NEWS WE WERE WAITING FOR
We were indeed waiting for news to come from Amgen (NASDAQ:AMGN) about the fate of the heart failure drug Omecamtiv mecarbil. The reason is that heart failure treatments are not really working as expected and some studies began to suggest that abandoning the old inexpensive drug digoxin in favor of non-specific cardiac muscle drugs was not well advised, to say the least.
In the news, Amgen (AMGN) and Cytokinetics (NASDAQ:CYTK) finally announced that they are expanding their strategic collaboration to include Japan. Of cours,e the collaboration is about discovering and developing small molecule therapeutics that activate the heart (cardiac) muscle contractility for potential applications in the treatment of heart failure. The original agreement was signed way back in 2006, when Cytokinetics` licensed to Amgen omecamtiv mecarbil molecules for heart failure excluded Japan.
Since that time, investors have been waiting to see whether Amgen believes in the value of Cytokinetics' drug. We got a hint about good news once or twice, and we were comforted only knowing that Amgen did not cancel the agreement with Cytokinetics, whose stock kept losing value due to the lack of news from Amgen.
Under the amendment to the announced collaboration, the companies have agreed on expanding Amgen`s license for omecamtiv mecarbil and related compounds to include Japan. So, Amgen believes in the drug's merit, which is good news that we needed to hear. More good news for Cytokinetics is that it will receive $25 million from Amgen comprised of a non-refundable license fee of $15 million and $10 million for Amgen`s purchase of Cytokinetics` common stock.
Amgen's announcement that it will be investing in CYTK is comforting. Knowing that Amgen is the last to throw money made us gain more comfort and confidence in Cytokinetics' research in general, and omecamtiv mecarbil in particular.
The companies have executed a stock purchase agreement providing for the sale of Cytokinetics` common stock to Amgen at a price per share equal to the 10-day trailing average of the closing price of Cytokinetics` stock on the last trading day prior to execution of the stock purchase agreement. In addition,
Cytokinetics is also eligible to receive additional pre-commercialization milestone payments for the development of omecamtiv mecarbil in Japan of up to $50 million as well as royalties on sales of omecamtiv mecarbil in Japan.
Under the terms of the amended collaboration agreement, Cytokinetics plans to conduct a Phase I pharmacokinetic study in Japan, the costs of which will be reimbursed by Amgen. Amgen is intended to support the inclusion of Japanese patients in a potential Phase 3 clinical development program for omecamtiv mecarbil.
Robert I. Blum, Cytokinetics` President and Chief Executive Officer stated that his firm's decision to amend the agreement at this time is based on its confidence in the progress of the collaborative development program for omecamtiv mecarbil and on Amgen`s recent commitment to expand its business activities in Japan. Sean E. Harper, M.D., Amgen`s Executive Vice President of Research and Development said, "This expanded collaboration furthers Amgen`s hopes to address needs of patients with heart failure in Japan."
Omecamtiv mecarbil is a small molecule cardiac myosin activator, which was discovered by Cytokinetics` scientists. It is being investigated for the treatment of heart failure. All we can say is good luck. The fact is that we are in desperate need of a cardiac muscle failure drug that exerts its action on the heart muscle, and Omecamtiv mecarbil does this.
Disclosure: Long CYTK and AMGN.