ViroPharma reports net sales of $127 million for first quarter 2011

Apr 28 2011

ViroPharma Incorporated (Nasdaq: VPHM) reported today its financial results for the first quarter ended March 31, 2011.

In the first quarter of 2011, we:

• Achieved a record $127 million in net product sales, including $57 million in net sales of Cinryze® (C1 esterase inhibitor [human]) representing Cinryze growth of 62 percent over the same period in 2010;
• Attained non-GAAP adjusted net income of $45 million; GAAP net income reached $36 million;
• Delivered positive cash flows from operations of $39 million;
• Improved working capital to $551 million as of March 31, 2011, including cash, cash equivalents and short-term investments of $495 million; and
• Acquired an initial 2.4 million shares through a $50 million accelerated share repurchase arrangement.

"While I am pleased with our financial results for the first quarter of 2011, I'm most proud of the team's dedication during the quarter toward meeting the evolving needs of our patients by focusing on global commercial, clinical and manufacturing excellence," stated Vincent Milano, ViroPharma's president and chief executive officer.  "Our momentum in adding new U.S. patients onto Cinryze therapy and building long term brand loyalty continued through the quarter.  We made excellent progress with our partners at Sanquin on new production initiatives to meet the growing needs of our expanding patient populations. We advanced toward the next stage of clinical development of subcutaneous Cinryze and VP-20621, and initiated a Phase 2 study of C1 esterase inhibitor in antibody mediated rejection.  And, our work in Europe continued toward potential approval and launch of not one, but two products in 2011: Cinryze, which achieved a positive CHMP recommendation in March 2011, and an exciting new late stage product opportunity called Buccolam® (midazolam hydrochloride, oromucosal solution), which came as part of our acquisition of Auralis in 2010, for which we are seeking a Pediatric Use Marketing Authorization (PUMA) for treatment of acute epileptic seizures in children.  All in all, the first quarter was a period of continued strong execution by our global ViroPharma team."

The Company is reporting both GAAP net income and non-GAAP adjusted results for the three months ended March 31, 2011.  Non-GAAP adjusted net income is GAAP net income excluding non-cash interest expense, amortization related intangible assets acquired, stock compensation expenses, and certain non-recurring events.  A reconciliation between GAAP and non-GAAP adjusted net income is provided in the Selected Financial Information - Reconciliation of GAAP Net Income  to Non-GAAP adjusted Net Income table included with this release.

The Company believes it is important to share these non-GAAP financial measures with shareholders as they better represent the ongoing economics of the business and reflect how we manage the business.  Accordingly, management believes investors' understanding of the Company's financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP adjusted net income should not be viewed in isolation, or as a substitute for or superior to reported GAAP net income. ViroPharma's definition of non-GAAP financial measures may differ from others.

Non-GAAP adjusted net income in the three months ended March 31, 2011 and March 31, 2010 was $45.5 million and $28.6 million, respectively.  This increase is primarily due to the net effect of the increased Cinryze sales volume, partly offset by increased  selling, general and administrative expense.

The change between our GAAP net income of $36.4 million for the quarter ended March 31, 2011 from GAAP net income of $21.3 million for the quarter ended March 31, 2010 was driven primarily by the same factors resulting in the increase in Non-GAAP adjusted net income for these same periods.

Operating Highlights

Net sales were $127 million for the first quarter ended March 31, 2011, as compared to $91 million in the comparative period of 2010, representing 40 percent growth in the first quarter in net product sales.

Cinryze net sales during the three months ended March 31, 2011 were $57 million, a 62 percent increase over the respective period in 2010 due to an increase in the number of patients receiving Cinryze. Vancocin net sales during the three months ended March 31, 2011 were $69 million, or a 24 percent increase over the respective period in 2010 due to net realized price and volume growth.

Cost of sales for the three month period of 2011 increased over the same period in the prior year by $4.9 million due to increased Cinryze volume.  

Research and development costs increased slightly to $10.4 million in the first quarter of 2011 from $9.7 million in the first quarter of 2010 primarily as a result of development of the Cinryze life cycle management program and efforts in conjunction with increasing the manufacturing capacity.  Selling, general and administrative expenses increased by $7.4 million to $28.3 million in the first quarter of 2011 over that of 2010.  The increase was driven primarily by increased HAE patient support costs, higher marketing and medical education efforts and expenses related to building our European organization.

Working Capital Highlights

At March 31, 2011 our working capital was $550.6 million compared to $561.0 million at the end of 2010 as we generated $39.1 million in cash flow from operations during the first quarter of 2011, offset by the $50 million cash outlay associated with the accelerated share repurchase agreement under which we repurchased an initial 2.4 million shares in the quarter.  

Looking ahead in 2011

ViroPharma is updating its guidance for the year 2011 as a convenience to investors.  The following 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.

For the year 2011, ViroPharma expects the following:

• Net Cinryze sales are expected to be $245 to $260 million.
• Research and development (R&D) and selling, general and administrative (SG&A) expenses are expected to be $170 to $190 million.