piper: KEY POINTS:
* Providing Balance Around Ranexa Comments. We hosted a call with a
cardiologist regarding Ranexa - its use in angina and market potential.
While the tone of the expert's commentary was negative, we believe that he
approached the call from the perspective of addressing Ranexa's potential
utility as a broadly used antianginal to displace currently marketed drugs,
a positioning which has never been in the framework of investor
expectations for the initial launch. Rather, he concluded that Ranexa would
address a limited initial market opportunity in refractory angina,
consistent with our analysis of the target market. He quantified this
opportunity to be 5% of his patient population, within the range of
feedback we have previously heard from physicians and, importantly, would
represent a $350-$500m market opportunity for the drug, in line with our
peak sales estimates. Our expert was also clear that this patient
population would be defined predominantly by patients who are ineligible
for surgical intervention and require aggressive combination therapy. He
noted that typical combination therapy is limited by hemodynamic side
effects, an area where we believe Ranexa could make for an ideal
combination agent given its lack of additive blood pressure or heart rate
lowering effects, and he agreed that Ranexa would have utility in this
unmet medical need. Of note, while his refractory population may be only 5%
given his success as an academic cardiology interventionalist,
epidemiological data presented at ACC last year show that the pool of
patients who cannot be successfully treated surgically is larger overall at
12%-15%.
* Commentary Underscores The Importance Of MERLIN Safety Data To Improving
Physician Perceptions. Our expert did highlight that much of the negativity
could be mitigated when more safety data was available. The expert did note
that MERLIN, a 6,000 patient trial, will provide a much larger safety
database in a higher-risk population; data from this study should be
available by late 06-early 07. Importantly, our expert acknowledged that he
expects the safety data from the study to be positive. Nonetheless, our
conference call did underscore the importance of the MERLIN safety data to
quell any questions that emerge on safety of the drug and the potential
need for these safety data to achieve our peak sales estimates for Ranexa.
On the efficacy side, he viewed a positive mortality/morbidity benefit as
speculative, which we believe is consistent with the prevailing Street
perspective and is not priced into current expectations.
* Continue To Defend $300-$500M Initial Market Opportunity. We perceive low
Street expectations on the launch of Ranexa and believe that success toward
a $300-$500m trajectory would lead to upside to current stock levels. We
also believe that new uses of Ranexa, in particular the data generated in
diabetes, could drive significant long-term upside.
From To Price: $24.93
Changes (Previous) (Current)
52 Week High: $29.79
Rating -- Outperform
52 Week Low: $19.15
Price Tgt -- $34.00
Price Target: $34.00
FY06E Rev (mil) -- $49.9
FY07E Rev (mil) -- $135.8
Shares Out (mil): 44.4
FY06E EPS -- ($4.63)
Market Cap. (mil): $1,106.9
FY07E EPS -- ($2.51)
Avg Daily Vol (000): 704
Book Value/Share: $2.88
Cash Per Share: $11.76
Debt to Total Capital: 1%
Est LT EPS Growth: NM
P/E to LT EPS Growth (FY06): NA
Est Next Rep Date: 02/01/2006
Fiscal Year End: Dec
INVESTMENT RECOMMENDATION:
We believe that Ranexa could outperform low investor expectations.
RISKS TO ACHIEVEMENT OF TARGET PRICE:
Risks include: 1) failure to achieve Ranexa sales estimates, 2) inability to
obtain reimbursement, and 3) clinical risk in Ranexa label expansion.
COMPANY DESCRIPTION:
CV Therapeutics, Inc. is a leading cardiology company.
Important Research Disclosures
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Analyst Certification - Thomas Wei, Senior Research Analyst
The views expressed in this report accurately reflect my.. |
