Cardiome Pharma Corp. (USA) (NASDAQ:CRME)

inverse tort screen

There are currently 45000 CRME shares in my "fund" with break-even of around 1.57 USD. http://caps.fool.com/Blogs/fund-trades/678775.

going going up

magic formula, no additional research.

magic formula

Multiple products in the pipe line. Has real potential to be bought out by a major drug company.

Price/earnings of 7.28, market cap of 257.96 million, Debt/equity of 0.49, Return on Invested Capital (TTM) of 70.14, based in Canada, drug development company.

My last outperform on Cardiome ended tragically with a fat finger ending of the pick and a negative score, which was naturally followed days later with a sharp upswing in the share price. Hopefully I'll fare better this time around.

In the winter Cardiome looked like they would recover from the beating they took after the FDA hold on the ACT 5 phase III trial of IV vernakalant. The share price rose from about 4.6 to as high as 7, but then over the past seven weeks has declined to new lows despite an absence of negative catalysts.

Cardiome plays their cards close to their chests to a frustrating degree, but I believe upcoming catalysts are more likely to be positive than negative. The hold on IV vernakalant is based on a single adverse event which did not prompt the DSMB to suspend the trial. IV vernakalant is already approved in Europe and it seems unlikely that development will be terminated in the US over safety issues. Furthermore, the company will begin reporting revenues from IV vernakalant in Europe over the next couple of quarters.

The most important long-term concern may be development of oral vernakalant, which has been inexplicably in limbo since the compound was partnered with Merck two years ago. The company recently released a typically inscrutable statement in which they confide that they have been advised by Merck of the next steps to occur in development of oral vernakalant. What exactly those steps are will apparently remain between Cardiome and Merck.

I sold out of my large bet on Cardiome about a year ago, for a sizable profit but well below highs. I've lost a lot of confidence in management as they appear to have severely bungled the development of both IV and oral vernakalant, and they don't seem to have much feeling for their shareholders. I'm willing to take a chance in CAPS here but I'm very hesitant to risk real money in such an opaque, unpredictable outfit.

mfi

There were 30 items in your list. Here they are in random order:

1 CRME CAPS=4 star
2 TER CAPS=4 star
3 SCEI CAPS=5 star
TNAV
CHKE
MSFT
PWER
MRX
VPHM
UNTD
RLRN
HRB
SNDK
IPXL
DLX
CMTL
IDCC
AGX
LO
APOL
PRSC
UIS
USMO
AFAM
OSK
TSRA
PDLI
PPD
AMED
ELNK
Timestamp: 2011-02-02 21:11:52 UTC

Just following some other highly ranked players. Didn't do any other due diligence.

Pick up on a drop

Port

One of the first lessons I learned in investing is to never blindly follow anyone, no matter how knowledgeable they appear to be and regardless of the strength of their track record. Everyone is wrong from time to time, even the best investors. In fact, if you hit on 7 out of 10 of your buys, that's actually a very good record; but that still leaves three duds/non-movers.

With that opening, I'm following portefeuille, zzlangerhans, and a handful of other top ranked Fools on this one. This is a "for fun" pick more than anything. Don't take it as a recommendation. In fact, as a deep value investor, I look at CRME's balance sheet and cash flows and I get scared off. However, CRME's balance sheet is not that atypical of a biotech outfit. Biotech is not normally the playground of value investors :)

In spite of that, I highly respect the opinions of port and ZZ and I still want to learn more about biotech/pharmas, so I figure this is a good stock to follow. It's also my type of high-risk/high-reward play.

wait until it gets around 8 per share and sell off

Biotech and Biomedical industries are the new future for jobs and research.

Still waiting on FDA ruling for Kynapid, which should be approved plus oral form of the drug with more commercial potential and continued clinical development to move the shares higher.

The IV version of its anti-fib heart drug, Kynapid (vernakalant hydrochloride), was recommended for approval with a 6-2 vote by an FDA advisory committee in December 2007. No action letter was delivered by the FDA to either Cardiome or its partner, Astellas Pharmaceuticals by the expected action date of January 19, 2008. However the FDA had requested more time to review the NDA. It has been assumed that 60 days (previously announced by the FDA as the new expected delay for the FDA on certain non-critical drugs) would be enough time to determine the approval status of the drug. However, at 60 days, no new news has been announced either by the FDA or by Cardiome or by its partner Astellas.

Earlier in the week, Amgen announced that the FDA was pushing back its review of romiplostim by three months -- from an April 23 PDUFA date to July 23. The FDA has been constantly delaying its review of nearly all drugs in the first quarter, so Amgen had probably already guessed that some sort of announcement like this was coming.

Therefore, assuming a possible 3-month delay by the FDA is to be expected for a drug approval beyond the standard approval timeframe, the time for a decision from the FDA on Kynapid nears. Assuming Kynapid will be reviewed timely by the FDA within a 90-day delay window, that would mean that the company should hear from the FDA by Saturday, April 19, 2008 (90th day), or by Monday, April 21, 2008 (92 days, or exactly 3 months).

Therefore, an announcement is forthcoming either Thurday or Friday this week, or Monday or Tuesday next week. Very good probability of an approval of the $800 million to $1.3 billion per year IV version of the drug. Cardiome holds all rights to produce this drug outside of the US and is partnered with Astellas in the US. The oral version of the drug, is wholly owned by Cardiome within and outside of the US and Canada, and is in late Stage 2b trials. The market for the oral version of the drug is much greater ($1.3 billion - $1.8 billion per year). Recent early results of the Stage 3b drug trials are very positive.

And Canadian approval could come any day now (early May 2008). Lastly, the company says it is up for possibly sale or partnership as it proceeds with late-stage trials of its oral version of the anti-fib heart drug.

Vernakalant hydrochloride (KYNAPID) is the first new drug for use in conversion of Afib in 8 years. With a conversion time of +/- 11 minutes, I can see this being the first line I.V. drug used for new onset Afib patients in the ER setting. While there are other drugs currently available to treat Afib, they have their fair share of potential complications which are on par with, if not worse then what the study results for KYNAPID have shown, yet do not have the rapidness of response time that KYNAPID has shown. About the only other form of therapy with a faster response time is to cardiovert, (Plug your butt into a wall socket and hit the switch. FUN, FAST and it HURTS!!!!!)

I feel that this will be rapidly accepted as the gold standard treatment for ER patient dx'd with new onset Afib. After all, you will only want to get lit up like a christmas tree one time to know that you would greatly prefer an alternative that won't hurt as much.

When the oral version reaches market, which will open the patient population base exponentially, the sky could very well be the limit.

So, I say a year or so on the I.V. form of this drug.

Long term hold based on the oral version still being in phase 2.

As to this being a one drug wonder company, what a wonderful drug it is. The returns from the I.V. form alone in MHO will generate revenues that should finance research into other drugs for many years to come, or they get bought out for a nice premium. Who knows?

I'm buyin all I can get before the FDA finally gets their act together on their PDUFA mess/delays.... If I am wrong, y'all will hear the blood curdling scream for miles ! LOL

Fool on

POPS83