Cytokinetics Fails Lou Gehrig's Trial But Still Holds Value With Cardiac Drug


BENEFIT-ALS trail failure gives investors opportunity to take a risk on the Cardiac drug at a lower share price.

Positive outcome for phase 2 COSMIC-HF will push omecamtiv mecarbil compound moving forward into a phase 3 trial.

The Positive secondary endpoint for ATOMIC-AHF still gives positive hope for omecamtiv mecarbil to help patients with heart failure.

Positive phase 2 results from COSMIC-HF is a catalyst for share price appreciation..

Cytokinetics (NASDAQ:CYTK) reported results from the BENEFIT-ALS trial which was in phase 2 clinical testing. The company reported that tirasemtiv failed to help patients in the primary endpoint of the study. Shares fell 64.67% to end the day down to $4.59 per share because of these test results.

The primary endpoint of the study was the mean change from baseline in the ALS Functional Rating Scale but in the company's revised version ALSFRS-R. This means that the company was testing the compound tirasemtiv and its placebo counterpart and used the scale to determine which produced more meaningful benefit for the patient. The placebo group patients fared better with a rating score of -2.40 points versus tirasemtiv obtaining a rating score of -2.90. The p-value in the study came in at p = 0.11 which had failed to produce any clinical significance for patients with ALS. The primary endpoint of the trial failing didn't leave much hope, but sometimes biotechnology companies are able to recover if at least the secondary endpoint shows some type of meaningful clinical benefit.

Unfortunately not even the secondary endpoint of the phase 2 BENEFIT-ALS trial was met. That is that tirasemtiv failed to at least help ALS patients with respiratory function or other muscle movement functions as well. The CEO of Cytokinetics had this to say about the results in a quote:

The results from BENEFIT-ALS are now just becoming available to our team at Cytokinetics and will be shared in more detail with the broader scientific and medical community focused to research in ALS in the next few days. Understanding these results will require significant further review. Once we have fully evaluated the data from BENEFIT-ALS, we expect to determine whether there is potential development path forward for tirasemtiv for the potential treatment of ALS and what may be the appropriate next steps.

The quote above is typical for a CEO to claim that something good may come out of the additional results as they are looked into more closely. The bottom line as we have described in the test results above is that the compound was unable to produce any type of meaningful clinical benefit for ALS patients. We think that it is better for Cytokinetics to put its focus on other parts of their pipeline as those have better chances for success.

The BENEFIT-ALS trial was attempting to treat patients with a disease known as ALS or Amyotrophic lateral Sclerosis. The disease is also sometimes referred to as Lou Gehrig's Disease. ALS is a progressive Neurodegenerative disease that affects both the nerve cells in the brain and spinal cord. The disease breaks down the person's motor neurons rendering them unable to move. These motor neurons are responsible for movement, so patients in later stages of ALS become paralyzed. There are about 20,000 to 30,000 people in the United States that have ALS, and at least 5,000 people are diagnosed with ALS each year. We think though that the most value for Cytokinetics comes from its drug known as omecamtiv mecarbil which is being developed for acute heart failure.

On September 2013 Cytokinetics and Amgen (NASDAQ:AMGN) together announced mixed results from the ATOMIC-AHF trial. The phase 2 trial had failed its primary endpoint of improving shortness of breath in acute heart failure patients, but at higher doses patients were able to breather easier. The primary endpoint was to improve dyspnea or shortness of breath in these patients. The low dose group saw 42% response rates, the middle dose group saw 47% response rates and the high level dose group saw 51% response rates. The placebo group saw 41% response rates but despite that the previous response rate results in each dose group for omecamtiv mecarbil were not significant enough to meet the primary endpoint of the study. Unlike the BENEFIT-ALS trial described above Cytokinetics in the ATOMIC-AHF trial had at least shown some improvement for patients on the secondary endpoint. With this conclusion Amgen has agreed to stay on board with Cytokinetics until the readout from another phase 2 trial known as COSMIC-HF. The Cosmic-HF trial is an oral formulation of omecamtiv mecarbil that is being given to patients with chronic heart failure and left ventricular systolic dysfunction. This trial will enroll 420 patients and together with the ATOMIC-AHF study will help determine whether the two companies should continue to pour money into omecamtiv mecarbil or stop the program completely. We believe that superior efficacy will be shown in the COSMIC-HF study over the ATOMIC-AHF because the COSMIC-HF study is using an all oral administration as opposed to intravenous administration. This is because the company has chosen an oral modified release type dosage with omecamtiv mecarbil. By doing an oral modified release administration of omecamtiv mecarbil the company can increase the efficacy of the compound because of the sustained blood level in the patients' body. This sustained blood level in the body allows for greater absorption of the compound. This is in contrast when the omecamtiv mecarbil compound is given intravenously and is taken up in the body at varying blood levels which can reduce the efficacy of the drug. Certain signals to be looked at to determine if the omecamtiv mecarbil drug compound shows far superior data would be the escalation of each dosage level in the COSMIC-HF study. For instance the study takes into account that for each successful dosage level, Cytokinetics can add additional dosages as improved efficacy is seen in patients. This increased efficacy and dose escalation could be initiated upon observation of reduced strokes, reduced heart rate, and a change from baseline for the left ventricular end-systolic diameter. These improvement signals will show more promise for the drug in future clinical trials. If the COSMIC-HF trial is successful then both companies will move omecamtiv mecarbil into a phase 3 clinical trial.

As of December 31, 2013 according to the 10-k SEC Filing Cytokinetics had cash and cash equivalents of $80.2 million dollars. The company had since done an offering in February of 2014 to raise more capital at an offer price of $8.00 per share obtaining $37.4 million dollars in additional capital. With the combined cash the company expects to be able to run the company for at least another 12 months at which time it may have to do another offering.

The risk with this biotech though is that it lacks a big pipeline, so a failure in COSMIC-HF would also be an even further declining stock. Therefore investors should be aware that they could lose their entire investment if the trial fails to meet on both the primary endpoint and the secondary endpoint. Failure in the trial would also constitute Amgen to pull out of the program which means Cytokinetics would lose significant value. On the flip side if the results from the COSMIC-HF trial are positive then both Cytokinetics and Amgen would advance omecamtiv mecarbil to a phase 3 trial which would be a big increase to shareholder value.

We believe that the drop in share price gives investors an opportunity to enter a position in Cytokinetics to capitalize on possible positive results from the phase 2 COSMIC-HF trial. Subsequent share price appreciation in Cytokinetics can be seen with the advancement of omecamtiv mecarbil to a phase 3 trial with their partner Amgen. With the positive secondary endpoint for ATOMIC-AHF and the fact that Amgen chose to continue with the omecamtiv mecarbil compound we still think that Cytokinetics is a good long term buy.

Disclosure: I am long CYTK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.