ViroPharma Inc. (VPHM) recently announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of Cinryze. The company is seeking approval to market the drug as a treatment for hereditary angioedema (HAE) in adolescents and adults.

The panel recommended European approval of the drug for pre-procedure prevention of angioedema attacks in patients suffering from HAE. Moreover, approval is also recommended for the routine prevention of angioedema attacks in patients with severe and recurrent attacks of HAE.

ViroPharma anticipates approval of the drug from the European Commission by the second quarter of 2011.

Cinryze is currently marketed in the United States for preventing angioedema attacks in adolescent and adult patients with HAE. Cinryze revenues of $52.5 million during the fourth quarter of 2010, reflects an increase of 46%. Additionally, ViroPharma forecasts Cinryze sales to range from $235–$260 million in 2011.

Our Take

We currently have a Neutral recommendation on ViroPharma, which is supported by a Zacks #3 Rank (short-term Hold rating). We are encouraged by CHMP’s positive recommendation for the approval of Cinryze and expect investor focus to remain on the European approval and launch of the drug, anticipated in the second quarter of 2011.

However, there lurks a potential cause of concern with Vancocin, one of the primary revenue contributors at ViroPharma, not protected by any patent. Vancocin generics are yet to hit the market with the FDA requiring generic companies to conduct a bioequivalence study to gain approval for their versions.

We note that a proposed bioequivalence method for Vancocin is filed for approval with the FDA. If the method gets the regulatory body’s nod, the time required for a generic manufacturer to get a generic version of Vancocin approved will be reduced. This would lead to multiple generics entering the market with significant sales erosion of the drug.

Moreover, Vancocin could face competition from Optimer Pharmaceuticals Inc.’s (OPTR) fidaxomicin, which is currently under regulatory review in the US, with a target date set for May 30, 2011.

 
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