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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-28 · 669 added, 607 removed, 807 unchanged (61% of the section changed)

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We are a late-stage biopharmaceutical company focused on discovering, developing and commercializing first-in-class muscle activators and next-in-class muscle inhibitors as potential treatments for debilitating diseases in which muscle performance is compromised and/or declining.

We have discovered and are developing muscle-directed investigational medicines that may potentially improve the health span of people with devastating cardiovascular and neuromuscular diseases of impaired muscle function.

We have discovered and are developing muscle-directed investigational medicines that may potentially improve the healthspan of people with devastating cardiovascular and neuromuscular diseases of impaired muscle function.

Our research and development activities relating to the biology of muscle function have evolved from our knowledge and expertise regarding the cytoskeleton, a complex biological infrastructure that plays a fundamental role within every human cell.

As a leader in muscle biology and the mechanics of muscle performance, we are developing small molecule drug candidates specifically engineered to impact muscle function and contractility.

As a leader in muscle biology and the mechanics of muscle performance, we are discovering and developing small molecule drug candidates specifically engineered to impact muscle function and contractility with objective to build a sustainable specialty biopharmaceutical business.

Our clinical-stage drug candidates are:

aficamten, a next-in-class cardiac myosin inhibitor, omecamtiv mecarbil, a novel cardiac myosin activator, CK-586, an additional cardiac myosin inhibitor.and CK-136, a novel cardiac troponin activator.

(i) aficamten, a next-in-class cardiac myosin inhibitor, (ii) omecamtiv mecarbil, a novel cardiac myosin activator, (iii) CK-586, an additional cardiac myosin inhibitor, and (iv) CK-089, a novel fast skeletal troponin activator.

For further information regarding our business, refer to Part I, Item 1 (Business) of this Annual Report on Form 10-K.

Critical Accounting Policies and Significant Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities.

We review our estimates on an ongoing basis.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements included in this Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Accrued Research and Development Expenditures

Clinical trial costs are a component of research and development expense.

We accrue and expense clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research and manufacturing organizations and clinical sites.

We determine the actual costs through monitoring patient enrollment, communications with internal personnel and external service providers regarding the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Revenue Participation Right Purchase Agreements

We have entered into certain revenue participation right purchase agreements for omecamtiv mecarbil and aficamten with affiliates of Royalty Pharma, pursuant to which such affiliates purchased rights to royalties from certain revenue streams in exchange for consideration.

We typically account for such agreements as liabilities to be amortized under the effective interest rate method over the life of the related royalty stream, when we have continuing involvement with the underlying R&D.

We typically account for such agreements as deferred income to be amortized under the units-of-revenue method, when there is no continuing involvement with the underlying R&D.

We are required to update our estimates, each reporting period, related to the amount and timing of future royalty payments to be paid to the counterparties of the revenue participation right purchase agreements.

The estimates of the future royalty payment determine the measurement of the non-cash interest expense and the carrying value of the liability.

Revenue participation right purchase agreements are measured using significant unobservable inputs.

The estimates of future royalties requires the use of several assumptions such as:

the probability of clinical success, the probability of regulatory approval, the estimated date of a product launch, estimates of eligible patient populations, estimates of prescribing behavior and patient behavior, estimates of pricing, payor reimbursement and coverage, and sales ramp.

As products containing aficamten and omecamtiv mecarbil have not yet been commercialized, the estimates are highly subjective.

The carrying amount of the liabilities are based on our estimate of the future royalties to be paid over the life of the arrangements as discounted using an imputed rate of interest.

The imputed rate of interest on the RP Aficamten Liability was approximately 24.8% as of December 31, 2023 and 22.4% as of December 31, 2022.

In 2023, the change in estimate increased our non-cash interest expense and net loss by $2.0 million.

The imputed rate of interest on the RP OM Liability was approximately 0.2% as of December 31, 2023 and 8.5% as of December 31, 2022.

In 2023, the change in estimate decreased our non-cash interest expense and net loss by $12.8 million.

We periodically assess the amount and timing of expected royalty payments and account for any changes in such estimates on a prospective basis.

As of December 31, 2023, we have a total carrying value of approximately $380.0 million of liabilities related to revenue participation right purchase agreements.

Results of Operations

A discussion of our results of operations for the year ended December 31, 2021 and year-to-year comparisons between 2022 and 2021 can be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K under the heading "Results of Operations."

Our revenues since inception were primarily from our strategic alliances.

We have not generated any revenue from commercial product sales to date.

Revenues in 2023, 2022, and 2021 were as follows (in thousands):

Years Ended December 31,

(In millions)

Research and development revenues

License revenues

Milestone revenues

Realization of revenue participation right purchase agreement

Total revenues

Research and development revenues in 2023 were primarily from Astellas for reimbursements under the Astellas FSRA Agreement and from Ji Xing under the Ji Xing Agreements.

In 2022, research and development revenues were primarily from Astellas for reimbursements under the Astellas FSRA Agreement.

Under the Astellas FSRA Agreement, Astellas agreed to pay one-third of the out-of-pocket clinical development costs which may be incurred in connection with the Company’s Phase 3 clinical trial of reldesemtiv in ALS, up to a maximum contribution by Astellas of $12 million.

On March 31, 2023, we announced that we would be discontinuing COURAGE-ALS, our Phase 3 clinical trial of reldesemtiv in patients with ALS, and COURAGE-ALS OLE.

As of December 31, 2023 we have billed and collected from Astellas up to the maximum contribution of $12.0 million, and no further revenue is expected under this arrangement.

Milestone revenues for 2023 consist primarily of a $2.5 mllion milestone payment from Ji Xing for the initiation of our Phase 3 clinical trial of aficamten in patients with nHCM (ACACIA-HCM).

In 2022, we recognized revenues of $87.0 million related to the RTW Royalty Purchase Agreement.

On July 14, 2020, we entered the RTW Royalty Purchase Agreement with RTW Royalty Holdings, pursuant to which we sold our Mavacamten Royalty under the Research Collaboration Agreement, dated August 24, 2012, between us and MyoKardia, Inc.

to RTW Royalty Holdings for a one-time payment of $85.0 million.

The RTW Royalty Purchase Agreement transaction closed on November 13, 2020.

On March 31, 2021, RTW Royalty Holdings assigned its rights and obligations under the RTW Royalty Purchase Agreement to its affiliate, RTW ICAV.

We understand that on April 18, 2022, RTW ICAV and MyoKardia, Inc.

entered into agreements, which purported to assign all of RTW ICAV's rights, title and interest to the Mavacamten Royalty to MyoKardia, Inc., and on April 25, 2022, we entered into a tripartite agreement with RTW ICAV and MyoKardia, Inc.

acknowledging the release and discharge of any further obligations by us or MyoKardia, Inc.

in connection to the Mavacamten Royalty.

As a result of the full extinguishment of the Mavacamten Royalty, we recognized revenue of $87.0 million in 2022.

Research and Development Expenses

We incur research and development expenses associated with both partnered and our own research activities.

Research and development expenses related to any development we elect to fund consist primarily of employee compensation, supplies and materials, costs for consultants and contract research and manufacturing, facilities costs and depreciation of equipment.

Research and development expenses by program for 2023, 2022, and 2021 were as follows (in thousands):

Years Ended December 31,

(In millions)

Cardiac muscle contractility

Skeletal muscle contractility

All other research programs

Total research and development expenses

Research and development expenses increased to $330.1 million in 2023 from $240.8 million in 2022, primarily due to higher expenses for our clinical development activities for our cardiac muscle contractility (i.e.SEQUOIA-HCM) and skeletal muscle contractility (i.e.

COURAGE-ALS) and for early research activities.

On March 31, 2023, we announced that we would be discontinuing COURAGE-ALS and COURAGE-ALS OLE.

Research and development expenses for COURAGE-ALS and COURAGE-ALS OLE was $42.9 million in 2023.

We expect the related expenses will decrease in 2024.

We continue to develop aficamten to treat both oHCM and nHCM in two phase 3 clinical trials.

MAPLE-HCM is our Phase 3 clinical trial of aficamten as a monotherapy for patients with oHCM and ACACIA-HCM is a Phase 3 clinical trial for patients with symptomatic nHCM.

Additionally we have FOREST-HCM which is an open label extension study designed to assess the long term safety and tolerability of aficamten in patients with symptomatic oHCM.

On February 28, 2023, we received a CRL from FDA in connection with our NDA for omecamtiv mecarbil for the treatment of HFrEF.

With the CRL, FDA communicated that GALACTIC-HF is not sufficiently persuasive to establish substantial evidence of effectiveness for reducing the risk of heart failure events and cardiovascular death in adults with chronic heart failure with HFrEF, in lieu of evidence from at least two adequate and well-controlled clinical investigations.

FDA stated that results from an additional clinical trial of omecamtiv mecarbil are required to establish substantial evidence of effectiveness for the treatment of HFrEF, with benefits that outweigh the risks.

In 2023, we participated in a Type A meeting with FDA in order to understand FDA’s views regarding the CRL and what may be required to support potential approval of omecamtiv mecarbil in the United States, and subsequently submitted a formal dispute resolution request to FDA, with the objective to appeal the FDA's conclusion, as stated in the CRL, that substantial evidence of effectiveness had not been established to support approval of omecamtiv mecarbil.

FDA subsequently denied our appeal in November 2023 and reaffirmed its decision in the CRL that GALACTIC-HF is not sufficiently persuasive to establish substantial evidence of effectiveness for reducing the risk of heart failure events and cardiovascular death in adults with chronic heart failure with HFrEF, in lieu of evidence from at least two adequate and well-controlled clinical investigations.

Under our strategic alliances with Ji Xing, Ji Xing is responsible for the development of aficamten and omecamtiv mecarbil in China and Taiwan.

Clinical development timelines, the likelihood of success and total completion costs vary significantly for each drug candidate and are difficult to estimate.

We anticipate that we will determine on an ongoing basis which research and development programs to pursue and how much funding to direct to each program, taking into account the potential scientific and clinical success of each drug candidate.

The lengthy process of seeking regulatory approvals and subsequent compliance with applicable regulations requires the expenditure of substantial resources.

Any failure by us to obtain and maintain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase and, in turn, could have a material adverse effect on our results of operations.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation for employees in executive and administrative functions, including, but not limited to, finance, human resources, legal, business and commercial development and strategic planning.

Other significant costs include facilities costs, consulting costs and professional fees for accounting and legal services, including legal services associated with obtaining and maintaining patents and regulatory compliance.

General and administrative expenses by program for 2023, 2022, and 2021 were as follows (in thousands):

Years Ended December 31,

(In millions)

Total general and administrative expenses

General and administrative expenses decreased to $173.6 million in 2023 from $178.0 million in 2022, primarily due to lower outside service spend related to commercial activities, offset by an increase in personnel related costs including stock-based compensation recorded in 2023.

We expect that general and administrative expenses will increase in the future, depending in part on the timing of and investments in commercial readiness.

Interest Expense

Interest expense for 2023, 2022, and 2021 were as follows (in thousands):

Years Ended December 31,

(In millions)

Total interest expense

Interest expense in 2023 consists primarily of interest expense related to the RP Loan Agreement between us and RPDF and interest expense related to the 2026 Notes and 2027 Notes.

Commensurate with our entry into the RP Loan Agreement, we terminated the Term Loan Agreement with Silicon Valley Bank and Oxford Finance LLC and repaid all amounts outstanding thereunder in January 2022.

The RP Loan Agreement effectively replaced the Term Loan Agreement.

In July 2022, we issued the 2027 Notes and used the net proceeds and common stock to partially repurchase the 2026 Notes.

Non-cash interest expense on liabilities related to revenue participation right purchase agreements

Non-cash interest expense results from the accretion of our liabilities to RPFT and RP ICAV related to the sale of future royalties under the RP OM RPA and the RP Aficamten RPA, respectively.

On January 7, 2022, we entered into the RP Aficamten RPA with RPI ICAV.

Pursuant to the RP Aficamten RPA, RPI ICAV purchased the right to receive a percentage of net sales equal to 4.5% for annual worldwide net sales of pharmaceutical products containing aficamten up to $1 billion and 3.5% for annual worldwide net sales of pharmaceutical products containing aficamten in excess of $1 billion, subject to reduction in certain circumstances (the “RP Aficamten Liability”).

The carrying amount of the RP Aficamten Liability is based on our estimate of the future royalties to be paid to RPI ICAV over the life of the arrangement as discounted using an imputed rate of interest.

The imputed rate of interest on the unamortized portion of the RP Aficamten Liability was approximately 24.8% as of December 31, 2023.

In 2023, we updated our analyses of the RP Aficamten RPA to reflect our assumptions resulting from ongoing global market research and to reflect other adjustments in connection with our anticipated commercialization, including the additional consideration of $50.0 million which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

Our estimates regarding the amount of future royalty payments under the RP Aficamten RPA changed from the fourth quarter of 2022 due to changes in management’s estimates of unobservable inputs related to market conditions and timing to include projections of future royalty payments.

The resulting sales forecast for aficamten has increased year over year mainly due to the receipt of positive topline results from SEQUOIA-HCM, the Phase 3 trial for aficamten, in December 2023.

The adjustment is accounted for on a prospective basis in our liability calculation and resulted in changes in our imputed interest rate and non-cash interest expense from 22.4% and $5.2 million in the fourth quarter of 2022, 22.4% and $5.4 million in the first quarter of 2023, 19.0% and $4.9 million in the second quarter of 2023, 18.0% and $5.4 million in the third quarter of 2023, to 24.8% and $9.8 million in the fourth quarter of 2023.

The non-cash interest expense was $25.5 million and $15.5 million in 2023 and 2022, respectively.

In 2023, the change in estimate increased our non-cash interest expense and net loss by $2.0 million.

The change in accounting estimate increased the net loss per share by $0.02 in 2023.

In 2023, we updated our analyses of the RP OM RPA to reflect our current assumptions resulting from ongoing global market research and to reflect other adjustments in connection with our anticipated commercialization, including the result of our receipt of a CRL in connection to our NDA for omecamtiv mecarbil.

As a consequence of our receipt of the CRL from FDA, the royalty rate under the RP OM RPA will increase to no more than 5.5%.

The resulting sales forecast for omecamtiv mecarbil has decreased year over year because commercialization and sales of omecamtiv mecarbil will be delayed.

The adjustment is accounted for on a prospective basis in our liability calculation and resulted in changes in our imputed interest rate and non-cash interest expense from 8.5% and $4.0 million in the fourth quarter of 2022, 1.9% and $0.9 million in the first quarter of 2023, 2.9% and $1.4 million in the second and third quarter of 2023, and to 0.1% and $0.1 million in the fourth quarter of 2023, respectively.

The non-cash interest expense was $3.9 million, $16.2 million, and $12.9 million in 2023, 2022, and 2021, respectively.

In 2023, the change in estimate decreased our non-cash interest expense and net loss by $12.8 million.

The change in accounting estimate reduced the net loss per share by $0.13 in 2023.

We review our assumptions on a regular basis and our estimates may change in the future as we refine and reassess our assumptions.

Non-cash interest expense on liability related to the RP OM RPA and the RP Aficamten RPA for 2023, 2022, and 2021 were as follows (in thousands):

Years Ended December 31,

(In millions)

RP OM Liability

RP Aficamten Liability

Total non-cash interest expense recognized

Interest and Other Income, net

Interest and other income, net for 2023, 2022, and 2021 consisted primarily of interest income generated from our cash, cash equivalents and investments.

Liquidity and Capital Resources

Our cash, cash equivalents, and investments and a summary of our borrowings and working capital is summarized as follows:

Our cash, cash equivalents, and investments and a summary of our borrowings and working capital as of December 31, 2024 and 2023 are summarized as follows (in millions):

December 31, 2024

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Total cash, cash equivalents, and marketable securities

Term loan, net

Term loans, net

2026 Notes, net

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Working capital

The following table shows a summary of our cash flows for the periods set forth below:

The following table shows a summary of our cash flows for the periods set forth below (in millions):

Years Ended December 31,

1 unchanged sentence

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net (decrease) increase in cash, cash equivalents, and restricted cash

Sources and Uses of Cash

We have funded our operations and capital expenditures with proceeds primarily from private and public sales of our equity securities, a royalty monetization agreement, strategic alliances, long-term debt, other financings and interest on investments.

To date we have funded our operations and capital expenditures with proceeds primarily from private and public sales of our equity securities, royalty monetization agreement, and revenue interest agreements, strategic alliances, long-term debt, other financings and interest on investments.

We have generated significant operating losses since our inception.

Our expenditures are primarily related to research and development activities.

Our expenditures have historically primarily related to research and development activities, but have recently and will increasingly also relate to our commercial readiness activities and general commercialization activities upon regulatory approval of aficamten.

Cash Flows Used in Operating Activities

Net cash used in operating activities of $395.9 million and $414.3 million for 2024 and 2023, respectively, was largely due to ongoing research and development activities and general and administrative expenses to support those activities.

In 2022, the net cash used in operating activities was offset by collection of receivables primarily from our 2021 RTW Transactions.

Net loss for 2024 and 2023 included, among other items:

non-cash stock-based compensation, non-cash interest expense on liabilities related to revenue participation right purchase agreements, and non-cash interest expense related to debt.

non-cash stock-based compensation, non-cash interest expense on liabilities related to revenue participation right purchase agreements, non-cash interest expense related to debt and non-cash changes in fair values related to derivative liabilities and liabilities related to RPI Transactions.

Cash Flows Used in Investing Activities

Net cash provided by investing activities of $239.3 million for 2023 was primarily due to sales and maturities of investments offset by purchases of investments.

Net cash used in investing activities of $262.1 million for 2022 was primarily due to purchases of investments and property and equipment offset by proceeds from maturity of investments.

Net cash used in investing activities of $553.1 million for 2024 was primarily due to purchases of investments offset by maturities of investments.

Net cash used in investing activities of $239.3 million for 2023 was primarily due to sales and maturities of investments offset by purchases of investments.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities of $930.6 million in 2024 was due to $250.0 million in proceeds from the 2024 RPI Transactions, $563.2 million of net proceeds from a public offering, $50.0 million of net proceeds from a private placement, and issuances of common stock of $93.6 million under the Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co, discussed below, and stock-based award activities.

Net cash provided by financing activities of $221.3 million in 2023 was due to proceeds from public offerings of common stock of $164.2 million under the Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co discussed below and $50.0 million of additional consideration associated with the 2022 RP Aficamten Royalty Purchase Agreement which was paid to us in September 2023 and stock-based award activities.

Net cash provided by financing activities of $516.2 million in 2022 was primarily due to proceeds related to RP Aficamten RPA and the RP Loan Agreement and offset by the repayment of amounts owed under our Term Loan Agreement and stock-based award activities.

2024 Royalty Pharma Transactions

On January 7, 2022, we announced that we had entered into that certain RP Loan Agreement and the RP Aficamten RPA with RPDF and RPI ICAV respectively, each of which were at the time of our entry into such agreements affiliated with Royalty Pharma International plc.

Under the RP Loan Agreement, we were initially entitled to receive up to $300.0 million in term loans, $50.0 million of which was disbursed to us on closing and the remaining $250.0 million scheduled to have been available to us upon our satisfaction of customary disbursement conditions and certain development conditions by specific deadlines, as follows:

• $50.0 million of tranche 2 term loans during the one year period following the receipt on or prior to March 31, 2023 of marketing approval from FDA of omecamtiv mecarbil;

• $25.0 million of tranche 3 term loans during the one year period following the commercial availability of a diagnostic test measuring levels of omecamtiv mecarbil to support the final FDA label language applicable to such drug, subject to such commercial availability and the conditions to the tranche 2 term loans having occurred on or prior to March 31, 2023;

• $75.0 million of tranche 4 term loans during the one year period following the receipt on or prior to September 30, 2024 of positive results from SEQUOIA-HCM, the Phase 3 trial for aficamten;

• $100.0 million of tranche 5 term loans during the one year period following the acceptance by the FDA on or prior to March 31, 2025 of an NDA for aficamten, subject to the conditions to the tranche 4 term loans having occurred on or prior to September 30, 2024.

As a result of our receipt of a CRL in connection to our NDA for omecamtiv mecarbil, we have not satisfied the conditions to the availability of the tranche 2 and tranche 3 loans under the RP Loan Agreement.

In December 2023, we announced positive topline results from SEQUOIA-HCM, the Phase 3 trial for aficamten.

This entitled us to receive $75.0 million under tranche 4 during the one year period following the receipt of the positive results and requires us to draw a minimum of at least $50.0 million of the $75.0 million available under tranche 4.

The remaining $100.0 million under tranche 5 remains available for disbursement to us, subject to satisfaction of the conditions described above.

Each term loan under the RP Loan Agreement matures on the 10 year anniversary of the funding date for such term loan and is repayable in quarterly installments of principal, interest and fees commencing on the last business day of the seventh full calendar quarter following the calendar quarter of the applicable funding date for such term loan, with the aggregate amount payable in respect of each term loan (including interest and other applicable fees) equal to 190% of the principal amount of the tranche 1, tranche 4 and tranche 5 term loans and 200% of the principal amount of the tranche 2 and tranche 3 loans (such amount with respect to each term loan, “Final Payment Amount”).

We have made our first payment in the fourth quarter of 2023.

We may prepay the term loans in full (but not in part) at any time at our option by paying an amount equal to the unpaid portion of Final Payment Amount for the outstanding term loans under the RP Loan Agreement;

provided that if the conditions for either the tranche 4 term loans or the tranche 5 term loans have been met, we must have borrowed at least $50 million principal amount of the tranche 4 or 5 term loans.

In addition, the term loans under the RP Loan Agreement are repayable in full at the option of either us or the lender in an amount equal to the unpaid portion of Final Payment Amount for the outstanding term loans upon a change of control of Cytokinetics.

In addition, on January 7, 2022, we entered into the RP Aficamten RPA with RPI ICAV, pursuant to which RPI ICAV purchased rights to certain revenue streams from net sales of pharmaceutical products containing aficamten by us, our affiliates and our licensees in exchange for up to $150.0 million in consideration, $50.0 million of which was paid on the closing date, $50.0 million of which was paid to us in March 2022 following the initiation of the first pivotal trial in oHCM for aficamten, and $50.0 million of which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

The RP Aficamten RPA also provides that the parties will negotiate terms for additional funding if we achieve proof of concept results in certain other indications for aficamten, with a reduction in the applicable royalty if we and RPI ICAV fail to agree on such terms in certain circumstances.

In May 2024, we entered into a series of financing agreements with affiliates of Royalty Pharma, including the RP OM Loan Agreement, the RP CK-586 RPA, the 2022 RP Multi Tranche Loan Agreement Amendment, the RP Aficamten RPA Amendment, and the RP Stock Purchase Agreement for a private placement of common stock concurrent with our underwritten public offering of common stock.

The RP OM Loan Agreement provides for a loan in a principal amount of $100.0 million that was drawn at the closing with no remaining amounts available for disbursement.

The loan under the RP OM Loan Agreement matures on the 10 year anniversary of the funding date and is repayable in quarterly installments, the amounts of which will depend on the occurrence of certain events related to the results and timing of COMET-HF and potential regulatory approvals of omecamtiv mecarbil, as follows:

• Scenario 1:

If the Phase 3 clinical trial of Cytokinetics’ proprietary small molecule cardiac myosin activator known as omecamtiv mecarbil is successful (defined as meeting the composite primary endpoint of the first event, whichever occurs first, comprising of cardiovascular death, heart failure event, LVAD implementation/cardiac transplantation, or stroke, with a hazard ratio (HR) of less than 0.85 and cardiovascular death endpoint HR of less than 1.0) by June 30, 2028 and we receive the marketing approval from the FDA for omecamtiv mecarbil on or prior to December 31, 2029 (“OM Approval Date”), commencing on the calendar quarter during which the FDA approval is obtained, we are required to pay RPDF (x) (i) $75.0 million ten business days after the OM Approval Date and (ii) $25.0 million on the first anniversary of the OM Approval Date and (y) on a quarterly basis an amount equal to 2.0% of the annual worldwide net sales of omecamtiv mecarbil, subject to a minimum floor amount ranging from $5.0 million to $8.0 million during the first 18 calendar quarters (the payment of the 2.0% of the annual worldwide net sales starting from the 19th calendar quarter shall be referred to as the “Royalty Payment”).

Our obligation to pay the Royalty Payment will continue after maturity of the Loan;

• Scenario 2:

If the Phase 3 clinical trial of omecamtiv mecarbil is successful by June 30, 2028 but we have not received the marketing approval from the FDA for omecamtiv mecarbil on or prior to December 31, 2029, we are required to pay RPDF 18 equal quarterly cash payments totaling 237.5% of the principal amount of the loan commencing on March 31, 2030;

• Scenario 3:

If the Phase 3 clinical trial of omecamtiv mecarbil is not successful by June 30, 2028, we are required to pay RPDF 22 equal quarterly cash payments totaling 227.5% of the principal amount of the loan commencing on September 30, 2028.

The interest on this loan is included in the scheduled payment amount for each scenario.

Pursuant to the RP CK-586 RPA, RPI ICAV purchased rights to up to 4.5% of worldwide net sales of CK-586 by us, our affiliates or licensees, in exchange for up to $200 million in consideration, $50 million of which was paid upfront and, following the initiation of the first Phase 3 clinical trial (or the Phase 3 portion of the first Phase 2b/3 clinical trial) in HFpEF for CK-586, at RPI ICAV’s sole discretion, up to in aggregate $150 million to fund 50.0% of the research and development cost of CK-586.

The initial $50 million paid to us entitles RPI ICAV to 1% of worldwide net sales of CK-586 by us, our affiliates, or licenses.

We will not know for certain whether any additional funding under the RP CK-586 RPA will be available to us until the conclusion of AMBER-HFpEF, the results of the trial are known, and RPI ICAV has decided to exercise its option to purchase an incremental 3.5% revenue interest on our future annual worldwide net sales of CK-586 or not.

2022 Royalty Pharma Transactions

In January 2022, we entered into a series of financing agreements with affiliates of Royalty Pharma, including the RP Multi Tranche Loan Agreement, and the RP Aficamten RPA.

Under the RP Multi Tranche Loan Agreement, we have drawn $100 million and an additional $350 million remains available to us for disbursement as long-term debt, subject to satisfaction of certain conditions.

Of these available loans, we have satisfied the conditions to draw on the tranche 4 loan in the amount of $75 million upon receipt of positive results from SEQUOIA-HCM and tranche 5 in the amount of $100 million upon acceptance of the filing of our NDA for aficamten.

We are obliged to draw at least $50 million of either the tranche 4 or tranche 5 facility by November 24, 2025.

The remaining $175 million tranche 7 loan is subject to conditions related to the approval of our NDA for aficamten in patients with oHCM on or prior to December 31, 2025.

We expect to draw all available loans under the RP Multi Tranche Loan Agreement unless we are able to meet our financing requirements through more favorable funding sources.

If, for any reason, we are unable to satisfy the conditions for disbursement of the remaining $175 million in available loans under the RP Multi Tranche Loan Agreement, we would need to seek alternative debt or equity financing.

Each term loan under the RP Multi Tranche Loan Agreement matures on the 10 year anniversary of the funding date for such term loan and is repayable in quarterly installments of principal, interest and fees commencing on the last business day of the seventh full calendar quarter following the calendar quarter of the applicable funding date for such term loan, with the aggregate amount payable in respect of each term loan (including interest and other applicable fees) equal to 190% of the principal amount of the tranche 1, tranche 4, tranche 5, tranche 6, and tranche 7 term loans (such amount with respect to each term loan, “Final Payment Amount”).

We commenced repayment of the tranche 1 loan in the fourth quarter of 2023 and will continue to incur approximately $2.9 million in quarterly interest expenses for the tranche 1 loan until our repayment obligations are satisfied in full.

RP Aficamten Royalty Purchase Agreement

Under the RP Aficamten RPA, RPI ICAV purchased rights to certain revenue streams from net sales of pharmaceutical products containing aficamten by us, our affiliates and our licensees in exchange for up to $150.0 million in consideration, $50.0 million of which was paid on the closing date, $50.0 million of which was paid to us in March 2022 following the initiation of the first pivotal trial in oHCM for aficamten, and $50.0 million of which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

RPI ICAV initially purchased the right to receive a percentage of net sales equal to 4.5% for annual worldwide net sales of pharmaceutical products containing aficamten up to $1 billion and 3.5% for annual worldwide net sales of pharmaceutical products containing aficamten in excess of $1 billion, subject to reduction in certain circumstances.

However, in May 2024, we entered into the RP Aficamten RPA Amendment to restructure the royalty so that RPI will now receive 4.5% up to $5.0 billion of worldwide annual net sales of aficamten and 1% above $5.0 billion of worldwide annual net sales.

Our liability to RPI ICAV is referred to as the “RP Aficamten Liability”.

We account for the RP Aficamten Liability as a liability primarily because we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

If and when aficamten is commercialized and royalties become due, we will recognize the portion of royalties paid to RPI ICAV as a decrease to the RP Aficamten Liability and a corresponding reduction in cash.

The imputed rate of interest on the carrying value of the RP Aficamten Liability was approximately 23.5% and 24.8% as of December 31, 2024 and 2023, respectively.

Convertible Notes

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As of December 31, 2024, there remains $21.1 million aggregate principal amount of 2026 Notes outstanding and $540.0 million of aggregate principal amount of 2027 Notes outstanding.

The 2026 Notes are redeemable, in whole or in part, at our option at any time, and from time to time, and, in the case of any partial redemption, on or before the 60th scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we may send the related redemption notice;

The 2026 Notes and the 2027 Notes are redeemable, at our option at any time in the case of the 2026 Notes and at any time after July 7, 2025 in the case of the 2027 Notes and, in the case of any partial redemption, on or before the 60th scheduled trading day before the maturity date for the relevant notes, at a cash redemption price equal to the principal amount of the relevant notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price for the relevant notes on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we may send the related redemption notice;

and (2) the trading day immediately before the date we may send such notice.

2021 Ji Xing and RTW Transactions

On December 20, 2021, we entered into the Ji Xing OM License Agreement, pursuant to which we granted to Ji Xing an exclusive license to develop and commercialize omecamtiv mecarbil in China and Taiwan.

Under the terms of the Ji Xing OM License Agreement, we received a $50.0 million nonrefundable payment from Ji Xing comprised of a $40.0 million payment as consideration for the rights granted by us to Ji Xing and $10.0 million attributable to our having submitted to FDA an NDA for omecamtiv mecarbil.

We may be eligible to receive from Ji Xing additional payments totaling up to $330.0 million for the achievement of certain commercial milestone events in China in connection to omecamtiv mecarbil.

In addition, Ji Xing will pay us tiered royalties in the mid-teens to the low twenties range on the net sales of pharmaceutical products containing omecamtiv mecarbil in China and Taiwan, subject to certain reductions for generic competition, patent expiration and payments for licenses to third party patents.

The Ji Xing OM License Agreement, unless terminated earlier, will continue on a market-by-market basis until expiration of the relevant royalty term.

We recognized a $2.5 million milestone from Ji Xing in 2023 for the initiation of a phase 3 clinical trial for aficamten in nHCM, which was collected in the fourth quarter of 2023.

In addition to the Ji Xing OM License Agreement, we entered into common stock purchase agreements with each of the RTW Investors, pursuant to which we sold and issued an aggregate of 0.5 million shares of our common stock at a price per share of $39.125 and an aggregate purchase price of $20.0 million.

Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

On March 1, 2023, we entered into the Amended ATM Facility, with Cantor, under which we may offer and sell, from time to time at our sole discretion, shares of the Common Stock having an aggregate offering price of up to $300.0 million through Cantor, as sales agent.

The Amended ATM Facility amends, restates and supersedes the Controlled Equity Offering Sales Agreement dated as of March 6, 2019 between the Company and Cantor.

Cantor may sell the Common Stock by any method that is deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, including sales made directly on the Nasdaq Global Select Market or any other trading market for our common stock.

Cantor will use commercially reasonable efforts to sell the Common Stock from time to time, based upon instructions from us (including any price, time or size limits or other customary parameters or conditions we may impose).

We will pay Cantor a commission of up to 3.0% of the aggregate gross sales proceeds of any common stock sold through Cantor under the Amended ATM Facility, and also have provided Cantor with customary indemnification rights.

In 2023, we issued 5,016,170 shares of our common stock for net proceeds of $164.2 million pursuant to the Amended ATM Facility.

China Out-license for Omecamtiv Mecarbil

In December 2021, we entered into the Corxel OM License Agreement, pursuant to which we granted to Corxel an exclusive license to develop and commercialize omecamtiv mecarbil in China and Taiwan.

In December 2024, we entered into a mutual termination agreement with Corxel to terminate the Corxel OM License Agreement.

Accordingly, all rights to develop and commercialize omecamtiv mecarbil have reverted to us.

China Out-license for Aficamten

In July 2020, we entered into a license and collaboration agreement with Corxel, pursuant to which we granted to Corxel an exclusive license to develop and commercialize aficamten in China and Taiwan.

In December 2024, Corxel assigned its rights and obligations under our license and collaboration agreement to Genzyme Corporation, an affiliate of Sanofi.

We recognized $15.0 million dollars from Corxel in connection with a modification of the original license prior to the assignment of Corxel's rights under our license and collaboration agreement for the development and commercialization of aficamten to Sanofi and we may be eligible for another $10.0 million milestone from Corxel under certain commercial circumstances.

We may be eligible to receive from Sanofi future milestone payments totaling up to $150.0 million for the achievement of certain development and commercial milestone events in connection to aficamten in oHCM and/or nHCM.

In addition, Sanofi will pay us tiered royalties in the low-to-high teens range on the net sales of pharmaceutical products containing aficamten in China and Taiwan, subject to certain reductions for generic competition, patent expiration and payments for licenses to third party patents.

The Sanofi Aficamten License Agreement, unless terminated earlier, will continue on a market-by-market basis until expiration of the relevant royalty term.

Japan Out-license for Aficamten

In November 2024, we entered into a license and collaboration agreement with Bayer Consumer Care AG, an affiliate of Bayer AG, pursuant to which we granted to Bayer an exclusive license to develop and commercialize aficamten in Japan, subject to certain reserved development rights.

Under the terms of the Bayer License Agreement, we received an up-front payment of €50.0 million (equivalent to $52.4 million at the time of payment) which was recorded as deferred revenue at December 31, 2024 and will be recognized upon the completion of certain performance obligations.

We expect to fulfill and satisfy the associated performance obligation in the first half of 2025.

We may be eligible to receive from Bayer future milestone payments totaling up to an additional €90 million upon achievement of milestones through commercial launch, including €20 million of which are near-term.

We may also be eligible to receive up to an additional €490 million in commercial milestone payments upon the achievement by Bayer of certain sales milestones and tiered royalties on the net sales of pharmaceutical products containing aficamten in Japan ranging from the high teens to the low thirty percents, subject to certain reductions for generic competition, expiration of certain patents and payments for licenses to third-party patents, until the latest of the expiration of certain patents, the expiration of regulatory exclusivity for the Product in Japan, and the end of a minimum specified term.

For collaborative agreements that have a performance obligation where the counterparty is a customer for the unit of account, we apply ASC 606, Revenue Recognition , to the unit of account and the revenue is classified as License and milestone revenue in our consolidated statement of operations.

For other transactions in collaborative arrangements, consisting of research and development cost reimbursements, we recognize the research and development cost reimbursements as collaboration revenues in our consolidated statement of operations.

At-the-Market Sales of Common Stock

In March 2023, we entered into the Amended ATM Facility, with Cantor, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $300.0 million through Cantor, as sales agent.

We issued 5,016,170 and 1,237,460 shares of our common stock for net proceeds of $164.2 million and $93.6 million in 2023 and 2024, respectively, under the Amended ATM Facility.

We exercised our rights to terminate the Amended ATM Facility with Cantor in February 2024.

On February 27, 2025, we entered into an Open Market Sale Agreement SM with Jefferies LLC under which we may offer and sell, from time to time, at our sole discretion, shares of common stock in “at the market offerings” pursuant to Rule 415(a)(4) under the Securities Act of 1933 through Jefferies LLC, as sales agent.

Public Offering of Common Stock and Concurrent Private Offering

On May 28, 2024, we closed an underwritten public offering of 9,803,922 shares of Common Stock at a public offering price of $51.00 per share, which included the exercise in full by the underwriters of their option to purchase up to 1,470,588 shares of Common Stock at the public offering price.

The gross proceeds to the Company from the offering were approximately $575 million and net proceeds were approximately $563.2 million, after deducting the applicable underwriting discounts and commissions.

Concurrently with the closing of the underwritten public offering, RPI ICAV purchased 980,392 shares of Common Stock pursuant to the RP Stock Purchase Agreement, at a price of $51.00 per share in a concurrent private placement.

The gross proceeds from the concurrent private placement were $50 million.

Future Uses of Cash

In future periods, we expect to incur substantial costs as we continue to expand our research programs and related research and development activities.

We expect to incur significant research and development expenses as we advance the research and development of compounds from our other muscle biology programs through research to candidate selection to clinical development, and we plan to file one to two investigational new drug applications in 2023.

We may also incur significant sales and marketing expenses in anticipation of regulatory approval of one of our drug candidates.

We expect that general and administrative expenses will significantly increase in 2025.

We have submitted an NDA to FDA for aficamten for the treatment of oHCM, which was accepted for filing with a PDUFA target action date of September 26, 2025.

Accordingly, we will be incurring expenses for the purpose of commercial readiness activities, including, but not limited to, the hiring and training of a field sales force, the implementation of compliance systems and sales and marketing expenses.

In addition, we submitted an MAA to EMA for aficamten for the treatment of oHCM in the fourth quarter of 2024, which was validated by EMA, and therefore, we will be incurring similar expenses for commercial readiness activities in Europe but with additional expenses for the establishment of a corporate infrastructure to enable commercialization activities in key European markets.

A significant portion of these anticipated commercial readiness expenses in the United States and Europe are not expenses that have been reflected in our financial statements for previous periods.

In future periods, we also expect to incur substantial costs as we continue to expand our research programs and related research and development activities, including for the conduct of our on-going clinical trials for aficamten, omecamtiv mecarbil, CK-586 and CK-089.

We expect to incur significant research and development expenses as we advance the research and development of compounds from our other muscle biology programs through research to candidate selection to clinical development, and we expect to file investigational new drug applications.

Cytokinetics and multiple third-party contract development manufacturing organizations entered into various scopes of work with respect to the manufacturing of aficamten.

Our future capital uses and requirements depend on numerous factors.

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• the initiation, progress, timing, scope and completion of preclinical research, non-clinical development, CMC, and clinical trials for our drug candidates and other compounds;

• the time and costs involved in obtaining regulatory approvals;

• the time, costs and outcomes of regulatory reviews or other regulatory actions related to our drug candidates, including with respect to our NDA submission for aficamten for the treatment of oHCM to FDA and our related MAA submission to EMA;

• the jurisdictions in which we are granted regulatory approvals and thus are able to successfully launch our products for commercial sale;

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• our revenues, if any, from successful development of our drug candidates and commercialization of potential drugs;

• the cost of additional construction to expand our headquarters in South San Francisco and in relation to our leased office facilities in Radnor, Pennsylvania;

• the cost of additional construction to expand our headquarters in South San Francisco and the cost in relation to expanding our leased office facilities in Radnor, Pennsylvania or other leased office spaces in Europe;

• the payments due for interest on the term loan and convertible debt;

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Until we achieve profitable operations, we intend to continue to fund operations through payments from strategic collaborations, additional sales of equity securities, grants and other financings.

We have never generated revenues from commercial sales of our drugs and may not have drugs to market for at least several years, if ever.

We have never generated revenues from commercial sales of our drugs.

The earliest we might reasonably expect to commence commercial sales and record revenues is in 2025 following the acceptance for filing of our NDA for aficamten for the treatment of oHCM by FDA in September of 2024.

Therefore, our success is dependent on our ability to obtain additional capital by entering into new strategic collaborations and/or through financings, and ultimately on our and our collaborators’ ability to successfully develop and market one or more of our drug candidates.

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These factors could have a material adverse effect on our future financial results, financial position and cash flows.

Based on the current status of our development plans, we believe that our existing cash and cash equivalents, investments and interest earned on investments will be sufficient to meet our projected operating requirements for at least the next 12 months.

If, at any time, our prospects for internally financing our research and development programs decline, we may decide to reduce research and development expenses by delaying, discontinuing or reducing our funding of development of one or more of our drug candidates or of other research and development programs.

Based on the current planning assumptions, we believe that our existing cash and cash equivalents, investments and interest earned on investments will be sufficient to meet our projected operating requirements for at least the next 12 months.

If, at any time, our prospects for internally financing programs and activities decline, we may decide to reduce expenses across the business.

Alternatively, we might raise funds through strategic relationships, public or private financings or other arrangements.

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We have one primary business activity and operate in one reportable segment.

Results of Operations

A discussion of our results of operations for the year ended December 31, 2022 and year-to-year comparisons between 2023 and 2022 can be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K under the heading "Results of Operations."

Our revenues since inception were primarily from our strategic alliances.

We have not generated any revenue from commercial product sales to date.

The earliest we might reasonably expect to commence commercial sales and obtain revenues is in 2025 following the acceptance for filing of our NDA for aficamten for the treatment of oHCM by FDA in September 2024.

Revenues in 2024, 2023, and 2022 were as follows (in millions):

Years Ended December 31,

(In millions)

License and milestone revenues

Collaboration revenues

Realization of revenue participation right purchase agreement

Total revenues

License and milestone revenues recognized in 2024 were attributable to a $15.0 million non-refundable upfront payment from Corxel in the fourth quarter of 2024 in connection with a modification of the original license prior to the assignment of Corxel’s rights under our license and collaboration agreement for the development and commercialization of aficamten in China and Taiwan to Sanofi.

The $15.0 million is reflected as a receivable at December 31, 2024.

License and milestone revenues for 2023 consisted of a milestone recognized from Corxel for the initiation of our Phase 3 clinical trial of aficamten in nHCM.

Collaboration revenues in 2024 were primarily from Corxel under our collaboration and license agreement with Corxel (now assigned to Genzyme Corporation, an affiliate of Sanofi).

As of December 31, 2024 receivables of $1.5 million were recorded related to Corxel.

In 2023, Collaboration revenues were primarily from Astellas for reimbursements under the Astellas FSRA Agreement.

Under the Astellas FSRA Agreement, Astellas agreed to pay one-third of the out-of-pocket clinical development costs which was incurred in connection with the Company’s Phase 3 clinical trial of reldesemtiv in ALS, up to a maximum contribution by Astellas of $12 million.

On March 31, 2023, we announced that we would be discontinuing COURAGE-ALS, our Phase 3 clinical trial of reldesemtiv in patients with ALS, and COURAGE-ALS OLE.

As of December 31, 2023 we billed and collected the maximum contribution of $12.0 million from Astellas, and no further revenue is expected under this arrangement.

We expect to fulfill and satisfy the associated performance obligation in the first half of 2025.

Research and Development Expenses

We incur research and development expenses associated with both partnered and our own research activities, which we finance from our own cash-on-hand, financing arrangements with third parties, and reimbursement from our collaboration partners

Research and development expenses related to any development activities we elect to fund consist primarily of employee compensation, supplies and materials, costs for consultants and contract research and manufacturing, facilities costs and depreciation of equipment.

Research and development expenses for 2024, 2023, and 2022 were as follows (in millions):

Years Ended December 31,

(In millions)

Total research and development expenses

Research and development expenses increased to $339.4 million in 2024 from $330.1 million in 2023, primarily due to advancing our clinical trials and higher personnel related costs.

We continue to develop aficamten to treat both oHCM and nHCM in three additional clinical trials, as follows:

(i) MAPLE-HCM is our Phase 3 clinical trial of aficamten as a monotherapy for patients with oHCM, (ii) ACACIA-HCM is a Phase 3 clinical trial for patients with symptomatic nHCM, and (iii) CEDAR-HCM, our placebo-controlled and open-label extension clinical trial to evaluate the efficacy, pharmacokinetics (PK) and safety of aficamten in a pediatric population with symptomatic oHCM.

Additionally, we have FOREST-HCM which is an open label extension study designed to assess the long term safety and tolerability of aficamten in patients with symptomatic oHCM.

We continue to develop omecamtiv mecarbil in COMET-HF, a Phase 3 clinical trial of omecamtiv mecarbil in patients with symptomatic HFrEF with severely reduced ejection fraction.

The intention of the $100 million RP OM Loan Agreement was to partially cover the costs of the COMET-HF clinical trial.

We recently announced our commencement of AMBER-HFpEF, a Phase 2 clinical trial of CK-586 in patients with symptomatic HFpEF, in which patient enrollment commenced in the first quarter of 2025.

The $50 million in proceeds from the RP CK-586 RPA are intended to offset expenses related to the conduct of AMBER-HFpEF.

If the results of AMBER-HFpEF are supportive of continuing the development of CK-586 and commencing a Phase 3 clinical trial, we expect to Royalty Pharma to cover potentially 50% of the continued development of CK-586 up to $150 million, subject to Royalty Pharma’s opt-in right to acquire an additional 3.5% revenue interest in our or our licensee’s future worldwide net sales of CK-586.

Finally, we also recently announced commencement of our Phase 1 single and multiple ascending dose clinical study of CK-089, a fast skeletal muscle troponin activator with the potential therapeutic application to a specific type of muscular dystrophy and other conditions of impaired muscle function.

We expect that research and development expenses will increase in 2025 relative to 2024 due to ongoing clinical trials of aficamten, COMET in HFrEF, AMBER HFpEF, manufacturing of drug product and raw materials for aficamten to enable a potential commercial launch and employee related costs.

General and Administrative Expenses

General and administrative expenses by program for 2024, 2023, and 2022 were as follows (in millions):

Years Ended December 31,

(In millions)

Total general and administrative expenses

General and administrative expenses increased to $215.3 million in 2024 from $173.6 million in 2023, primarily due to investments in commercial readiness and higher personnel related costs, including stock based compensation.

We expect that general and administrative expenses will increase in 2025.

We have submitted an NDA to FDA for aficamten for the treatment of oHCM.

Accordingly, we will be incurring additional expenses for commercial readiness activities, included, but not limited to, the hiring and training of a field sales force, the implementation of compliance systems, sales and marketing expenses.

we submitted an MAA to EMA for aficamten for the treatment of oHCM in the fourth quarter of 2024, and therefore, we will be incurring similar expenses for commercial readiness activities in Europe but with additional expenses for the establishment of a corporate infrastructure to enable commercialization activities in key European markets.

Interest Expense

Interest expense for 2024, 2023, and 2022 were as follows (in millions):

Years Ended December 31,

(In millions)

Total interest expense

The components of interest expense were fairly consistent period over period in 2024 and 2023.

The most significant change was related to Term loan interest expense increasing due to drawing on Tranche 6 of the RP Multi Tranche Loan Agreement Amendment in the second quarter of 2024.

Interest expense in 2024 also included approximately $4.8 million of financing fees related to the 2024 RPI Transactions.

We expect our interest expenses in 2025 to increase under the RP Multi Tranche Loan Agreement as we draw upon additional loans available to us thereunder.

Non-cash interest expense on liabilities related to revenue participation right purchase agreements

Non-cash interest expense results from the accretion of our liabilities to RPFT and RP ICAV related to the sale of future royalties under the RP OM RPA and the RP Aficamten RPA, respectively.

The carrying amount of the RP Aficamten Liability is based on our estimate of the future royalties to be paid pursuant to RP Aficamten RPA over the life of the arrangement as discounted using an imputed rate of interest.

In the second quarter of 2024, we recorded an additional $33.3 million to the carrying value related to the RP Aficamten RPA Amendment entered into May 22, 2024.

The imputed rate of interest on the carrying value of the RP Aficamten Liability was approximately 23.5% as of December 31, 2024 and 24.8% as of December 31, 2023.

The carrying amount of the RP OM Liability is based on our estimate of the future royalties to be paid pursuant to RP OM RPA over the life of the arrangement as discounted using an imputed rate of interest.

The excess of future estimated royalty payments over the $92.3 million of allocated proceeds, less issuance costs, is recognized as non-cash interest expense using the effective interest method.

The imputed rate of interest on the carrying value of the RP OM Liability was approximately 0.1% as of December 31, 2024 and 0.1% as of December 31, 2023.

We review our assumptions on a regular basis and our estimates may change in the future as we refine and reassess our assumptions.

Non-cash interest expense on the liabilities related to the RP OM RPA and the RP Aficamten RPA for 2024, 2023, and 2022 was as follows (in millions):

Years Ended December 31,

(In millions)

RP OM Liability

RP Aficamten Liability

Total non-cash interest expense recognized

Interest and Other Income, net

Interest and other income, net for 2024, 2023, and 2022 consisted primarily of interest income generated from our cash, cash equivalents and investments.

Change in fair value liabilities related to RPI transactions and derivative liabilities reflected on the Consolidated Statement of Operations

The change in fair value liabilities related to the RPI transactions (RP OM Loan Agreement and CK-586 RPA) and the derivative liabilities for the RP Multi Tranche Loan Agreement for 2024 were as follows (in millions):

Year Ended December 31

(In millions)

RP Multi Tranche Loan Agreement Derivatives

Total change in fair value liabilities

The fair values of the liabilities related to RPI transactions (RP OM Loan Agreement and CK-586 RPA) are based on significant unobservable inputs, including the probability of clinical success and regulatory approval based on historical industry success rates for product development specific to cardiovascular products, the estimated date of a product launch, estimates of pricing, sales ramp, variables for the timing of the related events, probability of change of control, and discount rates (which range from 10% to 18% as of December 31, 2024), which are deemed to be Level 3 inputs in the fair value hierarchy.

As products containing omecamtiv mecarbil and CK-586 have not yet been commercialized, the estimates are highly subjective.

For example, assumed increases in the probability of the clinical success for the omecamtiv mecarbil or CK-586 programs could increase the value of the liabilities.

Similarly, assumed decreases in the discount rates used in the fair value measurements could also increase the value of the liabilities at period end.

The fair values of the derivative liabilities is determined using the probability-weighted expected return method and the “with and without” method.

The fair values are based on significant unobservable inputs, including the probability of change of control, the probability of default (less than 10%), discount rates (ranging from 10% to 16% as of December 31, 2024) and other factors.

The total change in the estimated fair value liabilities for 2024, was primarily due to a decrease in the discount rates used in the measurement of the 2024 RP OM Loan Agreement and the RP CK-586 RPA as of December 31, 2024, compared to June 30, 2024.

This decrease resulted in an increase in the estimated fair value of the liabilities and the recognition of a loss on the change in fair value of liabilities related to RPI transactions of approximately $19.6 million for 2024.

Critical Accounting Policies and Significant Estimates

We review our estimates on an ongoing basis.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

Fair Value of 2024 RPI transactions

In May 2024, the Company entered into 2024 RPI transactions including the 2024 RP OM Loan Agreement, the RP CK-586 RPA, the RP Stock Purchase Agreement, the 2022 RP Multi Tranche Loan Agreement Amendment and the RP Aficamten RPA Amendment.

As permitted under Accounting Standards Codification 825, Financial Instruments, or ASC 825, the Company elected the fair value option for recognition of the liabilities related to 2024 RP OM Loan Agreement and the RP CK-586 RPA.

In accordance with ASC 825, the Company records the liabilities at fair value and remeasures the liabilities at fair value each reporting period with changes in fair value associated with non-credit components are recognized in Other income (expense), net, while the change in fair value associated with credit components is recognized in accumulated other comprehensive loss.

The fair value of the liabilities is based on significant unobservable inputs, including the probability of clinical success, the probability of regulatory approval, the estimated date of a product launch, estimates of pricing, sales ramp, variables for the timing of the related events, probability of change of control, discount rates and other estimates, which are deemed to be Level 3 inputs in the fair value hierarchy.

As products containing omecamtiv mecarbil and CK-586 have not yet been commercialized, the estimates are highly subjective.

As of December 31, 2024, the discount rates that we used in the measurement of the 2024 RP OM Loan Agreement and the RP CK-586 RPA decreased compared to June 30, 2024, which resulted in an increase in the estimated fair value of the liabilities and the recognition of a loss on the change in the fair value of liabilities related to RPI transactions in our consolidated statement of operations of approximately $19.6 million in 2024.

See Note 3 — Agreements with Royalty Pharma for further detail.

Derivative Liabilities

We recognize liabilities of our embedded derivative instruments related to the RP Multi Tranche Loan at fair value in the consolidated balance sheets.

Each period, the fair value of the derivative liabilities are recalculated and resulting gains and losses from the changes in fair value of the derivatives with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in accumulated other comprehensive loss.

Estimating fair values of derivative instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.

Since derivative instruments are initially and subsequently carried at fair value, the Company’s income will reflect the volatility in these estimate and assumption changes.

Revenue Participation Right Purchase Agreements

We have entered into certain revenue participation right purchase agreements for omecamtiv mecarbil, aficamten, and CK-586 with affiliates of Royalty Pharma, pursuant to which such affiliates purchased rights to royalties from certain revenue streams.

We typically account for such agreements as deferred income to be amortized under the units-of-revenue method, when there is no continuing involvement with the underlying research and development activities.

The estimates of the future royalty payment determine the measurement of the non-cash interest expense and the carrying value of the liability.

Revenue participation right purchase agreements are measured using significant unobservable inputs.

The estimates of future royalties requires the use of several assumptions such as:

As products containing aficamten, omecamtiv mecarbil and CK-586 have not yet been commercialized, the estimates are highly subjective.

The carrying amount of the liabilities are based on our estimate of the future royalties to be paid over the life of the arrangements as discounted using an imputed rate of interest.

The imputed rate of interest on the RP Aficamten Liability was approximately 23.5% as of December 31, 2024 and 24.8% as of December 31, 2023.

The imputed rate of interest on the RP OM Liability was approximately 0.1% as of December 31, 2024 and 0.1% as of December 31, 2023.

We periodically assess the amount and timing of expected royalty payments and account for any changes in such estimates on a prospective basis.

As of December 31, 2024, we have a total carrying value of approximately $462.2 million of liabilities related to revenue participation right purchase agreements.

Accrued Research and Development Expenditures

Clinical trial costs are a component of research and development expense.

QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK

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These risks primarily include risk related to interest rate sensitivities.

Market Risk and Interest Rate Risk

Interest Rate Risk

We are exposed to market risk related to changes in interest rates.

As of December 31, 2023, we had cash and investments of $655.4 million, which consist of U.S.

As of December 31, 2024, our cash and investments totaled $1221.1 million, comprising U.S.

Treasury securities, U.S.

government agency bonds, commercial paper, global portfolio of corporate debt, money market fund, and repurchase agreements backed by U.S.

government agency bonds, commercial paper, a global portfolio of corporate debt, money market funds, and repurchase agreements backed by U.S.

Treasury securities.

To reduce the volatility relating to these exposures, we have put investment and risk management policies and procedures in place.

The primary objective of our investment activities is to preserve capital to fund our operations.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Our investments are subject to interest rate risk and could fall in value if market interest rates increase.

We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.

A 1% increase or decrease in current interest rates would not have a material effect on our financial results.

A hypothetical 1% increase in market interest rates would result in a decline in the value of our investments of approximately $6.1 million and $2.4 million as of December 31, 2024 and December 31, 2023, respectively.

In addition, we have elected the fair value option for certain liabilities.

The fair value of the liabilities related to 2024 RP OM Loan Agreement, the RP CK-586 RPA, and the derivatives of the RP Multi Tranche Loan Agreement will increase as market interest rates decrease.

In addition, the fair value of the liabilities may fluctuate based upon changes in the Company’s credit rating.

Changes in the interest rate environment and the credit rating of the Company could have an effect on our future earnings.

For example, a hypothetical 1% decrease in the discount rates used to measure the 2024 RP OM Loan Agreement, the RP CK-586 RPA, and the derivatives of the RP Multi Tranche Loan Agreement would result an increase in the fair value, and the recognition of a loss, of approximately $5.4 million as of December 31, 2024.

In 2024, we recognized a loss on the change in the estimated fair value of liabilities of approximately $19.6 million, primarily due to changes in the discount rates used to measure the 2024 RP OM Loan Agreement and the RP CK-586 RPA.

The discount rates ranged from 10% to 18% as of December 31, 2024, compared to 14% to 18% as of June 30, 2024, resulting in an increase in the estimated fair value of the liabilities.

We had $21.1 million under 2026 Notes with a fixed rate of 4.0% and $540.0 million under 2027 Notes with a fixed rate of 3.5% outstanding as of December 31, 2024.

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ (Deficit) Equity

Consolidated Statements of Stockholders’ Deficit

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cytokinetics, Incorporated (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Cytokinetics, Incorporated (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Measurement of Revenue Participation Right Purchase Agreements

Description of the Matter

Description of

As of December 31, 2024, the liabilities related to revenue participation right purchase agreements, net were $462.2 million.

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As products containing Aficamten and Omecamtiv Mecarbil have not yet been commercialized, the estimates are highly subjective.

How We Addressed the Matter in Our Audit

Addressed the Matter in Our

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s processes for estimating the amount and timing of future royalty payments.

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Evaluating the reasonableness of management’s assumptions included consideration of (i) relevant industry forecasts and data, (ii) consistency with observable data for competitor products, and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Fair Value Liabilities

Description of

In May 2024, the Company entered into the 2024 RPI transactions including the 2024 RP OM Loan Agreement, the RP CK-586 RPA, and the 2022 RP Multi Tranche Loan Agreement Amendment.

The Company elected the fair value option for recognition of the liabilities related to 2024 RP OM Loan Agreement and the RP CK-586 RPA and remeasures the liabilities at fair value each reporting period.

In addition, the RP Multi Tranche Loan Agreement has embedded derivatives which are remeasured to fair value each reporting period.

As of December 31, 2024, the carrying value of liabilities related to RPI transactions measured at fair value were $137.0 million and the derivative liabilities measured at fair value were $11.3 million.

For the year ended December 31, 2024, the Company recognized a change in fair value of liabilities related to RPI Transactions of $(19.6) million and a change in fair value of derivative liabilities of $1.3 million.

As described in Note 3 to the consolidated financial statements, the fair values of the liabilities for the RP OM Loan Agreement and CK-586 RPA are based on significant unobservable inputs, including the probability of clinical success and regulatory approval based on historical industry success rates for product development specific to cardiovascular products, the estimated date of a product launch, estimates of pricing, sales ramp, variables for the timing of the related events, probability of change of control, and discount rates.

The fair values of the embedded derivatives are based on significant unobservable inputs, including the probability of change of control and the probability of default.

Auditing the Company’s measurement of the fair value of the 2024 RPI transactions and the ongoing measurement of the fair value liabilities and derivative liabilities was complex due to the significant estimation uncertainty.

Addressed the Matter in Our

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s processes for estimating the fair value of the fair value liabilities and derivative liabilities.

To test the measurement of the fair value liabilities and derivative liabilities, our audit procedures included, among others, a review of the valuation methods, key valuation assumptions, preparation of corroborative valuations, and testing the cash proceeds from the financing.

/s/ Ernst & Young LLP

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Current portion of long-term debt

Derivative liabilities measured at fair value

Deferred revenue

Other current liabilities

Total current liabilities

Term loan, net

Term loans, net

Convertible notes, net

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Long-term operating lease liabilities

Liabilities related to RPI Transactions measured at fair value

Other non-current liabilities

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Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

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Years Ended December 31,

Research and development revenues

License revenues

Milestone revenues

License and milestone revenues

Collaboration revenues

Realization of revenue participation right purchase agreement

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Interest and other income, net

Change in fair value of derivative liabilities

Change in fair value of liabilities related to RPI Transactions

Net loss per share — basic and diluted

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CYTOKINETICS, INCORPORATED

CONSOLIDATED STATEMENTS OF ST OCKHOLDERS’ (DEFICIT) EQUITY

CONSOLIDATED STATEMENTS OF ST OCKHOLDERS’ DEFICIT

(In thousands, except shares)

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Stockholders’

(Deficit) Equity

Balance, December 31, 2020

Exercise of stock options

Vesting of restricted stock units,

net of taxes withheld

Net share settlement

Underwritten public offering of

common stock, net of discounts,

commissions and offering cost

Issuance of common stock upon private placement

Issuance of common stock under

Employee Stock Purchase Plan

Stock-based compensation

Other comprehensive loss

Income (Loss)

Balance, December 31, 2021

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Induced conversion of convertible notes

Exercise of warrants

Exercise of warrants, net

Settlement of capped call on 2026 Notes

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Balance, December 31, 2023

Exercise of stock options

Vesting of restricted stock units

Shares withheld related to net share settlement of equity awards

Issuance of common stock under Employee Stock Purchase Plan

Issuance of common stock under at-the-market offering, net of issuance costs

Issuance of common stock in public offering, net of issuance costs

Issuance of common stock in private placement, net of issuance costs

Exercise of warrants, net

Conversion of 2026 Notes

Stock-based compensation

Other comprehensive income

Balance, December 31, 2024

The accompanying notes are an integral part of these consolidated financial statements.

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Non-cash lease expense

Impairment of right-of-use assets

Loss on disposition of property and equipment

Depreciation of property and equipment

Realized gain on investment, net

Change in fair value of derivative liabilities

Change in fair value of liabilities related to RPI Transactions

Realized (loss) gain on investment, net

Interest receivable and amortization on investments

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Accounts payable

Accrued and other liabilities

Deferred revenue

Accrued and other liabilities

Operating lease liabilities

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Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Repayment of finance lease liabilities

Repayment of term loan

Repayment of term loans

Debt extinguishment costs

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Proceeds from issuance of convertible debt, net

Proceeds from public offerings of common stock, net of discounts, commissions and offering cost

Proceeds from private placement, net

Proceeds from 2022 RPI Transactions, net

Proceeds from RPI Transactions

Proceeds from issuance of common stock related to at-the-market offering, net of issuance costs

Proceeds from issuance of common stock related to public offering, net of issuance costs

Proceeds from issuance of common stock related to private placement, net of issuance costs

Proceeds from issuance of common stock under equity incentive and stock purchase plans

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Effect of exchange rate changes

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

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CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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We had a net loss of $ 589.5 million and net cash used in operations of $ 395.9 million for the year ended December 31, 2024.

Cash, cash equivalents, and investments decreased to $ 655.4 million as of December 31, 2023 from $ 829.3 million as of December 31, 2022.

Cash, cash equivalents, and investments increased to $ 1,221.1 million as of December 31, 2024 from $ 655.4 million as of December 31, 2023.

We anticipate that we will have operating losses and net cash outflows in future periods.

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Our liquidity will be impaired if sufficient additional capital is not available on terms acceptable to us.

To date, we have funded operations primarily through sales of our common stock, contract payments under our collaboration agreements, sales of future revenues and royalties, debt financing arrangements, government grants and interest income.

Until we achieve profitable operations, we intend to continue to fund operations through payments from strategic collaborations, additional sales of equity securities, grants and debt financings.

We have never generated revenues from commercial sales of our drugs and may not have drugs to market for several years, if ever.

Our success is dependent on our ability to enter into new strategic collaborations and/or raise additional capital and to successfully develop and market one or more of our drug candidates.

We cannot be certain that sufficient funds will be available from such a financing or through a collaborator when required or on satisfactory terms.

Additionally, there can be no assurance that our drug candidates will be accepted in the marketplace or that any future products can be developed or manufactured at an acceptable cost.

We have never generated revenues from commercial sales of our drugs.

Our success is dependent on our ability to obtain additional capital by entering into financings or new strategic collaborations, and ultimately on our and our collaborators’ ability to successfully develop and market one or more of our drug candidates.

We cannot be certain that sufficient funds will be available from financings or such collaborators when needed or on satisfactory terms.

Additionally, there can be no assurance that any of our drug candidates will be accepted in the marketplace or that any future products can be developed or manufactured at an acceptable cost.

These factors could have a material adverse effect on our future financial results, financial position and cash flows.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

We evaluate our estimates on an ongoing basis.

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Intercompany transactions and balances have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform the prior period presentation to the current year.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject us to concentrations of risk consist principally of cash, cash equivalents, restricted cash, investments, and accounts receivable.

Segment Information

We have one primary business activity and operate in one reportable segment.

Our chief operating decision maker (“CODM”) is our Chief Executive Officer ("CEO") who evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis.

The measures of profitability and the significant segment expenses reviewed by the CODM are consistent with these financial statements and footnotes.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject us to concentrations of risk consist principally of cash, cash equivalents, restricted cash, investments, and accounts receivable.

Our cash, cash equivalents, restricted cash, and investments held with large financial institutions in the United States and deposits may exceed the Federal Deposit Insurance Corporation’s insurance limit.

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Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents, which consist of money market funds and repurchase agreements backed by U.S.

Treasury securities.

Repurchase agreements are collateralized by US Treasury securities for an amount not less than 102 % of their value and are reported at a carrying value which approximates fair value due to their short duration.

We consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

A reconciliation of cash, cash equivalents, and restricted cash reported in our consolidated balance sheets to the amount reported within our consolidated statements of cash flows was as follows (in thousands):

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Total cash, cash equivalents, and restricted cash as reported within our consolidated statement of cash flows

As of December 31, 2023, our restricted cash balance of $ 0.4 million is used to collateralize letters of credit.

As of December 31, 2024, our restricted cash balance of $ 0.4 million recorded in other assets is used to collateralize letters of credit.

Our investments consist of U.S.

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Amortization of leasehold improvements and finance lease right-of-use assets are computed using the straight-line method over the shorter of the remaining lease term or the estimated useful life of the related assets, typically ranging from three to twelve years .

Upon sale or retirement of assets, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operations.

Impairment of Long-lived Assets

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For example, a license to our intellectual property is determined to be distinct from other performance obligations if licensee is able to use and benefit from the license on its own.

Otherwise, licenses are bundled with other promises, such as ongoing research and development services, as combined performance obligation.

We enter into collaborative arrangements with partners that typically include payment to us for one of more of the following:

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For contracts that include sales-based royalties or sales-based milestones, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty or sales-based milestone has been allocated has been satisfied.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our joint programs with Astellas under the Astellas OSSA Agreement, and with Amgen under the Amgen Agreement (both of the Astellas OSSA Agreement and the Amgen Agreement having now been terminated), included promises of research and development services.

We also entered into the Astellas FSRA Agreement on April 23, 2020.

We determined that these services collectively were distinct from any licenses provided to Astellas and Amgen under such agreements, and as such, these services were accounted for as a separate performance obligation recorded over time.

We recognized revenue for these services as the performance obligations were satisfied, which we estimated using internal research and development costs incurred.

When a collaborative agreement has more than one performance obligation, we must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations.

The stand-alone selling price may include such items as, forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success, to determine the transaction price to allocate to each performance obligation.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For performance obligations that consist of the delivery of an intellectual property license, the revenue is recognized at the point in time that the license is delivered.

For combined performance obligations consisting of an intellectual property license and research and development services, we recognize the combined performance obligation over time, using an input method, as the research and development services are performed.

We are required to make estimates related to the determination of the transaction price and our measurement of how revenue is recognized over time, using the input method.

Any changes in these estimates are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

Accrued Research and Development Expenditures

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Revenue Participation Right Purchase Agreements

We have entered into certain revenue participation right purchase agreements with certain investors, pursuant to which such investors purchased rights to royalties from certain revenue streams in exchange for consideration.

We typically account for such agreements as deferred income to be amortized under the units-of-revenue method, when there is no continuing involvement with the underlying R&D.

We have entered into certain revenue participation right purchase agreements with RPI ICAV, pursuant to which such investors purchased rights to royalties from aficamten and omecamtiv mecarbil revenue streams in exchange for consideration.

We account for such agreements as liabilities to be amortized under the effective interest rate method over the life of the related royalty stream, when we have continuing involvement with the underlying R&D.

We are required to update our estimates, at each reporting period, related to the amount and timing of future royalty payments to be paid to the counterparties of the revenue participation right purchase agreements.

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As products containing aficamten and omecamtiv mecarbil have not yet been commercialized, the estimates are highly subjective.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In 2020, we entered into a royalty purchase agreement, pursuant to which we sold our right to receive certain payments on the net sales of products containing the compound mavacamten.

The consideration received was deferred income to be amortized under the units-of-revenue method, as there was no continuing involvement with the underlying R&D.

In 2022, we entered into a tripartite agreement with RTW ICAV and MyoKardia, Inc.

acknowledging the release and discharge of any further obligations by us or MyoKardia, Inc.

in connection to the Mavacamten Royalty and consequently we recognized the deferred revenue as Realization of revenue participation right purchase agreement on the income statement.

As of December 31, 2023, we have a total carrying value of approximately $ 380.0 million of liabilities related to revenue participation right purchase agreements.

Fair Value of 2024 RPI transactions

As permitted under Accounting Standards Codification 825 , Financial Instruments, or ASC 825, the Company elected the fair value option for recognition of the liabilities related to 2024 RP OM Loan Agreement and the RP CK-586 RPA.

As products containing omecamtiv mecarbil and CK-586 have not yet been commercialized, the estimates are highly subjective.

Derivative Liabilities

We recognize liabilities of our embedded derivative instruments related to the RP Multi Tranche Loan at fair value in the consolidated balance sheets.

Since derivative instruments are initially and subsequently carried at fair value, the Company’s income will reflect the volatility in these estimate and assumption changes.

Research and Development Expenditures

Research and development costs are charged to operations as incurred.

Research and development expenses consist primarily of clinical manufacturing costs, preclinical study expenses, consulting and other third-party costs, employee compensation, supplies and materials, allocation of overhead and occupancy costs, facilities costs and depreciation of equipment.

Research and development expenses consist primarily of clinical trial costs, clinical manufacturing costs, preclinical study expenses, technical operations, consulting and other third-party costs, employee compensation, supplies and materials, allocation of overhead and occupancy costs, facilities costs and depreciation of equipment.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We account for income taxes under the asset and liability method.

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Stock-based compensation expense related to the ESPP is recognized based on the fair value of each award estimated on the first day of the offering period using the Black Scholes option pricing model and recorded as expense over the service period using the straight-line method.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2 — Net Loss Per Share

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Shares issuable upon conversion of 2027 Notes

Note 3 — Research and Development Arrangements

2021 Ji Xing and RTW Transactions

In December 2021, we entered into the 2021 RTW Transactions as described below, related to omecamtiv mecarbil.

Ji Xing Omecamtiv Mecarbil License and Collaboration Agreement

Under the terms of the Ji Xing OM License Agreement, we are the beneficiary of a nonrefundable $ 50.0 million payment obligation from Ji Xing comprised of a $ 40.0 million payment as consideration for the rights granted by us to Ji Xing and $ 10.0 million attributable to our having submitted to the FDA an NDA for omecamtiv mecarbil.

The $ 50.0 million payment was received by the Company in January 2022.

We may be eligible to receive from Ji Xing additional payments totaling up to $ 330.0 million for the achievement of certain commercial milestone events in connection to omecamtiv mecarbil.

Ji Xing will be responsible for the development and commercialization of omecamtiv mecarbil at its own cost and is required to use diligent efforts to develop and commercialize omecamtiv mecarbil in China and Taiwan.

The development of omecamtiv mecarbil will be initially focused on HFrEF, and Ji Xing will have the opportunity to participate in Cytokinetics’ global clinical trials of omecamtiv mecarbil.

Cytokinetics will supply omecamtiv mecarbil to Ji Xing either as a finished product or as an active pharmaceutical ingredient.

Ji Xing may reimburse Cytokinetics for certain costs related to development and supply activities that we perform on their behalf.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Ji Xing OM License Agreement, unless terminated earlier, will continue on a market-by-market basis until expiration of the relevant royalty term.

Ji Xing has the right to terminate the Ji Xing OM License Agreement for convenience.

Each party may terminate the Ji Xing OM License Agreement for the other party’s uncured material breach, insolvency, or failure to perform due to extended force majeure events.

Cytokinetics may also terminate the Ji Xing OM License Agreement if Ji Xing challenges Cytokinetics’ patents or undergoes certain change of control transactions.

Rights granted to Ji Xing in relation to omecamtiv mecarbil will revert to Cytokinetics upon termination, and, under certain circumstances, subject to a low single digit royalty payment by the Company to Ji Xing on the net sales of the products containing the compound omecamtiv mecarbil in China and Taiwan.

We assessed this arrangement in accordance with ASC 606 and concluded that there is one performance obligation relating to the license of functional intellectual property.

The performance obligation was satisfied, and we recognized the residual allocation of arrangement consideration as revenue of $ 54.9 million in 2021.

Due to the nature of development, including the inherent risk of development and approval by regulatory authorities, we are unable to estimate if and when the development milestone payments could be achieved or become due and, accordingly, we consider the milestone payments to be fully constrained and excluded any potential milestone payments from the initial transaction price.

The consideration related to sales-based milestone payments, including royalties, will be recognized when the related sales occur under the sales- and usage-based royalty exception as these amounts have been determined to relate predominantly to the license.

We re-evaluate the probability of achievement of development milestones and any related constraints each reporting period.

We will include consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

Common Stock Purchase Agreements

On December 20, 2021, as part of the 2021 RTW Transactions, we entered into common stock purchase agreements with each of the RTW Investors.

These common stock purchase agreements provided for the sale and issuance of an aggregate of 511,182 shares of our common stock at a price per share of $ 39.125 and an aggregate purchase price of $ 20.0 million.

The closing occurred on December 20, 2021 .

The RTW Investors have agreed to certain trading and other restrictions with respect to the shares of common stock they purchased pursuant to these agreements, including a restriction on sales or other transfers of the shares, subject to certain exceptions, for a period of one year from the closing date.

The restrictions resulted in a premium paid by the RTW Investors of $ 4.9 million, which represents the excess amount paid over the fair value of the shares of common stock purchased.

The premium was determined by analyzing the restrictions discount applied to the closing stock price as of December 20, 2021, which is a Level 2 fair value input.

The cash received less the calculated premium is the $ 15.1 million fair value of the common stock recorded .

2020 Ji Xing and RTW Transactions

On July 14, 2020, we entered in the 2020 RTW Transactions, as described below, with RTW Royalty Holdings and Ji Xing, related to aficamten, our proprietary small molecule cardiac myosin inhibitor product, a novel cardiac myosin inhibitor, and other assets.

Ji Xing Aficamten License and Collaboration Agreement

On July 14, 2020, we entered into the Ji Xing Aficamten License Agreement with Ji Xing, pursuant to which we granted to Ji Xing an exclusive license to develop and commercialize aficamten in China and Taiwan.

Under the terms of the Ji Xing Aficamten License Agreement, we received from Ji Xing a nonrefundable upfront payment of $ 25.0 million.

We may be eligible to receive from Ji Xing milestone payments totaling up to $ 200.0 million for the achievement of certain development and commercial milestone events in connection to aficamten in the field of oHCM and/or nHCM and other indications.

In addition, Ji Xing will pay us tiered royalties in the low-to-high teens range on the net sales of the products containing aficamten in China and Taiwan, subject to certain reductions for generic competition, patent expiration and payments for licenses to third party patents.

Ji Xing will be responsible for the development and commercialization of aficamten at its own cost and is required to use diligent efforts to develop and commercialize aficamten in China and Taiwan.

The development of aficamten will be initially focused on HCM, and Ji Xing will have the opportunity to participate in Cytokinetics’ global pivotal clinical trials of aficamten.

Cytokinetics or a designated supplier will supply aficamten to Ji Xing either as a finished product or as an active pharmaceutical ingredient.

Note 3 — Agreements with Royalty Pharma

On January 7, 2022, we announced that we had entered into the 2022 RPI Transactions with affiliates of Royalty Pharma International plc.

Pursuant to the 2022 RPI Transactions, the RP Multi Tranche Loan Agreement and the RP Aficamten RPA described below, are determined to be debt instruments subsequently measured at amortized cost and were entered into with parties that were at the time of our entry into the 2022 RPI Transactions affiliated and in contemplation of one another.

We used the relative fair value method and made separate estimates of the fair value of each freestanding financial instrument and then allocated the proceeds in proportion to those fair value amounts.

Arrangement consideration for the RP Multi Tranche Loan Agreement and the RP Aficamten RPA totaled $ 150 million, consisting of the two $ 50 million up front payments for the signing of the RP Multi Tranche Loan Agreement and the RP Aficamten RPA and milestone of $ 50 million for initiation of the first pivotal trial in oHCM for aficamten that was deemed probable at the signing of the agreements.

On May 22, 2024, we announced that we had entered into the 2024 RPI Transactions with affiliates of Royalty Pharma International plc, which included an amendment the RP Aficamten RPA, a component of the 2022 RPI Transactions.

The 2024 RPI Transactions include the 2024 RP OM Loan Agreement, the RP CK-586 RPA, the RP Stock Purchase Agreement, the RP Multi Tranche Loan Agreement Amendment and the RP Aficamten RPA Amendment, as described below, are accounted for as a debt modification of the 2022 RPI Transactions.

The 2024 RPI Transactions consideration of $ 200.0 million was allocated as follows (in thousands):

Units of Accounting:

RP Aficamten RPA

Tranche 6 of RP Multi Tranche Loan Agreement

Tranche 6 of RP Multi Tranche Loan Agreement - Embedded Derivatives

Tranche 4 of RP Multi Tranche Loan Agreement - Embedded Derivatives

RP CK-586 RPA

RP OM Loan Agreement

Total consideration

Liabilities Related to RPI Transactions Measured at Fair Value

As permitted under ASC 825, we elected the fair value option for recognizing the liabilities related to the 2024 RP OM Loan Agreement and the RP CK-586 RPA.

The fair value option was elected because these liabilities included embedded derivatives which would have otherwise required separate recognition and measurement.

The Company elected the fair value option as it is believed to more practical for each liability as a single unit of account at fair value.

Under the fair value option, debt issuance costs are expensed as incurred and the Company is required to record the fair value option elected arrangements at their fair value on the date of issuance and at each balance sheet thereafter.

Changes in the estimated fair value of the arrangements are recognized as changes in fair value of liabilities related to RPI Transactions in the consolidated statement of operations and comprehensive loss.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Ji Xing Aficamten License Agreement, unless terminated earlier, will continue on a market-by-market basis until expiration of the relevant royalty term.

Ji Xing has the right to terminate the Ji Xing Aficamten License Agreement for convenience.

Each party may terminate the Ji Xing Aficamten License Agreement for the other party’s uncured material breach, insolvency, or failure to perform due to extended force majeure events.

Cytokinetics may also terminate the Ji Xing Aficamten License Agreement if Ji Xing challenges Cytokinetics’ patents or undergoes certain change of control transactions.

Rights granted to Ji Xing in relation to aficamten will revert to Cytokinetics upon termination, and, under certain circumstances, subject to a low single digit royalty payment by the Company to Ji Xing on the net sales of the products containing the compound aficamten in China and Taiwan.

We assessed this arrangement in accordance with ASC 606 and concluded that there is one performance obligation relating to the license of functional intellectual property.

The performance obligation was satisfied, and we recognized the residual allocation of arrangement consideration as revenue of $ 36.5 million for 2020.

Due to the nature of development, including the inherent risk of development and approval by regulatory authorities, we are unable to estimate if and when the development milestone payments could be achieved or become due and, accordingly, we consider the milestone payments to be fully constrained and exclude the milestone payments from the initial transaction price.

The consideration related to sales-based milestone payments, including royalties, will be recognized when the related sales occur under the sales and usage-based royalty exception of ASC 606 as these amounts have been determined to relate predominantly to the license.

The RP OM Loan Agreement provides for a loan in a principal amount of $ 100.0 million that was drawn at the closing.

The loan under the RP OM Loan Agreement matures on the 10 year anniversary of the funding date and is repayable in quarterly installments as follows:

• Scenario 1:

If the Phase 3 clinical trial of Cytokinetics’ proprietary small molecule cardiac myosin activator known as omecamtiv mecarbil is successful (defined as meeting the composite primary endpoint of the first event, whichever occurs first, comprising of cardiovascular death, heart failure event, LVAD implementation/cardiac transplantation, or stroke, with a hazard ratio (HR) of less than 0.85 and cardiovascular death endpoint HR of less than 1.0) by June 30, 2028 and we receive the marketing approval from the FDA for omecamtiv mecarbil on or prior to December 31, 2029 (“OM Approval Date”), commencing on the calendar quarter during which the FDA approval is obtained, we are required to pay RPDF (x) (i) $ 75.0 million ten business days after the OM Approval Date and (ii) $ 25.0 million on the first anniversary of the OM Approval Date and (y) on a quarterly basis an amount equal to 2.0 % of the annual worldwide net sales of omecamtiv mecarbil, subject to a minimum floor amount ranging from $ 5.0 million to $ 8.0 million during the first 18 calendar quarters (the payment of the 2.0 % of the annual worldwide net sales starting from the 19th calendar quarter shall be referred to as the “Royalty Payment”).

Our obligation to pay the Royalty Payment will continue after maturity of the Loan;

• Scenario 2:

If the Phase 3 clinical trial of omecamtiv mecarbil is successful by June 30, 2028 but we have not received the marketing approval from the FDA for omecamtiv mecarbil on or prior to December 31, 2029, we are required to pay RPDF 18 equal quarterly cash payments totaling 237.5 % of the principal amount of the loan commencing on March 31, 2030 ;

• Scenario 3:

If the Phase 3 clinical trial of omecamtiv mecarbil is not successful by June 30, 2028, we are required to pay RPDF 22 equal quarterly cash payments totaling 227.5 % of the principal amount of the loan commencing on September 30, 2028 ;

(the aggregate amount to be paid by us with respect to each scenario is referred to as the “Scheduled Payment Amount”).

The interest of the loan is included in the Scheduled Payment Amount for each scenario.

In each scenario, we may prepay the loan in full (but not in part) at any time at its option by paying an amount equal to the unpaid portion of Scheduled Payment Amount for the outstanding loan;

provided that, in scenario 1, we would be required to continue to pay the Royalty Payment after such prepayment.

In addition, upon the occurrence of a change of control of the Company, the loan is repayable in full at the option of either the Company or the lender in an amount equal to (x) depending on when such change of control occurs, 150.0 % to 237.5 % of the principal amount of the loan minus (y) the then paid Scheduled Payment Amount.

The RP OM Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on dispositions, mergers, indebtedness, encumbrances, distributions, stock repurchases, investments and transactions with affiliates.

The RP OM Loan Agreement also includes customary events of default, including but not limited to the nonpayment of principal or interest, violations of covenants, material adverse changes, attachment, levy, restraint on business, cross-defaults on material indebtedness, bankruptcy, delisting, material judgments, misrepresentations, governmental approvals, payment defaults under other royalty purchase agreements and development funding agreements with RPDF or RPI ICAV.

Upon an event of default or simultaneously with payment in full of the term loans in the RP OM Loan Agreement, the lenders may, among other things, accelerate the loan (with the amount payable between 227.5 % and 237.5 % of the principal amount (less amounts previously paid) in the case of other events of default).

Upon execution of the RP OM Loan Agreement in the second quarter of 2024, we recorded liabilities of $ 104.7 million using the probability-weighted expected return method and the fair value inputs are classified as Level 3 in the fair value hierarchy.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table demonstrates the future minimum payments for our RP OM Loan under Scenario 3, based on 227.5 % of the principal amount with repayment expected to start in 2028 as defined above, as of December 31, 2024 (in thousands):

Years ending December 31:

Future minimum payments

As defined above, the minimum repayment schedule under Scenario 1 would be a total of 124.0 % of the principal amount and the royalty payment with quarterly payments starting in 2028.

In addition, under Scenario 1 we would be obligated to make the royalty payment each quarter, and such amounts are not determinable at this time.

The repayment schedule under Scenario 2 would be 237.5 % of the principal amount with quarterly payments starting in 2030.

Pursuant to the RP CK-586 RPA, RPI ICAV purchased rights to certain revenue streams from worldwide net sales of CK-586 by us, our affiliates or licensees, in exchange for up to $ 200 million in consideration, $ 50 million of which was paid up-front and, following the initiation of the first Phase 3 clinical trial (or the Phase 3 portion of the first Phase 2b/3 clinical trial) in heart failure with preserved ejection fraction in humans for CK-586, at RPI ICAV’s sole option and discretion, up to in aggregate $ 150 million in quarterly payments to fund 50.0 % of the research and development cost for a potential Phase 3 clinical trial of CK-586.

Pursuant to the RP CK-586 RPA, RPI ICAV purchased the right to receive a percentage of net sales ranging from 1.0 % to up to 4.5 % for annual worldwide net sales of CK-586 (depending on the aggregate amounts funded by RPI ICAV), subject to reduction in certain circumstances, and will receive a 0.75x milestone payment upon market approval of CK-586 by the FDA, or if market approval of CK-586 by the European Medicines Agency is obtained prior to market approval by the FDA, 0.375x milestone payment for such obtained approval and 0.375x milestone payment upon subsequent market approval by the FDA.

Upon execution of the RP CK-586 RPA in the second quarter of 2024, we recorded a liability of $ 12.7 million using a combination of the discounted cash flow method and the probability-weighted expected return method.

The fair value inputs are classified as Level 3 in the fair value hierarchy.

We account for the RP CK-586 RPA as a liability because, among other reasons, we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

Accounting for RPI Transactions Measured at Fair Value

The fair values of the liabilities for the RP OM Loan Agreement and CK-586 RPA are based on significant unobservable inputs, including the probability of clinical success and regulatory approval based on historical industry success rates for product development specific to cardiovascular products, the estimated date of a product launch, estimates of pricing, sales ramp, variables for the timing of the related events, probability of change of control, and discount rates (which range from 10 % to 18 % as of December 31, 2024), which are deemed to be Level 3 inputs in the fair value hierarchy.

As products containing omecamtiv mecarbil and CK-586 have not yet been commercialized, the estimates are highly subjective.

For example, assumed increases in the probability of the clinical success for the omecamtiv mecarbil or CK-586 programs could increase the value of the liabilities.

Similarly, assumed decreases in the discount rates used in the fair value measurements could also increase the value of the liabilities at period end.

In 2024, the Company recorded a loss of $ 19.6 million associated with the change in fair value of the liabilities related to 2024 RP OM Loan Agreement and the CK-586 RPA.

The change in the fair value has been recognized in the consolidated statement of operations and comprehensive loss.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the changes of the fair value of the CK-586 RPA and RP OM Loan (in thousands):

Beginning balance, May 22

Change in fair value

Ending balance, December 31

Liabilities Related to Revenue Participation Right Purchase Agreements

RP Aficamten Royalty Purchase Agreement

On January 7, 2022, we entered into the RP Aficamten RPA with RPI ICAV, pursuant to which RPI ICAV purchased rights to certain revenue streams from net sales of pharmaceutical products containing aficamten by us, our affiliates and our licensees in exchange for up to $ 150.0 million in consideration, $ 50.0 million of which was paid on the closing date, $ 50.0 million of which was paid to us in March 2022 following the initiation of the first pivotal trial in oHCM for aficamten, and $ 50.0 million of which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

Th e RP Aficamten RPA also provides that the parties will negotiate terms for additional funding if we achieve proof of concept results in certain other indications for aficamten, with a reduction in the applicable royalty if we and RPI ICAV fail to agree on such terms in certain circumstances.

Pursuant to the RP Aficamten RPA, RPI ICAV purchased the right to receive a percentage of net sales equal to 4.5 % for annual worldwide net sales of pharmaceutical products containing aficamten up to $ 1 billion and 3.5 % for annual worldwide net sales of pharmaceutical products containing aficamten in excess of $ 1 billion, subject to reduction in certain circumstances.

On May 22, 2024, we entered into the RP Aficamten RPA Amendment to restructure the royalty so that RPI will now be entitled to receive 4.5 % of the first $ 5.0 billion of worldwide annual net sales of aficamten and 1 % of any incremental annual worldwide net sales of aficamten by us and our licensees.

Our liability to RPI ICAV is referred to as the “RP Aficamten Liability”.

We account for the RP Aficamten Liability as a liability primarily because we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

In the second quarter of 2024, we recorded an additional $ 33.3 million to the carrying value related to the 2024 RPI Transactions entered into May 22, 2024.

The imputed rate of interest on the carrying value of the RP Aficamten Liability was approximately 23.5 % and 24.8 % as of December 31, 2024 and 2023, respectively.

2017 RP Omecamtiv Mecarbil Royalty Purchase Agreement

In February 2017, we entered into the RP OM RPA pursuant to which we sold a portion of our right to receive royalties from Amgen on future net sales of omecamtiv mecarbil to RPFT for a one-time payment of $ 90 million, which is non-refundable even if omecamtiv mecarbil is never commercialized.

Concurrently, we entered into a common stock purchase agreement with RPFT through which RPFT purchased 875,656 shares of the Company’s common stock for $ 10.0 million.

We allocated the consideration and issuance costs on a relative fair value basis to our liability to RPFT related to sale of future royalties under the RP OM RPA (the “RP OM Liability”) and the common stock sold to RPFT, which resulted in the RP OM Liability being initially recognized at $ 92.3 million.

The RP OM RPA, as amended, provides for the sale of a royalty to RPFT of 5.5 % on worldwide net sales of omecamtiv mecarbil.

We account for the RP OM Liability as a liability primarily because we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

If and when omecamtiv mecarbil is commercialized and royalties become due, we will recognize the portion of royalties paid to RPFT as a decrease to the RP OM Liability and a corresponding reduction in cash.

The carrying amount of the RP OM Liability is based on our estimate of the future royalties to be paid to RPFT over the life of the arrangement as discounted using an imputed rate of interest.

The excess of future estimated royalty payments over the $ 92.3 million of allocated proceeds, less issuance costs, is recognized as non-cash interest expense using the effective interest method.

The imputed rate of interest on the carrying value of the RP OM Liability was approximately 0.1 % as of December 31, 2024 and 2023.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounting for Revenue Participation Right Purchase Agreements

We periodically assess the amount and timing of expected royalty payments using a combination of internal projections and forecasts from external sources.

To the extent such payments are greater or less than our initial estimates or the timing of such payments is materially different than its original estimates, we will prospectively adjust the amortization of the RP OM Liability and the RP Aficamten Liability and the effective interest rate.

There are a number of factors that could materially affect the amount and timing of royalty payments, a number of which are not within our control.

The RP OM Liability and the RP Aficamten Liability are recognized using significant unobservable inputs.

The estimates of future royalties requires the use of several assumptions such as:

the probability of clinical success, the probability of regulatory approval, the estimated date of a product launch, estimates of eligible patient populations, estimates of prescribing behavior and patient compliance behavior, estimates of pricing, payor reimbursement and coverage, and sales ramp.

A significant change in unobservable inputs could result in a material increase or decrease to the effective interest rate of the RP OM Liability and the RP Aficamten Liability.

We recorded $ 50.0 million of additional consideration associated with the 2022 RP Aficamten Royalty Purchase Agreement upon receipt of the cash in the third quarter of 2023.

In the second quarter of 2024, we recorded an additional $ 33.3 million to the carrying value related to the 2024 RPI Transactions entered in May 22, 2024.

We review our assumptions on a regular basis and our estimates may change in the future as we refine and reassess our assumptions.

Changes to the RP Aficamten Liability and the RP OM Liability are as follows (in thousands):

RP Aficamten Liability

RP OM Liability

Beginning balance, January 1

Initial carrying value

Additional consideration

Modification in the 2024 RPI Transactions

Interest accretion

Amortization of issuance costs

Ending balance, December 31

RP Multi Tranche Term Loan

As of December 31, 2024, under the 2022 RP Loan Agreement, we are entitled to receive tranches 4 and 5 as described below.

On May 22, 2024, we entered into the RP Multi Tranche Loan Agreement Amendment which provides for two tranches of additional term loans in an aggregate principal amount up to $ 225.0 million as follows:

• $ 75.0 million of tranche 4 term loans during the one year period following the receipt on or prior to September 30, 2024 of positive results from SEQUOIA-HCM, the Phase 3 trial for aficamten;

• $ 100.0 million of tranche 5 term loans during the one year period following the acceptance by the FDA on or prior to March 31, 2025 of an NDA for aficamten, subject to the conditions to the tranche 4 term loans having occurred on or prior to September 30, 2024;

• $ 50.0 million tranche 6 term loan, which was drawn on May 22, 2024;

• $ 175.0 million tranche 7 term loan drawable at Cytokinetics’ discretion within one year of a future FDA approval of aficamten in obstructive hypertrophic cardiomyopathy if such approval is obtained on or prior to December 31, 2025.

In December 2023, we announced positive topline results from SEQUOIA-HCM, the Phase 3 trial for aficamten.

This entitled us to draw $ 75.0 million under tranche 4 at any time prior to April 3, 2025.

In November 2024, we announced that FDA has accepted our NDA for aficamten.

This entitled us to draw $ 100.0 million under tranche 5 at any time prior to November 25, 2025.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We are contractually required to draw at least $ 50.0 million of either tranche 4 or tranche 5 prior to November 24, 2025.

Each term loan under the RP Multi Tranche Loan Agreement matures on the 10 year anniversary of the funding date for such term loan and is repayable in quarterly installments of principal, interest and fees commencing on the last business day of the seventh full calendar quarter following the calendar quarter of the applicable funding date for such term loan, with the aggregate amount payable in respect of each term loan (including interest and other applicable fees) equal to 190 % of the principal amount of the term loan for the tranche 1, tranche 4, tranche 5, tranche 6, and tranche 7 term loans (such amount with respect to each term loan, “Final Payment Amount”).

We account for amounts drawn under the RP Multi Tranche Loan Agreement using the effective interest method.

The RP Multi Tranche Loan Agreement and amendment contains embedded derivative features.

The fair values of the embedded derivatives are based on significant unobservable inputs, including the probability of change of control, the probability of default, discount rates and other factors.

We have bifurcated and recognized the embedded derivatives as Derivative Liabilities Measured at Fair Value as discussed below.

In addition, the term loans under the RP Multi Tranche Loan Agreement are repayable in full at the option of either us or the lender in an amount equal to the unpaid portion of Final Payment Amount for the outstanding term loans upon a change of control of Cytokinetics.

Future minimum payments under the existing borrowing under Tranche 1 and Tranche 6 of RP Multi Tranche Loan are (in thousands):

Years ending December 31:

Future minimum payments

Unamortized interest and loan costs

Term Loan, net

The weighted-average effective rate of interest on the Tranche 1 and Tranche 6 term loans was approximately 11.8 % as of December 31, 2024.

As of December 31, 2024, the estimated fair value of the Tranche 1 and Tranche 6 term loans was $ 110.0 million .

The fair value was estimated based on Level 3 inputs.

Derivative Liabilities Measured at Fair Value

We have bifurcated and recognized the embedded derivatives in the RP Multi Tranche Loan Agreement.

These embedded derivatives include repayment features based upon a change in control and default.

We recognize the derivative liabilities at fair value in the consolidated balance sheets.

Each period, the fair value of the derivative liabilities will be recalculated and resulting gains and losses from the changes in fair value of the derivatives with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in accumulated other comprehensive loss.

The fair values of the derivative liabilities is determined using the probability-weighted expected return method and the “with and without” method.

The fair values are based on significant unobservable inputs, including the probability of change of control, the probability of default (less than 10 %), discount rates (ranging from 10 % to 16 % as of December 31, 2024) and other factors.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In 2024, the Company recorded a gain of $ 1.3 million associated with the change in fair value of the derivative liabilities.

The amounts have been recorded as other expense in the consolidated statement of operations and comprehensive loss.

The following table summarizes the changes of the fair value of the derivative liabilities for the RP Multi Tranche Loan Agreement (in thousands):

RP Multi Tranche Loan Agreement Derivatives

Beginning balance, May 22

Change in fair value

Ending balance, December 31

RP Stock Purchase Agreement

Concurrently with the closing of our underwritten public offering on May 28, 2024, RPI ICAV purchased 980,392 shares of Common Stock in a private placement transaction at a price of $ 51.00 per share.

The proceeds from this private placement were $ 50 million .

Note 4 — Research and Development Arrangements

Collaboration for Commercialization of Omecamtiv in China

On December 20, 2021, we entered into a license and collaboration agreement with Corxel , or the Corxel OM License Agreement, pursuant to which we granted to Corxel an exclusive license to develop and commercialize omecamtiv mecarbil in China and Taiwan.

Under the terms of the Corxel OM License Agreement, we received a $ 50.0 million nonrefundable payment from Corxel comprised of a $ 40.0 million payment as consideration for the rights granted by us to Corxel and $ 10.0 million attributable to our having submitted to FDA an NDA for omecamtiv mecarbil.

In December 2024, we entered into a mutual termination agreement with Corxel to terminate the Corxel OM License Agreement.

Accordingly, all rights to develop and commercialize omecamtiv mecarbil have reverted to us.

Collaboration for Commercialization of Aficamten in China

On July 14, 2020, we entered into the Corxel Aficamten License Agreement, pursuant to which we granted to Corxel an exclusive license to develop and commercialize aficamten in China and Taiwan.

On December 17, 2024, Corxel assigned all of its rights under our license and collaboration agreement to Sanofi.

As a result of the Corxel assignment transaction with Sanofi, we received a $ 15.0 million non-refundable payment in connection with a modification of the original license prior to the assignment of Corxel’s rights under our license and collaboration agreement for the development and commercialization of aficamten in China to Sanofi.

We are also eligible to receive an additional $ 10.0 million payment from Corxel contingent on aficamten being approved in China and included on China's National Reimbursement Drug List.

Effective December 17, 2024, Sanofi has an exclusive license to develop and commercialize aficamten in China and Taiwan (the "Sanofi License Agreement").

T he total maximum future development and commercial milestone payments achievable for development and commercial milestone events in the field of oHCM and nHCM are $ 160.0 million, of which we have already earned and received $ 10.0 million.

We are also entitled to receive tiered royalties in the low-to-high teens range on the net sales of pharmaceutical products containing aficamten in China and Taiwan, subject to certain reductions for generic competition, patent expiration and payments for licenses to third party patents.

The Sanofi License Agreement will, unless terminated earlier, continue on a market-by-market basis until expiration of the relevant royalty term.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounting for the License and Collaboration Agreements in China

We assessed the original arrangements of the Corxel License Agreements in accordance with ASC 606 and concluded that there was one performance obligation, for which the counterparty is a customer for the unit of account, relating to the license of functional intellectual property for each agreement.

The performance obligation was satisfied, and we recognized the residual allocation of arrangement consideration as revenue of $ 54.9 million in 2021 for the Corxel OM License Agreement and $ 36.5 million in 2020 for the Corxel Aficamten License Agreement.

Due to the nature of development, including the inherent risk of development and approval by regulatory authorities, we are unable to estimate if and when the development milestone payments could be achieved or become due and, accordingly, we consider the milestone payments to be fully constrained and exclude the milestone payments from the transaction price.

For the other transactions in collaborative arrangements, consisting of research and development cost reimbursements, we recognize the research and development cost reimbursements as collaboration revenues in our consolidated statement of operations.

In 2024, we entered into an agreement to modify the Corxel Aficamten License Agreement.

The $ 15.0 million up-front payment was recognized upon execution of the modification as all performance obligations were satisfied.

The $ 10.0 million contingent payment to be earned upon aficamten being approved in China and included on China's National Reimbursement Drug List is constrained due to the significant uncertainty as of December 31, 2024.

Collaboration revenues from Corxel for 2024, 2023, and 2022 were $ 3.3 million , $ 1.3 million , and $ 0.9 million , respectively, related to certain development cost reimbursements.

We had accounts receivable from Corxel of $ 16.5 million as of December 31, 2024 and $ 0.3 million as of December 31, 2023.

Collaboration for Commercialization of Aficamten in Japan

On November 19, 2024, we announced that we had entered into a collaboration and license agreement with Bayer Consumer Care AG, an affiliate of Bayer AG, for the exclusive development and commercialization of aficamten in Japan, subject to certain reserved development rights of Cytokinetics to continue the conduct certain clinical trials (the "Bayer License Agreement").

The Company received an upfront payment of € 50.0 million (equivalent to $ 52.4 million) and is eligible to receive up to an additional € 90.0 million upon the achievement of milestones through commercial launch.

The Company is also eligible to receive up to € 490.0 million in commercial milestone payments upon the achievement of certain sales milestones, and tiered royalties on net sales of aficamten in Japan.

Accounting for the License and Collaboration Agreement in Japan

We assessed the Bayer License Agreement under ASC 606 and concluded that there was one performance obligation, for which the counterparty is a customer for the unit of account, relating to the license of functional intellectual property.

The € 50.0 million (equivalent to $ 52.4 million) up-front payment received under this agreement was recorded as deferred revenue in the fourth quarter of 2024, as the technology transfer related to the license of functional intellectual property has not yet been satisfied.

We expect to fulfill and satisfy the technology transfer in the first half of 2025.

The agreement also includes additional milestone payments, including future milestone payments totaling up to an additional € 90.0 million upon achievement of milestones through commercial launch.

T hese payments are constrained due to uncertainties related to regulatory and development progress and will be recognized as revenue only when it becomes probable that a significant revenue reversal will not occur.

In addition, we are eligible to receive up to € 490.0 million in commercial milestone payments based on the achievement of specific sales thresholds and tiered royalties on net sales of aficamten in Japan.

The sales-based milestone payments, including royalties, will be recognized when the related sales occur under the sales and usage-based royalty exception of ASC 606 as these amounts have been determined to relate predominantly to the license.

As of December 31, 2024, we had deferred revenue of $ 52.4 million, which related to the up-front payment from the Bayer License Agreement.

We re-evaluate the probability of achievement of development milestones and any related constraints each reporting period.

We will include consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

We recognized a $ 2.5 million milestone from Ji Xing in 2023 for the initiation of a phase 3 clinical trial for aficamten in nHCM which was collected in the fourth quarter of 2023.

We recognized a $ 5.0 million milestone from Ji Xing during the third quarter of 2021 for initiation of a phase 3 clinical trial for aficamten in oHCM.

Although our contractual right to payment had not arisen under the Ji Xing Aficamten License Agreement, we determined recognition of the milestone in 2021 was appropriate based on our expected initiation of a phase 3 clinical trial of aficamten in oHCM and was recorded as a corresponding contract asset in other current assets in our consolidated balance sheet as of December 31, 2021.

Research and development revenue from Ji Xing for 2023 and 2022 was $ 1.3 million and $ 0.9 million , respectively, related to certain development cost reimbursements.

We had no research and development revenue from Ji Xing in 2021.

We had accounts receivable from Ji Xing of $ 0.3 million as of December 31, 2023 and $ 0.1 million as of December 31, 2022.

Royalty Purchase Agreement

On July 14, 2020, we entered the RTW Royalty Purchase Agreement with RTW Royalty Holdings, pursuant to which we sold our Mavacamten Royalty, under the Research Collaboration Agreement, dated August 24, 2012, between us and MyoKardia, Inc.

to RTW Royalty Holdings for a one-time payment of $ 85.0 million.

The RTW Royalty Purchase Agreement transaction closed on November 13, 2020.

On March 31, 2021, RTW Royalty Holdings assigned its rights and obligations under the RTW Royalty Purchase Agreement to its affiliate, RTW ICAV.

We understand that on April 18, 2022, RTW ICAV and MyoKardia, Inc.

acknowledging the release and discharge of any further obligations by us or MyoKardia, Inc.

in connection to the Mavacamten Royalty.

The allocation of the consideration for the 2020 RTW Transactions resulted in $ 87.0 million being allocated to the RTW Royalty Purchase Agreement representing its fair value.

The $ 87.0 million was initially recorded as deferred revenue.

On April 25, 2022, as discussed above, we entered into a tripartite agreement with RTW ICAV and MyoKardia, Inc.

acknowledging the release and discharge of any further obligations by us or MyoKardia, Inc.

in connection to the Mavacamten Royalty.

As a result of the full extinguishment of the Mavacamten Royalty, we recognized revenue of $ 87.0 million in 2022.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our strategic alliance with Astellas to advance novel therapies for diseases and medical conditions associated with skeletal muscle impairment and weakness commenced in 2013 under the Astellas Agreement.

On April 23, 2020, we and Astellas entered into the two agreements referenced below which, taken together, amend and restate the Company’s research, development and commercialization collaboration with Astellas under the Astellas Agreement.

Fast Skeletal Regulatory Activator Agreement

Collaboration for development of reldesemtiv

The Company and Astellas entered into the Astellas FSRA Agreement on April 23, 2020.

As a result of the Astellas FSRA Agreement, the Company will now have exclusive control and responsibility for the Company's future development and commercialization of reldesemtiv, CK-601 and other FSRA compounds and products, and accordingly, Astellas has agreed to terminate its license to all FSRA compounds and related products.

Astellas also agreed to non-cash contributions to the Company, which included the transfer of its existing inventories of active pharmaceutical ingredient of reldesemtiv and CK-601.

As of December 31, 2023 , we have billed and collected from Astellas up to the maximum contribution of $ 12.0 million.

On March 31, 2023, we announced that we discontinued COURAGE-ALS, our Phase 3 clinical trial of reldesemtiv in patients with ALS, and COURAGE-ALS OLE.

Research and development revenue from Astellas for 2023, 2022, and 2021 was $ 2.7 million , $ 5.7 million , and $ 3.2 million , respectively.

We had no accounts receivable from Astellas as of December 31, 2023 and 2022.

On November 23, 2020, we received written notice of termination from Amgen of the Amgen Agreement pertaining to the discovery, development and commercialization of novel small molecule therapeutics, including omecamtiv mecarbil, a novel cardiac myosin activator, and CK-136 (formerly AMG 594), a novel cardiac troponin activator.

The termination of the Amgen Agreement was effective May 20, 2021.

We recognized research and development revenue for reimbursements from Amgen of both internal costs of certain full-time employee equivalents and other costs related to the Amgen Agreement, which terminated effective May 20, 2021.

Research and development revenue from Amgen was $ 7.4 million in 2021 and consisted of reimbursement of costs we incurred related to METEORIC-HF.

There was no research and development revenue from Amgen in 2023 and 2022 .

On March 31, 2023, we announced that we would be discontinuing COURAGE-ALS, our Phase 3 clinical trial of reldesemtiv in patients with ALS, and COURAGE-ALS OLE.

As of December 31, 2023 we billed and collected the maximum contribution of $ 12.0 million from Astellas, and no further revenue is expected under this arrangement.

We had no revenue from Astellas in 2024.

Collaboration revenue from Astellas for 2023 and 2022 was $ 2.7 million and $ 5.7 million , respectively, related to certain development cost reimbursement.

Note 5 — Fair Value Measurements

4 unchanged sentences

Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and consider the security issuers’ and the third-party issuers’ credit risk in our assessment of fair value.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We classify fair value based on the observability of those inputs using a hierarchy that prioritizes the inputs used to measure fair value.

11 unchanged sentences

Commercial paper

Asset-backed securities

Corporate obligations

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2023

2 unchanged sentences

Treasury securities

Treasury securities backed repurchase agreements

Government agency securities

Foreign government agency securities

Commercial paper

Asset-backed securities

Corporate obligations

No credit losses on debt securities were recognized in 2023 or 2022 .

Investments in corporate debt securities, commercial paper, asset-backed securities and U.S.

Government agency securities are classified as Level 2 as they are valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third-party data providers, including but not limited to benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.

No credit losses on debt securities were recognized in the periods presented.

In its evaluation to determine expected credit losses, management considered all available historical and current information, expectations of future economic conditions, the type of security, the credit rating of the security, and the size of the loss position, as well as other relevant information.

The unrealized losses as of December 31, 2024 are attributed to market interest rate changes and are not attributed to credit.

The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6 — Balance Sheet Components

16 unchanged sentences

Total accrued liabilities

We sponsor a 401(k) defined contribution plan covering all employees and contributed $ 2.5 million , $ 1.8 million , and $ 1.1 million to this plan in 2023, 2022, and 2021 , respectively.

Note 6 — Agreements with Royalty Pharma

On January 7, 2022, we announced that we had entered into the 2022 RPI Transactions with affiliates of Royalty Pharma International plc.

The RP Loan Agreement and the RP Aficamten RPA described below, are determined to be debt instruments subsequently measured at amortized cost and were entered into with parties that were at the time of our entry into the 2022 RPI Transactions affiliated and in contemplation of one another.

Arrangement consideration for the RP Loan Agreement and the RP Aficamten RPA totaled $ 150 million, consisting of the two $ 50 million upfront payments for the signing of the RP Loan Agreement and the RP Aficamten RPA and milestone of $ 50 million for initiation of the first pivotal trial in oHCM for aficamten that was deemed probable at the signing of the agreements.

The initial consideration was allocated as follows (in thousands):

Units of Accounting:

Revenue Participation Right Purchase Agreement

Development Funding Loan Agreement

Total consideration

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2022 RP Loan Agreement

Under the RP Loan Agreement, we were initially entitled to receive up to $ 300.0 million in term loans, $ 50.0 million of which was disbursed to us on closing and the remaining $ 250.0 million scheduled to have been available to us upon our satisfaction of customary disbursement conditions and certain development conditions by specific deadlines, as follows:

• $ 50.0 million of tranche 2 term loans during the one year period following the receipt on or prior to March 31, 2023 of marketing approval from FDA of omecamtiv mecarbil;

• $ 25.0 million of tranche 3 term loans during the one year period following the commercial availability of a diagnostic test measuring levels of omecamtiv mecarbil to support the final FDA label language applicable to such drug, subject to such commercial availability and the conditions to the tranche 2 term loans having occurred on or prior to March 31, 2023;

• $ 75.0 million of tranche 4 term loans during the one year period following the receipt on or prior to September 30, 2024 of positive results from SEQUOIA-HCM, the Phase 3 trial for aficamten;

• $ 100.0 million of tranche 5 term loans during the one year period following the acceptance by the FDA on or prior to March 31, 2025 of an NDA for aficamten, subject to the conditions to the tranche 4 term loans having occurred on or prior to September 30, 2024.

As a result of our receipt of a CRL on February 28, 2023, in connection to our NDA for omecamtiv mecarbil, we have not satisfied the conditions to the availability of the tranche 2 and tranche 3 loans under the RP Loan Agreement.

In December 2023, we announced positive topline results from SEQUOIA-HCM, the Phase 3 trial for aficamten.

This entitled us to receive $ 75.0 million under tranche 4 during the one year period following the receipt of the positive results and requires us to complete a minimum mandatory draw of at least $ 50.0 million of the $ 75.0 million available.

The remaining $ 100.0 million under tranche 5 remains available for disbursement to us, subject to satisfaction of the conditions described above.

Each term loan under the RP Loan Agreement matures on the 10 year anniversary of the funding date for such term loan and is repayable in quarterly installments of principal, interest and fees commencing on the last business day of the seventh full calendar quarter following the calendar quarter of the applicable funding date for such term loan, with the aggregate amount payable in respect of each term loan (including interest and other applicable fees) equal to 190 % of the principal amount of the term loan for the tranche 1, tranche 4 and tranche 5 term loans and 200 % of the principal amount of the term loan for tranche 2 and tranche 3 term loans (such amount with respect to each term loan, “Final Payment Amount”).

We accounted for amounts initially drawn under the RP Loan Agreement using the effective interest method which resulted in an effective interest rate of 7.65 % over the ten-year term.

As of the date of the prepayment or maturity of the term loan (or the date such prepayment or repayment is required to be paid), we will be required to pay an additional amount equal to $ 34.6 million accreted over the term of the loan.

We have made our first payment in the fourth quarter of 2023.

provided that if the conditions for either the tranche 4 term loans or the tranche 5 term loans have been met, we must have borrowed at least $ 50 million principal amount of the tranche 4 or 5 term loans.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future minimum payments under the existing borrowing under RP Loan Agreement are (in thousands):

Years ending December 31:

Future minimum payments

Unamortized interest and loan costs

Term Loan, net

As of December 31, 2023, the estimated fair value of our RP Loan Agreement was $ 59.9 million .

The fair value was estimated based on Level 3 inputs.

Concurrent with our entry into the RP Loan Agreement discussed above, we terminated the Term Loan Agreement with Silicon Valley Bank and Oxford Finance LLC and repaid all amounts outstanding thereunder as further described in Note 7.

2022 RP Aficamten Royalty Purchase Agreement

In addition, on January 7, 2022, we entered into the RP Aficamten RPA with RPI ICAV, pursuant to which RPI ICAV purchased rights to certain revenue streams from net sales of pharmaceutical products containing aficamten by us, our affiliates and our licensees in exchange for up to $ 150.0 million in consideration, $ 50.0 million of which was paid on the closing date, $ 50.0 million of which was paid to us in March 2022 following the initiation of the first pivotal trial in oHCM for aficamten, and $ 50.0 million of which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

Pursuant to the RP Aficamten RPA, RPI ICAV purchased the right to receive a percentage of net sales equal to 4.5 % for annual worldwide net sales of pharmaceutical products containing aficamten up to $ 1 billion and 3.5 % for annual worldwide net sales of pharmaceutical products containing aficamten in excess of $ 1 billion, subject to reduction in certain circumstances.

Our liability to RPI ICAV is referred to as the “RP Aficamten Liability”.

We account for the RP Aficamten Liability as a liability primarily because we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

The imputed rate of interest on the carrying value of the RP Aficamten Liability was approximately 24.8 % as of December 31, 2023 and 22.4 % as of December 31, 2022.

In 2023 , we updated our analyses of the RP Aficamten RPA to reflect our assumptions resulting from ongoing global market research and to reflect other adjustments in connection with our anticipated commercialization, including the additional consideration of $ 50.0 million which was paid to us in September 2023 following the initiation of the first pivotal clinical trial in nHCM for aficamten.

The resulting probability-adjusted sales forecast for aficamten has increased year over year mainly due to the receipt of positive topline results from SEQUOIA-HCM, the Phase 3 trial for aficamten, in December 2023.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The change in estimates are accounted for on a prospective basis in our liability calculation and resulted in changes in our imputed interest rate and non-cash interest expense from 22.4 % and $ 5.2 million in the fourth quarter of 2022, 22.4 % and $ 5.4 mi llion in the first quarter of 2023, 19.0 % and $ 4.9 million in the second quarter of 2023, 18.0 % and $ 5.4 million in the third quarter of 2023, to 24.8 % and $ 9.8 million in the fourth quarter of 2023.

The non-cash interest expense was $ 25.5 million and $ 15.5 million in 2023 and 2022, respectively.

In 2023, the change in estimate increased our non-cash interest expense and net loss by $ 2.0 million .

The change in accounting estimate increased the net loss per share by $ 0.02 in 2023.

2017 RP Omecamtiv Mecarbil Royalty Purchase Agreement

Concurrently, we entered into a common stock purchase agreement with RPFT through which RPFT purchased 875,656 shares of the Company’s common stock for $ 10.0 million.

The RP OM RPA provides for the sale of a royalty to RPFT of 4.5 % on worldwide net sales of omecamtiv mecarbil, subject to a potential increase of up to an additional 1 % under certain circumstances.

As a result of our receipt of a CRL on February 28, 2023 in connection to our NDA for omecamtiv mecarbil, pursuant to the terms of the RP OM RPA, the applicable royalty rate will increase to a maximum of 5.5 % if omecamtiv approval obtains FDA approval at any time after June 30, 2023.

As a result of the termination of the Amgen Agreement and pursuant to our obligations under the RP OM RPA, we and RPFT amended the RP OM RPA on January 7, 2022 to preserve RPFT’s rights under the RP OM RPA by providing for direct payments by us to RPFT of up to 5.5 % of our and our affiliates and licensees worldwide net sales of omecamtiv mecarbil.

The RP OM RPA, as amended, had no impact on the original accounting for the $ 92.3 million associated with the RP OM Liability established in February 2017.

We account for the RP OM Liability as a liability primarily because we have significant continuing involvement in generating the related revenue stream from which the liability will be repaid.

The carrying amount of the RP OM Liability is based on our estimate of the future royalties to be paid to RPFT over the life of the arrangement as discounted using an imputed rate of interest.

The excess of future estimated royalty payments over the $92.3 million of allocated proceeds, less issuance costs, is recognized as non-cash interest expense using the effective interest method.

The imputed rate of interest on the carring value of the RP OM Liability was approximately 0.1 % as of December 31, 2023 and 8.5 % as of December 31, 2022.

In 2023 , we updated our analyses of the RP OM RPA to reflect our current assumptions resulting from ongoing global market research and to reflect other adjustments in connection with our anticipated commercialization, including the result of our receipt of a CRL in connection to our NDA for omecamtiv mecarbil.

As a consequence of our receipt of the CRL from FDA, the royalty rate under the RP OM RPA will increase to no more than 5.5 %.

The resulting probability-adjusted sales forecast for omecamtiv mecarbil has decreased year over year because commercialization and sales of omecamtiv mecarbil will be delayed.

Changes in estimates are accounted for on a prospective basis in our liability calculation and resulted in changes in our imputed interest rate and non-cash interest expense from 8.5 % and $ 4.0 million in the fourth quarter of 2022, 1.9 % and $ 0.9 million in the first quarter of 2023, 2.9 % and $ 1.4 million in the second and third quarter of 2023, and to 0.1 % and $ 0.1 million in the fourth quarter of 2023, respectively.

The non-cash interest expense was $ 3.9 million , $ 16.2 million , and $ 12.9 million in 2023, 2022, and 2021, respectively.

In 2023, the change in estimate decreased our non-cash interest expense and net loss by $ 12.8 million .

The change in accounting estimate reduced the net loss per share by $ 0.13 in 2023.

CYTOKINETICS, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounting for the Royalty Pharma Royalty Purchase Agreements