Cytokinetics Inc (CYTK) 2004 Q3 法說會逐字稿

Good afternoon. Welcome, ladies and gentlemen, to the Cytokinetics third quarter 2004 conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. (Operator Instructions). I will now turn the conference over to Mr. Robert Blum, Cytokinetics' Executive Vice President of Corporate Development and Commercial Operations and Chief Business Officer. Please go ahead, sir.

Good afternoon and thank you for joining the Cytokinetics senior management team on this conference call to discuss our third quarter 2004 results. Also present during this call is Dr. James Sabry, President and Chief Executive Officer; Sharon Surrey-Barbari, Senior Vice President of Finance and Chief Financial Officer; Dr. Andrew Wolff, Senior Vice President of Clinical Research and Development and Chief Medical Officer.

Following my introduction, Dr. Sabry will provide insights into the Company's operations for the quarter. Then Sharon will review the Company's financial performance for the quarter ended September 30, 2004. After those comments, Dr. Sabry and Dr. Wolff will provide some further perspective and updates on the Company's milestones. We will then conclude the call with a question-and-answer session.

Please be advised that the following discussion, including our responses to questions at the end of our formal remarks, contain certain statements that constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.

Examples of such statements include statements relating to the expected timing, scope, and results of our clinical development and research programs; the expected benefits of our drug candidates and a potential drug candidates; the status of strategic relationships; and anticipated expenses. These statements are only predictions and are based upon our current expectations.

Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events can differ materially from those anticipated in our forward-looking statements as a result of these risks and uncertainties. The Company refers you to its publicly filed SEC documents for further details of the other risk factors, including our periodic report on Form 10-Q filed with the SEC.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein; to reflect any change in our expectations with regard thereto; or any change in events, conditions, or circumstances on which any such statements are based. Now, it gives me pleasure to turn over the call to Dr. Sabry.

Thank you Robert and thank all of you for joining us today on our third quarter conference call. I'd like to begin by welcoming several recent and important additions to our management team. And they are here on the call with me.

First, Sharon Surrey-Barbari has joined us as our new Senior Vice President of Finance and Chief Financial Officer. Sharon most recently served as Senior Vice President of Finance and CFO of InterMune. I'm also pleased to introduce Andrew Wolff as our new Chief Medical Officer and Senior Vice President of Clinical Research and Development. Andrew comes to us from CV Therapeutics where he was Senior Vice President and Chief Medical Officer.

We are extremely pleased to have these two individuals with us on the Cytokinetics team. With the insight and experience that each of them brings, we believe we've greatly strengthened an already superb team.

Additionally, as part of the corporate evolution of Cytokinetics, I'm also pleased to announce that Robert Blum has taken on the responsibilities of Chief Business Officer. This is in addition to Robert's role as Executive Vice President of Corporate Development and Commercial Operations.

As a member of the executive team at Cytokinetics, Robert has played a leadership role since the Company's inception as many of you know. And we are happy that he will be bringing his vast knowledge of the industry to his new additional duties as Chief Business Officer. So thank you Robert. And welcome, Sharon and Andy.

Now, I would like to cover some of the highlights of and progress in our development programs since our last call.

Our strategic partner, GlaxoSmithKline, continued the development of our compound SB-715992 with a broad Phase II program in the treatment of cancer which began earlier this year. The first of these trials, as we've mentioned before, is in the setting of second line non small cell lung cancer.

Specifically, SB-715992 is being studied as a monotherapy in a multi-center international trial with 70 patients who have failed a single platinum-containing regimen. The trial's primary endpoint is response rate as measured radiologically using these standard resist re-cyst (ph) criteria. And based on updated site initiation and patient enrollment rates provided by our partner GSK, we now anticipate the data from this trial will be available in mid 2005.

In July, GSK initiated an international Phase II monotherapy clinical trial evaluating the efficacy of SB-715992 in the treatment of second or third line breast cancer patients. This study will treat 55 patients previously treated with anthrocytenine (ph) antaxans (ph) and the primary endpoint of the study is response rate as determined by re-cyst. Based on the current rate of enrollment, interim data are expected during the second half of 2005 with the final data available during the first half of 2006.

GSK also continue to enroll patients in a Phase Ib clinical trial in the United Kingdom evaluating the safety of SB-715992 in combination with docetaxel Taxotere. Additional Phase Ib combination therapy studies are also expected to begin in the coming months and data from these studies are expected next year in 2005.

The supporting rationale for these trials was derived from Phase I data, some of which was presented this past month in September at the EORTC meeting in Geneva. Among the presentations was data from our 45-patient Phase I study that we initiated -- that we initially presented at Ascot this year and many of you are familiar with these data.

This study was designed to assess the pharmacokinetics and pharmacodynamics of SB-715992, and the presentation in Geneva was an analysis that suggested that the dose -- total dose and CMAX, or maximum concentration of the drug at peak, are important independent predictors of absolute neutrophil count with this agent.

In addition to the studies being conducted with SB-715992, GSK also initiated a Phase I study of our drug candidate SB-743921. The study is an open label, non-randomized, dose-escalating trial designed to evaluate the safety, tolerability, and pharmacokinetic profile of SB-743921 in patients with advanced cancer.

As you may recall, SB-743921 is the second drug candidate that has emerged from our collaboration with GSK. Like SB-715992, SB-743921 is a cancer drug candidate and is a highly specific inhibitor of the mitotic kinasin KSP. It was first identified by Cytokinetics scientists and has demonstrated attractive anti-cancer potential in pre-clinical models.

During the quarter on the research front, Cytokinetics and GSK also together advanced forward in the collaborate research another mitotic kinesin drug target which is different than KSP, and thus triggered a predefined milestone payment of $250,000.

Beyond our programs in oncology and separate from GSK, as many of you are aware we're also pursuing the development of therapies to treat cardiovascular disorders and specifically acute congestive heart failure. This program, again based on Cytokinetics focus on the cytoskeleton and on our cell-based drug discovery abilities, is based on small molecule activators in the molecular motor cardiac myosin. This is the motor that powers contraction of your heart. And based on our animal -- our data in animal models, we believe we have identified several compounds that increase cardiac contractility in these animal models without the side effects of existing heart failure drugs.

In the third quarter, our scientists continued to optimize and characterize several novel cardiac myosin activators, including our initial candidate CK 296 (ph). We're advancing these compounds toward preclinical development. We plan to put one of the compounds from this program into human clinical trials in 2005.

Importantly, we've identified candidates with oral bioavailability that could potentially be used in the treatment of chronic heart failure. In addition, the Company is discontinuing negotiations with its potential partner for this program at the present time in favor of our current plan to proceed both the acute and chronic congestive heart failure indications. Now I would like to turn the call over to Sharon to present our third quarter financial results.

Thank you James. And thank you for the kind words earlier. I am truly happy to be part of the team here at Cytokinetics and look for the working with the exceptional group of individuals that are and have been so important to the success of the Company.

With that, let me begin by saying that I'm pleased to report the financial results for the third quarter of 2004. Our net loss for the quarter was $10.2 million or 36 cents per share. This compared to a net loss for the same period in 2003 of $8.7 million or $4.51 per share.

Revenue from research and development collaborations for the third quarter of 2004 were $2.4 million compared to revenue in the third quarter of 2003 of $2.6 million. Revenues included payments for research collaborations with GSK and AstraZeneca.

The decline in collaborative research revenues for the third quarter as compared to the third quarter of 2003 was a result of the net effect of a contractual decrease in funding by GSK, offset in part by an increase in AstraZeneca funding.

Total research and development expenses for the third quarter were $9.5 million compared to $9 million for the same period in 2003. Expenses related to the development of the Company's drug candidates for the treatment of acute congestive heart failure and research for the treatment of fungal infections were the primary reasons for the increased R&D spending in 2004.

Total general and administrative expenses of $3.6 million for the 3 months ended November 30 -- sorry, September 30, 2004 increased $1.4 million from $2.2 million in the third quarter of 2003. The increase over the prior year was largely due to additional outside services of $800,000 associated with the cost of being a public Company. Our cash, cash equivalents, restricted cash, and marketable securities as of September 30, 2004 totaled $127.1 million.

That concludes the financial portion of our call. And I would like to turn the call back over to James and Andy for a discussion of upcoming events and milestones.

Thank you Sharon. I'm going to touch briefly on our upcoming events and then hand the call over to Andy to discuss some of the studies that will be initiated the coming months.

The Company will be presenting data at both the American Heart Association meeting in New Orleans on November 8 of this year and at the American Society of Cell Biology meeting in Washington D.C. at the beginning of December. We will provide you with more details on these meetings in coming weeks.

Now as I mentioned earlier in the call, it gives us great pleasure to introduce Dr. Andrew Wolff as our new Senior Vice President of Clinical Research and Development and Chief Medical Officer. We're looking forward to capitalizing on Andy's vast experience as our products advance in clinical development. We have many Phase II and Phase I trials to describe. And I would like to hand over to Andy to do that.

Thank you James. It really is a pleasure to join Cytokinetics at such an exciting time in the Company's development. As you are all aware, Cytokinetics and GSK have a development program underway in the treatment of cancer with our drug candidate, SB-715992. This program will get even broader in the coming months, as I will detail.

GSK is planning on initiating an international 35-patient Phase II open-label monotherapy study evaluating the efficacy of SB-715992 in ovarian cancer patients previously treated with platinum and taxane-based therapies. The primary endpoint of this study is response rate as determined by re-cyst and CA 125 levels. Based on the current timelines, we anticipate data from this study in the second half of 2005.

In addition, the National Cancer Institute in collaboration with GSK will be initiating several Phase II and Phase I studies in the coming months which will further evaluate the efficacy of SB-715992. The first of these NCI-sponsored studies is a Phase II trial of 75 patients to study SB-715992 in the setting of second line colorectal cancer.

This is an open-label monotherapy study which will have 2 arms to examine different treatment schedules -- one arm with SB-715992 given at 7 milligrams per meter squared every week times 3 on a 28 day schedule, and the second arm with SB-715992 given at the more typically studied 18 milligram per meter squared every 3 weeks. The primary endpoint will be the objective response, again as determined using re-cyst criteria.

NCI is also planning on initiating a Phase II trial of 33 patients to study SB-715992 in the setting of second line head and neck cancer. This open-label monotherapy study will have SB-715992 given at 18 milligrams per meter squared every 3 weeks. And again, the primary endpoint will be objective response using re-cyst criteria.

NCI is further planning on initiating a Phase II trial of 29 patients to study 992 in the setting of second line renal cell cancer. This open-label monotherapy study will have 992 given at 18 milligrams per meter squared every 3 weeks. Again, the primary endpoint will be objective response using re-cyst criteria.

NCI is further planning on initiating a Phase II trial of 30 patients to study 992 in the setting of hepatotoxic cellular cancer untreated with any systemic chemotherapy. This open-label monotherapy study will have 992 given at 18 milligrams per meter squared every 3 weeks. And again in the primary endpoint will be objective response using re-cyst criteria.

NCI is further planning on initiating another Phase II trial in 40 patients to study 992 in second line hormone refractory prostate cancer in patients that have failed a single taxane-containing regimen. This open-label monotherapy study will evaluate 992, again given at 18 milligrams per meter squared every 3 weeks, and again the primary -- well not again -- the primary endpoint will in this study be the objective response as determined by PSA.

NCI, the National Cancer Institute is additionally planning on initiating a Phase II trial of 25 patients to study 992 in melanoma patients that may have received regimen immunotherapy but no chemotherapy. This open-label monotherapy study will evaluate 992 again at 18 milligrams per meter squared every 3 weeks. And again, the primary endpoint will be the objective response is determined using re-cyst criteria.

In addition to these Phase II studies, NCI is planning on initiating 2 Phase I studies to examine the safety, pharmacokinetics and pharmacodynamics on a different schedule of 992 administered daily times 3, every 3 weeks. One of these studies is in the setting of acute leukemia refractory to standard induction therapy. And the other is in the setting of histologically-proven solid tumors that have failed all standard therapies.

In addition to these studies, the GSK is planning on initiating additional Phase Ib studies which will evaluate 992 in combination with existing cancer therapies such as capecitabine and carboplatin in the coming months.

James, let me turn the call back over to you.

Thank you Andy. Given that this is the last call of the year, I would like to summarize some of our milestones for 2005 as mentioned earlier in the call. With respect to milestones surrounding the development of SB-715992, we expect data from the Phase II non small cell lung cancer trials platinum sensitive arm to be available in 2005 with data from the platinum refractory arm later in 2005.

Interim data from a Phase II advanced breast cancer study is expected in the second half of 2005 with the final data available during the first half of 2006. As I mentioned earlier, we anticipate data from the soon-to-be initiated ovarian study to be available in the second half of 2005. And as more information becomes available, we will update you on the progress of the multiple NCI studies that Andy mentioned earlier.

The completion of enrollment in the Phase I study that evaluates SB-743921 in advanced cancer patients is anticipated in the in the first half of 2005, with the data available shortly thereafter. And lastly, our cardiac myosin activator program we are -- in our cardiac myosin activator program, we're looking for to the initiation of clinical trials in 2005.

In closing, Cytokinetics continues to augment and advance its promising research and development pipeline with multiple programs across a variety of therapeutic areas. We've been discussing the broad clinical development program for our lead cancer drug candidate SB-715992, this program now of 9 Phase II trials and 5 Phase I and Ib trials.

We've been discussing our second cancer drug SB-743921, now in Phase I, we've also been discussing our lead cardiovascular program, which we plan to initiate the Phase I trials in this program in acute heart failure next year. As you can tell, we continue to leverage our unique and highly productive cell biology driven engine for the discovery of novel therapeutics against validated cytoskeletal targets and biologies.

We look forward to updating you, both on our research and development programs as they progress. And this now concludes the formal portion of our call. I would like to turn it back over to the operator.

(Operator Instructions).

Cool.

Jean Mack (ph), Lazard Freres.

I was wondering if you could talk a little bit about -- a little more detail about the Phase II non small cell lung trial. I previously thought that was just in patients where they either failed or relapsed. It looks like there's a platinum sensitive arm to that. Could you just give a little detail about maybe the stratification of the trial, and then maybe why it seems that data expectations from the trial is pushed back a little bit? It looks like it's going to beginning of '05 instead of the end of '04. And maybe just a little bit more detail there.

And then, is there any detail you can give on your strategy -- approach to the congestive heart failure market? It appears as though you are signaling that you're going to go it alone there for the time being. Maybe you could just shore that up for us. And then finally, the fungal program -- are you guys going to have anything to announce there soon?

Hi Jean, it’s James. Thanks very much your questions. Let me -- I will be the moderator here and ask the team to accommodate them. First, with regard to our non small cell lung trial, you're absolutely right. This trial, which is an open-label Phase II trial looking for activity using response rate in re-cyst criteria, has two arms to it -- one arm in patients that have been given a single platinum-containing regimen and progress through that regimen, and other arm in patients that were sensitive to platinum-containing regimen but then relapsed shortly thereafter. For detail on this and also in terms of the timing, let me hand it over to you Andy.

I think James has adequately described the two strata. I don't think I could add anything to that. That's the distinction between sensitive and refractory -- having never responded at all and having responded once and relapsed. And then the delay has just been caused, as we understand it from our partners at GSK who are actually running the study, by delays that are typical in the initiation of clinical trials.

They have to do with longer than anticipated timelines and hammering out legal agreements between the company and the site, delays getting protocols to and through IRBs and so forth. And to some extent, enrollment at some sites has been slower than anticipated. Although, now, with most of the sites that were planned up and running, we feel that we could be a little bit more confident as we recast the timelines forward.

Thank you Andy. Jean, the second part of your three-part question really had to do with our strategy in the area of heart failure. And let me hand it over to Robert.

So from the standpoint of our business development and commercial development strategies in heart failure, we are interested both in the acute care indications and the chronic care indications that may arise from this continued research and development. And as you know, we intend to push forward on both fronts, whether or not that is done in collaboration with another company.

I think it's also fair to say that it's at least conceivable that the development program for chronic congestive heart failure is one that could be operationalized by Cytokinetics. We don't know what it will take to achieve an indication in chronic congestive heart failure really until we discuss it with FDA. But it's at least possible that a morbidity and mortality study would not be required. And until we know that one is or is not, we feel that it's important to preserve all our options for developing that indication.

Finally, Jean, with regard to your question on the fungal program, the fungal program is a program earlier on in discovery at Cytokinetics where we're continuing to leverage our expertise now focused on the molecular motors and on the cytoskeletal proteins within the fungal kingdom rather than the human kingdom.

This project is still in discovery research, and we're not giving guidance relay on when we can expect further data from that. So I think I will leave it at that point. It continues to go forward, along with a number of other earlier stage discovery project that the Company -- that we mentioned and have mentioned probably over the past 3 quarters. So thank you for your question.

(Operator Instructions). I'm showing no questions that this time. I would like to turn the call back over to the presenters for closing remarks. I do have a follow question from Jean of Lazard. Would you like to take it this time?

Go ahead Jean.

(multiple speakers) I was wondering if there was any detail you can give on the second target that seems to be identified.

I thank you for that question. What Jean is referring to is the second -- I assume you meaning the second cancer target within our alliance with GSK?

That's right.

As you know, we are -- that alliance is built around a series of 14 targets, that representing the full complement of human mitotic kinesins that are required to split the DNA during mitosis. And Cytokinetics and GSK continued to prosecute along all 14 of them. And they're all moving forward -- as you know, KSP now in the clinic.

What we were very pleased to announce both in financial and scientific viewpoints is that the second target has now moved into a formal program status, triggering the milestone payment. We're not disclosing the actual name of the target, Jean. But what I can tell you is that the target is involved like KSP essentially in mitosis. And it's involved in a different place in the mitotic pathway.

And so we believe this adds diversity to our program by being able to inhibit mitosis and produce an anti-mitotic effect by inhibiting a totally different protein that acts in a different part in the pathway. And the way you can think about it is these proteins have to line up one after the other in order to prosecute cell division. And now we're starting to go down and identify specific small molecule inhibitors of each one of them.

There are no questions at this time. I will turn the call back over to you for closing remarks.

Thank you operator. I would like to thank each of you for your participation in today's third quarter 2004 conference call. Thank you for your continued interest in Cytokinetics. With that, operator, let's end the call.

Ladies and gentlemen thank you for calling in today. You may now disconnect.