Buying ViroPharma Ahead of June 3rd FDA Decision

Is it just me or does it seem like the good old days of biotech are back? With monster moves from Dendreon (DNDN) and Map Pharma (MAPP) based on positive phase 3 data, buyouts of IDM Pharma (IDMI) by Takeda and Cougar Biotech (CGRB) by JNJ and FDA approvals for Vanda Pharma (VNDA) and United Therapeutics (UTHR), it looks like a good time to start buying ahead of important news flow.

One stock that I think has the potential to move higher is ViroPharma (VPHM). On June 3, 2009 the FDA is scheduled to make a decision whether or not to approve ViroPharma's orphan drug Cinryze for acute attacks of hereditary angioedema (HAE).

In October of 2008, Cinryze was approved for routine prophylaxis (prevention) against HAE attacks in adults and adolescents, which I believe makes the chances for approval in acute setting of HAE much more probable. One other point that makes this approval even more important is the fact that the orphan drug status that Cinryze would carry with FDA approval would also keep a competing drug from CSL Behring off the market for seven years, the length of time a company benefits from orphan drug status .

That's why I'm looking for $10 a share with approval, but back to $5 with a non approval.

Disclosure: The author is long VPHM

Comments

[YoYoMama:]

Buying any biopharm stock before FDA approval is very risky. The downside in this environment can be much greater than this author predicts. Take it from a sucker who bought CEGE, a former $4 stock now stuck in my portfolio at about 40 cents. Uggh. Buyer beware.

May 28 09:17 AM

[ertsfan:]

A less risky way to play this is, buy the July 7.50 calls (90 cents) or the August 7.50 calls ($1). If you go long by buying the shares @ 6.88, and the drug gets dinged or delayed, the share price will no doubt drop more than $1. If the FDA approves the drug, you'll be in the money so long as the share price exceeds 8.40.

May 28 03:10 PM

[PhillyDan:]

I agree it is risky but that this when you can make big money or inversely lose big money. In this case, it is less of a risk for ViroPharma since they already have drug products on the market generating revenue. I would buy long but ertsfan's recommendation is a good one for the less risk adverse.

May 29 07:33 PM

[gullahman:]

i got in at 7.02 playing small with 100 shares. I agree with philly dan about them having other products to lessen possible downside on jun 3rd. May get a good bump on good news from fda but will not be a whopper due to the fact that only 10,000 people suffer from hae in US

May 29 11:01 PM

[Dan Weiss:]

The larger item for Viropharma will be the FDA decision in August on whether generic companies can create Vancocin but the acute HAE decision is also important for VPHM.

Jun 01 12:13 PM

[Mark Cifra:]

You could be right, I have generic Vancocin priced in as a given, its been off patent for years. Now look at whats happening to ARCA Bioscience today (ABIO), down almost 50 percent on news of a CR letter from the FDA for their heart drug, it shows the risk of getting a CR letter for Cinryze. I'm long VPHM, I say 10 on FDA approval of Cinryze in acute HAE.


On Jun 01 12:13 PM Dan Weiss wrote:

> The larger item for Viropharma will be the FDA decision in August
> on whether generic companies can create Vancocin but the acute HAE
> decision is also important for VPHM.

Jun 01 12:53 PM

[Cormack:]

Is the PDUFA news released pre-market or after the close?

Jun 01 04:16 PM

[DGCasey:]

I have been doing this for years. Recently, I haven't had enough time but in the late 90s, I put in $16k and ended up with over $80k in two years. The total number of transactions was around 50. The best one was a 3x gain in two days. If you buy enough stocks, this is like venture capital investing. Half of them go to zero but the good ones easily return more than the bad ones lose.

Jun 01 10:59 PM

[boudreaufarms:]

i like this company other than bio's because it has revenues...a big difference than other speculations....and the bio-availability is big in the anti/bacterial progression/battle and a must in a terrorist world of both "bug" and human! a mycin

Jun 02 09:06 PM

[Ray Ray:]

Did FDA approve Cinryze as planned on June 3rd?

Jun 03 06:24 PM

[jimmy Turano:]

HOW ABOUT SHAREHOLDERS THINKING THAT A NEW CEO WHO JUST HAD HIS COMPANY 'SIRNA' TAKEN OVER IN A BUYOUT CAN DO THE SAME THING FOR THE COMPANY HE JUST BECAME CEO FOR?
IS THAT REALITY, IS IT REALISTIC, SOLEY DEPENDANT ON PARTNERING ONLY?
CHECK IT OUT, 'MRNA' COMPLETELY RIDICULOUS TO ME.


On May 28 09:17 AM YoYoMama wrote:

> Buying any biopharm stock before FDA approval is very risky. The
> downside in this environment can be much greater than this author
> predicts. Take it from a sucker who bought CEGE, a former $4 stock
> now stuck in my portfolio at about 40 cents. Uggh. Buyer beware.

Jun 04 05:26 PM

[mlnlaw:]

The PE is pretty high at this point. Used to be a simpler stock to follow. One trick pony though?

Jun 16 09:38 PM