Cytokinetics(CYTK) - 2025 Q1 - Quarterly Report

GLOSSARY OF TERMS This section defines various terms and abbreviations used throughout the Quarterly Report on Form 10-Q, ensuring clarity and consistent understanding of the document - The section defines various terms and abbreviations used throughout the Quarterly Report on Form 10-Q, covering company-specific agreements, clinical trial names, regulatory bodies, and financial instruments to ensure clarity and consistent understanding of the document[9][10][11][12] PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements for Cytokinetics, Incorporated, including balance sheets, statements of operations, stockholders' deficit, and cash flows, along with detailed notes, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements (Unaudited) This section provides the unaudited condensed consolidated financial statements for Cytokinetics, including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' deficit, and statements of cash flows, along with explanatory notes detailing accounting policies, debt agreements, collaboration revenues, and fair value measurements Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' deficit as of March 31, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------- | :---------------- | | Total assets | $1,264,051 | $1,401,673 | | Total liabilities | $1,530,464 | $1,537,045 | | Total stockholders' deficit | $(266,413) | $(135,372) | | Cash and cash equivalents | $73,680 | $94,857 | | Short-term investments | $864,538 | $981,157 | | Accounts receivable | $2,012 | $16,650 | | Deferred revenue | $52,370 | $52,370 | | Liabilities related to revenue participation right purchase agreements, net | $476,296 | $462,192 | | Liabilities related to RPI Transactions measured at fair value | $133,100 | $137,000 | Condensed Consolidated Statements of Operations and Comprehensive Loss This section details the company's financial performance, including revenues, operating expenses, and net loss for the three months ended March 31, 2025, and 2024 Key Financial Performance (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :---------------------------------------------------------------- | :--- | :--- | | Collaboration revenues | $1,579 | $835 | | Research and development expenses | $99,841 | $81,570 | | General and administrative expenses | $57,369 | $45,500 | | Total operating expenses | $157,210 | $127,070 | | Operating loss | $(155,631) | $(126,235) | | Net loss | $(161,376) | $(135,643) | | Net loss per share — basic and diluted | $(1.36) | $(1.33) | | Weighted-average shares outstanding | 118,496 | 101,924 | - Non-cash interest expense on liabilities related to revenue participation right purchase agreements increased to $14.078 million in Q1 2025 from $10.218 million in Q1 2024[19] - The company recognized a $3.9 million gain from the change in fair value of liabilities related to RPI Transactions in Q1 2025, compared to no such gain in Q1 2024[19] Condensed Consolidated Statements of Stockholders' Deficit This section outlines changes in stockholders' deficit, including accumulated deficit and total deficit, for the periods ending March 31, 2025, and December 31, 2024 Stockholders' Deficit Changes (in thousands) | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | | :-------------------------- | :---------------- | :------------- | | Accumulated deficit | $(2,701,764) | $(2,863,140) | | Total stockholders' deficit | $(135,372) | $(266,413) | - Stock-based compensation expense was $23.549 million for the three months ended March 31, 2025[22] - The net loss of $161.376 million for the period directly contributed to the increase in accumulated deficit[22] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash flows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Cash Flow Summary (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :--- | :--- | | Net cash used in operating activities | $(131,617) | $(129,507) | | Net cash provided by investing activities | $105,956 | $32,641 | | Net cash provided by financing activities | $4,754 | $103,791 | | Net (decrease) increase in cash | $(21,177) | $6,952 | | Cash, cash equivalents, and restricted cash, end of period | $74,055 | $120,351 | - Maturities of investments significantly contributed to cash provided by investing activities, totaling $275.725 million in Q1 2025, up from $175.296 million in Q1 2024[25] - Financing activities provided substantially less cash in Q1 2025 ($4.754 million) compared to Q1 2024 ($103.791 million), mainly due to the absence of proceeds from at-the-market offerings in 2025[25] Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the condensed consolidated financial statements, covering accounting policies, debt, collaboration revenues, and fair value measurements Note 1 — Organization and Significant Accounting Policies Cytokinetics is a late-stage biopharmaceutical company focused on muscle function therapeutics, with an accumulated deficit of approximately $2.9 billion, anticipating future operating losses, and relying on equity sales, collaborations, and debt for funding, with commercial sales of aficamten in oHCM potentially starting after December 26, 2025 - Cytokinetics is a late-stage biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that modulate muscle function[26] - The company has an accumulated deficit of approximately $2.9 billion since inception and incurred a net loss of $161.4 million and net cash used in operations of $131.6 million for the three months ended March 31, 2025[27] - Operations are funded primarily through sales of common stock, collaboration agreements, sales of future revenues and royalties, and debt financing, with commercial sales not expected before the PDUFA target action date of December 26, 2025, for aficamten in oHCM[28] - Existing cash, cash equivalents, and investments are believed to be sufficient to fund cash requirements for at least the next 12 months[30] - The company operates in one primary business activity and one reportable segment[34] Note 2 — Net Loss Per Share This note details the calculation of net loss per share, identifying instruments excluded from diluted net loss per share computation due to their antidilutive effect, such as stock options, restricted stock units, ESPP shares, and convertible notes Antidilutive Instruments (in thousands) | Instrument | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :-------------------------------------- | :------------- | :------------- | | Options to purchase common stock | 11,714 | 11,095 | | Restricted stock and performance units | 2,498 | 1,692 | | Shares issuable related to the ESPP | 66 | 65 | | Shares issuable upon conversion of 2026 Notes | 2,003 | 2,003 | | Shares issuable upon conversion of 2027 Notes | 10,572 | 10,572 | | Total shares | 26,853 | 25,427 | Note 3 — Agreements with Royalty Pharma This note details Cytokinetics' financing agreements with Royalty Pharma, including the 2022 and 2024 RPI Transactions, which involve various loan agreements and revenue participation right purchase agreements for aficamten, omecamtiv mecarbil, and CK-586, with liabilities measured at fair value or amortized cost, and embedded derivatives - The 2024 RPI Transactions, entered into on May 22, 2024, included amendments to existing agreements and new agreements (2024 RP OM Loan Agreement, RP CK-586 RPA, RP Stock Purchase Agreement), accounted for as a debt modification of the 2022 RPI Transactions[38] - The RP OM Loan Agreement provides a $100.0 million loan, repayable in quarterly installments based on omecamtiv mecarbil's Phase 3 trial success and FDA approval, with scenarios ranging from 124.0% to 237.5% of the principal amount plus royalties[41][43][46] - Under the RP CK-586 RPA, RPI ICAV purchased rights to CK-586 revenue streams for up to $200 million, including a $50 million upfront payment for 1.0% of net sales, with an option for an additional 3.5% for funding 50.0% of Phase 3 R&D costs up to $150 million[47][48] - Liabilities related to the 2024 RP OM Loan Agreement and RP CK-586 RPA are measured at fair value using Level 3 inputs, including probabilities of clinical success, regulatory approval, and discount rates (12% to 18%)[50] - Under the RP Aficamten RPA, RPI ICAV purchased rights to aficamten revenue streams for up to $150.0 million, with the royalty structure amended in May 2024 to 4.5% of worldwide annual net sales up to $5.0 billion and 1% above $5.0 billion[53][54] - As of March 31, 2025, under the RP Multi Tranche Loan Agreement, the company is entitled to draw $75.0 million under tranche 4 (drawn in April 2025) and $100.0 million under tranche 5, with an additional $175.0 million under tranche 7 contingent on FDA approval of aficamten in oHCM by December 31, 2025[64][65][70] - Embedded derivatives in the RP Multi Tranche Loan Agreement, related to change in control and default features, are recognized at fair value using Level 3 inputs (probabilities of change of control, default, and discount rates of 12% to 14%)[72][74] - RPI ICAV purchased 980,392 shares of Common Stock for $50 million in a private placement concurrent with a public offering on May 28, 2024[76] Note 4 — Research and Development Arrangements This note details collaboration agreements for the development and commercialization of omecamtiv mecarbil and aficamten in Greater China and Japan, including the termination of the Corxel OM License Agreement, the assignment of the Corxel Aficamten License Agreement to Sanofi, and a new agreement with Bayer granting exclusive rights for aficamten in Japan - The license and collaboration agreement with Corxel for omecamtiv mecarbil in China and Taiwan was mutually terminated in December 2024, reverting all rights to Cytokinetics[77] - Corxel assigned its rights for aficamten in China and Taiwan to Sanofi in December 2024, with Cytokinetics receiving a $15.0 million non-refundable payment for a license modification and eligibility for up to $160.0 million in development and commercial milestones, plus tiered royalties in the low-to-high teens range[78][79] - A collaboration and license agreement with Bayer Consumer Care AG was signed in November 2024 for exclusive development and commercialization of aficamten in Japan, with Cytokinetics receiving an upfront payment of €50.0 million ($52.4 million), recorded as deferred revenue, and eligibility for up to €90.0 million in development milestones and up to €490.0 million in commercial milestones, plus tiered royalties[84][85][86] - Upfront payments for licenses of functional intellectual property are recognized as revenue upon satisfaction of performance obligations (e.g., technology transfer), while milestone payments are constrained and recognized only when probable of not resulting in significant revenue reversal, and sales-based milestones and royalties are recognized when sales occur[81][86] - Collaboration revenues from Bayer were $1.4 million and from Sanofi were $0.1 million for the three months ended March 31, 2025, related to R&D cost reimbursements[83][87] Note 5 — Fair Value Measurements This note describes the company's fair value measurements for financial assets and liabilities, classifying them into a three-level hierarchy based on input observability, providing a breakdown of cash equivalents and available-for-sale securities, and noting the use of Level 3 inputs for certain RPI-related liabilities - Financial assets and liabilities are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[92] Financial Assets (March 31, 2025, in thousands) | Asset Type | Fair Value Hierarchy Level | Fair Value (in thousands) | | :-------------------------- | :----------------------- | :--------- | | Money market funds | Level 1 | $60,918 | | U.S. Treasury securities | Level 1 | $438,706 | | U.S. Government agency securities | Level 2 | $107,056 | | Commercial paper | Level 2 | $210,688 | | Asset-backed securities | Level 2 | $14,004 | | Corporate obligations | Level 2 | $254,755 | | Total | | $1,086,127 | - Liabilities related to the 2024 RP OM Loan Agreement and RP CK-586 RPA, as well as derivative liabilities, are valued using significant unobservable (Level 3) inputs, including probabilities of clinical success, regulatory approval, change of control, default, and discount rates[50][74] Note 6 — Balance Sheet Components This note provides a reconciliation of cash, cash equivalents, and restricted cash, and details the composition of accrued liabilities, noting that restricted cash collateralizes letters of credit and accrued liabilities primarily consist of clinical and preclinical costs and compensation-related expenses Cash, Cash Equivalents, and Restricted Cash (in thousands) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------------------------------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $73,680 | $94,857 | | Restricted cash | $375 | $375 | | Total cash, cash equivalents, and restricted cash | $74,055 | $95,232 | Accrued Liabilities (in thousands) | Category | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------ | :------------- | :---------------- | | Clinical and preclinical costs | $16,237 | $13,567 | | Compensation related | $18,610 | $35,132 | | Other accrued expenses | $8,511 | $6,624 | | Total accrued liabilities | $43,358 | $55,323 | Note 7 — Debt This note details the company's outstanding convertible senior notes, including the 2026 Notes ($21.1 million principal) and 2027 Notes ($540.0 million principal), outlining their interest rates, maturity dates, conversion terms, and redemption options, noting that the 2027 Notes were not convertible as of March 31, 2025, due to unmet conditions Outstanding Convertible Notes (as of March 31, 2025) | Note Type | Principal Amount (in millions) | Interest Rate | Maturity Date | Conversion Rate (per $1,000) | | :---------- | :----------------------------- | :------------ | :------------ | :----------------------------- | | 2026 Notes | $21.1 | 4.0% | November 15, 2026 | 94.7811 shares ($10.55/share) | | 2027 Notes | $540.0 | 3.5% | July 1, 2027 | 19.5783 shares ($51.08/share) | - As of March 31, 2025, the conditions for holders to convert the 2027 Notes were not met, making them non-convertible[106] - The effective interest rate for the 2026 Notes was 4.6%, and for the 2027 Notes was 4.2% as of March 31, 2025[105][106] - The estimated fair value of the 2027 Notes was $618.8 million and the 2026 Notes was $81.7 million, based on Level 2 observable inputs as of March 31, 2025[107] Note 8 — Stockholders' Equity This note details the company's equity incentive plan, including stock options and restricted stock units granted, the associated stock-based compensation expense, the grant of Performance Stock Units (PSUs), and recent public and private offerings of common stock - The 2004 Plan provides for grants of various equity awards to employees, directors, and consultants[108] Stock-based Compensation Grants (Q1 2025) | Award Type | Grants | Weighted Average Grant Date Fair Value per Share | | :------------------ | :------- | :--------------------------------------------- | | Stock options | 1,861,099 | $44.53 | | Restricted stock units | 1,390,967 | $44.40 | Total Stock-based Compensation Expense (Three Months Ended March 31, in thousands) | Category | 2025 (in thousands) | 2024 (in thousands) | | :------------------------ | :--- | :--- | | Research and development | $11,678 | $8,628 | | General and administrative | $11,871 | $12,984 | | Total | $23,549 | $21,612 | - 467,804 Performance Stock Units (PSUs) were granted in 2024-Q1 2025, with $1.2 million expense recognized in Q1 2025 and $4.5 million unamortized compensation remaining[111][112] - The company closed an underwritten public offering of 9,803,922 shares at $51.00/share, generating $563.2 million net proceeds, and concurrently, RPI ICAV purchased 980,392 shares for $50.0 million in a private placement in May 2024[113][185] Note 9 — Commitments and Contingencies This note outlines the company's operating lease commitments, specifically for its South San Francisco headquarters (Oyster Point Lease, expiring October 2033) and its Radnor, Pennsylvania office (Radnor Lease, extended to July 2029 with a renewal option), noting recent amendments to the Radnor Lease resulted in increased right-of-use assets and lease liabilities - The Oyster Point Lease for office and laboratory space in South San Francisco commenced March 31, 2021, and expires October 31, 2033[115] - In February 2025, the Radnor Lease was amended to include additional office space and extend the term through July 2029, resulting in a $1.1 million increase in operating lease right-of-use asset and lease liability for existing space, and a $2.4 million recognition for the new space[116] Note 10 — Subsequent Events This note discloses a subsequent event where the FDA extended the PDUFA target action date for aficamten in oHCM to December 26, 2025, due to a requested Risk Evaluation and Mitigation Strategy (REMS) submission being deemed a Major Amendment, resulting in a three-month delay - On April 29, 2025, the FDA extended the PDUFA target action date for the NDA for aficamten in oHCM to December 26, 2025[117] - The extension was due to the FDA's request for a Risk Evaluation and Mitigation Strategy (REMS) submission, which was classified as a Major Amendment to the NDA, leading to a standard three-month delay[117] - The FDA did not request any additional clinical data or studies[117] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Cytokinetics' financial condition and results of operations for the three months ended March 31, 2025, covering the company's biopharmaceutical focus, R&D programs, liquidity, capital resources, and a detailed analysis of revenues and expenses, highlighting increased R&D and G&A costs due to clinical trials and commercial readiness Overview Cytokinetics is a late-stage biopharmaceutical company specializing in muscle activators and inhibitors for debilitating cardiovascular and neuromuscular diseases, leveraging its expertise in muscle biology and the cytoskeleton to discover, develop, and commercialize novel small molecule drug candidates and build a sustainable specialty biopharmaceutical business - Cytokinetics is a late-stage biopharmaceutical company focused on discovering, developing, and commercializing first-in-class muscle activators and next-in-class muscle inhibitors for debilitating diseases[123] - The company's innovation is driven by its knowledge and expertise in muscle biology and the cytoskeleton, distinguishing it from competitors[124] - The strategic goal is to build a sustainable specialty biopharmaceutical business by leveraging muscle contractility expertise to expand its pipeline and identify new drug candidates[124] Research and Development Programs Cytokinetics' R&D efforts are concentrated on cardiac and skeletal muscle contractility programs, aiming to develop novel therapeutics for cardiovascular and neuromuscular diseases, including cardiac myosin inhibitors (aficamten, CK-586) for HCM and HFpEF, a cardiac myosin activator (omecamtiv mecarbil) for HFrEF, and a fast skeletal muscle troponin activator (CK-089) for neuromuscular dysfunction Specialty Cardiology Programs The specialty cardiology program focuses on modulating cardiac sarcomere function to treat heart diseases, including developing cardiac myosin inhibitors like aficamten for hypertrophic cardiomyopathies (HCM) and CK-586 for heart failure with preserved ejection function (HFpEF), as well as a cardiac myosin activator, omecamtiv mecarbil, for heart failure with reduced ejection fraction (HFrEF) - The program targets the cardiac sarcomere to develop treatments for hypertrophic cardiomyopathies (HCM) using cardiac myosin inhibitors and heart failure with reduced ejection fraction (HFrEF) using cardiac myosin activators[126][127] - HCM affects approximately 280,000 diagnosed patients in the U.S., with an estimated 400,000-800,000 undiagnosed patients, and two-thirds of HCM patients have obstructive HCM (oHCM)[129] Aficamten Aficamten is a novel, oral, small molecule cardiac myosin inhibitor developed for HCM, designed to reduce hypercontractility, which has received orphan drug designation and demonstrated significant improvements in exercise capacity and symptoms in the SEQUOIA-HCM Phase 3 trial for oHCM, with the NDA for oHCM accepted by the FDA (PDUFA target action date extended to December 26, 2025, due to a REMS submission) and an MAA validated by the EMA - Aficamten is a selective cardiac myosin inhibitor designed to reduce hypercontractility in HCM by binding to cardiac myosin and preventing it from entering a force-producing state[130] - The SEQUOIA-HCM Phase 3 trial showed aficamten significantly improved exercise capacity (pVO2 increased by 1.8 ml/kg/min vs. 0.0 ml/kg/min for placebo, p=0.000002) and all 10 prespecified secondary endpoints in oHCM patients[132] - The NDA for aficamten in oHCM was accepted by the FDA, with the PDUFA target action date extended to December 26, 2025, due to the submission of a proposed REMS being deemed a Major Amendment, and no additional clinical data was requested[117][133] - An MAA for oHCM has been validated by the EMA and is under review, while the NDA for aficamten for oHCM was accepted with priority review by China's National Medical Products Administration[134][137] - Aficamten is also being evaluated in MAPLE-HCM (Phase 3, oHCM monotherapy), ACACIA-HCM (Phase 3, non-obstructive HCM), CEDAR-HCM (pediatric oHCM), and FOREST-HCM (open-label extension)[135] - RPI ICAV is entitled to 4.5% of worldwide annual net sales of aficamten up to $5.0 billion and 1% above $5.0 billion[139] Omecamtiv mecarbil Omecamtiv mecarbil is a selective cardiac myosin activator being developed for heart failure with reduced ejection fraction (HFrEF), with the GALACTIC-HF Phase 3 trial showing a statistically significant reduction in the primary composite endpoint of CV death or heart failure events, leading to the initiation of COMET-HF, a Phase 3 confirmatory study in HFrEF patients with severely reduced ejection fraction, and the termination of the Greater China license agreement reverting rights to Cytokinetics - Omecamtiv mecarbil is a selective cardiac myosin activator designed to increase the number of active actin-myosin cross bridges, augmenting impaired contractility in HFrEF[141] - The GALACTIC-HF Phase 3 trial demonstrated a statistically significant reduction in the primary composite endpoint of CV death or heart failure events (HR 0.92; 95% CI 0.86, 0.99; p=0.025) compared to placebo[143] - A Phase 3 confirmatory study, COMET-HF, was initiated in Q4 2024, enrolling approximately 1,800 HFrEF patients with severely reduced ejection fraction (LVEF <28%) to assess efficacy and safety[144] - The license and collaboration agreement for omecamtiv mecarbil in China and Taiwan was mutually terminated in Q4 2024, with rights reverting to Cytokinetics[145] - RPFT has a revenue interest entitling it to up to 5.5% of worldwide net sales of omecamtiv mecarbil, and the RP OM Loan Agreement provides for quarterly payments of 2.0% of annual worldwide net sales, subject to minimums, upon successful Phase 3 trial and FDA approval[146][147] CK-586 CK-586 is a novel, selective, oral, small molecule cardiac myosin inhibitor designed to reduce hypercontractility in heart failure with preserved ejection fraction (HFpEF), a condition affecting approximately half of U.S. heart failure patients, with Phase 1 trial results showing it was safe, well-tolerated, and demonstrated dose-linearity with predictable LVEF reduction, and the AMBER-HFpEF Phase 2 trial is currently enrolling patients to evaluate its safety and tolerability in symptomatic HFpEF - CK-586 is a selective cardiac myosin inhibitor designed to reduce cardiac hypercontractility in HFpEF by decreasing active myosin cross-bridges without affecting calcium transients[149] - HFpEF affects approximately 6.7 million patients in the U.S., representing about half of all heart failure patients, with a poor prognosis[148] - Phase 1 trial results showed CK-586 was safe and well-tolerated in healthy participants, demonstrating dose-linearity, a half-life of 14-17 hours, and exposure-dependent LVEF decrease (<5% at highest dose)[150] - The Phase 2 randomized, placebo-controlled, double-blind, multi-center, dose-finding clinical trial in symptomatic HFpEF patients (LVEF ≥ 60%), AMBER-HFpEF, is currently enrolling, with primary objectives to evaluate safety and tolerability[151] - RPI ICAV purchased rights to CK-586 revenue streams, receiving 1.0% of worldwide net sales for an upfront $50 million, and has an option to purchase an additional 3.5% revenue interest for funding 50.0% of Phase 3 R&D costs up to $150 million[152] Neuromuscular Program Cytokinetics' neuromuscular program focuses on activating the skeletal sarcomere to develop new therapeutic options for diseases associated with neuromuscular dysfunction, aging, and muscle weakness/wasting, with a Phase 1 clinical study of CK-089, a fast skeletal muscle troponin activator, currently underway in healthy participants, though it is subject to a partial FDA clinical hold limiting high-dose administration - The program aims to develop skeletal sarcomere activators for neuromuscular dysfunction, aging, and conditions involving muscle weakness and wasting[153][154] - A Phase 1 randomized, double-blind, placebo-controlled, multi-part, single and multiple ascending dose clinical study of CK-089 in healthy human participants commenced in Q4 2024[155] - The CK-089 program is subject to a partial clinical hold from the FDA, limiting the ability to dose patients at exposures higher than certain levels, which may impact identifying a therapeutic dose[155] Beyond Muscle Contractility Leveraging its extensive preclinical expertise in skeletal, cardiac, and smooth muscle mechanics, Cytokinetics is exploring novel treatments for disorders involving muscle functions beyond contractility, aiming to apply its deep understanding of muscle biology to discover new therapeutic applications - The company is using its preclinical expertise in muscle mechanics to investigate new ways of modulating muscle function beyond contractility[156] - The goal is to discover novel treatments for disorders involving other aspects of muscle function for potential therapeutic applications[156] Liquidity and Capital Resources Cytokinetics' liquidity and capital resources as of March 31, 2025, show total cash, cash equivalents, and marketable securities of $1.089 billion, a decrease from December 31, 2024, with significant borrowings totaling $777.5 million and a working capital of $796.3 million, primarily funded by equity sales, royalty monetization, revenue interest agreements, and debt, with substantial operating losses incurred since inception, anticipating increased expenditures for R&D and commercial readiness for aficamten, expecting existing capital to cover needs for at least the next 12 months, but acknowledging the need for future additional funding Sources and Uses of Cash Cytokinetics funds its operations primarily through equity sales, royalty monetization, revenue interest agreements, strategic alliances, and debt, with operating activities consistently using cash, investing activities providing cash in Q1 2025 due to investment maturities, and financing activities providing less cash in Q1 2025 compared to Q1 2024 due to the absence of significant public offering proceeds from the prior year, while recent Royalty Pharma transactions in 2024 provided substantial funding through loans and revenue participation rights for omecamtiv mecarbil, CK-586, and aficamten, alongside a concurrent private placement of common stock - Operations are funded primarily from private and public sales of equity securities, royalty monetization and revenue interest agreements, strategic alliances, long-term debt, and interest income[159] - Net cash used in operating activities was $131.6 million in Q1 2025 and $129.5 million in Q1 2024, primarily due to R&D and G&A expenses[160] - Net cash provided by investing activities was $106.0 million in Q1 2025, up from $32.6 million in Q1 2024, mainly due to maturities of investments[161] - Net cash provided by financing activities decreased significantly to $4.8 million in Q1 2025 from $103.8 million in Q1 2024, primarily due to the absence of proceeds from a public offering of common stock in 2025[162][163] - The 2024 Royalty Pharma Transactions included a $100.0 million RP OM Loan Agreement, RP CK-586 RPA (up to $200 million, $50 million upfront), amendments to RP Multi Tranche Loan Agreement and RP Aficamten RPA, and a $50 million private placement of common stock[164][165][168] - $175 million has been drawn under the RP Multi Tranche Loan Agreement, with an additional $275 million available, including $100 million from tranche 5 (conditions met) and $175 million from tranche 7 (contingent on aficamten FDA approval by Dec 31, 2025)[170] - As of March 31, 2025, $21.1 million of 2026 Notes and $540.0 million of 2027 Notes are outstanding[176] - The Amended ATM Facility with Cantor was terminated in February 2025, and a new Open Market Sale Agreement with Jefferies LLC was entered into, but no shares were sold as of March 31, 2025[183][184] Future Uses of Cash Cytokinetics anticipates significant increases in general and administrative expenses in 2025 due to commercial readiness activities for aficamten in the US and Europe, following NDA and MAA submissions, with substantial R&D costs also expected for ongoing clinical trials and new drug candidate development, while the company has an accumulated deficit of $2.9 billion and relies on external funding, with existing capital projected to last at least 12 months, but future capital needs are uncertain and dependent on numerous factors including regulatory approvals, market acceptance, and financing availability - General and administrative expenses are expected to significantly increase in 2025 due to commercial readiness activities for aficamten in the US (NDA PDUFA target date Dec 26, 2025) and Europe (EMA MAA validated), including hiring sales force, compliance systems, and marketing[186][208] - Research and development expenses are expected to increase in 2025 due to ongoing clinical trials for aficamten, COMET-HF (omecamtiv mecarbil), AMBER-HFpEF (CK-586), and CK-089, as well as manufacturing for aficamten and new drug candidate development[187][205] - The company has an accumulated deficit of approximately $2.9 billion since inception and has never generated commercial sales revenue[190] - Existing cash, cash equivalents, and investments are believed to be sufficient for at least the next 12 months, but future funding needs are substantial and uncertain, dependent on strategic collaborations, equity sales, and debt financings[191] - Failure to raise capital when needed could lead to delays or discontinuation of R&D activities and negatively impact the stock price[191] Results of Operations Cytokinetics' results of operations for Q1 2025 show an increase in collaboration revenues, primarily from Bayer and Sanofi, but a larger increase in operating expenses, particularly R&D and G&A, leading to a higher net loss compared to Q1 2024, with interest expenses also rising due to new term loans, while non-cash interest expense on revenue participation agreements increased significantly Revenues Cytokinetics' revenues for the three months ended March 31, 2025, increased to $1.6 million from $0.8 million in the prior year, primarily driven by research and development cost reimbursements from collaboration agreements with Sanofi and Bayer, with the upfront payment from the Bayer License Agreement, recorded as deferred revenue, expected to be recognized through the first half of 2025 Collaboration Revenues (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :---------------------- | :--- | :--- | | Collaboration revenues | $1,579 | $835 | - Q1 2025 collaboration revenues were from Sanofi and Bayer, related to R&D cost reimbursements[195] - The €50.0 million ($52.4 million) upfront payment from the Bayer License Agreement was recorded as deferred revenue and is expected to be recognized through the first half of 2025 upon completion of technology transfer[196] Research and Development Expenses Research and development expenses increased by $18.3 million to $99.8 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily attributed to advancing ongoing clinical trials for aficamten, omecamtiv mecarbil (COMET-HF), CK-586 (AMBER-HFpEF), and CK-089, as well as higher personnel-related costs and manufacturing activities for aficamten Total R&D Expenses (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :--- | :--- | | Total research and development expenses | $99,841 | $81,570 | - The increase is primarily due to advancing clinical trials for aficamten (MAPLE-HCM, ACACIA-HCM, CEDAR-HCM, FOREST-HCM), omecamtiv mecarbil (COMET-HF), CK-586 (AMBER-HFpEF), and CK-089, along with higher personnel costs and manufacturing for aficamten[200][201][202][203][204][205] - Proceeds from the RP OM Loan Agreement ($100M) and RP CK-586 RPA ($50M upfront) are intended to partially cover the costs of COMET-HF and AMBER-HFpEF, respectively[202][203] General and Administrative Expenses General and administrative expenses increased by $11.9 million to $57.4 million for the three months ended March 31, 2025, compared to the same period in 2024, mainly driven by investments in commercial readiness activities for aficamten in the US and Europe, including hiring sales forces and marketing, as well as higher personnel-related costs, including stock-based compensation Total G&A Expenses (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------ | :--- | :--- | | Total general and administrative expenses | $57,369 | $45,500 | - The increase is primarily due to investments in commercial readiness for aficamten (US NDA, EMA MAA), including hiring and training a field sales force, implementing compliance systems, and sales and marketing expenses, along with higher personnel-related costs[207][208] Interest and Other Expense, net Total interest expense increased by $1.8 million to $8.9 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to increased interest on term loans, specifically from drawing on Tranche 6 of the RP Multi Tranche Loan Agreement Amendment in May 2024 Total Interest Expense (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------- | :--- | :--- | | Term loans | $3,118 | $1,318 | | 2026 Notes | $237 | $240 | | 2027 Notes | $5,472 | $5,498 | | Other | $41 | $47 | | Total interest expense | $8,868 | $7,103 | - Term loan interest increased due to drawing on Tranche 6 of the RP Multi Tranche Loan Agreement Amendment in May 2024[209] - Interest expenses are expected to increase further in 2025 as additional loans under the RP Multi Tranche Loan Agreement are drawn[210] Non-cash interest expense on liabilities related to revenue participation right purchase agreements Non-cash interest expense from revenue participation right purchase agreements increased by $3.9 million to $14.1 million for the three months ended March 31, 2025, compared to the prior year, primarily driven by the accretion of the RP Aficamten Liability, which saw an additional $33.3 million added to its carrying value in Q2 2024 and had an imputed interest rate of 23.5% as of March 31, 2025 Total Non-cash Interest Expense (Three Months Ended March 31, in thousands) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :--- | :--- | | RP OM Liability | $41 | $(21) | | RP Aficamten Liability | $14,037 | $10,239 | | Total non-cash interest expense recognized | $14,078 | $10,218 | - The carrying value of the RP Aficamten Liability increased by $33.3 million in Q2 2024 due to the RP Aficamten RPA Amendment, with an imputed interest rate of approximately 23.5% as of March 31, 2025[212] - The imputed interest rate on the RP OM Liability was approximately 0.1% as of March 31, 2025[213] Interest and Other Income, net Interest and other income, net, for the three months ended March 31, 2025, primarily consisted of interest income from cash, cash equivalents, and investments, with the company recognizing a total gain of $3.5 million from changes in the fair value of RPI-related liabilities and derivative liabilities, mainly due to an increase in discount rates used for the 2024 RP OM Loan Agreement and RP CK-586 RPA - Interest and other income, net, primarily derived from interest income generated from cash, cash equivalents, and investments[215] Change in Fair Value of Liabilities (Three Months Ended March 31, 2025, in thousands) | Liability | Change in Fair Value (in thousands) | | :------------------------------------ | :------------------- | | CK-586 RPA | $300 | | RP OM Loan | $3,600 | | RP Multi Tranche Loan Agreement Derivatives | $(400) | | Total change in fair value liabilities | $3,500 | - The gain was primarily due to an increase in discount rates (ranging from 12% to 18% as of March 31, 2025, up from 10% to 18% as of December 31, 2024) used to measure the 2024 RP OM Loan Agreement and RP CK-586 RPA, which are based on significant unobservable (Level 3) inputs[216][219][223] Critical Accounting Policies and Significant Estimates This section refers to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for a summary of its critical accounting policies and significant estimates, stating that there have been no material changes to these policies or estimates during the three months ended March 31, 2025 - There have been no material changes to critical accounting policies and significant estimates in the three months ended March 31, 2025[220] Item 3. Quantitative and Qualitative Disclosures About Market Risk Cytokinetics' market risk exposure has not materially changed since December 31, 2024, primarily relating to interest rate risk on its $1.1 billion in cash and investments, where a hypothetical 1% increase in market interest rates would decrease investment value by approximately $5.4 million, and conversely, a 1% decrease in discount rates for certain RPI-related liabilities would increase their fair value by $5.6 million, resulting in a loss - The company's $1.1 billion in cash and investments (U.S. Treasury securities, corporate debt, etc.) are subject to interest rate risk[221] - A hypothetical 1% increase in market interest rates would result in a $5.4 million decline in the value of investments as of March 31, 2025[222] - A hypothetical 1% decrease in discount rates for the 2024 RP OM Loan Agreement, RP CK-586 RPA, and derivative liabilities would increase their fair value by approximately $5.6 million, leading to a recognized loss[223] - A $3.9 million gain was recognized in Q1 2025 due to an increase in discount rates (12-18% vs. 10-18% previously) used to measure these liabilities, resulting in a decrease in their estimated fair value[223] Item 4. Controls and Procedures As of March 31, 2025, Cytokinetics' Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter, and the company acknowledges that control systems provide reasonable, not absolute, assurance - As of March 31, 2025, disclosure controls and procedures were deemed effective at the reasonable assurance level by the CEO and CFO[224] - No changes in internal control over financial reporting occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[225] - Control systems provide reasonable, not absolute, assurance of achieving objectives[226] PART II. OTHER INFORMATION This part covers legal proceedings, a comprehensive discussion of risk factors, information on unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information including Rule 10b5-1 trading arrangements, and a list of exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings - The company has no legal proceedings[227] Item 1A. Risk Factors This section outlines various risks that could materially and adversely affect Cytokinetics' business, financial condition, and results of operations, categorized into those specific to R&D activities, commercial operations, intellectual property, financial risks, legal and compliance risks, and general risks Risks Specific to our Company in connection with our Research and Development Activities Risks include the expensive, time-consuming, and uncertain regulatory approval process, which may prevent commercialization of drug candidates, with disruptions at the FDA potentially delaying reviews and approvals, as seen with aficamten's PDUFA extension, and clinical trials may fail to demonstrate desired safety and efficacy, leading to delays or discontinuation, with patient enrollment difficulties further impeding development, while the company also faces risks related to developing and obtaining regulatory clearance for companion diagnostics and relies heavily on CROs, over whom it has limited control, for clinical trial conduct and regulatory compliance - The regulatory approval process is expensive, time-consuming, and uncertain; approval is never guaranteed, and drug candidates may not meet safety/efficacy standards[229][230][233] - Reductions in FDA workforce or inadequate funding could delay reviews and approvals, as exemplified by the aficamten PDUFA date extension to December 26, 2025, due to a REMS submission[232] - Clinical trials may fail to demonstrate desired safety and efficacy, leading to additional development costs or preclusion from commercial sales, as seen with omecamtiv mecarbil's CRL and reldesemtiv's futility[233] - Delays in patient enrollment due to various factors (e.g., eligibility criteria, competing therapies) could increase costs and affect trial timing/outcome[236] - Failure to successfully develop, manufacture, and obtain regulatory clearance for required companion diagnostics (e.g., for omecamtiv mecarbil) could harm commercialization strategy[237] - Dependence on CROs for clinical trials means limited control over their performance, potential delays, and risks of non-compliance with cGCPs, which could deem data unreliable[238][239] Risks Specific to our Company in connection with our Commercial Operations Commercial success is threatened by difficulties in accurately estimating market size, potential competition from more effective or cheaper drugs, and the critical dependence on third-party payor coverage and adequate reimbursement, while the company also faces significant risks due to its reliance on contract manufacturers for drug production, including potential supply disruptions, quality control issues, and increased costs from trade restrictions or tariffs - The potential market for aficamten or other product candidates is difficult to estimate, and inaccurate assumptions could lead to smaller actual markets and adversely affect revenues[240][242] - Competitors may develop drugs that are less expensive, safer, or more efficacious, diminishing commercial success[243] - Commercial success is highly dependent on obtaining sufficient third-party payor coverage and adequate reimbursement, which is uncertain, time-consuming, and can be impacted by changing policies and required rebates[244][246][249] - The company has no manufacturing capabilities and relies entirely on CMOs, facing risks of performance failure, supply disruptions, quality control issues, and increased costs from trade restrictions/tariffs (e.g., potential pharmaceutical tariffs from the US government)[250][251][252][253] - Inability to successfully manufacture drug candidates in sufficient quality and quantity, or maintain cGMP compliance, could delay development, regulatory approval, or commercialization[255][257] - Post-approval, drugs will be subject to ongoing regulatory review and potentially costly REMS programs (like for aficamten, similar to Camzyos®), which could limit commercial success by making prescription and patient access more difficult[258] - Even with regulatory approval, drugs may not gain market acceptance due to factors like competitive drugs, cost-effectiveness, insurance coverage, and adverse events[260] Risks Specific to our Company in connection with our Intellectual Property Cytokinetics' success hinges on its ability to obtain and maintain robust intellectual property protection for its drug candidates and technologies globally, facing risks including inadequate patent coverage, challenges to patent validity (e.g., EU oppositions for aficamten), limited patent lifespans, and difficulties in protecting trade secrets, while also facing the risk of costly and time-consuming litigation for infringing third-party IP rights or defending its own IP, and claims of wrongful use or disclosure of confidential information by employees - Success depends substantially on obtaining and maintaining intellectual property protection (patents, trade secrets) for drug candidates and technologies[261] - Patent protection is country-specific, expensive, and may be less extensive or subject to challenges (e.g., EU oppositions for aficamten patents)[262] - Patent lifespans may be insufficient to protect competitive positions, as patents can expire before or shortly after commercialization[263] - Difficulty in protecting trade secrets, especially outside the US, due to potential unintentional or willful disclosure by employees/consultants, or independent development by competitors[264] - Risk of costly and time-consuming lawsuits for infringing third-party patents, potentially leading to substantial damages, injunctions, or licensing fees[265][266] - Undertaking infringement suits against third parties is expensive and exposes the company's own IP to challenges (e.g., invalidity)[267] - Potential for claims that employees or the company wrongfully used or disclosed third-party confidential information or trade secrets, leading to litigation, loss of IP rights, or personnel[268] Financial Risks Cytokinetics has a history of significant operating losses since its inception and may not achieve profitability, risking investor capital, requiring substantial additional capital for R&D and commercialization, with existing funds projected for only the next 12 months, and its significant indebtedness ($0.8 billion as of March 31, 2025) could limit cash flow, expose it to adverse economic conditions, and restrict future financing, while covenants in various loan and revenue participation agreements impose restrictions on business operations, and non-compliance could lead to defaults and accelerated repayment obligations, and the conversion of outstanding convertible notes could dilute existing stockholders and create downward pressure on stock price - Incurred operating losses since 1997, with an accumulated deficit of $2.9 billion, and expects increasing losses, risking investor capital[269] - Requires substantial additional funding for R&D and commercialization activities, with existing cash, cash equivalents, and investments projected to meet operating requirements for only at least the next 12 months[270][271] - As of March 31, 2025, had $0.8 billion in debt (RP Multi Tranche Loan, RP OM Loan, 2026/2027 Convertible Notes), which could limit cash flow, expose to risks, and impair ability to satisfy obligations[272][273] - Covenants in loan and revenue participation agreements (RP Multi Tranche Loan, RP OM Loan, RP CK-586 RPA, RP Aficamten RPA, RP OM RPA, Convertible Notes indentures) restrict business and operations, and non-compliance could lead to default and acceleration of payments[275][276] - No rights to repurchase revenue interests in aficamten, omecamtiv mecarbil, or CK-586 (except for CK-586 under change of control), limiting ability to eliminate future covenant applicability[277] - May not be entitled to obtain all available additional loan disbursements under the RP Multi Tranche Loan Agreement if conditions are not met or defaults occur[279] - Conversion of outstanding Convertible Notes may result in dilution of existing stockholders and downward pressure on common stock price[280] - Relies on Sanofi (China) and Bayer (Japan) for aficamten development and commercialization, with risks if partners fail to perform or agreements terminate[281][282] - Ability to use net operating loss carryforwards and tax credit carryforwards may be subject to limitations due to ownership changes, potentially increasing future effective tax rates[283][284] - Failure to maintain effective internal controls could lead to material misstatements, adverse opinions, and negative impact on investor confidence and stock value[285][286] Legal and Compliance Risks Cytokinetics faces legal and compliance risks from recently enacted laws like the Inflation Reduction Act (IRA), which may increase costs, impact pricing, and reduce Medicare coverage, while relationships with healthcare providers and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, with potential for significant penalties for non-compliance, and the company is also exposed to costly product liability claims and must maintain compliance with evolving privacy and data protection regulations (e.g., CCPA, CPRA, GDPR), with failures potentially leading to sanctions, litigation, and increased costs - Recently enacted laws like the Inflation Reduction Act (IRA) may increase difficulty and cost for regulatory approval, commercialization, and Medicare coverage, potentially impacting product pricing and increasing rebate obligations[287][288] - Relationships with customers, healthcare providers, and payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, with potential for significant civil/criminal penalties, exclusion from government programs, and reputational harm for non-compliance[291][292] - Exposure to costly product liability or other liability claims from adverse events in clinical trials or commercial use, with limited insurance coverage[293] - Subject to evolving privacy and data protection laws (e.g., CCPA, CPRA, GDPR), with failure to comply potentially leading to sanctions, litigation, increased costs, and questions about data processing validity[294] - Risks from handling hazardous chemicals and radioactive/biological materials, including accidental contamination, lawsuits, and compliance costs with environmental regulations[295] General Risk Factors General risks include the failure to attract and retain skilled personnel, which could impair drug development and financial reporting, significant disruptions to IT systems or data security breaches could adversely affect business operations and reputation, the company's facilities are located in an earthquake-prone area, posing risks of natural disaster disruptions, the stock price is expected to fluctuate significantly due to various factors, and provisions in charter documents and Delaware law could discourage takeovers, potentially entrenching management - Failure to attract and retain skilled senior management, scientific, technical, commercial, and financial reporting personnel could delay or prevent business objectives[296] - Dependence on complex IT systems makes the company vulnerable to cyberattacks, breaches, and system failures, which could disrupt operations, harm reputation, and lead to material adverse effects[297] - Facilities in South San Francisco are near earthquake faults, posing risks of significant business interruption from natural disasters or catastrophic events[298] - The stock price is expected to fluctuate significantly due to clinical trial announcements, regulatory actions, market conditions, and other factors[299] - Charter documents and Delaware law contain provisions that could discourage, delay, or prevent mergers, acquisitions, or changes in control, potentially entrenching management[300][301] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds to report[303] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - No defaults upon senior securities[304] Item 4. Mine Safety Disclosures This section states that there are no mine safety disclosures - No mine safety disclosures[305] Item 5. Other Information This section discloses Rule 10b5-1 trading arrangements adopted or terminated by directors and officers during Q1 2025, including one adopted by Dr. Edward M. Kaye for stock option exercises and concurrent sales, and notes participation in employee stock purchase plans and director equity programs that may qualify as Rule 10b5-1 arrangements - Dr. Edward M. Kaye adopted a Rule 10b5-1 trading arrangement on March 6, 2025, for exercising stock options and selling shares, set to terminate by July 1, 2026, or upon sale of all securities[306] - Certain officers and directors participate in employee stock purchase plans and director equity programs, which may also be Rule 10b5-1 or non-Rule 10b5-1 arrangements[306] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt instruments, certifications, and XBRL-related files, indicating whether they are incorporated by reference or filed herewith - The section provides a comprehensive list of documents filed as exhibits, including Amended and Restated Certificate of Incorporation, Bylaws, Convertible Notes Indentures, and certifications[308] SIGNATURES This section contains the official signatures of the company's principal executive and financial officers, certifying the accuracy of the report - The report is signed by Robert I. Blum (President and CEO) and Sung H. Lee (EVP,