Wedbush Securities downgraded its rating on shares of Cardiome Pharma Corp. (NASDAQ: CRME) to “neutral” from “outperform” as the trial of oral vernakalant continues to delay. The brokerage also lowered its fair value estimate to $4 from $8.50.

“We are downgrading Cardiome Pharma due to the continued uncertainty regarding timelines for U.S. IV Vernakalant approval and the start of U.S. Phase 3 trials for oral Vernakalant. While we continue to believe that Vernakalant has best-in-class potential, we expect Cardiome Pharma shares to trade sideways over the next 12 months,” said Duane Nash, an analyst at Wedbush Securities.

Based on previous comments from Cardiome, Nash has previously expected Merck & Co. (NYSE: MRK) to begin a Phase 3 trial of oral vernakalant by mid-2012. Last week, though, Cardiome said that Merck had completed Phase 1 PK/PD studies and was planning to initiate a Phase 2 trial towards the end of 2012, as opposed to proceeding directly to Phase 3.

Meanwhile, during its R&D day Thursday, Merck indicated that it will initiate a Phase 3 trial of IV Vernakalant in the U.S. in 2012 which Nash believes suggests that the ACT V study will not be restarted. He still awaits additional clarity on IV Phase 3 program progress, but does not expect a 2012 NDA submission.

Cardiome reported third quarter revenue of $0.3 million and loss of $0.12 per share, compared to Wedbush’s estimates of $0.6 million and loss of $0.12 per share, and consensus of $1.0 million and loss of $0.10 per share.

Royalties from European sales of IV Vernakalant remained negligible at less than $100,000 as the drug’s launch continues to proceed slowly. Nash is lowering his longer-term projections to $35 million from $42 million in peak annual royalties from European IV Vernakalant sales.

The brokerage narrowed its 2011 loss per share estimate to $0.47 from $0.49, while lowering its revenue estimate to $1.4 million from $2.2 million. The brokerage reduced its 2012 per share estimate to loss of $0.39 from profit of $0.04 and cut its revenue estimate to $6.5 million from $37.3 million.

“Our new fiscal 2012 estimates reflect the lower expectations for European revenues as well as the lack of a $20 million milestone that Cardiome is set to receive from Merck upon the start of Phase 3 trials for oral Vernakalant,” said Nash.

Cardiome Pharma stock is trading down 4.44 percent at $2.58 on the NASDAQ Stock Market at 10:15 am EST, while Merck stock is trading up 3.52 percent at $36.20 on the NYSE.