First Albany: CVTX :Reminder: FDA Deadline On Aceon Label Expansion Is Today
June 10, 2005
StrongBuy (CVTX - $ 20.51)
David Webber, Managing Director
212.273.7153, david.webber@fac.com
Action:
We are maintaining our Strong Buy rating in front of an FDA decision on the
supplemental New Drug Application for Aceon, which seeks to expand the approved
indication to the broad reduction of cardiovascular risk from the current
narrow treatment of hypertension.
Key Points:
* We are maintaining our Strong Buy rating in front of an FDA decision on the
supplemental New Drug Application for Aceon, which seeks to expand the
approved indication to the broad reduction of cardiovascular risk from the
current narrow treatment of hypertension.
* We expect the FDA to approve the label expansion, based on strong data from
the pivotal EUROPA trial, which showed significantly reduced risk of serious
cardiovascular events (heart attack, cardiovascular death, or cardiac arrest)
over a period of four years.
* We consider the label expansion key to the potential for Aceon
(perindropril), now a $35-million per year product in the United States, to
increase sales substantially; in Europe, where Aceon has a broad label,
annual sales exceed $500 million.
* CVT last fall licensed U.S. rights to Aceon, a tissue ACE inhibitor, from
Solvay Pharmaceuticals (SVYSY.PK-$104.50-Not Rated), which does not actively
promote the drug in this country; CVT will receive royalties of 50%-60% on
annual sales above approximately $35 million.
* In the U.S., the top ACE inhibitor is Monarch Pharmaceuticals's Altace
(ramipril), with 2004 sales of $833 million.
* CVT plans to "relaunch" Aceon this summer with a newly hired sales force of
85 representatives; we project royalties to CVT of $7 million in 2005 and $19
million in 2006, rising to $58 million in 2009.
Valuation:
Our price target is $38, based on estimated 2009 EPS of $1.95, a 40 P/E, and a
20% risk discount factor.
Price $20.51
52 Wk High: $24.70
52 Wk Low: $11.28
30-Day Avg Daily Vol: 997,252
Rating Strong Buy
Market Capitalization: $680.9M
Price Target $38.00 --
Shares Outstanding: 33.2M
FY05E EPS ($5.93) --
FY06E EPS ($4.95) -- Cash: $389.9M
Cash/Share: $11.74
FY05E Rev (M) $23.3 --
FY06E Rev (M) $48.1 -- Debt/Capital: 62.55%
Book Value: $59.21M
Book Value/Share: $1.78
Discussion:
See Key Points.
Company Description:
CV Therapeutics is developing pharmaceuticals to treat cardiovascular disease.
The company's lead product, Ranexa for chronic angina, is in Phase III studies,
with the ERICA trial completed and the MERLIN trial ongoing. Regadenoson (CVT-
3146) is in Phase III testing as a pharmacologic stress agent for use in
cardiac imaging studies. |
