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Expert Financial Analysis and Reporting

Cytokinetics: Positive Topline Results of Omecamtiv in COSMIC-HF Trial Are a Major Positive (CYTK, Buy, $7.04)

  • There is a very high probability that omecamtiv will now be taken into phase 3 development. I await Amgen’s decision on this.
  • I view omecamtiv as one of the most exciting drugs in development in cardiology.
  • If the efficacy and safety profile suggested by phase 1 and 2 trials is borne out in bigger and longer duration phase 3 trials, this could be a multi-billion drug.
  • Cytokinetics appears substantially undervalued at a $300 million market capitalization based only on omecamtiv.
  • I remind you that it also has tirasemtiv in a phase 3 trial in ALS and CK-107 is in phase 1 trials in spinal muscular atrophy.
  • I am encouraged and reiterate my long standing buy recommendation.

I am encouraged by today’s joint press release by Amgen and Cytokinetics that topline results from the phase 2 trial of COSMIC-HF trial of omecamtiv mecarbil in congestive heart failure were positive. I must put forward the caveat that topline results do not always tell the entire story of a trial and that when full data is published and analyzed negative issues not signaled by the topline data could yet arise. That said, this data and the joint statements by Amgen and Cytokinetics in which both concur that the data is very positive are exciting news.

Cytokinetics has said that the gating factor for Amgen taking omecamtiv into phase 3 trials is the outcome of the COSMIC-HF trial. As the first entrant of an entirely new drug class, if successful in phase 3 omecamtiv could have blockbuster potential. We have known for some time that omecamtiv has the effect of increasing the amount of blood pumped by hearts damaged by congestive heart failure this is the desired therapeutic effect. The question was whether the companies could find a dose in which this could be done with acceptable side effects. Remember that in congestive heart failure the heart is damaged and compromised so that the action of increasing blood flow could potentially lead to strain and dangerous side effects notably cardiac arrythmias. On a cautionary note, this trial was only for 20 weeks and there is no data showing safety or efficacy over a longer period.

I have felt that a successful outcome in COSMIC-HF followed by an announcement by Amgen that it would begin a phase 3 trial would be a major catalyst for the stock. The former appears to have been achieved and it seems highly probable that Amgen will take the drug into phase 3. The design and endpoints of a phase 3 trial have not been discussed in any detail. My judgment at this point is that it will involve thousands of patients and could take two to three years from start of enrollment to report topline results which would be 2018 or 2019. Amgen will be responsible for most of the trial costs and will pay Cytokinetics very significant payments based on reaching unspecified milestones during the course of the trial which would end with approval of the drug. Cytokinetics can elect to apply these milestones against costs of the trial in return for a greater share of economics upon commercialization.

Based on the profile of omecamtiv as we now know it, I view omecamtiv as having the potential to be considered as one of the most exciting drugs in development in cardiology in general and heart failure in particular. If successful in phase 3 trials, it has (several) billion dollar potential. I think that omecamtiv alone more than justifies the approximate $300 million market valuation of Cytokinetics. In actuality this looks extremely low in my judgment. I could see twice this valuation based on omecamtiv alone. Of course, in addition to omecamtiv the Company also has tirasemtiv in a phase 3 trial in ALS in which we could see topline results by 2017. It has retained all rights to this drug which if successfully developed also has billion dollar potential. And finally, it is developing CK-107 with Astellas for spinal muscular atrophy. This is another exciting drug. This is why Cytokinetics has been one of my top picks for the last year.

Investors have been most concerned about the side effect profile of the drug. The companies were very encouraging in this regard as they said: “Adverse events, including serious adverse events, in patients on omecamtiv mecarbil appeared comparable to those on placebo. A small increase in troponin was seen among subjects receiving omecamtiv mecarbil. Events of increased troponin were independently adjudicated and none were determined to be myocardial ischemia or infarction. There was no imbalance in deaths, and cardiac adverse events were generally balanced between placebo and active treatment groups.” This is really good news.

Because this was only a 20 week study and was not powered to show efficacy, Cytokinetics had been cautioning that investors should be focused on measures relating to pharmacokinetics, pharmacodynamics, safety and tolerability of the drug and not efficacy. The companies did report very encouraging data on certain measure relating to efficacy. They said omecamtiv “showed statistically significant improvements in several measures of cardiac function, including systolic ejection time, stroke volume and N-terminal-pro-brain natriuretic peptide, at 20 weeks following randomization. The pharmacodynamic effects of omecamtiv mecarbil were generally dose dependent.” Ultimately efficacy will be judged on the basis of reduced hospitalizations and/or reduced mortality. Nevertheless, these findings are encouraging that there is a therapeutic effect.

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  1. Hi Larry,

    Thanks for the update. I did take an initial position in CYTK based on one of your earlier articles. Would it make sense to take a position in Amgen?
    1) The key stats for the Company seem at least reasonable (P/E ttm 21, EBIT margin ttm 47%, strong RoA, RoE, a higher debt than I’d like, etc.)
    2) An impressive pipeline: 9 Ph III underways, 7 in PhII, and still more in PhI

    The CYTK collaboration alone could lead to some serious upside. What do you think of ‘playing’ omecamtiv by being on both CYTK and AMGN?

    Thanks again for your continued research and analysis!

  2. I think that the valuation of Amgen will be positively influenced (perhaps significantly) but I have not tries to evaluate the other components of Amgen.

  3. Hi Larry, shows BENEFIT-ALS (NCT01709149) enrolled 711 patients and completed the study from Oct 2012 to March 2014.

    For Ph III on a very similar treatment/study, VITALITY-ALS (NCT02496767) is planning on an enrollment of 442 patients, with most likely most of the same hospitals as for Ph II. The planning looks so far from Oct 2015 to … March 2017, or exactly the same time frame as for a much smaller Ph II with hospitals pretty much already on-boarded, trained, confident, etc.

    Now they did double the time frame from 12 weeks to 24. But my guess is that the enrollment is going to be so much faster that I would imagine March 2017 is a conservative target, or that at least that the final data collection will not go over that date, as many other biotech tend to.

    Any thoughts?

    Thanks Larry,

    Best regards

  4. New PR from CYTK:
    First Chronic Dosing Trial of Oral Omecamtiv Mecarbil Showed Statistically Significant Improvements in Several Pre-Specified Measures of Cardiac Function and Volumes
    THOUSAND OAKS, Calif. and SOUTH SAN FRANCISCO, Calif., Nov. 08, 2015 (GLOBE NEWSWIRE) — Amgen (NASDAQ:AMGN) and Cytokinetics Incorporated (NASDAQ:CYTK) today announced the presentation of data from the expansion phase of COSMIC-HF (Chronic Oral Study of Myosin Activation to Increase Contractility in Heart Failure), a Phase 2 trial evaluating omecamtiv mecarbil in patients with chronic heart failure, in a Late-Breaking Clinical Trial session at the American Heart Association (AHA) Scientific Sessions 2015 in Orlando, Fla. The trial met its primary pharmacokinetic objective and demonstrated statistically significant improvements in all pre-specified secondary measures of cardiac function in the treatment group employing pharmacokinetic-based dose titration. Omecamtiv mecarbil, a novel investigational cardiac myosin activator, enhances cardiac function by increasing cardiac contractility and is being developed for the potential treatment of heart failure.1,2

    I’m glad you are covering this Company Larry! Thanks for all your work!
    Best regards,


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