This appears to be an excellent transaction with some strong synergies. The stock/deferred cash structure of the deal is also commendable. This should reduce execution risk for CRME in implementing its strategy and alleviate liquidity concerns. Let's see what the market has to say.
Cardiome Pharma Corp. (NASDAQ: CRME) today announced that it has completed the acquisition of Correvio LLC (“Correvio”), a privately held pharmaceutical company headquartered in Geneva, Switzerland. Key benefits of the transaction include the following:
* Accelerates Cardiome's launch of BRINAVESS™ (vernakalant IV) and its transformation into a global commercial organization positioned for future growth
*Correvio is an EBITDA positive, European, specialty pharmaceutical company selling Aggrastat® (tirofiban HCL) to cardiologists in over 60 countries worldwide with annual revenues of US$30+ million
* Brings together two highly complementary, in-hospital, intravenous, cardiology products sold through a direct sales force in Europe and via specialty distributors elsewhere
* Reduces BRINAVESS build out costs and shortens the time to profitability by providing an established operational and financial infrastructure with significant operating cost synergies
*Transaction expected to be accretive immediately
"The acquisition of Correvio markedly accelerates Cardiome's recent transformation from a research and development-based company to an integrated, commercial, specialty pharmaceutical company. The Correvio acquisition fulfills many of our immediate strategic needs by providing an operational European platform, global distribution, complementary products and the financial flexibility required to accelerate the launch of BRINAVESS," stated William Hunter, M.D., Cardiome’s president and CEO. "The cash contribution from synergistic sales of AGGRASTAT will lessen our reliance on external financing by providing low cost,
ongoing funding while also shortening our road to profitability."
"We have worked hard over the years to build a scalable infrastructure to successfully promote and support AGGRASTAT sales worldwide,” stated Bert Van Den Bergh, chairman of Correvio. 'It's exciting to see a growing product like BRINAVESS able to leverage off of our existing hospital-bas
Long is obviously a relative term. The market potential outside the US is fraction of that of the US. That is a fact. It was estimated by our CEO at $50-150 million. The US market potential according to the same source is $250 million. Those of us that are optimistic about FDA approval are LONG!!!!!!!!!!! FDA put a clinical hold on Act V when it had demonstrated significantly less efficacy than the drug is now known to have. Prior to the holds the FDA's cardio advisers had recommended approval and at the time of the incidence of cardiogenic shock that precipitated the hold the FDA trial advisers had recommended the trial continue. So, the FDA decision was purely based on risk reward. With that, I believe the probability of FDA approval is significant higher that it has ever been. For non-US sales this is just a matter of time for the rev to ramp-up and is it does the PPS will gradual increase. On the FDA side we need to see tasks executed. This is not lost on the street. Non-US sales is a safety net, US approval is a homerun.
Under Food and Drug Administration (FDA) regulations, an investigational new drug application (IND) is either allowed to proceed or placed on clinical hold (21 CFR 312.42). A clinical hold is an order issued by the FDA to the applicant to delay a proposed clinical investigation or to suspend an ongoing investigation. A clinical hold may be designated either a complete clinical hold or a partial clinical hold. An applicant may respond to a clinical hold. Once the applicant has submitted a complete response to the clinical hold, the Agency must evaluate the response and decide whether to lift the hold. The Agency has committed itself to respond to the applicant within 30 days.
That is the question. From what I have been told by some knowledgeable folks, FDA does not ordinarily accept none trial data, but it may be possible for them to review existing data (in light of the real world experience), but nothing is known with certainty. So, a megatrial is not out of the question. But, with a us IV market of as much as $250m, what ever has to be done to get it on the market will pay off handsomely.
it is interesting (but I guess not surprising that the analysts are still sitting on the sidelines. I can understand their frustration with the history of this thing but they have to have some thoughts to share.
We should be north of $45 a share. When the FDA place the Act V trial on hold (due to risk/reward concerns) analysts lowered their price target to $45 ($9 at the time). Now, knowing what we know about the real risk/reward of this drug, we should be above $45 and well above $45 as soon as the FDA lifts the hold.
Stay long my friends!
It would seem to make sense that they would wait until publication of the Malmo study. That is probably the strongest evidence to date. The FDA put the IV trial on hold when the drugs efficacy was much less strong, basically saying the potential risk outweighed the potential benefit. Certainly Malmo (as well as other study) strongly suggest (if not indicate) this is the best (most effective and safest) pharma AFib treatment and, for many reasons, may be superior to elctro cardioversion. FDA will release the hold.
EU IV Rev Potential: $50m-100m
US IV Rev Potential: $250m
Oral Rev Potential: $500m
Current Share Price: $5.50
Potential share price, based on above sales @ 1x Rev: $60.00+
An oral loading dose of propafenone 600 mg is used in our center as in other places around the world for conversion of recent onset atrial fibrillation (AF) in patients without structural heart disease. Vernakalant is a novel, safe and effective drug used intravenously and has proved to be more rapid in converting recent onset AF to sinus rhythm compared to placebo and amiodarone. There is not a study which compares Vernakalant with propafenone. The aim of our study is to compare the time taken for conversion of recent onset AF in patients treated with vernakalant or propafenone.
36 hemodynamically stable patients with recent onset AF without structural heart disease were prospectively included. A single oral dose of propafenone 600 mg was administered to 19 patients and 17 received intravenous vernakalant. Clinical and laboratory variables, conversion rate and time to conversion were recorded.
Baseline characteristics were similar in both groups. Time to conversion to sinus rhythm was of 166 minutes (120-300) in the propafenone group versus 9 minutes (6-18) in the vernakalant group (p=0.0001). Conversion rate was of 78% in the propafenone group at 8 h and of 93% in the vernakalant group at 2 h; yet, this difference was not statistically significant (p= 0.4). Time to conversion had a direct impact in hospital stay, which was 43% shorter in the vernakalant group (p=0.0001).
Time to conversion of AF to sinus rhythm was significantly shorter in the vernakalant group compared with the propafenone group, and was associated with shorter hospital stay.
This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process which may lead to differences between this version and the Version of Record. Please cite this article as an ‘Accepted Article’, doi: 10.1111/1755-5922.12036
This article is protected by copyright. All rights reserved.
As you can see from the chart, profit taking set in after that, and since then the stock has gone into consolidation mode, hanging around the $3.25 – $3.35 channel on much lower volume. This move lower has corresponded with the broader market pulling off of record highs, as the reality that Fed tapering is inevitable despite the recent Fed statement holding QE4 bond-buying steady for the time-being.
Given the recent and rapid outsized moves higher in CRME shares, it wouldn’t be surprising to see further consolidation at current or even lower levels. That said, it appears that the current pullback from 52-week highs may offer a great long-term opportunity to buy shares of a young pharmaceutical company may be in the midst of coming of age in a very big way. As a result, I expect patient investors to be rewarded both this year and next, as long as bullish company developments continue, and those translate into top and bottom line growth.
Good luck with this and all of your trades!
Warren Gates, Senior Analyst, Oakshire Financial