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FDA Calendar: Buy CV Therapeutics and Sell Noven Pharma

September 28, 2008 – Comments (0) | RELATED TICKERS: CVTX.DL , NOVN , MYL

FDA Calendar: Buy CV Therapeutics and Sell Noven Pharma
CV Therapeutics (CVTX) announced in late July that the FDA would delay its final decision on the Company’s pending sNDA to expand the labeled uses for chest pain (angina) drug Ranexa (ranolazine). The PDUFA date was previously set for 7/27/08, and the FDA expects to complete draft labeling in the next few weeks. The wording of the delay by the agency provides investors with a strong hint that the sNDA for Ranexa will be approved for at least a first-line angina indication – versus current labeling for the treatment of chronic angina in patients who have not achieved an adequate response with other anti-angina drugs and in combination with amlodipine, beta-blockers, or nitrates. The sNDA for Ranexa seeks a first line angina indication, marketable claims for the reduction of hemoglobin A1c (HbA1c), and reduction in ventricular arrhythmias in patients with coronary artery disease. Since the sNDA for Ranexa was originally filed, the FDA initiated separate sNDA reviews by the Division of Cardiovascular and Renal Products to evaluate the approval of potential anti-arrhythmic claims and a separate review by the Division of Metabolism and Endocrinology Products to evaluate the approval of potential HbA1c reduction claims in patients with coronary artery disease.

The FDA issued a similar delay for final labeling to CV Therapeutics earlier this year prior to approving cardiac imaging agent Lexiscan (regadenoson) in April. In my opinion, the FDA will likely issue a front-line angina indication and anti-arrhythmia claim for Ranexa, which should markedly improve sales and marketing from the current label concerns over potential arrhythmia concerns due to a condition known as QTc prolongation which can be caused by many drugs. I do not think the FDA will allow the HbA1c reduction claim because it was not a primary statistical end-point in the trials; although this claim is not as crucial as the previous two which are directly related to Ranexa’s primary indication in the treatment of chest pain. The Company also recently reported a narrower-than-expected operating loss at the end of July thanks to cost-cutting initiatives and European marketing approval for Ranexa earlier in the month. CV Therapeutics is a buy ahead of expected sNDA approval for at least a front-line angina indication and anti-arrhythmic claims. Furthermore, the Company is expected to sign a lucrative marketing deal for the European rights to Ranexa ahead of a planned commercial launch in early 2009 and this process may even result in a more comprehensive deal given cost-cutting last year which reduced the sales force for the drug.

Despite approval for Stavzor at the end of July, shares of Noven Pharma (NOVN) are a sell due to generic competition for the drug, an uninspiring pipeline, and the lack of sales growth for approved skin patch formulations already on the market (Daytrana – for attention deficit hyperactivity disorder or ADHD, Vivelle Dot – for estrogen replacement therapy). Stavzor (valproic acid delayed-release capsules) will be marketed in 125 mg, 250 mg, and 500 mg strengths for the treatment of manic episodes associated with bipolar disorder, seizure disorders, and the prevention of migraine headaches. Despite the fact that Stavzor is smaller and easier to swallow as a soft gel capsule as compared to Depakote and Depakote ER tablets; the entire class of drugs now faces generic competition as of the end of July, which will erode all brand drug sales of extended/delayed-release valproic acid.

In early August, Noven announced that the third and final $25M sales milestone from Shire (SHPGY) will be paid during 3Q08 due to sales of Daytrana exceeding $75M for the 12-month period through mid-year. Daytrana patches contain the widely-used ADHD drug methylphenidate (e.g. Ritalin, Concerta) in a skin patch formulation. However, the patches have been subject to FDA warnings and product recalls due to manufacturing issues that make it difficult to remove the back lining from the patches. Last July, Noven paid $125M in cash to acquire JDS Pharma to bolster its pipeline and expand its product offerings beyond just skin patches – including the recently approved Stavzor. I rate Noven a sell due to lackluster sales results, manufacturing issues for Daytrana, and a weak pipeline. I believe the Company missed its chance for a lucrative approval and a billion dollar market cap several years ago when its application for a generic version of the pain patch Duragesic (fentanyl) was rejected due to higher levels of active drug in Noven’s patches as compared to the brand formulation and a generic patch made by Mylan Labs (MYL).