) recently announced that it signed a key deal with an undisclosed
new customer to supply an active pharmaceutical ingredient during
2013 and 2014. This will aid the customer in conducting a phase III
program for one of its candidates.
Cambrex will produce and deliver phase III and pre-launch
quantities of the candidate, as per the agreement.
The deal is significant for Cambrex as it is expected to boost
2013 revenues by more than $20 million. The deal has the potential
to contribute a higher amount to 2014 revenues depending on
regulatory developments, the time of Cambrex's capacity expansion
related to the opportunity and the achievement of product delivery
Cambrex stated that the deal will be beneficial if the phase III
program is not terminated or cut short. The non-exclusive supply
agreement will not affect 2012 sales or revenues. The deal is till
2014, and does not include any further commitments beyond that
We note that Cambrex has revised its 2012 capital expenditure
guidance, on the basis of the upcoming capital investment related
to this agreement. Cambrex is set to spend around $19 million over
the remainder of 2012 and in early 2013 for the expansion of its
multipurpose large scale cGMP assets. Cambrex now expects its
capital expenditure guidance for 2012 to be in the range of $33-$36
million (previous guidance: $16-$19 million).
Cambrex will also be receiving reservation fees of $9.5 million
by next month as an advance for the expected 2013 revenues.
We are pleased with Cambrex's new supply agreement. The deal
will boost the company's revenue in the next couple of years. We
currently have an Outperform recommendation on Cambrex. The stock
carries a Zacks #2 Rank (short-term 'Buy' rating).
CAMBREX CORP (CBM): Free Stock Analysis Report
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