TWST April 28, 2003-- MPM Capital
In an in-depth (6,700 words) Interview, Kurt Von Emster, MPM Capital, LP
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TWST: What holdings do you have in the cardiovascular field, and what is the outlook for investment opportunities in this area?
Mr. von Emster: The cardiovascular space has always been a tough one for the biotechnology sector because the clinical trials, to show your drug works in cardiovascular disease, often need to be extremely large, potentially in excess of 5,000 patients. This often requires a vast amount of resources, which many biotechnology companies lack.
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The other company that I think is very interesting, and somewhat attractive at these levels, is a company called CV Therapeutics (CVTX), which is developing a drug called Ranexa that has been filed with the FDA to treat angina. Looking at the risk involved now, it's now drug approval risk with the product in front of the FDA. I think that the risk in that is meaningful, but not as substantial as the stock price would tell you.
This is a company that's currently valued at about $500 million, but if this drug can be approved early next year, it will be operating with the opportunity to sell, roughly, $300-$500 million a year. They own the drug outright, they have not licensed it out, and they will sell it themselves, so the leverage to the bottom line is extremely high.
CV is selling at a very depressed price relative to its historic highs. It is selling at roughly its 52-week lows, $17. It's backed up with about $12 in cash per share, so while we have about nine months of little or no news, we actually think it's relatively attractive if you have a three- to five-year time frame in your investment horizon.
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