piper: KEY POINTS:
* Ranexa Receives Favorable Label " No Black Box Warning. CVTX received FDA
approval for its anti-anginal Ranexa on Friday, January 27. The initial
indication, as expected, is for resistant patients who have failed other
anti-anginal therapies. Surprises included: 1) no black box warning for QT
prolongation or syncope, two key safety issues debated at the FDA panel
meeting for Ranexa that held the risk of being highlighted upfront in the
label as a strong warning; 2) the efficacy data from ERICA was positioned
in a more favorable light than we had expected (showing a mean angina
attack reduction of 1.0 relative to placebo, generally in line with other
Ranexa studies and higher than the 0.4 angina attack reduction per week the
Street had been expecting to see on the label); 3) drug-drug interactions
with other cardiovascular drugs were highlighted, in particular with
diltiazem and verapamil, although these calcium channel blockers generally
have low usage; and 4) the FDA highlighted a trend to lower efficacy in
women, an issue that was raised during the panel meeting but which we did
not anticipate would be as prominently highlighted on the label. We outline
more detailed discussion of these factors on page 2 of our note. Overall,
we are particularly encouraged on the lack of a black box warning and the
efficacy language, and we believe that the overall label is favorable and
will allow CVTX to effectively market Ranexa.
* We Remain Positive On A $350M+ Peak Market Opportunity, Despite Mixed
Investor Expectations. CVTX management reiterated its intent to launch
Ranexa in late March. The company will provide additional details on
pricing and its sampling program shortly. We remain confident in our peak
sales estimate of $300-$500 million, which is based on approximately 25%
penetration of those patients ineligible for a surgical intervention.
Upside to our estimates could come from higher-than-expected pricing,
penetration into patient subgroups beyond our target market (i.e., patients
with comorbidities where current anti-anginals carry restrictions or
warnings), and/or new uses of Ranexa.
* Conference Call With Cardiology Expert At 2 PM Eastern Today. We will be
hosting a call with a cardiologist involved in Ranexa studies today at 2 PM
EST to discuss the Ranexa label and commercial prospects. Contact your
Piper salesperson for the dial-in information.
* CVTX Remains One Of Our Top Small-Cap Picks. Given what we perceive to be
low Street expectations on the launch of Ranexa, we believe that CVTX could
outperform if the company meets or exceeds sales estimates. We also
continue to believe that there is long-term upside from Ranexa in new
indications, which remain upside to the current valuation.
From To Price: $26.08
Changes (Previous) (Current)
52 Week High: $29.79
Rating -- Outperform
52 Week Low: $19.15
Price Tgt -- $34.00
Price Target: $34.00(40x 2010E EPS, disc. 30%)
FY06E Rev (mil) -- $49.9
FY07E Rev (mil) -- $135.8
Shares Out (mil): 44.4
FY06E EPS -- ($4.63)
Market Cap. (mil): $1,158.0
FY07E EPS -- ($2.51)
Avg Daily Vol (000): 718
Book Value/Share: $2.88
Cash Per Share: $11.76
Debt to Total Capital: 1%
Div (ann): $0.00
Est LT EPS Growth: NM
P/E to LT EPS Growth (FY06): NA
Est Next Rep Date: 02/01/2006
Fiscal Year End: Dec |
