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Cytokinetics Rises After Extending Astellas Agreement - Analyst Blog

Cytokinetics, Incorporated ( CYTK ) shares jumped around 12.7% after announcing an amendment to its collaboration with Astellas Pharma Inc. ( ALPMY ). The companies expanded their deal to develop CK-2127107 in spinal muscular atrophy and other neuromuscular indications.

As per the amemded agreement, Cytokinetics will be receiving $55 million from Astellas. This $55 million includes a $30 million upfront license fee, $10 million for Astellas' purchase of Cytokinetics' common stock and another $15 million as milestone payment in relation to Astellas' decision to advance CK-2127107 into phase II clinical development which is expected in 2015.

Cytokinetics and Astellas have agreed to extend their joint research program till 2016. Cytokinetics expects to receive over $20 million as research and development expenses over these two years. As per the amended agreement the companies will initially start a phase II development program on CK-2127107 in the spinal muscular atrophy indication. The companies may explore other neuromuscular indications in the program in the future.

Additionally, Cytokinetics is expected to receive over $600 million as pre-commercialization and commercialization milestone payments including more than $100 million payable for CK-2127107 in SMA and other neuromuscular indications. Moreover, as per the deal, Cytokinetics is also eligible to receive escalating royalties.

Meanwhile, Astellas will have the exclusive rights to co-develop and commercialize CK-2127107along with other candidates in fast skeletal troponin activators in non-neuromuscular indications and certain neuromuscular indications and some other novel mechanism skeletal muscle activators in all indications. However, under agreed circumstances Cytokinetics may co-promote and conduct certain commercial activities in North America and Europe.

Cytokinetics' association with Astellas goes back to 2013, when the companies entered into an agreement as per which Cytokinetics exclusively licensed the co-development and commercialization rights of CK-2127107 in non-neuromuscular indications to Astellas. As per the terms of their initial agreement, Cytokinetics finished the phase I development program along with other phase II readiness activities.

The company received $7.6 million of license revenues from its collaboration with Astellas for the first nine months of 2014. Cytokinetics also has collaborations with Amgen Inc. ( AMGN ).

Cytokinetics carries a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the health care sector include Amgen and Affymetrix Inc. ( AFFX ), carrying similar ranks.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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