ViroPharma Inc.‘s (VPHM) shares recently plunged over 20%, following news of the US Food and Drug Administration (FDA) denying the company’s citizen petition filed way back on March 17, 2006. The citizen petition was related to the in vitro method for determining bioequivalence of abbreviated new drug applications (ANDAs) for Vancocin (vancomycin). In its response, the regulatory body also mentioned that it will very soon release a final guidance for Vancocin bioequivalence.
Moreover, the FDA said that Vancocin’s label update in December 2011 would not result in three additional years of the drug’s marketing exclusivity. For an old antibiotic like Vancocin to be eligible for additional exclusivity, the FDA noted that the drug must be approved for a significant new use or indication, which is not the case currently. As a final blow, the FDA approved three ANDAs for generic Vancocin, one of which was filed by Watson Pharmaceuticals Inc. (WPI).
Unfortunately, that was not the only blow to ViroPharma. The company received a notification from the Federal Trade Commission stating that it is conducting an investigation into whether ViroPharma engaged in unfair means to promote Vancocin.
Vancocin is approved for the treatment of antibiotic-associated pseudomembranous colitis caused by clostridium difficile infection (CDI), or C. difficile, and enterocolitis caused by staphylococcus aureus, including methicillin-resistant strains.
The company plans to file a complaint in the United States District Court for the District of Columbia, seeking an injunction to the FDA's approval of ANDAs for generic versions of Vancocin.
ViroPharma plans to provide a complete update and revised Vancocin net sales guidance (previous guidance for 2012: $260 – $310 million) along with its financial results for the first quarter of 2012, expected to be released on or around May 1, 2012.
Our Take
We are very disappointed with the recent developments, as Vancocin is one of the lead marketed products of ViroPharma and accounted for over 50% of the company’s revenues in 2011.
We would prefer to remain on the sidelines currently and wait to see how the company deals with the present scenario. Thus, we have a Neutral recommendation on ViroPharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.
VIROPHARMA (VPHM): Free Stock Analysis Report
WATSON PHARMA (WPI): Free Stock Analysis Report
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