Cardiome Pharma Corp. (USA) (CRME)

portefeuille6

Share buyback at 4.25 seems to be bringing down PPS. Good entry point?, wish I knew for sure. Smart folks are picking this one so I will stay patient.

Pick up on a drop

Mmm...pharmaceuticals...

Great product in the pipeline.......

Port

Good pipeline working right now.

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.

Cardiome Announces Upcoming Presentation Of Results Of Phase 2b Clinical Trial Of Vernakalant (Oral) At The European Society Of Cardiology Congress 2009 -> http://finance.yahoo.com/news/Cardiome-Announces-Upcoming-prnews-3013527373.html?x=0. Cardiome Pharma Corp. Announces Tender Offer To Purchase Up To US$27.5 Million Of Its Common Shares -> http://finance.yahoo.com/news/Cardiome-Pharma-Corp-prnews-1933342574.html?x=0.
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John C. writes, "As a practicing physician and an investor, I have been anxiously awaiting the FDA's decision for Cardiome's(CRME Quote) atrial fibrillation medication. Is it unusual for them to take so long? This is potentially a very useful drug and all that I have read about it makes me think it is safe and effective. I don't understand the FDA's seeming reluctance to give it approval."

I don't think anyone really understands why the FDA has held up approval of Cardiome's drug intravenous vernakalant for what is now almost 18 months (dating back to the original FDA decision date in January 2008).

Cardiome and its partner Astellas have said little, and of course, neither has the FDA. Honestly, I think most investors have given up and moved on. In April, Cardiome licensed ex-U.S. rights to the drug to Merck(MRK Quote) along with worldwide rights to the oral version of vernakalant.

The vernakalant pill, if successfully developed, could be a very big drug, so attention is probably more focused on that program today. Merck is expected to start a phase III program for the drug in early 2010.
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http://www.thestreet.com/story/10509765/4/.

Cardiome Pharma is a little strange, even for a development stage pharmaceutical....perhaps, because they are based in Canada? eyyy? Products are in several stages of development and they just announced a phase 3B (second round of testing that could take another 18 months) for their KYNAPHID fibrillation drug. Granted that Cariome specializes in cardiovascular and the risk and testing are extremely extensive, to work with the FDA to establish additional testing to help with a smoother passage of their drug could be the best move in the long haul. In the short run, what I find "unusual" is Cardiome, which has no products, issuing a stock buyback. Using part of the $60 Million milestone from Merck to by back shares is either a brillant move of confidence or a foolish move that will bite them later. An analysis of Cardiome's cash flow, however shows that research has been cut way down pending outcome of their current pipeline. Run rate on cash is exceptionally low, and Cardiome should be able to pull off the buyback or about 8%. Normally in a revenue positive company this would equate back to EPS. In this case, it only equates back to Cardiome bumping the share price while they are buying time for a real catalyst. All in all one should be banking on thier portfolio and not the buyback. Canadian based, I am impressed with their regulatory approaches in multiple coutries and give them a decent chance of not needing their own fibulation drugs!

wait until it gets around 8 per share and sell off

There are so many exhaustive pitches, so I'll keep it simple. There seems to be little to depress the stock much going forward, while having a long term positive outlook. By most accounts, they should turn a profit in a year or two, and there is less fear in the heart of investors, which should help them be more patient.

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

it can only go up from here.

Despite some obvious speed bumps, I think Cardiome remains significantly undervalued given the prospects for both IV and oral vernakalant. While the process is certainly frustrating for impatient investors, the eventual payoff is likely to be very high. I wouldn't be surprised if the share price is four or five times higher in two years, and there's no telling when in that two years the rise will occur. I closed one outperform as the S&P drop gave me a positive score, and I've now re-entered at a lower price hoping for an eventual three or four hundred points. The bottom line is that the vernakalant data is good, the need for the drug is certainly there, and there's definitely potential for it to be a game changer in the emergency management of atrial fibrillation. I see Cardiome, Arena, and Ligand as the most undervalued small cap biotechs in the current market.

Oversold on approvable letter, and a good acquisition target as well.

Dreaded (and not altogether unexpected) approvable letter came out today and the stock plunged. This is a one trick pony ( actually one pony - two tricks) but it should eventually get approved (or bought outright).

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.