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Company Description-

Cytokinetics, Incorporated (CYTK) is a biopharmaceutical company that focuses on the discovery, development and commercialization of therapeutics. The company utilizes its high level of expertise in the human exoskeleton to try and develop treatments for different diseases. They believe that by using innovative techniques and attempting to create new and innovative therapeutic methods that they can help to bring substantial benefits to patients. The company was started in San Francisco in the late 90’s and have been trying to find new drugs and treatments to help ailing patients ever since. Cytokinetics uses a time tested business strategy in which they minimize potential business risk by creating partnerships and focus on therapeutic development areas in which there are “clinical unmet needs.” This is a company that is trying to create the future of medicinal cytoskeletal pharmacology and bring new and successful treatments to patients.  The company focuses on three main areas of therapeutics: Cardiac Muscle Contractility, Smooth Muscle Contractility, and Skeletal Muscle Contractility. Although all three areas are important and require significant research and time, Skeletal Muscle contractility is a strong point for Cytokinetics as it is an area in which the company attempts to play on their knowledge and expertise in cytoskeletal pharmacology.

Skeletal Muscle Disease-

One of the main focus areas of Cytokinetics is helping people with skeletal muscle issues. They hope to create treatments that will reverse and fight against the clinical effects of muscle weakness and wasting and fatigue. These symptoms can lead to a decreased quality of life and life threatening conditions, as well as death. Cytokinetics hopes to create drugs and treatments that can reverse the effects of these diseases and improve muscle growth and muscle function within patients. This would allow people with diseases such as ALS and Muscular dystrophy the chance to enhanced muscle performance and a better quality of life.

Amyotrophic Lateral Sclerosis (ALS)-

Amyotrophic Lateral Sclerosis (ALS), also commonly known as Lou Gehrig’s disease, is a neurodegenerative disease that affects nerve cells in the brain as well as in the spinal cord. ALS creates the degeneration of motor neurons in the brain, which leads to decreased control of muscles and the inability to use muscles or create muscle movement within the body. Because the brain cannot direct the use of the muscles, the muscles in the body remain unused and begin to atrophy. Although the disease is not all that common, it has a massive impact as it does considerable damage and has no cure or drug that reverses the degeneration. That is where Cytokinetics comes in. Cytokinetics has been working on an ALS drug called “Tirasemtiv” for a couple of years now. The drug passed into phase two of trials in 2011. This drug improves the sensitivity of muscles to calcium, which leads to an increase in muscle growth and delays muscle fatigue. It was revealed very recently that Tirasemtiv failed to significantly outperform the placebo drugs (as rated by the ALS Functional Rating Scale) and struggled to meet secondary endpoints and goals. This negative news led to a massive decline in stock price as CYTK fell from around $13 to $4.59 Friday afternoon in the span of just one day. This is a loss of more than 64%! CYTK may continue to try and test and tweak Tirasemtiv to try and create a more successful ALS drug or they may have to start anew.

Stock Analysis-

Despite the negative news and massive stock price, I believe that Cytokinetics is a buy. You may be highly confused why a stock that dropped 64% is a buy, but you have to look deeper than some recent stock news when evaluating the company. First of all, CYTK has two other main drugs in clinical trials at the moment. They also have partners on both of these drugs as they have pared up with Amgen and Astellas. This partnership ensures increased funding and also guarantees Cytokinetics a huge payout if the drugs come to be successful or pass certain tests.  One drug that Cytokinetics is working with in collaboration with Astellas is CK-107, another drug that aims to help patients with muscle degenerative diseases. This drug is only in phase one, but is backed by strong funding and research and could help to alleviate pain and suffering from patients with degenerative muscle diseases. The company also has seen great growth in recent years. Cytokinetics increased its revenues by a multiple of 4 times from 2012-2103. They also have very strong current and quick ratios which is rare for biopharmaceutical companies. The company is also valued by most analysts and investors at much higher than their current stock price. Out of 7 analysts on Yahoo Finance, the average one year price target is $16.05 and the low is $7, which is $2.50 over the current price. To sum up, the massive price drop is definitely attributable to the recent negative stock news, but was a massive over adjustment for bad news by investors. The stock should have dropped with this news, but not as much as it did. This is a highly undervalued stock and even if the company does not see any drug successes in the near future, their stock should still rise in price.

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