Cadence Wins Lawsuit, Shares Up

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Shares of Cadence Pharmaceuticals, Inc. (CADX) increased 45.2% over the last week after the company announced that the U.S. District Court for the District of Delaware has ruled the patent infringement lawsuit against Exela Pharma Sciences in its favor.

The lawsuit was related to Cadence Pharma’s sole approved product, Ofirmev.

Ofirmev is Cadence Pharma’s proprietary intravenous formulation of acetaminophen.

We remind investors that Cadence Pharma and SCR Pharmatop had filed suit against Exela Pharma for infringement of two patents covering Ofirmev in Aug 2011. 

However, the court rejected Exela Pharma’s claims of the patents being invalid. The court also concluded that Exela Pharma’s Abbreviated New Drug Application (ANDA) for a generic version of the product infringes both of these patents.  

We note that Ofirmev is indicated to manage pain with adjunctive opioid analgesics as well as for the reduction of fever.

The exclusive rights to Ofirmev in the U.S. and Canada were acquired by Cadence Pharma from Bristol-Myers Squibb (BMY) in 2006. The drug is marketed by Bristol-Myers as Perfalgan in Europe and other parts of the world.

The patent win news has relieved investors. we note that Cadence Pharma suffered a setback in Oct 2013 when the U.S. Food and Drug Administration (:FDA) asked Cadence Pharma to add a “black box” warning to the label of Ofirmev injection.

The “black box” warning will include information regarding doses and the risk of liver injury associated with doses that exceed the recommended daily limit. However, the company does not expect the warning to impact sales.

Cadence Pharma currently holds a Zacks Rank #3 (Hold). Other stocks that currently look attractive include Forest Laboratories (FRX) and Auxilium Pharmaceuticals (AUXL). Both carry a Zacks Rank #2 (Buy).

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