Cytokinetics Gets $95M in First ALS Deal, Needs Results For More

South San Francisco, CA-based drug developer Cytokinetics stumbled two years ago, but a deal with Astellas Pharma could be a big step toward recovery.

Astellas, of Tokyo, is paying Cytokinetics (NASDAQ: [[ticker:CYTK]]) $65 million for an option to the rights to its drug tirasemtiv in Japan, other Asian countries, the Middle East and Africa, and South America. But before Astellas exercises the option, tirasemtiv must first show positive results in a key clinical trial treating patients with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.

The Phase 3 trial, which aims to improve patients’ ability to breathe, is due to produce results in late 2017. Cytokinetics and Astellas are partners on other drugs, but to date Cytokinetics has kept tirasemtiv to itself.

The firm hit a roadblock in 2014 when tirasemtiv, compared to a placebo, failed to slow the decline of patients’ muscle activity when doing activities such as handwriting, swallowing, and speaking in a Phase 2b trial. In the following months, Cytokinetics revealed that tirasemtiv did, however, slow the loss of muscle function that helps patients breathe, compared to placebo.

“This is why you do clinical research,” CEO Robert Blum said in a telephone interview. “You learn things along the way.”

The company’s stock sank to a low of $3.07 per share in 2014, from $9.52 the week before the results were released. The stock closed at $9.89 per share Tuesday.

With the knowledge that the drug might help muscles that control breathing, Cytokinetics built its Phase 3 trial around that narrower goal.

Even if the drug doesn’t improve broader muscle function for ALS patients, who slowly get locked into their bodies as the disease sets in, improving their ability to breathe would be a significant step for those afflicted.

The deal announced this morning gives Astellas the option to grab regional rights for tirasemtiv to treat ALS once the Phase 3 results are in. Cytokinetics also must first gain marketing approval from regulators in North America and Europe, among other conditions.

Cytokinetics would retain development and commercialization rights in North America, Europe, and other countries, Blum said.

“We believe we can build a very lean sales and marketing organization, one that’s affordable to a company like ours with limited access to capital,” Blum said. “We can therefore have a very profitable high return on investment in ALS.”

The option deal would also include as much as $100 million in royalty and milestone payments to Cytokinetics for Astellas’ territories. Astellas may be eligible for royalties from Cytokinetics, too, for sales in the North American and European regions.

In addition to the option deal on tirasemtiv, Astellas is paying $30 million for rights to study another drug, known as CK-107, in ALS. Astellas and Cytokinetics already have an agreement to study the drug for other indications, such as spinal muscular atrophy. The new deal provides funding through 2017, including a Phase 2 trial on CK-107 in ALS.

Blum said he believes CK-107 will benefit from the long-term study of tirasemtiv—the Phase 3 trial observes patients for an entire year—if the drug shows any additional impact on muscles other than those that control breathing. CK-107 was synthesized by Cytokinetics’ chemists to have the same mechanism of action as tirasemtiv, but without side effects such as dizziness that patients reported in early trials, he says.

The exact cause of ALS is still unknown. Some of the 30,000 or so patients who have the disease in the U.S. at any given time die in their sleep, after the muscles that help them breathe stop functioning—if they haven’t opted for something like a ventilator. The current Phase 3 trial of tirasemtiv is testing the drug’s impact on various measures of respiratory function in 445 patients. It’s a double-blind, placebo-controlled study of slow vital capacity—the amount of air expelled from the lungs—which helps show the strength of the muscles used for breathing and is a measure of disease progression.

Cytokinetics is also collaborating with Amgen on treatments for heart failure. For more on Cytokinetics and other ALS treatments, read these Xconomy stories.