I was alarmed to read an article on Bloomberg early this Sunday morning about Texas high school football. While I am a recovering football addict, I still jump at the chance to even watch Pop Warner football on TV at 3 AM. But enough with my issues. There is something really serious going on in Texas and internationally with certain drug-resistant staph bacteria. This bacteria, a type that's plagued hospitals for decades, has made its way into the general population in recent years.
Without proper treatment, it can spread to internal organs and bones after reaching the bloodstream, causing organ failure. Texas faces a certain type of this bacteria with the acronym, MRSA.
Bloomberg reports that this MRSA has migrated to playing fields in Texas, particularly on artificial turf. Texas has artificial turf at 18 percent of its high school football stadiums. It also has an MRSA infection rate among players that is 16 times higher than the estimated national average, according to three studies by the Texas Department of State Health Services.
Scary, absolutely. What makes this even more troubling is that there doesn't seem to be an accepted practice by the medical profession to treat MRSA. Doctors have differing opinions as to what drugs to use as first-line treatments. One company that provides such a drug is ViroPharma (NASDAQ: VPHM), a small-cap bio firm with a market cap of around $600 million.
ViroPharma markets Vancocin® capsules as "the only antibiotic approved to treat two significant bacterial infections of the lower digestive tract. The product is indicated for oral administration for treatment of enterocolitis caused by Staphylococcus aureus (including methicillin-resistant strains)."
ViroPharma started marketing Vancocin in 2004 and sales of the antibiotic have grown 22% in the first nine months of this year. Stock has gotten pummeled off of disappointing results of clinical trials for a hepatitis C drug and heating up of competition surrounding Vancocin. That said, ViroPharma has an extremely strong balance sheet with about $300 million of net cash/investments and some nice cash flow.
Let's hope that the medical community finds a way to treat MRSA. Regardless, ViroPharma seems poised to continue going long in this market.
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author doesn't own shares in VPHM.











Reader Comments (Page 1 of 1)
12-24-2007 @ 12:06AM
Dan said...
Vancocin (the oral form of vancomycin) is used for the treatment of Clostridium difficile, a bacterial infection of the GI tract. This occurs when your body's normal gut flora are taken over by this bacteria, such as is seen in hospitalized patients on multiple antibiotics or immune-compromised patients. There is another approved oral antibiotic available for this infection and some talk of generics on the way. Unfortunately Vancocin can not be used for serious skin infections or respiratory tract infections caused by the bacteria MRSA which are often reported by the news media and lead to devastating effects, stronger intravenous antibiotics are needed (such as Vancomycin). While I do own stock in VPHM and have high hopes for the company it is not for any of the reasons this article improperly cited. IV drugs are almost always administered for serious infections because of the greater bio-availability they offer by not having to pass through the gut before reaching their target of interest. Conversely, oral Vancocin is important mostly for infections of the GI tract.
12-24-2007 @ 12:54AM
Zack Miller said...
Thanks for your comments and clarification, Dan.
1-02-2008 @ 10:03AM
Kristina said...
Zack, thanks so much for your post on ViroPharma. For the record, as of the end of the third quarter of 2007, ViroPharma had more than $500 million of cash/investments – a bit more than the $300 million that you reported. But beyond and more important than the numbers, we are very passionate about helping patients and healthcare professionals combat the growing threat of infectious superbugs. To add a bit more detail to Dan’s earlier response, hospital-acquired infections (HAIs) – infections people get simply from being hospitalized – are one of the most serious problems facing the U.S. health care system today. In American hospitals, HAIs account for an estimated 1.7 million infections and 99,000 deaths each year. One of the most common and dangerous HAIs is a bacterial infection called Clostridium difficile (C.diff) infection. Once contracted, C.diff infection has historically led rapidly to severe stomach symptoms as well as fever, loss of appetite, nausea, pseudomembraneous colitis, and in some cases sepsis and death.
Today, though, a highly toxic and far more dangerous strain of C.diff is spreading through hospitals throughout the United States. If infected, patients can die within just a few days. In hospitals across the nation, C.diff infection is doubling the average hospital bill, tripling the average length of stay and quadrupling the number of deaths. Sadly, for most hospitals infected by this dangerous strain, once the strain is there, it can not be eradicated by any standard method - so the focus becomes reducing the spread of this superbug as opposed to eliminating it.
And like methicillin-resistant Staphylococcus aureus (MRSA) – C.diff infection is now being contracted by healthy people outside of the hospital setting. One study found that nearly one in five people treated for C. difficile-associated diarrhea picked up the bacteria outside of the hospital.
In response to the C.diff infection epidemic, two leading infectious disease organizations – The Infectious Disease Society of America and The Society for Healthcare Epidemiology of America – have released draft guidelines for the treatment of C.diff infection. The final guidelines are set to be published in early 2008. The draft guidelines recommend ViroPharma’s drug Vancocin® as the first choice for the treatment of severe C.diff infection, which accounts for up to 60 percent of all cases. In a recent study of patients with severe C.diff infection, 97 percent of those treated with Vancocin were cured. We at ViroPharma are committed to continuing production of this lifesaving medicine.