Company Overview
Cardiome Pharma Corp. (NASDAQ: CRME) is a specialty pharmaceutical company engaged in the development of therapeutic options to manage acute medical conditions. The company is focused on the development and commercialization of cardiovascular therapies for heart disease. Cardiome has two marketed, in-hospital products: Brinavess, used for the rapid conversion of recent onset atrial fibrillation (AF) to sinus rhythm, and Aggrastat, used in patients with acute coronary syndrome (ACS).
Cardiome has also licensed Xydalba, an antibiotic approved in the European Union, and Trevyent for the treatment of pulmonary arterial hypertension (PAH). In addition, the company holds commercialization rights to Esmocard, a cardiology product used to control rapid heart rates. The company is headquartered in Vancouver, British Columbia, Canada.
Pipeline and Products
Brinavess is the intravenous formulation of vernakalant hydrochloride, an antiarrhythmic medicine for the treatment of AF, which occurs when the electrical signals in the heart’s upper chambers beat in an uncoordinated and uncontrolled fashion. Brinavess acts preferentially in the atria to block ionic currents and normalize the electrical signals converting the patient’s heart rhythm to sinus rhythm.
Cardiome holds exclusive, global development and marketing rights to Brinavess, and is responsible for all future development and commercialization expenses. Brinavess is protected by patents until 2024, and is approved for use in 50 countries worldwide, but not the U.S.
Aggrastat contains tirofiban hydrochloride, a reversible GP IIb/IIIa inhibitor that is used to assist the blood flow to the heart and to prevent chest pain and/or heart attacks in ACS patients. Aggrastat helps to prevent platelets from forming into blood clots in coronary arteries which can result in a heart attack. It can also be used in patients whose heart vessels are dilated with a balloon (percutaneous coronary internation). Applications for additional indications are pending worldwide. Aggrastat is currently approved in 60 countries worldwide outside of the U.S.
Xydalba is a semi-synthetic lipoglycopeptide. It is the first and only intravenous antibiotic approved in Europe for the treatment of acute bacterial skin and skin structure infections in adults. Xydalba has demonstrated bacterial activity against a variety of bacteria, including S. aureus and S. pyogenes. The dosing regimen makes it possible to treat patients in an outpatient setting without compromising efficacy.
In May 2016, Cardiome obtained exclusive commercialization rights for dalbavancin (Dalvance in the U.S., Xydalba in the rest of the world) from Allergan plc in certain European countries, Canada, and parts of the Middle East. The company launched Xydalba in the United Kingdom and Germany in December 2016, and expects to commercialize other countries over time.
Esmocard is used for the treatment of supraventricular tachyrdia and for the rapid control of the ventricular rate in patients with atrial flutter. It is also indicated for tachyrdia and hypertension requiring specific intervention. In May 2015, Cardiome entered a commercialization agreement with AOP Orphan Pharma to sell Esmocard in Italy, France, Spain, and Belgium.
Treyvent is a development stage product that combines SteadyMed’s PatchPump technology with treprostinil, a vasodilatory prostacyclin analogue to treat PAH. Cardiome entered an exclusive license agreement with SteadyMed in June 2015 for Europe, Canada, and the Middle East. Launch is currently projected for 2019.
Recent Developments
- On August 21, 2017, the company announced that the data package submitted to the FDA regarding Brinavess would not be sufficient to support the resubmission of a new drug application.
- On July 3, 2017, the company announced that SteadyMed, its partner for Trevyent, had submitted a new drug application for their PAH treatment.
- On June 21, 2017, the company announced that it had signed an exclusively license and distribution agreement with Tzamal Medical Ltd. that will advance Xydalba toward commercialization in Israel.
- On June 12, 2017, the company announced that it had received authorization from Health Canada to begin selling Brinavess in Canada.
- On May 15, 2017, the company announced an amended term loan agreement with CRG-managed funds that will provide Cardiome with $50 million of additional borrowing capacity.
Second Quarter Earnings Review
In the quarter ended June 30, 2017, the company reported revenue of $5.8 million, roughly flat from the same period one year ago. Cardiome did note that revenue for the six months ended June 30, 2017, decreased by $2 million year-over-year, but this was primarily attributable to the timing of a large distributor order that is likely to be booked in the third quarter.
Gross margin for the second quarter decreased slightly year-over-year, from 71.5 to 70.1 percent, due to changes in customer mix. Selling, general, and administrative expenses increased 20 percent year-over-year due to the expansion of Cardiome’s sales force in Europe and Canada. Accordingly, the second quarter net loss was $8.5 million, or $0.26 per share, as compared to a net loss of $7.5 million, or $0.37 per share, in the second quarter of 2016.
Cash used in operating activities during the three months ended June 30, 2017 totaled $7.3 million, a six percent increase from the same period one year ago. At June 30, 2017, Cardiome listed cash and equivalents of $28.4 million and debt equal to $28.4 million. Stockholders’ equity totaled $28.9 million.
Stock Influences
- New developments related to the U.S. approval of Brinavess, including new a development partner;
- Increased adoption of Xydalba in hospitals;
- A European MAA application for Treyvent; and
- Acquisitions of additional specialty hospital-based products.
Risk Factors
- While the company has multiple product candidates, Cardiome is dependent on two products for substantially all its revenues;
- Furthermore, the company is exposed to generic product risk for Aggrastat;
- Significant additional investment will be required to develop and commercialize the company’s product pipeline; and
- The company may never have a product enter the U.S. market.
Stock Performance
As of September 1, 2017, shares of Cardiome closed at $2.46, yielding a market capitalization of approximately $80 million. Over the past 12 months, the stock climbed to a high of $4.84 in July before crashing to a low of $2.09 in late August after it was announced that the FDA did not support the resubmission of a new drug application for Brinavess.
Summary
Investors reacted quite negatively to the FDA’s response to the Brinavess submission. While disappointing, this does not take away from Cardiome’s core business, commercializing hospital-based specialty pharmaceutical products outside of the U.S. As Xydalba wins formulary placements, it should represent a growing share of the company’s revenue. The company’s remaining product candidates represent additional upside. Ongoing concerns include growing debt and interest expense.
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