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Expert Financial Analysis and Reporting

A New Note on Cytokinetics with a Focus on Omecamtiv

Cytokinetics and its partner Amgen have guided that topline data from the GALACTIC-HF phase 3 trial of omecamtiv in advanced heart failure will be released in 4Q, 2020. The promise of omecamtiv has been the driving force for my long standing buy recommendation of Cytokinetics and is the overwhelming factor driving the current stock price. The successful completion of two interim looks in the trial has increased investor confidence for its potential for success, but does not by any means assure it.

The designation by the FDA of Fast Track Approval status on May 8, 2020 coupled with the encouraging interim looks has triggered a major rally in the stock since the stock hit a low of $8.75 on March 8, 2020. It nearly doubled to $15.76 on May 8 and following the announcement on May 8 of FDA fast track designation, it reached a high of $22.22 on May 18. At the time of this writing, it is selling at $20.97.

I believe and more importantly so does Cytokinetics’ partner Amgen that omecamtiv has blockbuster commercial potential. Amgen has probably invested significantly more than $500 million in the GALACTIC-HF trial. In a report I have just published, I go through a series of reasonable assumptions that if accurate suggest that royalties from Amgen owing to omecamtiv could contribute around $4.00 per share to EPS by 2025 or 2026. I could see the stock selling at $100 per share or more in this favorable scenario. The reasoning behind this is explained in my report which is available to paid subscribers.

There is also the potential for considerable market value from the pipeline. In addition to omecamtiv, there are five clinical programs underway. By 2025, the goal is to have three drugs approved and five additional programs in the clinic. All eyes are now focused on the release of top line data for omecamtiv in the phase 3 GALACTIC-HF trial in advanced heart failure. Success in this trial would greatly enhance investor interest in the pipeline which currently contributes very little to the stock market valuation.

  • reldesemtiv has completed a large, randomized phase 2 trial in ALS and is poised to begin phase 3 trials in ALS and potentially spinal muscular atrophy (SMA)
  • CK-274 is in a phase 2 trial for hypertrophic cardiomyopathy
  • AMG 594 is a follow-on to omecamtiv and is in phase 1
  • CK-271 is a pre-clinical follow-on to CK-274
  • CK-601 is a pre-clinical follow-on to reldesemtiv

The in-depth report is available to paid subscribers on this link.

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