Cytokinetics, Defying the Fashion in Biotech, Sticks with Gradual Science-Based Strategy
Cytokinetics isn’t trying to do the most popular thing at the moment. The company is taking time to do a lot of basic science and methodical clinical trials to do the best it can to make sure it has something that works. That’s not exactly the most fashionable thing in today’s high-speed investing environment, when it seems like everyone wants to figure out how a biotech company will generate returns next quarter, next month, or next week—not in the next decade.
“A company like this would be anathema today to VCs, trying to get them behind translating a new biology into a new pharmacology. But we’re doing it, and doing it well. It takes time,” CEO Robert Blum says. “We’re executing on a vision we had for the company over 10 years ago.”
Cytokinetics was founded in South San Francisco in 1997 on the idea of rallying some top scientists around a big biology challenge, and giving them resources to pursue new drugs against truly unexplored biological targets. If you’re willing to shoulder that kind of risk, the thinking went, you could grab the first-mover advantage, make a real impact against a variety of diseases, and build a meaningful new company. Forget about mitigating risk through “me-too” drugs, or a bet-the-company-on-one-drug-for-a-high-profile-disease strategy that might be easier for investors to understand and accept.
Cytokinetics has certainly had its ups and downs like any biotech company pursuing this kind of science-based strategy, but it’s still in the game. The company has burned through more than $320 million in cash in its history, and still had about $80 million in cash and investments left on its books at the end of June, more than enough to run the company for another 20 months, Blum says. A partnership with GlaxoSmithKline to develop cancer drugs was terminated last December, and the company has trimmed down its workforce from 150 people a couple years ago to 110 today. Despite the financial pressures, the company has stuck with a strategy of going after novel targets for muscle disorders.
None of these programs are in the third and final phase of clinical trials where investors see the most value. And interestingly, even though investors don’t appear to have much patience to wait for Cytokinetics to produce data on its programs for amyotrophic lateral sclerosis (ALS) and heart failure, Cytokinetics hasn’t given in to the urge to overhype what it has. Instead of ramming forward into the final phase of trials based on preliminary evidence, the company is running a series of randomized trials, with a variety of doses, to give it the best shot at success in later trials.
Many companies overhype their Phase II trials by framing them as “proof of concept” studies, but Cytokinetics uses more cautious, sci
entific language, saying its studies are designed to gather “evidence of effect.” On a conference call with analysts last week, Andrew Wolff, the company’s chief medical officer, said studies with the company’s lead drug, CK-357, will be “hypothesis-generating,” which is the sort of cautious verbiage you usually hear from scientists or the FDA, not startups. Not all of these trials or programs are likely to work, but when one does, it could be big.
“We still believe in portfolio risk management in this business, even as other companies are pivoting on one program and standing on one leg. Not only do we continue to invest in discovery research, but it continues to pay off for us,” Blum says.
The Cytokinetics story, as mentioned above, goes back to an era of biotech when investors hadn’t accumulated as many battle scars as they have today from buying into the new biology. Legendary venture capitalist Bob Swanson, a founder of Genentech, and Roy Vagelos, the legendary former CEO of Merck in its glory days, were among the angel investors in Cytokinetics. Mayfield Fund and Sevin Rosen Funds co-led the Series A venture round. Amazingly, even though Cytokinetics has been a public company since April 2004, the original VCs still haven’t cashed out their holdings in the company, and still have seats on the board 13 years after its founding.
The science behind Cytokinetics, as for so many other companies in the Bay Area, came from Stanford University and UC San Francisco. The idea was to pursue new drug development based on growing understanding of the cell’s skeleton, or cytoskeleton, or basically a network of proteins involved in mechanical aspects of cell behavior. This approach has evolved over the years into a focus on how cells act during muscle contraction.
This scientific foray has led Cytokinetics in a number of interesting directions. I spoke to Blum mainly about CK-357, a compound the company is developing for ALS, otherwise known as Lou Gehrig’s disease. This is a neurodegenerative disease that gradually paralyzes and kills people. The basic biological cause is unknown, and there aren’t really any effective treatments on the market today.
Cytokinetics isn’t really seeking a cure for this condition, but it hopes its basic biology approach will be useful for treating major symptoms of the disease. The drug is designed to increase muscle force, and delay fatigue in fast-twitch muscles. That’s the muscle type that enables sprinters to run their races, or ordinary people to go up a flight of stairs. They also deteriorate more quickly than other muscle types as people age, and the downhill slide is worsened by neurodegenerative diseases like ALS.
Cytokinetics has structured its clinical trial program to provide a clear answer on both whether the drug is working at a biological level, and whether it’s doing anything that matters for patients. The patient goes in for a series of visits to the doctor, and gets a sequence of placebo or different doses of the drug, so each patient can serve as his or her own control for the experiment. Researchers are monitoring the patient’s speaking ability, handwriting, and lung volume—which are all movements controlled by fast-twitch muscle that deteriorates in patients with ALS. So far, the Cytokinetics drug looks to be well-tolerated. More details on whether the drug has any effect on muscle function are expected to be available by the end of the year, Blum says.
If this drug shows an ability to help ALS patients, then the company will move on to further clinical trials that could show things like whether the drug is able to keep patients’ diaphragms strong enough so they can stay off a ventilator for a longer period of time than without the drug, Blum says. Even without treating the underlying cause of disease, such a drug could help patients live longer.
“If you can get patients out of the hospital sooner, or prevent hospitalization, or prevent expensive procedures, we think there’s a strong [health economics] benefit,” Blum says.
It will take time for Cytokinetics to follow through on that kind of vision. And it will probably take even longer for the company to show some evidence that its muscle biology hypothesis is useful in another program, supported by Amgen, to help patients with heart failure.
How long this will take, Blum isn’t really saying. But he told me he understands what a few biotech entrepreneurs have said in these pages lately, lamenting the trend toward more cautious investment in biotech. By venturing out on the edge, Cytokinetics may toil in obscurity for years and then one day hit it big with something that matters.
“We’re building what we think will be a more durable business. Every day we see another specialty pharma company pivot on a single program, misfiring. Our business is not built on that model,” Blum says. “Our investors have bought into a longer-term vision.”