j. birchenough, now Barclays, 11/6/08
CV Therapeutics (CVTX - US$ 9.70) 1-Overweight
Operating Results
Break Even in 2009 a Possibility
Investment Conclusion
We are reiterating our 1-Overweight rating on
shares of CVTX following this morning's call on
3Q08 results and Ranexa label expansion. Overall
label expansion was better than expected and with
guidance for reduced cash burn in 2009 we
believe that CVTX can be breakeven next year.
Summary
À‰ CVTX hosted a conference call this morning to
review 3Q08 operating results and discuss
Ranexa label expansion. With focus on Ranexa
trends CVTX highlighted a 19% sequential
increase in sales with no change in inventory
levels. With today's label expansion CVTX is
adding 40 reps to the Northeast and embarking on
print ad and ehealth initiatives to drive growth.
À‰ With focus on label expansion implications, CVTX
now has an unrestricted indication for chronic
stable angina allowing for first line use with label
claims for arrythmia reduction and HbA1c benefits.
While QTc prolongation of 6msec is a fact
maintained in the label we believe that antiarrythmia
claims are more important and expect
risk averse physicians to rapidly adopt the drug.
Partnership interest in Ranexa and follow on late
Na+ channel inhibitors remains high and strategic
flexibility remains to optimize shareholder value.
United States of America
Healthcare
Biotechnology
Reuters CVTX
Bloomberg CVTX
ADR
EPS (US$) (FY Dec)
2007 2008 2009 % Change
Actual Old New St. Est. Old New St. Est. 2008 2009
1Q -0.93A -0.53A -0.53A -0.53A N/A N/A -0.22E 43% N/A
2Q -0.66A -0.07A -0.07A -0.07A N/A N/A -0.18E 89% N/A
3Q -0.55A -0.41A -0.41A -0.35E N/A N/A -0.12E 25% N/A
4Q -0.57A -0.09E -0.17E -0.26E N/A N/A -0.08E 70% N/A
Year -2.71A -1.10E -1.18E -1.18E 0.47E 0.00E -0.49E 56% 100%
P/E N/M 0.0
Market Data
Market Cap (Mil.) 591
Dividend Yield N/A
52 Week Range 12.05 - 5.41
Financial Summary
Revenue TTM (Mil.) 135.0
Stock Overview
CV THERAPEUTICS - 11/ 6/ 2008
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Source: LehmanLive
5.25
6.75
8.25
9.75
11.25
Volume
0
2M
4M
6M
Stock Rating Target Price
New: 1-Overweight New: US$ 22.00
Old: 1-Overweight Old: US$ 22.00
We are making the following adjustments to our financial model following today's release of 3Q08 results. Our forecast for Ranexa
revenues is slightly increased to roughly $108.8M from $106.5M. We are lowering our Lexiscan forecast to $8.6M from our former estimate
of $11.9M and we are reducing our collaborative research revenue estimate to $29.4M from our prior $39.0M estimate. As a result, our total revenue forecast for 2008 is now $157.3M vs. our prior estimate of $168.0M. Our operating expense estimate is now $221.1M compared to
our previous forecast of $216.6M. Consequently, our per share loss forecast for full-year 2008 is now ($1.18) vs. our prior forecast of a loss
per share of ($1.10).
We are introducing our estimates for 2009 with revenue projection of $244.0M comprised of U.S. Ranexa sales of $174.0M, ex-U.S. Ranexa
royalties of $8.8M, Lexiscan royalties of $28.2M, other royalties/license fees of $19.2M, and collaborative research revenues of $13.8M. In
terms of expense items, we estimate R&D to be $80.0M and SG&A to be $160.0M. As such, we forecast 2009 to be a breakeven year for
CVTX with EPS of $0.00.
Our valuation year 2010 EPS estimate remains unchanged at $1.69.
CVTX Milestones
Product Development Pipeline
Program Indication Next Milestone
Ranexa Chronic Angina
Publication of
MERLIN subset
data
Additional
MERLIN data
Ranexa - EU Chronic Angina Germany and UK
launch in 1Q09
EU Partnership
Lexiscan/Regadenoson Myocardial
Perfusion Imaging
US launch
progress
EMEA filing by
YE08
CVT-6883 Asthma Initiate proof of
pharmacology
studies in
asthma, COPD,
IPF, and
Oncology
CVT-3619 Diabetes/
Dyslipidemia
Ongoing
CVT-10216 Alcoholism/
Addictions
IND filing by
YE08 and
initiation of
Phase 1 in 2009
Adentri Heart Failure Ongoing
IND
On 7/10/08 CVTX received marketing authorization from the EMEA as add on therapy for the symptomatic treatment of
patients with stable angina pectoris inadequately controlled or intolerant to 1st line anti-anginal therapies. Ranexa is
approved for use in 375, 500, and 750mg doses bid
Menarini is expected to launch Ranexa in germany and UK in 1Q09 with commercial launch in other licensed territories
expected following formal pricing and reimbursement authorizations in those countries.
CVTX granted to Menarini exclusive rights to Ranexa in 68 countries - the EU, CIS, and select countries of Central and
Southern America. CVTX received an upfront payment of $70mln and Menarini will potentially make additional
payments and investments up to $315mln for commercial (linked to sales levels) and development (linked to Ranexa
approval in Europe for certain additional indications that are jointly developed - costs to be shared) milestones and
promotional and detailing committments. Menarini is responsible for commercial activities and pursuing regulatory and
pricing approvals and will provide minimum levels of physician details and promotional spending for Ranexa for a
specified period of time.
Launched June 2008
in US
Phase 1
Phase I
Phase
Launch Planned
Phase 3
CVT-6883 is an adenosine A2B antagonist that blocks mast cell degranulation by inhibiting the A2B receptor. Phase 1
dose-ascending studies have demonstrated that CVT-6883 was safe and well tolerated and its potential suitability for
once-daily chronic dosing. Adenosine A2B receptor is expressed in the lung and expression can be increased
significantly when lung tissues become inflammed or injured and hence potential utility of this drug in chronic pulmonary
diseases like asthma, COPD, and pulmonary fibrosis.
On 8/21/08, CVTX's partner BIIB announced the initiation of a Phase III clinical trial of iv Adentri for acute
decompensated heart failure (ADHF) patients with renal insufficiency. The trial will evaluate Adentri or placebo in
addition to standard of care in approximately 900 patients in 21 countries globally, including the United States. The
TRIDENT-1 (TReatment with Intravenous BG9928 for patients with acutely DEcompensated heart failure and reNal
insufficiency Trial) study is a Phase III randomized, multi-center, double-blind, placebo-controlled, parallel-group study
to assess the efficacy and safety of IV Adentri dosed up to five days on body weight in ADHF patients with impaired
renal function. Body weight is a measure of fluid accumulation, which is considered an important cause of symptoms
experienced by heart failure patients
The phase 1 trial will assess the safety and pk profile of CVT-3619 in healthy volunteers - Initiated Sep '08
CVT-3619 is an A1 adenosine receptor agonist under development for diabetes/dyslipidemia. CVT-3619 reduces free
fatty acids (FFA) that when chronically elevated decrease insulin sensitivity, increase gluconeogenesis, and decrease
glucose uptake eventually leading to hyperglycemia and an increased risk for cardiovascular disease. FFA reduction by
CVT-3619 results in glucose lowering and improvement in insulin sensitivity, lowering of plasma triglycerides across
various animal models, and increased ABCA1 protein expression.
CVT-10216 is a novel small molecule inhibitor of ALDH-2 that suppresses excessive alcohol drinking and drug
addiction. ALDH-2 knockout or silencing has been shown to inhibit excessive drinking in rodent models of alcoholism.
CVT-10216 is a derivative of Diadzin. In preclinical studies, CVT-10216 was shown to reduce heavy drinking,
deprivation/ stress-induced drinking, self-administration at the “bar” and relapse to drinking. CVT-10216 was also shown
to reduce addictive behaviors in the absence of alcohol by reducing dopamine levels in the nucleus accumbens without
inhibiting normal basal levels.
On 6/24/08, Lexiscan was launched in the US. On 4/15/08, CVTX announced that TPG-Axon agreed to pay up to
$185mln in exchange for rights to 50% of royalties on N. American sales. Small molecule A2-adenosine receptor
agonist being developed as a cardiac imaging agent in collaboration with Astellas. Results from two phase III studies
confirming superior safety to market leader Adenoscan in terms of dyspnea (shortness of breath), chest pain and
flushing and with clear advantage in delivery with a 10 second IV push vs. 20 minute slow infusion. Astellas pays 75%
of all development costs for the drug and CVT will receive a 20% royalty on North American sales.
Comments
On 11/06/08 the FDA approved a new, first line indication for Ranexa for the treatment of chronic angina. The revised
labeling includes new language noting that there was a significantly lower incidence of arrhythmias (ventricular
tachycardia, bradycardia, supraventricular tachycardia and new atrial fibrillation) in patients treated with Ranexa versus
placebo. This difference in arrhythmias did not lead to a reduction in mortality, a reduction in arrhythmia hospitalization
or a reduction in arrhythmia symptoms.
The revised labeling also includes new language noting that Ranexa produces small reductions in HbA1c. Though
Ranexa should not be considered a treatment for diabetes, Ranexa may be a particularly useful medication for the
reduction of chronic angina in this patient population, which is difficult to treat because some anti anginal medications
such as beta blockers increase HbA1c.
While significant interest has emerged from MERLIN on potential additional indications for Ranexa beyond chronic
stable angina CVTX provided no further detail on next steps for development in diabetes, congestive heart failure and
atrial fibrillation pending potential partnership. CVTX has given prior guidance for up to 60 publications from MERLIN
subset data and highlighted a planned separate publication describing HbA1c effects in diabetics with results previously
characterized as inline with the 0.7% reduction observed in prior phase III experience.
On 11/06, CVTX presented data on the effect of Ranexa on HbA1c in MERLIN TIMI-36 study at AHA. Specifically, data
from a prospectively identified 2220 patient subset of diabetics from the 6500 patient MERLIN study demonstrated a
0.7% HbA1c reduction in patients with an already low baseline mean HbA1c of 7.5% and 0.43% change vs. placebo
(p<0.001). Further evidence of benefit was seen with 59% of diabetics achieving HbA1c goal levels <7% (p<0.001) at 4
months, 32% reduction in risk of developing hyperglycemia (p=0.003) and 37% lower risk of worsening hyperglycemia
(p<0.001).
Preliminary preclinical data on mechanism of glycemic control by Ranexa demonstrated that Ranexa increased insulin
secretion from beta islet cells in the presence of glucose leading to improvement in glucose tolerance.
On 09/05, MERLIN TIMI-36 data demonstrating safety and anti-arrhythmic effects of Ranexa was presented at
European Society of Cardiology Congress in Vienna . Pts receiving Ranexa had a 37% reduction in their relative risk of
ventricular tachycardia lasting 8 beats or more (p<0.001) with fewer episodes of sudden cardiac death in patients taking
Ranexa (56) than placebo (65)
Launched March 2006 in
the US
On 7/10/08 CVTX received marketing authorization from the EMEA as add on therapy for the symptomatic treatment of
patients with stable angina pectoris inadequately controlled or intolerant to 1st line anti-anginal therapies. Ranexa is
approved for use in 375, 500, and 750mg doses bid
Menarini is expected to launch Ranexa in germany and UK in 1Q09 with commercial launch in other licensed territories
expected following formal pricing and reimbursement authorizations in those countries.
CVTX granted to Menarini exclusive rights to Ranexa in 68 countries - the EU, CIS, and select countries of Central and
Southern America. CVTX received an upfront payment of $70mln and Menarini will potentially make additional
payments and investments up to $315mln for commercial (linked to sales levels) and development (linked to Ranexa
approval in Europe for certain additional indications that are jointly developed - costs to be shared) milestones and
promotional and detailing committments. Menarini is responsible for commercial activities and pursuing regulatory and
pricing approvals and will provide minimum levels of physician details and promotional spending for Ranexa for a
specified period of time.
Launched June 2008
in US
Phase 1
Phase I
Phase
On 6/24/08, Lexiscan was launched in the US. On 4/15/08, CVTX announced that TPG-Axon agreed to pay up to
$185mln in exchange for rights to 50% of royalties on N. American sales. Small molecule A2-adenosine receptor
agonist being developed as a cardiac imaging agent in collaboration with Astellas. Results from two phase III studies
confirming superior safety to market leader Adenoscan in terms of dyspnea (shortness of breath), chest pain and
flushing and with clear advantage in delivery with a 10 second IV push vs. 20 minute slow infusion. Astellas pays 75%
of all development costs for the drug and CVT will receive a 20% royalty on North American sales.
CVT-6883 is an adenosine A2B antagonist that blocks mast cell degranulation by inhibiting the A2B receptor. Phase 1
dose-ascending studies have demonstrated that CVT-6883 was safe and well tolerated and its potential suitability for
once-daily chronic dosing. Adenosine A2B receptor is expressed in the lung and expression can be increased
significantly when lung tissues become inflammed or injured and hence potential utility of this drug in chronic pulmonary
diseases like asthma, COPD, and pulmonary fibrosis.
The phase 1 trial will assess the safety and pk profile of CVT-3619 in healthy volunteers - Initiated Sep '08
CVT-3619 is an A1 adenosine receptor agonist under development for diabetes/dyslipidemia. CVT-3619 reduces free
fatty acids (FFA) that when chronically elevated decrease insulin sensitivity, increase gluconeogenesis, and decrease
glucose uptake eventually leading to hyperglycemia and an increased risk for cardiovascular disease. FFA reduction by
CVT-3619 results in glucose lowering and improvement in insulin sensitivity, lowering of plasma triglycerides across
various animal models, and increased ABCA1 protein expression
CVT-10216 is a novel small molecule inhibitor of ALDH-2 that suppresses excessive alcohol drinking and drug
addiction. ALDH-2 knockout or silencing has been shown to inhibit excessive drinking in rodent models of alcoholism.
CVT-10216 is a derivative of Diadzin. In preclinical studies, CVT-10216 was shown to reduce heavy drinking,
deprivation/ stress-induced drinking, self-administration at the “bar” and relapse to drinking. CVT-10216 was also shown
to reduce addictive behaviors in the absence of alcohol by reducing dopamine levels in the nucleus accumbens without
inhibiting normal basal levels
On 8/21/08, CVTX's partner BIIB announced the initiation of a Phase III clinical trial of iv Adentri for acute
decompensated heart failure (ADHF) patients with renal insufficiency. The trial will evaluate Adentri or placebo in
addition to standard of care in approximately 900 patients in 21 countries globally, including the United States. The
TRIDENT-1 (TReatment with Intravenous BG9928 for patients with acutely DEcompensated heart failure and reNal
insufficiency Trial) study is a Phase III randomized, multi-center, double-blind, placebo-controlled, parallel-group study
to assess the efficacy and safety of IV Adentri dosed up to five days on body weight in ADHF patients with impaired
renal function. Body weight is a measure of fluid accumulation, which is considered an important cause of symptoms
experienced by heart failure patients |
