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Expert Financial Analysis and Reporting

Cytokinetics: Even if Tirasemtiv Were to Fail in Vitality-ALS. There is Great Long term Stock Potential (CYTK, $14.25, Buy)

Critical VITALITY-ALS Data Is Imminent

During the 3Q conference call, Cytokinetics said that the still unknown results of the VITALITY-ALS trial of tirasemtiv in ALS have been accepted for presentation at the International Symposium on ALS/MND on December 8th at 4:20 p.m. in Boston; the presenter will be the lead investigator on the trial, Dr. Jeremy Shefner. The last patient has completed treatment and final data is being collected. The data base lock should occur shortly and then the statistical analysis will be performed. I think that it is probable that topline data will be released in late November or early December prior to the conference. This will be a highly binary event that will have a dramatic effect on the stock price regardless of success or failure.

I believe that the chances for success in the VITALITY-ALS trial are good. The end point of the trial is slow vital capacity (SVC). In the earlier phase 2b BENEFIT-ALS trial this proscribed endpoint was achieved with a p-value of <0.0001 and the trial design and baseline patient characteristics of the two trials are comparable. My guess is that if the stock is trading at $14 at the time of the topline release that success could cause the stock price to open at $25 to $30 or perhaps more. A disappointing outcome could drop the stock to $7. Importantly, in the latter case, I would be a strong buyer based on the prospects for omecamtiv mecarbil alone.

Tirasemtiv has blockbuster potential and CYTK has retained full rights in the US and I estimate that if VITALITY-ALS is a success, U.S. sales  could $750 million by 2025. Its potential impact on the stock price of CYTK was laid out in my March 15, 2017 report: Estimating a Potential 2025 Price Target of $220 Based only on the Potential for Tirasemtiv (CYTK, Buy, $13.00) and Ignoring Omecamtiv Mecarbil and CK-107

What if Tirasemtiv Fails in VITALITY-ALS?

The Gods of biotechnology are cruel and there is no such thing as a sure thing in biotechnology drug development so that investors have to recognize that the trial could fail. In that case, I think that the stock would still be very attractive based on the potential for omecamtiv mecarbil. This drug is partnered with Amgen (profits will be split roughly 50/50 in the US with double digit royalties internationally) and is involved in the pivotal phase 3 trial GALACTIC-HF. This is a massive trial that is enrolling 8,000 patients in 500 sites in 25 countries. The clinical timelines for this trial are long as I expect final results in 2021 although there could be an interim look in 2019 or 2020. So there may be no meaningful clinical trial results until perhaps 2021.

I assign a high probability of success in this trial and believe that it will be a major advance in the treatment of congestive heart failure. Amgen’s head of R&D Sean Harper agrees with that assessment. He said that Amgen has shown the phase 2 data to heart failure experts from all around the world. Dr. Harper said that it has been quite unique in his experience to see such a uniformly enthusiastic response to the phase 2 data. In one way or another, each expert has essentially said that they see this as the most compelling heart failure data set of all the drugs they have ever seen. For more detailed comments you may want to refer to my report:  Amgen's R&D Chief Expresses Great Optimism About Omecamtiv Mecarbil for Treating Congestive Heart Failure

I estimated the potential impact of omecamtiv mecarbil on the stock price in my March 17 report- Cytokinetics: Estimating a Potential 2025 Price Target of $172 Based Only on the Potential for Omecamtiv Mecarbil and Ignoring Tirasemtiv and CK-107.


CK-107 Could Be Another Important Drug

The third drug in development is CK-107 which is second generation follow-on to tirasemtiv with an improved side effect profile; tirasemtiv is difficult to tolerate for some patients at higher doses. A key data readout on a phase 2 trial in spinal muscular atrophy (SMA) will occur in 1Q, 2018 and I am anxious to see the results. CK-107 is also in phase 2 trials in amyotrophic lateral sclerosis (ALS), chronic obstructive pulmonary diseases (COPD) and elderly adults with limited mobility. The results from a 400 patient trial in ALS are expected in mid-2018. Clinical success in any one of these four indications would lead me to the conclusion that CK-107 also has blockbuster potential like omecamtiv mecarbil and tirasemtiv.

Side effects of tirasemtiv were a negative factor in the BENEFIT-ALS trial. This gives rise to the possibility that VITALITY-ALS might fail because of side effect issues rather than efficacy. If that were the case, CK-107 might give CYTK as second shot on goal in ALS.

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