A month after agreeing to take on additional responsibility in its collaboration with GlaxoSmithKline plc, Cytokinetics Inc. secured an arrangement to access up to $75 million that could be used to fund development of its lead compounds in cancer and heart disease.

The South San Francisco-based company entered a committed equity financing facility with private investment group Kingsbridge Capital Ltd., which agreed to provide capital over the next three years, in exchange for newly issued shares of Cytokinetics' common stock. Under the terms, Cytokinetics will determine when and how much money would be drawn down.

"We evaluated several opportunities," said Robert Blum, chief business officer and executive vice president of corporate development and commercial operations for Cytokinetics, "and we think this provides us significant flexibility and, at the same time, carries the lowest cost of capital."

The financing facility allows for funds to be accessed in tranches of up to $15 million or 2.5 percent of the company's market capitalization at the time of the draw-down. Each tranche would be issued and priced over an eight-day period, and Kingsbridge would purchase the shares at discounts ranging from 6 percent to 10 percent, depending on the average market price during the pricing period. Cytokinetics is not obligated to access the funds, and at this time, there are no immediate plans to pull down money.

Blum said the financing facility with Kingsbridge would not interfere with any other financing opportunities, such as a potential public offering under the $100 million shelf registration statement filed by Cytokinetics in June. But in the case of unfavorable market conditions, the company is assured of another financing option.

"It provides a safety net," Blum told BioWorld Today. "This type of financing seemed like a very prudent mechanism to put in place so we can maintain a healthy balance sheet as we contemplate moving forward with our development programs and clinical trials."

A total of nine Phase II trials are ongoing for ispinesib, Cytokinetics' lead product that it is development with GSK. Late last month, the companies halted part of a study that tested the small-molecule candidate in platinum-refractory non-small-cell lung cancer patients, after an interim analysis failed to show enough clinical benefit. However, a second arm of the study in platinum-sensitive NSCLC patients is ongoing, with interim results due by the end of the year. In a second Phase II study, ispinesib showed enough activity to proceed in patients with locally advanced or metastatic breast cancer. (See BioWorld Today, Sept. 29, 2005.)

Cytokinetics holds an option to co-fund development if the product is approved for Phase III testing, Blum said. The financing facility "provides for us access to capital so we could exercise that option," he added.

In addition to NSCLC and breast cancer, the drug is being evaluated in ovarian cancer, colorectal cancer, hepatocellular cancer, melanoma, head and neck cancer, prostate cancer and renal-cell cancer. Ispinesib is designed to inhibit cell proliferation and promote apoptosis in cancer cells by disrupting the function of kinesin spindle protein (KSP), a cytoskeletal protein needed for cell proliferation.

The company's second product, SB743921, also included in the deal with London-based GSK, is in Phase I development in advanced cancer patients. That drug also is a KSP inhibitor, though it has a different structure than ispinesib.

"We recently negotiated rights to conduct our own independent development of [SB743921] in certain hematologic cancers," Blum said, referring to an amendment signed last month for Cytokinetics to take the lead in investigating the drug's potential action against non-Hodgkin's lymphoma, Hodgkin's lymphoma and multiple myeloma, subject to the option for GSK to resume responsibility for those indications. Under that amended agreement, Cytokinetics could receive additional milestone-based payments for those indications, as well as royalties. (See BioWorld Today, Sept. 29, 2005.)

On its own, the company began Phase I testing last month for CK-1827452, a cardiac myosin activator to treat heart failure. The trial is aimed at evaluating escalating doses of the intravenously administered product and also determining the pharmacokinetic and pharmacodynamic effect of the drug, while measuring left ventricular systolic and diastolic function.

Cytokinetics, which recently released its third-quarter earnings, posted a net loss of $10.1 million, or 35 cents per share, for the three months ending Sept. 30. At the end of the quarter, the company had cash, cash equivalents and marketable securities totaling $85.5 million.

In connection with the financing facility, Cytokinetics issued a warrant to Kingsbridge to purchase up to 244,000 shares of common stock at an exercise price of $9.13 per share, a 30 percent premium over the average five-day closing price prior to the signing of the agreement. The warrant will become exercisable after the six-month anniversary of the agreement and will remain exercisable until five years after the agreement date.

Shares of Cytokinetics (NASDAQ:CYTK) closed at $7.80 Monday, up 78 cents.