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Why This Analyst Upgraded Shares Of Cardiome To 'Speculative Buy'; Stock Skyrockets In Pre-Market

Allergan, Inc. NYSE:AGN, Cardiome Pharma Corporation NASDAQ:CRME - Why This Analyst Upgraded Shares Of Cardiome To 'Speculative Buy'; Stock Skyrockets In Pre-Market

Mackie Research has upgraded CARDIOME PHARMA CORP CRME 0.2% to Speculative Buy from Hold on its recent licensing of Xydalba (Dalbavancin) from Allergan plc Ordinary Shares AGN 0.09% for $13 million up front.

The Potential Power Of Dalbavancin

Cardiome will also pay undisclosed "additional milestone payments and royalties based upon commercial achievements and sales of Xydalba."

"We view this as a great acquisition for CRME, it diversifies the revenue base, there is opportunity to grow a new product in a new therapeutic field and their hospital sales force has an exciting new product to promote," analyst André Uddin wrote in a note.

Dalbavancin "is approved for ABSSSI (a skin and skin structure infection) and is being developed for osteomyelitis (bone infections), hospital community acquired pneumonia and diabetic foot infections." It is sold under the trade name Dalvance in the United States and Xydalba in certain countries outside the United States.

"Our conservative total dalbavancin net sales estimates from 2016 to 2020 are: $2.3 million, $17.6 million, $30.9 million, $42.9 million and $52.1million, respectively," Uddin elaborated.

According to a press release issued by Cardiome, the pharma company would commercialize Xydalba in France, the U.K., Germany, Belgium, Nordic nations, certain other European nations, various Middle Eastern nations and Canada. "Cardiome expects to initiate commercial sales of Xydalba in its territories as early as 2016," the press release read.

Looking Forward

Uddin believes this "transformative acquisition" should help Cardiome becoming cash flow positive in 2017 or 2018.

Cardiome shares may rally on the news, and Uddin believes investors should have another opportunity to buy the stock after the company reports its first-quarter results.

The analyst also raised the price target on the stock to $8.60 from $5.20, while the shares closed Thursday's regular trading session at $4.36. During pre-market Friday, the stock was up 24.77 percent.

Apr 2016Piper JaffrayDowngradesOverweightNeutral
Apr 2016Guggenheim SecuritiesInitiates Coverage onNeutral
Apr 2016Goldman SachsReinstatesBuy

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