Ofirmev economics are improving, and we continue to see evidence of growth. With its earnings release in November, Cadence revealed that 3Q12 sales of $13.9M climbed 25% from $11.1M in 2Q12, and if Wednesday’s announcement proves correct, sales will have climbed another 37% in 4Q12. In addition, gross margin on Ofirmev sales was 56% in the third quarter, an improvement over the 48% seen in the second quarter of last year.
If FY13 sales hit company guidance of near $100M, Ofirmev sales will have improved by roughly 100% over FY12 (likely $50M). Management expects growth to continue, and has guided for vastly improved market penetration for Ofirmev as doctors begin prescribing Ofirmev in a multi-modal approach to pain management. As of CADX’s investor day, management believed the drug had penetrated just 7% of the market but expected a whopping 56% in the next few years, meaning revenue could increase by eight-fold as well. The customer base for Ofirmev gained by 10% during the third quarter of 2012, with a total of nearly 3,500 unique customer accounts at September 30 and Ofirmev was on formulary at over 2,000 institutions in the U.S. Considering the strong sales growth thus far, Ofirmev should continue to drive value for CADX; peak sales could support a valuation in the billion dollar range. For a more detailed look at Cadence and Ofirmev’s differentiation, see PropThink’s original article from December 6th. Since we noted the stock’s potential, CADX has climbed 23%, 35% before a pull-back in the last week. Cadence will release FY12 details during its normal earnings call.