The companies' 2006 partnership allowed Amgen to license the program for $50 million. There's potential for Cytokinetics to get milestone payments of up to $600 million for the program and royalties on the drug, should it get approved.
For Cytokinetics, the deal has to be a sigh of relief. The company only had $64 million in cash and short-term investments at the end of last quarter. An extra $50 million -- plus not having to fund costly phase 3 trials -- must be a load off its shoulders.
The move looks like a good one for Amgen as well, since further diversifying may be just what the doctor ordered. Like Johnson & Johnson
Expansion into heart drugs and osteoporosis, if denosumab is approved later this year, should help Amgen diversify for any future downturns. The only concern that investors should have is that Amgen doesn't have any experience in marketing heart drugs. Gilead Sciences
Diversify with some additional Foolishness:
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. Read The Fool's disclosure policy backwards, just for a little diversity.