Cytokinetics Inc (CYTK) 2008 Q4 法說會逐字稿

Good afternoon, and welcome, ladies and gentlemen to the Cytokinetics fourth quarter and year end 2008 conference call. (Operator Instructions). At the request of the Company, we will open up the call for questions and answers after the presentation. I will now turn the call over to Sharon Barbari, Cytokinetics's 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 fourth quarter and year end 2008 results. Also present during this call are Robert Blum, our President and Chief Executive Officer, and Dr. Andrew Wolff, Senior Vice President of Clinical Research and Development and Chief Medical Officer. Following the forward-looking statements disclaimer, Robert will provide an overview of the past quarter. Andy will then provide highlights and details on the progress of the Company's clinical development programs, and I will provide some brief comments regarding our investment and research and development in 2008, and the companies financial guidance for 2009. Robert will then discuss recent additions to the Company's pipeline, and finish with a summary of our projected Company milestones for 2009. We'll then open the call for a brief question-and-answer session.

The following discussion, including our responses to questions contains certain statement that constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Examples of such statements include, but are not limited to, statements regarding our financial guidance for 2009, the expected focus, conduct, initiation, design, timing, scope, enrollment, progress and completion of our and our partner's research and development activities, the results from such activities, including the timing of availability and planned presentations of data from our development activities, and the possible significance of such results. The anticipated benefits of our muscle biology focus, our provision of data to Amgen to inform it's potential exercise of its option, the potential receipt of funds under strategic alliance with Amgen, potential partnering activities and the availability of funds under our committed equity financing facility, and the properties and potential benefits of our drug candidates and potential drug candidates.

These statements involve a number of risks and uncertainties that are affected by a variety of factors, and could cause actual results and the timing of events to differ materially from those anticipated by these statements. These forward-looking statements speak only as of today. You should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For more detailed description of the risk factors that may affect our results, please refer to our SEC filings, including the most recently quarterly report on Form 10-Q. Copies of the 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 Robert.

Thank you, Sharon. The past year was marked by significant progress we made in further defining the therapeutic potential of our lead drug candidate CR-1827452 or CK-452. Complementing our clinical activities, we expanded our muscle biology focus development pipeline with the advancement of one potential drug candidate in IND Enabling studies, and the addition of two other drug candidates in into preclinical development. As evidenced by the announcements in the fourth quarter of clinical data from our Phase I and Phase IIa clinicals, CK-452 continues to be a major focus for the Company.

Data from this drug development program continues to drive an increasing level of interest amongst investigators, and as Andy will share with you momentarily, we are encouraged with the top line data from the recently completed Phase IIa Clinical Trials in patients with ischemic cardiomyopathy and angina. In addition, we're looking forward to the completion of our ongoing Phase IIa clinical trial of CK-452 in stable heart failure patients. The latest interim data from this trial were presented at American Heart Association meeting in November 2008, and we recently completing dosing in the 5th cohort of this trial. We look forward to the completion of final data collection and analyses for this trial in this quarter.

And also in this quarter, we look forward to our delivery of the final clinical trials data to Amgen, which will in turn commence the period in which they may decide whether to exercise their option for a license to develop and commercialize CK-452 worldwide, excluding Japan. As I mentioned earlier, and will outline for you in greater detail later in the call, we recently announced the advancement of promising potential drug candidates from research activities focused toward muscle biology, and more specifically, the modulation of muscle contractility. As I believe you will hear on our call today, we continue to make important advancements in both our clinical, nonclinical and research pipeline in the past quarter. And indeed throughout the year. And we are looking forward to more of the same in 2009. With that, I'll now turn the call over to Andy.

Thank you, Robert. Cytokinetics international clinical trials program, which is comprised of both our cardiovascular and oncology clinical development programs, continued to perform well during past quarter with the completion of a Phase I and Phase IIa trial of CK-452 and the announcement of additional interim data from ongoing clinical trials of CK-452 and SB-743921. As Robert mentioned, the Phase IIa clinical trial results from CK-452 continue to be of interest to the medical, scientific and investment communities. In November at the 2008 scientific sessions of the American Heart Association, Cytokinetics reported interim results from an ongoing Phase IIa clinical trial evaluating CK-452 administered intravenously to patients with stable heart failure. These interim analyses demonstrated statistically significant increases in systolic ejection time and fractional shortening at plasma concentrations greater than a 100 nanograms per ml, and statistically significant increases in stroke volume at plasma concentrations greater than 200 nanograms per ml.

In addition, we observed statistically significant correlations between increasing CK-452 plasma concentrations and increases in systolic ejection time, stroke volume, fractional shortening and cardiac output. Of particular note, these data demonstrated statistically significant correlations between increasing CK-452 plasma concentrations and increases in ejection fraction, as measured by each of two methods, what is commonly referred to as the 2 D method, and a hybrid method which employs a combination of both 2 D and Doppler technology. Statistically significant increases in ejection fraction by the hybrid method were observed at plasma concentrations greater than 300 nanograms per ml.

Furthermore, these increases in cardiac systolic function were accompanied by other encouraging trends, including statistically significant correlations between increasing CK-452 concentration and decreases in supine and standing heart rate, and in left ventricular and systolic volume. As Robert mentioned we have recently completed the dosing in the 5th cohort of this trial, and are in the process of collecting and analyzing the data from this cohort. An important milestone in the CK-452 development program that many of you have been awaiting, came in the fourth quarter with our announcement of top line results from our Phase IIa trial evaluating the safety of CK-452 in patients with ischemic cardiomyopathy and angina.

The primary safety endpoint in the trial was to find a stopping and exercise test during double-blind treatment with CK-452 or placebo due to unacceptable angina at an exercise stage earlier than that at baseline. This end point was observed in one patient receiving placebo. And did not occur in any patient receiving CK-452 at either the lower or higher dosing regimen. This trial was not designed (inaudible) to test any formal statistical hypothesis. Rather, as I have often explained, we were looking to see if there was a signal for what we and our Amgen colleagues have come to call major badness in this trial.

In other words, an obvious signal that the drug may not be safe during maximal exercise, in this population of patients with both heart failure and angina due to coronary artery disease. In this regard, we were pleased that we did not see patients with diminished exercise tolerance compared to their baselines due to the onset of angina while exercising on CK-452. We're further encouraged that the majority of the adverse events observed were categorized in as mild, in both the lower and higher dose cohorts. Two serious adverse events were reported in this trial, both occurring in a single patient with severe underlying coronary artery disease, who received CK-452 in a higher dose cohort. Both events were judged by the investigator to be unrelated to treatment with the study drug.

Most importantly, we believe the results from this trial support the advancement of CK-452 into Phase IIb clinical development. We're looking forward to presenting the complete results from this trial in an appropriate medical meeting in 2009. During this quarter, we also announced the final results from our 5th basal and clinical trial of CK-452. This trial evaluated the potential for clinically meaningful drug-drug interactions between CK-452 and compounds cleared mainly by either of two drug metabolizing cytochrome P450 enzymes 3A4 or 2D6, enzymes that are involved in the eliminations in many commonly prescribed medications. The study demonstrated no clinically important differences in the pharmacokinetics of CK-452 between extensive or poor metabolizers via 2D6.

Furthermore, no clinical meaningful drug-drug interactions were identified between CK-452 and either of catecholamines, the first being a potent and the second a moderate inhibitor of 3A4. In either extensive or poor metabolizers via 2D6, these results suggest a low potential for clinically meaningful drug-drug interaction between CK-452 and compounds cleared mainly by either cytochrome P450 3A4 or 2D6. Moving to our oncology program, we continue to advance the Phase I portion of the Phase I/II clinical trials for each of Ispinesib and SB-921 on the more dose dense schedule of once every 14 days, compared to previously studied regimens of once every 21 days. In the fourth quarter, encouraging interim data from both of the studies were presented.

Ispinesib at the San Antonio breast cancer meeting and SB-921 at the annual American Society of Hematology. We look forward to additional clinical data from both of these programs in 2009. With that update on our clinical development programs in the fourth quarter, I will now turn the call back over to Sharon.

Thank you, Andy. As our press release contains detailed financial results for the quarter and the year ended December 31, 2008, I would like to part from our past practice of simply repeating the information on the call, and instead provide you with some additional information not contained in the press release. Our fourth quarter 2008 research and development or R&D expenses total $11.5 million. From a program perspective for the fourth quarter, approximately 45% of our R&D expenditures were attributable to our cardiac contractility development and research activities. 10% to our mitotic kinesin development and research activities, and 25% to our skeletal muscle modulation research and pre-clinical development activities, and 20% to our other research activities.

Our full year 2008 R&D expenditures total $54 million. From a program perspective for the full year, approximately 39% of our R&D expenses were attributable to our cardiac contractility development and research activities, 13% to our mitotic kinesin development and research activities, 19% to the skeletal muscle modulation research and pre-clinical development activities and and 29% to our other research activities. Our other research programs include in part, our programs directed toward smooth muscle modulation.

As of December 31, 2008, our cash, cash equivalents and long-term investment totaled $76.3 million. This amount included $16.6 million in auction rate securities classified as long-term investments at December 31, 2008. As we previously announced on January 5, 2009 we received $12.4 million in cash as part of a no net cost loan program offered by our portfolio money manager. This loan is secured by the auction rate security. In addition, we continue to have available to us a committed equity financing facility with Kingsbridge Capital. Under this facility, we have the ability at our discretion, at predetermined discounts to access the lesser of up to $75 million or proceeds available through the sale of up to 19.9% of our outstanding shares, subject to certain minimum share price and other requirements.

Now I'd like to turn to financial guidance. Given Amgen's potential exercise of its option for CK-452, it's important to understand that we are prudently managing the business in light of Amgen's decision not yet being known. Therefore, we anticipate our 2009 net cash utilization to be in the range of $52 million to $57 million. With cash, R&D expenses expected to be in the range of $38 million to $42 million, and cash G&A expenses to be in the range of $14 million to $15 million. On this basis, we believe that we have over 12 months of cash resources to fund operations. While Amgen may choose to exercise its option for an exclusive license to develop and commercialize CK-452, there is no certainty that this will occur.

Accordingly, this financial guidance excludes any revenues associated with such an option exercise by Amgen, including any projections regarding potential reimbursement of R&D expenses related to CK-452. This guidance also does not take into account revenues from other potential collaborations that Cytokinetics may enter into in 2009 relating to CK-452 or other programs. However, if Amgen does exercise its option, we will provide an update to our 2009 financial guidance, taking into account the $50 million option exercise fee that Amgen would pay to us as, well as any other payments that we may receive from Amgen for R&D activities related to CK-452 that we may conduct under Amgen's sponsorship.

We expect that if Amgen exercises its option related to CK-452, our cash resources would then be sufficient for approximately 24 months of operation. This financial guidance is on a cash basis, and does not include an estimated $12 million in GAAP revenue related to Amgen's initial payment for its option for a license of CK-452, and $7.5 million in noncash related operating expenses primarily related to FAS 123R stock compensation expense. That concludes the financial portion of today's call, and with that, I'll now turn the call over to Robert.

Thank you, Sharon. To conclude, I would like to comment on a few recent events and how they impact the strategic direction of the Company. Looking back on 2008, I am pleased with the progression of our CK-452 clinical trials program. I believe that the profile of CK-452 emerging from these trials has met both ours and Amgen's expectations. Furthermore, I believe both we and Amgen are satisfied that Cytokinetics has executed this program well. For example, focusing on the Phase IIa Clinical trial in Ischemic Cardiomyopathy for a moment. Recall, we initiated in the beginning of April, and rolled and dosed patients and issued top line data by mid-December. To have this all completed in eight months is no small feat and speaks to a great effort put forward by many within Cytokinetics, as well as our clinical investigators and other site personnel.

In the near term we're focused on completing the final data collection and analysis of the Phase IIa Clinical Trial evaluating CK-452 in stable heart failure patients, as well as providing the final date of deliverables to Amgen. I would you like to remind you that Amgen has been receiving the agreed clinical trials data in realtime, throughout the execution of the Phase IIa clinical trials program. Although this does not alter the agreed time frame Amgen has to makes it exercise decision. To repeat, in this first quarter, we look forward to delivering the necessary data package to Amgen that will trigger the time clock associated with their option exercise.

Moving briefly now to our anti-cancer drug candidates. In December, we announces that GSK informed us of their decision not to exercise their options on Ispinesib and SB-921 our novel inhibitors of kinesin spindle protein, or KSP. As a result, Cytokinetics retains all development and commercialization rights to these drug candidates. Going forward, given the restructuring of the Company announced last September, and our forward focus to muscle biology, we are now seeking a new partner for the continued funding of the Phase I/II Clinical trials for both Ispinesib and SB-921.

We have initiated discussions in order to repartner these programs, and are seeking a new collaboration relating to our KSP inhibitors. We are aware that a number of pharmaceutical and biotechnology companies are currently developing KSP inhibitors for the treatment of cancer, and we believe we maintain a compelling position in this emerging area of anticancer drug development. We believe that any new partner in the development of these drug candidates could assume a leading position in KSP inhibitor development. At the same time, the collaboration between Cytokinetics and GSK is continuing with a focus on the development of GSK-295 and translational research relating to centromere-associated protein E or CENP-E.

Recently we have disclosed more about the Cytokinetics activities focused on muscle biology and modulation of muscle contractility. With a restructuring of the Company announced last September, this related biology and pharmacology became an important focus for us as we continue towards a building a sustainable biopharmaceutical Company. We are very pleased with the productivity of our research activities in this field over the past year. In April of last year, we announced a selection of a skeletal muscle activator, CK-2017357 or CK-357. This novel potential drug candidate may prove to be a treatment for diseases associated with aging, muscle wasting and neuromuscular dysfunction such as ALS. This compound has been progressing nicely in the IND enabling studies. Also last month we announced a selection of another skeletal muscle activator to serve as a backup potential drug candidate to CK-357.

We generally speak to identify backups for lead drug candidates, in order to mitigate any development risks that might be encountered with a lead development compound. In addition, we announced the selection of a smooth muscle inhibitor development candidate, that acting through a novel mechanism to relax smooth muscle may offer potential treatment for diseases such as pulmonary hypertension, asthma, and chronic obstructive pulmonary disease. We're excited about these promising novel potential drug candidates that emerged from our research activities, and believe that our ability to leverage our expertise derived from our cardiac contractility program, has contributed to discovery and advancement of these potential drug candidates in a relatively short period of time.

We believe these additional programs offer important technical and capital efficiencies, all the more significant in today's increasingly challenging business environment. Now, as we turn the page to 2009, I would like to share with you our key milestones for the coming year. On the cardiovascular side of our business, in March we plan on presenting final data from the Phase IIa clinical trial of CK-452 in patients with stable heart failure at the American College of Cardiology meeting in Orlando. In 2009, we plan on presenting final data from our Phase IIa clinical trial of CK-452 in patients with ischemic cardiomyopathy and angina. In mid 2009, we anticipate the initiation of a Phase IIb Clinical Trial of CK-452 in chronic heart failure outpatients at an increase risk for death and rehospitalization for heart failure.

With respect to our oncology drug candidates in 2009, we anticipate that GSK will initiate a Phase II clinical trial of GSK-295. Looking to our nonclinical research and development programs, in 2009 we plan to submit an IND application for CK-357, and to initiate a Phase I study of CK-357 in healthy volunteers. Also in 2009, we anticipate progressing our smooth muscle inhibitor in IND Enabling studies. On the corporate milestone front in the first quarter, we anticipate providing the required clinical data from our CK-452 Phase IIa Clinical Trials program to Amgen in order to inform the potential exercise of Amgen's option under the company's strategic alliance. Looking back on 2008, I'm especially pleased with Cytokinetics's performance, and despite the external environment which presents key challenges, we remain committed to our plans and optimistic for our future.

We believe the steps we have taken in the past year, including the restructuring of the Company, concentrating our focus to muscle biology, the strengthening of our pipeline with the advancement of three potential drug candidates, potential new partnerships, and of course the potential near term option exercise by Amgen, all may contribute to continued successes in 2009. In all, Cytokinetics is committed to building a solid pipeline of novel drug candidates, all with the goal of putting us in a sustainable and durable business position heading into this year and beyond. That concludes the formal portion of our call today. And I would now like to open up the call to questions.

(Operator Instructions). Your first question comes from Mark Monane with Needham. You're line is open.

Thank you, good afternoon. And thank you for reviewing 2008 and look into 2009 on this fine afternoon in New York city.

Good afternoon, Mark.

Please, would you spend some time helping us think about prioritizing the smoothamuscle and skelamuscle programs. Clearly there is a number of different systems that are involved in terms of organ systems. Does your technology or Andy's thinking reflect preference for certain areas over others and why?

I'll start and then I'll turn it over to Andy as well. In terms of priority, our higher priority right now is advancing CK-357, Our skeletal muscle activator into Phase I clinical trials this year in healthy volunteers. It will be through the course of this year, that we'll elaborate more on what we have already learned mechanistically and pharmacologically from the study of this compound, and other compounds from the program. And then I think we'll be able to provide you and others with more insights into our thinking for Phase II and beyond. But suffice it to say at this time, we're looking at a variety of different indications, some of which I would say are more affordable to us alone, others which may require a partner. And those that we're focused to include diseases such as ALS, sarcopenias, [cacexias] and others for which activating the skeletal muscle, increasing the strength and force of skeletal muscle may redirectly on improved quality of life and other measures. With that, I'll turn it over to Andy.

Well honestly, I Robert, I think you've been complete. I don't know what more I would say, actually. I think we'll -- I mean maybe the one thing I would add, is often it's difficult to look for a pharmacodynamic signal in a normal individual. But we think we may be able to do that. And if we can get some readout of the drugs affect each in a first human healthy volunteer study, we're certainly doing that and we're being quite diligent right now, looking to see what sort of assessments and technologies we might bring to bear on that. But otherwise clearly very shortly after determining the maximum tolerated dose in healthy human subjects we would go into -- each if a more mildly diseased population where the chances of a signal -- of higher signal to noise ratio would be better, even healthy helderly people lose muscle mass and function, and as Robert has said, we may be able to see very strong signal in patients with Lou Gherrigs disease or ALS.

Does that help, mark?

Your next question comes from Michael Aberman with Credit Suisse. Your line is open.

Hi, Michael.

Hi, guys, can you hear me.

Yes.

First question, does the initiation of the Phase IIb clinical trial, trigger the expiration of Amgen's option period?

A very good question. What we've been able to disclose publicly, given the confidential nature of our agreement with Amgen, is that Amgen has a defined period of time to make a decision. During that time, they can evaluate the data that we'll have presented to them. Following that period of time, were we to initiate Phase IIb, that would render their option no longer exercisable.

So is it a lesser of -- or in other words, if you start the Phase IIb before that time period expires, then they have that full time period, or is it once you -- because you do not have --

I think they have a minimum period of time where even in that period were we to initiate Phase IIb, they would still have the defined period of time. But however, once that period of time has elapsed, if we initiate Phase IIb, then their option is no longer valid, if you will.

Could you talk about the decision to go your first Phase IIb in an outpatient. This is an oral-only? Which formulation and dosing do you intend to use in that trial? How many patients do you contemplate, et cetera? And how involved has Amgen been in this trial and have they agreed to this -- I know they do not have to, but in theory, have they agreed to this -- are they in agreement with this strategy?

Lots of good questions. I'll say that it's not going to be on this call today, that I'll be elaborating on the specific design of the study. That is in affect something that has been discussed quite at length internally with consultants and also with Amgen. I believe we do have good alignment with Amgen on our plans going forward, but however, as you know, until they exercise their option, it is for us to determine and for us to fund. As such, I'm not sure what else we can say to you, as to our plans in Phase IIb. It's consistent with what we've shared with you and others publicly where our goal is to develop the IV and oral in a coupled form in a Phase IIb program that would evaluate both in-hospital and outpatient patients.

Well let me -- but you mentioned a chronic heart failure outpatient. Will this be initiated as inpatient, and then continue the oral as outpatient? You can give some framework as to how you're thinking about it without giving specifics?

Sure. What we have talked about is that we want to -- we wanted to be able to register two ways of initiating treatment with this compound. Hospitalized patients can be treated with the IV and go on to oral, and other patients can go directly on to the oral. And then they include less ill hospitalized patients even. Because once they're in the hospital -- even if they respond very dramatically and rapidly to standard therapy, that hospitalization for heart failure still puts them at risk, as you know, for heart failure death and further hospitalization. So they would still be a good patient for us.

Whether it's one study with different strata, IV to oral, or direct to oral, or two separate studies, I don't think that matters a whole lot. The idea is to register it two ways on to treatment with the compound. And as we discussed, we have no plan -- we'll take it if we can get it, but we certainly would not do anything that would slow down the program or make it more expensive or difficult to register the IV by itself. It will be a bridge to oral.

Your next question comes from Christopher James with Rodman & Renshaw. Your line is open.

Thanks for taking my question. This may be a bit premature but I have a question about the potential Phase III design. It appears that the FDA is interested in accepting [Dismia] as an endpoint for acute heart failure drugs, but for credit card failure drugs, that Robert you mentioned in the past you would expect to see a benefit in mortality. The question is, do you think you would need to show a benefit versus another comparator, potential another inotrope on the safety side, a better mortality, or would you need to see an absolute or no increase in mortality. And then I have a follow-up about the Amgen option.

Well it's been -- I think our stated goal very clearly for a while, that we will register these two approaches to the initiation and continuation of treatment either IV to oral or straight on to oral for the reduction of death and rehospitalization due to heart failure. And we do not -- we'll look at things like [Dismia] for the in hospital phase of patients who happen to be initiated acutely with the IV. But that wouldn't be a primary end point. In the United States, there is no need to study the compound versus anything but placebo. In Europe, they do like to see comparator data, but there needs to be -- what is a clear and appropriate and ethical comparator, and until we have those discussions with EMEA, I can't really comment on whether anything other than just beating placebo on top of standard therapy would be necessary. My guess is not.

And Chris, just to elaborate, I don't believe we've ever said that a mortality benefit alone would be required, but certainly we would expect that you need to be able to rule out the possibility of the increase in mortality, and as function of a composite end point we believe mortality with be included.

All right. Okay. Thanks. And then I guess very quickly, could you describe interest -- potential interest by other partners should Amgen decide not to opt in or delay their options. Are you getting interest from other parties.

I think that's a good question. We do get solicited -- I'm sorry, unsolicited interest from other companies with respect to this program, albeit inasmuch as this program is currently partnered with Amgen, albeit under an option structure, we need to be careful about what we can share with them. Certainly they are in possession of that information that is already public, and that's something that has generated interest from other potential partners. Our focus right now remains however though on Amgen.

Thanks.

Your next question comes from Charles Duncan with JMP securities, your line is open.

Hi, Charles.

Hi, guys. Congrats on the progress in completing enrollment in cohort 5.

Thank you very much.

I actually have a question regarding that particular trial, the stable heart failure trial. You showed some improved heart rate in the other cohorts, at least in cohort 4 and under much more limited duration of treatment. Would you expect perhaps that the heart -- the heart rate affect is function of dose and/or duration and could be perhaps even bigger in cohort 5?

Well, what we've said even during this call earlier, is that there is a very definite relationship between the plasma concentration and the decline in heart rate. So the higher the plasma concentration, the more the heart rate drops. And since the plasma concentration is an internal function of dose, it would be reasonable to think that a higher doses, the heart rate will go down further. I can't comment on whether it may go down yet even further, with continued therapy. It may. That's certainly a reasonable hypothesis. I can't say anything about anything from cohort 5, yet as we just really finished the dosing there and still need to collect and analyze the data. I will say it's my belief that this decline in heart rate is not a direct affect of the drug, because in preclinical studies we've seen absolutely no evident of a direct affect on heart rate in deed we have evident that there is no direct affect on heart rate. But rather as the systolic function of the failing heart improves in response to 452, there is a withdraw of the elevated sympathetic tone, that such a pathophysiologic marker of heart failure, such that heart rate declines as the heart is not being whipped by catecholamines as much as it was prior to treatment.

So that makes sense and suggests that you may have have a better affect in maybe some heart remodeling over time?

There is -- you know there has long been speculation that the acute affects of this drug will be dwarfed by what we see in terms of clinical benefit when we can maintain, even a modest increase in systolic function at a tolerable dose over extended periods.

Okay. And then question perhaps for Sharon. Have you set a date for your R&D day. I know you were kicking that around possibly this spring, possibly this fall?

No. We haven't set it yet. We do understand though that I think one of the key events that needs to happen before anybody would be really interested in listening to the rest of what is in our pipeline is the Amgen opt in. And so we'll defer confirming a date until that time.

Okay. That makes sense. And then final question regarding the skeletal muscle program. Did you -- maybe I missed it, but did you provide any information on the clinical setting there, that your planning on filing an IND for.

No we haven't. All we said that we expect to begin Phase I study this year in healthy volunteers to be followed by movement then into disease populations. But we haven't indicated to what division we would submit that IND, nor what are the specific indications we might prioritize in Phase II.

But you think you would be able to talk about that obviously at that R&D day. What kind of considerations are you given? Is that an area that you would like to pursue all the way to commercialization, Robert?

Yes, so most certainly we'll want to elaborate on this at the R&D day. But we have done some very thorough market research assessments and competitive and commercial positioning around the -- each of a variety of different indications for which we think this mechanism reads on improvements in quality of life. We do think there are indications that we could afford in some of our base and better case scenarios to take forward into commercialization. That said, we also recognize these are especially challenging times, and we have to be careful about how we manage our cash burn.

So a lot of it has to do with CK-452 and Amgen. or if not Amgen, it might be then another repartnerring. All of these things figure into a calculus around which we look to, what can we afford to take deeper into clinical trials and potentially into the market ourselves. All of our programs we think offer up potential for partnering, and we're certainly interested in partnering these programs. Our ambitions extend towards though maturing some of our capabilities, as we might also ready for late stage development and commercialization. So it's a delicate and dynamic balance if you will, a lot of which depends on our financials. But there are certainly indications that we think we can afford to take forward potentially in parallel with a partner, funding and taking responsibility for other indications.

Okay. Thanks for the added color, Robert.

Sure thing.

Your next question comes from the Jason Kantor with RBC Capital Markets. Your line is open.

Hi. This is [Shim Shan] for Jason. Just quickly two questions on CK-452 program, and first I know you probably won't give a clear answer to this but I still want to ask. I just want to know a little bit more about the time line of the opt in position and I understand you are -- you delivered the data to Amgen in Q1. So should we expect option decision in Q1 or early Q2? And that's the first question. I just want to know a little bit more about the time line of the opt in position and I understand you are -- you delivered the data to Amgen in Q1. So should we expect option decision in Q1 or early Q2? And that's the first question. The second one, just I wonder if you can rely on a scenario of what is your plan with and without Amgen opt in? Thank you.

So I do not think I'll disappoint you in terms of your expectations. I cannot answer your question regarding the timing of the Amgen option for binders of confidentiality we are not able to disclose the amount of time Amgen has to makes it decision. All I can say is that we will deliver in this first quarter that last bit of data, intended to then trigger their option. So I do not think I can do any better for you than that. Your next question relates to what we would do with Amgen's exercising or not, and I'll start and maybe ask Sharon to pick up as well.

As we have given guidance today, we believe our current in hand financial resources afford us a solid path forward as we might then have to take CK-452 into Phase IIb ourselves, and also advance our other muscle biology related programs. And with those expectations, we believe that our current financial resources afford us greater than 12 months of forward burn. But, however, we hope Amgen will exercise this option. We have prepared for the possibility they may not. But we hope they will. And if they do, not only does that then afford us $50 million in addition on our balance sheet, but also they pick up on the substantial burn that has historically gone to our CK-452 program, and going forward they're responsible for 100% of those costs. And in addition to that, we have the potential for further reimbursement of R&D related activities in this program from Amgen. None of those are in our current guidance because we have no certainty with respect to Amgen's decision. So with that, I'll turn it over to Sharon.

Okay. Well I don't know if I have that much more to add. I think that the key -- the key for us is just being prudent going forward with -- as far as our spending and the prioritization of our program. We also have available to us the Kingsbridge community equity financing facility and we continue to have the ability to access up to $75 million, or the proceeds available from the sale of up to 19.9% of our outstanding shares. And so that's key for us moving forward besides the potential of having additional income come in from partnering other programs besides CK-452 as well. And we're very, very cognizant of the burn and trying to make sure that we're driving towards valuation points for both CK-452, as well as the smooth and skeletal program.

Okay. Thank you.

Thank you.

Your next question comes from Michael Aberman with Credit Suisse. Your line is open.

Thanks for allowing a follow-up.

Good morning.

I just want to turn back to the Phase IIb question again. And keeping in mind I think in the past some of the time lines that have slipped a quarter and when you say mid 2009, can you give me some comfort that what activities have you to date in terms of planning the Phase II B? Do you have a trial design agreed upon? Do you need to go to the FDA first to get that? Have you started the process? And when you say mid 2009 -- can you give us a time frame? What do you mean by mid 2009, in terms of the latest month that would incorporate?

So I will try to help you, Michael you may also not be fully satisfied with my response. In terms of what we're doing, we're manufacturing drug product with the expectation that we'll begin this study again in mid '09. We're being purposely silent on whether that means Q2 or Q3, in as much as and we do not want to put a tight control on this, and we don't want to set expectations we cannot deliver, so instead we're saying mid '09. However I would not expect Q4 would fall into mid '09 and the other activities in terms of protocols, we're locking down on protocols that are being discussed internally and with Amgen.

I underscore with Amgen, albeit I'll also emphasize that we're prepared to go forward even as Amgen may not exercise their option. We do not believe that a meeting with the FDA is required. However, that's not to say we might not have meetings with regulatory authorities as we might go forward. So I think that's probably the best we can do. I don't know if, Andy, you want to elaborate or anything further.

No. I think we have to proceed right now with the assumption that Amgen will not exercise, in the hope that they will. And as Robert has said many times, we think they will. But we cannot read their mind. And so it makes it very difficult for us to tell you about some of the details that you've asked, because it may be one thing under one scenario and a different thing under the other.

Well under the scenario, as you said you do not need -- you need to plan as if they're not going to. So under the scenario that you do not, they do not exercise the option, can you give us again just some color as to how -- since you have some trial designs, can you give us some color as to will it be an IV or oral start. Is there more than one Phase IIb program. Is it a single trial or multiple trials? And what time frame? Are you looking at 6 month end points, 12 month end points. How should we think about the timing of the Phase IIb program, to help us think about when a phase 3 might start?

I think Robert has said all we can say about when it will start. And unfortunately, I just do not think on this call we can go any further and say more than we have.

Okay. But you do have -- all right. Thank you.

Well, I mean, Michael, obviously we've been doing a lot of thinking and planning, it's just what we can talk about and what we cannot. That's the problem.

Okay. Thanks.

Thank you.

Your next question comes from the Mark Monane with Needham. Your line is open.

Hi. Good afternoon. I just wanted to -- like Mike, I just wanted to follow-up with some financial questions. On the balance sheet you listed a put option for $3.4 million or so. Could you explain what that is?

The put option is related to our investments so if part of the agreement that we signed with UBS. We gave them rights to essentially redeem the auction rates at par up until 2000 -- June of 2010 and then after that they are required to repurchase them from us. And so that's related to the auction rate securities and the valuation, the difference between the fair value of the auction rates, which is $16.6 million, and the par value of $20 million.

One question on your GAAP versus non-GAAP financials. For the $12 million going forward on Amgen's initial option payment, how long is that amortized for? Will it continue into 2010? And for the R&D and SG&A GAAP numbers, which percentage is cash and non-cash.

I don't have the difference between the G&A and R&D for you with me today. But the $12 million is -- represents an amortization of four years for the initial up-front payment that Amgen made to the Company. If in fact, Amgen does exercise their option for $50 million in this year, the remaining balance of that option exercise, which shows up in deferred revenue, would then be taken to the P&L. But that's still all noncash.

Well thank you very much.

Thanks.

Your next question comes from Charles Duncan with JMP Securities. Your line is open.

Thanks for taking the followup, guys. I had a question regarding the Phase IIb and I understand why you're not able to provide a lot more detail here. But I think one of the concerns in the market is the cadence or the time of the Phase IIa, would you characterize the enrollment criteria, thinking about the enrollment criteria and the design that you're targeting for Phase IIb, would you anticipate you know, the number of measures that you take, et cetera, in terms of conducting that trial, to result in a cadence that is more reflective of the stable heart failure study in Phase IIa or the ischemic cardiomyopathy trial which was executed very quickly.

First off I I want to a -- first off I want to apologize to you and Michael and anyone else who feels we're not being as forthcoming as we should be. A lot of this has to do with the fact that -- this is fluid. This is fluid in large part meaning that what we can do -- what we can afford to do in absence of Amgen exercising, is different in what we would choose to do if Amgen were to exercise and we are going forward together. I don't think it would be productive for us to layout a clinical development program until we have specific clarity on Amgen's decision.

But however, we are proceeding forward to ready for the initiation of Phase IIb as that matter has top priority for us in this mid 2009 time frame. The specific design elements are things that I think best be left for a decision, as to whether we're doing that alone or with our partner. As to your next question, in terms of what are the criteria for inclusion, I think I'll turn that to Andy. I think we continue to think broadly as we may ourselves be funding this alone, as to what would be the type of patients enrolled in Phase IIb.

I think -- I don't want to be so optimistic as to say it will enroll as rapidly as the ischemic cardiomyopathy study. On the other hand, we're looking for a more real world population for a more clinically -- I don't want to say clinically relevant, because I think what we've done is clinically relevant, but let's just say treating patients more as they would expect to be treated after the drug is approved on the market.

So not so many plasma samples, not so much in patient time. Some of these folks will go directly on to the oral. That's a very easy study. There won't be the kind of exercise tests that might even been barrier to enrollment for the ischemic cardiomyopathy study. So I'm thinking it will be easier to find patients willing to come on to the Phase IIb studies. And that having been said, obviously we have to be particular with our inclusion and exclusion criteria. . But I expect not to have the difficulty of the first cohort of the stable heart study, and perhaps it would be prudent not to be quite so optimistic to think we can enroll hundreds of patients at rate in which we enrolled the ischemic cardiomyopathy

Thanks for the details, Andy. We'll look forward to the details when you're ready to provide them.

Thank you Charles.

The next question comes from George Zavoico with West Fort Capital. Your line is open.

Hi, George.

Hi everyone and congratulations and thank you for taking the question. A couple of -- just three quick questions. One follow up on Charles's question regarding the heart rate affect. Andy, you mentioned withdrawal of elevated sympathetic tones as being possible mechanism. First question is do you have any external evidence of that? Second question is regarding backups. You said you had -- as a routine policy, you develop backups. Do you have a backup for 452, and if so does Amgen have the option for that too if they decide to exercise the option. And finally, just a brief update if you can on the progress of the cardio cath trial. Thank you.

So I'll start with the question on heart rate. And we've seen this in dogs, where we've been able to instrument them more fully. And we see the heart rate fall within 15 minutes of initiating an infusion. And at the same time we see a decline in peripheral resistance without any change in blood pressure. So this is all consistent with the decrease in sympathetic tone. I know that in more recent studies we have been measuring circulating catecholamines, but I don't know what those data have shown at this point.

In patients we do not have that kind of thing. However, to then leap frog to your third question and I'll save the middle one for Robert, the cath lab study as we can get that to finally enroll, should answer some of these questions more directly, we will be measuring peripheral resistance in these patients and see what happens to it in response to 452. And I think we'll have more clarity around that (inaudible) withdrawal of sympathetic tone as we get more patients enrolled in that trial, which I do expect you will through the course of the year see begin to pick up.

Yes, to that point. The study has not been a high priority for us. In the second half of 2008 we focused instead on other studies, and in 2009 we may see a ramp up in enrollment in that trial. With respect to your question on backups, at the time we did the deal with Amgen, this is dating back to December 2006, we did have and still do have a backup to CK-452 that remains a viable option, were we to find something idiosyncratic or otherwise that limits the development of CK-452.

We have not identified any reason to turn to the backup. But we do have a backup. And like that backup, we also have follow on pounds that we're continuing to investment, research and characterize. The backup and the follow ons would also travel together to Amgen, if you will, if they were to exercise their option. Meaning the whole program goes hand in hand with CK-452. If Amgen does not exercise its option, then those all -- also all go with us to what would then be our interest to repartnering the program, CK-452, its back up and follow on compounds.

This concludes the question and answer portion of today's call. I will now turn the call over to Robert Blum for closing remarks.

I wanted to say thank you to all of the participants today for your continued interest in Cytokinetics. We look forward to updating you throughout 2009 on more progress and more activities and with that operator, we can conclude the call. Have a good day, everyone.

This concludes today's Cytokinetics fourth quarter and year end 2008 conference call. You may now disconnect.