Holy Moley, CV Therapeutics!

Sometimes, a drugmaker just has one of those quarters where everything goes right. With big successes on the regulatory and financial fronts, there's no other way to describe CV Therapeutics' (Nasdaq: CVTX  ) second quarter. Better yet, the good times may be just beginning.

CV Therapeutics started the second quarter off with a bang, after the Food and Drug Administration approved its heart-imaging diagnostic aid Lexiscan in April. CVT wasted no time in trading half of the royalty stream it will receive from Lexiscan for $185 million, which it will use to partly pay down its debt.

The regulatory successes kept rolling in for CVT in April, as its lead drug, angina treatment Ranexa, also essentially gained marketing approval in the European Union. In the conference call accompanying its earnings release yesterday, management said that it should have a European marketing partner for Ranexa "in time to launch [Ranexa] in Europe in the first part of next year."

That search could produce some very interesting game-changing results for the company. CVT hasn't ruled out doing a deal for more than just the European rights to Ranexa. If it can snag a partner with a deep and experienced sales force, like AstraZeneca (NYSE: AZN  ) , GlaxoSmithKline (NYSE: GSK  ) , or Sanofi-Aventis (NYSE: SNY  ) , then Ranexa's future prospects in Europe will be bright indeed.

Based on similar deals in the past, I expect CVT to negotiate a double-digit royalty on all European sales of Ranexa, plus an up-front payment potentially topping $100 million, depending on the scope of the marketing deal that it inks.

Ranexa's prospects in the U.S. have also been shining lately. Though CVT smartly slashed its Ranexa sales force last year to conserve cash, the drug's sales still rose 66% year over year in the second quarter, to more than $25 million.

CVT also announced that Lexiscan sales by marketing partner Astellas started strongly, raking in $13 million after only a couple of weeks of active marketing in June. Especially given the strong competition from King Pharmaceuticals (NYSE: KG  ) and Astellas' similar imaging agent, Adenoscan, these swift and lucrative Lexiscan sales could portend bright royalty prospects, assuming demand hasn't been distorted by wholesalers stocking up on the drug.

None of this success was enough to stem the tide of red ink at CVT, but things there are nonetheless improving. Once you take out amortized royalty revenue and one-time milestone payments, CVT turned in an approximately $30 million operating loss this quarter. That's still far better than the more than $62 million operating loss it turned in last year, stripping out license revenue and restructuring charges.

Unfortunately, CVT didn't get the FDA regulatory decisions on Ranexa that it was waiting for this week. There's a silver lining from the FDA delays, though; approval to grant at least the front-line angina labeling claim sounds highly likely, after CVT announced that the FDA is working on "draft labeling" for the drug. Investors shouldn't have to wait much longer to better know what Ranexa's future potential is, and whether CVT's shares are as undervalued as I think they may be.

More high-growth Foolishness:

CV Therapeutics is an active pick of our Rule Breakers newsletter. GlaxoSmithKline is an active Income Investor pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A+ disclosure policy.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 698491, ~/Articles/ArticleHandler.aspx, 10/24/2016 11:42:51 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

4/17/2009 4:00 PM
CVTX.DL $20.01 Down +0.00 +0.00%
CV Therapeutics CAPS Rating: **
AZN $30.08 Down -0.64 -2.08%
AstraZeneca CAPS Rating: ****
GSK $40.68 Down -0.45 -1.09%
GlaxoSmithKline CAPS Rating: ***
KG.DL2 $0.00 Down +0.00 +0.00%
King Pharmaceutica… CAPS Rating: **
SNY $37.76 Up +0.01 +0.03%
Sanofi CAPS Rating: *****