Yesterday, the Wall Street analyst firm of Needham & Co. initiated coverage on Cytokinetics Inc. (CYTK) issuing a “Buy” rating and a $2.50 price target. The biopharmaceutical penny stock has not seen $2.50 in over 18 months and just agreed to sell an additional 55.92 million shares with 33.55 million attached warrants to Cowen and Co. LLC for $56 million. Seeing as how Needham & Co. are acting as co-managers with Canaccord Genuity on the offerings that Cowen and Co., LLC and JMP Securities LLC are acting as joint book-running managers on, that seems more likely as to why the $2.50 price target on CYTK stock.
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CYTK Stock Chart
Market Cap: 48.08M
Price/Sales (ttm): 9.51
Price/Book (mrq): 1.14
52-Week High
(Sep 15, 2011): 1.45
52-Week Low
(Jun 25, 2012): 0.57
50-Day Moving Avg: 0.83
200-Day Moving Avg: 1.01
Avg Vol (3 month): 280,249
Avg Vol (10 day): 305,933
For the Trailing 12 Months:
Revenue: 5.06M
Operating Margin: -889.88%
Operating Cash Flow: -$41.45M
Needham wasn’t even being bullish with their $2.50 price target on CYTK. In April, MLV Capital initiated coverage on CYTK stock issuing a “Buy” rating and a $4.00 price target. This came just 2 months after Canaccord Genuity reiterated their “Buy” rating on Cytokinetics.
(see analysts coverage history of CYTK stock here)
CYTK stock price is currently -24.93% below its 50-day moving average of 0.83, -38.43% below its 200-day moving average of 1.01, -57.22% below its 52-week high of 1.45, and just 8.82% above its 52-week low of 0.57 which was set last week. After receiving a Nasdaq warning letter 2 weeks ago for trading under $1 for 30 consecutive days, what could possibly propel CYTK stock price to $2.50 other than a 1:4 reverse split of their penny shares? Maybe a drug in their pipeline could be the catalyst.
The Company’s drug candidates currently in clinical development include omecamtiv mecarbil for the potential treatment of heart failure and CK-2017357 for the potential treatment of diseases or medical conditions associated with skeletal muscle weakness or wasting. The Company is also advancing a structurally distinct, fast skeletal muscle sarcomere activator, CK-2127107, in non-clinical studies intended to enable the filing of an IND with the FDA.
Cytokinetics “bread and butter” drug candidate is omecamtiv mecarbil, a novel cardiac muscle myosin activator. Nearly 6 years ago, the Company entered into a collaboration and option agreement with Amgen Inc. (Nasdaq: AMGN) to discover, develop and commercialize novel small molecule therapeutics that activate cardiac muscle contractility for potential applications in the treatment of heart failure, including omecamtiv mecarbil. Amgen paid Cytokinetics $50 million in May, 2009, to obtain an exclusive license worldwide, except Japan, to develop and commercialize omecamtiv mecarbil and other drug candidates arising from the collaboration.
As a result, Amgen is now responsible to for all expenses and pays Cytokinetics for agreed research and development activities the Company performs. The agreement provides for potential pre-commercialization and commercialization milestone payments of up to $600 million total on omecamtiv mecarbil and other potential products arising from research under the collaboration, and royalties that escalate based on increasing levels of annual net sales of products commercialized under the agreement. The agreement also provides for the Company to receive increased royalties by co-funding Phase III development costs of drug candidates under the collaboration.
If Cytokinetics was to co-fund such costs, they would be entitled to co-promote omecamtiv mecarbil in North America and participate in agreed commercialization activities in institutional care settings, at Amgen’s expense.
About CYTK Stock
Cytokinetics, Inc. is a clinical-stage biopharmaceutical company focused on the discovery and development of novel small molecule therapeutics that modulate muscle function for the potential treatment of serious diseases and medical conditions. The Company is a development stage enterprise and has been primarily engaged in conducting research, developing drug candidates and technologies, and raising capital.
To view the SEC filings for CYTK, click here.
Bottom Line: Biopharmaceutical penny stocks are such a long, drawn out waiting for something to happen type of investment almost like getting your seat for the 4th of July fireworks show on July 5th and camping out. Cytokinetics’ CYTK stock price at $2.50 is so far from happening other than a reverse split that your better of banking on a comeback from GWBU.
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