Why Cytokinetics Inc. Shares Soared Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Cytokinetics shares climbed by more than 10% earlier today after reporting fourth quarter earnings results and providing guidance for 2015. By late day, shares had retreated to a gain of roughly 5%.

So what: Cytokinetics reported revenue of $21.8 million for the fourth quarter and $46.9 million for the full year. Due to the timing of revenue from collaborations, revenue in the fourth quarter was lower than the $24.3 million reported in the fourth quarter of 2013; however, full year sales marked an increase from the $30.6 million notched in 2013.

The increase in revenue stems from licensing and collaboration partnerships that the company has with Astellas Pharmaceuticals and, to a lesser extent Amgen Inc.In 2014, Astellas paid Cytokinetics $15.4 million in R&D, $9.8 million in licensing, and $17 million in milestones, while Amgen paid Cytokinetics $4.5 million in R&D last year.

Cytokinetics also updated investors on its clinical pipeline.

The company has met with regulators in the U.S. and European Union and as a result plans to launch a phase 3 trial of tirasemtiv, its skeletal muscular therapy for patients with ALS. Cytokinetics is also near completing enrollment in its phase 2 trial of omecamtiv mecarbil, a drug for the treatment of heart failure on which it's partnered with Amgen. Cytokinetics expects that it will have data to report on omecamtiv mecarbil later this year.

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Also, Cytokinetics and co-developer Astellas have agreed to advance CK-2127107 into phase 2 trials this year as a therapy for spinal muscular atrophy. In January, Astellas agreed to expand its deal with Cytokinetics to include the discovery of additional skeletal targets. As part of that expanded agreement, Cytokinetics received a $30 million upfront license fee, a $15 million milestone payment, and $10 million for the purchase of Cytokinetics shares.

Now what:This year, Cytokinetics expects that its revenue will total between $40 million and $43 million, which it will use to continue to advance its clinical stage research trials. The company appears to be well funded with $83.2 million in cash and investments exiting year end, up from $77.7 million a year ago.

Cytokinetics benefits from deep-pocketed collaborators that are willing to pay for high value clinical targets. For example, Astellas' agreement could be worth as much as $600 million in potential milestone payments. Regardless, Cytokinetics is a high risk, clinical stage company without any products on the market, and as a result, I'm content to watch from the sidelines until more data from its trials becomes available.

The article Why Cytokinetics Inc. Shares Soared Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.