piper CVTX :Aceon Data Provide Significant Upside Potential
2004-12-16 04:25 (New York)
CV Therapeutics, (CVTX - $22.27)
Outperform
Volatility: High
Rating -- Outperform
Price Tgt -- $33.00
Shares Out (mil): 31.8
Market Cap. (mil): $708.2
Avg Daily Vol (000): 847
Book Value/Share: $2.93
Cash Per Share: $12.61
Debt to Total Capital: 354%
* ASCOT Study Stopped Early. CVTX announced early termination of the ASCOT (Anglo-Scandinavian Cardiac Outcomes Trial) study, which showed that hypertensive patients on Pfizer's Norvasc and CVTX/Solvay's Aceon had better outcomes than patients receiving beta-blockers and diuretics. This trial, funded by Pfizer, tested approximately 19,000 patients with hypertension at high risk for a cardiac event (i.e., >2 risk factors: smoking, diabetes, male, left ventricular hypertrophy, history of stroke, high cholesterol, or peripheral vascular disease) with standard anti-hypertensive regimen (b- blocker +/- diuretic) versus Norvasc +/- Aceon (Ca channel blocker +/- ACE inhibitor). The trial was powered at 80% todetect a relative 20% additional benefit of the Norvasc/Aceon regimen over the beta-blocker/diuretic treatment in the composite primary endpoint of reduction in non- fatal heart attacks and fatal coronary heart disease (CHD).
Patients were randomized to Norvasc or atenolol (a beta blocker), and had their respective second drug (Aceon with Norvasc, or a diuretic for atenolol patients) added if initial drug titration was not sufficient to control blood pressure. Cardura was added in either regimen as needed. A significant enough benefit was seen in the Norvasc/Aceon arm at an interim analysis, and the trial was halted early. Full results are expected to be presented at the American College of Cardiology meeting March 6-9, 2005.
* How To Interpret ASCOT After ALLHAT. Published in 2002, the ALLHAT trial in 42,000 patients showed that diuretics were generally superior to calcium channel blockers and ACE inhibitors. The trial showed that, compared to a diuretic, Norvasc patients had a 38% higher risk for developing heart failure, and patients on had a 15% higher risk of stroke (40% in African-Americans), 19% higher risk for heart failure and a 10% higher risk of needing coronary revascularization. This trial had a notable effect on physician prescribing patterns and entrenched diuretics as an important front-line option and combination choice for hypertension. We believe that the data from ASCOT could cause physicians to reconsider combination therapy regimens for advanced patients, although ASCOT will likely come under close scrutiny given the apparent divergence of conclusions versus ALLHAT. We note, however, that ALLHAT specifically assessed lisinopril, which is not a tissue ACE inhibitor while Aceon is, and that there is growing evidence that tissue ACE inhibitors may be more efficacious. In addition, the proportion of minority patients plays an important factor in differences in observed ACE activity.
EUROPA And ASCOT Will Help
Drive Sales. We view the co-
promotion deal for Aceon as
highly favorable and accretive
for CVTX, further strengthened
by yesterday's announcement of
positive ASCOT data. Although
we are not changing our Aceon
estimates at this time, our $33
price target (45x 2009E EPS,
disc 35%) is based on
conservative estimates for
Aceon sales.
INVESTMENT RECOMMENDATION:
We believe that CVTX will be a
2005 turnaround story.
RISKS TO ACHIEVEMENT OF TARGET
PRICE:
Risks include but are not limited
to: 1) negative outcome of Ranexa
studies; and 2) uncertainty on
the commercial opportunity of
Ranexa.
COMPANY DESCRIPTION:
CV Therapeutics, Inc. is a
leading cardiology company. |
