MOT FOOL: Feeling Good About CV Therapeutics
By Brian Lawler February 28, 2008
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It's often hard to see a turnaround as it's happening, especially when a company's shares are continually trading lower and lower, but its fourth-quarter results show that one may be under way for Rule Breakers pick CV Therapeutics (Nasdaq: CVTX).
CV Therapeutics has been stuck in a rut ever since its launch of lead drug and angina treatment Ranexa. The problem has been that since the Food and Drug Administration granted marketing approval to Ranexa in early 2006, Ranexa's sales growth has never matched the huge dollars the company was pouring into its marketing efforts.
After much investor angst, CV Therapeutics finally changed tactics in May last year and decided to cut out some of the fat from the Ranexa sales force and reduce its cash burn. The results have been positive. Revenue from Ranexa has continued to increase at a moderate pace, and costs have headed in the opposite direction. Sales of Ranexa were up 14% quarter over quarter to $21 million for the fourth quarter, and CV Therapeutics' quarterly cash burn shrunk to less than $21 million.
This year is going to be very important in determining whether this turnaround continues. In the middle of March, CV Therapeutics and marketing partner Astellas are set to hear back from the FDA on their marketing application for heart imaging diagnostic agent Regadenoson. Later in the year, the company will get FDA decisions on two ways it could widen the use of Ranexa.
A positive Regadenoson decision would bring some costless royalties into CV Therapeutics' coffers, but the big money could be in the Ranexa decisions. One of them could lead to Ranexa being approved as a frontline treatment for angina, in addition to a second-line treatment for angina, and the other one could lead to the company being able to better market the drug to certain diabetics.
The pharmaceutical and biotech sectors are notorious for falling in and out of favor with investors. Take a look at the contrasting performances of other Rule Breakers like Vertex Pharmaceuticals (Nasdaq: VRTX) and BioMarin (Nasdaq: BMRN) recently for examples. Right now, CV Therapeutics is definitely out of favor, but investors could fall in love with it again after these FDA decisions. |
