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CV Therapeutics

January 05, 2009 – Comments (0) | RELATED TICKERS: CVTX.DL

CV Therapeutics (CVTX)

Company: Biotech
Main Drug: Ranexa
Treating: Chronic Angina - the lack of blood supply to the heart muscles causing pain
Patents: First patents expire 2019


Angina Drugs

These are the current Angina drugs:

Asprin
Beta Blockers
Calcium channel blockers.
Nitrates
Ranolazine, CV Therapeutics drug

The limitations of the drugs according to CV Therapeutics:

Asprin

(Didn't discuss so I don't know if there is a limitation)

Beta blockers

Difficult to use for diabetics. Causes slowing of the heart especially in older patients (bradyarrhythmias) - diabetics + bradyarrhythmias make up 40% of all angina patients.

Calicum Channel Blockers

Lacks outcomes data
Cause slowing of the heart (bradyarrhythmias)

Nitrates

Lacks outcomes data
Severe headaches
Cannot be used with certain erectile disfunction drugs.


Ranolazine

Can be used with Beta blockers, Calicum Channel Blockers or nitrates and other drugs associated with Angina suffers without any known complication.


Revenues

- Milestone payments make the revenue lumpy - we need to pull out Ranexa
- Growth of Ranexa is double digit quarter over quarter (Except Q4 07 to Q1 08) +65% Y/Y. This is before Europe is added starting Q1 09. The labeling will be less restrictive in the US which should also accelerate acceptance.

Ranexa Revenue Growth

Q2-07..15.3M  
Q3-07..18.4M ..+20
Q4-07..20.9M ..+14
Q1-08..22.0M ..+05
Q2-08..25.4M ..+15
Q3-08..30.3M ..+19

Angina is a chronic disease - once the patient is on the drug they will keep taking repeat prescriptions.
Even if we assume 5% growth over the remainer of 08 and for 09 - we get revenues of 130Million. This ignores the reduced restriction of selling the drug and 0 sales of EU. A more realistic figure of 15% Q/Q growth of only US sales gives $200M for '09.


Sales of Ranexa are less than 1% of possible Angina market - from Q3 2008 Earnings Call:

"Given that we currently have less than 1% market share of the highly restricted label, I don't believe that multiples of current sales are out of the question with the sales force of this size."


Other Revenue: Lexiscan
Recently approved.
Took payment of 185M for 50% of the royalties.
Unknown until the revenue comes in. It looks nice but far less important than Ranolazine.

Profit and loss

CV Therapeutics is not profitable - however compared with Q3 2007 expenses have increased by 7% while revenues have increased by 64%. Like most biotechnology companies - drugs sales revenues are highly profitable.


Balance Sheet

Note the large convertible debt.

167 M Cash
330 M Convertible debt

Paid off 14.3M in convertible debt in Q3 2008. The nearest debt is 43M in 2010.
Management could pay off more of the debt but are also looking for aquisition targets.


Summary

CV Therapeutics is selling the first Angina drug in at least a decade and in doing so offers a next generation drug without, according the company information, the complications of the most commonly used drugs.

The growth is strong, with one quarter exception, double digit Q/Q growth. While the actual penetration of the drug is still, according to the company, slight (<1%) - and with increased market - by making the label less restrictive and, effectively, doubling the market by selling to the EU. It is difficult to imagine the sales for '09 being less than $200 and more likely higher.

Large market, weak competition and high growth should see yearly revenues above $ 1 Billion in the coming years; with the potential being much higher. This should translate, eventually, to a highly profitable biotech company.