Great Outlook for this Biotech

Written by GSCR Staff   
Monday, 28 January 2013 02:00

Cadence Pharmaceuticals, Inc. (NASDAQ – CADX - $5.36) has had a nice run from the $2.92 level since November and is set for a great boom in 2013.

CADX is primarily involved in the acquisition, in-licensing, development, and marketing of proprietary products for hospital use in the U.S. and Canada.  CADX owns the rights to the OFIRMEV injection, a proprietary intravenous formulation of acetaminophen for pain and fever reduction.  It has in-license rights to OFIRMEV from Bristol-Meyers Squibb, which sells the product in Europe under a different name. 

The company announced financial results on Wednesday with the big news that OFIRMEV sales for 4Q12 were $17.1 million, beating prior estimates of $16.2 million. Plus, management raised revenue guidance for 2013 to the $95 to $100 million range, citing an aggressive sales strategy targeting hospitals and increasing repeat orders from existing customers.  Additionally, the Company stated outright that it did not believe that generic competition should be any serious threat for the immediate future.  To that end, one of its competitors, Perrigo (NASDAQ – PRGO), agreed not to market the generic version of the drug until 2020. 

Figure 1 illustrates the solid sales growth of OFIRMEV.

 

Figure 1: CADX – Sales Growth of OFIRMEV

The charts show that the bulls may be running for CADX in the short term.  The stock broke its prior 52-week high of $4.42, from July of 2012.  The next step should see the stock approach the $7-$8 level from 2011.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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