, 2012 was $7.5 million and $45.2 million, respectively, compared to $48.4 million and $131.3 million for the same periods in 2011. A reconciliation between GAAP and non-GAAP adjusted measures is provided in the Selected Financial Information — Non-GAAP Financial Measures Reconciliation table included with this release.
Our net sales of Cinryze during the three and nine months ended September 30, 2012 increased to $85.3 million and $230.1 million, respectively, from sales of $65.4 million and $184.5 million, respectively, during the same periods in the prior year due to demand growth.
Cost of sales increased for the three months and nine months ended September 30, 2012 primarily due to the effect of continuing growth of Cinryze and the royalty due to Genzyme for Vancocin sales which was not payable in 2011.
Research and development costs decreased in the third quarter of 2012 compared to the same period in 2011 as the spending in our various programs was offset by the delay of the costs associated with our Phase 2 study of subcutaneous administration of Cinryze in combination with rHuPH20 due to FDA actions. Additionally, the three month period in 2011 included license payments of $6.5 million and $3.0 million to Intellect Neurosciences and Halozyme, respectively. The nine-month period in 2011 included a $9.0 million upfront payment made to Halozyme. The increase in selling, general and administrative expenses in the three and nine months ended September 30, 2012 compared to the same periods of 2011 was driven by the growth of our global organization and our commercialization efforts.
We also incurred other operating expenses of $6.0 million in the nine month period ended September 30, 2012 compared to $16.9 million during the nine month period ended September 30, 2011, primarily related to the increase in the fair value of the contingent consideration for the acquisition of DuoCort and start up cost paid to suppliers. The nine months in 2011 includes approximately $3.4 million of costs to expand Cinryze manufacturing capacity at Sanquin and an $8.5 million impairment charge.
Our effective tax rates for the nine months ended September 30, 2012 and 2011 were 53 percent and 40 percent, respectively. As we have previously indicated, our tax rate has increased due to the reduction in Vancocin revenues and corresponding decrease in income and losses in foreign jurisdictions with tax rates lower than the U.S. statutory rate. As in prior periods, state income taxes and items that are not deductible for tax purposes such as stock compensation, increases in the fair value of contingent consideration and certain amortization, also increase our effective tax rate. We expect our effective tax rate to decline in future years as profits increase, especially if those profits are attributable to our foreign operations.
Working Capital Highlights
At September 30, 2012, our working capital was $347 million compared to $537 million at December 31, 2011. The decrease was primarily due to the additional acquisition payments to the Lev shareholders and our stock buyback program. Operating cash flow was $74.8 million in the first nine months of 2012.
ViroPharma is adjusting its Worldwide Net Product Sales guidance for the year 2012 as a direct result of the impact of the entry of generic oral vancomycin capsules. The following guidance and peak year sales estimates 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.
For the year 2012, ViroPharma expects the following:
- Worldwide net product sales are expected to be $425 to $435 million, reflective of updated expectations for Vancocin;
- Net U.S. Cinryze sales are expected to be $320 to $335 million; and
- Research and development (R&D) and selling, general and administrative (SG&A) expenses are expected to be $215 to $235 million.