Cytokinetics Inc (NASDAQ:CYTK)

CAPS Rating: 3 out of 5

A biopharmaceutical company, focused on developing small molecule therapeutics for the treatment of cardiovascular diseases and cancer.

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Player Avatar zzlangerhans (99.74) Submitted: 7/15/2013 6:09:59 AM : Underperform Start Price: $13.68 CYTK Score: +10.31

After being nearly left for dead in 2012, Cytokinetics is enjoying a resurgence on the back of deals with Amgen to expand the omecantiv partnership to Japan and a new deal with Astellas for CK-2127107. The omecantiv deal is especially positive for Cytokinetics as it comes just ahead of topline data for ATOMIC-CHF, suggesting that Amgen is anticipating positive data. While this argument has its merits, I've been rather unimpressed by the developmental arc of omecantiv over the last seven years and I've seen large biopharmas like Amgen flush a lot more than 15M down the tubes.

Meanwhile, the market has shrugged off an egregious procedural error in the conduct of the BENEFIT-ALS trial that at the very least will invalidate the data for 58 patients who were incorrectly administered placebo instead of tirasemtiv for part of their treatment course. At worst, the error will call into question all the trial data even if positive. Tirasemtiv, a skeletal muscle activator, is at best a palliative for ALS and won't have the commercial impact of a therapy that treats the underlying cause of the disease.

The current share count likely reflects conversion of the large majority of Series B Preferred into common stock but there remains an overhang of 8M in the money warrants that will likely be exercised over the next few years and add another 30% to the market cap without providing much in the way of value.

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