Cytokinetics has shucked off two high-profile setbacks, leading CYTK stock to double over a month as it looks to take on Big Pharma behemoth Bristol Myers Squibb in heart disease treatment.
Bristol Myers and Squibb are working to treat obstructive hypertrophic cardiomyopathy, or HCM, a genetic mutation that causes the ventricles in patients' heart to thicken. People with this condition have limited cardiac function and often experience breathlessness, chest pain, dizziness and fainting during exercise.
Cytokinetics says its drug, aficamten, blocks an enzyme called myosin, helping reduce excessive contractility. On Dec. 27, the company "hit a bull's-eye" with the results of a Phase 3 study, UBS analyst Ashwani Verma said in a recent report to clients. Shares soared almost 83% that day and continued rising.
CYTK stock tacked on another 15%-plus on Jan. 8 when a rumor suggested Novartis could be entertaining a buyout bid for Cytokinetics. That put CYTK stock's gain at more than 141% over two weeks.
The rally underlined a comeback after what Chief Executive Robert Blum acknowledged as a tough year.
"As a company that's been the leader in this space of muscle biology and converting that to a new pharmacology, we've had positives and negatives like any company pioneering in a new biology," he said in a December interview with Investor's Business Daily. "But we built this company (to be able) to withstand and overcome those setbacks."
CYTK Stock: All Eyes On Aficamten
Cytokinetics was reeling from two big setbacks at the start of 2023 when shares tumbled by more than half from September 2022 to October 2023 and then trended sideways.
In February, the Food and Drug Administration rejected omecamtiv mecarbil, the company's treatment for heart failure with reduced ejection fraction. In this condition, the heart's left ventricle doesn't contract normally, meaning the heart no longer pumps with enough force to push the blood into circulation.
The FDA said a single study called Galactic-HF wasn't enough to secure the approval. The regulator wants Cytokinetics to run another study. But that wasn't part of Cytokinetics' plan. Instead, the company focused on gaining approval for the drug in Europe based on the same study.
A month later, Cytokinetics scrapped an experimental treatment for amyotrophic lateral sclerosis, or ALS, that failed in a Phase 3 study.
At that point, though, CYTK stock was trading sideways, a negative signal for the company. Investors have long focused on aficamten, a potential rival to Bristol Myers' Camzyos.
Camzyos Sales Are Ramping
Meanwhile, Camzyos, an aficamten rival, has been gaining traction.
The Bristol Myers drug gained FDA approval in early 2022 and now sales are ramping. In the December quarter, Camzyos brought in $88 million for Bristol Myers. That was narrowly above expectations for $85.7 million, according to FactSet. First-quarter sales are expected to surge 217% to $92 million.
But Blum says aficamten could be a better HCM treatment than Camzyos. And analysts seem to agree.
Verma, the UBS analyst, noted aficamten showed robust effectiveness on exercise capacity and a low risk of sending ejection fraction below 50%. Ejection fraction is the amount of blood the heart pumps, with a normal level being 50%. Camzyos can lower ejection fraction, increasing the risk of heart failure.
"Our prior (key opinion leader) check indicated aficamten's ease of dosing and differentiated safety profile would support high use in obstructive hypertrophic cardiomyopathy," Verma said.
Blum cited aficamten's safety benefit, which is tied to the drug's half-life. The half-life of a drug measures its exposure in the blood and its lingering effect on the body. Aficamten has a shorter half-life than Camzyos, meaning it leaves a patient's body faster. So, doctors have an easier time increasing the dosage without running the risk of aficamten doing its job too well by effectively over-suppressing cardiac function.
"One of the downsides of this treatment is you can overcompensate in suppressing cardiac function," he said. "You're relaxing the heart. You don't want to do so in such a way that you reduce the contractility of the heart too much, sending patients into heart failure."
Differentiating From Camzyos
In fact, the label for Camzyos warns against the risk of heart failure. Camzyos is associated with a risk evaluation and mitigation strategy, or REMS, program. These FDA-mandated programs require extra monitoring for some drugs carrying heightened risks.
Cytokinetics hopes the FDA won't view aficamten in the same risky light.
Verma expects Cytokinetics to ask the FDA to approve aficamten in the second half of this year. That means the potential for a differentiated label from Camzyos won't be clear until late 2025. Verma downgraded CYTK stock to a neutral rating, citing a lack of near-term catalysts.
Notably, in January, Cytokinetics unveiled imaging data for 16 patients who received aficamten for 48 weeks. The images show statistically significant improvements in cardiac structure and function, Mizuho Securities analyst Salim Syed said in a report.
He has a buy rating and 103 price target on CYTK stock.
Acquisition Rumors Stoke CYTK Stock
UBS' Verma called aficamten "a rare, quality biotech asset." That could make the drug — and Cytokinetics — attractive acquisition targets.
In early January, it looked like Novartis could be considering a Cytokinetics buyout. That would line up with recent acquisition activity in the space. Big Pharma has been buying up drugs that have proven their merit in late-stage testing. Representatives of both companies declined to comment to IBD. The news sent CYTK stock to its record high.
Bloomberg also reported in December than AstraZeneca could be mulling a bid for Cytokinetics. The former didn't return a request for comment from IBD.
Since then, Novartis has reportedly pulled away from a potential deal, Verma said. CYTK stock has also pulled back somewhat. And it's difficult to predict acquisitions in the biotech space. Bristol Myers bought Myokardia for the drug that eventually became Camzyos.
"In our view, a diversified global pharma could unlock the commercial potential of aficamten particularly because this market requires material diagnosis expansion, which is relatively challenging for a small biotech firm," UBS' Verma said.
Leerink Partners analyst Roanna Ruiz notes Cytokinetics is already ramping its U.S. commercial infrastructure and expects to spend more closer to the potential approval in 2025. She reiterated her outperform rating on CYTK stock.
Highly Rated Biotech Stock
It's important to note, CYTK stock has a best-possible Relative Strength Rating of 98. This means the stock ranks in the leading 2% of all stocks when it comes to 12-month performance, according to IBD Digital. Shares are also well above their key moving averages, MarketSmith.com shows.
Blum says Cytokinetics is building a big cardiac disease treatment franchise.
"We still have five compounds in various stages of development," he said. "Aficamten is the lead."
This story has been updated to clarify aficamten's method of action.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
