Cadence (CADX): Ofirmev Sales Could Surprise on the Upside in Second Quarter and Generic Concerns Appear to be Overblown
Cadence (CADX) has just released estimates from the independent market research firm Wolters, Kluwer on the number of vials that were shipped in April and May. The results are encouraging and suggest that Ofirmev could produce an upside sales surprise in upcoming second quarter. Management issued guidance after the first quarter for Ofirmev sales of $10.0 to $10.5 million. Based on the recent results, I am using a 2Q sales projection for Ofirmev of $11.3 million. Many investors have characterized the Ofirmev launch as disappointing; I think that an upside surprise could start a change in this negative thinking and could cause a near term trading opportunity. In any event, I remain a buyer of Cadence. I have just published a report that discusses my Ofirmev sales projections. I have also discussed the issue of a generic challenge to Ofirmev in this report.
Some investors think that there could be generic competition to Ofirmev as early as 2013; I think it is more likely to come in 2017. Investors are used to seeing a rapid meltdown of sales soon after the emergence of generic competition. While this is commonplace for orally dosed products, it is less so for injectable products and I think that when generic competition arises that we could see a slow erosion of sales.
This report goes into detail on my thinking.
Tagged as Cadence Pharmaceuticals, CADX, Ofirmev + Categorized as Company Commentary