CV Therapeutics

(CVTX)

says it's on track to submit an approval application for its heart drug, Ranexa, by year's end. But Ranexa's odds for approval could be narrowed because an old safety concern -- the drug's tendency to cause an irregular heartbeat -- is getting fresh scrutiny from U.S. drug regulators.

The Food and Drug Administration is holding a workshop Jan. 13 to 14 to discuss recommendations for new drugs that affect the QT interval, a measure of electrical activity in the heart. Drugs that cause relatively large changes in QT intervals -- known as QT prolongation -- are a significant safety risk because they can lead to abnormal heart rhythms, even death. Last week, the FDA posted on its Web site a

concept paper

on the QT interval issue in advance of the workshop, and in this document, regulators appear to be taking a very conservative safety stance.

There's a long list of approved drugs that cause some degree of QT prolongation, but appear to pose no significant safety risk. But in recent years, some drugs, most notably the allergy medicine Seldane and the severe heartburn drug Propulsid, were pulled off the market because excessive QT prolongation was causing heart problems in patients.

CV Therapeutics has long acknowledged that Ranexa, which is being developed to treat chronic angina, or attacks of cardiac pain, does cause some QT prolongation, but not enough to raise serious safety concerns or derail the drug in front of the FDA.

CV Therapeutics will seek FDA approval for Ranexa (formerly known as Ranolazine) based largely on the positive outcomes from two pivotal clinical trials. These studies showed that patients who take Ranexa either alone or with other medications have fewer angina attacks. In the second of the two trials, the combination of Ranexa and another antiangina medicine allowed patients to exercise for 24 seconds longer than those taking a placebo. The difference seems small, but for people who can't walk up a flight of stairs without experiencing chest pain, it's a significant clinical benefit.

If approved, Ranexa would become the first new drug to treat angina in 20 years. Peak annual sales could reach $300 million to $450 million, according to various sell-side analyst forecasts.

But some risks come with Ranexa's apparent benefits.

According to data released from clinical studies, Ranexa, on average, causes less than a 10-millisecond prolongation in the QT interval, which the company and many analysts have considered below the safety danger threshold of 30 to 40 milliseconds. In fact, the level of QT prolongation caused by Ranexa is about half that of Geodon, a recently approved schizophrenia drug marketed by Pfizer.

But the FDA, in its just-published concept paper, seems to be proposing a new scale of concern: Drugs with an average QT interval increase of 5 to 10 milliseconds are OK; a drug causing a 10- to 20-millisecond average increase is a "concern," although drugs can be approved if they show important medical benefits; and drugs with an average increase greater than 20 milliseconds are in danger of causing serious heart rhythm abnormalities.

"Substantial prolongation of the QT/QTc interval, with or without documented arrhythmias, may be the basis for non-approval of a drug or discontinuation of its clinical development when the drug has no clear advantage over available therapy and available therapy appears to meet the needs of most patients," according to the FDA concept paper.

A Matter of Milliseconds

Is Ranexa in the clear? It depends on whom you ask.

"There's nothing new in the FDA concept paper," says CV Therapeutics spokesman John Bluth. "We've been in front of the QT issue for years, we've gathered a lot of information on it that we will be including in our regulatory submission to the FDA."

But one hedge fund manager who is short CV Therapeutics, says the company has never disclosed all the pertinent data on Ranexa's QT prolongation issue, so the company's claims can't be verified and are overly optimistic.

In particular, this fund manager believes the FDA will look closely at, and be concerned with, so-called outlier patients in the Ranexa clinical trials. By his reckoning, some of these patients likely have extreme measures of QT prolongation that will raise red flags with regulators.

"CV Therapeutics talks about the mean QT prolongation interval being less than 10 milliseconds," says this fund manager. "But my analysis suggests that there could be a good number of patients with QT prolongations in the range of 14 to 25 milliseconds, and if that's the case, I don't think the FDA will approve this drug without further clinical studies being conducted."

Shares of CV Therapeutics fell 7% last Friday as the FDA's QT interval concept paper made the rounds of Wall Street's biotech traders. The debate over the regulatory risk of Ranexa appears to be reinvigorated, with some investors and analysts now seeing the upcoming FDA workshop in January, and not the expected Ranexa filing by the end of December, as the next big milestone event for CV Therapeutics.

Shares of CV Therapeutics broached $60 a share late last year, just after the last clinical data for Ranexa was released. Since then, the stock has languished with the rest of the biotech sector, falling to as low as $14.85 this past summer. But as the expected Ranexa regulatory filing approaches, the stock has started to move back up, hitting a closing high of $26.30 in the beginning of November. CV Therapeutics closed Monday at $24.72.

The problem for investors is that waiting for some form of final resolution on Ranexa will take a long time. It's already been a year since the last clinical data on the drug were made public; and if the company files its approval application next month, as expected, it could be another year, or the end of 2003, before the FDA makes a final decision.

In the interim, there will be the upcoming FDA workshop. The agency is also expected to schedule an advisory panel meeting to review Ranexa, possibly in the middle of next year.

Even CV Therapeutics' supporters acknowledge that the new overhang caused by the FDA workshop might prevent the stock from rising significantly when Ranexa's application is filed.

"We are maintaining our rating

buy, but note that the January FDA workshop on evaluation of drugs that prolong the QT interval creates uncertainty that is likely to keep the stock weak until then," writes First Albany analyst David Webber in a note published Monday morning. His firm has a banking relationship with the company.

CIBC analyst Matt Geller says his reading of the FDA concept paper is "clearly not good news for

CV Therapeutics. We believe the 7% selloff Friday is reasonable given the new risk this paper introduces." Geller rates CV Therapeutics outperform and his firm doesn't have a banking relationship with the company.