`
`
`
`Biotechnology - Company Report
`
`March 7, 2012
`
`
`
`ViroPharma Incorporated (1)
`Phase 2 Data Presented at AAAAI - High Dose Combination Promising
`
`
`
`Liisa A. Bayko
`
`lbayko@jmpsecurities.com
`
`(312) 768-1785
`
`Heather Behanna, PhD
`
`hbehanna@jmpsecurities.com
`
`(312) 768-1795
`
`
`
`
`
`
`
`
`MARKET OUTPERFORM
`
`Price
`Target Price
`52-Wk Range
`Shares Out. (M)
`Market Cap. (M)
`Average Daily Vol. (000)
`Float (M)
`
`Total Debt (M)
`LT Debt/Total Cap.
`Cash (M)
`Cash/Share
`
`
`
`
`
`
`$30 62 FY Dec
`$35 00 Revenue (M)
`
`$14 62 - $32.70
`71
`
`$2,160
`
`1,199
`
`$70
`
`
`
`$151.5 EPS
`0.2
`
`$460.4
`
`$6.5
`
`
`
`
`
`
`
`
`
`
`
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`VPHM $30.62
`
`
`
`
`1Q
`2Q
`3Q
`4Q
`FY
`
`
`1Q
`2Q
`3Q
`4Q
`FY
`P/E
`Previous FY
`CY
`P/E
`
`
`
`2010A
`$90.6
`$109.0
`$117.8
`$121.6
`$439.0
`
`2010A
`$0 26
`$0 35
`$0.45
`$0.44
`$1.51
`20.3x
`--
`$1.51
`20.3x
`
`
`
`2011E
`$127.0A
`$128.8A
`$143.0A
`$145.6
`$544.2
`
`2011E
`$0.40A
`$0.28A
`$0.35A
`$0 65
`$1.68
`18.2x
`NC
`$1.68
`18.2x
`
`
`
`2012E
`$153.9
`$158.7
`$166.0
`$172.2
`$649.8
`
`2012E
`$0.44
`$0.43
`$0.44
`$0.44
`$1.74
`17.6x
`NC
`$1.74
`17.6x
`
`NC indicates no change to previous estimate. NE indicates no previous estimate.
`
`Source: Company reports and JMP Securities
`
`
`
`INVESTMENT HIGHLIGHTS
`
`• Phase 2 data presented at AAAAI, high dose combination promising, reiterate Market
`Outperform rating and $35 price target on ViroPharma based on a risk adjusted discounted
`cash flow analysis. The pharmacokinetic and pharmcodynamic analysis of the combination of
`Halozyme's rHuPH20 with Cinryze in a subcutaneous (SC) formulation was presented yesterday
`at a late breaker poster at AAAAI. The small data set (unfortuantely 1/3 of the 12 patients in the
`study were mishandled) suggest that: 1. the 2000 unit dose in combination with rHuPH20
`enables functional concentrations of the C1 esterase inhibitor to remain at steady state for longer
`durations than IV Cinryze, and 2. on the surface, the 1000 unit combination appears inferior to IV
`Cinryze (management explained to us that this appears to be due to a mishandled sample which
`drove down the mean given the small number of patients in the study). We are pleased to see
`that no patient on the combination therapy experienced an HAE attack during the 30 day study.
`The majority of adverse events were related to redness at site of injection with two severe cases
`of erythema (based on duration of redness) which did not interfere with drug administration. We
`believe ViroPharma will move forward exploring doses ranging from 1000- 2000 units every 3
`days, and may explore a variety of other regimens including once daily dosing with smaller doses
`to once weekly doses with larger volumes. The data presented suggest flexibility with respect to
`dosing given the ability to sustain trough levels (Figure 1) within the range required to thwart
`attacks. We anticipate the company will prioritize speed to market and cost of goods, then fine
`tune patient convenience once approved. We look forward to the initiation of a 40-50 patient
`Phase 2 trial next quarter that should provide more clarity to the Phase 3 development plan and
`we see the weakness in the share price yesterday (we believe a reaction to the disappointment
`regarding the results of the lower 1000 unit dose because of high cost of goods) as an attractive
`buying opportunity.
`
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`FOR DISCLOSURE AND FOOTNOTE INFORMATION, REFER
`TO THE JMP FACTS AND DISCLOSURES SECTION
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`Page 1 of 4
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`CSL EXHIBIT 1093
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`

`

`FIGURE 1: Mean Plasma C1 INH Functional Concentrations (Outliers Excluded)
`
`Source: AAAI March 2012
`
`INVESTMENT RISKS
`
`Clinical development risk. Drug development is a risky business. Historically, approximately one of
`every ten drugs that enter clinical trials makes it to the market.
`
`Regulatory risk. ViroPharma, like all other drug development companies, is reliant on the FDA's pace for
`evaluating new drugs and the agency's willingness to approve new drugs.
`
`Competitive risk. Due to the unmet need and rapid growth available in the anti-infective space, there are
`several companies developing products targeting similar diseases as ViroPharma. Some are presently
`in later-stage clinical development and, if they are approved and launched, could potentially have a
`negative impact on sales of ViroPharma's products.
`
`Partnership risk. ViroPharma is developing two of its products on a partnered basis. As a result,
`ViroPharma is reliant on the cooperation and progress of its partners to drive value from these
`programs.
`
`Intellectual property risk. Like all other technology-driven companies, ViroPharma's success may
`depend upon its ability to protect its intellectual property.
`
`Sector risk. Valuation of biotechnology stocks is subject to investors' assessments of the prospects of
`the underlying companies as well as investors' tolerance for risk and their confidence in the prospects of
`biotechnology stocks as a group. Therefore, VPHM may decrease in value even while ViroPharma
`meets or exceeds investor expectations.
`
`COMPANY DESCRIPTION
`
`Exton, Pennsylvania-based ViroPharma Inc. is a commercial-stage biotechnology company with two
`marketed and one product candidates in clinical development. Vancocin was acquired from Eli Lilly and
`is used to treat clostridium difficile infection (CDI). Cinryze is the first and only drug approved in the US,
`an orphan drug indication, to treat patients with hereditary angioedema. ViroPharma's pipeline includes
`non-toxigenic c. difficile for the prevention of CDI.
`
`2
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`Page 2 of 4
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`

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`JMP FACTS AND DISCLOSURES
`
`Analyst Certification:
`The research analyst(s) who prepared this report does/do hereby certify that the views presented in this report are in accordance with my/our personal views on the securities
`and issuers discussed in this report. As mandated by SEC Regulation AC no part of my/our compensation was, is or will be directly or indirectly related to the specific views
`or recommendations expressed herein. This certification is made under the obligations set forth in SEC Regulation AC. Any other person or entity may not use it for any other
`purpose. This certification is made based on my/our analysis on the date of this report’s publication. I/We assume no obligation to update this certification to reflect any facts,
`circumstances or events that may subsequently come to my/our attention. Signed Liisa A. Bayko, Heather Behanna, PhD
`
`Publicly Traded Companies Covered by JMP and Mentioned in This Report (as of March 6, 2012):
`
`Company
`Halozyme Therapeutics, Inc.
`ViroPharma Incorporated
`
`Disclosures
`(1)
`(1)
`
`
`JMP Securities Disclosure Definitions:
`(1) JMP Securities currently makes a market in this security. (2) JMP Securities has received compensation for banking or other services rendered to this company in the past
`12 months. (3) JMP Securities was manager or co-manager of a public offering for this company in the past 12 months. (4) JMP Securities participated as an underwriting or
`selling group member of a public offering by this company in the past 12 months. (5) JMP Securities and/or its affiliates have obtained a position of at least 1% in the equity
`securities of this company during the ordinary course of its/their business/investments. (6) An officer of JMP Securities is a director or officer of this company. (7) The analyst
`covering this company (as defined in NASD Rule 2711) or a member of the analyst's household has a financial interest in this company. (8) The analyst covering this company
`or a member of the analyst’s household serves as an officer, director, or advisory board member of this company. (9) The analyst covering this company has had discussions
`of employment with the company.
`
`JMP Securities Investment Opinion Definitions:
`Market Outperform (MO): JMP Securities expects the stock price to outperform relevant market indices over the next 12 months.
`Market Perform (MP): JMP Securities expects the stock price to perform in line with relevant market indices over the next 12 months.
`Market Underperform (MU): JMP Securities expects the stock price to underperform relevant market indices over the next 12 months.
`
`JMP Securities Research Ratings and Investment Banking Services: (as of January 3, 2012)
`
`
`
`JMP Rating
`
`Market Outperform
`Market Perform
`Market Underperform
`
`TOTAL:
`
`
`Regulatory
`Equivalent
`
`Buy
`Hold
`Sell
`
`
`
`
`# Co's
`Under
`Coverage
`
`226
`117
`6
`
`349
`
`%
`of
`Total
`
`65%
`34%
`2%
`
`100%
`
`
`Regulatory
`Rating
`
`Buy
`Hold
`Sell
`
`
`
`# Co's
`Under
`Coverage
`
`226
`117
`6
`
`349
`
`%
`of
`Total
`
`65%
`34%
`2%
`
`100%
`
`# Co's
`Receiving
`B Services in
`Past 12 Months
`
`43
`11
`0
`
`54
`
`% of Co s
`With This
`Rating
`
`19%
`9%
`0%
`
`15%
`
`
`Stock Price Chart of Rating and Target Price Changes:
`Note: First annotation denotes initiation of coverage or 3 years, whichever is shorter. If no target price is listed, then the target price is N/A. In accordance with NASD Rule
`2711, the chart(s) below reflect(s) price range and any changes to the rating or price target as of the end of the most recent calendar quarter. The action reflected in this note
`is not annotated in the stock price chart. Source: Jovus and JMP Securities.
`
`
`
`
`
`
`
`
`
`
`
`JMP Disclaimer:
`JMP Securities LLC (the “Firm”) compensates research analysts, like other Firm employees, based on the Firm’s profitability, which includes revenues from the Firm’s
`institutional sales, trading, and investment banking departments as well as on the quality of the services and activities performed that are intended to benefit the Firm’s
`institutional clients. These data have been prepared by JMP Securities LLC for informational purposes only and are based on information available to the public from sources
`that we believe to be reliable, but we do not guarantee their accuracy or completeness. Any opinions and projections expressed herein reflect our judgment at this date and
`are subject to change without notice. These data are neither intended nor should be considered as an offer to sell or a solicitation or a basis for any contract for the purchase
`of any security or other financial product. JMP Securities LLC, its affiliates, JMP Group LLC, Harvest Capital Strategies LLC, and their respective partners, directors, officers,
`and associates may have a long or short position in, may act as a market maker for, or may purchase or sell a position in the securities mentioned herein. JMP Securities
`LLC or its affiliates may be performing, have performed, or seek to perform investment banking, advisory, or other services and may have acted as manager or co-manager
`for a public offering of securities for any company mentioned herein. The reader should assume that JMP Securities LLC will solicit business from the company covered in
`this report. Members of our Sales and Trading Department provide oral and/or written market opinions and trading strategies to our clients that reflect their personal opinions
`about stocks that are the subject of the firm's research reports. Our research analysts discuss trading strategies with clients and complete surveys from clients that sometimes
`reflect short-term expectations for the price of the securities that are the subject of research reports. Those trading strategies and survey responses are distinct from the
`analysts' fundamental rating for the stock, which is based upon the analysts' view compared to other stocks under coverage for the relevant time period. © Copyright 2012.
`All rights reserved by JMP Securities LLC. JMP Securities LLC is a member of BATS, FINRA, NASDAQ, and SIPC.
`
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`3
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`Page 3 of 4
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`

`

`
`
`JMP SECURITIES LLC
`
`600 Montgomery Street, Suite 1100, San Francisco, CA 94111-2713, www.jmpsecurities.com
`
`Jeffrey H. Spurr
`Director of Equity Research
`(415) 835-3903
`
`(212) 906-3525
`(212) 906-3548
`(212) 906-3532
`
`(212) 906-3548
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`(212) 906-3532
`
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`
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`(312) 768-1786
`
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`Chris Ross, CFA
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`(415) 835-3940
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`Trevor Cranston, CFA
`(415) 869-4431
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`Trevor Cranston, CFA
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`Healthcare
`Biotechnology
`Charles C. Duncan, PhD
`
`Roy Buchanan, PhD
`
`Jason N. Butler, PhD
`
`Gena H. Wang, PhD
`
`Liisa A. Bayko
`
`Heather Behanna, PhD
`
`Jason N. Butler, PhD
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`Peter L. Martin, CFA
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`Aaron Hecht
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`For Additional Information
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`(212) 906-3510
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`(212) 906-3505
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`(312) 768-1785
`(312) 768-1795
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`(415) 835-8904
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`Maureen McCarthy
`Director of Sales & Trading
`(415) 835-3935
`
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`(415) 835-8944
`(212) 906-3509
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`(415) 835-3934
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`Erin Seidemann
`Vice President, Publishing
`(415) 835-3970
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`Page 4 of 4
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