Why Cytokinetics Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, clinical-stage biopharmaceutical company Cytokinetics (NASDAQ: CYTK  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Cytokinetics and see what CAPS investors are saying about the stock right now.

Cytokinetics facts

Headquarters (founded)

South San Francisco, Calif. (1997)

Market Cap

$342.1 million

Industry

Biotechnology

Trailing-12-Month Revenue

$6.6 million

Management

CEO Robert Blum (since 2007)
CFO Sharon Surrey-Barbari (since 2004)

Return on Equity (average, past 3 years)

(80%)

Cash/Debt

$61.6 million / $0

Competitors

Biogen Idec
Ligand Pharmaceuticals

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 13% of the 184 members who have rated Cytokinetics believe the stock will underperform the S&P 500 going forward.

Earlier today, one of those Fools, All-Star zzlangerhans, touched on the stock's seemingly unsustainable valuation:

After being nearly left for dead in 2012, Cytokinetics is enjoying a resurgence on the back of deals with Amgen to expand the omecantiv partnership to Japan and a new deal with Astellas for CK-2127107. ...

Meanwhile, the market has shrugged off an egregious procedural error in the conduct of the BENEFIT-ALS trial that at the very least will invalidate the data for 58 patients who were incorrectly administered placebo instead of tirasemtiv for part of their treatment course. At worst, the error will call into question all the trial data even if positive. Tirasemtiv, a skeletal muscle activator, is at best a palliative for ALS and won't have the commercial impact of a therapy that treats the underlying cause of the disease.

The current share count likely reflects conversion of the large majority of Series B Preferred into common stock but there remains an overhang of [$8M] in the money warrants that will likely be exercised over the next few years and add another 30% to the market cap without providing much in the way of value.

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Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On July 15, 2013, at 1:04 PM, PharmTeam wrote:

    There is a ton left out of this article worth consideration, like, for example, cytokinetics lead drug candidate Omecamtiv mecarbil concluding phase 2 trials with results released in September, or the likelihood of breakthrough designation for one or both drug candidates.

  • Report this Comment On July 15, 2013, at 8:18 PM, Slinger812 wrote:

    @ Pharmteam Exactly. It sounds like whoever wrote this article is trying to buy at a lower price. Very poor research on the part of the author.

  • Report this Comment On July 15, 2013, at 10:35 PM, tjsimone wrote:

    Brian, do you pay zzlangerhans for quoting him all the time......maybe we need to just follow zz, and skip the middleman...

  • Report this Comment On July 15, 2013, at 11:59 PM, crt6978 wrote:

    Stating CYTK is poised for a pullback is totally premature since the scheduled 9 /3 break-through conference might just push it to the $20's.

    The stock has increased a tremendous amount this year for justified,scientific reasons that will eventually lead to two possible BB drugs and share price north of $50...IMO.

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