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ViroPharma Falters, Guides Lower

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ViroPharma Inc. posted first quarter 2012 adjusted earnings of 32 cents per share, missing the Zacks Consensus Estimate of 39 cents and the year-ago earnings of 44 cents. Higher revenues and lower share count were more than offset by increased operating expenses, resulting in reduced earnings.

Quarterly revenues, which increased 6.9% year-over-year to $135.8 million, also missed the Zacks Consensus Estimate of $149 million. Higher sales of Cinryze boosted revenues. Revenues missed estimates due to lower-than-expected Cinryze sales and higher-than-expected tax rate.

Quarterly Highlights

Cinryze sales increased 21% from prior-year quarter to $68.2 million during the reported quarter, driven by higher demand. A milder flu season negatively impacted the Vancocin sales, which dropped 4% year on year to $66.2 million.

Research and development (R&D) expenses soared 47.7% during the quarter to $12.7 million. ViroPharma’s efforts to develop its pipeline contributed to the increase.

Selling, general and administrative (SG&A) expenses amounted to $36.0 million, up 34.0% from the prior year quarter. The jump was primarily due to increased expenses related to global organization and the company’s European commercialization efforts.

During the reported quarter, ViroPharma repurchased 1.6 million shares for $50 million.

Outlook Revised

Following the first quarter results, ViroPharma revised its forecast for 2012. The company expects net product sales in the range of $450 - $500 million (previous guidance: $600 - $660 million). Of this, US Cinryze sales are expected to contribute $310 - $330 million (guidance unchanged).

Further, combined R&D and SG&A expenses are forecasted in the range of $220 - $250 million (previous guidance: $230 - $260 million).

Our View

We currently have a Neutral recommendation on ViroPharma. The stock carries a Zacks #4 Rank (Sell rating) in the short-run.

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