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CBM-Possible Beneficiary Of Sovaldi Launch

Jan. 29, 2014 7:17 PM ETCBM
Leonard Yaffe profile picture
Leonard Yaffe's Blog
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Growth, Healthcare, Biotech

Seeking Alpha Analyst Since 2012

I am an MD by background who runs a healthcare hedge fund. I worked as a sell-side medical analyst for 20 years, covering pharmaceuticals, medical devices, PBMs and drug distributors.

Cambrex is an active pharmaceutical ingredients manufacturer. The company is making significant capital investments for key growth projects. Cambrex signed a non-exclusive manufacturing agreement with a customer in 2012 for production of "commercial launch material for a large new product candidate, including Phase 3". In Q3 2013, custom development revenues grew by over 500%. It is speculated that the drug involved is Gilead's Sovaldi. Although this is not certain, Cambrex's stock is conservatively valued, and I strongly maintain that Sovaldi revenues will be significantly higher than Street expectations. However, even if Sovaldi is the drug, the nature of the agreement with Gilead is not known. Cambrex is going to report Q4 2013 results around 2/11. Given the revenue contribution of this manufacturing agreement to Cambrex, it may be required to disclose the other party. All this being said, I find this stock very interesting at its current level. Len

Disclosure: I am long CBM, GILD.

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