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Cytokinetics, Astellas: $490M Potential Skeletal Muscle Deal

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By Randy Osborne
Staff Writer

Cytokinetics Inc.'s deal with Astellas Pharma Inc. to develop skeletal muscle activators for weakness-related disorders preserves rights to tirasemtiv for the biotech firm, and focuses on the follow-on compound, CK-212707 (or CK-107, as it's more often known), providing $40 million for Cytokinetics during the first two years, with potential milestone payments up to $450 million.

Of the first $40 million, "$16 million is the no-refundable up-front, and there will be $24 million in reimbursement of sponsored research activities," said Sharon Barbari, chief financial officer of South San Francisco-based Cytokinetics, during a conference call. "That doesn't include any development activities."

Piper Jaffray analyst Charles Duncan wrote in a research report that the decision – probably made by Cytokinetics – that the company would retain ownership of tirasemtiv, an activator of fast skeletal muscle, while awaiting Phase IIb data in amyotrophic lateral sclerosis (ALS), due by the end of this year, is "a savvy strategy that preserves upside," if the drug works.

Cytokinetics will handle research and development for the first two years of the deal, "at which point or before, we anticipate a possible continuation of the program in Phase II by Astellas," as happened with a previous deal that Cytokinetics struck with Thousand Oaks, Calif.-based Amgen Inc., Duncan wrote.

Amgen said earlier this month that it's expanding the 2006 deal with Cytokinetics for omecamtiv mecarbil for heart failure to include Japan, which was not included in the original deal. (See BioWorld Today, Jan. 4, 2007.)

Under the new terms, Cytokinetics got $25 million, including a nonrefundable license fee of $15 million and $10 million from purchase of common stock by Amgen – 8.4 million shares at about $1.18 each. Amgen owns 7.3 percent of Cytokinetics, which also could collect pre-commercialization milestone payments of up to $50 million and royalties on sales in Japan.

Muscle contractions result from the interactions of actin and myosin. Myosin hydrolyzes ATP, and uses the energy it gets out of that reaction to pull on an actin filament, bringing about the contraction that shortens the muscle. Systolic heart failure happens when the weakened heart cannot contract, and omecamtiv mecarbil works by targeting myosin directly. (See BioWorld Today, March 18, 2011.)

In November, Cytokinetics opened enrollment of the third and final cohort in the Phase IIb trial with omecamtiv mecarbil in left ventricular systolic dysfunction in patients hospitalized for heart failure, which will enroll about 400 patients.

CK-107, the drug just partnered with Tokyo-based Astellas, also derives from the muscle contractility research. It has less tendency to sequester in the brain than its precursor, tirasemtiv, which likely will mean less dizziness as a side effect – which is not a major concern in ALS, where tirasemtiv is being tested, since the dizziness is transient and ALS is so severe. But reducing the problem "may be a significant benefit in other indications that Cytokinetics/Astellas may investigate, such as cachexia due to HIV or cancer, or possibly sarcopenia from aging," Duncan wrote.

Cytokinetics CEO Robert Blum said during the conference call that the company is "very interested in those areas, as we know our partner Astellas is, as well," though neither party would specify which therapeutic spaces may be investigated first. "Over time, we'll have more to say about that," he said.

Fady Malik, Cytokinetics' senior vice president of early research and development, noted that the company has "talked a lot about conditions where muscle dysfunction is second to another, underlying disease such as heart failure, chronic obstructive pulmonary disease, cachexia due to cancer and things like that. There are several others as well. This deal on CK-107 really affords us that opportunity to begin to explore the mechanism of action in other areas. The hope is at least to have a single candidate identified, but the potential is that we could identify multiple candidates."

Cowen and Co. analyst Simos Simeonidis called the Astellas news a "clear positive" for Cytokinetics, since the company maintains worldwide rights to tirasemtiv, while gaining more cash that the firm can use for that drug's advancement, and it also could license tirasemtiv after the Phase IIb data become available.

Tirasemtiv in April bagged an undisclosed amount of cash for Cytokinetics in the form of an award from Families of Spinal Muscular Atrophy to support preclinical research on muscle function in a mouse model of spinal muscular atrophy.

Separately from the Astellas news, Cytokinetics executed a 1-for-6 reverse stock split of its common stock. The move reduces the number of shares of common stock issued and outstanding from about 163.6 million to about 27.3 million, the company said. The authorized number of shares of common stock went down to 81.5 million.

Cytokinetics' shares (NASDAQ:CYTK) closed Tuesday at $12.05, down 25 cents.