ViroPharma Skyrockets on Buyout Rumors

Jacob Harper |

Reports came out Sept. 13 indicating that the Exton, Penn.-based pharmaceutical company ViroPharma Incorporated (VPHM) is being actively pursued as a takeover target by both French pharma Sanofi and Irish biopharma Shire Plc (SHPG) . On news that two companies were simultaneously interested in ViroPharma, shares of the company exploded.

Shire and Sanofi's interest in Viropharma is of little surprise. The major pharmaceutical firms around the world are looking to add to their roster to compete with Amgen Inc (AMGN) after that company finalized its buyout of Onyx Pharmaceuticals (ONXX) on Aug. 26 in a blockbuster $10.4 billion deal.

ViroPharma is an attractive target for the European pharmas with two successful products on the American market. ViroPharma produces the treatment drug Cinryze, which treats the inflammatory condition hereditary angioedema. Sales of this drug pushed ViroPharma’s second quarter revenue to $103.7 million, representing an uptick of 10 percent.

The company also holds the license for Vancomycin, a “last resort” antibiotic that was first developed in 1953. While the drug was formerly the company’s main revenue driver, the launch of generics in April 2012 greatly hampered sales, with revenue dropping to $4 million during the first quarter of 2013, a precipitous fall from the $66 million in revenues from the prior year period.

Depsite the vacomycin setback, both the success of Cinryze and its pipeline have excited investors. ViroPharma is in Phase II with VP20621, which treats gastrointestinal infections; marabavir, which treats infections that occur in transplant patients; and VP20629, which treats Friedrich’s Ataxia, a recessive inherited disease that damages the nervous system.

While ViroPharma had been valued at $2 billion, its stock soared on the unsolicited interest from both companies. Any speculation that ViroPharma wasn’t interested dissipated on Sept 13, when the company hired Goldman Sachs Group (GS) to engineer a potential auction, indicating they are serious about fielding one of the offers.

ViroPharma skyrocketed on the day, following a respectable year. The stock had already risen 30.24 percent prior to the announcement of the impending buyout. But on the news ViroPharma hired Goldman, shares spiked 24.62 percent on the day to hit $37.90 a share, raising the value of the company $500 million in one day.

 

(image of Vancomycin eTest courtesy of Wikimedia Commons)

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Companies

Symbol Name Price Change % Volume
GS The Goldman Sachs Group Inc. 241.85 0.40 0.17 5,456,047
AMGN Amgen Inc. 143.45 2.86 2.03 4,638,007
SHPG Shire plc 166.97 3.02 1.84 1,037,597
NZRFY New Zealand Refining Co. Ltd. ADR 3.50 0.00 0.00 0

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