How To Save A Life: CV Therapeutics Revamps R&D, Ranexa Sales Focus

Firm says it will seek a partner to help detail Ranexa to internal medicine and primary care physicians if granted FDA approval for expanded labeling based on MERLIN results.

CV Therapeutics hopes to breathe new life into the company's financial performance by paring and reshaping its sales force, curtailing research and development and cutting administrative costs to reduce expenses by about $75 million over the next 12 months, the firm announced May 24.

However, to perform in line with its new projections, the firm is counting on FDA to approve a new label for its second-line angina drug, Ranexa (ranolazine), which has never generated strong sales, and to approve - without delay - regadenoson, its novel cardiac imaging stress agent.

Those changes, which one analyst called "Solomon-like," will give the firm enough cash for roughly two years of operating expenses, putting CVT in a better position to find a partner to bring Ranexa sales to the next level via detailing to primary and internal medicine physicians.

Most of the cost cuts will come from reorganizing the company's existing Ranexa sales force, which concentrates on cardiologists. The firm cut its 250-member Ranexa sales force to 140, focusing only on those cardiologists responsible for 80 percent of prescriptions. "Fifteen thousand physicians have already written prescriptions," said CVT Chief Executive Officer Louis Lange. "We simply have to bring even more focus to bringing Ranexa trialists to Ranexa."

The firm is betting that positive safety data from Ranexa's outcomes trial, MERLIN TIMI-36, will help boost sales. Some physicians had questioned Ranexa's safety profile because studies had shown an association between the drug and prolongation of the QT interval.

MERLIN results put those safety questions to bed, Lange said. However, Ranexa did not meet its primary endpoint, designed to show the drug is effective as an addition to standard treatment of non-ST-elevation acute coronary syndromes.

The results were released March 27 at a late-breaker session at the American College of Cardiology in New Orleans and published in the April 25 Journal of the American Medical Association.

Currently Ranexa is indicated for the treatment of chronic angina in patients who have not achieved an adequate response with other antianginal drugs, in combination with amlodipine, beta-blockers or nitrates.

CVT expects to submit a MERLIN-based sNDA later this year in an attempt to expand Ranexa's labeling for use as a first-line angina treatment.

The firm's revised projections assume that Ranexa scripts grow "only at the rate we saw prior to MERLIN," even though the company has seen an uptick in prescriptions since the results were made public. "Our sales [are] profitable starting today," Lange said.

Ranolazine posted 2006 sales of $18.4 million after its March 2006 launch.

R&D will be cut by $15 million to $20 million in the next 12 months, almost 20 percent. The firm will put less immediately promising projects "on hold," Lange added.

Those cuts are in addition to a reduction in R&D expenses of $30 million compared with 2006, due to the completion of the MERLIN study, CVT said in its April 24 first quarter 2007 earnings report. The firm reported a net loss of $55.1 million, or $0.93 per share for the first quarter.

General and administrative expenses for the four quarters beginning in the third quarter 2007 will be reduced by about 15 percent. "In total, [selling, general and administrative] expenses in the United States will be reduced by $55 million - $60 million, approximately 33 percent over that time period," the firm said.

In addition to the reduced operating expenses, the company expects to take a $16 million - $20 million one-time charge against expenses in the second quarter 2007.

On May 14, CVT submitted an NDA for its novel cardiac imaging stress agent regadenoson, which it outlicensed to Astellas. The filing triggered a $7 million milestone payment from Astellas. CVT would receive another $12 million upon approval of the NDA, and Astellas signed up to reimburse the firm 75 percent of regadenoson development costs (¹ (Also see "CVT/Astellas Submit Next-Gen Cardiac Stress Agent Regadenoson" - Pink Sheet, 15 May, 2007.)).

The firm's revised projections assume regadenoson will receive FDA approval and launch in mid-2008.

In a research note, Bear, Stearns & Co. analyst Akhtar Samad said he was "encouraged" by the company's actions, but maintained a "Peer Perform rating, pending further evidence of sustained growth in Ranexa sales."

"In addition," he said, "we do not expect CVTX to achieve profitability until the 2010 timeframe."

- Pamela Taulbee ([email protected])