Several firms comment on CV Therapeutics (NASDAQ:CVTX) after the co announced MERLIN trial failed to reach the primary efficacy endpoint (composite of cardiovascular death, MI, and recurrent ischemia), but there was no adverse trend in death or arrhythmias in patients taking Ranexa. Full data will be presented on March 27th, 2007 at 8:50AM at the American College of Cardiology meeting in New Orleans:
- Morgan Stanley notes this outcome, neutral safety data and failed efficacy, is largely consistent with their expectations, and the company believes it could support a first line label for Ranexa. A wider label should allow Ranexa to expand beyond niche status and potentially drive the company towards breakeven. However, given the current greater than$200M burn rate and the current less than $10M per quarter run rate, the firm continues to doubt sales will become large enough to drive meaningful profitability.
The worst case scenario that this drug leads to inferior outcomes has been taken off the table. However, the firm expects the underperformance to continue. Maintains Underweight.
- Merrill Lynch says that as they expected, MERLIN failed to achieve the primary efficacy endpoint but "there was no adverse trend in death or arrhythmias. The company believes that "the data could support expansion of the existing Ranexa indication to include first line angina" per the special protocol agreement (SPA) with the FDA. However, FDA does not always abide by SPAs, so the firm would wait to see the final label, which the company suggested could be issued in 1H:08.
The bulls expect this safety data to accelerate script growth, but they firmconservatively models ongoing, consistent TRx growth and maintain peak US sales of $240M in 2012E. They think the company could expand sales and marketing efforts and/or look to partner Ranexa (which would help offset costs). Maintains Neutral.
- Piper Jaffray notes that with cardiovascular efficacy questions now addressed, their key
remaining question on MERLIN is whether Ranexa causes a significant reduction in glucose levels in diabetics. If the company shows at least a 0.7% A1c reduction relative to placebo, the firm would view this as a significant positive with the potential to reinvent Ranexa as a diabetes drug. As a reminder, there was a 0.7% A1c reduction seen in the CARISA study and an even greater A1c reduction for placebo diabetics rolled over into extension studies. They have historically viewed and continue to view the diabetes data as a possible game changer for Ranexa.
Piper has lowered 2010 sales in the angina setting from $336m to $200m, reflecting continued growth at current rates. This lowers target from $12 (35x 2010E EPS of $0.60, disc. 30% for 2 periods) to $10 (35x 2010E EPS of $0.47, disc. 30% for 2 periods). This could prove highly conservative if Ranexa works in diabetes. With the stock indicated post-market close at $9-10, the firm remains at a Market Perform rating, but they will re-evaluate their rating if A1c data from MERLIN are positive.
- Bear Stearns says that while the MERLIN results are in-line with their expectations, they believe there could be some short term strength in CVTX shares based on short covering (roughly 28% of the shares are short), the anticipated filing for Ranexa in front-line angina (anticipated in the next 1-2 quarters), and the NDA filing for Regadenoson in mid-07. However, they are maintaining their Peer Perform rating for longer-term investors.
Notablecalls: Trial results are always difficult to interpret, especially when they appear to be mixed. I must say I like the comments from Bear Stearns as the expecations regarding efficiency in the MERIL were pretty low. Most analysts were just looking for solid safety. That's pretty much what we got, too. The co may still get first-line angina indication for Ranexa from the FDA, based on safety. With a very high short interest and Piper ringing the bell on diabetes potential, I'd keep CVTX on my radar screens for a bounce. More agressive accounts may find the $9 level reached in after market action a good entry point. Tight leash.
- Morgan Stanley notes this outcome, neutral safety data and failed efficacy, is largely consistent with their expectations, and the company believes it could support a first line label for Ranexa. A wider label should allow Ranexa to expand beyond niche status and potentially drive the company towards breakeven. However, given the current greater than$200M burn rate and the current less than $10M per quarter run rate, the firm continues to doubt sales will become large enough to drive meaningful profitability.
The worst case scenario that this drug leads to inferior outcomes has been taken off the table. However, the firm expects the underperformance to continue. Maintains Underweight.
- Merrill Lynch says that as they expected, MERLIN failed to achieve the primary efficacy endpoint but "there was no adverse trend in death or arrhythmias. The company believes that "the data could support expansion of the existing Ranexa indication to include first line angina" per the special protocol agreement (SPA) with the FDA. However, FDA does not always abide by SPAs, so the firm would wait to see the final label, which the company suggested could be issued in 1H:08.
The bulls expect this safety data to accelerate script growth, but they firmconservatively models ongoing, consistent TRx growth and maintain peak US sales of $240M in 2012E. They think the company could expand sales and marketing efforts and/or look to partner Ranexa (which would help offset costs). Maintains Neutral.
- Piper Jaffray notes that with cardiovascular efficacy questions now addressed, their key
remaining question on MERLIN is whether Ranexa causes a significant reduction in glucose levels in diabetics. If the company shows at least a 0.7% A1c reduction relative to placebo, the firm would view this as a significant positive with the potential to reinvent Ranexa as a diabetes drug. As a reminder, there was a 0.7% A1c reduction seen in the CARISA study and an even greater A1c reduction for placebo diabetics rolled over into extension studies. They have historically viewed and continue to view the diabetes data as a possible game changer for Ranexa.
Piper has lowered 2010 sales in the angina setting from $336m to $200m, reflecting continued growth at current rates. This lowers target from $12 (35x 2010E EPS of $0.60, disc. 30% for 2 periods) to $10 (35x 2010E EPS of $0.47, disc. 30% for 2 periods). This could prove highly conservative if Ranexa works in diabetes. With the stock indicated post-market close at $9-10, the firm remains at a Market Perform rating, but they will re-evaluate their rating if A1c data from MERLIN are positive.
- Bear Stearns says that while the MERLIN results are in-line with their expectations, they believe there could be some short term strength in CVTX shares based on short covering (roughly 28% of the shares are short), the anticipated filing for Ranexa in front-line angina (anticipated in the next 1-2 quarters), and the NDA filing for Regadenoson in mid-07. However, they are maintaining their Peer Perform rating for longer-term investors.
Notablecalls: Trial results are always difficult to interpret, especially when they appear to be mixed. I must say I like the comments from Bear Stearns as the expecations regarding efficiency in the MERIL were pretty low. Most analysts were just looking for solid safety. That's pretty much what we got, too. The co may still get first-line angina indication for Ranexa from the FDA, based on safety. With a very high short interest and Piper ringing the bell on diabetes potential, I'd keep CVTX on my radar screens for a bounce. More agressive accounts may find the $9 level reached in after market action a good entry point. Tight leash.
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