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Analyst Blog

Swedish pharma company, DuoCort Pharma AB, recently announced that the European Commission (EC) has approved Plenadren to be used for the treatment of adrenal insufficiency in adults. The approval of Plenadren does not come as a surprise, as earlier this year in July the Committee for Medicinal Products for Human Use (CHMP) had recommended the candidate’s approval. We note that Plenadren has orphan drug designation in the European Union (EU).

In October 2011, ViroPharma Inc. had agreed to acquire DuoCort Pharma for $33.6 million. DuoCort Pharma is also eligible to receive $131 million on the achievement of certain milestones. We note that the closure of the deal, which is expected by the fourth quarter of 2011, was dependant on the European approval of Plenadren.

We believe that this acquisition will expand ViroPharma's orphan disease commercial product portfolio, with the addition of Plenadren. ViroPharma currently has only two products on the market – Cinryze and Vancocin.

We are pleased with Cinryze’s (approved for the treatment of hereditary angioedema) uptake in the US and expect investors to keep a close watch on the performance of the drug in the EU, where it was launched recently.

However, we are concerned about Vancocin (approved for the treatment of clostridium difficile infection), which faces competition from Optimer Pharmaceuticals Inc.’s Dificid (fidaxomicin), which is marketed in the US. The candidate is currently under review in the EU. We believe that Dificid could turn out to be a major threat to Vancocin, which is currently not protected by any patent.

We currently have a Neutral recommendation on ViroPharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

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