Cytokinetics Inc (CYTK) 2009 Q2 法說會逐字稿

Good afternoon, and welcome, ladies and gentlemen, to the Cytokinetics second quarter 2009 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.

(Operator instructions).

I will now turn the call over to Sharon Barbari, Cytokinetics' Executive 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 second quarter 2009 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 statement disclaimer, Robert will provide an overview of the past quarter, along with an update on the advancement of our development pipeline focused on the biology of muscle contractility. Andy will then provide highlights and details on the progress of the Company's clinical development programs, and I will then provide some brief comments with respect to our financials and our second quarter investments in ongoing research and development activity, as well as an update of the Company's financial guidance for the remainder of 2009 in light of our second quarter events. Robert will then conclude the call with additional comments regarding our recent activities and summarize our current progress in context of our remaining 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 statements that constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause our actual results to materially differ from those in these forward-looking statements is contained in our SEC filings, including our most recent Annual Report on Form 10-K, our Quarterly Report on Form 10-Q and current reports on Form 8-K. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website. These forward-looking statements speak only as of today. 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.

I'll now turn the call over to Robert.

Thank you, Sharon.

During the second quarter, Cytokinetics experienced two major events that, in particular underscore the transformative changes we anticipated when we announced our restructuring in 2008, with a focus to muscle contractility. Together they contribute to the expansion and advancement of our company's development pipeline as well as the added financial resources required to position us well, most especially in these more challenging economic times.

Regarding the first major event, in May Amgen announced that it exercised its option to obtain an exclusive license worldwide, excluding Japan, to our cardiac contractility program, which includes our cardiac muscle myosin activator, CK-1827452, or CK-452. With this decision, Amgen continues its demonstrated commitment to potential drugs that act by novel mechanisms of action.

Cytokinetics has now completed five Phase I trials and two Phase IIa trials of CK-452, which have generated a new pharmacology tied to this novel compound first-in-class biological mechanism. Together with Amgen, we are setting our sights on a very large and medically underserved patient population, those afflicted with heart failure.

Our partnership has been and continues to be productive. We have executed a comprehensive series of clinical trials that have produced robust data showing clinically meaningful and statistically significant results that we believe strongly position the program for advancement.

Looking forward, we are engaged collaboratively in the planning and conduct of a robust program of next-stage studies and trials that will aim to translate pharmacodynamic effects observed to date into potential clinical benefit that may serve to set the stage for potential registration studies. As Sharon will explain in a moment, Amgen's commitment to this program defines a new financial vector for our business that we believe will significantly benefit our plans to advance and expand other programs arising from our other research, which similarly ties to muscle contractility.

The second major event is the recent demonstration of progress in the advancement of our fifth drug candidate, CK-2017357, or CK-357, a fast skeletal muscle troponin activator, which entered a Phase I first-time-in-humans clinical trial in healthy male volunteers in the second quarter. If we view our muscle contractility franchise as a three-legged stool, with our cardiac muscle contractility program forming the first leg, this next first-in-class compound now in clinical development represents the second leg, with potential applications in a wide array of diseases and medical conditions rooted in muscle fatigue, wasting and neuromuscular dysfunction.

This program has technically leveraged our leadership position in the biology of muscle contractility and has also advanced to clinical trials in a more economically efficient manner than our previous drug candidates, meaning we believe we are realizing economies rooted in our heightened R&D focus. The third leg of this metaphorical stool, directed to smooth muscle inhibition, is progressing as well, and will be the subject of additional company announcements.

We are certainly pleased with these important advancements, as we believe they have the potential to significantly add value for our shareholders and add muscle, pardon the pun, to our business.

With respect to CK-452, during the second quarter Cytokinetics received notification from the United States Adopted Names, or USAN, Council indicating the adoption of omecamtiv mecarbil as the USAN or generic name for CK-452. This information has been posted on the USAN website, which is noted in our press release. Information on omecamtiv mecarbil is planned to be submitted to the United States Pharmacopeial Convention for publication in the USP Directory of USAN and International Drug Names. Going forward, on this call today we will be referring to CK-452 as omecamtiv mecarbil, or, more simply, omecamtiv.

I would now like to turn the call over to Andy.

Thank you, Robert.

As Robert just mentioned, Amgen's exercise of its option tied to omecamtiv followed the successful completion of multiple Phase I and Phase IIa clinical trials which we effectively executed in several countries. I am pleased with how Cytokinetics conducted this global development program, and we look forward to working alongside Amgen in what we anticipate to be a robust and thorough nonclinical and clinical development program for this novel drug candidate.

During the quarter, at the 2009 Heart Failure Congress of the European Society of Cardiology, as part of the late-breaking trials session, investigators presented data from our Phase IIa clinical trial of omecamtiv in patients with stable heart failure. Included amongst these results were the first public disclosure of analyses which demonstrated that patients with reduced stroke volumes of less than 50 milliliters at baseline had generally greater pharmacodynamic responses to omecamtiv than those observed in patients with greater stroke volumes at baseline, demonstrating robust pharmacodynamic activity in this more severely affected subpopulation of heart failure patients.

In addition, also at the Heart Failure Congress, a poster presentation containing data from the same trial compared the standard, image-based method for calculating left ventricular ejection fraction with "hybrid" methods that use a combination of image-based measurements of ventricular volumes and Doppler-derived measurements of stroke volume. The authors concluded that hybrid ejection fraction calculations relating Doppler-derived stroke volume to an image-derived ventricular volume may be more sensitive to increases in systolic function than assessments of ejection fraction based entirely on imaging.

Also at the Heart HHHEhEh Failure Congress, investigators presented final data from another Phase IIa clinical trial that evaluated omecamtiv in patients with ischemic cardiomyopathy and angina. The authors concluded that in these patients, who theoretically could be most vulnerable to the possible deleterious consequences of systolic ejection time prolongation, treatment with omecamtiv at concentrations that increase cardiac function did not deleteriously affect a broad range of safety assessments in the setting of exercise.

In all, the presentations from these two completed Phase IIa trials of omecamtiv were very well received. Investigator enthusiasm is growing as we are moving forward, together with Amgen, towards the conduct of a comprehensive Phase IIb clinical trials program, anticipated to be comprised of multiple nonclinical studies as well as clinical pharmacology studies that are already ongoing and Phase IIb clinical trials that are to be initiated.

Indeed, based on results to date from an ongoing open label Phase IIa clinical study designed to evaluate and compare the oral pharmacokinetics of both a modified release and an immediate release formulation of omecamtiv in patients with stable heart failure, Amgen and Cytokinetics have recently agreed to advance a modified release oral formulation of omecamtiv into Phase IIb clinical trials. This joint decision underscores the excellent nonclinical development work performed by Cytokinetics and its outside vendors that was performed with a similar high quality and supervision as our internal clinical operations team. As mentioned, Cytokinetics is continuing this Phase IIa trial, as agreed with Amgen.

With respect to the Phase IIa trial evaluating an intravenous formulation of omecamtiv in patients with stable heart failure undergoing clinically indicated coronary angiography in the cardiac catheterization laboratory, Cytokinetics and Amgen have recently agreed to discontinue the trial due to the current challenges and constraints associated with enrolling eligible and consenting patients. This decision was made jointly, and Cytokinetics and Amgen may revisit the objectives of this trial in the context of the ongoing development program.

Overall, we are pleased with the progression of our clinical development program for omecamtiv, and, more importantly, the richness of the clinical data that have been generated to date supporting this novel drug candidate's use as a potential treatment for both acute and chronic heart failure. We recognize that heart failure reminds the number one discharge diagnosis for the Medicare patient population and the most frequent discharge diagnosis in US hospitals, placing a growing burden on our healthcare system. Yet the treatment of heart failure has not materially changed in decades. As we plan to embark on the Phase IIb clinical program for omecamtiv, we do so with the goal of continuing to develop a drug candidate that we believe has the potential to increase both the length and quality of heart failure patients' lives.

With an increased focus towards building a clinical development platform that builds on our expertise in the biology of muscle contractility, this quarter's other clinical activities also support our strategic objectives and reflect significant progress. In June, we initiated a first-time-in-humans, double-blind, randomized, placebo-controlled, single ascending dose Phase I clinical trial designed to evaluate CK-357 in healthy male volunteers. Each subject will participate in two dosing sessions, separated by an adequate washout period. Subjects will be randomized three to one at the start of each dosing period to receive active study drug or a placebo.

The primary objective of this clinical trial is to determine the safety, tolerability and maximum tolerated dose, or MTD, of CK-357 administered orally. The secondary objective is to evaluate the pharmacokinetic profile of CK-357. Following determination of the MTD and the pharmacokinetic profile of CK-357, further evaluation of this drug candidate's pharmacodynamic effects on skeletal muscle function in healthy volunteers may be undertaken in a second stage of this clinical trial.

Lastly, during the most recent quarter, all three of our oncology drug candidates -- ispinesib, SB-743921, or SB-921, and GSK-923295, or GSK-295 -- continued to progress in Phase I clinical trials. In all three programs, investigators presented interim data from ongoing Phase I dose escalation trials at the Annual Meeting of the American Society of Clinical Oncology. A highlight from these presentations included a poster presentation of data relating to SB-921 indicating an objective partial response rate of 30%, three of ten Hodgkin or non-Hodgkin lymphoma patients, in the more recent two-dosing level as we continue to escalate towards an MTD. Each of these trials continues, and we look forward to a determination of the MTD in each case ahead of possibly initiating Phase II trials.

With that update on our clinical development programs for the second quarter, I'll turn the call back over to Sharon.

Thank you, Andy.

As our press release contains detailed financial results for the second quarter and six months ended June 30, 2009, let me refer you to that public statement but also provide you with a little more detail on how our research and development or R&D spending is now aligned by program. In addition, I'd like to update you on our financial guidance.

Our second quarter 2009 R&D expenditures totaled $10.2 million. From a program perspective for the second quarter, approximately 34% of our R&D expenses were attributable to our cardiac muscle contractility development and research activities, 30% to our skeletal muscle contractility research and development activities, 12% to our mitotic kinesin development activities, and 24% to our other research and nonclinical development activities, which include our smooth muscle contractility program.

For the six months ended June 30, 2009, our R&D expenditures totaled $20.2 million, and from a program perspective for this six months ended, we had approximately 37% of our R&D expenses were attributable to our cardiac muscle contractility development and research activities, 28% to our skeletal muscle contractility research and development activities, 12% to our mitotic kinesin inhibitor development and research activities, and 23% to our other research and nonclinical development activities, which included our smooth muscle contractility program.

As of June 30, 2009, cash, cash equivalents and investments, excluding restricted cash and the put option on our auction rate securities, totaled $132 million, which represents more than 24 months of going-forward net cash burn based on our current burn rate. This cash balance includes the net proceeds of the $13 million from the registered direct offering we completed in May, as well as the $50 million we received from Amgen for the exercise of its option.

We also announced today that we are updating our financial guidance for 2009. Our cash revenues are anticipated to be in the range of $54 million to $58 million, cash R&D expenses are anticipated to be in the range of $40 million to $45 million and cash G&A expenses are anticipated to be in the range of $15 million to $17 million. The financial revenue guidance includes the $50 million which was received during the quarter associated with the option exercised by Amgen and also includes anticipated revenues associated with the reimbursement of our R&D expenses related to the clinical development program for omecamtiv.

Cytokinetics may further update its financial guidance based on ongoing discussions with Amgen and the possibility that the Company may assume responsibility for additional R&D activities under the collaboration. These additional activities may be reimbursed by Amgen.

This financial guidance is on a cash basis and does not include an estimated $24.5 million in GAAP revenues primarily related to Amgen's initial payment for its nonexclusive license and technology access fee under the parties' collaboration and option agreement and $7.3 million in non-cash-related operating expenses primarily related to FAS 123R stock compensation expense.

That concludes the financial portion of today's call.

With that, I'll now turn the call back over to Robert.

Thank you, Sharon.

From the events of the last quarter, I think you will agree that both financially as well as strategically Cytokinetics enters the second half of 2009 in a strong position. Fiscally, we are in sound shape, with over two years of cash, based on our current burn rates, even as we plan to build out and advance our pipeline with the entry of CK-357 into Phase I clinical study and plan on continued investments in other research and nonclinical development programs.

Of course, Amgen's exercise of its option to omecamtiv added significantly to the cardiac contractility program and provides potential promise to patients suffering grievous illnesses. But it also points out and adds more fuel to the Company tank to augment other R&D programs which are rooted similarly in novelty of mechanism, such as our skeletal muscle contractility program.

Also of note in the second quarter, with respect to our smooth muscle myosin inhibitor program, currently in IND-enabling studies, in May, at the Annual Meeting of the American Society of Hypertension, Cytokinetics scientists presented nonclinical data suggesting that direct inhibition of smooth muscle myosin may offer a novel therapeutic approach for the potential treatment of hypertension. Like our cardiac and skeletal muscle programs that have entered clinical development, this program, in preclinical development, may afford a novel entry point to deliver on unmet needs in diseases, including hypertension, pulmonary hypertension and asthma, that may also benefit from our novel mechanistic approach.

As you can hopefully see, our muscle biology focus is very much alive and well at Cytokinetics. As we continue to build out our business with focus to muscle biology I would like to share with you our key milestones looking at the remainder of 2009.

On the cardiovascular side of our business, in August, final data from the Phase IIa clinical trial of omecamtiv in stable heart failure patients and the Phase IIa clinical trial of omecamtiv in patients with ischemic cardiomyopathy and angina are scheduled to be presented at the Annual Meeting of the European Society of Cardiology in Barcelona. In September, final data is scheduled to be presented from the Phase IIa clinical trial of omecamtiv in stable heart failure patients and the Phase IIa clinical trial of omecamtiv in patients with ischemic cardiomyopathy and angina scheduled to be presented at the Annual Meeting of the Heart Failure Society of America in Boston.

With the exercise of Amgen's option, we are working with Amgen to move rapidly into larger and more definitive clinical trials of omecamtiv as part of a robust development program that is anticipated to include Phase IIb clinical trials in subjects with heart failure, as well as nonclinical activities and additional clinical pharmacology studies that support these trials. Certain collaborative activities under this program are ongoing and will continue through the remainder of 2009, while others are anticipated to be initiated in 2010.

Looking to our other ongoing development programs, in 2009 we plan to progress our smooth muscle myosin inhibitor in IND-enabling studies.

Lastly, we are committed to sharing additional details on our research and development programs that have arisen or are arising from our focus on the biology of muscle contractility and function. On September 18, 2009, we are scheduled to host an R&D Day for the investment community at the Grand Hyatt Hotel in New York City, led by our senior management team, including me, Sharon and Andy, as well as Drs. Dave Morgans and Fady Malik, and with additional commentary provided by translational research and clinical development thought leaders. The event will highlight the Company's progress in advancing its muscle biology-directed drug development program. We anticipate providing additional details closer to the event date.

To summarize, I am pleased with Cytokinetics' performance during the quarter and believe that we have continued to execute well against our planned milestones. Furthermore, our commitment towards leveraging our experience in cardiac muscle contractility and the biology of muscle function has recently yielded still another novel drug candidate, with others expected to follow. We are nicely positioned to build additional value as we go about our business. We appreciate your support and look forward to providing additional updates.

That concludes the formal portion of our call today, and, Operator, I would now like to open up the call to questions.

(Operator instructions).

Your first question comes from the line of Mark Monane, with Needham & Company.

Hi, Mark.

Hello. Good afternoon, everybody. Greetings from a murky East Coast.

Murky?

Murky -- cloudy and rainy and unfavorable. And speaking of unfavorable, congratulations on choosing a brand name that will be very, very hard to use -- a generic name, excuse me, that will be very, very hard to use in the future. I hope you choose a brand name called Sam or something like that.

So, as you probably do appreciate, this was a name assigned to us by USAN, and we don't have that many degrees of freedom in terms of what might be our choice and selection, but I take your point.

Yes, very good. And then congratulations on -- the collaboration I think is a real win-win for both organizations. Speaking about the patients, though, I heard a comment about the drug potentially having more utility in the low ejection fraction patients. Is that accurate? A number of the patients that I saw in clinical practice had both -- had also diastolic dysfunction. Maybe you could talk about any plans or any further discussions on targeting the different populations.

Well, as you know, Mark, the main therapeutic hypothesis for this compound is that it increases systolic function. So, to answer your second question first, we wouldn't see it as having particular utility in patients whose heart failure symptoms are primarily due to diastolic dysfunction.

Having said that, most patients with systolic dysfunction also have an element of diastolic dysfunction, as well, and, importantly, to date we have demonstrated no negative effect on diastolic function with omecamtiv. So there certainly is no harm that we would anticipate from giving the compound to patients with an element of diastolic dysfunction. But, truly, we would expect the target population of heart failure patients to be those whose symptoms are primarily from systolic function.

And there, yes, you did hear correctly that at the heart failure sessions of the European Society of Cardiology last month there were subgroup analyses that compared the effect of the drug to increased stroke volume in patients whose stroke volumes at baseline were below 50 milliliters, which is a pretty generally accepted threshold for abnormally low versus those that were more preserved, or above 50 milliliters. And, while I don't recall the exact values right now, you can go to our website and see the presentation. And, in fact, there were bigger, generally larger increases for a given concentration of omecamtiv in the patients whose ventricular function was more depressed at baseline, as evidenced by a smaller stroke volume. And we did a similar analysis with ejection fraction, as well, and saw a similarly more robust pharmacodynamic response in those patients who started out with poor ventricular function.

That was helpful. That is consistent with the mechanism. Speaking of mechanism, you have drugs that you're developing now for both cardiac -- for cardiac and skeletal and smooth. And the question is, are you able to design the molecule specific enough that there's not crossover among the different muscle fiber types?

I'll take that question, Mark, and the answer is yes. In fact, the way we screen initially at the biochemical level for these programs is with each of those muscle systems being either a primary or negative control for the others. So when we're looking for specific cardiac contractility activators, we're specifically excluding those that may have activity against skeletal or smooth as we are making that part of our target product profile, if you will. Naturally, those compounds that fall into one bin or another can serve as starting materials for the other programs directed towards those other tissue types and muscle systems. So I think that's actually one of the key advantages of our focus on muscle biology and muscle contractility is the same underlying platform that serves one program with synergy and economies lends itself to the other programs in what I think is a more productive way.

Very good. Thanks for the added information, and congratulations on moving the collaboration forward.

Thank you, Mark. Appreciate that.

Your next question comes from the line of Michael Aberman, with Credit Suisse.

Hey, Michael.

Hi, guys. This is actually Nick Catarpo filling in for Michael today.

Hey.

Hi. I had a quick question regarding the PK profile and the PK data you collected from the bridging study. Does this new data at all support a once-daily dosing of omecamtiv? I hope I said that right.

Not this formulation. The formulation of the modified release that we are currently contemplating to take forward into later stage studies, Phase IIb and Phase III would be twice daily. However, the half-life of the drug is on the order of 20 hours, and so it is conceivable that another technology might support once-daily dosing, but not this particular modified release.

Great. Thank you.

You're welcome.

Your next question comes from the line of Mike [Kane], with Merriman.

Hey, Mike.

Good afternoon. Can you hear me okay?

Yes, we can hear you. How are you?

Good, thanks. Just a couple of quick questions. I guess it's good news that Amgen has assigned an AMG designation to the former CK-452. I just wonder -- one of the things I guess I wonder a little bit about with anything that goes into Amgen's auspices is losing track of what the status is. So can you give us some idea of how we can monitor the continued progress of CK-452/AMG-423?

It's an excellent question, and a third name is omecamtiv, as you heard on today's call.

Yes.

You know, firstly, with respect to AMG-423, let me just mention for those that may not have picked up, in Amgen's earnings call they identified publicly what has been for some time now the designated nomenclature for CK-452 in their system, referring to it as AMG-423. Now that we have also been assigned the generic name, I think more likely both companies will be referring to omecamtiv mecarbil, to be complete.

With respect to disclosures, I think what you can anticipate, Mike, is that we're going to be able to disclose that which is significant and materially important to our business, and Amgen, I think, is committed to that, as well, as they recognize that is important to us. Right now what we're in a position to share is that which we shared today. We are engaged in a lot of collaborate activities, things that are routine for an asset that is moving now in Phase IIb clinical trials, but certainly more significant in their scope than that which we were doing ourselves with this asset when it was then in Phase IIa earlier studies.

Moving forward, as we initiate activities we'll certainly test them for their materiality, and as it would be material we will then be in a position to disclose those. So I hope that you won't see any change in the way that we are disclosing things than the way we have been. Certainly that's not our intention.

But, I mean, I guess the question would be is it's now sort of Amgen's domain and at their discretion to disclose, or do you have some agreements in the contract, your agreement with them, that allow you to designate or -- the level of materiality to them versus Cytokinetics is different. So are there some clauses in the contract that allow disclosure of clinical development status or presentation of data at conferences and such?

Yes, so that which is deemed material to us is permitted for disclosure under the collaboration agreement, and surely that recognizes that the materiality threshold is different for a company like Cytokinetics and Amgen. But I think Amgen is also committed -- I can't really speak for them, but I certainly don't have any evidence to suggest otherwise -- that we'll be in a best position to share with the scientific community that which is meaningful with respect to the progress, and certainly as we do that we'll share that with the investment community as well.

Okay, great. And then, just with regard to 357, I wonder if -- what can we look at, are there going to be any troponin blood levels? I mean, would we expect there to be any increase in troponin in the blood with the use of CK-357, or is that a silly question?

I don't think it's a silly question. It was selected for development in part because of its substantial selectivity, though, for skeletal (inaudible) as opposed to cardiac. We will be looking for evidence of any untoward effect on all muscle, and so we will be monitoring a complete panel of blood safety laboratories, which would include CPK and other muscle enzymes, as you suggest.

Right. I'm just wondering how much is sort of mechanism-based or artifactual versus something that might be viewed as real. How could one (inaudible)?

Well, it's a little -- I mean, in terms of what we're seeing in the clinic right now it's premature to say anything. In terms of what we've seen preclinically, I don't know that we've actually disclosed much of that, either. So that is something that I think I would point toward the R&D Day that Robert mentioned earlier, where we will be able to, in much more detail than what we have disclosed today, talk about where we have been with the skeletal muscle activator, where we are now and where we will intend to be going.

Right. I'm sorry, and I heard you mention it, Robert, but -- and I thought you said something in December. But did I get the date wrong?

Yes, the R&D Day is September 18.

September 18. Okay, great. Thanks very much.

Thanks, Mike.

Your next question comes from the line of Charles Duncan, with JMP Securities.

Good afternoon, Charles.

Hi, folks. Congratulations on a great quarter of progress with omecamtiv and many of the other programs.

Thank you.

I had a quick question on 357, as well. I wanted to ask you about the kind of data that will come out of that. Obviously you're looking at safety data and PK data, but do you anticipate being able to do any muscle function testing or anything that can give some sense as to call it biologic activity?

Yes, we expect that we may be able to do that, and we did make a brief mention of it during the call, that once we have determined the maximum tolerated dose and the pharmacokinetic profile of the compound we may in a second stage of the trial do something just as you suggest that would allow us in a controlled way to look at muscle performance in the presence versus the absence of the drug, and potentially at more than one dose level. And that's probably about as much as I can say about it right now, but it is our intention to get some sort of pharmacodynamic response data from the study.

Just to add to that, Charles, you know, in the same way that in Phase I in our cardiac muscle program we saw good pharmacodynamic activity in healthy volunteers, our hope is that we'll be able to do that here also, again, not by echocardiogram, obviously, but by other validated measures. And in that way we'll have both a safety and tolerability study in Phase I but also one that provides a human proof of mechanism as measured pharmacodynamically in healthy male volunteers.

Second question, Robert, I appreciate that added color, Robert and Andy, as you kind of look forward at the different indications you could pursue with the skeletal muscle program, do you anticipate being able to identify that are -- identify some indications that are kind of more niche oriented, or ones that you perhaps could get early clinical data that can have very strong predictive value for kind of registrational endpoints?

Yes, put simply, the answer is yes. We're in the process now of vetting those potential indications along parameters as you described, and what would rank high on our list is something that would provide validation in a disease or illness population that reads on the potential for other populations as well as something that would be sufficiently tractable, as measured by cost per patient and concentration of the target population, in order to be able to get a rapid answer and in a population that could lend itself to an accelerated development program and even accelerated regulatory review and time to market. So those are the ways we're thinking about this.

We're blessed, if you will, it's a bit of a double-edged sword in that we have a number of indications or conditions to choose amongst here where this sort of mechanism should play out, and we look forward to learning about that. But we have to triage those potential indications in a way that is affordable and gets us a quick answer, and that's what we're in the midst of doing. We'll elaborate more on our choices at the R&D Day.

Okay, good. And if I may hop over to 921 quickly, just wondered if there was any additional update. I saw the data at ASCO, but what are the kind of next things to look for out of the 921 program?

We continue to move toward determination of the maximum tolerated dose. As we've mentioned on the call today, we're currently enrolling at 10 milligrams per meter squared, with the addition of empiric prophylactic granulocyte colony stimulating factor. As we noted during the call, we've seen a response rate that would calculate out to 30% in the cohorts that treated with 8 and 9 milligrams per meter squared. So we're looking toward the MTD determination, and then, as resource permits, we'll move into Phase II.

Any sense on timing? I know it's kind of, obviously, an event-driven thing, but do you think that we can get an update around the ASH timeline?

I think that's a reasonable assumption. You know, we're not spending as aggressively in this program, obviously, as we are in our muscle contractility programs, and we don't know precisely when we may hit the MTD as we're continuing to dose escalate. But our assumption is we may be getting close, and as such we may have more complete data that we could share later this year. ASH, I think, is a reasonable assumption.

Thanks for the updated financial guidance, as well, Sharon.

Thanks.

Your next question comes from the line of Joel Sendek, with Lazard Capital Markets.

Hi, Joel.

Hi. Thanks a lot. So, let's see. I wanted to follow up on the line of questions both for omecamtiv and 357, so maybe start with 357. I'm trying to find a way to slot this into my model, and so the two questions I have are with this -- can you at least help us think about this? Is it more of a supportive care drug or a primary therapy when you look at your different choices for the type of patients?

You know, there's a broad range of potential applications, and some may be viewed one way and others the other. Perhaps a population among those that would have the most compelling unmet medical need would be patients with ALS, or Lou Gehrig's disease, where, in fact, the muscle, as you probably know, is normal, but the signal from the nerve into the muscle is what becomes diminished as the myelin dies.

And because one action of the drug is to amplify the muscle's response to a given electrical signal, whether it be externally applied or coming from the native nerve, it could be that treatment with 357 in patients with ALS may allow them to retain function for longer and potentially, for example, to stay off a ventilator and out of the hospital for longer. So that would really be altering the course of the disease. Certainly, in the end the demyelination will persist, and you're going to wind up with patients with no input into their muscle, and that, of course, we can't do anything about with this mechanism, but hopefully it would potentially provide a survival benefit.

Perhaps at the other extreme there is also evidence that the compound makes exercising muscle more efficient, much as we have seen with omecamtiv in cardiac muscle, where we have seen increases in systolic function without measurable increases in oxygen consumption. We've seen similar things with 357, and so consequently there's a rationale that it might be useful in treating the pain of claudication, which is sort of angina of the exercising limb muscles, if you will. That might be viewed as a more supportive care, but then also a much larger potential marketplace.

Maybe Michael Phelps could use it since he's not allowed to use his razor suit anymore.

Right.

Why don't you recommend that to him?

I'll call him right after this call's over. Then on omecamtiv, I know it's going to be tough for you to answer this, but can you give us a sense of whether you think the program is moving -- and obviously I'm really after when you're going to start the Phase IIb, but can you give us a sense of whether the program is moving faster, quicker or about the same post-Amgen as it was before?

So, it's really hard to answer the question, because we were prepared, as you know, to initiate Phase IIb midyear, but what we would be able to do had Amgen not exercised would have been a longer program that likely would have enrolled much -- many fewer patients per month and fewer sites. So we could only do that which we could have afforded had Amgen not exercised.

With Amgen exercising, we're not starting the program midyear, as you know, and what we are contemplating is a global program of multiple sites internationally, and, as we also mentioned in this press release and call, trials. So it's not a singular trial, as we referred to it before, but rather trials. And, as such, I would expect that with Amgen onboard and them, frankly, at the steering wheel, we're in a position now to deliver an answer on a time frame that may be similar, but it could be [in] effect a more robust program, delivering more information. So I'll turn it back to Andy to elaborate.

Right. Well, I know you want to know when, and, as I'm sure you recognize, that's really under Amgen's control, and all we can tell you is that when Phase IIb begins we will certainly let you know. I would echo Robert's comments that while already they have not initiated the study on the same time frame that we had planned, I think overall the addition of their resource to the program will make what is done far more robust, and it could well be that when the results are available it may not be that much different, because once the program begins, I think they have the wherewithal to move it, perhaps, more quickly than we would have been able to do ourselves. So, all in all, we're very pleased with the collaboration and the amount of resource they're bringing to bear on it.

And I think it's also worth mentioning, and I recognize that you're looking for an answer, and you recognize that we're not in a position to give it, but what I can say very matter of factly is that the conversations with Amgen are going well. I think Amgen is very serious about this program, and they are inviting our inputs and we are collaboratively designing studies that are -- and underscore plural, studies -- that are going to I think very importantly address the right questions. So once the studies start, as Andy mentioned, we will elaborate, as we then will need to, on timing and design, but until such time I think it would be premature, and certainly, because it's under Amgen's supervision and control, that's about as much as we can do.

And just to be clear, when you say trials, does that mean multiple Phase IIb's?

Yes.

Okay. All right, great. Thanks a lot.

Thanks, Joel.

Your next question comes from the line of George Zavoico, with Westport Capital.

Hey, George.

Hi, Robert, Andy and Sharon. Congratulations. That was really welcome news in May, for sure.

Thank you.

I have a question, a little follow-up on something Mark mentioned earlier in the call regarding the mechanism of action. You mentioned 357 as being a troponin activator, 452 as a myosin activator. I mean, the muscle physiology is certainly more complex, and the mechanism of action for each of these drugs is not only -- probably not only different, but you have multiple approaches, as it were, to modify muscle function. So in a sense, are these, the drugs you have now lining up to go into the clinic, are they sort of the leading edge of a whole slew of backups that perhaps may act slightly differently in the various muscle fibers?

I think the answer is yes. As with all of our programs, in each case with CK-452 and CK-357, we have designated a backup that is in preclinical development. In both cases, CK-452 and CK-357, we're not aware of any clinical liabilities that would warrant accelerating the development of the backup, but it is there, chemically distinct and mechanistically similar, in each case.

In both cases, yet again, we are looking at follow-on compounds that are also chemically distinct and mechanistically dissimilar, and those could represent next-generation compounds, if you will, and we're continuing research, meaning in each area, and we also have other programs that build on our interest in contractility that extend to other aspects of muscle function. So this is a company that is quite serious about building and maintaining a leadership position in muscle that extends beyond contractility in other research programs. So I think the answer to your question is most definitively yes.

So, regarding -- that's great. Now, regarding 452, Amgen, that's as far as the Amgen partnership goes. The backup compounds are or are they not included in the --

So the Amgen exercise provides for them access not strictly to CK-452 but others of the compounds from the same program, including what I mentioned, the backup and any potential follow-ons.

Okay. That's great. Now, regarding the R&D spend, basically for the rest of 452 now, if I remember correctly with your agreement, Amgen now takes over all of the cost. So that frees up a tremendous amount of cash that you were spending in that program to the other programs. In fact, looking at your [statement] of operations, it appears as though, from what your guidance -- from Sharon's guidance, as well, that the new R&D spend really isn't going to change very much. So I suspect, is this going to be like a turbo boost to the skeletal and smooth muscle programs? Is it going to act like that?

Yes, so one thing I just want to clarify, George, so what you see in the P&L is GAAP, what we gave was cash guidance. But you are correct. I mean, we are freeing up some funds to be able to then provide additional resources to 357 so that we can advance our skeletal program to a position of proof of concept clinical trials in 2010. So we will be looking to if you'd call boost our investment in 357 with that goal in mind as we move forward.

We do still have spending, though, that is reflected in the R&D guidance related to omecamtiv, but those -- that spending, for a large extent, is reimbursed, and it's included in our revenue guidance. So it's a net zero to the bottom line, but basically has to be included as part of our R&D guidance as well.

I see. So it's included as an R&D expense, but then the net zero part, it's also included as the license revenue.

That's correct.

I see. Okay. And, finally, I think you alluded to this in Joel's question, you speak about Amgen being in control and Amgen being at the steering wheel, as it were, but at the same time you also mention that it's a collaborative partnership and that you're advancing it as such, like a joint committee. Does -- Amgen, I imagine, has the final say, but, Andy, I mean, this has been your baby for a while, and I imagine it's kind of hard to cut the cord. I hope you still have a tremendous amount of input in the design of the Phase IIb's.

It's a very collaborative situation, and I will say that the folks at Amgen have been explicit in recognizing the history that we, not just me, by no means, but Fady Malik and many others in our clinical operations group, with executing the trials that have been completed to date, and they have accommodated the learning that we have accomplished in performing those trials, not just in terms of about the compound but also about the investigators and investigator sites where we've had good success in executing the trials. So they've been very, very receptive to our input.

What I think I can add, George, is that one of the beauties of this collaboration and an option structure is that as we invited Amgen into conversations and planning with us over the last couple of years, so are they now with their being in the driver's seat inviting us. So it's not as if we have started a collaboration here recently. Rather, we are extending and expanding a collaboration that's been in place since the end of 2006.

Okay. That's reassuring. Thank you. Thank you very much, and I look forward to more data coming out in the next couple of months.

Thank you, George.

Your next question comes from the line of Larry Smith, with DLS Research.

Hey, Larry.

Hi, Sharon and Robert and Andy. I wanted to ask you a question. Sharon, you gave guidance that the current $132 million will provide roughly two years of burn. But there are so many variables that go into that -- the decision on whether you opt in more to the omecamtiv Phase III trial, whether you get a strong signal with 357, what happens in some of the oncology indications. What kind of variability can you see around that guidance that you have two years of burn rate?

I mean, we use two years as kind of a benchmark, but we really do have well over two years' worth of going-forward cash at this point in time, and that's the reason that we were a little on the conservative side is because of some of those variables that you mention. I think the time frame until the Phase IIb trials get underway for omecamtiv, we don't know exactly what fiscal year a potential opt-in for us would occur if we were to opt in to Phase II -- or Phase III development. And then also the potential investment on whether it's on our dime, so to speak, for 357, I think our goal overall strategically is to take that asset as far as we can ourselves, or further along, if we can, ourselves, to derive more value for it in the marketplace. So we're being conservative when we say 24 months at this point in time because of those variables.

I think what we can also add, Larry, is that by saying over two years of cash at our current burn rate, we are not assuming what may be additional revenues that could accrue from the partnering activities relating to, let's say, CK-452 or omecamtiv in Japan, which is currently unpartnered, or otherwise any monetization of our skeletal program, our smooth program or our oncology programs. All of that would be on the plus side.

Thank you.

Thank you.

And there are no further questions at this time.

So, I would like to thank all the participants for your continued interest in Cytokinetics. Obviously, we feel very strongly about this having been a very successful quarter. We look forward to updating you throughout the remainder of the year.

And, Operator, with that we can conclude the call.

Have a good day, everyone.

Thank you. This does conclude today's conference call. You may now disconnect.