Cytokinetics Inc (CYTK) 2011 Q1 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics First Quarter 2011 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 would now like to 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 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 highlights on the advancement of our clinical development pipeline. Andy will then provide details on the progress of the company's clinical development program, and I will provide some brief comments with respect to our cash position and our investment in research and development activities. Robert will then conclude the call with additional comments regarding our recent activities, next steps for our clinical development stage programs, including omecamtiv mecarbil and CK-2017357, which we'll refer to as CK-357, and a discussion of the projected company milestones for the remainder of 2011. 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, including, but not limited to, statements relating to our financial guidance; to 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 annual report on Form 10-K and our current report 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'll turn the call over to Robert.

Thank you, Sharon.

Our activities during the first quarter pivoted on the progression of our cardiac and skeletal development programs -- in particular, the recent opening to enrollment of the Phase II-B trial of omecamtiv mecarbil in patients hospitalized with acutely decompensated heart failure -- marks an important point in the advancement of this clinical development program. We believe that this trial, as a function of its international scale, demonstrates Amgen's commitment to this novel drug candidate. I continue to be pleased with the dedication put forth by both the Cytokinetics and Amgen teams, which is evidenced by the execution of this trial and also the plans that we are developing together in order to prepare for additional trials to get underway potentially later this year, as well as next year.

During the quarter, we also completed enrollment of a Phase II-A clinical trial of CK-357 in patients with claudication and also initiated a Phase I drug/drug interaction study of CK-357 in healthy volunteers, which Andy will describe shortly.

Finally, we continue to enroll patients in our Phase II-A clinical trial of CK-357 in patients with myasthenia gravis.

As Sharon will describe in a moment, in recent weeks we also took steps to ensure that we have the necessary financial resources to support our ongoing R&D activities.

Now I'd like to turn the call over to Andy to elaborate on the specific clinical progress achieved during the last quarter in our drug candidates' development programs and to provide some insights into our plans for the future.

Thank you, Robert.

We began 2011 with our teams making great strides within each of our clinical development programs. Starting with our cardiac muscle contractility program, we recently announced that Amgen opened to enrollment an international, randomized, double-blind placebo-controlled Phase II-B clinical trial in approximately 600 patients with left ventricular systolic dysfunction hospitalized for acutely decompensated heart failure. This trial is designed to enroll three sequential ascending-dose cohorts. In each cohort, patients will be randomized to receive omecamtiv mecarbil or placebo. This trial will evaluate the effects of 48 hours of treatment with IV omecamtiv mecarbil on measures of dyspnea, patients' global assessments, change in N-terminal pro brain-type natriuretic peptide, which is a biomarker associated with the severity of heart failure, and short-term clinical outcomes in these patients. We are pleased that this trial is now underway and look forward to working alongside Amgen in planning additional studies as omecamtiv mecarbil plan to occur later this year and next year.

As Robert mentioned, we also continued to advance our CK-357 development program. During the quarter, we initiated a Phase I study, part A of which was designed to quantify the effect of CK-357 on the pharmacokinetics of riluzole, each administered orally to healthy volunteers. As you know, riluzole is the only drug currently approved for the treatment of ALS. Part B of the study is designed to evaluate the effect of CK-357 on the pharmacokinetics of other drugs and the pharmacokinetics of CK-357 when administered after a meal and when fasting. By mid-year, we also expect to initiate a randomized, double-blind placebo-controlled parallel group trial of three active dose levels of CK-357 inpatients with ALS. This trial will also include assessment of ALSFRSR, muscle fatigue, pulmonary function and global assessments.

We also recently completed dosing of patients in our Phase II-A evidence of effect trial of CK-357 in patients with intermitting claudication associated with peripheral artery disease. As Robert will cover in a moment, we plan on presenting data from this trial in this second quarter.

Lastly, we continue to enroll patients in our Phase II-A evidence of effect trial of CK-357 in patients with generalized myasthenia gravis.

Additional information about all of our Phase II-A evidence of effect trials can be found at www.clinicaltrials.gov.

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

Thank you, Andy.

As our press release contains detailed financial results for the first quarter 2011, I'll refer you to that public statement for the details on our P&L and balance sheet.

We ended the first quarter with approximately $60 million in cash, cash equivalents and investments, excluding restricted cash. Last week, we announced a financing with Deerfield Management Company in which we sold a combination of common and preferred stock and warrants for approximately $20 million before deducting for estimated expenses. This financing, coupled with our cash balance at March 31, 2011, of $59.9 million, represents approximately 16 to 18 months of going-forward net cash burn based on our 2011 financial guidance.

Our first quarter 2011 R&D expenditures totaled $9.2 million. From a program perspective for the first quarter, approximately 64% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, 15% -- excuse me -- 5% to our cardiac muscle contractility activities, 14% to our smooth muscle contractility program activities, and 17% to our other research activities. We continue to focus our financial resources largely on our skeletal muscle research and development programs which, together with our cardiac muscle contractility research and development program partnered with Amgen, we believe provides the nearest-term value generation for the company, as Robert will outline in a moment with the remaining milestones for 2011.

That concludes the financial portion of today's call. With that, I'll turn the call back over to Robert.

Thank you, Sharon.

Now, more than ever, the R&D innovations and advances that we have made over the years are being recognized by the scientific and medical communities who share our enthusiasm for the potential of our novel drug candidates. To that point, we are pleased that our innovative insights into modulating the mechanics of cardiac muscle contractility were recently recognized with a foundational publication of our fundamental research in the journal Science. We believe that having our research published in such a well-respected publication constitutes a particularly important validation of the work we are doing. We intend to continue to communicate our advances in the most appropriate scientific venues.

A similar example of our work being recognized in a prestigious venue was the recent presentation of data from our Phase II-A evidence of effect trial of CK-357 in ALS patients that occurred earlier this month at the 63rd annual meeting of the American Academy of Neurology. This conference brought together the world's thought leaders in the treatment of patients with neurodegenerative diseases. The feedback we received from this presentation was especially positive, as there are very few treatment options available for the treatment of ALS patients, and we know that that is a seriously debilitating and uniformly fatal disease.

We continue to forge ahead with our research and development activities in 2011 and can now point you to the following milestones for the remainder of the year.

For omecamtiv mecarbil, we, along with Amgen, are discussing the development strategy for oral formulations of this novel drug candidate, including plans regarding the initiation of a Phase I study designed to investigate the safety, tolerability and pharmacokinetics of multiple oral formulations of omecamtive mecarbil in healthy volunteers. We expect this study may occur in the second half of 2011.

Turning to our skeletal muscle contractility program. In June, we plan on presenting two abstracts from our Phase II-A evidence of effect clinical trial of CK-357 in patients with symptoms of claudication associated with peripheral artery disease at the 22nd annual sessions of the Society of Vascular Medicine to be held in early June in Boston. By mid-year, we anticipate that data will be available from our Phase I drug/drug interaction study of CK-357 administered orally to healthy volunteers, which was designed to evaluate the effects of CK-357 on the pharmacokinetics of riluzole and other drugs, as well as the pharmacokinetics of CK-357 when administered after a meal and when fasting.

We anticipate initiating a Phase II multi-dose safety tolerability pharmacokinetic and pharmacodynamic clinical trial of CK-357 in patients with ALS, again by mid-year 2011.

Next, we anticipate that data will be available from the ongoing Phase II-A evidence of effect clinical trial of CK-357 in patients with generalized myasthenia gravis by the end of 2011.

With respect to CK-2066260, a second compound arising from our skeletal muscle contractility program, which we refer to as CK-260, we anticipate filing an investigational new drug application for this potential drug candidate by mid-year 2011. And we also anticipate initiating a first-in-humans Phase I clinical trial of CK-260 in healthy volunteers in the second half of 2011.

We will provide further guidance on the expected availability of data from each of our clinical trials following each trial initiation and an assessment of patient enrollment.

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

Thank you. (OPERATOR INSTRUCTIONS.) Please hold for your first question. Your first question comes from the line of Andrew Vaino with Roth.

Hi, Andrew.

Hi. Just a quick question on the omecamtiv mecarbil. I noticed that the Phase II-B enrollment is open. Is there any clarity as to when the first patient could be dosed?

So we are oftentimes in the position of mentioning when a study is open and otherwise initiation can be expected to follow soon afterwards. In this case, we similarly expect that to be true. I don't know that we're going to be necessarily announcing the first patient dosing, but rather, with the next earnings call, we'll be in a position to speak to the enrollment to date. But I think it would be safe to assume that we anticipate initiation of dosing to occur proximal and soon afterwards to the opening of enrollment.

Okay. Thanks. And secondly, can you just refresh my memory? What's the longest-term animal study you've carried out with 357?

Well, we've done the necessary toxicology studies to support up to 6 months of dosing.

But have you looked at efficacy up to 6 months?

I'm sorry?

Have you looked at efficacy in animals over 6 months?

No. I think that -- the longest is, I think, around 4 weeks.

Okay. Thank you.

Thank you, Andrew.

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

Good afternoon, Charles.

Good afternoon, folks. Thanks for taking our questions. I'm sorry if you covered this in your prepared remarks. We were hopping back and forth between two different calls. I'm wondering if you could update us on the data that you would anticipate seeing with 357 by year-end and what we could anticipate talking about -- I'll call it in a year -- with regard to that candidate.

So I'll take the first stab at that and ask Andy to add any comments he may wish to add as well. So in this second quarter, we announced that we'll have data from the evidence of effect Phase II-A trial in patients with intermittent claudication. That's going to be presented in June in Boston at the Society of Vascular Medicine. Later this year, we expect we'll have data to announce relating to the third Phase II-A evidence of effect study in myasthenia gravis. We are in process now in an ongoing DDI study and we expect we'll have data mid-year from that study. I'm not sure exactly what we might do in the way of presenting that data, but otherwise, we can certainly provide information, if not in a scientific or medical congress, then as would be appropriate for inclusion in an earnings call. That's a clinical pharmacology kind of set of information that may or may not be --

Sure.

Requiring presentation at a congress. And then we have a study that we refer to as the next Phase II study, which is a multi-dose safety and PK study. That should be underway mid-year, and whether that data will be available for presentation by the end of the year will be a function of the enrollment rate, which once we see that enrollment, we'll be able to give better guidance. So that's what we have in mind for CK-357 this year, and then I also mentioned we'll file an IND for the second compound, CK-260. We'll start a Phase I study and that study, depending on its enrollment -- we'll be able to give guidance as to whether the data could be expected from that study later this year. You also asked a question about next year, and all of this is geared towards being in the best position, we believe, to have a Phase II-B study with 357 ready to begin next year or otherwise a Phase II study with CK-260. And that'll all be a function of internal planning and financials and budgeting, hopefully together with a partner, and as we may have regulatory feedback as well. And one or both of those studies will be underway, we expect, next year.

And Robert, thanks for the overview on that. With regard to the current partnering environment, the kind of work that you're doing now -- do you believe that that is creating some interest in the partnering arena or do you think that more larger, longer-term pharmacology efficacy safety-type studies -- Phase II-Bs, call them -- would be required in ALS to drive a partnership?

Yes. I do not believe that the Phase II-B studies and data from those studies would be required to drive a partnership, although certainly there are companies that would more than likely wish to see that data. We have ongoing discussions with companies where I do expect, as things are continuing to progress, that we could move towards closure of a deal prior to having those data. And based on the data we already have secured -- in particular, the results from the single-dose study of CK-357 in ALS patients -- I think we're generating sufficient enthusiasm where it's realistic to assume that we can bring home a deal.

And then final question is with regard to partnering strategy in these programs. Would it be your sense that these indications lend themselves to you, Cytokinetics, perhaps championing the cause with regard to development and driving timelines and then eventually taking some -- taking on some role as -- with some sort of a commercial infrastructure or are these the types of indications that you think would be better handled by -- call it a larger infrastructure?

So we certainly hope that those activities that we are pursuing for the potential of this mechanism of action in the treatment of ALS will lead to a development program around which we could similarly build out our organization, both in clinical research and related functions as well as in commercial activities. That is the current plan and we believe that the partnership discussions we're having will similarly allow for that to occur. That can always change, we recognize, but that is currently the way we're approaching partnering the program. And again, we believe that that will be achievable with the data that we've generated. That's as to ALS and there are other related neuromuscular indications, similarly that may garner orphan drug designation. Similarly, that may afford us a faster time to market and which are, in and of themselves, affordable to a company like ours with more limited access to capital, and those are ones that we continue to believe we can build a deal around enabling us to continue to be responsible for those activities. The claudication and others studies associated with CK-357 may point to other indications that are less tractable to a company like ours and, therefore, may be better suited for a larger company with more access to capital than we have, and in that way, we hope that we can construct a deal -- architect a structure that affords us an opportunity to proceed forward together -- us being primarily responsible for those neuromuscular indications in North America, our partner outside of North America and where we might share non-neuromuscular indications with our partner globally.

And then final question is comparing and contrasting 357 versus 260. I understand there is differences in terms of the amount of drug that gets into the brain between the two, but are there any other differences with regard to target specificity and/or metabolism?

Well, we can't say as much about the metabolism of 260 as we know about 357, but pharmacologically, it's very similar. It's equally selective for fast skeletal muscle troponion. And the major -- one of the major differences, really, and one of the things that we focused on is that it does not cross the blood-brain barrier to the same extent as 357 does.

Okay. Thanks for the added color.

Thank you, Charles.

Your next question comes from the line of Ritu Baral with Canaccord.

Hi, Ritu.

-- taking the question. I'll start with 357 and ALS and the study that you guys are planning on initiating mid-year. I'm sorry if I missed this, but did you guys go over the treatment duration of the dose cohorts? And since one of the dose -- you're looking at three cohorts but there are only two in the Phase II-A. Are you going to be looking at a higher dose or a lower dose than what was investigated there?

So we didn't mention the treatment duration. It will be a fairly short study -- probably on the order of somewhere between two and three weeks of treatment. This is now multiple dosing, so the doses are not analogous. We looked at single doses of 250 and 500 in the evidence of effect study, and in this one, we'll be looking at multiple doses that would be expected to cover that entire range and possibly a little higher. So the doses would be probably -- they would be 125 and 250 and 375 once a day.

Got it. And what will the role of riluzole be in this trial? Will it be background? Will it be a comparator?

No. It won't be -- these will be patients not receiving riluzole in this study. One of the reasons for that is to understand the tolerability of 357 not confounded by riluzole, because we do know -- and we've discussed and we're quantifying it now in Part A of the ongoing Phase I study -- that 357 inhibits the major metabolic pathway for riluzole, and so it does cause the levels of riluzole to go up when riluzole is co-administered with 357. Since riluzole causes dizziness itself, it's impossible really to understand what will be the effect of continued dosing of 357 in patients who are continuing to take riluzole. And that's also one of the reasons why the duration of the study isn't any longer than it is, because we don't want patients who come into the study, having been on riluzole and who are coming off to come into the study, to be off the riluzole for any longer than they really need to be.

I see. And will you have any entry criteria for disease duration for ALS? Basically, are you looking for recently-diagnosed patients? Are you going after some of the more sick patients?

I don't -- I haven't got the draft of the protocol in front of me. I don't think we do have a criterion for disease duration per se because, much as with the evidence of effect study, what we're really looking for are patients who have demonstrable weakness that might respond to 357. So when you're doing a longitudinal study with, say, mortality where rate of decline is an endpoint, you tend to exclude patients who have had the diagnosis for an extended period of time because, obviously, they are not progressing very quickly, fortunately for them, but it means that in terms of reaching study endpoints, they're probably not likely to do so and won't generate a good signal-to-noise ratio in your population. We're just looking for -- in the EOE study, we were looking for changes in performance. And so as long as they were weak and we thought they could get better, it didn't really matter how long they had the disease. In this case, we're more interested in tolerability of continued dose than anything else. So we can afford to enroll a somewhat broader spectrum of patients than a sponsor might who's looking specifically at the effect of the drug on the rate of decline in the ALS functional rating scale or on mortality.

Got it. Thanks. And -- so moving on to omecamtiv, just a couple quick questions there. You mentioned that you haven't disclosed the doses yet, but I guess what should we be thinking about for that dose range? Have the doses under consideration essentially been bracketed by what we've seen in the Phase I and Phase II work there so far?

To this point, we've been emphasizing that, together with Amgen, we're interested in understanding whether the pharmacodynamic effects we've seen translate to potential clinical benefit in these acutely ill heart failure patients, and our goal is to test the low end of the dose response curve. And we've indicated that we believe that from approximately 100 nanograms per mil to about 400 nanograms per mil, we may start to see a plateauing of the effect at the high end of the range, and yet, with those plasma concentrations, we believe we're staying well below the variability that might ultimately lead to potential adverse effects. So safe to assume we're in that range.

Got it. And you mentioned that you guys were thinking -- you and Amgen were thinking about multiple oral formulations. Would that encompass sort of different dosing regimens over the course of the day, whether once a day, twice a day? What should we be thinking of for the different forms?

I wouldn't be thinking about it so much around whether it's different as to q.d. versus b.i.d. We've been, to this point, focused to formulations that more likely are going to be b.i.d. but may ultimately have potential to be q.d. These are not per se looking to optimize around that measure, but instead, as it relates to release kinetics so that there are a number of different formulations that allow for different absorption, peak and trough, etc. And that's really where we're looking at different technologies associated with these different formulations.

And would those be suitable for, I guess, different types of patients with different stages of disease?

That's not the current thinking. Instead, we want to go forward with one or two of these in the next studies once we feel like we've got the best optimized release profile.

And the real goal is to have an oral formulation that's Phase III-ready. And just one. We just pick the formulation that looks best for Phase III and, ultimately, commercialization.

Got it.

The discussions we're having with Amgen tie to what we expect may be not just one study, but a few studies where we would be in a position to have that oral form selected in order to proceed into Phase III.

Got it. And last question on CK-260. Do you plan on the Phase I program for 260 sort of resembling the program for 357? Were you satisfied with what you guys got out of the 357 healthy volunteer study or would you sort of -- are you planning on doing stuff differently?

I think the plan is to do it in a similar way, albeit a way that may allow us to get to that information more rapidly without the requirement to do all of those things in sequence as we did with CK-357.

Great. Thanks for taking the question, guys.

Thanks, Ritu.

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

Hi, Mark.

Hello. Good afternoon, everybody there. No matter where you are, I think, in the US now, I think it's safe to say that spring is in the air, and that relates to my next question which has to do with the spring in the step of patients with intermittent claudication. Now unlike the other diseases that you're studying, patients can pretty much modulate their own symptoms by doing less. And so a patient with intermittent claudication could -- he or she could his activities -- his or her activities to, therefore, decrease symptoms. And I'm wondering if your studies that you're working on now have addressed this issue and what might be the best way to think about this since there clearly is a way for the patient and medication to work together.

Well, the current study prescribes that patients do various exercises of their claudicating muscle until they have symptoms. So they can't rest their way through it. The study requires them to get up on their tiptoes and down again and up and down and up and down, which exercises their calf musculature, and to come into the study, they all to have claudication in their calf muscles. So it's just not the way we're assessing them that they could, if you will, sort of be indolent and therefore avoid symptoms. You're right. That is what patients of claudication do in everyday life, and what we believe might be the case over longer studies if we go forward into longer studies in that disease area would be. We can well see that because patients can exercise longer without pain. They will. And that actually will also tend to improve their symptoms, just the active exercising to pain. So we've speculated many times with our investigators and advisors in that area that there could be, over time, a beneficial cycle where the more they can exercise or the longer they can go before they get claudication symptoms, the longer they'll be able to go the next time and the next time and the next time. But that will remain to be seen with longer-term studies.

Yes. Absolutely. My question -- and your comments are helpful. My question has to do basically with the registration quality-type of studies in the future. And then, given that there's a wide range of patients with intermittent claudication -- some have symptoms every once in a while, some have symptoms every day -- do you plan to look at specific range excluding the very sick where it's hard to make a difference and/or excluding the ones that have mild disease where you're unlikely to make a difference because the disease is not profound.

It's a bit premature. We haven't really mapped out a registration pathway. We haven't even really seen the data from the ongoing evidence of effect study. So we're not sure there'll be a basis for it, but I can say generally, as you know, some measure of exercise -- 6-minute walk or a graded treadmill exercise test -- is the primary endpoint for registration studies, and usually the patients that you enroll have to at least be ambulatory. They can't be so end-stage where their limbs are threatened to have limb ischemia at rest. You take those patients out. And the way you get patients without disease that's too mild is by ensuring that their so-called ankle brachial index -- the ratio of their ankle blood pressure to their arm blood pressure -- is diminished. It's 0.9 or below where normal is around 1.1 or 1.2. And that ensures that they have significant obstructive arterial disease in their lower extremities.

Mark, we recognize our limitations -- most especially our financial limitations -- and as it relates to moving beyond this evidence of effect study of CK-357 in patients with peripheral artery disease, we don't currently have plans to proceed, instead rather hoping that a partner might find in these data sufficient basis of evidence of effect to want to do that, but under their own sponsorship. So this was intended really to assess pharmacodynamically whether we could see translation of some of the pharmacology we had seen pre-clinically which suggests that this mechanism of action leads to a delay in the onset of muscle fatigue, and hence, this was the way that we could get to that kind of answer, we think, relatively swiftly. But beyond that, as I underscored, our focus remains to ALS and neuromuscular disease.

Thanks very much for your point of view and (inaudible) information as well as a comprehensive review. Appreciate it.

Thank you, Mark.

Your next question comes from the line of Brian Klein with Lazard Capital Markets.

Good afternoon, Brian.

Hi. Thanks a lot. Quick questions on omecamtiv. Can you give us some expectation of how long you think it will take to enroll the first cohort of patients?

Especially in light of the fact that this study just opened to enrollment, I think that would be premature. What we have indicated is that this study operates in sequential fashion, so there'll be approximately 200 patients enrolled, randomized 1-to-1 drug-to-placebo, and then there'll be a look at those data before deciding to proceed to the next ascending dose cohort. Until we see the enrollment rate and until we have a chance to review that together with Amgen, I don't think we'll be in a position to give any kind of guidance to that.

Okay. Do you expect either Amgen or yourselves will present that first cohort data separately or will we have to wait for the entire trial to be enrolled before we see any data?

Again, that's something that we'll need to discuss with Amgen. My assumption right now is based on what will be predominantly a review of safety information that may not permit a presentation of data until the final patient is enrolled in the third cohort and that data is analyzed all together. Certainly, the progression from cohort 1 to cohort 2, cohort 2 to 3, as would be informed by a safety review, is itself informative, but as far as data that may come beyond that, I can't really point to that today.

Okay. Thanks.

Thank you.

This concludes today's question-and-answer session. I'll now turn the call over to Mr. Blum for closing remarks.

Thank you, operator, and also thank you to all the participants on our teleconference today. We certainly appreciate your continued interest in Cytokinetics. And operator, with that, we can conclude the call. Thank you.

Thank you for participating in today's teleconference. At this time, you may now disconnect.