ViroPharma Incorporated (Nasdaq: VPHM) reported today its financial results for the fourth quarter and year ended December 31, 2009.
In the fourth quarter of 2009 we:
- Delivered record $88 million in net product sales including $36 million in net sales of Cinryze;
- Achieved adjusted net income of $26 million; GAAP net income reached $12 million;
- Improved working capital to $406 million as of December 31, 2009, including cash and cash equivalents of $332 million; and
- Delivered positive cash flows from operations of $43 million for the quarter ended December 31, 2009.
Net sales were $87.8 million and $310.4 million for the fourth quarter and year ended December 31, 2009, respectively, as compared to $50.0 million and $232.3 million in the comparative periods of 2008, respectively. This represents 76 percent growth in the fourth quarter and 34 percent growth for the year in net product sales.
The Company is reporting both GAAP net income (loss) and adjusted results for the three and twelve months ended December 31, 2009 and 2008. Adjusted net income is GAAP net income excluding (1) non-cash interest expense, (2) amortization related to the acquisition of Lev Pharmaceuticals and Vancocin, and step up in inventory related to purchase accounting arising from the acquisition of Lev Pharmaceuticals, (3) stock compensation expenses, and (4) certain non-recurring events such as the goodwill write off, impairment loss and gain on extinguishment of repurchased bonds. A reconciliation between GAAP and adjusted net income is provided in the Selected Financial Information - Reconciliation of GAAP Net Income to Adjusted Net Income table included with this release.
The Company believes it is important to share these non-GAAP financial measures with shareholders as they better represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors' understanding of the Company's financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP adjusted net income should not be viewed in isolation, or as a substitute for or superior to reported GAAP net (loss) income. ViroPharma's definition of non-GAAP financial measures may differ from others.
"As we provide Cinryze to patients to prevent attacks of hereditary angioedema, we put ourselves in a position to drive great value for our shareholders," commented Vincent Milano, ViroPharma's chief executive officer. "Throughout the year, we made great strides toward our ultimate goal of providing Cinryze to every patient who needs it. I'm pleased that during 2009 alone, over 400 patients' lives were transformed by initiating Cinryze therapy. For these patients, starting on prophylaxis with Cinryze marks the beginning of an entirely new prevention-minded routine in which they can look forward to reducing the length, frequency and severity of attacks of HAE, and the ability to utilize this therapy in the comfort of their own homes. This early success of Cinryze, combined with another solid year of Vancocin® sales, contributed to our record net product sales during 2009 of $310 million. We believe that the momentum we have generated since the launch of Cinryze, along with our newly expanded rights for Cinryze, will serve as a springboard for new levels of growth as we seek to impact the lives of many more patients with diseases marked by C1 esterase inhibitor deficiency through global expansion, additional disease states, and potential new formulations."
Non-GAAP adjusted net income in the three and twelve months ended December 31, 2009 was $26.4 million and $102.6 million, respectively, compared to $10.0 million and $93.9 million, respectively, for the same periods in 2008. The increase in adjusted net income for both periods is primarily due to the net effect of the Cinryze launch and lower research and development expenses, offset by lower Vancocin net sales, lower interest income, and higher income tax expense due to lower qualified orphan drug spend for maribavir.
The change between our GAAP net loss of $11.1 million for the twelve months ended December 31, 2009 from GAAP net income of $64.0 million in the same period of 2008 was primarily the impact of our Goodwill impairment of $65.1 million, increased intangible amortization of $17.4 million associated with our acquisition of Lev Pharmaceuticals, Inc. and the $9.1 million gain on the repurchase of our convertible notes, in addition to the factors influencing our non-GAAP adjusted net income discussed above. The change in GAAP net income in the three months ended December 31, 2009 compared to 2008 was impacted by a $1.2 million increase in intangible amortization related to the acquisition of Lev Pharmaceuticals, Inc. in addition to the factors influencing the non-GAAP adjusted net income.
Effective January 1, 2009, the Company was required under a new accounting standard to change the method of accounting for the Company's convertible notes. The Company revised its previously reported financial statements to apply this change in accounting to prior periods. Under this new accounting method, the Company's EPS and net (loss) income calculated in accordance with GAAP have been reduced as a result of recognizing incremental non-cash interest expense. In connection with adopting this new accounting standard, the Company recorded $1.8 million and $2.0 million of additional non-cash interest expense in the three months ended December 31, 2009 and 2008, respectively, and $7.3 million and $7.9 million for the year ended December 31, 2009 and 2008, respectively. For the three months ended December 31, 2008, the Company's previously reported net loss calculated in accordance with GAAP has been increased by $1.3 million to $2.3 million. For the twelve months ended December 31, 2008, the previously reported net income has been reduced by $3.7 million to $64.0 million.
Operating Highlights
Cinryze net sales during the three and twelve months ended December 31, 2009 were $36.0 million and $97.3 million, respectively. Vancocin net sales during the three months ended December 31, 2009 increased 3.6 percent to $51.9 million due to realized price growth, offset by lower sales volume. For the twelve months ended December 31, 2009, Vancocin sales decreased 8.2 percent to $213.1 million due to lower sales volume, partially offset by realized price growth.