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Expert Financial Analysis and Reporting

Cytokinetics Announces that Tirasemtiv Phase 2b Trial in ALS Failed (CYTK, Buy, $5.01)

Cytokinetics announced that tirasemtiv failed to reach the primary endpoint in the phase 2b BENEFIT-ALS trial in ALS. The mean change from baseline in the ALS Functional Rating Scale in its revised form (ALSFRS-R) for tirasemtiv was -2.98 as compared to -2.40 in the placebo group indicating no difference from placebo. The Company said that there were “mixed effects” on secondary endpoints.

The full data will be released on Tuesday at the American Association of Neurology, but this primary announcement seems to indicate that there is probably no path forward for future development. However, there is the possibility that the Tuesday presentation will offer some slim thread of hope. The most probable outcome is that investors won’t assign any value to tirasemtiv or its follow-on compound CK-107, which is partnered with Astellas

The prospects for the stock now rest with omecamtiv mecarbil; a first in class cardiac myosin activator that activates cardiac muscle contractility. It is being developed for the treatment of congestive heart failure in collaboration with Amgen. It addresses the significant unmet medical need for an inotropic drug that can increase cardiac output (amount of blood pumped by the heart) without overstressing a heart which is already impaired by the damage caused by congestive heart failure.

Omecamtiv mecarbil has multi-billion sales potential if it is successfully developed. It is partnered with Amgen and under the current terms of the deal, CYTK will realize through the form of royalties about half of operating profits. Amgen is funding all of the current trial costs and all of the future costs. There are over $600 million of future payments tied to milestone events, about half of which are tied to pre-commercial events and could be achieved before 2018.

The next important event for omecamtiv is the expansion phase of the COSMIC-HF trial which is expected to start in 2Q, 2014 and should complete in 1H, 2015, Amgen and Cytokinetics will decide at that time on whether and how to conduct a phase 3 program. The beginning of phase 3 would be a major milestone for the drug and the Company. The development pathway for omecamtiv will probably mean that the drug will be in phase 3 for perhaps three years so that topline results could be released in 2018.

The Company should end 1Q, 2014 with about $105 million of cash which is about $3.50 per share and has been showing a quarterly burn rate of $8 million. It is well funded and not in danger of a cash squeeze that would require a financing in 2014 or probably not in 2015.

I think that at the price of $5 that the stock is attractive based on the prospects for omecamtiv and the strong cash position. The market capitalization is about $150 million at a price of $5.00, which seems low given the potential for omecamtiv.

Tagged as , , , + Categorized as Smith On Stocks Blog


  1. The COSMIC-HF trial has opened since March 28th.

    This kind of result is unexpected. It seems I ruled out catastrophic scenario too early. There is no hope in tirasemtiv for ALS. I really do not understand why they seem to have abandoned tirasemtiv for MG.

  2. Thanks for the update Larry. As usual, your writing is very informative and straight forward. You warned that this was a possible scenario.

    Dave Michael

  3. Robert Dorney says:

    Putting no more than 1% of a portfolio in any of these development stage biotech is a rigorous rule for me, thankfully it this case. However, I think this CYTK tirasemtiv result surprised most of the few analysts following this company. Zack’s analyst profile yesterday had: 4 strong buy, 1 buy, 0 hold/sell/strong sell. I looked again, for a postmortem review, at Cytokinetics’ March 10th presentation at ROTH conference (the presentation is still available from CYTK website). The presentation contains a scatter chart entitled “BENEFIT-ALS: Aggregate Data Changes From Baseline”. The chart implies as many trial patients show improvement as show deterioration at 4, 8 and 12 week intervals in four measurable and seemingly pertinent categories. I suspect many people made a decision to buy/hold the stock based on this one chart. However, failure of the trial indicates this scatter chart data is either not pertinent to the analysis or is presented so that it is easily misinterpreted.

  4. The scatter charts suggested that some patients were showing improvement and key opinion leaders have indicated that while ALS patients may stabilize for a month or two, they don’t show improvement. This suggested that tirasemtiv was causing an improvement. There were issues with the charts; there were so many circles that they formed a blob that obscured most of the individual circles and we didn’t know at what time point they occurred following therapy. Still, it looked like half of the resultant green blob lay above the zero line indicating improvement.

    A possible explanation for this apparent improvement is that there was a placebo effect. There is some subjectivity involved in scoring the 12 components of the ALSFRS-r scale. The patients might have been inspired by the thought that they were getting a drug that could help and temporarily performed better and/or physicians thought (hoped) they were seeing improvement where there was none. I thought that tirasemtiv based on the scatter charts was showing a positive biological effect although whether this was statistically significantly better than placebo remained to be seen. This interpretation was wrong as tirasemtiv was no better than placebo in the trial.

    There will be an exhaustive study of the data over the coming weeks, months and years that will provide some clarity to this trial failure.

  5. I agree. It seems this chart must have had serious misleading deficiencies. Larry highlighted the chart in his last blog. There should be no improvement in ALS measurements so a chart showing anything would indicate success. Very troubling.

  6. Larry – I hope this isn’t beating a dead horse, but out of curiosity and for future reference, does a company have a legal obligation to disseminate trial results or data as soon as they become aware of them? Is this why CYTK disclosed the results on Friday morning instead of waiting until the presentation on Tuesday?


  7. dwmichael

    For bio startups if the results are so bad like those in this ALS trial, the company probably has to disclose in a timely fashion something like within 72 hours.

    But if the results are good or mixed showing a trend for improvement, the company can withhold the data to a meeting. So when I saw the news, I knew something very bad happened which the company had to disclose it right away.


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