Investing in biotechs is not for the faint of heart. Case in point: Cytokinetics (CYTK) shares cratered over 40% following the release of disappointing clinical trial results.
Specifically, in the GALACTIC-HF Phase 3 clinical trial of omecamtiv mecarbil in patients with heart failure with reduced ejection fraction (HFrEF), the oral drug met the primary endpoint by reducing cardiovascular (CV) death or heart failure events vs. patients who were treated with a placebo.
So far, so good, then. However, the treatment failed to achieve the secondary endpoint of a reduction of CV death, i.e. the treatment didn't show it could extend chronic heart failure patients’ lives.
For H.C. Wainwright analyst Joseph Pantginis, investors’ disappointment comes as no surprise.
“We believe the reaction is understandable as time to CV death alone was considered a relevant endpoint for the trial as well as one of the metrics for the comparison of omecamtiv with the emerging competitors in the HF landscape,” the 5-star analyst said. “The results open questions around the path forward for omecamtiv and more data are necessary to evaluate all the elements that could come into play for the drug’s potential approval.”
Pantginis mitigates the disappointment by making two important points. First, the trial’s positive outcome by meeting its main objective should not be overlooked.
“A composite reduction of ~8% in CV death or HF events (in over 8,000 patients) is significant, as it suggests that the drug contributes to mitigate the disease outcome in these patients,” Pantginis noted.
Secondly, with the full data set not yet available, the upcoming data could add important information regarding the use of the drug. Further analysis of different patient groups and data points “could reveal differences in efficacy according to the severity of their disease, dose titration, comorbidities and other factors.”
Full results from the GALACTIC-HF study should get an airing at the AHA (American Heart Association) Scientific Session on November 13.
Nevertheless, until further data changes the picture, the trial’s outcome has Pantginis reducing omecamtiv’s projected chance of success for from 70% to 45%.
Pantginis’ price target also gets a trim and is pulled down from $59 to $43. Despite the haircut, after the share price’s massive drop, investors are looking at upside of 154% from current levels. Pantginis’ rating stays a Buy (To watch Pantginis’ track record, click here)
The rest of the street remains firmly in Cytokinetics’ corner. CYTK's Strong Buy consensus rating is based on Buys only – 7, as it happens. The analysts expect shares to soar by 103% over the next 12 months, given the $34.38 average price target. (See CYTK stock analysis on TipRanks)
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