Cytokinetics, Incorporated’s stock plunged by 16.41% following a report claiming that Swiss pharmaceutical giant Novartis NVS had lost interest in acquiring the company.
The news came as a surprise after earlier reports suggested that Novartis was on the verge of acquiring Cytokinetics, fueling a surge in the latter’s share price. Previously, Cytokinetics had been the subject of acquisition rumors involving AstraZeneca and Johnson & Johnson, which had sent its stock price soaring.
Although Novartis’s interest seems to have cooled, there is still speculation about potential capital raising by Cytokinetics. It’s also possible that Novartis or another major player may re-emerge as a potential buyer, keeping the market on its toes.
In the past six months, Cytokinetics has seen its shares surge by a whopping 139.3%, outpacing the industry growth of a mere 1.8%.
Image Source: Zacks Investment Research
The pharmaceutical and biotech sector has witnessed a revival in merger and acquisition activity as major players seek to fortify their product portfolios and pipelines amid escalating generic competition for key drugs.
Shares of Cytokinetics soared last month after its late-stage study, SEQUOIA-HCM, demonstrated a statistically significant and clinically meaningful increase in the primary efficacy endpoint in patients with obstructive hypertrophic cardiomyopathy. The company plans to submit regulatory applications for aficamten in the second half of 2024.
Cytokinetics also has another candidate in its pipeline, omecamtiv mecarbil, for the treatment of advanced or worsening heart failure with reduced ejection fraction (“HFrEF”). The FDA had earlier issued a complete response letter for omecamtiv mecarbil to its new drug application seeking approval for HFrEF.
Concurrently, Novartis, having divested its generic division, Sandoz, has positioned itself as a pure-play pharmaceutical company and is actively seeking strategic acquisitions and deals to strengthen its position.
In a move to bolster its renal pipeline, Novartis had acquired Chinook Therapeutics for $3.5 billion in 2023, adding two late-stage candidates, atrasentan and zigakibart, for the treatment of immunoglobulin A nephropathy to its pipeline.
Looking Ahead
Cytokinetics currently has a Zacks Rank #3 (Hold). Recommended biotech companies include Regeneron Pharmaceuticals REGN and Acadia ACAD, with Regeneron sporting a Zacks Rank #1 (Strong Buy) and Acadia carrying a Zacks Rank #2 (Buy).
Over the past 60 days, Regeneron’s 2024 earnings estimates have risen from $41.57 per share to $43.66 per share, with its stock surging by 26.9% in the past year. Acadia’s loss per share estimate for 2023 narrowed to 33 cents from 41 cents, and the company’s shares have risen by 11.6% in the past six months.
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