Cytokinetics Inc (CYTK) 2006 Q3 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics third-quarter 2006 conference call. At this time I would like to inform you that this call is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open up the call for question and answers after the presentation. I will now turn the conference over to Sharon Surrey-Barbari, Cytokinetics' Senior Vice President of Finance and CFO. Please go ahead.

Good afternoon and thank you for joining the Cytokinetics senior management team on this conference call to discuss our third-quarter 2006 results. Also present during this call are Dr. James Sabry, Chief Executive Officer; Robert Blum, President; and Dr. Andrew Wolf, Senior Vice President of Clinical Research and Development and Chief Medical Officer.

Following the forward-looking statements, James will provide an overview of the past quarter and then Andy will provide some highlights and details on the progress of the Company's clinical development program. I will then review the Company's financial performance for the third quarter and Robert will then conclude our call with our projected company milestones for 2006 and some initial milestones for 2007. We will then open up the call for a brief 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 the purposes of the Private Securities Litigation Reform Act of 1995. Examples of such statements include but are not limited to statements relating to the expected initiation, timing, scope, enrollment or results of clinical trials in our or our partners' clinical development and research program; and expected announcements of results from such programs including our research and development milestones for 2006 or 2007; the timing of announcements and presentations of clinical trial data and the benefits of data obtained from completed clinical trials; the expected benefits of our drug candidates; and our potential development and commercialization goals with respect to CK-1827452.

These statements involve a number of risks and uncertainties that could cause actual results in the timing of events to differ materially from those anticipated by these forward-looking statements. These risks and uncertainties include a variety of factors some of which are beyond our control. These forward-looking statements speak as of today and you should not rely on them as representing our views in the future and we undertake no obligation to update these statements after this call.

Please refer to our SEC filings including our report on Form 10-Q from the quarter ended September 30, 2006 as well as our earnings release posted on our website and filed with the SEC on Form 8-K for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the investor relations section of our website.

Now I'll turn the call over to James.

Thank you, Sharon, and thank you all for joining us today on our 2006 third-quarter conference call. This has been an important few months for Cytokinetics as we continue to execute on our strategic goals of discovering and developing novel small molecule drug candidates focused on modulating cytoskeletal protein that we hope will one day allow for the more effective treatment of certain cardiovascular diseases and cancer.

The presentation of our Phase I first in human clinical trial for CK-452, our novel cardiac myosin activator at the recent and late-breaking clinical trial session at the Heart Failure Society of America meeting in September was very exciting for the Company. Andy will provide more details on these developments in a few minutes.

We're pleased with the progress we've made in the CK-452 development program in the past several months with the unveiling of our first clinical data from this program which nicely supports our therapeutic hypothesis and the initiation of our Phase I oral bioavailability study for CK-452. We believe that if approved CK-452 will provide a meaningful new treatment option for patients with heart failure who are currently underserved by available therapies.

On the oncology front, Cytokinetics in collaboration with Glaxo SmithKline, continues to develop a menu of Mitotic Kinesin inhibitors as next generation anti-mitotic anticancer drugs. Two drug candidates in clinical trials, ispinesib and SB-921, have already shown activity by decreasing tumor mass by independent radiologic review using the RECIST criteria and a potential drug candidate, GSK-295, is in the later stages of preclinical development and is expected to go into clinical trials next year in 2007.

As further data from our ongoing clinical trials becomes available, we continue to learn about the potential spectrum of activity of ispinesib when used as monotherapy as well as in combination with other chemotherapeutic agents and across different dosing schedules. Based on the data accumulated thus far, ispinesib's strongest signal of clinical activity has been in breast cancer and we look forward to further data in this disease population as results from the second stage of the monotherapy Phase II trial in breast cancer become available later this year.

In addition we anticipate completing our evaluation of ispinesib in combination with capecitabine, or Zeloda, in order to inform a future development path for this drug candidate. In addition, we've observed clinical activity as reflected by disease stabilization in non small cell lung cancer. These data along with data that are anticipated later this year from other Phase II and Phase I clinical trials will help further inform our development for ispinesib.

And lastly, SB-921 continues to be developed by Cytokinetics in the hematologic cancer area.

And now I'd like to turn the call over to Andy to review these highlights in more detail and delve more deeply into the progress in our clinical development activities.

Thank you, James. As you have already heard over the last quarter we made significant progress in our cardiovascular program in addition to the further advancement of our ongoing clinical trials for ispinesib and SB-921. Let me offer you some further insight and details on these programs.

First, I'd like to talk about our cardiovascular program. In June, we released topline data from our Phase I clinical trial evaluating CK-452, our novel cardiac myosin activator in healthy volunteers. In September, [Dr. John R. Teerlink], associate professor of medicine at the University of California San Francisco, presented the results of this trial at the annual meeting of the Heart Failure Society of America or HFSA.

In this Phase I clinical trial, the maximum tolerated dose or MTD in healthy volunteers was determined to be 0.5 milligrams per kilogram per hour for the six-hour infusion. This dose of CK-452 produced statistically significant mean increases in left ventricular ejection fraction and fractional shortening of 6.8 and 9.2 absolute percentage points respectively as compared to placebo. Importantly, these increases in indices of left ventricular function were associated with the mean prolongation of systolic ejection time of 84 milliseconds which was also highly statistically significant.

These mean changes in ejection fraction, fractional shortening and ejection time were dosed proportional across the range of doses evaluated in this clinical trial which were also characterized by linear dose proportional pharmacokinetics. At the MTD, CK-452 was well tolerated when compared to placebo. The adverse effects at dose levels exceeding the MTD were associated with longer prolongation of systolic ejection time and larger increases in ejection fraction and fractional shortening than those that were observed with doses at or below the MTD.

The corresponding adverse effect at the higher doses in humans appear similar to the adverse findings observed in the preclinical safety study which occurred at similar plasma concentrations. These effects are believed to be related to an access of the intended pharmacologic affect, resulting in excessive prolongation of the systolic ejection time and resolved promptly with discontinuation of the infusions of CK-452.

These data are encouraging and consistent with results from preclinical models which evaluated CK-452 in both normal dogs and dogs with heart failure. With these data in hand, the next step in our clinical program is to initiate our Phase II clinical trials program. The first Phase II clinical trial we plan to conduct is to evaluate CK-452 in stable heart failure patients. This clinical trial is intended to provide critical data on the pharmacokinetics and pharmacodynamics of CK-452 in stable heart failure patients and is anticipated to get underway in the fourth quarter of this year.

Our Phase II program is planned to include several clinical trials starting with the stable heart failure clinical trial that I just mentioned and is designed to allow us to enroll the broadest and most representative population of heart failure patients in our eventual layer Phase IIb and Phase III studies. These earlier Phase IIa studies will evaluate patient populations with conditions that commonly complicate the treatment of heart failure such as myocardial ischemia, tachycardias and renal impairment before moving on to inpatients with acutely decompensated heart failure into outpatients with chronic heart failure at increased risk of death or hospitalization for heart failure.

Our goal is to develop CK-452 so that it can be used across the continuum of care in heart failure both in the in hospital setting as an IV formulation for acutely decompensated heart failure transitioning to the oral formulation before going home and in the outpatient setting as an oral formulation for chronic heart failure.

Also at HFSA, Cytokinetics presented three preclinical posters from our cardiovascular program. The first poster entitled in vitro and in vivo Characterization of CK-452, a Selective Cardiac Myosin Activator, demonstrated that CK-452 consistent with its mechanism of action, increases contractility in myocytes without increasing intracellular calcium and significantly increases cardiac fractional shortening in normal rats, normal dogs and rats with heart failure.

The second poster entitled activating cardiac myosin, a novel inotropic mechanism to improve cardiac function in conscious dogs with congestive heart failure, provided supportive data on the preclinical profile of CK-452. This poster demonstrated that CK-452 increased stroke volume and left ventricular fractional shortening in normal dogs and increased cardiac output, stroke volume and left ventricular fractional shortening in dogs with heart failure.

In association with the improvement of left ventricular systolic performance, left ventricular filling pressures, heart rate and total peripheral resistance decreased in the dogs with heart failure. Expressed as a percentage change from base line, the effects of CK-452 in dogs with heart failure were generally greater than those observed in normal dogs.

The third poster entitled, cardiac myosin activator, CK-1316719, increases myofibril ATPase activity and myocyte contractility in a rat model of heart failure provided further data validating the mechanism of action of another Cytokinetics cardiac myosin activator.

Now I'd like to turn to our clinical oncology program. As most of you are already aware, ispinesib, our most advanced drug candidate, is being evaluated in a broad clinical trials program conducted by Glaxo SmithKline or GSK, and the National Cancer Institute or NCI. This program currently includes five ongoing Phase II clinical trials all of which have completed enrollment and one planned Phase II clinical trial and four ongoing Phase I or Ib clinical trial, two of which have completed enrollment and two of which are still enrolling patients. And one planned Phase I or Ib clinical trial.

Recently the NCI in collaboration with GSK presented data from the Phase II clinical trial of ispinesib in patients with recurrent and/or metastatic head and neck squamous cell carcinoma or simply head and neck cancer at the European Society of Medical Oncology in Istanbul Turkey. This clinical trial evaluated the safety and efficacy of ispinesib administered at 18 milligrams per meter squared as a one-hour intravenous infusion once every 21 days in patients with head and neck cancer who had received no more than one prior chemotherapy regimen.

This two-stage trial required a minimum of one confirmed partial or complete response out of 19 evaluable patients in stage 1 in order to proceed to stage 2. The clinical trial's primary endpoint was response rate as determined using the RECIST criteria in solid tumors. At the interim analysis after stage 1 of this clinical trial, ispinesib in patients of head and neck cancer at this dosing level did not satisfy the criteria for advancement to stage 2. The best overall response was the destabilization which was observed in five of the 19 patients evaluable for efficacy at cycle 2.

Overall, median time to disease progression was 5.9 weeks. The safety and pharmacokinetics of ispinesib in this clinical trial were evaluated in 20 of the patients enrolled in the trial. The most frequently observed adverse events of any grade that were viewed by the investigator to be possibly related to ispinesib were leucopenia and neutropenia. As occurs often in studies in patients with advanced malignancies, two patients died on study.

One death was in a patient with a non-neutropenic infection listed as grade 3, and that death was attributed to progressive disease. The other death in a patient with four days of grade 3 or 4 neutropenia was attributed to pneumonia.

In our current clinical trials program, GSK continues to treat a patient in a Phase II open label clinical trial evaluating the efficacy of ispinesib as monotherapy in the second line treatment of ovarian cancer patients previously treated with a platinum- and taxane-based regimen. This clinical trial is also evaluating ispinesib administered as a one-hour infusion at 18 milligrams per meter squared every three weeks. The primary end point of this clinical trial is response rate as determined by the RECIST criteria and the CA-125 levels.

GSK has recently concluded patient enrollment after enrolling a total of 50 patients in a two-stage Phase II clinical trial evaluating ispinesib as a treatment for patients with locally advanced or metastatic breast cancer. In this open label clinical trial, ispinesib is infused at 18 milligrams per meter squared every 21 days. The primary end point is objective response as determined using the RECIST criteria.

As you may recall, in stage 1 of this trial the best overall responses observed were three partial responses out of 33 evaluable patients. Those three responders had maximum decreases in tumor size ranging from 46% to 68% with the duration of response ranging from 7.1 to 13.4 weeks. The most common adverse event was grade 4 neutropenia.

GSK completed enrollment and continues to treat patients in a Phase 1b clinical trial evaluating the safety, tolerability and pharmacokinetics of ispinesib in combination with carboplatin. Data from this clinical trial are anticipated in the first half of 2007.

In the last quarter, GSK concluded patient enrollment but continues to treat patients in a Phase 1b clinical trial evaluating the safety, tolerability and pharmacokinetics with ispinesib in combination with capecitabine and data from this clinical trial are anticipated to be presented at the EORTC-NCI-AACR meeting in November of this year in Prague. The NCI continued treating patients in two Phase I clinical trials, one designed to evaluate the safety, tolerability and pharmacokinetics of ispinesib as monotherapy in patients with leukemia, chronic myelogenous leukemia or advanced myelodysplastic syndrome, the other a trial on patients with advanced solid tumors.

Furthermore, the NCI has concluded patient enrollment in three of its Phase II clinical trials evaluating ispinesib as monotherapy in the treatment of hormone refractory prostate cancer, hepatocellular cancer and melanoma. All patients are now off study drug in the two clinical trials that are evaluating ispinesib in hormone refractory prostate cancer and melanoma.

While enrollment is complete, patients remain on study drug for the clinical trial evaluating ispinesib in patients with hepatocellular cancer. All of these clinical trials were or are evaluating ispinesib administered as a one-hour infusion at 18 milligrams per meter squared every three weeks. The primary end point for all these clinical trials' objective response is determined using the RECIST criteria except for the prostate cancer trial in which the primary end point is objective response using the prostate specific antigen or PSA.

We are also continuing to enroll patients in the Phase I/II clinical trial evaluating SB-921, our second KSP inhibitor in patients with non-Hodgkin's lymphoma. This Phase I/II clinical trial is an open label nonrandomized study to investigate the safety, tolerability, pharmacokinetic and pharmacodynamic profile of SB-921 administered on a one-hour infusion on days one and 15 of a 28-day schedule in patients with non-Hodgkin's lymphoma.

The objective of the Phase I portion of this clinical trial is to identify the MTD of 921 on this schedule in patients with either Hodgkin's or non-Hodgkin's lymphoma initially without prophylactic administration of granulocyte colony stimulating factor or GCSF. Notably at the dose limiting toxicity determining this first MTD of neutropenia, a second MTD will be determined with SB-921 given with prophylactic administration of GCSF.

One of these two MTDs that is with or without the prophylactic administration of GCSF, is then expected to be chosen for use in the Phase II portion of the clinical trial which is designed to examine the efficacy and safety of that regimen in the treatment of both indolent and aggressive subtypes of NHL.

With that, let me turn the call back over to Sharon for the financial portion of our call.

Thank you, Andy. Today I would like to review with you the financial results for the third quarter and nine months ended September 30, 2006. Our net loss for the third quarter was $14.9 million or $0.41 per share. This compares to a net loss for the same period in 2005 of $10.1 million or $0.35 per share. Our net loss for the nine months ended September 30, 2006 was $41.2 million or $1.15 per share and compares to a net loss for the same period in 2005 of $31.2 million or $1.09 per share.

Revenues from research and development collaborations for the third quarter of 2006 were $0.1 million compared to $1.9 million for the same period in 2005. Revenues from research and development collaborations for the nine months ended September 30, 2006 were $3 million compared to revenues of $6.8 million for the same period in 2005. Revenues for both the third quarter and nine months ended September 30, 2006 and 2005 were largely derived from our research collaboration with GSK.

The decline in collaborative research revenues for both the third quarter and nine months ended September 30, as compared to the same period in 2005 was the result of a reduction in license fee full-time equivalent and patent reimbursement revenues by GSK and a reduction in collaboration revenues as a result of the expiration of the research term under our collaboration agreement with AstraZeneca in December of 2005.

Total research and development expenses for the third quarter of 2006 were $12.5 million compared to $9.3 million for the same period in 2005. Total R&D expenses for the nine months ended September 30, 2006 were $36.2 million compared to $29.8 million for the same period in 2005. The higher expenditures in both the third quarter and the nine months ended September 30, 2006 were primarily due to increased spending associated with the advancement of our cardiovascular and early research programs slightly offset by decreased spending on our oncology program and proprietary technology.

Total general and administrative expenses were $3.6 million for the third quarter of 2006 compared to $3.3 million for the same period in 2005. Total G&A expenses for the nine months ended September 30, 2006 were $11.1 million compared to $9.9 million for the same period in 2005. The increase in expense relative to both the third quarter and nine months ended September 30, 2005 was primarily due to employee stock-based compensation charges related to FAS 123(R) recorded in 2006 which were partially offset by lower legal fees.

As of September 30, 2006 our cash, cash equivalents, restricted cash and marketable securities totaled $93.9 million.

That concludes the financial portion of today's call. With that, I'd now turn the call over to Robert who will provide guidance on our expected milestones for the fourth quarter of 2006 and some initial milestones for 2007.

Thank you, Sharon. In closing, I'd like to review and highlight the company's expect research and development milestones for 2006 and the first half of 2007.

First of all in our cardiovascular program, we expect data from our ongoing Phase I clinical trial evaluating the oral bioavailability of CK-452 to be announced by the end of 2006. Also during the fourth quarter of 2006, we anticipate the initiation of our Phase II clinical trials program with the first clinical trial to be evaluating CK-452 as an intravenous formulation in stable heart failure patients.

In our oncology program with respect to anticipated milestones and the development of ispinesib, we expect data from GSK's ongoing Phase II ovarian cancer clinical trial in the fourth quarter of 2006. We have been informed by GSK that this trial has completed patient enrollment and one patient remains on study drug.

We also anticipate data from stage 2 of GSK's Phase II clinical trial evaluating ispinesib in the treatment of patients with locally advanced or metastatic breast cancer also by the end of 2006.

We also expect additional data from GSK's Phase 1b clinical trial evaluating ispinesib in combination with capecitabine. These data are expected to be presented at the triple meeting EORTC-NCI-AACR in November in Prague. Additional data from GSK's Phase 1b clinical trial evaluating ispinesib in combination with carboplatin are anticipated in the first half of 2007.

With respect to the three other Phase II NCI trials, we expect data from each of the Phase II clinical trials evaluating ispinesib in patients with hormone refractory prostate cancer and melanoma in the fourth quarter of 2006. We cannot give guidance on the availability of data from the study in patients with hepatocellular cancer until all of the patients have come off treatment with ispinesib.

Furthermore we have been informed that the NCI currently plans to initiate another Phase II clinical trial evaluating ispinesib in patients with renal cell cancer by the end of 2006. And similarly, a Phase I clinical trial evaluating ispinesib in pediatric patients with relapsed or refractory solid tumors also by the end of 2006.

Ispinesib has yielded substantial data thus far in 2006 and we expect that trend to continue through the end of this year.

In addition to ispinesib, we're also enthusiastic about reviewing data arising from the further clinical evaluation of SB-921. We expect certain initial data from the Phase I/II clinical trial of SB-921 in the treatment of patients with NHL in 2007.

We're also looking forward to GSK's regulatory filing for GSK-295, a CENP-E inhibitor in early 2007 in order to allow for the initiation of a first in humans clinical trial of this novel anti-mitotic in 2007.

So in summary, the third quarter of 2006 was indeed eventful as we presented meaningful clinical trials data and we continue to make progress in the development of both our oncology and cardiovascular programs. Our clinical programs to date have proven to be both informative and instructive in the further development of each of our development candidates, ispinesib, SB-921 and CK-452 and we look forward to reviewing with you even more data over the next few months.

And with that, we conclude the formal portion of our call today and I'd like to open up the call, operator, to questions.

(OPERATOR INSTRUCTIONS) Mark Monane with Needham.

Thank you. Good afternoon. Thanks for the thorough review. With every good review of course there's going to be additional questions and I'd like to begin there. In the stable heart failure program Andy described, I think you mentioned IV drug use -- IV administration there. Can you outline, will that be done as an inpatient or will that be done in the doctor's office? How do you see that Phase II trial commencing?

Well, it's a pharmacokinetic and pharmacodynamic study as we've said and then typically and historically we've given additional details about the design and conduct of the study when we enroll the first patient which is what we will do in this case.

Fair enough. In terms of ispinesib, without -- I know there's going to be data at EORTC -- I don't want to preempt that but I do want to ask is there in an A priority level that the company feels is important or that GSK feels is important for further evaluation of this drug in this setting? It seems pretty exciting to date. Can you describe any further thoughts on this?

Mark, it's James. There's no specific A priority level. Actually Cytokinetics and GSK are in constant communication around the totality of the data that we have. And as I'm sure you know and I think all of us know, the clinical trials program for ispinesib has been an appropriately broad one. We've seen activity in breast cancer and in lung cancer to date. We have ongoing trials in lung cancer. We have ongoing trials in combination with Zeloda that would be also applicable to our breast cancer interest.

So I think there is no specific number that we are looking for, that GSK is looking for but rather we will take into consideration the totality of the data in planning our later development strategy with them.

That's fair. That was helpful. I mean that's fair and we will look forward to the data. One question for Sharon, please. Can you help us a little bit with the math because -- able to get to 93 to the 93.9 million I'm looking at [48214] for cash and [4478] for short-term investment. How do I get to --?

You also have restricted cash of $5.2 million as well.

Okay, right. Okay, got it. Thanks very much for the added information.

Joel Sendek with Lazard Capital Management.

Thanks. Lazard Capital Markets. My question is given 452's promise and your kind of that need of every small biotech to watch their cash balance, I'm wondering when you might plan to narrow the focus on ispinesib? Maybe one or two indications because it's great that you've gotten all this data and everything but it seems like now might be the time or soon might be the time to kind of narrow it down with a lot of data coming into the end of the year. Can you maybe talk to that? Thanks.

I'd be happy to talk to that. With the situation of a novel anti-mitotic drug like ispinesib, one of the goals of our clinical trials program as we strategize with Glaxo SmithKline with regard to that as it was going into man was to look at both previously anti-mitotic sensitive as well as novel tumors that had not historically been anti-mitotic sensitive. I think the way it has been done with GSK paying the development cost for ispinesib as well as with the NCI being participatory there has been from the economic viewpoint a very fruitful one.

I think what you're going to see as we complete the Phase II clinical trials program through 2007, that the biology of the activity of the drug will become apparent and at that point it would be appropriate to think clearly about how to move towards registration. But I think at this point we continue as does GSK and the NCI to be interested in the drug broadly and there still are trials that are going to be initiated by the NCI, as Andy mentioned, that will continue to evaluate ispinesib broadly as we go forward.

Joe, its Robert. Just to maybe piggyback on that. As you I think correctly point out, a company such as ours really does have to think about how it spends its money until it has an appropriate proof of concept clinical activity signal. And that is exactly why we did the deal with GSK in June of '01 that we did. And the costs associated with this Phase II clinical trials program in Phase I and Phase 1b with the exception of the NHL study with SB-921 are all being borne by our partner either GSK or in the case of what they are doing collaboration with NCI, the NCI directly.

So we are very cognizant of the issue we mentioned. And as we have structured the option in our alliance with GSK, we can use the signals of activity from the POC studies in Phase II to inform where we might choose to invest our later stage risk capital.

If I could follow up I guess two follow-ups to that. As you budget for '07, is there going to be a time point at which you say okay we're going to go with this indication. This looks best, you know breast obviously looks pretty good maybe you find one or two others.

Then another question I had also on the revenue side as it came down in the third quarter from earlier in the year, what should be the run rate that we can model out for top line for the next couple of quarters?

Sharon, why don't you start with the first one and I can --

The run rate at this time, Joe, we are not going to be revising our guidance for 2004 -- I'm sorry 2006. We will provide guidance for the going forward burn in 2007 on our fourth-quarter call in January. We're not prepared at this time to provide that kind of guidance.

And with regards to your first question, I think it really just springboards off Robert's comment about the option structure we have with GSK. So this is something that as we get to Phase II data back, Joel, we will be able to discuss internally as well as with GSK about the most appropriate development program for ispinesib in 921. And then to understand how we should then use the options that we have within our the context of our alliance in order to go forward in a way that is cognizant of our cash position but also obviously our aspirations to move cancer programs forward into late stage development.

Just to remind you about the deal we have with GSK, it's structured so as to based on these signals of activity observed in Phase II inform what may be GSK's decision to move forward going into Phase III. The entry into Phase III triggers our option which then allows us to decide how we want to invest alongside of GSK were they to go into Phase III based on a development program and plan that they are responsible for. So we'll have a keen sense as to where their head is at and that will allow us to make an educated decision about whether we want to invest alongside of that in Phase III.

Presumably that decision point will happen once you have the Phase II data maybe toward the end of this year maybe early next year?

You know, it's anybody's guess as to how much data they are going to in fact want to see in order to inform a decision. They could decide based on one clinical trial or all the clinical trials concluding and we're not going to comment on what may be their approach that way. But you could imagine that based on activity that has been observed or activity that will come from ongoing clinical trials, that that will inform how they might choose to proceed.

Thanks.

Charles Duncan.

Congratulations on a quarter of good progress. My questions were pretty much answered. But what I wanted to do is drill down, have you talk a little bit more about 452 in terms of clinical trial starts. And the data that you are really looking forward to over the course of the next 12 months to get a signal of moving forward with the program.

Let me ask Andy to talk to you, Charles, about our clinical trials program in 452 and what our broad based approaches are. As Andy mentioned earlier, the specifics of the trials will be communicated as the trial themselves begin. But, Andy, maybe you can talk just broadly about 452 and how you (multiple speakers) development.

Sure. And similarly we haven't said anything about the timing of any trials other than the first Phase II that we've already discussed here today beginning before the end of this year. What we are going to be doing after determining the pharmacokinetics and pharmacodynamics of the drug in heart failure and understanding what dose of 452 produces what plasma concentration which in turn produces what effect on ventricular function and the failing heart is to do a number of studies that will examine conditions that are common and commonly complicate the treatment of congestive heart failure.

So notably tachycardia, coronary artery disease and the potential for ischemia and renal dysfunction. You may have heard Barry Matthews speak at HFSA said that 80% of admissions to the hospital with heart failure have moderate or severe renal dysfunction. So we really need to understand how our drug interacts with each of those conditions because the goal in the end is in Phase III to enroll as I believe I did say earlier the broadest and most representative population of heart failure patients that we can find.

So to Phase IIa will be aimed toward that and the Phase IIb later on will be aimed at piloting the Phase III study and determining the right dose. And then Phase III will as I believe we have said at this point we're looking at a program that would examine the death and morbidity end point probably death and hospitalization.

I think it is pretty clear that you are planning on being rigorous, very rigorous and perhaps differentially so on this program compared to some biotechs. But one of the concerns might be of investors kind of the scope of the program in terms of cost and timelines. Can you give us some greater sense as to really as you look at the entire program for 452 based on some assumed success, how much cost -- what is the cost and kind of timelines that you can imagine?

Charles, we have not commented on the specific costs of the clinical trials program and the timelines and you will get more clarity on that as we get the study started.

As to the comprehensiveness of it, Cytokinetics in both oncology and in cardiovascular medicine is interested in doing in Phase II the right number of trials in order to maximize the probability of Phase III success, and I think we all experience as to what happens for the patients and for the companies when Phase III trials fail. So the program that Andy just outlined is one that we think is the appropriate program for 452. We're not planning on overstudying compounds in Phase II but we're also planning on doing those studies that we think will tee up the highest probability registration study to move the compound forward into the market as quickly and efficiently and with as high a probability as possible and that is really the way we think about this broadly.

Thanks. That is helpful, James. Can you also talk about backup compounds within this program but also moving beyond 452? In heart failure, where else can we see you focus going forward?

The company I think you are aware of this -- I think many of you are has had a history of building backup and follow-on compounds for each of its programs. We think that is good drug discovery and development hygiene and something we committed to as the company got started. So there are multiple active compounds for each of our programs not only our cardiovascular programs but also our oncology program.

We also have research programs that we don't talk about a whole lot on this call that are in discovery stage at this point and they are focused again in our two franchise areas of cardiovascular medicine and oncology and represent novel anti-mitotic therapies in the area of cancer as well as new approaches to hypertension, bronchoconstrictive disease such as asthma, frailty, etc., on the cardiovascular end.

And we're excited by the pipeline of products we're bringing in through discovery. Cytokinetics as a company has a history now of bringing now four novel chemical entities with novel targets into the development stage, three of them now in the clinic as you know. And all three of those that are in the clinic have shown activity in the clinic. So we are very excited about our history to date and believe that our research group can continue to find novel chemical entities against novel drug candidates with strong therapeutic hypothesis that really eventually will benefit the patient.

Do you plan to file any new INDs next year outside of 452?

We can comment on the fact that Glaxo SmithKline is planning on making a regulatory filing for GSK-295. That is the first CENP-E inhibitor that we're aware of that will be entering clinical trials begin in '07. As far as what may come from our research programs, again, James mentioned work we're doing in other unpartnered areas of oncology and contractility in particular other anti-mitotics and other programs relating to smooth muscle contractility and skeletal muscle contractility. We haven't given specific guidance about when we would be expected to file a regulatory filing but you can rest assured that we are in fact advancing those programs towards development and we may have more to say about those in 2007.

Thanks, Robert.

Greg Wade with Pacific Growth.

Thanks for taking my questions. Robert, just with respect to when you anticipate you might be in a position to have proof of concept and potentially anteing up for a bigger participation in the economics. You would expect that that starts sometime around the end of this year and could conclude towards the end of next year as more data is available. Is that correct?

I'm assuming your question directly relates to ispinesib or 921. Keeping in mind we have a separate option for each of those products as they may read on proof of concept and move into Phase III. Whether that happens in fourth quarter '06 or whether that happens in '07 I can't say right now. It really is a function of a decision made by GSK to move into Phase III were they to do that. And at this time I can't give specific guidance on that.

Okay. And then with respect to 921's pharmacodynamic effects, you deployed somewhat of a dose dense approach to therapy. That's a question I guess more for James, but I understand the drug is orally bioavailable and that potentially there is the opportunity to explore an AUC effect. Can you just bring us up-to-date on any work that is ongoing with respect to that? And thanks for taking my questions today.

You are welcome, Greg. 921 as you know is an inhibitor of KSP and pharmacodyamically in animal models produces a malformed mitotic spindle and monopolar spindle in a way that is similar to ispinesib. Both ispinesib and 921 in preclinical models have shown oral bioavailability but we have not studied the oral bioavailability in humans. At the present time the schedules for both these drugs actually are well taken care of with intravenous use. And given that intravenous therapy is still very common in the treatment of cancer, we hold the oral bioavailability as an attractive part of the compound's pharmaceutic profile. But something at the present time we're not actually pursuing; we're pursuing more of the IV use of both of these drugs through Phase II.

Great, thanks very much.

George Zavoico with Cantor Fitzgerald.

Thank you everyone for taking the question. First I wanted to comment on the heart failure drug. I feel -- I agree that the buzz of the HFSA was quite palpitable and I'm very excited about the drug. I think that your approach to being very methodical about exploring the different heart failure patients is the way to go. To ensure I think the best possible success is something that you have to do rather than trying to get results quickly. Unfortunately investors might have to have some patience with that until that is. But as far as I can tell, the Phase I results were quite extraordinary. Pretty much the best as you could imagine.

Having said that, I wanted to ask Sharon I suppose about the financials. Regarding the guidance, I looked at my notes from the 2Q and for you to match those guidance you'd have to spend a lot more money in 4Q than you did in 3Q. So is this a purposeful sort of pull back on spending that you are doing or what can you say about that?

What I can say about it is we're not revising guidance at this time but the key events for us in the fourth quarter here are the startup of the Phase II program for 452 and until that program is up and running and we're ready, we're not in a position to change guidance at this time.

Okay. That's it. Thank you.

There are no further questions at this time.

I'd like to thank all the participants on our call today for your continued interest in Cytokinetics and we look forward to updating you on our progress across all of 2006 as well as the fourth quarter of 2006 in January of next year 2007. Operator, we can now conclude the call and wish you all a good day.

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