A $25.5 million asset sale is a tidy sum for any pharmaceutical company, but Bill Hunter says his firm’s recent divestment of its Canadian business portfolio is only a bridge toward profitability.
“We just didn’t have the scale or the ability to do a good job on [both] the Canadian market and the European market at our size,” Cardiome Pharma Corp.’s (TSX:COM) CEO said. “So we thought it would be better to put those Canadian assets in the hands of a Canadian company that would really do a nice job with them.”
In March, Ontario’s Cipher Pharmaceuticals Inc. (TSX:CPH) acquired the rights to Cardiome’s products in Canada.
The next step now for the Vancouver-based pharmaceuticals company, which specializes in treatments for bacterial infections, pneumonia and cardiovascular conditions, is to focus exclusively on the much larger European market.
Before Cardiome began commercializing its products in 2014, the firm employed eight workers in B.C. while concentrating on research and development.
It has since grown to 120 employees, about 100 of whom are based in Europe, where the majority of its sales have been the past four years.
Hunter, a medical doctor by profession, said the sale of the Canadian business portfolio wouldn’t change the headcount in Vancouver or spur a relocation of the company’s headquarters.
Cardiome is expected to generate sales between $29 million and $30 million this year, according to the CEO. But cost infrastructure is close to $40 million.
“So the [divestment] money is quite relevant to us because it gives us a bridge through to when we become profitable,” Hunter said.
LifeSciences BC chairwoman Nancy Harrison said Cardiome’s decision to divest its Canadian portfolio to focus on Europe isn’t uncommon for domestic firms.
“The reality is [we] don’t develop for the Canadian marketplace. It’s just fundamentally too small,” said Harrison, the co-founder and former president of pharmaceuticals company MSI Methylation Sciences.
“Our perspective is very global in nature.”
Meanwhile, Burnaby-based medical technology maker Kardium Inc. is launching a device to treat atrial fibrillation, an irregular heart, in Europe later this year.
The device will hit the Canadian market soon after, but Kardium vice-president of business development Kevin Chaplin told Business in Vancouver in March the American market will likely wait three more years.
Harrison said it’s easier for Canadian firms to make the hop across the pond rather than over the border due to Europe’s consolidated health regulation as well as similar health-care systems.
Hunter said those two factors also make Canadian firms more competitive in Europe than their American counterparts.
“If you’ve got a drug that’s five times more expensive but only 1% or 2% more effective, that might be successful in the U.S. It really doesn’t tend to be successful in other parts of the world,” he said.
“Picking drugs, and how you launch them, how you position them and what the value proposition [is] in Europe is very different than it is in the U.S.”
And, for now, Cardiome has no plans to enter the U.S. market.