Will CVT Bring In the Dough?

Last month, Rule Breakers pick CV Therapeutics (Nasdaq: CVTX) announced clinical trial results for its marketed angina drug Ranexa and presented data at the American College of Cardiology (ACC) medical conference. Shares of CVT have been down more than 33% since then, as investors have soured on the drug's prospects.

News service Reuters announced results last week from a small survey of cardiologists at the ACC conference showing that, although the Merlin study results failed on the primary endpoint, the study will still provide some monetary benefits to CVT. Out of 28 cardiologists polled for the Reuters survey, 17 said "they will increase their use of Ranexa."

It doesn't take a Reuters poll to know that the positive safety data released last month will drive higher Ranexa sales. In 2006, Ranexa brought in $18 million in sales with less than a full year on the market. The real sales growth will come if the FDA expands the Ranexa marketing label to indicate its use as a first-line agent for angina when CVT files for the improved label. If Ranexa gets this improved labeling, then CVT's sales reps will have a much easier time marketing the drug as an alternative to other anti-anginal agents.

Since the new safety data from the Merlin safety study wasn't released until the end of the first quarter, there probably won't be any dramatic new sales growth for Ranexa when CVT reports its first-quarter financial results in the coming weeks.

CVT has been more than a bit loose with its cash, spending $315 million last year in expenses and guiding for $275 million to $285 million in expenditures this year, so it needs a faster Ranexa launch to stave off future large share-diluting financings. We'll have to wait until its second-quarter financial results, though, to get a first glimpse of how the new positive Ranexa data affects CVT's top and bottom lines.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article.