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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER: 0-21643
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CV THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 43-1570294
(State of Incorporation) (I.R.S. Employer Identification No.)
3172 PORTER DRIVE, PALO ALTO, CALIFORNIA 94304
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (650) 384-8500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$.001 PAR VALUE
Indicate by check whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained to the best Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. / /
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant, based upon the last sale price of the Common Stock reported
on the Nasdaq Stock Market was $792,423,704 as of February 28, 2002.
The number of shares of Common Stock outstanding as of February 28, 2002
was 25,524,057.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Registrant's Proxy Statement in connection with the
Registrant's Annual Meeting of Stockholders are incorporated herein by
reference into Part III of this report.
________________________________________________________________________________
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PART I
ITEM 1. BUSINESS
OVERVIEW
CV Therapeutics, Inc., headquartered in Palo Alto, CA, is a
biopharmaceutical company focused on applying molecular cardiology to the
discovery, development and commercialization of novel, small molecule drugs
for the treatment of cardiovascular diseases. We currently have four
compounds in clinical trials. Ranolazine, the first in a new class of
compounds known as partial fatty acid oxidation (pFOX) inhibitors, is being
developed for the potential treatment of chronic angina. CVT-510
(tecadenoson), an A1 adenosine receptor agonist, is being developed for the
potential reduction of rapid heart rate during atrial arrhythmias. CVT-3146,
an A2A adenosine receptor agonist, is being developed for the potential use
as a pharmacologic agent in cardiac perfusion imaging studies. Adentri(TM),
an A1 adenosine receptor antagonist, is being developed by our partner
Biogen, Inc., for the potential treatment of acute and chronic congestive
heart failure (CHF). In addition, we have several research and preclinical
development programs designed to bring additional drug candidates into human
clinical testing.
Ranolazine for the potential treatment of chronic angina
We recently completed the second of two pivotal Phase III trials for
ranolazine, a potential treatment for chronic angina, and we plan on
submitting a New Drug Application (NDA) to the United States Food and Drug
Administration (FDA) for ranolazine for this indication. Chronic angina is
marked by repeated and sometimes unpredictable attacks of cardiac pain that
result from a shortage of oxygen-rich blood available to the heart relative
to the oxygen required for the amount of work the heart needs to do. For
many patients, this oxygen shortage occurs even when their hearts only need
to do the minimal work necessary to support routine activities such as
climbing stairs or carrying groceries from the car. Typically, this oxygen
shortage is the result of obstructions in the coronary arteries that prevent
proper circulation of oxygen-rich blood. According to the American Heart
Association's 2001 Heart and Stroke Statistical Update, approximately 6.4
million patients in the United States suffer from angina.
The key to treating angina is to bring the heart's need for oxygen into
balance with its available supply. Current pharmaceutical therapies, such as
beta blockers, calcium channel blockers and long-acting nitrates, all
achieve this result by forcing a reduction in the demand for oxygen by
lowering heart rate, blood pressure and/or the strength of contraction of
the heart muscle. Patients on these therapies may be unable to tolerate
sufficient reductions in heart rate, blood pressure or strength of
contraction to treat their condition, and therefore, current therapies may
prove unsatisfactory.
We believe ranolazine balances the oxygen supply/demand equation by
causing the heart to use oxygen more efficiently. In other words, ranolazine
may allow a diseased heart to do more work with a limited supply of oxygen.
By improving the heart's oxygen efficiency, ranolazine may be able to treat
angina without forcing a reduction in the amount of work that the heart can
do. This may allow patients to reduce their angina attacks without lowering
heart rate, blood pressure or cardiac contraction strength, an outcome not
currently available to patients.
In November 2001, we announced initial results from our second pivotal
Phase III trial of ranolazine for the potential treatment of chronic angina,
at a Late Breaking Clinical Trial plenary session of the 2001 American Heart
Association Scientific Sessions. The results of the trial, called
Combination Assessment of Ranolazine in Stable Angina, or CARISA, indicated
that in patients on a background anti-anginal therapy, ranolazine
statistically significantly increased patients' symptom-limited exercise
duration at trough drug concentrations compared to placebo, the primary
endpoint for this trial. These results were statistically significant at the
98.8% level, or what is commonly referred to as p = 0.012. This means that,
applying widely-used statistical methods, the chance that these results
could have occurred by accident is less than 1 in 80. These results were
comparable
to the results from our other pivotal Phase III trial of
ranolazine for chronic angina, called Monotherapy Assessment of Ranolazine
in Stable Angina, or MARISA, which we announced in August 1999.
CVT-510 (tecadenoson) for potential reduction of rapid heart rate during
atrial arrhythmias
CVT-510 (tecadenoson) is currently being developed for the potential
reduction of rapid heart rate during acute atrial arrhythmias. A Phase III
trial of CVT-510 is being conducted in patients with paroxysmal
supraventricular tachycardia (PSVT), and a Phase IIb trial is being
conducted in patients with atrial fibrillation. When a patient experiences
an atrial arrhythmia, the heart beats too fast to accommodate effective
pumping of blood throughout the body. According to hospital audit reports,
atrial arrhythmias were involved in approximately 2.8 million hospital
diagnoses in the United States in 2000.
Current therapies to control heart rate during atrial arrhythmias may
entail a number of undesirable features. Digoxin may not work quickly
enough. Beta blockers and calcium channel blockers may reduce blood pressure
in patients whose blood pressure is already dangerously low due to the
arrhythmia itself. Finally, Adenocard(R), a brand of adenosine, also reduces
blood pressure and may slow heart rate for too brief a time to be effective
in treating many arrhythmias.
CVT-510 is a new small molecule drug that we believe may address the
shortcomings of current therapies. CVT-510 selectively stimulates the A1
adenosine receptor, which may slow heart rate. However, CVT-510 does not
stimulate the A2 adenosine receptor, which may lower blood pressure. Thus,
CVT-510 may offer alternatives to current therapies that are either
relatively slow to act or that reduce blood pressure.
CVT-3146 for potential use in cardiac perfusion imaging studies
CVT-3146 is currently in a Phase II clinical trial for the potential use
as a pharmacologic agent in cardiac perfusion imaging studies. Cardiac
perfusion imaging studies help detect and characterize coronary artery
disease by identifying areas of insufficient blood flow in the heart. In
1999, approximately 6.5 million cardiac perfusion imaging studies were
performed in the United States, of which approximately 2.4 million were
conducted using a pharmacologic agent.
In July 2000, we entered into a collaboration with Fujisawa
Healthcare, Inc. (FHI) to develop and market second generation pharmacologic
cardiac stress agents. Under this agreement, FHI received exclusive North
American rights to CVT-3146, a short acting selective A2A adenosine receptor
agonist, and a backup compound. FHI reimburses us for 75% of the development
costs, makes payments upon the achievement of research and clinical
development milestones and, if approved by the FDA, we will receive a
royalty based on product sales of CVT-3146 and may receive a royalty on
another product sold by FHI.
Research and preclinical programs
We also have a number of preclinical and research programs in the areas
of adenosine receptor research, cardiac metabolism, atherosclerosis and cell
cycle inhibition. Our cardiovascular genomics program is designed to take
advantage of the advances in genomics for the discovery of new therapeutic
targets. In each of these programs, we are working to translate new
molecular mechanisms into new pharmacology that will ultimately offer new
hope and help for people with cardiovascular disease.
CARDIOVASCULAR DISEASE BACKGROUND
Cardiovascular disease is the leading cause of death in the United
States, claiming almost one million lives in 1999. The American Heart
Association (AHA) estimated the total amount spent on cardiovascular disease
and stroke related drugs and other medical durables in the United States in
2001 at $27.1 billion.
The cardiovascular system is comprised of the heart, the blood vessels,
the kidneys and the lungs. Together, the components of the cardiovascular
system deliver oxygen and other nutrients to the tissues of the body and
remove waste products. The heart propels blood through a network of arteries
and veins. The kidneys closely regulate the volume of blood in the body and
the balance of chemicals, such as sodium, potassium and chloride, in the
blood, and the lungs put oxygen in the blood and remove carbon dioxide. To
accomplish these tasks, the cardiovascular system must maintain adequate
blood flow, or cardiac output. Cardiac output is determined by factors such
as heart rate and blood pressure, which in turn are controlled by a variety
of hormones such as adrenaline, angiotensin and adenosine. These hormones
exert their effects by binding to specific receptors on the surfaces of a
variety of cell types in the heart, lungs, blood vessels and kidneys. Any
significant disruption of this system results in cardiovascular disease.
Cardiovascular diseases, including atherosclerosis, which is the
hardening of the arteries, hypertension, which is high blood pressure, and
others, may cause permanent damage to the heart and blood vessels, leading
to CHF, angina and myocardial infarction, or heart attack. According to the
AHA's 2001 Heart and Stroke Statistical Update, in the United States, there
were 6.4 million patients with angina and 4.7 million patients with CHF. In
2000, there were 2.8 million hospital diagnoses of acute atrial arrhythmias
in the United States. More than 20 years ago, drugs such as nitrates, beta
blockers, calcium channel blockers and ACE inhibitors were developed to
treat cardiovascular diseases. These drugs have contributed to an increase
in the survival of patients who suffer from cardiovascular disease. However,
these drugs also can cause a variety of undesirable side effects, including
fatigue, depression, impotence, headaches, palpitations and edema. They also
may lack effectiveness in various segments of the cardiovascular market.
Molecular cardiology has provided new insight into the mechanisms underlying
cardiovascular diseases, thus creating the opportunity for improved therapies.
BUSINESS STRATEGY
The key elements of our business strategy are as follows:
Identify and develop new drugs for the treatment of cardiovascular
diseases a single therapeutic area
By focusing on one therapeutic area, cardiovascular disease, we believe
that we can be relatively efficient in our drug discovery, development and
commercialization efforts. Our concentrated focus on cardiovascular disease
may add to our efficiency over a variety of areas, for example:
* Research focus is on the molecular mechanisms of the
cardiovascular system;
* Regulatory discussions are with a single FDA division;
* Clinical investigators investigators in one trial may be
candidates for future trials;
* Consultants thought leaders are engaged for numerous internal
programs;
* Clinical need key employees are experienced in cardiovascular
and/or clinical science; and
* Sales force efficiency detailing may be to the same
cardiologists and other prescribing doctors.
Focus on small molecule drug candidates
Small molecule therapeutics can frequently be administered orally on an
outpatient basis. By contrast, to date, "large molecule" therapeutics, such
as proteins or monoclonal antibodies, can very rarely be formulated to
accommodate oral outpatient administration. In addition, our emphasis on
small molecule therapeutics means that our drug candidates can be produced
by conventional pharmaceutical manufacturing methods, by using the outside
production capabilities of the established contract pharmaceutical
manufacturing industry.
Commercialize products, in part, through a concentrated marketing effort
targeted to cardiologists
A focused commercialization effort can provide marketing cost
efficiencies. Patients that have severe cardiovascular conditions are
generally treated by cardiologists. In 1998, there were approximately 20,000
cardiologists in the United States. Cardiologists are generally concentrated
in metropolitan communities near major medical centers. We believe that this
relatively small number of subspecialists is responsible for a significant
portion of the patient visits associated with prescriptions written for
severe cardiovascular conditions. These market dynamics make it possible to
sell the drugs in our pipeline with a focused sales force, like the one to
be provided for ranolazine through our sales and marketing services
agreement with Innovex, Inc.
Participate in the sales and marketing in the United States of at least
some of the drugs we develop
In the biopharmaceutical industry, a substantial percentage of the
profits generated from successful drug development are typically retained by
the entity directly involved in the sales and marketing of the drug.
Licensing our drug candidates to a third party who will complete development
and provide sales and marketing resources in exchange for a sales royalty
may reduce some of our risks. However, we believe that the risk-return
tradeoff typically favors developing and then marketing and selling products
ourselves. Therefore, a key element of our business strategy is to be
involved, when practical, in the sales and marketing of our products in the
United States. Though we may eventually become involved in direct sales and
marketing activities in other parts of the world, our initial direct efforts
will be in the United States.
PRODUCT PORTFOLIO
We have the following portfolio of product candidates:
PRODUCT TARGET AREAS OF DEVELOPMENT DEVELOPMENT
STATUS
Ranolazine Fatty acid oxidation inhibition Angina Preparing for
NDA submission
CVT-510 A1 adenosine receptor in the heart Acute heart rate control during atrial Phase III
arrhythmias-PSVT
Acute heart rate control during atrial Phase IIb
arrhythmias-atrial fibrillation
CVT-3146 A2A adenosine receptor in the heart Cardiac imaging Phase II
Adentri TM A1 adenosine receptor in the kidney Congestive heart failure Phase II
CVT-3619 A1 adenosine receptor in the heart Chronic heart rate control during atrial Preclinical
arrhythmias
CVT-4325 Fatty acid oxidation inhibition Angina/CHF Preclinical
CVT-2584 Inhibition of cell cycle enzyme (CDK2) Vascular stenosis Preclinical
CVT-3634 A2B Adenosine receptor Vascular disease Preclinical
Cholesterol Tangier disease gene/HDL elevation Atherosclerosis Research
Transport
In the table, under the heading "Development Status," "Phase III"
indicates evaluation of clinical efficacy and safety within an expanded
patient population at geographically dispersed clinical trial sites. "Phase
II" indicates safety testing and initial efficacy testing in healthy
volunteers and/or a limited patient population. "Phase I" indicates initial
safety testing in healthy volunteers and a limited patient population.
"Preclinical" indicates lead compound selected for possible development
which meets predetermined criteria for potency,
specificity, manufacturability, toxicity and pharmacologic activity in animal
and/or in vitro models. "Research" indicates lead candidate being tested
against predetermined criteria.
RANOLAZINE
Ranolazine is a novel small molecule for the potential treatment of
angina. Animal research indicates that ranolazine may cause a partial shift
in the source of energy for the heart from fatty acid toward glucose, a more
oxygen-efficient energy source. We are developing ranolazine for the
potential treatment of angina because we believe ranolazine may
significantly improve exercise tolerance, the standard clinical measurement
for angina treatment. However, unlike current anti-anginal medicines,
ranolazine may allow blood pressure and heart rate to remain essentially
unchanged, and as a result, ranolazine may have an improved tolerability
profile compared to currently available therapies. We licensed exclusive
rights to ranolazine in the United States and specified foreign territories
for use in cardiovascular indications, including angina, from Syntex
(U.S.A.), Inc. in March 1996.
We have recently completed the second of two pivotal Phase III trials
for ranolazine for the potential treatment of angina, and we plan on
submitting an NDA to the FDA.
Potential Indication Angina
Chronic angina is marked by repeated and sometimes unpredictable attacks
of cardiac pain. These attacks are typically triggered by physical exertion
or emotional stress. Angina is caused when the heart muscle does not get
enough oxygen-carrying blood to meet its needs, generally because of
obstructions in the coronary arteries feeding blood to the heart. These
obstructions typically are caused by a buildup of cholesterol deposits in
the coronary arteries. All the body's organs and tissues need oxygen to
extract energy from the foods we eat. The heart also needs oxygen in order
to fuel its mechanical work of pumping blood throughout the body. Angina
occurs when the blood supply cannot provide enough oxygen to meet the heart
muscle's demand.
According to the American Heart Association's 2001 Heart and Stroke
Statistical Update, approximately 6.4 million patients in the United States
suffer from angina. Based on published data, we estimate that over half of
these patients are currently being treated with multiple medications,
including nitrates, beta blockers and calcium channel blockers.
Current Approaches to Angina Treatment
Currently available drugs to treat angina include beta blockers, calcium
channel blockers and long-acting nitrates. These drugs decrease the heart's
demand for oxygen by reducing the work it is asked to perform, by lowering
heart rate, blood pressure and/or the strength of the heart's contraction.
These hemodynamic effects can limit or prevent the use of currently
available drugs in patients whose blood pressure or cardiac function is
already decreased. These effects can be particularly pronounced when these
drugs are used in combination. Additional adverse effects include lower
extremity edema associated with calcium channel blockers, impotence and
depression associated with beta blockers and headaches associated with
nitrates. Consequently, for some patients, presently available medical
treatment may not relieve angina without unacceptable effects.
pFOX Inhibition A Potential New Approach by Ranolazine
Cardiac metabolism is the process by which the heart extracts the energy
it needs to pump blood from fat or glucose by combining them with oxygen.
Under normal conditions, cardiac metabolism uses both fat and glucose in a
ratio of roughly 60% fat to 40% glucose. If fatty acid oxidation, which is
the combination of fatty acids and oxygen into energy, is inhibited, then
cardiac metabolism shifts to utilizing more glucose. Since the heart gets
more energy from a unit of oxygen combined with glucose than it does from
that same unit of oxygen combined with fat, causing a shift in cardiac
metabolism from fat to glucose should improve cardiac efficiency. However, a
complete shift away from metabolizing fatty acids could potentially lead to
unwanted side effects. Consequently, only a partial inhibition of fatty acid
oxidation is likely to be desirable.
Animal studies indicate that ranolazine is a partial and reversible
inhibitor of fatty acid oxidation, or a pFOX inhibitor. Inhibition of fatty
acid oxidation indirectly stimulates glucose oxidation, which produces more
energy per unit of available oxygen thereby increasing cardiac efficiency.
Ranolazine therefore may correct the imbalance between oxygen demand and
oxygen supply.
As a pFOX inhibitor, ranolazine appears to operate via a completely
different pathway than the existing anti-anginal drugs. Based on the CARISA
and MARISA trial results, ranolazine does not appear to produce clinically
meaningful lowering of heart rate or blood pressure. Consequently patients
taking ranolazine may be able to maintain these hemodynamic measures at or
near baseline levels, which they are unable to do if they take any of the
currently available anti-anginal medications.
The following table sets forth the mechanisms and effects of ranolazine
and anti-anginal drugs.
Heart Blood Mechanism
Rate Pressure
Ranolazine: - - Improves oxygen
pFOX Inhibitor metabolism in heart muscle
Beta [DOWN ARROW] [DOWN ARROW] Decreased
Blockers pump function
Calcium [DOWN ARROW] [DOWN ARROW] Decreased
Channel pump function,
Blockers vasodilation
Long-Acting [UPWARD ARROW] [DOWN ARROW] Vasodilation
Nitrates
For the above table, the data and the reflected mechanism of action
indicated for ranolazine is based on animal and clinical trials to date.
Unlike beta blockers, calcium channel blockers and long-acting nitrates,
ranolazine has not yet been approved by the FDA as safe or effective for any
use.
Ranolazine Clinical Trial Status
We have completed two pivotal Phase III trials for ranolazine. We are
preparing an NDA for submission to the FDA, seeking approval to market
ranolazine in the United States for chronic angina. To date, ranolazine has
been tested in over 2,000 patients and volunteers.
In November 2001, we announced initial results from our second pivotal
Phase III trial of ranolazine at a Late Breaking Clinical Trial plenary
session of the American Heart Association Scientific Sessions 2001. CARISA
(Combination Assessment of Ranolazine In Stable Angina) was a Phase III
multi-national, randomized, double-blind, placebo-controlled, parallel group
trial of the safety and efficacy of a sustained release formulation of
ranolazine. The clinical trial randomized 823 patients to assess the
anti-anginal effects of 12 weeks of treatment
with ranolazine in chronic angina patients also receiving a background
anti-anginal medication. Patients received one of three background therapies
(atenolol 50 mg, diltiazem CD 180 mg, or amlodipine 5 mg) and were randomized
to twice daily doses of ranolazine 750 mg, ranolazine 1000 mg or placebo.
Exercise testing was performed at trough (12 hours after dosing) and peak (four
hours after dosing) plasma concentrations. The results of the trial are
summarized below:
* The CARISA prospectively defined primary efficacy endpoint
was symptom-limited exercise duration at trough for all
ranolazine patients compared to placebo at 12 weeks. At
trough, ranolazine plasma concentrations are at their
lowest point during the dosing cycle. In both ranolazine
dose groups combined, symptom-limited exercise duration at
trough plasma concentrations increased on ranolazine
compared to placebo. These results were statistically
significant at the 98.8% level, or what is commonly
referred to as p = 0.012. This means that, applying widely
used statistical methods, the chance that these results
could have occurred by accident is less than 1 in 80. The
CARISA primary efficacy endpoint of symptom-limited
exercise duration at trough has historically been the
primary endpoint that the FDA reviews when considering
anti-anginal therapies.
* For each ranolazine dose considered independently,
symptom-limited exercise duration at trough plasma
concentrations increased on ranolazine compared to placebo
(p<= 0.03). The increases in exercise times on ranolazine
were not significantly different among the three
background therapies; insignificantly greater increases
were seen over diltiazem and amlodipine-than over atenolol.
* Statistically significant effects of ranolazine were also
observed in other secondary efficacy endpoints. Ranolazine
at doses of 750 mg and 1000 mg reduced the frequency of
angina by an average of 1.3 and 1.7 attacks per week,
respectively, compared to an average decrease of 0.6
attacks per week on placebo (p<=0.01 for each dose versus
placebo). Compared to placebo, ranolazine at doses of 750
mg and 1000 mg increased the average time to
electrocardiographic evidence of ischemia; those increases
approached statistical significance at trough (p<=0.1) and
achieved statistical significance at peak (p<0.005). In
addition, compared to placebo, ranolazine at both doses
statistically significantly increased the average time to
onset of angina at both peak (p<=0.003) and trough (p<=
0.05).
* The lack of clinically relevant hemodynamic effects was
consistent with results observed in MARISA and in prior
clinical trials of a different formulation of ranolazine.
While increases in exercise duration were observed,
ranolazine had no clinically meaningful impact on heart
rate or blood pressure, either at rest or following exercise.
* Adverse events, including dizziness, asthenia or weakness,
and nausea were consistent with those observed in MARISA
and in prior trials of a different formulation of
ranolazine. Adverse event frequency increased as dose
increased.
* The rate of serious adverse events was 6% on placebo and
7% on each ranolazine dose group.
* Small (<10 msec, similar to MARISA) but statistically
significant (p<=0.002) increases in QTc, an
electrocardiographic measurement, were observed compared
to placebo.
In August 1999, we completed our Monotherapy Assessment of Ranolazine
In Stable Angina, or MARISA trial. MARISA was a randomized, double-blind,
placebo-controlled trial of a sustained release formulation of ranolazine
used in patients who were not receiving other anti-anginal drugs. Patients
were evaluated by treadmill exercise testing during treatment with placebo
and each of three doses of ranolazine, 500mg twice daily, 1000mg twice
daily, and 1500mg twice daily. The results of the trial are summarized below:
* The MARISA primary endpoint was treadmill exercise
duration approximately 12 hours after the previous dose
and just before the next dose. At this time, ranolazine
plasma concentrations are at their lowest point during the
dosing cycle, or at trough. Data from 175 patients appear
to show that compared to placebo, ranolazine taken twice a
day increased exercise duration at trough plasma
concentrations, at all three active doses studied. These
results were statistically significant at the 99.5% or
greater level, or what is commonly referred to as p <
0.005. This means that, applying widely used statistical
methods, the chance that these results could have occurred
by accident is less than 1 in 200.
* Key secondary endpoints, exercise time to onset of angina
and exercise time to the electrocardiographic appearance
of ischemia were increased at all three ranolazine doses
studied compared to placebo. These results were
statistically significant at the 99.5% or greater level,
or p < 0.005.
* While increases in exercise duration were observed,
ranolazine had no clinically meaningful impact on heart
rate or blood pressure, either at rest or following exercise.
* Adverse events, including dizziness, asthenia or weakness,
and nausea, and the electrocardiographic changes observed
in this trial, were consistent with those observed in
prior trials of an immediate release formulation of
ranolazine. Adverse event frequency increased as dose
increased.
In addition, three Phase II trials completed by Syntex prior to 1994
indicated that an immediate release formulation of ranolazine statistically
significantly increased the exercise duration of angina patients during
exercise testing at peak dosage levels, compared to placebo. This result was
observed both when ranolazine was given alone and in combination with beta
blockers or calcium channel blockers. In these trials, ranolazine was
administered on a three times daily schedule. To achieve a more commercially
attractive product with a twice-daily dosing schedule, a sustained release
formulation of ranolazine was developed, which we tested in both our Phase
III clinical trials. To date, ranolazine has been tested in more than 2,000
patients and volunteers.
Commercialization of Ranolazine
In May 1999, we entered into a sales and marketing agreement with
Innovex, Inc., a subsidiary of Quintiles Transnational Corp. and a provider
of sales and marketing services to the pharmaceutical industry worldwide.
Under the agreement, if ranolazine is approved for sale in the United States
by the FDA, Innovex will hire and train a dedicated sales force for
ranolazine and assist in funding marketing expenses for up to five years
after launch. We will receive 100% of the revenues of ranolazine, and we
will pay Innovex a fee that will not exceed 33% of those revenues in the
first two years, and will decline to a maximum of 25% by the fourth and
fifth years. Further, in exchange for giving us the option to retain this
trained sales force at the end of the contract, we will pay Innovex a
royalty on sales of 7% in the sixth and 4% in the seventh years after launch.
CVT-510 (TECADENOSON)
We are developing CVT-510 (tecadenoson) for the potential reduction of
rapid heart rate during acute atrial arrhythmias. Atrial arrhythmias are
abnormally rapid heart rates, and include the conditions of atrial
fibrillation, atrial flutter and paroxysmal supraventricular tachycardias
(PSVT). CVT-510 is an A1 adenosine receptor agonist which may act
selectively on the conduction system of the heart to slow electrical
impulses. CVT-510 may offer a new approach to rapid and sustained control of
acute atrial arrhythmias by reducing heart rate without lowering blood
pressure. We are currently conducting a Phase III trial of CVT-510 in
patients with PSVT and a Phase IIb trial in patients with atrial
fibrillation.
Potential Indication Acute Heart Rate Control During Atrial Arrhythmias
Atrial arrhythmias occur when the atria of the heart beat rapidly, or
uncontrollably, sending multiple electrical impulses to the ventricles of
the heart. An excessive increase in ventricular rate reduces the heart's
cardiac output due to inadequate filling and emptying of the left ventricle.
Potentially damaging consequences include low blood pressure and damage to
the brain, heart and other vital organs; therefore, these rhythm
disturbances often require immediate treatment. Prompt slowing of the heart
rate is the goal of acute therapy. Because of the need to treat patients
quickly, intravenous therapies allow for rapid stabilization of the patient
while the underlying condition is treated.
In the United States, atrial arrhythmias are involved in approximately
2.8 million hospital diagnoses annually. Atrial arrhythmias are a major
complication of heart attacks, heart failure and cardiac surgery. The acute
treatment of atrial arrhythmias involves slowing the heart rate. Later, when
the heart rate is controlled, additional steps can be taken to reverse the
abnormal electrical activity in the atria which underlie these arrhythmias.
Current Approaches to Acute Heart Rate Control During Atrial Arrhythmias
Current medical therapies, which include digoxin, calcium channel
blockers, beta blockers and Adenocard(R), aim to slow the heart to a normal
rate but have significant limitations in the acute care setting. Digoxin is
effective in controlling heart rate, but requires a long time to take
effect. This can be dangerous in patients whose condition requires prompt
heart rate control to restore normal cardiac output. Calcium channel
blockers, beta blockers and Adenocard(R) act quickly but reduce blood
pressure and depress cardiac function. These drugs could potentially
exacerbate the condition of patients already experiencing cardiac
dysfunction as a complication of the arrhythmia. Furthermore, the effect of
Adenocard(R) persists only for a few seconds, and as a result, this product
is not indicated for treatment in patients with atrial fibrillation or flutter.
Cardiac Conduction System
During an atrial arrhythmia, the atria of the heart beat too rapidly,
sending excessive electrical impulses to the ventricles of the heart. These
electrical impulses are initiated at a set of specialized cells in the
atria, known as the sinus node, and then run to another set of specialized
cells known as the atrio-ventricular (AV) node. It is this AV node which
controls the transmission of the electrical impulses to the ventricles.
Since the rate at which electrical impulses pass through the AV node
determines ventricular heart rate, slowing AV nodal transmission will result
in a reduction in the ventricular heart rate. Since ventricular rate is a
primary determinant of cardiac output, prompt slowing of rapid AV nodal
conduction is one treatment approach to slowing the abnormally rapid heart
rate of an atrial arrhythmia.
Potential Treatment by CVT-510
CVT-510 is designed to selectively stimulate the A1 adenosine
receptor. Stimulation of the A1 adenosine receptor in the AV node slows the
speed of electrical conduction across the AV node, which in turn reduces the
number of electrical impulses that reach the ventricle. Stimulation of the
A2 adenosine receptor may lower blood pressure. Since CVT-510 is designed to
selectively stimulate the A1 adenosine receptor without significantly
stimulating the A2 adenosine receptor, it may be possible to use CVT-510 to
intervene quickly in the arrhythmia process without the unwanted effect of
lowering blood pressure. CVT-510 may offer cardiac patients and clinicians
alternatives to current therapies that are either relatively slow to act or
that reduce blood pressure.
CVT-510 Clinical Trial Status
In November 2001, we announced that in an open-label, dose ranging
Phase II clinical trial in patients with atrial fibrillation or flutter,
CVT-510 consistently reduced heart rate from baseline (p<0.05) without
clinically
meaningful changes in blood pressure. We have embarked on a Phase
IIb development program aimed at defining an optimized dosage regimen in
patients with this complex cardiac disease.
In addition, in November 2000, at the annual meeting of the American
Heart Association, we announced results from a Phase II trial of CVT-510
indicating that CVT-510 terminated paroxysmal supraventricular tachycardia
(PSVT) without adversely affecting blood pressure. In this open-label, dose
escalation study, CVT-510 was given as one or two bolus injections at least
two minutes apart to 37 patients with inducible PSVT undergoing
electrolphysiological study. The results indicated that in 32 of 37
patients, or 86%, the PSVT was terminated and normal sinus rhythm was
restored. CVT-510 was well tolerated in these patients with no adverse
effects on blood pressure, and no high-grade AV block or other serious
adverse events were observed. Based on the results of this trial, we
initiated a Phase III clinical trial of CVT-510 in patients with PSVT in
June 2001.
CVT-3146
We are developing CVT-3146 for the potential use as a pharmacologic
agent in cardiac perfusion imaging studies. Cardiac perfusion imaging
studies are used to detect and characterize coronary artery disease, by
identifying areas of insufficient blood flow in the heart. Some of these
studies are conducted using pharmacologic agents. CVT-3146 is an A2A
adenosine receptor agonist which may act selectively on the heart to cause
coronary vasodilation and thus increase coronary blood flow. Therefore,
CVT-3146 may provide doctors with an alternative agent for cardiac perfusion
imaging studies without unwanted side effects. We have entered into a
collaboration with Fujisawa Healthcare to develop and market CVT-3146 in
North America. We are currently in a Phase II trial for CVT-3146.
Potential Indication A Pharmacologic Agent in Cardiac Perfusion
Imaging Studies
During cardiac perfusion imaging studies, the heart is subjected to a
period of stress to stimulate maximal blood flow. Myocardial perfusion, or
blood flow, is measured during stress and compared to myocardial perfusion
when patients are at rest. Areas of relatively poor perfusion during stress
as compared to rest indicates which areas of the heart may be affected by
narrowed coronary arteries.
To stress the heart sufficiently to perform the test, many patients
exercise on a treadmill. However, more than a third of the patients who take
the test are unable to exercise adequately because of medical conditions
such as peripheral vascular disease or arthritis. For those patients, a
pharmacologic agent that temporarily increases coronary blood flow is used
to create the increase in blood flow which would otherwise be caused by
exercise. In 1999, approximately 6.5 million cardiac perfusion imaging
studies were performed in the United States, of which approximately 2.4
million were conducted using a pharmacologic agent.
Current Approaches to Increasing Coronary Blood Flow During Cardiac
Imaging Studies
Current pharmacologic therapies used in cardiac imaging testing are
dipyridamole and Adenoscan(R), the brand name for adenosine. Adenoscan(R) is
used for cardiac imaging because it is the naturally occurring agent that
causes coronary vasodilation and it has a short half-life. However, because
Adenoscan(R) activates all four adenosine receptor subtypes, it can cause
side effects including flushing, dyspnea and headache, and should not be
used in asthma patients. Another current cardiac imaging agent,
dipyridamole, is known to increase levels of adenosine by inhibiting its
transport into cells. Due to its longer half-life, coronary vasodilation
persists for long periods of time, and therefore, patients must be closely
monitored at the completion of the test. In addition, one of the main side
effects of dipryridamole is dizziness.
Potential Treatment by CVT-3146
CVT-3146 has been designed to selectively activate the A2A adenosine
receptor in the heart, in order to elicit the coronary vasodilation response
while avoiding many of the side effects of Adenoscan(R) or dipyridamole.
CVT-3146 Clinical Trial Status
In May 2001, we announced that results from our Phase I trial of
CVT-3146 met our previously established primary objective of providing data
on safety and tolerability over a broad range of doses administered to
healthy volunteers. Based on the results of this trial, we initiated a Phase
II clinical trial of CVT-3146 in August 2001. The purpose of the Phase II
trial is to determine the tolerability of CVT-3146 and its effect on
coronary blood flow in patients undergoing a clinically indicated cardiac
catheterization.
ADENTRI(TM) PROGRAM
Patients with congestive heart failure (CHF) have limited heart
pumping function, and the corresponding reduction in blood flow impairs the
kidney's ability to clear fluid wastes from the body. Current therapies for
CHF tend to negatively impact other activities of the kidneys. Preclinical
studies and clinical trials indicate that A1 adenosine receptor antagonists
may increase the kidney's ability to clear fluid wastes without decreasing
other functions of the kidneys. Thus, we believe that A1 adenosine receptor
antagonists have the potential to be a new therapy for the treatment of CHF.
In March 1997, we licensed the rights to our A1 adenosine receptor
antagonist technology, patents and compounds, including CVT-124, to Biogen,
Inc. Collectively, Biogen's efforts in this area are referred to as the
AdentriTM program. As a result of the agreements we signed, Biogen has an
exclusive worldwide license to develop, manufacture and commercialize
CVT-124 and any other A1 adenosine receptor antagonists developed either by
Biogen or us based on our patents or our technology. As long as Biogen
retains its license for our A1 adenosine receptor antagonist technology and
patents, Biogen is responsible for funding all development and
commercialization expenses related to these compounds.
In February 2000, Biogen announced that it had successfully completed
a Phase II trial of CVT-124 in patients with moderate-to-severe CHF.
However, Biogen also announced its intention to continue the AdentriTM
program with a new molecule. Biogen is currently in Phase II clinical trials
with the new molecule.
Potential Indication Congestive Heart Failure
CHF occurs when the heart muscle is weakened by disease so it cannot
adequately pump blood throughout the body. As a result of this pump failure,
fluid accumulates throughout the body, including in the lungs. This results
in shortness of breath. Fluid also accumulates in the body because of
adaptations by the kidneys during CHF.
According to the AHA's 2001 Heart and Stroke Statistical update,
approximately 4.7 million people in the United States suffered from CHF and
an estimated 550,000 new cases arise each year. Almost one million patients
in 2000 were hospitalized in the United States with a primary diagnosis of
CHF.
Current Approaches to Treating Congestive Heart Failure
Current treatment of CHF consists of therapy designed to improve the
pumping function of the heart combined with the administration of diuretics
to eliminate excess sodium and water from the body by blocking reabsorption
in the kidneys. However, current diuretic therapies such as furosemide,
thiazides and spironolactone become less effective over time as the disease
progresses. Approximately one quarter of hospitalized CHF patients are
resistant to current intravenous diuretic therapies. The dosage of the most
commonly prescribed diuretics for CHF are often increased as the disease
progresses, which can be associated with toxic side effects. One such side
effect is potassium loss, which may lead to an increased incidence of
cardiac arrhythmias if potassium is not monitored and replaced, and another
is a decline in kidney function.
Potential Treatment by A1 Adenosine Receptor Antagonists
An A1 adenosine receptor antagonist blocks the action of the A1
adenosine receptors. Since the A1 adenosine receptor plays an important role
in the kidneys to cause the kidneys to retain sodium and fluids, blocking
the action of this receptor may reduce the amount of fluid that the kidneys
retain.
Clinical Trial Experience
In Phase I and Phase II trials, CVT-124 appeared to be generally well
tolerated and produced increases in urine, sodium and chloride excretion
compared to placebo. This was observed both in healthy volunteers and in
moderately severe CHF patients. Moreover, trials to date indicate that
CVT-124 may be able to treat fluid overload without an associated reduction
in the filtration function of the kidneys. Furosemide, which is currently
the most commonly used treatment for fluid overload caused by CHF, has been
shown in prior trials to be associated with a reduction in the filtration
function of the kidneys.
Program Status
Biogen is developing Adentri for acute and chronic CHF and is
currently in Phase II clinical trials.
PRECLINICAL PIPELINE
Our research and development team is creating new product
opportunities through our expertise in molecular cardiology. We have
preclinical research programs in the areas of:
* Adenosine Receptor Research
- Cardiac conduction
- Angiogenesis
* Metabolism
- Cardiac energetics
* Atherosclerosis
- Increase HDL, "the good cholesterol"
* Cell Cycle Inhibition
* Cardiovascular Genomics
Adenosine Receptor Research
Adenosine is a naturally occurring small molecule that elicits
pharmacological responses that tend to compensate for the imbalance in
oxygen supply relative to demand that occurs when blood vessels are
partially blocked by cardiovascular disease. Our adenosine receptor research
program has discovered proprietary compounds that selectively elicit the
desired effects of adenosine receptor stimulation for the treatment of
certain electrical conductance disturbances, such as atrial arrhythmias, and
regulate the mechanisms of new blood vessel growths, or angiogenesis.
- Cardiac Conduction
Electrical impulses within the heart muscle play a key role in causing
the heart muscle to sequentially expand and then contract, which is required
for the heart to pump blood throughout the body in a controlled rhythm.
Failure of this electrical system to function properly will result in a
poorly pumping heart, such as in atrial arrhythmias.
We have discovered a series of novel, proprietary, orally
bio-available, partial A1 adenosine receptor agonists, including CVT-3619,
that selectively slow the electrical conductance in the heart to adjust the
rate of a beating heart into the normal range. These compounds are similar
to CVT-510, which is being developed for the acute care of atrial
arrhythmias, but are targeted for the continued care of patients with
chronic atrial arrhythmias.
- Angiogenesis
Our scientists have led the effort to fully characterize the role of
adenosine in the initiation, maintenance, and growth of new vessels in
vascular beds that are deprived of oxygen due to cardiovascular disease. We
have discovered the receptor that is responsible for regulation of the known
mitogens such as vascular endothelial growth factor and fibroblast growth
factor, and have discovered small molecule agonists and antagonists of this
process. The goal of these programs, which includes compounds such as
CVT-3634, is to harness this naturally occurring process for the potential
treatment of peripheral vascular disease or aberrant angiogenesis that
causes diabetic retinopathy and macular degeneration.
Metabolism
In order for the heart to adequately pump blood, fuel in the form of
fat, or fatty acids, and sugar, in the form of glucose, are metabolized with
oxygen to yield ATP (a key molecule involved in th expenditure of cellular
energy), water and carbon dioxide. When oxygen is in limited supply, for
example when the vessels that feed the heart are blocked from
atherosclerosis and cardiovascular disease, the normal utilization of
glucose becomes impaired. This metabolic imbalance in favor of fatty acid
oxidation (compared to glucose) can be partially restored by inhibiting
fatty acid metabolism with a partial fatty acid oxidation (pFOX) inhibitor.
The goals of our cardiac metabolism program are to further
characterize the therapeutic potential of ranolazine in the treatment of
indications other than angina, and to discover new, proprietary second
generation ranolazine products. For example, in an animal model of
congestive heart failure, ranolazine increased work output by the heart
without increasing the consumption of oxygen. In other words, cardiac
performance and cardiac efficiency were improved. We have also discovered
several series of novel, proprietary pFOX inhibitors, including CVT-4325,
that are potential second generation compounds to ranolazine.
Atherosclerosis
The goal of our HDL drug discovery program is to study the ways in
which the body removes excess cholesterol from the walls of blood vessels,
in an effort to prevent or reverse the buildup of arterial plaques that
cause heart attacks. Roughly half of heart attacks occur in patients with
low levels of high density lipoproteins, known as the "good" form of
cholesterol, or HDL. Patients with the genetic disorder called Tangier
disease have virtually no HDL in their blood, and are at a greatly increased
risk for developing cardiovascular disease. Our scientists have used a new
strategy combining gene expression microarrays and biochemical techniques to
identify the gene that is defective in patients with Tangier disease. Having
identified the gene that is responsible for the genetic disorder in Tangier
disease patients, we have targeted this gene as part of a drug discovery
program to identify novel, proprietary, small molecules that may increase
reverse cholesterol transport and thus HDL.
Cell Cycle Inhibition
The goal of our cell cycle inhibition program is to develop new
therapeutics that suppress abnormal cellular proliferation. Excessive
proliferation of cardiovascular connective tissue cells or vascular smooth
muscle cells causes the scarring and loss of function that is characteristic
of chronic diseases of the heart, blood vessels and kidneys. As part of our
drug discovery strategy, we have focused upon enzymes called cell cycle
enzymes that regulate cellular proliferation. CVT-2584 is a new compound
that selectively inhibits CDK2, a critical cell cycle enzyme. Animal studies
with CVT-2584 have shown a substantial reduction of blockages after vascular
injury.
Cardiovascular Genomics
Our cardiovascular genomics program is working to utilize the latest
tools of genomics and gene expression microarray technology to identify
novel gene and protein targets for drug discovery. We have focused on
evaluating the expression of tens of thousands of human genes that are
involved in the accumulation of lipids in the vascular wall and in the
response of blood vessels to injury. In this way, we are seeking to identify
novel approaches to reduce the risk of heart attacks and to reduce the
occurrence of restenosis following interventional vascular treatments such
as angioplasty or bypass surgery.
COLLABORATIONS AND LICENSES
We have established, and intend to continue to establish, strategic
partnerships to potentially expedite the development and commercialization
of our drug candidates. For those programs with potential application
outside of cardiovascular disease, we intend to identify additional
corporate partners. In addition, we have licensed chemical compounds from
academic collaborators and other companies. Our collaborations and licenses
currently in effect include:
University of Florida Research Foundation
In June 1994, we entered into a license agreement with the University
of Florida Research Foundation, Inc. under which we received exclusive
worldwide rights to develop A1 adenosine receptor antagonists and agonists
for the detection, prevention and treatment of human and animal diseases. In
consideration for the license, we paid an initial license fee and are
obligated to pay royalties based on net sales of products that utilize the
licensed technology. Under this agreement, we must exercise commercially
reasonable efforts to develop and commercialize one or more products covered
by the licensed technology. In the event we fail to reach certain milestones
under the agreement, the licensor may convert the exclusive license into a
non-exclusive license. We sublicensed our rights under this license that
relate to A1 adenosine receptor antagonists to Biogen in March 1997.
Syntex
In March 1996, we entered into a license agreement with Syntex
(U.S.A.) Inc. to obtain United States and foreign patent rights to
ranolazine for the treatment of angina and other cardiovascular indications.
Pursuant to the agreement, Syntex provided quantities of the compound to us
for use in clinical trials and related development activities. The license
agreement is exclusive and worldwide except for the following countries
which Syntex has licensed exclusively to Kissei Pharmaceuticals, Ltd. of
Japan: Japan, Korea, China, Taiwan, Hong Kong, the Philippines, Indonesia,
Singapore, Thailand, Malaysia, Vietnam, Myanmar, Laos, Cambodia and Brunei.
Under the license agreement, we paid an initial license fee. In
addition, we are obligated to make certain milestone payments to Syntex,
upon receipt of the first and second product approvals for ranolazine in any
of certain major market countries (consisting of France, Germany, Italy, the
United States and the United Kingdom). Unless the agreement is terminated,
if the first product approval in one of the major market countries occurs
before May 1, 2002, we will pay Syntex, on or before March 31, 2005, $7.0
million plus interest accrued thereon from the date of approval until the
date of payment, and if the first such product approval occurs after May 1,
2002, we will pay Syntex, on or before March 31, 2005, $7.0 million plus
interest accrued thereon from May 1, 2002 until the date of payment. Unless the
agreement is terminated, if the second product approval in one of the
major market countries occurs before May 1, 2004, we will pay Syntex, on or
before March 31, 2006, $7.0 million plus interest accrued thereon from the
date of approval until the date of payment, and if the second such product
approval occurs after May 1, 2004 but before March 31, 2006, we will pay
Syntex, on or before March 31, 2006, $7.0 million plus interest accrued
thereon from May 1, 2004 until the date of payment. Unless the agreement is
terminated, if the second product approval in one of the major market
countries has not occurred by March 31, 2006, we will pay Syntex $3.0
million on or before March 31, 2006, and if we receive the second product
approval after March 31, 2006, we will pay Syntex $4.0 million within thirty
(30) days after the date of such second product approval. No amounts have
been accrued to date in relation to these milestones. In addition, we will
make royalty payments based on net sales of products that utilize the
licensed technology. We are required to use commercially reasonable efforts
to develop and commercialize the product for angina.
We or Syntex may terminate the license agreement for material uncured
breach, and we have the right to terminate the license agreement at any time
on 120 days notice if we decide not to continue to develop and commercialize
ranolazine.
Biogen
In March 1997, we entered into two research collaboration and license
agreements with Biogen. The agreements grant Biogen the exclusive worldwide
right to develop and commercialize any products which are produced based on
our A1 adenosine receptor antagonist patents or technologies (including our
rights under the University of Florida Research Foundation license) for all
indications. In exchange, we received a $16.0 million payment consisting of
research related funding, an equity investment and $3.0 million in funding
under a general purpose loan facility. Biogen agreed to make milestone
payments and equity investments, as well as the loan facility, all of which
are subject to their achievement of clinical development and
commercialization milestones. In February 1998, we terminated the research
component of the agreements and, as a result, approximately $4.0 million of
deferred revenue was recognized as there were no further research
obligations related to this funding. In December 1998, Biogen released an
additional $4.5 million under the loan facility. In February 2000, based on
results of their Phase II clinical trial, Biogen announced its intention to
proceed with the AdentriTM program, but with a backup compound, and
subsequently paid us $6.5 million, consisting of a $2.0 million milestone
payment and $4.5 million under the loan facility. In March 2001, based on
Biogen's initiation of a Phase I oral development program, we recognized a
$1.0 million milestone payment. Biogen will also make milestone payments in
connection with development and commercialization of licensed products, and
pay royalties on any future sales of products covered by the agreement.
Biogen has control and responsibility for conducting, funding and pursuing
all aspects of the development, submissions for regulatory approvals,
manufacture and commercialization of A1 adenosine receptor antagonist
products under the agreement.
In March 2000, we repaid the initial $3.0 million installment under the
loan facility. In October 2000, we exercised our right to convert $9.0
million in debt under the loan facility into 118,932 shares of our common
stock at a price of $75.67 per share, in full repayment of the entire
principal amount under this loan facility. In December 2000, we repaid all
accrued and unpaid interest on the loan facility.
Biogen may terminate the agreements for any reason upon 60 days written
notice. If Biogen terminates the agreements, all rights to the technology
will revert to us, and we will pay Biogen a royalty on future sales of any
A1 adenosine receptor antagonist.
Incyte
In July 1998, we entered into a joint research collaboration agreement
with Incyte Genomics, Inc. to develop a prototype gene expression database
in the area of cardiovascular biology. We contribute our molecular
cardiology expertise and Incyte contributes its genomics capabilities.
Incyte owns the data produced, and we receive a perpetual, non-exclusive
license to use the data in our drug development efforts. Each party bears
its own costs of the research and neither party makes any payments to the
other. Either party may terminate the agreement on 60 days written notice.
In August 2001, we expanded the scope of our 1998 research collaboration, to
focus on identifying genes involved in the development of atherosclerosis
and coronary artery disease.
Innovex
In May 1999, we entered into a sales and marketing services agreement
with Innovex, a subsidiary of Quintiles Transnational Corp. Under this
agreement, if ranolazine is approved for sale in the United States by the
FDA, Innovex will hire and train a dedicated sales force for ranolazine and
assist in funding marketing expenses for up to five years after launch. We
will receive 100% of the revenues from sales of ranolazine and we will pay
Innovex a share of those revenues.
The agreement calls for Innovex to conduct pre-launch activities, hire
and train a dedicated cardiology sales force to launch and promote
ranolazine, and provide post-launch marketing and sales services. To fund
pre-launch activities, Quintiles will provide us with a $10 million credit
facility at the time we file with the FDA for approval. We are required to
spend a minimum of $10 million on ranolazine pre-launch marketing activities
so long as Quintiles provides advances under the credit facility. Upon FDA
approval, Quintiles will make a $10 million milestone payment to us, which
we are obligated to use to repay any amounts outstanding under the credit
facility. Should we file for FDA approval and draw down the credit facility,
but never receive FDA approval, we are obligated to repay the loan within 10
years of the date we received the loan.
Innovex has agreed to provide services for at least three years after
launch and to provide services in years four and five after launch if
minimum sales levels are met. The agreement also specifies the minimum
number of sales representatives and the minimum level of dollars to be spent
on marketing by Innovex during the first two years of the contract,
regardless of sales levels. The minimum size of the sales force and the
marketing expenses in year three or any subsequent year must be maintained
by Innovex as long as minimum sales levels are met.
In exchange for providing these sales and marketing services, Innovex
will receive a fee equal to up to an average of 33% of our revenues related
to the sale of ranolazine in the first two years of sales, up to 30% of
revenues for the third year and up to 25% of revenues in years four and
five. Also, for giving us the option to retain this trained sales force at
the end of the contract, Innovex will receive a royalty on sales of 7% in
the sixth year and 4% in the seventh year after launch.
In connection with the agreement, Quintiles purchased 1,043,705 shares
of our common stock for a total purchase price of $5.0 million.
We or Innovex may terminate the agreement in the event of material
uncured breach, bankruptcy or insolvency, our decision to not file an NDA
for ranolazine or to terminate development of the product, notice from the
United States Food and Drug Administration that it will not approve the
product for marketing, or failure to achieve certain minimum sales levels.
In addition, we or Innovex (subject to certain notice and response
provisions) may terminate the agreement if product launch will not occur by
a specific date. The agreement will terminate automatically if we no longer
retain our license rights to ranolazine.
Fujisawa Healthcare
In July 2000, we entered into a collaboration with Fujisawa Healthcare,
Inc. (FHI) to develop and market second generation pharmacologic cardiac
stress agents. Under this agreement, FHI received exclusive North American
rights to CVT-3146, a short acting selective A2A adenosine receptor agonist,
and to a backup compound. We received $10.0 million from FHI consisting of a
$6.0 million up-front payment, which will be recognized as revenue over the
expected term of the agreement, and the purchase of 54,270 shares of our
common stock for a total purchase price of $4.0 million. In September 2001,
based on initiating a Phase II clinical trial for CVT-3146, FHI paid us a
$2.0 million milestone payment. We may receive up to an additional $22.0
million in cash based on development and regulatory milestones such as
initiation of clinical studies and certain regulatory filings and approval.
FHI reimburses us for 75% of the development costs, and if the product is
approved by the FDA, we will receive a royalty based on product sales of
CVT-3146 and may receive a royalty on another product sold by FHI. The
amount reimbursed for development costs was $0, $996,000 and $2.8 million
for 1999, 2000 and 2001, respectively.
FHI may terminate the agreement for any reason on 90 days written
notice, and we may terminate the agreement if FHI fails to launch a product
within a specified period after marketing approval. In addition, we or FHI
may terminate the agreement in the event of material uncured breach, or
bankruptcy or insolvency.
MARKETING AND SALES
Except for our sales and marketing services agreement with Innovex, we
currently have no sales or distribution capabilities, and have only limited
marketing capabilities. We may promote our products in collaboration with
marketing partners or rely on relationships with one or more companies with
established distribution systems and direct sales forces. For example,
Innovex will provide sales and marketing for ranolazine in the United
States. For our other products, and for ranolazine at the end of the term of
our agreement with Innovex, we may elect to establish our own specialized
sales force and marketing organization to market our products to cardiologists.
MANUFACTURING
We do not currently operate manufacturing facilities for clinical or
commercial production of our proposed products. We have no experience in
manufacturing, and currently lack the resources and capability to
manufacture any of our proposed products on a clinical or commercial scale.
Accordingly, we are, and will continue to be, dependent on corporate
partners, licensees or other third parties for clinical and commercial scale
manufacturing. We have entered into several manufacturing agreements
relating to ranolazine, including for commercial scale-up of production of
bulk active pharmaceutical ingredient, tableting and supply of a raw
material component of the product.
We do have experience in the transfer of synthetic technology from
discovery to scale-up manufacturing facilities, having successfully executed
technology transfer for the manufacture of clinical supplies of one orally
administered agent and one intravenously administered agent. In addition,
prior to approval of an NDA for ranolazine, we will be required to
demonstrate to the FDA's satisfaction the equivalence of the multiple
sources of supply used in our clinical trials and their equivalence to the
product to be commercially supplied.
PATENTS AND PROPRIETARY TECHNOLOGY
Patents and other proprietary rights are important to our business.
Our policy is to file patent applications in the United States and
internationally in order to protect our technology, including inventions and
improvements to inventions that are commercially important to the
development of our business. The evaluation of the patentability of United
States and foreign patent applications can take several years to complete
and can entail considerable expense.
We own multiple patents issued by and/or patent applications pending
with the United States Patent and Trademark Office and foreign patents or
patent applications relating to our technology, including related to our
clinical programs, ranolazine, CVT-510 and CVT-3146. We also have acquired a
license, which is exclusive in specified territories, to specified patents
issued by the United States Patent and Trademark Office (US PTO) and foreign
corresponding patents and patent applications related to ranolazine. The
United States composition of matter patent relating to ranolazine will
expire in 2003 unless we are granted an extension based upon the
Waxman-Hatch Act, which we anticipate would extend the patent protection for
an additional five years; however, in 2001 we received an issued patent from
the US PTO for a method of using sustained release formulations of
ranolazine, including the formulation used in the MARISA and CARISA trials,
for the treatment of chronic angina. This patent expires in 2019.
In addition, we have acquired, and in turn have granted to Biogen, an
exclusive license to issued patents and pending patent applications relating
to A1 adenosine receptor antagonists.
GOVERNMENT REGULATION
FDA Requirements for Drug Compounds
The research, testing, manufacture and marketing of drug products are
extensively regulated by numerous governmental authorities in the United
States and other countries. In the United States, drugs are subject to
rigorous regulation by the FDA. The Federal Food, Drug and Cosmetic Act, and
other federal and state statutes and regulations, govern, among other
things, the research, development, testing, manufacture, storage,
recordkeeping, labeling, promotion and marketing and distribution of
pharmaceutical products. Failure to comply with applicable regulatory
requirements may subject a company to a variety of administrative or
judicially imposed sanctions.
The steps ordinarily required before a new pharmaceutical product may
be marketed in the United States include preclinical laboratory tests,
animal tests and formulation studies, the submission to the FDA of an
Investigational New Drug Application (or IND), which must become effective
before clinical testing may commence, and adequate and well-controlled
clinical trials to establish the safety and effectiveness of the drug for
each indication for which it is being tested.
Preclinical tests include laboratory evaluation of product chemistry
and formulation, as well as animal trials to assess the potential safety and
efficacy of the product. The conduct of the preclinical tests and
formulation of compounds for testing must comply with federal regulations
and requirements. The results of preclinical testing are submitted to the
FDA as part of an IND.
A 30-day waiting period after the filing of each IND is required prior
to the commencement of clinical testing in humans. If the FDA has not
commented on or questioned the IND within this 30-day period, clinical
trials may begin. If the FDA has comments or questions, the applicant must
answer the questions to the FDA's satisfaction before initial clinical
testing can begin. In addition, the FDA may, at any time, impose a clinical
hold on ongoing clinical trials. If the FDA imposes a clinical hold,
clinical trials cannot commence or recommence without FDA authorization and
then only under terms the FDA authorizes. In some instances, the IND
application process can result in substantial delay and expense.
Clinical trials involve the administration of the investigational new
drug to healthy volunteers or patients under the supervision of a qualified
principal investigator. Clinical trials must be conducted in compliance with
federal regulations and requirements, under protocols detailing the
objectives of the trial, the parameters to be used in monitoring safety and
the effectiveness criteria to be evaluated. Each protocol must be submitted
to the FDA as part of the IND. The study protocol and informed consent
information for patients in clinical trials must also be approved by the
institutional review board at each institution where the trials will be
conducted.
Clinical trials to support NDAs are typically conducted in three
sequential phases, but the phases may overlap. In Phase I, the initial
introduction of the drug into healthy human subjects or patients, the drug
is tested to assess metabolism, pharmacokinetics and pharmacological actions
and safety, including side effects associated with increasing doses. Phase
II usually involves trials in a limited patient population, to determine
dosage tolerance and optimal dosage, identify possible adverse effects and
safety risks, and provide preliminary support for the efficacy of the drug
in the indication being studied.
If a compound is found to be effective and to have an acceptable
safety profile in Phase II evaluations, Phase III trials are undertaken to
further evaluate clinical efficacy and to further test for safety within an
expanded patient population at geographically dispersed clinical trial
sites. There can be no assurance that Phase I, Phase II or Phase III testing
of our product candidates will be completed successfully within any
specified time period, if at all.
After completion of the required clinical testing, generally a
marketing application called a New Drug Application (NDA) is prepared and
submitted to the FDA. FDA approval of the NDA is required before marketing
of the product may begin in the United States. The NDA must include the
results of extensive clinical and other testing and the compilation of data
relating to the product's chemistry, pharmacology and manufacture. The cost
of the NDA is substantial.
The FDA has 60 days from its receipt of the NDA to determine whether
the application will be accepted for filing based on the agency's threshold
determination that the NDA is sufficiently complete to permit substantive
review. Once the submission is accepted for filing, the FDA begins an
in-depth review of the NDA. Under federal law, the FDA has 180 days in which
to review the NDA and respond to the applicant. The review process is often
significantly extended by FDA requests for additional information or
clarification regarding information already provided in the submission. The
FDA typically will refer the application to the appropriate advisory
committee, typically a panel of clinicians, for review, evaluation and a
recommendation as to whether the application should be approved. The FDA is
not bound by the recommendation of an advisory committee.
If FDA evaluations of the NDA and the manufacturing facilities are
favorable, the FDA may issue an approval letter, or, in some cases, an
approvable letter followed by an approval letter. Both letters usually
contain a number of conditions that must be met in order to secure final
approval of the NDA. When and if those conditions have been met to the FDA's
satisfaction, the FDA will issue an approval letter. The approval letter
authorizes commercial marketing of the drug for specific indications. As a
condition of NDA approval, the FDA may require postmarketing testing and
surveillance to monitor the drug's safety or efficacy, or impose other
conditions. Once granted, product approvals may be withdrawn if compliance
with regulatory standards is not maintained or problems occur following
initial marketing.
If the FDA's evaluation of the NDA submission or manufacturing
facilities is not favorable, the FDA may refuse to approve the NDA or issue
a not approvable letter. The not approvable letter outlines the deficiencies
in the submission and often requires additional testing or information. The
FDA ultimately may decide that the application does not satisfy the
regulatory criteria for approval.
Foreign Regulation of Drug Compounds
Approval of a product by comparable regulatory authorities may be
necessary in foreign countries prior to the commencement of marketing of the
product in those countries, whether or not FDA approval has been obtained.
The approval procedure varies among countries and can involve additional
testing. The time required may differ from that required for FDA approval.
Although there are some procedures for unified filings for some European
countries with the sponsorship of the country which first granted marketing
approval, in general each country has its own procedures and requirements,
many of which are time consuming and expensive. Thus, there can be
substantial delays in obtaining required approvals from foreign regulatory
authorities after the relevant applications are filed.
In Europe, marketing authorizations may be submitted at a centralized,
a decentralized or a national level. The centralized procedure is mandatory
for the approval of biotechnology products and provides for the grant of a
single marketing authorization which is valid in all European Union member
states. As of January 1995, a mutual recognition procedure is available at
the request of the applicant for all medicinal products which are not
subject to the centralized procedure. If we decide to pursue European
approval for our clinical candidates, we will choose an appropriate route of
European regulatory filing to accomplish the most rapid regulatory
approvals. There can be no assurance that the chosen regulatory strategy
will secure regulatory approvals on a timely basis or at all.
Hazardous Materials
Our research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials and produce waste
products. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposing of hazardous
materials and waste products.
COMPETITION
The pharmaceutical and biopharmaceutical industries are subject to
intense competition and rapid and significant technological change. If
regulatory approvals are received, ranolazine may compete with several
classes of existing drugs for the treatment of angina, some of which,
including calcium channel blockers, beta blockers and nitrates, are
available in relatively inexpensive generic form. Surgical treatments such
as coronary artery bypass grafting and percutaneous transluminal coronary
angioplasty can be another option for angina patients. In addition, we are
aware of companies that are developing products that may compete with our
other drug candidates. For example, we believe that Aderis Pharmaceuticals
and Fujisawa Healthcare have A1 adenosine receptor agonists under
development which could compete with CVT-510. We believe King
Pharmaceuticals Inc., Aderis Pharmaceuticals, DuPont Pharmaceuticals
Company, and Adenosine Therapeutics LLC have A2A adenosine receptor agonists
under development which could compete with CVT-3146. Finally, we believe
Fujisawa Pharmaceutical Co., Ltd. and Aderis Pharmaceuticals are each
developing A1 adenosine receptor antagonists which could compete with
Biogen's AdentriTM program.
We believe that the principal competitive factors in the potential
markets for ranolazine, CVT-510, CVT-3146 and AdentriTM will include:
* the length of time to receive regulatory approval;
* product performance;
* product price;
* product supply;
* marketing and sales capability; and
* enforceability of patent and other proprietary rights.
We believe that we and our collaborative partners are or will be
competitive with respect to these factors. Nonetheless, because our products
are still under development, our relative competitive position in the future
is difficult to predict.
EMPLOYEES
As of January 31, 2002, we employed 222 individuals full-time, including
52 who hold doctoral degrees. Of our full-time work force, 171 employees are
engaged in or directly support research and development activities and 51
are engaged in business development, finance and administrative activities.
Our employees are not represented by a collective bargaining agreement. We
believe that our relations with our employees are good.
RISK FACTORS
OUR PRODUCT CANDIDATES WILL TAKE AT LEAST SEVERAL YEARS TO DEVELOP, AND
WE CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY DEVELOP, MARKET AND
MANUFACTURE THESE PRODUCTS.
Since our inception in 1990, we have dedicated substantially all of our
resources to research and development. We do not have any marketed products,
and we have not generated any product revenue. Because
all of our potential products are in research, preclinical or clinical
development, we will not realize product revenues for at least several years,
if at all.
We have not applied for or received regulatory approval in the United
States or any foreign jurisdiction for the commercial sale of any of our
products. All of our product candidates are either in clinical trials under
an Investigational New Drug, or IND, or applicable foreign authority
submission, or are in preclinical research and development. We have not
submitted an NDA to the FDA or an equivalent application to any other
foreign regulatory authorities for any of our product candidates, and the
products have not been determined to be safe or effective in humans for
their intended uses.
Conducting clinical trials is a lengthy, time-consuming and expensive
process. Before obtaining regulatory approvals for the commercial sale of
any products, we must demonstrate through preclinical testing and clinical
trials that our product candidates are safe and effective for use in humans.
We will incur substantial expense for, and devote a significant amount of
time to, preclinical testing and clinical trials.
Drug discovery methods based upon molecular cardiology are relatively
new. We cannot be certain that these methods will lead to commercially
viable pharmaceutical products. In addition, some of our compounds within
our adenosine receptor research, metabolism, atherosclerosis and cell cycle
inhibition programs are in the early stages of research and development. We
have not submitted IND applications or commenced clinical trials for these
new compounds. We cannot be certain when these clinical trials will
commence, if at all. Because these compounds are in the early stages of
product development, we could abandon further development efforts before
they reach clinical trials.
We cannot be certain that any of our product development efforts will be
completed or that any of our products will be shown to be safe and
effective. Even if we believe that any product is safe and effective, we may
not obtain the required regulatory approvals. Furthermore, we may not be
able to manufacture our products in commercial quantities or market any
products successfully.
IF WE ARE UNABLE TO SATISFY THE REGULATORY REQUIREMENTS FOR OUR CLINICAL
TRIALS, WE WILL NOT BE ABLE TO COMMERCIALIZE OUR DRUG CANDIDATES.
All of our products may require additional development, preclinical
studies and clinical trials, and will require regulatory approval, prior to
commercialization. Any delays in our clinical trials would delay market
launch, increase our cash requirements and result in additional operating
losses.
We currently have only four products in clinical development:
ranolazine, CVT-510 (tecadenoson), CVT-3146 and AdentriTM. On June 29, 2001,
we announced that we initiated a Phase III trial of CVT-510 in patients with
paroxysmal supraventricular tachycardia. On August 21, 2001, we announced
that we commenced a Phase II clinical trial of CVT-3146. On November 19,
2001, we announced that in an open-label, dose-ranging Phase II
clinical trial in patients with atrial fibrillation or flutter, CVT-510
consistently reduced patients' heart rate from baseline (p<0.05) without
clinically meaningful changes in blood pressure. We subsequently embarked on a
Phase IIb development program aimed at defining an optimized dosage regimen in
patients with this complex cardiac disease.
Many factors could delay completion of our clinical trials, including:
* slower than anticipated patient enrollment;
* difficulty in obtaining sufficient supplies of clinical trial
materials; and
* adverse events occurring during the clinical trials.
For example, our first Phase III clinical trial of ranolazine, called
Monotherapy Assessment of Ranolazine In Stable Angina or MARISA, had
challenging enrollment criteria. As a result, enrollment for this trial was
slower than anticipated.
In addition, data obtained from preclinical and clinical activities are
susceptible to different interpretations, which could delay, limit or
prevent regulatory approval. Delays or rejections may be based upon many
factors, including regulatory requests for additional analyses, data and/or
studies, regulatory questions regarding data and results, and/or changes in
regulatory policy during the period of product development. For example, the
initial clinical trials with ranolazine used an immediate release
formulation of ranolazine, while a sustained release formulation was used in
the MARISA and CARISA trials. The NDA for ranolazine will contain data from
trials using two different formulations, which is subject to interpretation
by the FDA. An unfavorable interpretation could delay potential approval.
Furthermore, regulatory attitudes towards the data and results required to
demonstrate safety and efficacy change over time. We cannot be sure whether
future changes to the regulatory environment will be favorable or
unfavorable to our business prospects.
We may be unable to maintain our proposed schedules for IND applications
and clinical protocol submissions to the FDA, initiations of clinical trials
and completions of clinical trials as a result of FDA reviews or
complications that may arise in any phase of the clinical trial program.
Furthermore, even if our clinical trials occur on schedule, the results
may differ from those obtained in preclinical studies and earlier clinical
trials. Clinical trials may not demonstrate sufficient safety and efficacy
to obtain the necessary approvals. For example, in November 1995, based on
unfavorable efficacy data from a Phase II trial, we terminated a prior
development program.
IF WE ARE UNABLE TO SATISFY GOVERNMENTAL REGULATIONS RELATING TO THE
DEVELOPMENT OF OUR DRUG CANDIDATES, WE MAY BE UNABLE TO OBTAIN OR MAINTAIN
NECESSARY REGULATORY APPROVALS TO COMMERCIALIZE OUR PRODUCTS.
The research, testing, manufacturing and marketing of drug products are
subject to extensive regulation by numerous regulatory authorities in the
United States and other countries. Failure to comply with FDA or other
applicable regulatory requirements may subject a company to administrative
or judicially imposed sanctions. These include:
* warning letters;
* civil penalties;
* criminal penalties;
* injunctions;
* product seizure or detention;
* product recalls;
* total or partial suspension of manufacturing; and
* FDA refusal to review or approve pending NDAs or supplements to
approved NDAs.
The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, often takes many years and can vary
substantially based upon the type, complexity and novelty of the products
involved. Furthermore, this approval process is extremely expensive and
uncertain. We cannot guarantee that any
of our products under development will be approved for marketing by the FDA or
corresponding foreign regulatory authorities. Even if marketing approval of a
product is granted, we cannot be certain that we will be able to obtain the
labeling claims necessary or desirable for the promotion of those products.
Even if we obtain marketing approval, we may be required to undertake
post-marketing trials. In addition, identification of side effects after a
drug is on the market or the occurrence of manufacturing problems could
cause or require subsequent withdrawal of approval, reformulation of the
drug, additional preclinical testing or clinical trials, changes in labeling
of the product, and/or additional regulatory approvals.
If we receive marketing approval, we will also be subject to ongoing FDA
obligations and continued regulatory review, such as continued safety
reporting requirements, and we may also be subject to additional FDA
post-marketing obligations. In addition, we or our third party manufacturers
will be required to adhere to federal regulations setting forth current good
manufacturing practices, known as cGMP. The regulations require, among other
things, that we manufacture our products and maintain our records in a
prescribed manner with respect to manufacturing, testing and quality control
activities. Furthermore, we or our third party manufacturers must pass a
preapproval inspection of manufacturing facilities by the FDA and
corresponding foreign regulatory authorities before obtaining marketing
approval, and will be subject to periodic inspection by the FDA and
corresponding foreign regulatory authorities under reciprocal agreements
with the FDA. We cannot guarantee that such inspections will not result in
compliance issues that could prevent or delay marketing approval, or require
us to expend money or other resources to correct. In addition, drug product
manufacturing facilities in California must be licensed by the State of
California, and other states may have comparable requirements. We cannot
assure you that we will be able to obtain such licenses.
If we receive marketing approval and if any of our products or services
become reimbursable by a government health care program, such as Medicare or
Medicaid, we will become subject to certain federal and state health care
fraud and abuse and reimbursement laws. These laws include the federal
"Anti-Kickback Statute," "False Claims Act," "Prescription Drug Marketing
Act," and "Physician Self-Referral Law," and their state counterparts. If
and when we become subject to such laws, our arrangements with third
parties, including health care providers, physicians, vendors, distributors,
wholesalers and Innovex, will need to comply with these laws, as applicable.
We do not know whether our existing or future arrangements will be found to
be compliant. Violations of these statutes could result in substantial
criminal and civil penalties and exclusion from governmental health care
programs.
In addition, the regulatory environment in which our regulatory
submissions may be reviewed changes over time. For example, average review
times at the FDA for marketing approval applications have fluctuated
substantially over the last 10 years, with review times for marketing
applications for new chemical entities having recently increased from 12 to
15 months after having declined previously. In addition, review times at the
FDA can be impacted by a variety of factors, including federal budget and
funding levels and statutory and regulatory changes. For example, the
current federal statutory and regulatory framework for funding of FDA
reviews under
the Prescription Drug User Fee Act (PDUFA) is set to expire in 2002,
unless further Congressional action and regulatory implementation
occurs, and a delay in such actions could negatively impact review times at
the FDA.
OUR PRODUCTS, EVEN IF APPROVED BY THE FDA OR FOREIGN REGULATORY
AGENCIES, MAY NOT BE ACCEPTED BY PHYSICIANS, INSURERS OR PATIENTS.
If any of our products, after receiving FDA or other foreign regulatory
approval, fail to achieve market acceptance, our ability to become
profitable in the future will be adversely affected. We believe that market
acceptance will depend on our ability to provide acceptable evidence of
safety, efficacy and cost effectiveness. In addition, we believe that market
acceptance depends on the effectiveness of our marketing strategy and the
availability of government and private insurance reimbursement for our
products.
WE HAVE NO MARKETING OR SALES EXPERIENCE, AND IF WE ARE UNABLE TO ENTER
INTO OR MAINTAIN COLLABORATIONS WITH MARKETING PARTNERS OR IF WE ARE UNABLE
TO DEVELOP OUR OWN SALES AND MARKETING CAPABILITY, WE MAY NOT BE SUCCESSFUL
IN COMMERCIALIZING OUR PRODUCTS.
We currently have no sales or distribution capability and only limited
marketing capability. As a result, we depend on collaborations with third
parties, such as Innovex, Biogen and Fujisawa, which have established
distribution systems and direct sales forces. To the extent that we enter
into co-promotion or other licensing arrangements, our revenues will depend
upon the efforts of third parties, over which we may have little control.
For instance, we have entered into a sales and marketing services agreement
with Innovex with respect to ranolazine. Innovex will market and sell
ranolazine in the United States using a dedicated sales force if and when
the FDA approves the marketing of ranolazine. Our successful
commercialization of ranolazine depends on Innovex performing their
contractual obligations. Similarly, Biogen is responsible for worldwide
marketing and sales of any product that results from the AdentriTM program,
and Fujisawa is responsible for marketing and sales of CVT-3146 in North
America.
If we are unable to reach and maintain agreement with one or more
pharmaceutical companies or collaborative partners, we may be required to
market our products directly. We may elect to establish our own specialized
sales force and marketing organization to market our products to
cardiologists. In order to do this, we would have to develop a marketing and
sales force with technical expertise and with supporting distribution
capability. Developing a marketing and sales force is expensive and time
consuming and could delay any product launch. We cannot be certain that we
will be able to develop this capacity.
IF WE ARE UNABLE TO ATTRACT AND RETAIN COLLABORATORS, LICENSORS AND
LICENSEES, THE DEVELOPMENT OF OUR PRODUCTS COULD BE DELAYED AND OUR FUTURE
CAPITAL REQUIREMENTS COULD INCREASE SUBSTANTIALLY.
We may not be able to retain current or attract new corporate and
academic collaborators, licensors, licensees and others. Our business
strategy requires us to enter into various arrangements with these parties,
and we are dependent upon the success of these parties in performing their
obligations. If we fail to obtain and maintain these arrangements, the
development of our products would be delayed. We may be unable to proceed
with the development, manufacture or sale of products or we might have to
fund development of a particular product candidate internally. If we have to
fund the development and commercialization of all of our products
internally, our future capital requirements will increase substantially.
The collaborative arrangements that we may enter into in the future may
place responsibility on the collaborative partner for preclinical testing
and clinical trials, manufacturing and preparation and submission of
applications for regulatory approval of potential pharmaceutical products.
We cannot control the amount and timing of resources which our collaborative
partners devote to our programs. If a collaborative partner fails to
successfully develop or commercialize any product, product launch would be
delayed. In addition, our collaborators may pursue competing technologies or
product candidates.
Under our collaborative arrangements, we or our collaborative partners
may also have to meet performance milestones. If we fail to meet our
obligations under our collaborative arrangements, our collaborators could
terminate their arrangements or we could lose our rights to the compounds
under development. For example, under our agreement with Innovex, we are
required to launch the product by a specific date. If we fail to reach this
milestone, Innovex will no longer be obligated to provide sales and
marketing services for ranolazine. Under our agreement with Biogen, in order
for us to receive development milestone payments, Biogen must meet
development milestones. Under our license agreement with Syntex for
ranolazine, we are required to use commercially reasonable efforts to
develop and commercialize ranolazine for angina, and have related milestone
payment obligations. Under our agreement with Fujisawa, we are responsible
for development activities and must meet development milestones in order to
receive development milestone payments.
In addition, collaborative arrangements in our industry are extremely
complex, particularly with respect to intellectual property rights. Disputes
may arise in the future with respect to the ownership of rights to any
technology developed with or by third parties. These and other possible
disagreements between us and our collaborators could lead to delays in the
collaborative research, development or commercialization of product
candidates. These disputes could also result in litigation or arbitration,
which is time consuming and expensive.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND MAY NEVER ACHIEVE
PROFITABILITY.
We cannot be certain that we will ever achieve and sustain
profitability. Since our inception, we have been engaged in research and
development activities. We have generated no product revenues. As of
December 31, 2001, we had an accumulated deficit of $210.8 million. The
process of developing our products requires significant additional research
and development, preclinical testing and clinical trials, as well as
regulatory approvals. These activities, together with our general and
administrative expenses, are expected to result in operating losses for the
foreseeable future.
IF WE ARE UNABLE TO SECURE ADDITIONAL FINANCING, WE MAY BE UNABLE TO
COMPLETE OUR RESEARCH AND DEVELOPMENT ACTIVITIES OR COMMERCIALIZE ANY PRODUCTS.
We may require substantial additional funding in order to complete our
research and development activities and commercialize any of our products.
In the past, we have financed our operations primarily through the sale of
equity and debt securities, payments from our collaborators, equipment and
leasehold improvement financing and other debt financing. We have generated
no product revenue and do not expect to for at least several years. We
anticipate that our existing resources and projected interest income will
enable us to maintain our current and planned operations for at least the
next 24 months. However, we may require additional funding prior to that
time.
Additional financing may not be available on acceptable terms or at all.
If we are unable to raise additional funds, we may, among other things:
* have to delay, scale back or eliminate some or all of our
research or development programs;
* lose rights under existing licenses;
* have to relinquish more of, or all of, our rights to product
candidates at an earlier stage of development or on less
favorable terms than we would otherwise seek; and
* be unable to operate as a going concern.
Our future capital requirements will depend on many factors, including:
* scientific progress in our research and development programs;
* the size and complexity of our programs;
* the timing, scope and results of preclinical studies and
clinical trials;
* our ability to establish and maintain corporate partnerships;
* the time and costs involved in obtaining regulatory approvals;
* the costs involved in filing, prosecuting and enforcing patent
claims;
* competing technological and market developments; and
* the cost of manufacturing or obtaining preclinical and clinical
material.
If additional funds are raised by issuing equity securities, substantial
dilution to existing stockholders may result. There may be additional
factors that could affect our need for additional financing. Many of these
factors are not within our control.
IF WE ARE UNABLE TO COMPETE SUCCESSFULLY IN OUR MARKET, IT WILL HARM OUR
BUSINESS.
The pharmaceutical and biopharmaceutical industries, and the market for
cardiovascular drugs in particular, are intensely competitive. If our
products receive marketing approvals, they will often compete with
well-established, proprietary and generic cardiovascular therapies that have
generated substantial sales over a number of years. Many of these therapies
are reimbursed from government health administration authorities and private
health insurers.
In addition, we are aware of companies which are developing products
that may compete in the same markets as our products. Many of these
potential competitors have substantially greater product development
capabilities and financial, scientific, marketing and sales resources. Other
companies may succeed in developing products earlier or obtain approvals
from the FDA more rapidly than either we or our corporate partners are able
to achieve. Competitors may also develop products that are safer or more
effective than those under development or proposed to be developed by us and
our corporate partners. In addition, research and development by others
could render our technology or our products obsolete or non-competitive.
IF WE ARE UNABLE TO EFFECTIVELY PROTECT OUR INTELLECTUAL PROPERTY, WE
MAY BE UNABLE TO COMPLETE DEVELOPMENT OF ANY PRODUCTS AND WE MAY BE PUT AT A
COMPETITIVE DISADVANTAGE; AND IF WE ARE INVOLVED IN AN INTELLECTUAL PROPERTY
RIGHTS DISPUTE, WE MAY NOT PREVAIL AND MAY BE SUBJECT TO SIGNIFICANT
LIABILITIES OR REQUIRED TO LICENSE RIGHTS FROM A THIRD PARTY.
Our success will depend to a significant degree on our ability to:
* obtain patents and licenses to patent rights;
* maintain trade secrets; and
* operate without infringing on the proprietary rights of others.
In 2001, we received an issued patent from the U.S. Patent and Trademark
Office for a method of using ranolazine sustained release formulations,
including the formulation used in the MARISA and CARISA trials, for the
treatment of chronic angina. However, in general we cannot be certain that
patents will issue from any of our pending or future patent applications,
that any issued patent will not be lost through an interference or
opposition proceeding, reexamination request, infringement litigation or
otherwise, that any issued patent will be sufficient
to protect our technology and investments, or that we will be able to obtain
extensions of patents beyond the initial term.
Although United States patent applications are now published 18 months
after their filing date, as provided by federal legislation enacted in 1999,
this statutory change applies only to applications filed on or after
November 29, 2000. Applications filed in the United States prior to this
date are maintained in secrecy until a patent issues. As a result, we can
never be certain that others have not filed patent applications for
technology covered by our pending applications or that we were the first to
invent the technology. There may be third party patents, patent applications
and other intellectual property relevant to our products and technology
which are not known to us and that block or compete with our compounds,
products or processes.
Competitors may have filed applications for, or may have received
patents and may obtain additional patents and proprietary rights relating
to, compounds, products or processes that block or compete with ours. We may
have to participate in interference proceedings declared by the Patent and
Trademark Office. These proceedings determine the priority of invention and,
thus, the right to a patent for the technology in the United States. In
addition, litigation may be necessary to enforce any patents issued to us or
to determine the scope and validity of the proprietary rights of third
parties. Litigation and interference proceedings, even if they are
successful, are expensive to pursue, and we could use a substantial amount
of our limited financial resources in either case.
Just as it is important to protect our proprietary rights, we also must
not infringe patents issued to competitors or breach the licenses that might
cover technology used in our potential products. If our competitors own or
have rights to technology that we need in our product development efforts,
we will need to obtain a license to those rights. We cannot assure you that
we will be able to obtain such licenses on economically reasonable terms. If
we fail to obtain any necessary licenses, we may be unable to complete
product development.
We also rely on trade secrets to develop and maintain our competitive
position. Although we protect our proprietary technology in part by
confidentiality agreements with employees, consultants, collaborators,
advisors and corporate partners, these agreements may be breached. We cannot
assure you that the parties to these agreements will not breach them or that
these agreements will provide meaningful protection or adequate remedies in
the event of unauthorized use or disclosure of our proprietary technology.
In that event, we may not have adequate remedies for any breach. As a
result, third parties may gain access to our trade secrets, and our trade
secrets and confidential technology may become public. In addition, it is
possible that our trade secrets will otherwise become known or be discovered
independently by our competitors.
Patent litigation is widespread in the biopharmaceutical industry.
Although no third party has asserted a claim of infringement against us, we
cannot assure you that third parties will not assert patent or other
intellectual property infringement claims against us with respect to our
products or technology or other matters. If they do, we may not prevail and,
as a result, may be subject to significant liabilities to third parties or
may be required to license the disputed rights from the third parties or
cease using the technology. We may not be able to obtain any necessary
licenses on reasonable terms, if at all. Any such claims against us, with or
without merit, as well as claims initiated by us against third parties, can
be time-consuming and expensive to defend or prosecute.
WE HAVE NO MANUFACTURING EXPERIENCE AND WILL DEPEND ON THIRD PARTIES TO
MANUFACTURE OUR PRODUCTS.
We do not currently operate manufacturing facilities for clinical or
commercial production of our products under development. We have no
experience in manufacturing and currently lack the resources or capability
to manufacture any of our products on a clinical or commercial scale. As a
result, we are dependent on corporate partners, licensees or other third
parties for the manufacturing of clinical and commercial scale quantities of
our products.
For example, we have entered into agreements with third party
manufacturers for clinical scale production of ranolazine's active
pharmaceutical ingredient and for ranolazine tableting, which we believe are
sufficient to
support the remainder of the clinical program to support
filing of an NDA for ranolazine for chronic angina. In addition, we have
entered into several other manufacturing agreements relating to ranolazine,
including for commercial scale or scale-up of bulk active pharmaceutical
ingredient, tableting, and supply of a raw material component of the
product. However, the commercial launch of ranolazine is dependent on these
third party arrangements, and could be affected by delays or difficulties in
performance. In addition, because we have used different manufacturers for
ranolazine in different clinical trials and for potential commercial supply
prior to FDA approval of ranolazine, in order to obtain marketing approval
we will be required to demonstrate to the FDA's satisfaction the
bioequivalence of the multiple sources of ranolazine used in our clinical
trials and their bioequivalence to the product to be commercially supplied.
An unfavorable regulatory interpretation by the FDA could delay potential
approval.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH
ADMINISTRATION AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS
COULD MATERIALLY ADVERSELY AFFECT OUR FUTURE BUSINESS, RESULTS OF OPERATIONS
AND FINANCIAL CONDITION.
Our ability and the ability of our existing and future corporate
partners to market and sell our products will depend in part on the extent
to which reimbursement for the cost of our products and related treatments
will be available from government health administration authorities, private
health insurers and other organizations. Third party payors are increasingly
challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products. In addition, for sales of our products in
Europe, we will be required to seek reimbursement on a country-by-country
basis. We cannot be certain that any products approved for marketing will be
considered cost effective or that reimbursement will be available or that
allowed reimbursement in foreign countries will be adequate. In addition,
payors' reimbursement policies could adversely affect our or any corporate
partner's ability to sell our products on a profitable basis.
OUR BUSINESS DEPENDS ON CERTAIN KEY EXECUTIVES, THE LOSS OF WHOM COULD
WEAKEN OUR MANAGEMENT TEAM, AND ON ATTRACTING AND RETAINING QUALIFIED
PERSONNEL.
The growth of our business and success depends in large part on our
ability to attract and retain key management, technical, sales and marketing
and other operating personnel. We cannot assure you that we will be able to
attract and retain the qualified personnel or develop the expertise in these
areas as needed for our business. Although we have entered into executive
severance agreements with certain executives, we have not entered into any
employment agreements with key executives. The loss of the services of one
or more members of these groups or the inability to attract and retain
additional personnel and develop expertise as needed could limit our ability
to develop and commercialize our existing drugs and future drug candidates.
Such persons are in high demand and often receive competing employment offers.
OUR OPERATIONS INVOLVE HAZARDOUS MATERIALS, WHICH COULD SUBJECT US TO
SIGNIFICANT LIABILITY.
Our research and development activities involve the controlled use of
hazardous materials, including hazardous chemicals, radioactive materials
and pathogens, and the generation of waste products. Accordingly, we are
subject to federal, state and local laws governing the use, handling and
disposal of these materials. We may have to incur significant costs to
comply with additional environmental and health and safety regulations in
the future. Although we believe that our safety procedures for handling and
disposing of hazardous materials comply with regulatory requirements, we
cannot eliminate the risk of accidental contamination or injury from these
materials. In the event of an accident or environmental discharge, we may be
held liable for any resulting damages, which may exceed our financial
resources and may materially adversely affect our business, financial
condition and results of operations. Although we believe that we are in
compliance in all material respects with applicable environmental laws and
regulations, there can be no assurance that we will not be required to incur
significant costs to comply with environmental laws and regulations in the
future. There can also be no assurance
that our operations, business or assets will not be materially adversely
affected by current or future environmental laws or regulations.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS IF OUR PRODUCTS HARM
PEOPLE, AND WE HAVE ONLY LIMITED PRODUCT LIABILITY INSURANCE.
The manufacture and sale of human therapeutic products involve an
inherent risk of product liability claims and associated adverse publicity.
We currently have only limited product liability insurance for clinical
trials and no commercial product liability insurance. We do not know if we
will be able to maintain existing or obtain additional product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. This type of insurance is expensive and may not be available on
acceptable terms. If we are unable to obtain or
maintain sufficient insurance coverage on reasonable terms or to otherwise
protect against potential product liability claims, we may be unable to
commercialize our products. A successful product liability claim brought
against us in excess of our insurance coverage, if any, may require us to pay
substantial amounts. This could adversely affect our results of operations and
our need for and the timing of additional financing.
IF THE MARKET PRICE OF OUR STOCK CONTINUES TO BE HIGHLY VOLATILE, THE
VALUE OF YOUR INVESTMENT IN OUR COMMON STOCK MAY DECLINE.
Within the last 12 months, our common stock has traded between $23.75
and $60.85. The market price of the shares of common stock for our company
has been and may continue to be highly volatile. Announcements may have a
significant impact on the market price of our common stock. These
announcements may include:
* results of our clinical trials and preclinical studies, or those
of our corporate partners or our competitors;
* our operating results;
* developments in our relationships with corporate partners;
* developments affecting our corporate partners;
* negative regulatory action or regulatory approval with respect
to our announcement or our competitors' announcement of new
products;
* government regulations, reimbursement changes and governmental
investigations or audits related to us or to our products;
* developments related to our patents or other proprietary rights
or those of our competitors;
* changes in the position of securities analysts with respect to
our stock;
* operating results below the expectations of public market
analysts and investors ; and
* market conditions for biopharmaceutical or biotechnology stocks
in general.
The stock market has from time to time experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
emerging biotechnology and biopharmaceutical companies, and which have often
been unrelated to their operating performance. These broad market
fluctuations may adversely affect the market price of our common stock. In
addition, sales of substantial amounts of our common stock in the public
market could lower the market price of our common stock.
PROVISIONS OF DELAWARE LAW AND IN OUR CHARTER, BY-LAWS AND OUR RIGHTS
PLAN MAY PREVENT OR FRUSTRATE ANY ATTEMPT BY OUR STOCKHOLDERS TO REPLACE OR
REMOVE OUR CURRENT MANAGEMENT AND MAY MAKE THE ACQUISITION OF OUR COMPANY BY
ANOTHER COMPANY MORE DIFFICULT.
In February 1999, our board of directors adopted a stockholder rights
plan and authorized executive severance benefit agreements in the event of a
change of control for key executives, into which severance agreements we
have subsequently entered. The board of directors amended the stockholders
rights plan in July 2000 to lower the triggering ownership percentage and
increase the exercise price. Our rights plan and these agreements may delay
or prevent a change in our current management team and may render more
difficult an unsolicited merger or tender offer.
The following provisions of our Amended and Restated Certificate of
Incorporation, as amended, and our by-laws, may have the effects of delaying
or preventing a change in our current management and making the acquisition
of our company by a third party more difficult: our board of directors is
divided into three classes with approximately one third of the directors to
be elected each year, necessitating the successful completion of two proxy
contests in order for a change in contr