Cytokinetics, Incorporated — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. The company is a late-stage biopharmaceutical developer focused on muscle-function therapeutics. It has no commercial product sales; revenue is primarily from collaborations, licenses and milestones.
Financial performance and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $5.4 | $41.7 | $14.8 | $49.1 |
| Research and development expense | $48.4 | $24.2 | $116.4 | $67.7 |
| General and administrative expense | $26.2 | $12.3 | $63.0 | $38.9 |
| Operating loss | $69.2 | $5.2 operating income | $164.6 | $57.5 |
| Net loss | $76.1 | $3.2 | $184.7 | $83.4 |
| Basic and diluted net loss per share | $(0.95) | $(0.05) | $(2.48) | $(1.34) |
- Revenue included a $5.0 million Ji Xing milestone in Q3 2021. The prior-year periods included $36.5 million of license revenue recognized from the Ji Xing/RTW transactions; this makes the year-over-year revenue comparison unusually uneven.
- R&D spending rose with expanded cardiac inhibitor and ALS clinical work, and included $7.3 million of Q3 transition and omecamtiv mecarbil material-purchase costs related to Amgen’s termination. G&A increased with commercial-readiness spending, personnel and the new facility.
- Cash, cash equivalents and investments totaled $668.9 million at September 30, 2021, versus $501.0 million at December 31, 2020. Working capital was $414.1 million, down from $443.0 million.
- For the first nine months, operating cash use was $97.8 million; investing cash use was $195.1 million, including investment purchases and $31.1 million of property and equipment purchases; financing provided $300.5 million, principally from the July stock offering. Cash and cash equivalents ended at $90.6 million.
- Debt carrying amounts were $47.1 million for the term loan and $93.9 million for convertible notes. The separate liability for sold future royalties was $174.8 million. Operating lease liabilities totaled $119.9 million; undiscounted lease payments were $235.0 million.
- No commercial gross margin was reported because the company had no product sales. The filing does not provide a clear quantified revenue, R&D or G&A guidance range in the supplied text.
Material developments and outlook
- Amgen’s collaboration termination took effect May 20, 2021, returning worldwide omecamtiv mecarbil and CK-136 rights to Cytokinetics. The company assumed development and commercialization responsibilities and expects higher costs; Servier also terminated its European sublicense.
- GALACTIC-HF met its primary composite endpoint: omecamtiv mecarbil reduced the risk of cardiovascular death or heart-failure events versus placebo (hazard ratio 0.92; 95% CI 0.86–0.99; p=0.025). It did not reduce cardiovascular death, and the reported secondary endpoints were not met under the prespecified testing procedure. Regulatory approval is not assured.
- METEORIC-HF enrollment was completed in June 2021. Aficamten’s Phase 2 REDWOOD-HCM results showed significant reductions in outflow gradients; the company announced plans for the Phase 3 SEQUOIA-HCM trial, with screening and enrollment expected to begin in early 2022, contingent on drug-product availability.
- COURAGE-ALS, a Phase 3 reldesemtiv trial, opened to enrollment in August 2021. Prior FORTITUDE-ALS did not meet its prespecified primary dose-response endpoint; later supportive findings were post-hoc analyses.
- Astellas gave notice of termination of the other skeletal sarcomere activator collaboration, effective November 1, 2021. Its separate agreement provides up to $12 million toward eligible reldesemtiv Phase 3 costs, subject to the agreement’s terms.
- Management said existing cash, cash equivalents and investments were expected to fund projected requirements for at least 12 months from the filing date. It anticipates increased development, commercial-readiness and facility costs, and may pursue partnerships or additional financing. Future financing may be unavailable or dilutive.
- The July 2021 public offering generated approximately $296.9 million in net proceeds from 11.5 million shares. Common shares outstanding were 83.8 million at September 30 and 83.9 million at November 1, 2021.
- Key risks include clinical and regulatory uncertainty, the need to establish an acceptable omecamtiv mecarbil dose-selection assay if required by regulators, manufacturing and transition risks, reliance on partners and contractors, competition, reimbursement and pricing uncertainty, COVID-19 disruption, and ongoing cash burn. Management reported effective disclosure controls as of quarter-end; no legal proceedings were reported.
Important facts for investors to verify
- Regulatory feedback and the eventual filing path for omecamtiv mecarbil, including whether an alternative dose-selection assay is required or acceptable.
- SEQUOIA-HCM drug-product readiness, trial initiation and enrollment, and subsequent aficamten safety and efficacy results.
- COURAGE-ALS enrollment and trial progress in light of the failed prespecified FORTITUDE-ALS endpoint and reliance on post-hoc findings.
- Actual cash burn, commercial-readiness and Oyster Point facility costs, and whether management’s stated liquidity runway assumptions remain valid.
- Potential dilution and future obligations associated with equity financing, the 2026 convertible notes, the RPI royalty liability and any optional RTW aficamten funding.