Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Cadence Pharmaceuticals (UNKNOWN:CADX.DL), a biopharmaceutical company that acquires and commercializes in-hospital therapies, jumped as much as 11% after reporting its third-quarter earnings results.
So what: For the quarter, Cadence reported a whopping 109% increase in total revenue to $29 million from $14.1 million in the year-ago period. The sales boost comes from the growing acceptance of its Ofirmev acetaminophen injection for the treatment of mild to moderate pain. Gross margin also improved to 66% from 56% in the year prior. Net loss for the quarter also shrank handily to just $6.9 million, or $0.08 per share, from $15.9 million, or $0.19 per share, in the year-ago period. The $0.08 loss perfectly matched expectations, but net product sales topped the consensus by a clean $2 million. Looking ahead, Cadence boosted its full-year revenue forecast to a new range of $107 million to $109 million, which is up from its prior guidance of $103 million to $105 million.
Now what: This was actually a fairly impressive quarter all the way around. It's clear that Ofirmev is being well accepted as a pain management injection and Cadence's revenue guidance boost over already lofty targets proves this. With most peak sales projections of $350 million to $400 million on Ofirmev, and Cadence's market value hovering around $450 million, I would suggest that -- presuming it stays on the path toward profitability in 2014 -- the stock may be a bit cheap here. For biotech-savvy enthusiasts out there who are willing to take on a bit more risk than the average investor, I would certainly suggest a deeper dive is in order and an add to your watchlist.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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