Why Cytokinetics Is Poised to Pull Back

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, clinical-stage biopharmaceutical company Cytokinetics has received a distressing two-star ranking.

With that in mind, let's take a closer look at Cytokinetics and see what CAPS investors are saying about the stock right now.

Cytokinetics facts

Headquarters (founded)

South San Francisco, Calif. (1997)

Market Cap

$342.1 million



Trailing-12-Month Revenue

$6.6 million


CEO Robert Blum (since 2007)
CFO Sharon Surrey-Barbari (since 2004)

Return on Equity (average, past 3 years)



$61.6 million / $0


Ligand Pharmaceuticals

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 13% of the 184 members who have rated Cytokinetics believe the stock will underperform the S&P 500 going forward.

Earlier today, one of those Fools, All-Star zzlangerhans, touched on the stock's seemingly unsustainable valuation:

After being nearly left for dead in 2012, Cytokinetics is enjoying a resurgence on the back of deals with Amgen to expand the omecantiv partnership to Japan and a new deal with Astellas for CK-2127107. ...

Meanwhile, the market has shrugged off an egregious procedural error in the conduct of the BENEFIT-ALS trial that at the very least will invalidate the data for 58 patients who were incorrectly administered placebo instead of tirasemtiv for part of their treatment course. At worst, the error will call into question all the trial data even if positive. Tirasemtiv, a skeletal muscle activator, is at best a palliative for ALS and won't have the commercial impact of a therapy that treats the underlying cause of the disease.

The current share count likely reflects conversion of the large majority of Series B Preferred into common stock but there remains an overhang of [$8M] in the money warrants that will likely be exercised over the next few years and add another 30% to the market cap without providing much in the way of value.

While you can certainly make quick gains in speculative biotech stocks like Cytokinetics, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Cytokinetics Is Poised to Pull Back originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks 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.

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