ViroPharma Inc. and CollaGenex Pharmaceuticals Inc. aren’t companies most people would recognize. They’re not a Merck or GlaxoSmithKline or Wyeth.
But what happens to companies like ViroPharma and CollaGenex is important because a vibrant second tier of life-sciences firms means the Philadelphia area is still cooking up good ideas.
Both of these companies faced “near death” experiences a few years back, managed to change directions and ultimately found success.
CollaGenex lost patent protection on its treatment for periodontal disease and wound up reinventing itself as a dermatology company. Yesterday, the Swiss firm Galderma Pharma S.A. said it would pay $420 million to scoop up the small Newtown firm.
Its pending purchase does mean the end of its operations and 45 jobs in Bucks County. But the fact is CollaGenex succeeded in developing the first oral treatment for a facial-skin disorder called rosacea and winning Food and Drug Administration approval for it.
In the case of ViroPharma, its widely anticipated treatment for the common cold was rejected by the FDA in 2002 over safety concerns. Its shares plunged 59 percent the day after the FDA advisory panel’s decision. In succeeding months, CEO Michel de Rosen had to take drastic action, laying off employees and moving into smaller quarters to conserve cash.
Many small drug companies never recover from such a setback.
De Rosen has a Big Pharma pedigree, having headed Rhone-Poulenc Rorer Inc. in Collegeville from 1995 through 1999. From the ashes of a drug compound defeat, he laid the groundwork for how ViroPharma would move on.
Like any drug firm, ViroPharma needed a product to generate some money to fund its development efforts. ViroPharma found Vancocin, an antibiotic that produced sales of $40 million for Eli Lilly & Co. in 2003. Buying Vancocin in November 2004 would prove to be the best thing that could’ve happened.
Few could have foreseen that Clostridium difficile, the deadly bacterium that Vancocin treats, would become more virulent and widespread over the next few years. In the right place at the right time, ViroPharma has turned Vancocin into a product that now generates about $200 million in sales a year.
Consider that ViroPharma reported $75.0 million in net income on $156.1 million of Vancocin sales for the nine months ended Sept. 30. That would be a profit margin of 48 percent.
Yesterday after the stock market had closed, de Rosen said he would be stepping down as CEO. (He will remain non-executive chairman.) De Rosen, 57, intends to return to France to be closer to his family as well as to become the CEO of an unidentified private company.
His successor will be Vincent J. Milano, 44, who has been a ViroPharma executive for 12 years, having seen the highs and lows.
We’ll see how the stock market perceives the adjustment, but to me, the management transition comes at a time when ViroPharma is more than all right.
“I’ve been asked, ‘How the hell are you going to build in Atlantic City?’ The answer is if credit markets don’t improve, we won’t build.”
- Daniel Lee, chairman and CEO of Pinnacle Entertainment, about plans to build a $2 billion casino on the Boardwalk.