Cytokinetics Heart Drug's Future Sparks Optimism Despite M&A Hurdles and Royalty Deal Concerns: Analyst

Stifel initiated coverage on Cytokinetics Incorporated CYTK, noting the company’s catalyst rich one to two years.

The M&A speculation ramped up in early 2024 after the company released SEQUOIA-HCM Phase 3 trial data of aficamten in December 2023. However, last year, Novartis AG NVS decided to step back from pursuing the Cytokinetics deal.

Amgen Inc AMGN, AstraZeneca Plc AZN, and Johnson & Johnson JNJ also all popped up as potential suitors, though the stock faded from there as a deal never materialized.

Also Read: Cytokinetics Sets Stage For Mid-Stage Study For Heart Failure Drug After Encouraging Data From Phase 1 Study

Cytokinetics has fallen out of favor with investors after a turbulent start to 2024, marked by a controversial Royalty Pharma Plc RPRX deal and no mergers or acquisitions.

Investors poorly received the structure of the Royalty Pharma deal at the time, and it continues to be a concern for many even today.

Stifel has initiated coverage with a Buy rating and a price forecast of $80. However, the outlook appears promising, with its valuation adjusted and several catalysts expected over the next 12+ months.

Stifel analyst James Condulis writes Cytokinetics’ aficamten is an exceptional drug as it sets a strong competitive standard for a multi-billion-dollar obstructive hypertrophic cardiomyopathy (oHCM) market.

As the rollout of Bristol Myers Squibb Co’s BMY Camzyos mavacamten continues, some concerns remain about its potential in treating obstructive hypertrophic cardiomyopathy (oHCM).

While the initial launch is not seen as a negative sign for mavacamten’s potential, its Risk Evaluation and Mitigation Strategy (REMS) is a barrier to fully unlocking the market.

Cytokinetics appears well-positioned to capitalize on Bristol Myers’ groundwork with its second-to-market drug, aficamten, which is expected to have a best-in-class profile. There is a strong case for aficamten to secure a differentiated REMS, potentially including six-month echocardiograms (Q6M echos) as a standard.

Under conservative assumptions, aficamten could drive the U.S. oHCM market to approximately $3 billion.

Looking ahead to 2025 and 2026, Phase 3 nHCM data and early findings for HFpEF could present new opportunities. Although mergers and acquisitions are not a key focus, potential strategic interest could bring unexpected benefits.

Price Action: CYTK stock is up 3.45% at $47.40 at last check Wednesday.

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