Canaccord: Cardiome Pharma's Sale Of Canadian Business 'A Highly Positive Catalyst' For Shares

CARDIOME PHARMA CORP (NASDAQ: CRME) announced Tuesday it has agreed to divest its Canadian business to Cipher Pharmaceuticals for the U.S. dollar equivalent of $19.7 million.

The Analyst

Canaccord Genuity's Dewey Steadman maintains a Buy rating on Cardiome's stock with an unchanged $5 price target.

The Thesis

Cardiome's sale of its Canadian business includes on-market Brinavess and Aggrastat and is complemented by the Xydalba and Trevyent pipeline projects, Steadman said in a Tuesday note. (See the analyst's track record here.)

Cardiome will form a new company named Correvio and will net the $19 million in cash, which would boost its estimated cash balance to around $40 million, the analyst said. The cash on hand should prove to be sufficient to finance the pharma company's operations through at least 2019, if not longer, he said.

The divestiture is also an "attractive way" for Cardiome to finance its near-term business development without "sacrificing much upside," given the company's approximately $77,000 in revenue in 2017, the analyst said.

In return, Cipher likely accepted the transaction as it includes Cardiome's roughly $232.5 million in Canadian tax losses that Cardiome would never fully utilize itself.

Cardiome's deal is viewed favorably within the "often-overlooked" specialty pharmaceutical market outside of the U.S, Steadman said.

Price Action

Shares of Cardiome Pharma were up 3.35 percent at the close Wednesday.

Related Links:

27 Stocks Moving In Wednesday's Mid-Day Session

Mid-Day Market Update: Crude Oil Up 2.5%; General Mills Shares Plunge

Latest Ratings for CRME

Nov 2017	Canaccord Genuity	Maintains		Buy
Jul 2017	Canaccord Genuity	Assumes		Buy
Dec 2016	Leerink Swann	Initiates Coverage On		Outperform

View More Analyst Ratings for CRME
View the Latest Analyst Ratings

See more from Benzinga

• Wall Street Reacts To Salesforce's .5-Billion Mulesoft Acquisition

• Starbucks CEO Talks Gender Equality, Long-Term Commitment To China

• Turning Neutral: Morgan Stanley Downgrades Sarepta, Loxo Oncology, Global Blood Therapeutics

© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.