ViroPharma (VPHM)

Paper Summary:

This paper looks at how the explosion in market gain by ViroPharma is due mostly from the huge success of the prescription antibiotic drug Vancocin, which is used to treat intestinal bacteria. It points out that ViroPharma's is most likely trading at the correct level and probably would be a good buy even at the current price. It discusses how this strength is due to the fact that the price of Vancocin can be raised somewhat considering that the alternative treatments in the brand-name drugs being produced by Pfizer and Elan cost more and because the promise of new product that they are developing for the treatment of other diseases.

From the Paper:

"In order to purchase the rights in the U.S. and its territories to manufacture, market, and sell the drug Vancocin from Lilly, ViroPharma had to free up the revenue required. To do this, VPHM used $53.5 million from cash reserves and gross proceeds to the amount of $62.5 million from the issuance of aggregate principal amounts of senior notes and warrants to purchase 5.0 million shares of their own common stock, with stockholder approval. Those senior notes and warrants will be exchanged for $62.5 million aggregate principal amount of 6% Senior Secured Convertible notes due on October 2009. With VPHM having to use multiple means of financing to meet the purchase requirements of acquiring Vancocin, if this drug does not continue to do well even after the Return on Investment has been realized; it is possible that the stock price may not be able to maintain its current trading level."

More papers on ViroPharma (VPHM) :

• Case Study # 145423 : "ViroPharma: A Case Study"

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