Cadence Pharmaceuticals (CADX) Fails to Meet High Analyst Expectations
Shares of biotech company Cadence Pharmaceuticals (CADX) plunged last week after its quarterly earnings missed analyst estimates. For its second quarter, Cadence reported a loss of $0.14 per share, missing the consensus estimate for a loss of $0.11 per share. Revenue came in at $24.7 million, topping the $24 million that analysts had expected, but that top line gain wasn't enough to appease investors. Daily Chart
Cadence is best known for its IV acetaminophen formulation Ofirmev, which reported healthy growth with total vial sales rising 123% to 2.2 million.
For the full year, Cadence now expects Ofirmev revenues to come in between $103 million to $105 million, up from its prior estimate of $97 million to $103 million, now in line with the consensus estimate of $104 million. In 2006, Cadence in-licensed the U.S. and Canadian rights to Ofirmev from pharma giant Bristol-Myers Squibb (BMY
). Cadence launched Ofirmev in January 2012, which is primarily used to manage pain with adjunctive opioid analgesics and fever reduction. Bristol-Myers still produces the same pain reliever as Perfalgan in Europe and other international markets. To keep sales of Ofirmev going, Cadence extended its agreement with Bristol-Myers to December 2018. CEO Ted Schroeder was upbeat regarding Cadence's full year growth prospects. "We believe that usage of the product within our broad customer base will continue to increase, and our market share will grow," he stated. "I'm pleased with the momentum we have been able to maintain with our revenue growth." Even after Cadence's recent drop, the stock is still considered an expensive one, trading with a price-to-sales ratio of 10.2, compared to the industry average of 3.92. It also trades at 81 times forward earnings with a negative profit margin of -91%. In addition, its 5-year PEG ratio is currently negative, at -0.69, due to its lack of profitability. However, there is speculation that IV acetaminophen could become the de facto pain killer used in many major surgeries, in cases when narcotics and NSAIDs cannot be used. Analysts at JMP Securities support that view, rating Cadence as "market outperform," and raised its price target from $8.00 to $11.00. Analysts at Zacks also upgraded the stock from "neutral" to "outperform," with a price target of $8.30. In addition, analysts at UBS AG raised their price target on Cadence from $5.50 to $7.00, with a hold rating. Lastly, Ladenburg Thalmann analyst ratings consider Cadence a "buy," with a price target of $8.60. Other News About CADX Wider Loss at Cadence
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Published on Aug 9, 2013
By Leo Sun