Monday, March 22, 2010

Viropharma (NASDAQ:VPHM): Analysts positive after investor day; Target raised to $19 at Oppenheimer

Viropharma (NASDAQ:VPHM) is getting a lot of positive commentary this morning after the co held an investor event on Friday, March 19.

- Oppenheimer is raising their price target on VPHM to a new Street high of $19 (prev. $15) noting the investor meeting focused on Cinryze and the opportunity in hereditary angioedema (HAE), as well as future expansion opportunities. Importantly, 1) with only ~400 patients on Cinryze at YE09, out of a total of ~2,800 patients, the firm believes a robust US Cinryze launch should continue. 2) With ~12,500 HAE patients, they believe the EU represents a significant expansion opportunity. 3) Opco sees potential Cinryze expansion opportunities in renal transplantation, where a POC study will begin in late-2010/early-2011. 4) They raise their price target to $19 from $15 on higher peak US Cinryze sales ($400M) and addition of European sales. Reits Outperform.

- Jefferies ups their target to $18 (prev. $16) and reits Buy as Cinryze sales in Europe, as well as all other new geographies discussed at VPHM's analyst meeting, represent upside to firm's estimates. They continue to believe that the Street has underappreciated the Cinryze market opportunity.

For the first time, VPHM also outlined its plans for obtaining Cinryze approval in other countries outside of Europe. There are 28 countries targeted for Cinryze regulatory filing in 2010-2012 and another five countries where filings will occur in 2013-2014. The company believes that this could expand the target patient population by over 90,000 patients, assuming a consistent worldwide HAE prevalence of 1:40,000 (compared to 23,000-24,000 patients in the U.S. and Europe).

In addition, Jefferies calls VPHM one of the beneficiaries of the Health Care Reform. The new health care reform act is a major positive for companies with biologics, as it creates a 12-year exclusivity period prior to biosimilar competition. Orphan drug exclusivity in the U.S. for seven years is the primary protection for both VPHM"s Cinryze (exclusivity expires in Oct 2015) and AUXL's Xiaflex (February 2017). Both drugs would benefit from an additional five years of exclusivity under the new health care reform act. As they had modeled the impact of biosimilars differently in each case, the firm estimates that a 12-year exclusivity period would add $0-1 per share to their VPHM price target of $18 and $10 per share to their AUXL price target of $44.

- Thomas Weisel is raising their price target to $17 (prev. $14) to reflect the impact of an aggressive and comprehensive ex-U.S. commercialization strategy and believe the notion of potential label expansion into the transplant setting will support continued multiple expansion.

The role of complement inhibition is gaining traction in the transplant setting following the recent presentation of promising investigator-sponsored, proof-of-concept data with Alexion’s Soliris.
VPHM provided a compelling review of the biology behind C1 inhibition and believes Cinryze can be used to treat antibody mediated rejection (AMR) and delayed graft function (DGF) in kidney transplant patients and plans to initiate two proof-of-concept Phase II trials in each setting later this year.

TWP believes the HAE market opportunity remains underappreciated and believe the stock should continue to find decent support at these levels as Consensus numbers and excitement about the transplant opportunity increase after Friday’s event.

Notablecalls: Well, what's there not to like? VPHM used to be a crummy biopharma play with Vancocin, their best-selling drug going generic in a year or two. That's until Cinryze showed up. It's priced around $400,000/year putting VPHM in the same league with the other rare-disease plays like GENZ or BMRN.

Now it seems it's all about Cinryze and the analyst community has fallen in love with the drug and its potential.

The stock looks like it wants to break to new highs soon and I don't really see anything stopping it. I guess it's going to trade to $14+ today.

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