Acute Coronary Syndrome (ACS) is a group of conditions usually caused by a clot forming on a disrupted atherosclerotic plaque. It is divided into three groups, based on severity of risk as determined by electrocardiogram and laboratory findings: ST-elevation myocardial infarction (STEMI), non-ST-elevation myocardial infarction (NSTEMI), and unstable angina (UA). Myocardial infarction is commonly referred to as a heart attack. STEMI is the more severe form of heart attack. NSTEMI and some patients with UA who have certain clinical findings are also at high-risk of dying, though the risk is not as high as with STEMI.

In the US, there are 1.565 million hospitalizations for ACS each year. Percutaneous coronary interventions (PCI), such as angioplasty and stent placement, are procedures done by cardiologists to reduce blockage in both ACS and stable angina. They are performed in 850,000 cases per year. Depending on where the blockage is, some patients will need coronary bypass grafting surgery (CABG), with over 300,000 cases a year.

A major area of competition in ACS and PCI concerns drugs that fight clot formation. An anticoagulant approved for use with PCI, The Medicines Company’s Angiomax, is seeking to supplant a couple classes of traditional drugs and has gained significant share in low- risk patients. To grow much further, trial results in the higher risk patients (expected starting in 2006) will be needed. We project that in the US, Angiomax will become the anti-coagulant market leader in treating NSTEMI/UA patients receiving PCI, though because of different practice patterns, it will lag behind Lovenox in Europe. Another Medicines Company drug, intravenous antiplatelet agent Cangrelor, is intriguing because of its rapid onset and short duration of action. We feel it will be the first choice over oral Plavix in the acute treatment of high-risk ACS patients eligible for PCI and used in combination with Angiomax. Early results in the new area of cardioprotectants suggest this will be an interesting field to follow. We expect Pexelizumab to be the first one approved and to gain a large market share in STEMI patients undergoing PCI and in certain CABG patients at high risk for complications. Finally an anti-anginal agent with a novel mechanism of action, Ranexa, is in a large phase III trial for ACS. While this trial may alleviate some safety concerns, we anticipate physicians will initially use Ranexa in ACS only after traditional agents.

The following descriptions of usage for currently approved drugs and those in development are summarized in our linked ACS drug usage summary table.

BACKGROUND

Acute Coronary Syndrome (ACS) is a dangerous condition caused by a critical blockage of an artery feeding the heart - usually due to a clot forming on a disrupted atherosclerotic plaque. Due to chemical changes and inflammation, the plaque becomes unstable and ruptures, exposing blood to material inside the plaque that activates the formation of clots. Heart symptoms such as chest pain increase, distinguishing ACS from stable angina, which has a pattern of symptoms that is regular and predictable (in stable angina the blockage is not as severe as in ACS and usually is due to the plaque alone without an overlying clot). In the US, there are 1.565 million hospitalizations for ACS each year, 945,000 for acute myocardial infarction (MI) and 620,000 for UA.

There are several forms of ACS depending on severity. The most serious is called ST- elevation myocardial infarction (STEMI), referring to an electrocardiogram signifying a rapid wave front of heart muscle death from severe occlusion of an artery. This condition requires treatment to immediately reopen the artery. Non-ST-elevation myocardial infarction (NSTEMI) and unstable angina (UA) involve lesser degrees of occlusion, but NSTEMI patients have laboratory evidence of heart cell death, indicating the condition is more severe. Since these findings may not show up for hours, the two may be initially indistinguishable. Patients with NSTEMI and some with UA who have certain clinical findings are at high risk of dying, but not as high as those with STEMI. As such, we have classified these high-risk UA patients with the NSTEMI patients.

CURRENT TREATMENT

Standard initial treatment of ACS includes drugs that reduce the workload of the heart and dilate coronary vessels. These drugs, which will generally not be evaluated in this report, include nitrates, beta blockers, ACE inhibitors, and calcium channel blockers. This report will focus on the acute treatment of ACS, and not treatment after discharge from the hospital.

The major goal in treating ACS is to relieve the blockage caused by the atherosclerotic plaque and the overlying clot. The available options for this include percutaneous interventions (PCI) performed by cardiologists, coronary artery bypass surgery (CABG), and medical treatment with clot fighting drugs. When patients are first evaluated for ACS in the emergency room, their level of risk of death is assessed by the type of symptoms, electrocardiogram findings, and laboratory tests. Medical treatment to fight clots is then initiated. If a patient has a very high risk of death and PCI can be performed quickly, the patient needs to have an angiogram, a study where dye is injected into the arteries of the heart to determine where the blockage is and how severe it is. If a blockage is found, the type and site of blockage will determine if the patient gets either PCI or, usually at a later date, CABG.

The most common type of PCI is balloon angioplasty (PTCA) with stent placement. A catheter is inserted from a blood vessel in the leg up into a coronary artery and a balloon is inflated to open the blockage. The stent keeps the vessel from closing back up. PCIs, which are used to treat both ACS and stable angina, are performed in 850,000 patients each year.

Coronary artery bypass surgery (CABG) entails taking a blood vessel from another part of the body and using it to bypass the clot in the heart artery. In on-pump CABG, a cardiac pulmonary bypass machine pumps the patient’s blood while the heart is stopped. In off- pump CABG, instead of using a bypass machine, physicians slow the heartbeat. On-pump cardiac surgery requires higher levels of anticoagulation to prevent clots from forming in the machine or the patient’s blood system. It is also more stressful on the heart, but much easier for surgeons to learn. There are over 270,000 cases of CABG performed each year, 65% of which are on-pump.

The clot fighting drugs include clot dissolving agents, antiplatelet drugs, and anticoagulants (which target blood-borne clotting factors). Depending on the agent, they are used to treat both the risk of clot from the disease itself and the additional risk of clotting induced by the PCI or CABG procedure. The specific combination of clot fighting drugs and procedures depends on a number of factors, such as how quickly the patient is seen, the diagnosis, and the level of risk. The following descriptions of usage for currently approved drugs and those in development are summarized in our linked ACS drug usage summary table.

Treatment of NSTEMI/UA

There are two major approaches in treating NSTEMI/UA: an early invasive strategy in which all patients routinely have angiograms for potential PCI or CABG and an early conservative strategy (just medical treatment) for lower risk patients, in which angiograms are given based on symptoms or, if no further symptoms, the results of a noninvasive stress test (e.g. a treadmill test). Angiograms for high risk patients are recommended within 48 hours.

Anticoagulants in NSTEMI/UA

Anticoagulants are the mainstay of anti-clot treatment (for patients not at high risk of bleeding). They are used early in the course of treatment whether patients receive medical treatment alone, PCI, or CABG, though for low-risk patients their use is variable.

The standard anticoagulants have been the heparins, either unfractionated heparin (UFH) or low-molecular-weight heparin (LMWH). UFH is an intravenously given heterogeneous mix of molecules that acts through antithrombin to inactivate various clotting factors. However, because its effect is very different for different patients, it has to be monitored by laboratory measurements of clotting time. Also, 1-3% of patients develop a dangerous condition called heparin induced thrombocytopenia (HIT).

The LMWHs, such as Lovenox (Sanofi-Aventis) and Fragmin (Pfizer), are better on these counts. Lovenox is the market leader, with sales over 10 times that of Fragmin. Lovenox has shown some improvement in outcomes over UFH, at a cost of more minor but not major bleeding. However, as an injection, its effect is not as easily controlled. As a result, there has been hesitation about using it prior to PCI, though there is geographical variation in this. For example, in NSTEMI patients, use of LMWHs has only recently caught up to UFH in the US, whereas in Europe they have been used in 85% of cases for a number of years. The reasons are unclear, but probably involve differing opinions about the benefits of LMWH in situations where the time between the last injection and the PCI procedure cannot be controlled, as well as issues of convenience.

A major source of competition for UFH are the injectable direct thrombin inhibitors, particularly Angiomax (The Medicines Company), approved in 2000. Currently, Angiomax is primarily used in lower risk patients in place of UFH plus the antiplatelet agents called glycoprotein IIb/IIIa inhibitors (see below). As an infused agent with the convenience of replacing two other drugs and also providing a lower risk of bleeding, it has gained a majority share in lower risk patients undergoing PCI in the US. Sales in Europe have been slow. In order to expand its usage to additional indications, Angiomax is currently being studied in high-risk patients expected to receive PCI (see the Drugs in Development section).

An additional direct thrombin inhibitor, Argatroban (Encysive Pharmaceuticals), is only approved for PCI in patients with HIT.

Antiplatelet Drugs in NSTEMI/UA

Because clots are formed by both platelets and blood-borne clotting factors, antiplatelet drugs (in addition to aspirin) are used with anticoagulants for the acute treatment of NSTEMI/UA. While indicated for both medical treatment and PCI in NSTEMI/UA (but not CABG due to the risk of bleeding), their use is variable, partly over concerns about specific agents and partly as not all physicians agree that they are necessary to add.

The oral agent Plavix (Sanofi-Aventis) is an adenosine diphosphate P2Y12 receptor antagonist that blocks platelet clumping. It is by far the market leader of the adenosine diphosphate P2Y12 receptor antagonists, because there are safety concerns regarding the other agent, generically available ticlopidine. Plavix is used both for the early conservative approach or when angiography for possible PCI is planned (because of its slow onset of action it has to be given hours before the PCI to be effective). It is continued for up to 9 to 12 months after discharge from the hospital. Part of the reason for its use in PCI is to prevent clotting of stents. However, due to its long duration of action, a number of cardiologists are reluctant to give Plavix routinely before angiography, because the risk of bleeding would delay CABG, if needed. This leaves the drug potentially vulnerable to agents in development with fast on and fast off characteristics.

Another class of antiplatelet agents includes the intravenous glycoprotein IIb/IIIa inhibitors (GPIs). ReoPro (Lilly) was the first in this class, approved in 1995. It is a fragment of an antibody whose affect can last 24 to 48 hours. Integrilin (Millennium) and Aggrastat (Guilford) are smaller molecules, and platelet function returns to normal within 8 hours of their discontinuation. While the GPIs block the last step of platelet clumping on the same pathway as Plavix, the two can have a complementary effect. Because they are strong intravenous agents, the GPIs may be added to Plavix when there is a higher risk of an occluding clot forming, namely high-risk patients and those undergoing PCI (they are not used with CABG because of the risk of bleeding). For high-risk patients they are recommended soon after the patient is diagnosed in the emergency room, though if the PCI will be done soon they can be started at the beginning of the procedure. However, usage of specific agents varies because of differing results in clinical trials: 1) Integrilin or ReoPro at the time of PCI and 2) Integrilin or Aggrastat early on before angiography in high risk patients who may or may not get PCI. Due to mixed evidence, utilization of the GPIs in low-risk patients not undergoing PCI is controversial. There is geographic variation in their use in the treatment of NSTEMI/UA: in the US, GPIs are used in over 50% of patients; in Europe, where guidelines do not recommend their use in PCI patients without other evidence of a high clinical risk, they are used half as much.

While the GPIs have been shown to significantly reduce major outcomes, they also come with an increased risk of bleeding, which has left them vulnerable to drugs such as Angiomax. Higher dose Plavix may prove a competitor, as well, and change the way these agents are thought about: a recent trial in low to intermediate risk patients undergoing PCI found no benefit to adding GPIs if higher dose Plavix was used. A trial looking at this in high risk patients (ISAR-REACT II) is under way.

Treatment of STEMI

In STEMI, the occluding clot needs to be removed as soon as possible. PCIs are recommended if patients are seen within 12 hours of the start of their symptoms, but only a minority of US hospitals are qualified to perform the procedure as an emergency. In some circumstances, if the patient is seen soon enough and depending on how quickly PCI can be performed, clot dissolving agents may be used instead. (Emergency CABG is performed only for certain high risk patients.)

The traditional standard clot-dissolving drug has been the second-generation product Activase (Genentech). Third-generation products that have similar efficacy and safety, but are easier to deliver are Retavase (Protein Design Labs) and TNKase (Genentech). The anticoagulant UFH is used with these agents (LMWH has not been adequately studied). The anti-platelet drugs are currently not recommended. However, a recent trial showed a significant benefit for Plavix used with clot-dissolving drugs, and discussions are underway for regulatory approval in this situation. Also, a large trial (FINESSE) is looking at the GPI ReoPro in combination with Retavase for facilitated PCI, a controversial treatment in which combinations of a clot dissolving agent and a GPI are used before PCI. This could be particularly useful if the patient must be transferred to another facility.

As noted, PCI is the preferred treatment for STEMI. As in NSTEMI/UA, the anticoagulants and anti-platelet drugs are used with it. Intravenous UFH is preferred over subcutaneous LMWH. Plavix is recommended for patients who are planned to have PCI, but as in NSTEMI/UA there is controversy over routine use before angiography, as some patients may require CABG. ReoPro is recommended as the GPI to use, as it has been better studied than others in STEMI.

PCI for Stable Angina

The antiplatelet agents used for PCI in stable angina patients are Plavix (which is continued after the procedure for 9 to 12 months, though low risk patients may have shorter usage) and the GPIs Integrilin or ReoPro. In contrast with the US, in Europe the GPIs are only recommended for patients at higher risk for a thrombotic event. UFH is used with the antiplatelet drugs. As noted in the NSTEMI/UA section, Angiomax has taken a dominant market share in the US, displacing UFH plus the GPIs.

CABG

In CABG, UFH is the only clot fighting agent currently used, because of better control versus LMWHs (the LMWHs are not as easily reversed by an antidote called protamine, which binds and inactivates heparins) and the risk of bleeding from adding antiplatelet agents.

DRUGS IN DEVELOPMENT

ANTICOAGULANTS

Angiomax (Bivalirudin) in Expanded PCI Indications - The Medicines Company (MDCO)

Ongoing studies are addressing Angiomax’s use in high risk patients expected to receive PCI: results from ACUITY (patients with NSTEMI/UA) should be available March 2006, and HORIZONS (patients with STEMI) began recruiting April 2005. Regarding these trials, we are concerned that in the 6-month follow-up of the pivotal REPLACE-2 trial for lower risk patients, most of the outcomes were numerically better for UFH. As a result, we think that in high-risk patients, Angiomax will probably have to be used with the GPIs, or Cangrelor when approved. Because of this, we are pessimistic about Angiomax’s prospects in the HORIZONS trial, where its use with provisional GPIs is being compared to heparin and GPIs. Failure would then delay its approval for STEMI close to when Angiomax’s patent will expire. Hence, we project that the company will end up not pursuing the indication further, though we do expect to see limited off-label use.

On the other hand, in NSTEMI/UA, the ACUITY trial is comparing Angiomax with provisional GPI, Angiomax with routine GPI, and UFH/LMWH with routine GPI. The reason for the extra arm is that in NSTEMI/UA, the PCI is not done as quickly as in STEMI, and patients often receive the GPIs earlier in the course of treatment rather than when the PCI is started. Angiomax will also be given early in this setting. We project that Angiomax plus a GPI will be better than UFH but similar to LMWH plus GPIs. As a result, we think that in the US, where LMWH has been less popular, Angiomax will become the treatment of choice in combination with the GPIs (and later Cangrelor) for high-risk patients, but because of different practice preferences, we think Lovenox will prevail in Europe.

Angiomax in Expanded CABG Indications

Angiomax is also in phase III testing for patients with or at risk for HIT (heparin induced thrombocytopenia) undergoing CABG. Efficacy results from the CHOOSE trial are expected in Q3 2005, with submission of an sNDA in Q4 2005. Based on the earlier results, we are optimistic about Angiomax’s potential in this setting, though because testing is not currently done for HIT before CABG, the Medicine’s Company will have the task of educating doctors and uptake will be slow.

Arixtra (Fondaparinux) - GlaxoSmithKline (GSK)

Arixtra is an injected or infused inhibitor of the clotting factor Xa, whose effect, like that of the heparins, is indirect. Already approved for treatment of venous thromboembolism, it is in phase III studies for all forms of ACS. Phase II studies comparing Arixtra to LMWH Lovenox and UFH showed trends towards a benefit in certain outcomes, though overall we have not been impressed with the data. Of note, in venous thromboembolism Arixtra has not shown a clear superiority to LMWH and has had a slow uptake. While it has a good chance of being approved for ACS and PCI, we feel Arixtra will not be a market success and have not modeled revenues for it.

DX9065a – Daiichi

DX9065a is an intravenously given competitive inhibitor of coagulation factor Xa being developed as an alternative to UFH. In contrast to the heparins, as a direct agent it can inhibit factor Xa already in clots. While we are concerned about numerically worse rates of outcomes compared to UFH in a small pilot study of elective PCI patients (that is, stable patients in whom the PCI is routinely scheduled, rather than done as an emergency), a larger phase II trial of NSTEMI/UA patients showed both a trend for a benefit in outcomes and reduced bleeding. Despite these encouraging preliminary results, we do not feel it will surpass Angiomax, which we expect will maintain market dominance in high-risk NSTEMI/UA patients and those undergoing PCI. However, in those indications where we doubt Angiomax will end up competing in, STEMI and medically treated NSTEMI/UA patients, we feel DX9065a will be a strong contender.

ANTIPLATELET AGENTS

Prasugrel (CS-747) - Lilly (LLY)

Prasugrel is in phase III for ACS. It is an oral prodrug that irreversibly inhibits the P2Y12 receptor, with more potency and a faster onset of action than Plavix. Like Plavix, it has a long duration of action. In phase II trials, though not reaching statistical significance, there was some intriguing and consistent evidence for a benefit in ischemic cardiovascular events. There was also a slight increase in significant bleeding, but not major bleeding. We are optimistic that the phase III trial will show an overall benefit for Prasugrel and it will overtake Plavix for treatment after the acute phase of ACS (in-hospital and long-term outpatient). However, the long duration of action of Prasugrel will be a disadvantage for early use, particularly in high-risk patients who may need CABG.

Cangrelor (AR-C69931) - The Medicines Company (MDCO)

Cangrelor is an infused P2Y12 receptor antagonist with a rapid onset and short action, and unlike Prasugrel, this is an advantage in acute treatment (so it can be given early in the course of treatment, even when the angiography may later indicate that a CABG needs to be done). Though the GPIs act at the last step of platelet clumping, and should theoretically be stronger, Cangrelor in a phase II trial showed similar short-term efficacy to ReoPro with numerically less major bleeding. The Medicines Company recently had a meeting with the FDA, and plans are underway to implement phase III studies in both ACS and PCI. Though information is limited, based on what we have seen so far, we project that Cangrelor will become a standard treatment for patients eligible for PCI with either high risk NSTEMI/UA or STEMI. A major question is which drug Cangrelor would be combined with. We project that because of good efficacy and less bleeding, Cangrelor will be combined with Angiomax for NSTEMI/UA and achieve majority share in the US over treatment with GPIs. In Europe, Cangrelor will be used with LMWHs. For STEMI, since we believe Angiomax will not be approved, Cangrelor would mainly be used with UFH, LMWH, or one of the other anti- coagulants under development. It is possible Cangrelor could also be used with the GPIs, but we are concerned that the risk of bleeding may be too high and feel Cangrelor will most likely end up competing with those agents.

AZD6140 - AstraZeneca (AZN)

AZD6140 is an oral, platelet aggregation inhibitor that like Plavix targets the P2Y12 receptor, but with reversible inhibition. Though specific data is lacking, relative to Plavix its early use should be less likely to interfere with acute surgical treatment, so it could be given on a more routine basis. Significant efficacy data has not been released. A phase IIb study (DISPERSE II) for NSTEMI/UA should be completed soon, and AZN will be making a data- dependent decision on the fate of the drug later this year. As an oral agent, AZD6140 will face price pressure from competitor Plavix. We think AZD6140 will have limited market success: as a short-term acute treatment for 1) low-risk ACS patients undergoing PCI and 2) ACS patients undergoing medical only treatment (that is, no PCI). We feel it will lose out to Cangrelor for high-risk patients eligible for PCI, because as an infused agent with fast on and off characteristics, Cangrelor will offer better control. We also believe it will also lose to Prasugrel for the higher revenue chronic treatment after discharge from the hospital.

CARDIOPROTECTANTS

This is a new market segment whose goal is to protect the heart muscle from damage in ACS. While the data available is limited, we are including the following information because it appears there are real cardioprotective effects and this will be a promising segment of the market to follow.

Pexelizumab (5G1.1-SC) - Alexion Pharmaceuticals (ALXN)

Pexelizumab is a partial antibody to a component of the complement system that has been implicated in inflammation and apoptosis (cell death) after injury. It is being studied in ACS and CABG. In surprising results from phase II trials of patients with STEMI, Pexelizumab reduced 90-day mortality by 70% in patients undergoing PCI but without reducing infarct size. It also did not have an effect in patients who received clot-dissolving agents. While the mechanism for this is still unclear and the numbers involved small, it appears real: an intermediate result was seen with an intermediate dose and the reduction in mortality has also been seen in some groups of patients in the CABG studies. A phase III trial in STEMI patients undergoing PCI began in 2004.

In CABG patients undergoing surgery with a cardiopulmonary bypass pump, Pexelizumab showed a strong trend in improving death/myocardial infarction by 18% but failed to reach statistical significance. Some pre-specified subgroups of patients did show a statistically significant benefit. Enrollment in the pivotal phase III PRIMO- CABG2 trial, for patients at high risk of complications, was recently completed, and we are optimistic about its prospects.

In light of all this, we project that as the first cardioprotectant, Pexelizumab will be widely used for STEMI patients treated with PCI and certain groups of high-risk patients undergoing CABG “on-pump” surgery.

INO-1001 (Poly [ADP ribose] polymerase Inhibitor) - Inotek

INO-1001 is being studied in phase II trials in patients undergoing angioplasty after a myocardial infarction. INO-1001 is an infused inhibitor of the nuclear cell death enzyme poly (ADP-ribose) polymerase (PARP), which has been implicated in furthering the process of cell death in ischemia. Clinical data is not yet available. Of note, since PARP has also been implicated in DNA repair and resistance of cancer cells to chemotherapy, INO-1001 is also being studied in oncology. Since a number of companies have started development of PARP inhibitors, it will be interesting to see INO-1001 clinical data.

MC- 1 - Medicure (MCU)

MC-1 is a naturally occurring molecule that blocks the P2 purinergic receptor, which is involved in ischemia induced heart injury. It can be taken orally or intravenously. In a small phase I/II trial of high-risk patients undergoing non-urgent PCI, MC-1 showed reduction in heart damage as evidenced by laboratory measures of infarct size. However, the outcomes data were not impressive and the control group started with worse blockage. Because outcomes data are needed for FDA approval and rates of events in PCI are low, the company will first pursue an indication for CABG (a phase II/III trial recently completed enrollment and initial data is expected to be reported in the fall of this year). Considering what we have seen thus far, we do not think this drug will succeed.

OTHER AGENTS

Ranexa (Ranolazine) - CV Therapeutics (CVTX)

Ranexa is a first-in-class anti-anginal agent thought to inhibit the late sodium current, and can relieve angina without affecting pulse and blood pressure. Its approval had been held up due to concerns over electrocardiogram changes called QT prolongation, which can lead to dangerous arrhythmias. This outcome was not seen in a special protocol assessment trial of angina patients refractory to other treatment, and Ranexa is currently in NDA status for this restricted population (PDUFA 1/27/06). To expand the labeling to all stable angina patients and NSTEMI/UA, a large phase III trial for NSTEMI/UA was initiated in October 2004: after acute treatment with IV Ranexa, patients will be started on chronic anti-anginal therapy with the oral form. Because of pre-clinical evidence suggesting Ranexa does not increase the risk of arrhythmias, we are hopeful this will not be an issue with the phase III trial, though we believe physicians will be slow to adopt its use in higher risk patients until more experience is gained. Also, we doubt Ranexa will demonstrate a major anti-anginal benefit over conventional agents, and its acute use in the treatment of ACS will be restricted to a minority of patients who fail other treatments or who cannot tolerate other agents that might lower their blood pressure.

V10153 - Vernalis

V10153 is a novel clot-dissolving agent activated by material in newly forming clots. In a phase II proof-of-concept study, the drug was well tolerated and restored flow in the range of other thrombolytic therapies, though on the low end. The company states the next step is a phase II trial in stroke patients, which is to be initiated this year. We doubt this agent will show a benefit over existing treatment of STEMI, and as a late entrant it will not do well in the market.

REVENUE MODELS

We have reorganized our revenue models to include all ACS patients (medical treatment and PCI) under the ACS indication, with additional headings of PCI for Stable Angina and CABG.

Angiomax (Models for ACS, CABG, PCI for Stable Angina)
Angiomax’s sales have slowed and we estimate that further growth in low-risk PCI patients will be limited as it has already achieved major market share. Our models presume approval for PCI in high risk NSTEMI/UA in 2007 and that Angiomax (used with GPIs or Cangrelor) will achieve dominance in this segment in the US, but not Europe. We think Angiomax will not be successful in the HORIZONS trial, and because of the delay and the 2010 patent expiration, the company will not further pursue the STEMI indication. However, we have modeled a small amount of off-label use. We have also modeled further competition from a drug in development coming in 2010 and from a generic after extensions of the US patent expire in 2011 (as Angiomax is not simple to make, we expect only modest price pressure).

Peak US revenues are projected to be $99 million in 2009 for PCI for Stable Angina, $205 million in 2010 for ACS, and $40 million in 2010 for CABG patients at risk for HIT. Corresponding worldwide peaks are $119 million, $242 million, and $68 million. In our new models, we are reallocating more current income to peripheral artery disease (PAD), where there is a great deal of off-label use (the PAD model was updated as well). Nevertheless, peak US revenues for the combined ACS and PCI markets are $57 million higher compared to our previous model, though coming in 2010 rather than 2008.

Cangrelor (New model for ACS)
We project that because of its favorable pharmacokinetics, Cangrelor will gain a dominant share in the acute treatment of ACS early in the course of treatment of higher risk patients who may need PCI or CABG. It will be used with Angiomax or heparin, but displace Plavix and the GPIs. However, we currently project that it will not have a role in lower risk patients. Peak US revenue is projected at $220 million in 2015 and peak worldwide revenue at $507 million the same year.

Pexelizumab (Revised models for ACS, CABG)
We expect Pexelizumab to be the first cardioprotectant approved. Our models assume dominance in STEMI patients who receive PCI and high-risk CABG. Revenues for CABG are projected at $57 million in the US in 2013 (down from $292 million largely due to a revised estimate of the target market size) and $104 million worldwide. For STEMI PCI the figures are $178 million in the US in 2015 (up from $114 million due to higher estimates in number of patients treated) and $431 worldwide.

Ranexa (Revised model for ACS)
Because of its theoretical potential for increasing the risk of arrhythmias, the ongoing phase III trial will be critical for its future in ACS. Even if it shows good safety, we think there will be lingering concerns and Ranexa will initially be used in ACS patients only after other anti- anginal agents and for patients who need to avoid drugs that reduce their blood pressure. As more experience is gained, we project higher usage. We have only modeled the IV formulation, which is the one used in the acute treatment of ACS. Peak US revenue is projected at $65 million in 2015 (down slightly from $78 million, largely due to a slower projected uptake) and peak worldwide revenue at $142 in the same year.

Integrilin (Revised models for ACS and PCI for Stable Angina)
Integrilin is a market leader of the GPIs for some segments of patients. Like all these agents, however, sales have leveled. While we expect a slight benefit from consolidating marketing efforts in the past couple years, the potential for expansion is limited. Angiomax will be dominant in the low-risk patients (we expect it to be used with Integrilin or other agents in high-risk ones). And we project Cangrelor, though it works by a different mechanism, to eat away at Integrilin’s share.

EVALUATED COMPANY UPDATES

The Medicines Company (MDCO)
Including PAD, we expect Angiomax to generate 5 and 10-year LOA probability-weighted revenues of $386 million and $274 million for MDCO. We currently value MDCO’s 5 and 10- year pipeline at $29.55/share and $17.36/share, respectively. Upside to our valuation could come if Angiomax is successful in its trial in ACS patients with STEMI undergoing PCI. As Cangrelor advances to phase III, its LOA will increase, which will raise the valuation further.

CV Therapeutics (CVTX)
We project Ranexa to contribute 5 and 10-year LOA probability-weighted revenues of $464 million and $496 million to CVTX. The bulk of this is for chronic angina in patients who fail other treatment. We currently value CVTX’s 5 and 10-year pipeline at $29.38/share and $23.54/share. Upside to our valuation could come if Ranexa is used earlier on in treatment for the broader angina market. A major risk to the valuation is if Ranexa is found to increase arrhythmias in the large ongoing phase III trial.

Alexion Pharmaceuticals (ALXN)
We expect Pexelizumab to contribute 5 and 10-year LOA probability-weighted revenues of $41 million and $113 million to ALXN. We currently value ALXN’s 5 and 10-year pipeline at $26.43/share and $40.23/share. These values assume that Pexelizumab will only be used in a restricted population in CABG, which is the target of the current phase III trial.

Millennium Pharmaceuticals (MLNM)
Under the revised licensing agreement with Schering-Plough, we project 5 and 10-year revenues going to MLNM for approved Integrilin at $84 million and $72 million. We currently value MLNM’s 5 and 10-year pipeline at $15.74/share and $11.64/share.

V10153 - Vernalis

V10153 is a novel clot-dissolving agent activated by material in newly forming clots. In a phase II proof-of-concept study, the drug was well tolerated and restored flow in the range of other thrombolytic therapies, though on the low end. The company states the next step is a phase II trial in stroke patients, which is to be initiated this year. We doubt this agent will show a benefit over existing treatment of STEMI, and as a late entrant it will not do well in the market.

REVENUE MODELS

We have reorganized our revenue models to include all ACS patients (medical treatment and PCI) under the ACS indication, with additional headings of PCI for Stable Angina and CABG.

Angiomax (Models for ACS, CABG, PCI for Stable Angina)
Angiomax’s sales have slowed and we estimate that further growth in low-risk PCI patients will be limited as it has already achieved major market share. Our models presume approval for PCI in high risk NSTEMI/UA in 2007 and that Angiomax (used with GPIs or Cangrelor) will achieve dominance in this segment in the US, but not Europe. We think Angiomax will not be successful in the HORIZONS trial, and because of the delay and the 2010 patent expiration, the company will not further pursue the STEMI indication. However, we have modeled a small amount of off-label use. We have also modeled further competition from a drug in development coming in 2010 and from a generic after extensions of the US patent expire in 2011 (as Angiomax is not simple to make, we expect only modest price pressure).

Peak US revenues are projected to be $99 million in 2009 for PCI for Stable Angina, $205 million in 2010 for ACS, and $40 million in 2010 for CABG patients at risk for HIT. Corresponding worldwide peaks are $119 million, $242 million, and $68 million. In our new models, we are reallocating more current income to peripheral artery disease (PAD), where there is a great deal of off-label use (the PAD model was updated as well). Nevertheless, peak US revenues for the combined ACS and PCI markets are $57 million higher compared to our previous model, though coming in 2010 rather than 2008.

Cangrelor (New model for ACS)
We project that because of its favorable pharmacokinetics, Cangrelor will gain a dominant share in the acute treatment of ACS early in the course of treatment of higher risk patients who may need PCI or CABG. It will be used with Angiomax or heparin, but displace Plavix and the GPIs. However, we currently project that it will not have a role in lower risk patients. Peak US revenue is projected at $220 million in 2015 and peak worldwide revenue at $507 million the same year.

Pexelizumab (Revised models for ACS, CABG)
We expect Pexelizumab to be the first cardioprotectant approved. Our models assume dominance in STEMI patients who receive PCI and high-risk CABG. Revenues for CABG are projected at $57 million in the US in 2013 (down from $292 million largely due to a revised estimate of the target market size) and $104 million worldwide. For STEMI PCI the figures are $178 million in the US in 2015 (up from $114 million due to higher estimates in number of patients treated) and $431 worldwide.

Ranexa (Revised model for ACS)
Because of its theoretical potential for increasing the risk of arrhythmias, the ongoing phase III trial will be critical for its future in ACS. Even if it shows good safety, we think there will be lingering concerns and Ranexa will initially be used in ACS patients only after other anti- anginal agents and for patients who need to avoid drugs that reduce their blood pressure. As more experience is gained, we project higher usage. We have only modeled the IV formulation, which is the one used in the acute treatment of ACS. Peak US revenue is projected at $65 million in 2015 (down slightly from $78 million, largely due to a slower projected uptake) and peak worldwide revenue at $142 in the same year.

Integrilin (Revised models for ACS and PCI for Stable Angina)
Integrilin is a market leader of the GPIs for some segments of patients. Like all these agents, however, sales have leveled. While we expect a slight benefit from consolidating marketing efforts in the past couple years, the potential for expansion is limited. Angiomax will be dominant in the low-risk patients (we expect it to be used with Integrilin or other agents in high-risk ones). And we project Cangrelor, though it works by a different mechanism, to eat away at Integrilin’s share.

EVALUATED COMPANY UPDATES

The Medicines Company (MDCO)
Including PAD, we expect Angiomax to generate 5 and 10-year LOA probability-weighted revenues of $386 million and $274 million for MDCO. We currently value MDCO’s 5 and 10- year pipeline at $29.55/share and $17.36/share, respectively. Upside to our valuation could come if Angiomax is successful in its trial in ACS patients with STEMI undergoing PCI. As Cangrelor advances to phase III, its LOA will increase, which will raise the valuation further.

CV Therapeutics (CVTX)
We project Ranexa to contribute 5 and 10-year LOA probability-weighted revenues of $464 million and $496 million to CVTX. The bulk of this is for chronic angina in patients who fail other treatment. We currently value CVTX’s 5 and 10-year pipeline at $29.38/share and $23.54/share. Upside to our valuation could come if Ranexa is used earlier on in treatment for the broader angina market. A major risk to the valuation is if Ranexa is found to increase arrhythmias in the large ongoing phase III trial.

Alexion Pharmaceuticals (ALXN)
We expect Pexelizumab to contribute 5 and 10-year LOA probability-weighted revenues of $41 million and $113 million to ALXN. We currently value ALXN’s 5 and 10-year pipeline at $26.43/share and $40.23/share. These values assume that Pexelizumab will only be used in a restricted population in CABG, which is the target of the current phase III trial.

Millennium Pharmaceuticals (MLNM)
Under the revised licensing agreement with Schering-Plough, we project 5 and 10-year revenues going to MLNM for approved Integrilin at $84 million and $72 million. We currently value MLNM’s 5 and 10-year pipeline at $15.74/share and $11.64/share.