Cytokinetics (CYTK) PT Lowered to $92 at B.Riley

B.Riley analyst Mayank Mamtani lowered the price target on Cytokinetics (NASDAQ: CYTK) to $92.00 (from $122.00) while maintaining a Buy rating.

The analyst commented: "On 5/22, CYTK announced a $575M strategic funding collaboration with Royalty Pharma plc, the company's longstanding collaborator, which was coupled with a $500M follow-on offering (on top of $50M RPRX private placement) that was in line with expectations following the full Ph. III SEQUIOA-HCM trial results' disclosure (5/16 ESC-HF recap note). While equity weakness may seem to indicate potential NT M&A expectations being reset, we note long-term pipeline fundamentals improve as CYTK now has a fortified balance sheet to execute on a slew of regulatory filings/commercial launches over next several years, beginning with SEQUIOA-HCM trial-based US & EU filings completed in 2H24 that will be followed by MAPLE/ ACACIA-HCM based global regulatory filings in 2025-26 which potentially gets further layered on by omecamtiv mecarbil (OM) initial Ph. III readout/filing anticipated in 2027-28. The uplift in projected peak year sales is $1B to $5B, within RPRX deal terms, seems to have been overshadowed by CYTK resurrecting OM late-stage development where NT further R&D spend ramp is unfairly viewed as non-value-enhancing; notably, in worst-case scenario of OM failing and resulting in CYTK needing to repay $237.5M in return for initial $100M upfront received. Furthermore, the CK-586-related full development financing secured, totaling $350M, including $50M upfront payment secured for proof-of-concept Ph. II CK-586 HFpEF trial, is noteworthy as that represents the most high-risk/high-reward program within the pipeline that could have its prospects materially improve in case of peer BMY's extensive Ph. II data generation activities in coming months, i.e., (1) mavacamten EMBARK-HFpEF trial and (2) MYK-224 MERCUTIO and AURORA-HFpEF; which not only helps broaden CMI drug class' TAM but also elevates the safety and efficacy threshold for follow-on drug classes, e.g., EWTX's cardiac sarcomere modulator, to have any detrimental impact. PT lowered from $122 to $92 reflective of the deals' related dilution and increased LT opex trajectory."

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