QUOTE AND NEWS
Wall Street Journal  May 17  Comment 
The adage “once bitten, twice shy” clearly doesn’t apply to Astellas Pharma, which after failing in its hostile attempt to buy CV Therapeutics has now snapped up cancer-drug maker OSI Pharmaceuticals for $4 billion after launching a hostile...
Forbes  Mar 15  Comment 
Biotech rejects unsolicited $3 billion bid from Japan's Astellas Pharma, says it would entertain a higher offer.
Forbes  Mar 2  Comment 
Swiss drugmaker is unlikely to top OSI Pharma's $3 billion hostile bid from Japan's Astellas.
Bloomberg  Mar 2  Comment 
(Update1) OSI Pharmaceuticals Inc. rejected a $52-a-share hostile takeover bid from Astellas Pharma Inc. as investors anticipated a higher offer and possible bidding war.
Bloomberg  Mar 1  Comment 
(Update3) Astellas Pharma Inc., Japan’s second- largest drugmaker, will begin a $3.5 billion hostile takeover offer for OSI Pharmaceuticals Inc. to expand in treatments for cancer.
MarketWatch  Mar 16  Comment 
As a spree in mergers and acquisitions in the health-care industry showed last week, many companies have cautiously built up cash reserves over the past year, and with many stocks at 12-year lows, some are now ready to use it.
MarketWatch  Mar 16  Comment 
Drug stocks outpace their biotech counterparts as the sector makes a broad-based move into positive territory, paced by gains in U.S.-listed shares of European drugmakers.
MarketWatch  Mar 16  Comment 
Among the companies whose shares are seeing active trade in Monday's session are the insurers as well as Baker Hughes, Cedar Fair, CV Therapeutics, GE, Hitachi, Legg Mason, Union Pacific and Value Line.
MarketWatch  Mar 13  Comment 
Merck & Co. and Schering-Plough lead drug stocks into positive territory during a comparatively calm session for the sector on Wall Street.
Fusion Investing and Analysis  Mar 12  Comment 
BOSTON, March 12 (Reuters) - Gilead Sciences Inc (GILD.O) said on Thursday it has agreed to acquire CV Therapeutics Inc (CVTX.O) for about $1.4 billion, topping an earlier offer from Japan's Astellas Pharma Inc (4503.T) and sending CV's shares up...




 
TOP CONTRIBUTORS

CV Therapeautics was acquired by Gilead Sciences (GILD) on April 17, 2009.

CV Therapeutics, Inc. ("CVT") is a biopharmaceutical company focused on applying molecular cardiology to the discovery, development and commercialization of novel, small molecule drugs for the treatment of cardiovascular diseases. CVT currently has several potential growth drivers. The lead is Ranexa, a recently approved first-in-class antianginal therapy. The company is studying Ranexa as a potential therapy for acute coronary syndrome (ACS) as well. The company is also developing Regadenoson, a selective A2A-adenosine receptor agonist, for potential use as a pharmacologic stress agent in cardiac perfusion imaging studies. CVT is located in Palo Alto, CA and employs roughly 650 people.


Ranexa gaining traction

Approval of Ranexa (ranolazine extended-release tablets) for the treatment of chronic angina came in January 2006. The FDA approved the drug for patients that are not adequately treated with standard antianginal treatments such as calcium channel blockers, beta-blockers, and nitrates. This is known as a second-line (refractory) treatment. Approval was based on the phase III ERICA study demonstrating that Ranexa met its primary end-point of reducing angina attacks by 0.4 per week (p=0.028) in patients not adequately treated by calcium channel blocker amlodipine (Pfizer's Norvasc). These patients typically experience an average of three angina attacks per week, so the statistically significant reduction in cardiac events is meaningful. CVT launched the drug in March 2006 with this refractory indication.

Chronic angina is marked by repeated, and sometimes unpredictable, attacks of cardiac pain. Angina attacks occur when the heart is not receiving all the oxygen it requires to function effectively (supply < demand). The product, theoretically, reduces the demand for oxygen in low-oxygen states, thus protecting the organ from potential damage. According to the American Heart Association, nearly nine million people in the United States have angina, and 400,000 new cases are diagnosed each year. Of the patients receiving standard treatment, 60% require a form of combination therapy of the three classes of drug discussed above. According to company statistics, roughly 1/5th require triple therapy and another 1/6th discontinue treatment altogether due to failure. We believe this creates an enormous opportunity for a first-in-class agent to gain sizeable use even with a refractory setting.

As of the end of the third quarter 2007, some 20,000 physicians have written prescriptions to over 45,000 patients. The company notes that 10,000 of these physicians are cardiologists about 50% penetration. In the third quarter CVT was adding roughly 200-300 prescribers per week to the Ranexa network. Although we expect this trend to slow based on penetration in 2008, the vastly expanding network should help Ranexa break $100 million in sales next year. CVT currently has 140 sales reps actively promoting the drug. This is down from 250 reps earlier in the year. CVT dramatically over-estimated the initial demand for Ranexa in the second-line setting. The failure of MERLIN TIMI-36 in acute coronary syndrome (ACS) was the main reason for the restructuring, and we believe that with costs down substantially CVT can move toward profitability with Ranexa in the coming years. The current level of 140 reps seems more in-line with the overall potential of the drug. CVT is focusing on expanding the tier-2 coverage for the drug and recently signed up a top-3 pharmacy benefit manager (PBM) during the third quarter. There are currently over 100 million lives with tier-2 access to Ranexa.

with upside coming from MERLIN TIMI-36

CVT is seeking a first-line indication from a recently completed phase III trial called MERLIN TIMI-36. MERLIN was designed to evaluate the efficacy and safety of Ranexa during acute and long-term treatment in over 6,500 patients with non-ST elevation acute coronary syndromes (ACS) treated with standard therapy (calcium channel blocker/beta-blockers). In early March 2007, CVT announced that top-line analysis of unblinded data from the study at the American College of Cardiology (ACC) meeting. MERLIN demonstrated no statistical difference between Ranexa and the placebo in the primary endpoint of time to first event (i.e. myocardial infarction, stroke, ischemia, or death). This was a big disappointment for the company because the ACS indication (nSTEMI unstable angina) could have made Ranexa a blockbuster. The data was also published in the April 2007 Journal of the American Medical Association (JAMA). We summarize some of the data below:

There was no statistically significant difference between Ranexa (~22%) and the placebo (~23%) in the composite primary endpoint of CV death, stroke, MI, recurrent ischemia. Subset analysis showed no statistical difference in any pre-specified endpoint. The trial showed no statistically significant difference in number of individual events (both at ~19%) or mortality (both at ~5.2%). Other secondary endpoints such as improvement in physical limitations also showed no statistical difference in favor of Ranexa. Clearly a disappointment.

However, analysis of secondary endpoints showed that Ranexa reduced worsening angina by 23% (p=0.023) compared to placebo, and reduced the need to increase anti-anginal medication by 19% (p=0.003) compared to placebo. The trial also showed an improvement in reduction of arrhythmias in favor of Ranexa. This opens up a new label expansion opportunity in potential anti-arrhythmic benefit claims. Finally, the trial also achieved a statistically significant reduction in recurrent ischemia alone versus placebo. Recurrent ischemia occurred in 13.9% of Ranexa patients versus 16.1% of placebo patients (p=0.03), translating to a 14% relative reduction in recurrent ischemia for Ranexa.

After clearly mixed data negative for ACS but positive for angina CVT held discussion with the U.S. FDA. The MERLIN TIMI-36 trial was conducted under a special protocol assessment (SPA) agreement with the FDA that stated that if Ranexa showed no increased safety risk relative to the current standard of care, the data could support a potential label expansion into the first-line angina setting. The current label for Ranexa mandates a refractory use and contains significant cautionary language that is no doubt slowing uptake of the drug. Some of the cautionary language even includes statements that the drug appears to work less in women.

Given the substantial safety and subset analysis provided by MERLIN, CVT progressed with a supplemental application (sNDA) on September 27, 2007 seeking approval for a first-line angina use. This would greatly increase the target market for Ranexa. We estimate the refractory setting has peak sales potential in the area of $150-200 million, with a first-line indication more than doubling that level to potentially $400 million in the U.S. Given the novel mechanism and second-line limitation, Ranexa's ramp has been slow since the launch in March 2006. We have heard that many cardiologists were waiting to see the MERLIN data before they started to use the drug. With this data now out, trends have been improving greatly. After the filing the U.S. FDA asked CVT to break-out a new sNDA from the filing seeking approval for the potential anti-arrhythmic benefit claim. CVT has now filed a separate sNDA (separate user fee) for this indication. The FDA will review the data concurrently, and has pledged a PDUFA action date of July 27, 2008 for both. CVT has been active in presenting this data, mostly recently at the American Heart Association (AHA). The company presented six abstracts at AHA in November 2007 we highlight some of the more interesting ones:

Data from the MERLIN-TIMI 36 trial showed in reduction both ventricular and atrial arrhythmias in patients receiving Ranexa compared to placebo. Continuous monitoring of 6,351 patients showed a 37% reduction in the relative risk of ventricular tachycardia lasting eight beats or more. Moreover, there were fewer episodes of sudden cardiac death in patients taking Ranexa. Ranexa also reduced the occurrence of new onset atrial fibrillation by 27% though no statistical significance was observed.

Ranexa reduced the relative risk (primary composite endpoint) of CV death, myocardial infarction, and recurrent ischemia by 21% relative to placebo in patients (n=1935) with elevated (>80pg/ml) b-type natriuretic peptide (BNP). BNP rises in response to left ventricular wall stress and is a predictor of future ACS.

Ranexa reduce the risk of recurrent ischemic in women by 29% vs. placebo over a twelve month period. This is consistent with the response in men, and should be sufficient to remove the cautionary language discussed above that notes a weaker response in women.

Finally, the most impressive data from MERLIN comes from a prospective sub-set analysis in 2,220 diabetic patients. Patients on Ranexa saw a decline from baseline of 7.5% by 0.7% to 6.8% hemoglobin A1c (0.4% vs. placebo). This reduction of HbA1c seen in MERLIN is consistent with previous data from CVT's CARISA data demonstrating a 0.7% reduction. Additionally, patients on Ranexa were more likely to achieve goal of <7.0%, with 59% of Ranexa patients at or below this level after 4 months. Patients at risk for diabetes saw a 32% reduction in hyperglycemia (>6.0% or 110mg/dL fasting glucose). It seems that Ranexa stimulates increased glucose stimulated insulin secretion in the pancreatic beta-cells. This is highly encouraging data considering coronary disease is a leading killer for diabetic patients. This could be a brand new opportunity for CVT with Ranexa not currently listed in the label.

The goal is to now get the FDA to modify the existing label by reducing the cautionary language and adding the anti-arrhythmia claim. Both sNDAs will be reviewed by the FDA Division of Cardiovascular Renal Products.

CVT has also filed a separate NDA with the FDA Division of Metabolism and Endocrinology Products seeking to add the data above discussing the reduction of hemoglobin A1c (HbA1c) in coronary artery disease patients with diabetes. Use of Ranexa in this population could be meaningful in our view considering several types of diabetes drugs such as TZDs, metformin, and sulfonylurea all carry black-box warnings for heart failure. The PDUFA action date of for this indication is also July 27, 2008.

In the mean time CVT will continue to promote Ranexa for refractory chronic angina. Sales of $18.4 million in the third quarter were up 20% sequentially and dead-on with our $18.5 million forecast. Management discussed seeking a potential partner to maximize the future for Ranexa. This could be a worldwide collaboration that includes the U.S., or an Ex-U.S. partnership for the overseas launch. This would be advantageous especially if the drug ever gains approval for first-line use. In this regard, in July 2007, management hired biotech-banking guru Frederick Frank of Lehman Brothers to counsel the company on its strategic opportunities. CVT filed the marketing authorization application (MAA) for Europe in late December 2006. CVT is in the process of adding the MERLIN data to the MAA filing. We are hoping to hear something from the EMEA in early 2008 with regard to Ranexa approval. The possibility exists that CVT may also seek a separate partner in Japan. For 2007 we see U.S. Ranexa sales at $67.7 million. We see a significant improvement in sales after the sNDA / NDA approval in 2008. We think Ranexa has peak sales potential of around $600 million worldwide.

Regadenoson opportunity under-appreciated

With some much of the focus on Ranexa, investors are losing sight of the niche potential with regadenoson. Regadenoson is a selective A2A-adenosine receptor agonist CVT recently filed for approval for use as a pharmacologic stress agent in myocardial perfusion imaging (MPI). The drug offers a non-invasive tool to identify areas of poor blood flow to the heart muscle, often the result of atherosclerosis (clogged hardened arteries). To perform an MPI test, physicians would normally have patients stress the heart by running in place or walking on a treadmill. Stressing the heart gives insight into how blood flows to the heart in potential high-risk patients. However, for some patients with peripheral vascular disease or server arthritis, walking on a treadmill may not be a viable option. In these cases, generic stress agents such as dobutamine or dipyridamole are used. Unfortunately both these agents are non-specific in their targets and thus carry significant tolerability and side-effect issues. Physicians could definitely use a superior option. There are approximately eleven million MPI tests done in the U.S. each year. Some 40% of these may involve using a pharmacologic agent.

Data from over 2,000 patients in two phase III trials demonstrates that Regadenoson is as effective as Adenoscan (the current standard). Yet, regadenoson may offer significantly lower side-effects. The NDA was filed on May 14, 2007 by CVT's North American development partner, Astellas Pharmaceuticals (formerly Fujisawa). The FDA has established a PDUFA date of March 14, 2007. Astellas pays 75% of the development costs for regadenoson. CVT earned a $7 million milestone on the NDA filing, and can earn an additional $12 million if approved. CVT will also receive a 20% royalty on sales of regadenoson, and has the option to co-promote another cardiovascular Astellas drug in the future. Astellas currently markets Adenoscan, so we expect rapid market conversion once the product launches in 2008.

along with the rest of the early-stage pipeline

Outside of Ranexa and regadenoson, CVT is working on a number of early-stage candidates, and also has the potential to earn milestones on a licensing agreement of Adentri at Biogen Idec. Biogen recently presented positive phase II results on Adentri for heart failure and plans to enter phase III shortly.

Internal candidates that CVT can begin to focus on once R&D dollars on Ranexa and regadenoson are freed up are selective adenosine A1 agonist tecadenoson for paroxysmal supraventricular tachycardia and acute atrial fibrillation and phase I candidate CVT-6883 for asthma, COPD, and pulmonary fibrosis.

CVT presented data at AHA in November 2007 from a preclinical study on tecadenoson, in combination with a low dose of the beta blocker metoprolol, that showed increased rate control compared to either agent alone (p<0.05) in an established animal model of atrial fibrillation. Tecadenoson also demonstrated effective rate control at rest and during exercise in this preclinical model.

Recent phase Ib data on CVT-6883 demonstrates good safety and tolerability in 30 healthy volunteers.

Restructuring and Cash-Burn Reduction A MUST

CVT has spent heavily on the development of Ranexa roughly $1 billion as there have been four large-scale clinical programs: MARISA, CARISA, ERICA, and MERLIN. CVT has probably spent more on development of this drug than they will recoup in profits. Unfortunately, that is the nature of the business. However, there are opportunities for CVT. The company does have the potential to gain approval for Ranexa in the first line setting and the deal with Astellas turns lucrative once regadenoson hits the market. The company must now focus on reducing cash burn and turning Ranexa profitable. The reduction in sales force from 250 reps to 140 reps will certainly help get the SG&A line under control. And, with MERLIN TIMI-36 complete, R&D should reign in as well. We believe that the company can burn less than $50 million in cash in 2008 if several of the above wildcards sNDA approval on Ranexa in first-line angina, NDA approval for use in diabetes, and the NDA on regadenoson all work out in CVT's favor. CVT exited the third quarter with $195 million in cash enough to fund operations perhaps until profitability. We clearly see signs of a TURNAROUND POTENTIAL. We're not there yet but may be soon.




References

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