CV Therapeutics Big News to Come

Several big regulatory decisions will make 2008 a pivotal year for CV Therapeutics Inc. (CVTX). The first positive one came in April with the approval of Lexiscan for myocardial perfusion imaging. In July, the European Medicines Agency approved its chronic angina drug Ranexa in Europe. However, the biggest decisions are still to come.

The Street is pretty split on CVTX right now. We are in the moderately positive camp, believing that Ranexa will eventually pick up steam after the label expansion(s). We remind investors, there are three separate applications here: one for first-line angina, one for a potential anti-arrhythmic claim, and another for use in diabetics with coronary disease.

The first-line angina supplemental New Drug Application (NDA) and the anti-arrhythmic claim look solid in our view. We are cautious on the full NDA in diabetics because this was a prospective analysis and not a primary statistically powered end point. The FDA also has data from CARISA and MERLIN which look solid with respect to a 0.7% reduction of hemoglobin A1c in coronary artery disease patients.

Other than Ranexa, things are progressing nicely. The management quickly monetized half of its expected royalty from Lexiscan by selling the rights to TPG-Axon Capital putting itself in a solid financial situation heading into potential deal / alliance talks during the second half of the year.

The management expects to exit 2008 with over $200 million still on the books. If the above applications all pan out, CVTX has excellent turnaround potential. The stock looks well supported at these levels and could easily head to $20 if things come together. Our call is that investors should Hold onto the shares at this level as fundamentals are improving. If the potential starts to turn into a certainty, we would recommend buying the stock.

Read the full analyst report on CVTX