Duncan-Williams Revises CADX Estimates

Duncan-Williams reports that, with regard to Cadence Pharmaceuticals Inc. CADX, “after reviewing the 10K and speaking with management we have realized that our first year ramp curve is overly aggressive.”

“Management indicated that stocking a hospital typically corresponds to a single case (24 vials) of Ofirmev,” Duncan-Williams writes. “Management previously reported that 230 hospitals had stocked drug which implies sales of <$100K, though many hospitals have already re-ordered product. Because Cadence reports sales only when hospitals order the product rather than when booking wholesaler sales, we now expect a more gradual revenue build in 2011.”

Duncan-Williams added that the company has minimum purchase requirements that imply ~$13.4 million in product sales and management believes it can exceed these levels in the first year.

“We have updated our injectable analgesic model to correspond to vials tracked (from units previously),” Duncan-Williams writes. “Management also indicated that our pricing assumptions of 1% annual price increases are overly conservative so we went higher (2%), which may still be low.”

Cadence Pharmaceuticals closed Tuesday at $8.72.