Cowen Positive on Cytokinetics, Inc. (CYTK) as Amgen, Inc. (AMGN) Opts-in to Advance Omecamtiv to Phase 3

Cowen top analyst Ritu Baral chimes in on Cytokinetics, Inc. (NASDAQ:CYTK) after Amgen, Inc. (NASDAQ:AMGN) recently opted-in to advance their collaborative drug omecamtiv mercarbil, designed to treat people living with heart failure. The analyst anticipates the enrollment trial initiation to give rise to an estimated $50 million milestone to CYTK, though Baral notes the exact amount has yet to be disclosed.

Additionally, Baral anticipates the initiation of Phase 3 cardiovascular outcomes trial will likely commence by fourth-quarter of 2016, with a data read-out by 2020. Moreover, Baral projects a Phase 3 cardiac remodeling trial initiation come 2017 with a data read-out also by 2020.

In reaction, the analyst reiterates an Outperform rating on shares of CYTK with a $16 price target, which represents a nearly 71% upside from where the stock is currently trading.

Baral opines, “We note that after opt-in CYTK will have the right to ‘buy-up’ its royalty rate to where, at the highest levels, it could resemble profit-share like economics. We believe there are 4 step tiers of this ‘buy-up’, the highest of which would, we estimate, cost CYTK $50M to buy into.”

“At AMGN’s expense, CYTK will run another Ph3 trial with around 500-1000 patients receiving omecamtiv for at least 1 year and monitor ECHO’s and measures of exercise tolerance. The trial is assessing if omecamtiv can reverse remodeling like in the Ph2 COSMIC-HF trial. We believe the trial is being run to provide more data for the potential label and could strengthen the label. We estimate trial initiation in 2017 with data in 2020,” Baral contends.

Baral concludes by noting Astellas-partnered CK-107, a 2nd gen fast skeletal muscle troponin activator, is currently enrolled in a Phase 2a trial for chronic obstructive pulmonary disease (COPD) coupled with a Phase 2 trial for spinal muscular atrophy (SMA), with the analyst expecting data for the COPD trial by the close of 2016 and data from the ongoing SMA trial anticipated by the middle of 2017.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, top five-star analyst Ritu Baral has achieved a high ranking of #75 out of 4,193 analysts. Baral upholds a 49% success rate and realizes 17.4% in her annual returns. When recommending CYTK, Baral garners 22.8% in average profits on the stock.

TipRanks analytics demonstrate CYTK as a Strong Buy. Based on 6 analysts polled in the last 3 months, 100% rate a Buy on CYTK. The 12-month price target stands at $19.20, marking a 106% upside from where the shares last closed.

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