Cytokinetics Inc (CYTK) 2010 Q3 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics Third Quarter 2010 Conference Call. At this time I would like to inform you that this call is being recorded and that all participants are in a listen-only mode. At the request of the Company, we will open the call for questions and answers after the presentation.

I will now turn the conference over to Sharon Barbari, Cytokinetics Senior Vice President of Finance and CFO. Please go ahead.

Good afternoon and thank you for joining the Cytokinetics Senior Management Team on this conference call today. 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 function. Andy will then provide highlights and details on the progress of the Company's clinical development programs and then I'll provide some brief comments with respect to our financials and our investment in research and development activities. Robert will then conclude the call with additional comments regarding our recent activities and discuss the projected Company milestones for the remainder of 2010. 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 the purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to our financial guidance; the initiation, enrollment, design, conduct and results of clinical trials; and to other research and development activities. Our actual results might differ materially from those projected in these forward-looking statements.

Additional information concerning factors that could cause our actual results to differ materially from those in these forward-looking statements is contained in our SEC filings, including our most recent quarterly report on Form 10-Q and our 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.

Now I will turn the call over to Robert.

Thank you, Sharon. During the third quarter Cytokinetics continued to advance our pipeline focused to the biology of muscle function. In recent weeks we have conducted reviews of interim data from each of our two phase IIa evidence of effect clinical trials of CK-2017357 or CK-357; one in patients with amyotrophic lateral sclerosis or ALS and the other in patients with symptoms of claudication associated with peripheral artery disease. We are pleased with the progression of our skeletal muscle program.

Moreover, we are pleased with the interim results relating to the potential tolerability and also pharmacodynamic effects of CK-357 that are now emerging from these two ongoing trials. In a moment Andy will elaborate on our conduct of interim reviews of data from each of these trials. In addition, during the quarter we readied for the initiation of an evidence of effect trial in patients with myasthenia gravis, which is yet still further evidence of our commitment to investigating the potential of skeletal muscle activation in patients afflicted with neuromuscular diseases.

Also, during the last quarter we announced that Amgen and Cytokinetics have re-prioritized the order of planned clinical trials relating to omecamtiv mecarbil, our novel cardiac myosin activator, under joint development for the potential treatment of heart failure. Together with our partner, Amgen, we now plan to initiate a phase IIb clinical trial of an intravenous formulation of omecamtiv mecarbil in hospitalized patients with acutely decompensated heart failure prior to initiating further clinical trials of oral formulations of omecamtiv mecarbil. This plan, which is subject to further discussions with regulatory authorities, is intended to align feedback received from regulatory authorities and is designed to provide a larger placebo controlled experience with omecamtiv mecarbil prior to proceeding to clinical trials of oral formulations of omecamtiv mecarbil in outpatients.

I would now like to turn the call over to Andy to elaborate on specific clinical progress achieved during the last quarter in our respective drug development programs and also to provide some insights into our plans for the future.

Thank you, Robert. As Robert just indicated, during the quarter our clinical team was heavily involved with multiple activities related to our ongoing and planned clinical trials. We continue to enroll patients in our two ongoing phase IIa evidence of effect clinical trials, the most advanced of which is our trial on patients with ALS. To remind you, the primary objective of this early phase IIa hypothesis generating trial is to evaluate the pharmacodynamic effects of CK-357 on multiple measures of skeletal muscle function or fatigability in patients with ALS at single doses of each of 250 and 500 milligrams without specifying a single primary endpoint.

As we discussed in July during our second quarter earnings call, we conducted an interim review of the data from this ongoing trial. Those results indicated that 357 appeared to be well tolerated in these ALS patients and no serious adverse events were reported. Based on these interim data, we proceeded with the trial as initially designed with no changes to the protocol.

With today's release we announced that we recently conducted a second interim review of the data from this trial. The interim look, like the first one we did in July, suggested pharmacodynamic activity across multiple assessments of patient function and skeletal muscle performance. In addition, this review suggested that single doses of CK-357 at each of 250 milligrams and 500 milligrams continued to be well tolerated.

Two serious adverse events, one of pancreatic cancer and another of pulmonary embolism, were reported. Each was judged by the respective investigator to be unrelated to treatment with CK-357. Patient enrollment in this trial was recently completed.

Our second phase IIa evidence of effect clinical trial is in patients with symptoms of claudication associated with peripheral artery disease. To date patients in this trial have received in random order single oral doses of placebo, 375 milligrams and 750 milligrams of CK-357 over the course of three dosing periods. The primary objective of this phase IIa hypothesis generating trial is also to evaluate the pharmacodynamic effects of single doses of CK-357 on several measures of skeletal muscle function and fatigability in these patients, again, without specifying a single primary endpoint.

Recently we conducted an interim review of data from this trial that suggested potential pharmacodynamic activity of CK-357 to increase skeletal muscle performance in these patients. In addition, the data suggested that single oral doses of CK-357 were generally well tolerated by most patients in this trial. Two patients in the trial experienced serious adverse events that were judged to be related to treatment with CK-357 by each prospective investigator.

One patient experienced dizziness and mental confusion and the other experienced dizziness and dyskinesia or abnormal movements. Both patients required inpatient observation until their symptoms resolved. These events were judged by the investigators not to have been life threatening and to have resolved spontaneously and completely without additional treatment. Following these observations, the protocol has been amended to lower the 750 milligram dose to 500 milligrams. Additional information about both of these ongoing trials can be found at www.clinicaltrials.gov.

As Robert mentioned, during the quarter we also readied for the initiation of our third phase IIa evidence of effect clinical trial, this one in patients with myasthenia gravis. This trial follows the award to Cytokinetics of a $2.9 million grant from the National Institute of Neurological Disorders and Stroke or NINDS as part of the American Recovery and Reinvestment Act of 2009.

For those of you unfamiliar with myasthenia gravis, it is a chronic autoimmune neuromuscular disease in which patients make antibodies that attack the sites on the skeletal muscle cells through which neurons stimulate muscle contraction resulting in generalized weakness and fatigue. Myasthenia gravis commonly strikes people between the ages of 40 and 70 and afflicts between 50,000 and 85,000 people in the United States.

This trial will examine CK-357 as a potential treatment for symptomatic relief of the fatigue and weakness that affects these patients. We will provide additional details on the design of this trial upon its initiation, which is expected by the end of the year.

With that update on our clinical development activities in the third quarter, I'll turn the call back over to Sharon.

Thank you, Andy. As our press release contained detailed financial results for the third quarter ended September 30th, 2010, let me refer you to that public statement. We ended the third quarter with $77.2 million in cash, cash equivalents and investments, excluding restricted cash, which represents between 17 and 18 months of going forward cash burn based on our 2010 financial guidance.

Our third quarter 2010 R&D expenditures totaled $9.5 million. From a program perspective for the third quarter approximately 81% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, 3% to our cardiac muscle contractility activities, 15% to our other research and non-clinical development activities including our smooth muscle contractility program and 1% to the wind down activities related to our mitotic kinase and inhibitor development and research activities.

For the nine months ended September 30th, 2010 our R&D expenditures totaled $28.9 million and from a program perspective for the nine months approximately 78% of our research expenses were attributable to our skeletal muscle contractility activities, 5% to our cardiac muscle contractility activities, 15% to our other research and non-clinical development activities, which include our smooth muscle contractility program and 3% to our mitotic kinase and inhibitor development and research activities.

As you can see, we continue to focus our financial resources largely on our skeletal muscle research and development program, which together with our cardiovascular development program partnered with Amgen we believe may provide the nearest term value generation for the Company.

We also announced updated financial guidance reflecting lower anticipated expenditures for 2010. The Company anticipates cash R&D expenses to be in the range of $37 million to $40 million and cash G&A expenses to be in the range of $12 million to $13 million. This financial guidance is on a cash basis and does not include an estimated $6 million in non-cash operating expenses, primarily related to stock compensation expense. This guidance does not reflect potential revenue from Amgen, NINDS or potential collaborations with other partners.

That concludes the financial portion of today's call and with that I'll now turn the call back over to Robert.

Thank you, Sharon. What we have accomplished as a Company so far this year has laid a foundation for what we outlined for our shareholders a little over a year ago with our first research and development day. Our strategy has been clear to identify and execute on potential opportunities arising from our advanced and proprietary understandings of the biology of muscle function and to leverage the knowledge we gained through the development of omecamtiv mecarbil.

In this last year we gained a great deal of insight into the novel mechanism of action of CK-357 from our two phase one safety pharmacokinetic and pharmacodynamic studies that informed the design of our two evidence of effect trials, both of which are proceeding well. We continue to believe that if CK-357 demonstrates promise in ALS patients then it also may have the potential to demonstrate activity in terms of improved functional status in patients with other neuromuscular diseases.

Likewise, should CK-357 demonstrate promise in patients with claudication, then it may also have the potential to demonstrate activity in a number of other conditions tied to muscle impairment and loss of muscle function, as is increasingly common in the frail elderly. During the quarter in anticipation of the initiation of our third evidence of effect clinical trial, again by the end of the year, members of our clinical team had the opportunity to meet with key opinion leaders, who are all trained neurologists specializing in myasthenia gravis.

These physicians provided our team with valuable insights into how they treat the disease and what potential CK-357 may hold for these patients. I am pleased to say that these thought leaders expressed a great level of enthusiasm for this novel drug candidate and the feedback mirrors the same level of enthusiasm that we have seen from the heart failure in ALS medical communities when discussing omecamtiv and CK-357 respectively.

Now, I'd like to review our milestones for the remainder of the year related to each of the programs in clinical development. For omecamtiv mecarbil we anticipate that in the first half of 2011 Amgen will initiate a randomized double blind placebo controlled phase IIb clinical trial of an intravenous formation of omecamtiv mecarbil in patients hospitalized with acutely decompensated heart failure due to left ventricular systolic dysfunction.

We anticipate that in 2011 Amgen will initiate a multicenter open label phase IIa clinical trial of a modified release and an immediate release oral formulation of omecamtiv mecarbil in stable heart failure patients. And also we anticipate that following discussions with regulatory authorities Amgen will initiate a phase Ib multicenter open label single dose safety and pharmacokinetic clinical study of a modified release oral formulation of omecamtiv mecarbil in patients with various degrees of renal dysfunction.

Now, turning to our skeletal muscle program, in December we plan to present data from the ongoing phase IIa evidence of effects clinical trial of CK-357 in patients with ALS at the 21st Annual International Symposium on ALS and other Motor Neuron Diseases to be held in Orlando. We anticipate that in the first half of 2011 data will also be available from the phase IIa evidence of effect clinical trial of CK-357 in patients with symptoms of claudication associated with peripheral artery disease. And we anticipate that we will initiate a phase IIa evidence of effect clinical trial of CK-357 in patients with myasthenia gravis by the end of this year.

The fourth quarter has already shown to be a busy time for everyone at Cytokinetics, the kind of busy that we thrive on. Our clinical teams are executing our skeletal muscle phase IIa clinical trials program with two ongoing evidence of effect trials. Our business development and corporate development teams are busily engaged in partnering, forecasting and strategic planning activities.

Our legal and finance teams are preparing contracts to assist us in obtaining additional clinical trials site approvals. Our manufacturing teams are readying API and drug product supplies for the pending initiation of our third evidence of effect trial with CK-357. Our multiple research teams are ensuring that backup and follow-on candidates, a key staple to our risk mitigation strategies associated with our development pipeline, continue to progress.

And, of course, the many people at Cytokinetics that work with teams at Amgen on a daily basis in support of the omecamtiv mecarbil program are busily preparing for multiple clinical trials to be initiated in 2011. With the focus that our organization is bringing to bear, I am confident we can end the year strongly.

Operator, that concludes the formal portion of our call today and I'd now like to open the call up to questions.

(Operator Instructions). The first question comes from Joel Sendek with Lazard Capital Market.

I was actually confused on one thing with regard to what Amgen is going to do so if you can just help me with this, so for acutely decompensated heart failure they need to run this IV study before starting the oral but yet they're going to go forward with the oral next year in stable heart failure. I am wondering what -- why do they need more IV work in one but not in the other?

I'll start and then I'll turn it over to Andy but just to clarify, it's not that the expectation is that the phase IIb study of the intravenous form of the drug must be concluded prior to initiating any oral studies, but rather we are submitting the intravenous protocol with a goal of initiating that study first. And then, based on that dialogue, we'll be in a position to ready for progression of other studies and Andy can speak to what we might learn from the intravenous studies that could benefit oral studies.

And before he answers if I can just clarify one point, which is so you can effectively start the orals. Would you have interim data that you would need from the IV study or is there -- could you even start them before that?

It's not abundantly clear right now and that's what the ongoing dialogue is with respect to regulatory authorities on this matter. We believe that we'll be able to initiate the intravenous study and then subsequently be in a position to initiate the oral studies but whether that may require additional data or not we don't yet have a clear sense of that. But Andy can elaborate on what we might learn from the IV that could inform the oral.

Got it thanks.

Well, the IV study will be done in hospitalized patients and so they will be sicker than the patients that we've treated previously and in that regard we will have a better idea of both the safety and the efficacy of the compound in patients more toward the eventual target population that would be treated with it when the drug is eventually approved. And that would true both for treatment of patients with acutely decompensated heart failure in the hospital but also for higher risk patients who are outpatients.

Does that answer your question, Joel?

357 with regard to the side effects in the claudication study, I don't think you mentioned that but the drug related SAEs were they at 375 or 750?

We only know for sure one. We make an effort not to unblind ongoing trials so one of them was at 750. The other one we presume was at 750.

And do you have an explanation for the mechanism of the dizziness?

We believe it to be a centrally mediated thing. We've seen it even from the phase one studies in healthy volunteers. It's unassociated with changes in hemodynamics. There are no falls in blood pressure or heart rate to suggest that it's because of hypotension, for example, or tachycardia. Nor do we see anything to suggest that it's due to vertigo, true vertigo effect on the middle ear and the balance systems. So it does appear to us that it is some effect on the central nervous system but we don't -- we can't be more specific than that at this time.

Okay great. Thanks a lot.

Charles Duncan, JMP Securities.

Thanks for taking my question and congratulations on the recent data. First question is on 357 with the second interim look in ALS. Were there any differences in pharmacodynamic parameters that you observed with that second interim from the first one?

You're saying as between the second interim and the first interim were there differences in the pharmacodynamic assessments?

Yes.

Well, certainly we had more patients in the second interim so we began to uncover where there could be more statistically reliable data than was evidenced under the first. And in some respects we had a greater totality of pharmacodynamic effect than I think we observed in the first but keep in mind that with the first interim that was intended simply for safety purposes and in that regard we were predominantly looking at the data from the standpoint of whether a protocol might need to be modified and we concluded, as you know, it did not.

Right okay. Now, with regard to the PAD trial also wanted to understand a little bit better the AEs. You said that they were centrally mediated. Can you give me some sense as to first of all how long was the observation period? How long did it take for the resolution to occur in the dizziness?

They were both observed overnight and were able to go home the next day.

Okay and if there's a backup to 357 are you seeing different parameters in terms of CNS activity and/or potency?

Yes so, as we have reported, we do have ongoing research and development activities occurring with the goal of identifying not only what we consider a backup to ck 357 but also follow-on compounds, the distinction being that a backup would come from the same chemical series but would have different physio chemical properties. A follow on might come from a very different chemical series and even could have a different mechanism of action. And crossing the blood brain barrier is one of several parameters that we are looking at in thinking about advancing backups and follow-ons and we haven't yet commented as to those backup and follow-ons on those specific differences but it is certainly something we're aware about.

Also, underscore that, as Andy pointed out, we believe it may be mediated through a CNS effect but that's still something that we are in research looking to elucidate further and we have a lot of ongoing work intended here in this second half of 2010 to try to get a better handle on that.

Okay now let's move to the new stuff, which is interesting to me with regard to further investment in another evidence of the fact in myasthenia gravis, can you help us understand what kind of is different with regard to this particular model relative to that in ALS and claudication in terms of what you hope to take away from the study?

Well, it's a different disease obviously with a different mechanism but in terms of the properties of the compound that we think might be useful more similar, of course, to ALS than to claudication and claudication is our preclinical observations that show that the drug really delays the severity and the time to fatigue that provide the -- and particularly in models of limb ischaemia, that provide the measure of rationale for looking in claudication. In both ALS and myasthenia gravis it's the observation that the compound enhances the response to any given degree of neuronal stimulation that provides the basis for the therapeutic hypothesis.

And there are differences in why that neuronal input is diminished in ALS. It's, as you know, because the motor neurons are dying. In myasthenia gravis it's because there's antibodies to the motor end plate but in both cases you have a situation where muscles are being inadequately stimulated and we would hope that the presence of the compound would generate more force from this diminished neuromuscular transmission either because the impulse isn't being transmitted as in myasthenia gravis or it isn't being received at all in some muscles, as in ALS.

And, Andy, with regard to the scope of the study, is it similar in terms of size and then with regard to design is it a single dose or a multiple dose study?

We haven't spoken about the specific trial designs but I think it's fair to say that we've adopted a model with these evidence of effect studies in each of ALS and claudication and we're going to pursue the same model. The specifics will be elaborated on once we initiate dosing later this year.

And, Robert, would you anticipate data by the end of 2011 out of that study?

It's hard to say until we see the rate of enrollment but I certainly think that's possible.

I know you haven't done your year-end kind of budgeting or maybe you have but you haven't talked about it but could we anticipate a similar level of R&D spend to this year or would you expect to see that ramp in 2011?

So right now we're not anticipating if we look at the going forward number of months of cash we're assuming that our burn is going to be similar to what we have this year but we'll update on our fourth quarter call at the beginning of February with the specifics once we've finished our budgeting process.

Okay thanks. Thanks for the added color.

Ritu Baral, Canaccord.

Hi, guys. Thanks so much for the update today. I have some follow-up questions on the side effects seen with the claudication trial. How soon after dosing did these side effects appear? I am trying to figure out if they were sort of concurrent to when you might expect to see clinical benefit. And did they occur on the first dose of drug or the second dose?

So it's a single-dose study so they only -- I mean they do get treated three separate times. You're correct about that, a week apart, and one of them is placebo. But these episodes that are primarily characterized by dizziness occur within hours after dosing and then they do resolve spontaneously but they can take several hours to resolve. As I mentioned earlier, at least in one of the two cases were are certain it was after the 750 milligram dose and the other one we would suspect that it was but we didn't unblind. There was not a reason to. It wasn't going to change the treatment or anything.

As far as that first--

They're consistent with the time course of the rise and fall of plasma levels.

Quick question back to the patient who definitely got the 750, what I am trying to figure out is if that was the second, first or possibly second time that the patient received active drug.

I'm not certain.

Okay and what was the grade of the dizziness in the other side effects seen?

Well, they were moderately severe I believe. I'm not certain actually right off hand if they were classified as severe or moderate. They were viewed as sufficiently problematic that the patient couldn't really go home and so they were kept for inpatient observation. I mean most of the dizziness that we've seen across the two trials and in healthy volunteers has been characterized as mild and has needed no additional observation or intervention, so this was clearly worse than that.

Okay and the description of the dyskinesia seen was that sort of -- did that resemble spasticity? Were there other characteristics in that patient?

There were other adverse events in the patient besides the two that were deemed to be serious and requiring inpatient observation. I don't have a list of them right in front of me right now but they're -- they were things that we have been seeing that sort of go along. I don't want to name specifics because I don't remember what specifically one had in the other but I am sure that in each of those two patients there were two adverse events that were judged by the investigator to serious and then others that were present but not serious.

Okay and a classification of dyskinesia would be separate than a classification of spasticity then you're saying or could--?

Yes I mean if they would have thought the patient had spasticity then I believe they would have used the different term. Dyskinesia is an abnormal movement, not spasticity.

Okay thanks and have you conducted efficacy analysis yet for 357 in the ALS trial and, if so, when might we see top line versus the data at the December conference?

The data, the final data set -- now maybe not every analysis that we'll ever do on it, but the data that we present in December in Orlando will be final data.

Will we get top line before that or--?

I don't think so.

Okay.

That's something that until we have conducted the analysis and the review it's difficult to know whether or not we're going to be able to do that in time prior to the actual meeting in Orlando, so we're just being silent as to whether or not there will be a top line. It really is going to come down to the wire.

Well, and also many meetings will bump you from presenting if you say anything before you make the presentation at their meeting.

Okay thanks and last question and then I'll hop back in the queue, what are some of the other evidence of effect trials that could be planned? Robert, you had mentioned some other neuromuscular disorders I guess. Andy, what's on your wish list?

Well, I'll start and then Andy can certainly add. Under Andy's supervision our clinical scientists and clinical research team have put together a neuromuscular development plan of which it starts with ALS and goes to myasthenia gravis and the other things that we've talked about publicly that we might also consider and include a spinal muscular atrophy, Lambert-Eaton syndrome and still others and obviously this is part and partial to how much it might cost and whether that could be ourselves funded or together with a partner.

And, as you know, we're talking to partners about what they might themselves be interested in our doing. And it also I think will come a time when we wouldn't necessarily need to do an evidence of effect like design in each indication once we start to see these types of pharmacodynamic data sets, which were intended to generate hypotheses, we could also determine that the evidence of effect design no longer serves our purposes and we might just go straight into proof of concept like trial designs with multiple dosing. In 2011, as we put together our budgets, we're contemplating a number of different scenarios.

Thanks, guys. I'll hop back in the queue.

Mark Monane, Needham.

Greetings from New York City. Temperature is 73 degrees but a rapid change in the weather is expected. It's getting cooler here, which brings me to two change questions from the call, one on finances and one on the dose change. Actually let me start with the dose change.

Would you be kind enough to comment please on the doses that you're testing in the 357 trial in claudication and PAD? We know about 500 and 750. Are there any other doses which are being tested?

In the ALS study it was 250 and 500. The claudication study began with each of those two doses upped by 50% so it was 375 and 750 and now with the amended protocol in the claudication study we will continue with 375 but now it will be 500 as the higher dose.

Got it and did you see evidence of increased skeletal muscle performance at 375 as well as 750?

You know, we haven't commented with that level of granularity but I think what I can say is that we saw sufficient evidence of increased skeletal muscle performance that we're comfortable and also when you layer in the data from the ALS study where we're looking at 250 and 500 and seeing much better tolerability, that we felt it was reasonable to continue the study at 500 instead of 750 without sacrificing the pharmacodynamic effects that were suggested by this early analysis.

Okay and does the pharmacokinetic profile to date suggest that this might be able to be given as a twice a day drug and maybe you can each dose being lower rather than giving the [abolis] that might get a Cmax effect that might be less than optimal?

I mean, as we understand the more of the concentrations that need to be maintained in order to achieve an effect, we're looking at probably once a day or twice a day but I couldn't imagine it would need to be given more frequently, even with our current fairly simple immediate release formulation, more frequently than twice a day and it could well be that once a day will suffice, even with what we have now.

But, Mark, your point is a very valid one in that it may be ultimately that we would choose to start with lower doses and titrate up. This is all things that we need to determine as we will embark on multiple dose studies and strategies. This single dose crossover design evidence of effect study was not intended to optimize dosage schedule but rather to generate those pharmacodynamic signals that tell us how best to think about this drug on a going forward basis and then we'll do that in the context of multiple dosing.

That's fair. That's very helpful and then and question on the finances, Sharon, given your excellent CFO skills, I was surprised to see that you were decreasing guidance in terms of expenses. Is that because of your excellent negotiation skills or fewer people at the Cytokinetics or are the programs progressing at a rate maybe not as fast as you originally expected?

I think there's probably two things that feed into that. One is with the change that we are making with the claudication trial some of the expenses that were previously related to that study are now going to roll into 2011, as we revise the protocol and then begin dosing at the 500 milligram dosing schedule, so that's part of it. And then others are just really minor shifts because if you noticed we didn't move the guidance that much, minor shifts and expenses of things that maybe didn't occur when we thought they would and they'll roll into 2011.

That's helpful too and then finally, how many people now at Cytokinetics and what's the optimal number going forward?

We have currently about 108 employees at the Company and I think that the optimal number is maybe a little bit higher than that. We use consultants to fill gaps where we have critical need but I think we're overall we look for somewhere around 114 to 119 employees.

Thank you very much for the added information.

Greg Wade, Wedbush.

First off, with respect to the two studies, Andy, are you getting bloods on folks and do you have any sense as to whether dose is correlating well with exposure and you're going to get a good exposure pharmacodynamic relationship?

Yes.

And then secondly, qualitatively there's a spectrum of disease in both ALS and claudication. Are you seeing good levels of efficacy across all patients? And then if you could just comment on whether the opportunity in this situation to use the drug in patients and have them serve as their own controls, is that proving to be helpful in these studies? Thanks.

Any crossover study designs in this kind of a trial are always very, very helpful. You get more statistical power and I also think your get a more meaningful experience when each patient is exposed at the very least once to placebo and once to active treatment and, as you know, in this case it's active treatment at two different dose levels. It's too early and the data are too few to go through things with a sort of responder, non- responder analysis to say that everybody is benefiting or most patients are benefiting but I don't think we would be willing to make the statements that we've made about pharmacokinetic effects if they weren't sufficiently persuasive across the very limited data that we do have to go forward with something like that.

And then what was the rationale in the claudication study with going with the higher dose? Pre-clinically is there something that you're seeing with respect to an effect on stamina that's suggested that a higher level of exposure is necessary and are you still as confident that that type of achievement of benefit can be demonstrated? And thanks for taking my questions.

There is no reason to go with the higher doses in claudication per se. Well, there are a couple of minor ones and I'll elaborate. The first one was just very pragmatic. We were further along in the progression through our phase one first time in human study when we came to design the claudication study. We prioritized getting the ALS study into clinic first until we had the benefit of additional dose escalation in healthy volunteers when we came to the claudication trail and felt that we had good reason to believe that 375 and 750 should be well tolerated.

Secondly, there was some information from our pre-clinical safety studies that suggested that possibly women might have higher plasma levels that female animals did have somewhat higher levels than the male animals and since we were more likely to have women in the ALS study than in the claudication study, which is a disease preponderantly not exclusively but far more preponderantly in men, we felt a little more comfortable. And I will say, by the way, that our examination of the plasma data to date from the clinical studies doesn't really show any difference between men and women and that's often the case that you see these differences between the sexes in the animal species that then don't really come to be present in humans once you get into human testing.

And then finally, there is a potential for a drug, drug interaction with [riluzole], which is another drug that's used to treat ALS and we're still looking into that but that was another reason to be a little more gingerly on the dose in ALS compared to claudication.

Larry Smith, DLS Research.

My question, I have a follow-up to Joel's question, which started off the Q and A, and actually I was attending a meeting and I had an occasion to talk to Roger Perlmutter in a brief hallway discussion so it's with some trepidation I make any comments because it was not a conversation where you could follow up and I may have misunderstood some of the points he was making but I asked him pretty much the same questions that Joel presented to you, why the phase IIb IV study in a hospitalized setting and my -- what my takeaway from it was that he felt that systolic dysfunction was the gating factor.

This is my interpretation of his remarks, that he feels that systolic dysfunction is the gating factor before Amgen really plunges in and he wanted to look at a sicker population in a carefully controlled setting like the hospital to really get a firm fix on the degree of systolic, the effect of omecamtiv on systolic function. So, with that as a prelude, the question would be one, is it your feeling that this is why they're doing the study and if it is the case will we be getting information along the way that will allow his questions to be answered? And I guess also, was there any kind of signal, either from regulatory or clinical, that would cause him to perhaps put more emphasis on systolic function than might have been the case perhaps a year or two ago?

So again, I'll lead and then ask Andy to elaborate but I'll remind you, Larry, that we had originally expected that we would proceed initially with an intravenous form of the drug into phase IIb ahead of oral forms of the drug when Cytokinetics was developing this and still awaiting news from Amgen as to whether it was going to be exercising its option. We saw merit in taking that approach and I think Amgen also sees merit in that approach now and it's a part and parcel to the points that I think you inferred from Roger's comments back to you but also because we believe that we are continuing to optimize the oral forms of the drug and this will provide some information that could be helpful in terms of picking an oral form of the drug and also addressing the correlation between the pharmacodynamic response as we saw in phase IIa and what would be deemed clinical benefit as can be seen now and proceeding to phase IIb.

As specifically to systolic dysfunction, and more severely ill patients, I'll ask Andy to comment on that.

Well, all the patients that we enroll in the trials, whether they're inpatients or outpatients or IV or oral, have to have systolic dysfunction as a therapeutic hypothesis to be valid, so not being present for your hallway conversation with Roger and understanding exactly what you asked him and exactly what he answered, I don't know that I could -- I am not sure exactly what he was intending to convey because everyone that we've enrolled that has heart failure has heart failure due to systolic dysfunction and everybody that we would intend to study going forward.

But maybe you're getting at the fact that in the case of the phase IIa population they were deemed stable and in the case of the phase IIb they're going to be acutely decompensated so we would expect that those acute exacerbations of their heart failure may be informative to us with this mechanism of action.

I guess I am not trying to imply anything negative and, Andy, you're quite right. It was a very brief conversation and I could have easily misinterpreted it but what I am trying to figure out the best that I can try to ask the question is is it just that he really wants to nail down the systolic dysfunction category in a very meaningful population group, the sicker population group? And well, that seems to be what he's doing but is it just based upon caution or making sure that you really lay a good foundation for the phase III trial, and I suspect that is the case, as opposed to some kind of signal either from clinical data or from the regulatory agencies?

Again, if you're asking us to comment on what was going through Roger's mind at the time I hope you'll understand that we cannot. I can speak to for what the Joint Development Committee is interested in learning and how we have agreed together with Amgen to proceed and that's to answer your question informed both by discussions we've had with regulatory authorities, as well as together with our key opinion leaders.

And there is a general consensus that we ought to go with what we know for the product in its intravenous form having more predictable pharmacokinetic pharmacodynamic relationships it only seems prudent to proceed next into phase IIb with that form of the drug and while we will dialogue with regulatory authorities about how best to do that, that will instruct how then to approach those same regulatory authorities with respect to the study that would be comparing oral forms of the drug and getting those levels in plasma concentrations appropriately. So I hope that's an answer to your question. I am not exactly sure.

Yes that's fine. It's a very difficult question to answer. I appreciate it. Thank you.

Your final question is a follow-up of Ritu Baral.

Just looking at the two trials, the ALS trial and the claudication trial, can you sort of compare and contrast who or which patient population of the two would you see as more frail? ALS patients are notoriously frail but you are going after older I believe claudication patients in this trial, just trying to figure out how that may contribute to what was seen as far as the side effects.

Well, you know, I think you've put the -- I think you've hit the nail right on the head actually. The ALS patients are perhaps more debilitated overall in terms of their physical functioning. Claudication patients are definitely much older and on more concomitant therapies.

But I mean would you expect the ALS patients to have sort of manifested a dyskinesia before the claudication or actually -- I am just trying to figure out what the mechanism might be in one population versus another.

I don't -- I think these types of adverse events that we're seeing, the dizziness, the dyskinesia and that kind of thing are not related, I don't think and we don't really know for sure, but I don't think they're on target effects. They're not related to the mechanism of the drug. They're something unintended that occurs for some reason that we're trying hard to elucidate once the drug gets into the central nervous system so I can't speculate that there are relevant differences in the brains of patients with claudication or those with ALS that would make them more or less susceptible to these things and I really think it was just a matter of the higher dose and the claudication study being not as well tolerated as 500 is in patients with ALS in the ALS study. But I suspect that had we been studying stem and 50 in ALS we would have had similar issues.

Got it. So do you guys think that the promise of the drug in claudication is basically similar to what you thought before you started this trial as opposed to less promising?

So we're at the stage with our first look at the data from the claudication study as we were a couple of months ago when we took our first look at the data from ALS. In each case those first looks were based on relatively few patients and they were mostly about ensuring that we were comfortable continuing the study at the current doses and basically because they were tolerable. And in the ALS study with 250 and 500 milligrams we were not seeing any reason to reduce those doses. In the claudication study we felt we did need to reduce the higher dose but it's too soon to really comment much on the relative potential efficacy in the two different diseases because we have really very little data right now to look at in that regard from claudication.

So I mean it comes down to this; when you've got something that's not particularly well tolerated you can pretty well figure that out when, even as few as two patients don't tolerate something particularly well. You don't need to see it over and over again before you can conclude that perhaps you better give lower doses. In determining if something is really effective, you need to have amazingly clear data with the number of patients that we looked at in claudication to conclude anything I think about efficacy or effect. So while we could be comfortable that it was appropriate to reduce the dose, I don't think we can say anything one way or the other about we have an enhanced or diminished view of the potential for the compound on claudication.

Yes albeit with that said, Ritu, we very carefully are communicating today that we're encouraged by the pharmacodynamic effects in both studies, ranking them one relative to the other is I think impractical, given the designs here but I think what you're hearing Andy and Cytokinetics speak to publicly today is in each study the drug appears to be well tolerated and also we are seeing encouraging pharmacodynamic effects.

However, with that said the caveat being in the claudication study many fewer patients have presented right now for an interim review and we believe that we should be lowering the dose in recognition of these SAEs.

Got it and, Robert, you mentioned supply. Can you review status of supply and who's -- how much drug do you have on hand and who is making it for you?

So I certainly can't speak to who is making it for us, at least not publicly. That's something that we deem to be proprietary. I will tell you that we are making supply for what could be advancement into later stage studies, so we're approaching our budgeting with the understanding that, as we conclude these studies, we want to be well positioned to go to the next level.

And your current supplier has the capacity to provide you with all the supply that you do need going forward?

Most certainly yes.

So we're not looking at a transition in the near future?

No not at all. Thank you. That's a good question but no that would not be a risk.

Great thanks, guys.

And there are no further questions. I'll turn the conference back over to Robert Blum.

Thank you so much and also thank you to all the participants on our teleconference today. We very much appreciate your continued interest in Cytokinetics and with that, operator, we can conclude the call, wishing everybody a good day.

This does conclude the conference. You may now disconnect.