Cytokinetics Inc (CYTK) 2012 Q2 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics Second Quarter 2012 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 call over to Sharon Barbari, 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; Dr. Andrew Wolff, Senior Vice President of Clinical Research and Development, and Chief Medical Officer; and Dr. Fady Malik, Senior Vice President of Research and Early Development.

Following the forward-looking statement disclaimer, Robert will provide a summary overview of the past quarter along with brief highlights on the advancement of our clinical development pipeline, including omecamtiv mecarbil and tirasemtiv, formerly referred to as CK-2017357.

Andy will then provide details on recent progress in our skeletal muscle activator program directed to the potential treatment of ALS. And Fady will provide details on recent progress in our cardiac muscle activator program directed to the potential treatment of heart failure. I'll then provide a financial overview and comments with respect to our cash position, details on our investments in research and development activities, as well as updated financial guidance for 2012.

Robert will then conclude the cal with additional comments regarding recent activities and expected next steps for our development stage programs as well as an update regarding projected Company milestones for the remainder of 2012. We will then open the call for a brief question-and-answer session.

The following discussion, including our responses to questions, contain statements that constitute forward-looking statements for purposes of the Safe Harbor Provisions of the Private Securities Litigation and 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 statement is contained in our SEC filings, including our most recent annual report on Form 10-K, our quarterly reports 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'll turn the call over to Robert.

Thank you, Sharon. During the second quarter, we took important steps to ensure that we continued to build on the progress reported in the first quarter and remain focused to key value-driving milestones. In recent months, we have received notifications from each of the United States Adopted Names, or USAN Council, and the World Health Organization's Consultation on International Nonproprietary Names for Pharmaceutical Substances Program that indicated the adoption of tirasemtiv as the generic name for CK-2017357.

Going forward, and on this call today, we will use the newly adopted generic name tirasemtiv when referring to the lead development compound in our skeletal muscle activator program directed to the potential treatment of amyotrophic lateral sclerosis, or ALS.

In April, we presented data from two recently completed Phase II clinical trials in ALS patients, having now completed four Phase I and four Phase II clinical trials of tirasemtiv that have in total enrolled over 100 volunteers and over 200 patients. WE have learned a great deal about the safety, tolerability, pharmacokinetics and pharmacodynamics of tirasemtiv and have selected a dosing regimen for later stage studies of this [novel] mechanism drug candidate.

In addition, through our recent interactions with major regulatory authorities, including the US Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, we believe we have identified endpoints that in upcoming potential registration trials may demonstrate sufficient clinical benefit of tirasemtiv in patients with ALS to support its potential approval for the treatment of ALS.

As such, we believe we are now ready to advance tirasemtiv into a clinical trials program designed to support its registration for the potential treatment of ALS, beginning with a Phase IIb clinical trial we will call CY-4026. Accordingly, we submitted a protocol for CY-4026 to the FDA in the past quarter.

Also, during the quarter, we met with EMA's scientific advice working party to seek their advice regarding expanding the clinical development program for tirasemtiv to include countries in Europe. Andy will elaborate more on CY-4026 and our recent communications with these regulatory authorities in a moment.

As I mentioned last quarter, in order to ensure that tirasemtiv is developed as efficiently and effectively as possible, and to maintain urgency and momentum for the potential benefit of ALS patients and their families, we have explored alternative ways to fund our program. In a few minutes, Sharon will discuss our successful financing, which we announced in June and which resulted in our raising $60 million from high quality investors.

The net proceeds from this transaction substantially transform our balance sheet and should provide us with sufficient capital to conduct CY-4026, which we expect will cost approximately $25 million to $30 million.

Alongside our progress with tirasemtiv in the last quarter we also significantly advanced omecamtiv mecarbil. At the end of May, we announced the opening to enrollment of the second cohort in the Phase IIb ATOMIC-AHF clinical trial of omecamtiv mecarbil.

In addition, Amgen and Cytokinetics recently completed a review of data arising from the Phase I clinical trial designed to assess the pharmacokinetics of multiple oral formulations of omecamtiv mecarbil in healthy volunteers. Fady will elaborate on progress on the ATOMIC-AHF clinical trial and also discuss the selection of oral formulations intended for use in future clinical trials in patients with heart failure.

With that introduction, I'll now turn the call over to Andy to elaborate on the progress we have recently achieved in our skeletal muscle activator clinical development program. Later in the call, I will return and provide additional perspectives relating to our future plans.

Thank you, Robert. As you may recall last quarter, I summarized the data we have presented at the American Academy of Neurology, or AAN, annual meeting from two Phase II studies of tirasemtiv in patients with ALS. One of those studies was CY-4024, a Phase II, two-part, randomized, double-blind, placebo-controlled, multiple-dose, safety, tolerability, pharmacokinetic and pharmacodynamic clinical trial of tirasemtiv in patients with ALS.

CY-4024 was the first clinical trial to use the ALS Functional Rating Scale as Revised, or ALSFRS-R, to evaluate the effect of tirasemtiv on the functional status of patients with ALS. The ALSFRS-R measures functional changes in key areas such as breathing, swallowing, and other activities of daily living. It has been validated over 20 years to assess the progression of ALS and is used in both clinical trials and clinical practice.

During the 14 days of treatment with tirasemtiv and CY-4024, a number of patients reported increases in their ALSFRS-R scores relative to their baselines. Although the overall relationship between increasing doses of tirasemtiv and increases in the ALSFRS-R only approached nominal statistical significant across the entire study population, the increases we observed in certain patients are extremely encouraging and warrant further clinical study.

To date, no drug has been demonstrated even to decrease the rate of decline of the ALSFRS-R in ALS patients. Consequently, if tirasemtiv were demonstrated to do so, it could be viewed by the ALS community as an important advance in the treatment of these patients.

In association with the increase in ALSFRS-R observed in CY-4024, we demonstrated increases relative to placebo in measures of pulmonary function such as maximum voluntary ventilation, or MVV. This is an assessment of the strength and endurance of the skeletal muscles that control breathing. To measure MVV, patients are asked to inhale and exhale as deeply and as rapidly as they can for six seconds. The volume of air a patient [used] during this exercise is measured and studied -- I'm sorry, is measured multiplied by 10 to result in units of liters per minute.

In this trial, at the two higher doses studied, we observed an increase in MVV of about four liters per minute relative to placebo, an increase similar to the one we observed after a single 500 milligram dose in our earlier evidence of effect study in patients with ALS. We believe the potential effect of tirasemtiv to increase MVV in patients with ALS could be viewed by them, their physicians, and possibly even regulatory authorities as evidence of a clinically meaningful benefit of treatment.

In the second Phase II, randomized, double-blind, placebo-controlled, multiple-dose clinical trial of tirasemtiv that we also presented at AAN, a study called CY-4025, patients with ALS received riluzole at the reduced dose of 50 milligrams daily while receiving tirasemtiv dosed twice daily in a dose escalation regimen lasting three weeks. In this trial, we observed that changes in ALSFRS-R and MVV were also favorable relative to placebo and that tirasemtiv appeared well tolerated.

The dose escalation regimen we studied in CY-4025 enabled a majority of patients to achieve a higher total daily dose of tirasemtiv than in prior studies of tirasemtiv in ALS patients, yet with comparable tolerability. We believe that CY-4025 identified an appropriate tirasemtiv dosing regimen for further study and longer trials in patients with ALS as we now seek to evaluate more fully the potential clinical safety and effectiveness of this novel skeletal muscle activator in ALS patients.

Now, we want to evaluate the durability of these potentially clinically relevant effects over a longer period of treatment. Building on what we have learned from CY-4024 and CY-4025, we recently submitted a protocol to FDA for our planned Phase IIb trial, CY-4026, randomized, double-blind, placebo-controlled clinical trial designed to evaluate the safety, tolerability, and potential efficacy of escalating twice daily doses of tirasemtiv over a three-month treatment of approximately 400 patients with ALS in the United States, Canada and Europe.

The proposed primary endpoint is the mean change from baseline in the ALSFRS-R versus placebo. The proposed secondary endpoint includes changes in MVV. We are excited to be able to proceed with CY-4026 because we believe tirasemtiv may be an important potential treatment for ALS patients, especially if it can be demonstrated to afford these patients meaningful functional improvements in their activities of daily living and in the quality of their lives. We look forward to potential feedback from FDA regarding our plans for CY-4026.

Furthermore, during the quarter we learned that tirasemtiv was granted Fast Track designation by FDA for the potential treatment of ALS. In addition, during the last quarter we met with EMA's Scientific Advice Working Party. EMA's Scientific Advice process affords sponsors an opportunity to ask questions regarding the development and potential registration of a drug candidate.

We were pleased to correspond and meet face-to-face with representatives of EMA in recent months and are encouraged by their feedback that we believe indicates that single registration pathway may be acceptable in both Europe and the United States. Consequently, we are preparing to enroll patients in CY-4026 in both North American and European centers in a global registration program for tirasemtiv for the potential treatment of patients with ALS.

Lastly, as we have stated often, our interests for tirasemtiv are not limited to its potential for the treatment of ALS. We believe ALS may serve as a gateway to other potential indications that may also benefit from the novel mechanism of tirasemtiv. Accordingly, in the last quarter we continued to enroll patients in our double-blind, randomized, placebo-controlled, three-period crossover, pharmacokinetic and pharmacodynamic, Phase IIa, evidence of effect clinical trial of tirasemtiv in patients with generalized myasthenia gravis.

Patients enrolled in the trial received single oral doses of placebo and tirasemtiv at 250 milligrams and 500 milligrams in random order approximately one week apart. This clinical trial and additional preclinical research related to myasthenia gravis are funded by a $2.8 million grant from the National Institute of Neurological Disorders and Stroke.

Although this trial is taking longer to enroll given differences in the currently unmet treatment needs between myasthenia gravis and ALS, we are making steady progress in this area and continue to believe that data from this trial will importantly inform our plans for the further development of tirasemtiv. As always, additional information about our completed or ongoing Phase II trials can be found at www.clinicaltrials.gov.

Lastly, in recent months we also have been refining our plans for studies and potential indications that we may pursue beyond ALS and with potential partners. These are exciting and important times for us in the development of tirasemtiv. With that update on our tirasemtiv clinical development activities in the second quarter, I'll turn the call over to Fady for an update on our cardiac muscle contractility program.

Thank you, Andy. In the cardiac muscle contractility program, together with Amgen we've made important progress this past quarter with parallel development of the intravenous form of omecamtiv mecarbil in Phase IIb as well as with oral forms moving into Phase II.

At the end of May we were pleased to announce the opening to enrollment of the second cohort in the ongoing, international randomized, double-blind, placebo-controlled, Phase IIb clinical trial of an intravenous formation of omecamtiv mecarbil, known as ATOMIC-AHF. This step forward followed a review of the data from the first cohort by the Independent Data Monitoring Committee.

To remind you, this Phase IIb clinical trial in patients hospitalized with acutely decompensated heart failure is designed to enroll three successive extending dose cohorts, each including approximately 200 patients, randomized one-to-one to omecamtiv mecarbil versus placebo. Cohort two has now enrolled over 100 patients since the opening at the end of May and is enrolling at a rate faster than cohort one. Again, additional information relating to our Phase II trials can be found at www.clinicaltrials.gov.

Alongside the progress in ATOMIC-AHF, Amgen and Cytokinetics completed a review of data from the recently completed Phase I randomized, open-label, four-period crossover study designed to evaluate multiple modified release oral formulations of omecamtiv mecarbil in healthy subjects.

Approximately 60 subjects were enrolled in this study. Each of these subjects received two of the various oral formulations included in the study as a single dose under both fasted and fed conditions. A primary objective of this study was to determine the bioavailability of multiple modified release formulations of omecamtiv mecarbil following single dose administration under fasting conditions and to evaluate the effect of food on bioavailability.

Our review of the results from this clinical trial led to the selection of several oral modified release formulations of omecamtiv mecarbil that we believe warrant further evaluation in patients with heart failure. We are busily engaged, together with Amgen, in finalizing a protocol for the next Phase II clinical trial of an oral form of omecamtiv mecarbil and making other preparations for the potential initiation of this trial.

Advancing both the intravenous and the oral program in parallel is a priority as we prepare to study in later stages of clinical development both the intravenous and oral formations together in a combined regimen of omecamtiv mecarbil for the potential treatment of heart failure.

So with that update on our clinical development activities, I'll turn the call over to Sharon.

Thank you, Fady. As our press release contains detailed financial results for the second quarter of 2012, I'll refer you to that public statement for the details on our P&L and balance sheet.

In June, we completed a $60 million financing, which essentially represented a recapitalization of the Company. We were pleased with the quality of the investors that participated, many of which were already existing investors. In addition, new high quality investors also participated, several of whom are now identified in recent public filings. The funds raised will be focused primarily to the further advancement of tirasemtiv in clinical development, specifically in CY-4026, our planned Phase IIb clinical trial that Andy spoke of earlier.

Including the net proceeds from the offering, we ended the second quarter with approximately $90.5 million in cash, cash equivalents and investments, which represents approximately 22 to 24 months of net cash burned based on our updated 2012 financial guidance.

Our second quarter 2012 R&D expenditures totaled $8.2 million. From a program perspective for the second quarter, approximately 67% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities; 12% to our cardiac muscle contractility program; 9% to our smooth muscle contractility program; and 12% to our other research activities.

For the first six months ended June 30, 2012, our R&D expenditures totaled $17 million. From a program perspective for those six months, approximately 67% of our R&D expenditures were attributable to our skeletal muscle contractility activities; 13% to our cardiac muscle contractility program; 9% to our smooth muscle contractility program; and 11% to our other research activities.

Today we are announcing updated financial guidance for 2012. We anticipate our 2012 revenue to be in the range of $5 million to $7 million, our cash R&D expenses are anticipated to be in the range of $40 million to $44 million, and our G&A expenses to be in the range of $10 million to $12 million. This financial guidance is on a cash basis and does not include an estimated $4 million in non-cash-related expenses, primarily related to stock compensation expense. In addition, this guidance does not reflect potential revenue from potential collaborations with other partners.

Cytokinetics is executing on well considered plans relating to the advancement of both tirasemtiv, currently unpartnered, and omecamtiv mecarbil, partnered with Amgen. Doing so requires us to be prudent and opportunistic. We were pleased that in the recent quarter we successfully raised capital that we believe affords us a practical path forward for our first-in-class muscle biology-related programs.

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

Thank you, Sharon. Last quarter, I stated that our top priorities at Cytokinetics were to partner our skeletal muscle activator program and to advance tirasemtiv into a Phase IIb trial. Those priorities are still true today and, as Sharon mentioned, that is why we raised the capital we did in this last quarter. To be clear, the fundraising we recently completed is a key step towards both of those same objectives.

However, in parallel we also have been successfully executing against a strategy that affords us increased revenue from collaborations as our development expenses increase. We believe strongly that Cytokinetics and its collaborators, both current and potential new ones, benefit from our maintaining an organization that is integrated across research and development.

Ongoing research informs development and vice versa; however, we must ensure we can implement against our plans in a financially sustainable way and we continue to press forward to do deals that monetize our prior commitments and investments in research. We look forward to our potentially providing more updates on our activities to do additional deals that afford us sponsored research and other upside to Cytokinetics and shareholders.

As mentioned, having raised capital in the second quarter, we intend to conduct our Phase IIb clinical trial of tirasemtiv in patients with ALS, CY-4026, with or without a partner. Of course, we continue to work diligently to secure a partnership on terms that can be acceptable to Cytokinetics and in the interest of shareholders. That said, we now have a protocol under review by regulatory authorities and plan to initiate that clinical trial later in this calendar year.

We have the financial resources to conduct this important clinical trial and to continue to develop our novel skeletal muscle activator without delay. Our goal is to complete CY-4026 and announce the results in 2013. At the same time, we are still seeking an appropriate partnership with a company that shares our vision and sees the broad potential for this novel drug candidate and mechanism of action. We intend to maintain the urgency and momentum for this program for the benefit of patients with ALS, their caregivers and our investors.

We continue to believe we can secure a partnership that will contribute financially and operationally for the further advancement of tirasemtiv and also ensure a meaningful role for Cytokinetics in the co-development and co-commercialization of our first-in-class drug candidate.

As we have outlined for you, what the first half of 2012 has already delivered, let me now turn to our expected milestones for the remainder of the calendar year. For tirasemtiv, in the second half of 2012 we anticipate that data will be available from our ongoing Phase IIa evidence of effect clinical trial of tirasemtiv in patients with generalized myasthenia gravis, or CY-4023.

In the fourth quarter of 2012, we plan to initiate CY-4026, a Phase IIb multi-national, double-blind, randomized, placebo-controlled trial designed to evaluate the safety, tolerability and efficacy of tirasemtiv in patients with ALS. In 2012, we anticipate additional interactions with regulatory authorities to discuss the development of tirasemtiv as a potential treatment for patients with ALS, including potential registration strategies. Also, in the skeletal muscle program for the follow-on compound, CK-2127107, by the end of 2012 we anticipate filing an IND for this compound.

Turning now to omecamtiv mecarbil. In the fourth quarter of 2012, we anticipate a decision regarding the potential progression to the third cohort of the ATOMIC-AHF clinical trial following the review of data from the second cohort by an independent data monitoring committee. In the second half of 2012, we anticipate finalizing plans with Amgen for the initiation of a Phase II clinical trial of oral formulations of omecamtiv in patients with heart failure. As such, we expect to finalize a protocol and make other preparations for the potential initiation of a Phase II clinical trial.

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

(Operator Instructions). Our first question comes from Ritu Baral with Canaccord.

Hi, Ritu.

Hi, guys. Hi. Thanks for taking the question, guys. Some questions on the design of 4026. Congratulations on moving that forward. Can you talk to some of the other potential secondary endpoints that might be valuable? And, given that it's a three-month trial and you're looking at ALSFRS-R, what sort of magnitude of benefit might be expected during the treatment period around your powering assumptions, and will there be an extension?

I'll briefly just summarize that, Ritu. This is a protocol that, while it has been submitted to FDA and has been discussed at a high level of EMA through their Scientific Advice process, there are specific details that are still to be locked down as we may hear back from FDA. But that said, I'll ask Andy to speak to some of the secondary endpoints we have been considering, the specifics to be defined later.

So, first among them, as it currently is envisioned, is the maximal voluntary ventilation. We discussed that several times, including on the call today. It seems to be particularly responsive to the tirasemtiv, probably because it is a measurement that incorporates repeated efforts and so benefits from the property of tirasemtiv to delay the onset and potentially even reduce the magnitude of fatigue during repeated efforts.

We'll look at other measures of pulmonary function, the significant inspiratory pressure, and we'll probably look at measures of hand grip fatigability that we've discussed in the past, and certain measures of even maximum muscle strength by dynamometry.

The study -- I can't tell you what magnitude of benefit we can expect because we've never treated patients with ALS for more than three weeks. I can tell you that as the study is currently constructed and submitted for review with the 400 patients we plan to enroll, we would have 80% power to see a difference from the expected decline in the ALS Functional Rating Score on placebo of a little bit more than one point.

So, over a period of three months on average, as you know, the ALS Functional Rating Scale would go down around 2.7 points -- it generally goes down around 0.9 points per month. And we would be powered to see any decrease that was -- it's actually 1.18 points less than that. So that's the power this study has.

Lastly, you asked a question about whether there's an open-label extension contemplated, and that's, again, something that is still uncertain but not currently in the protocol as proposed.

Got it. And one follow-up and I'll hop back in the queue. In your discussions with EMA, do you feel that they have -- are coming to this sort of trial design from a different perspective than the FDA? Are there sort of focuses or sensitivities that are different in Europe versus the US around this disease for any reason?

Again, I'll turn it over to Andy, but I'll just start by saying, Ritu, that I suspect that they're aligning around a common path forward, especially as we and other sponsors are engaging with them. But they may be starting from a different place in part because there are some guidelines that exist today, albeit they're open now for public comment, regarding ALS drug approvals that form some precedent for what may be going forward.

And we've been engaging -- in addition to the Scientific Advice Working Process, we've been engaging in a public comment relating to those guidelines that, as you might imagine, point towards ALSFRS as an appropriate registration endpoint.

Right. One thing that we did mention during the call is that based on our discussions with the EMA Scientific Advice Working Party and their feedback and our earlier interactions with FDA, we do believe that a single development pathway should be satisfactory across both those major regulatory jurisdictions.

And then, as Robert mentioned, the current guidelines are -- in Europe are under review, and I suspect that they will look meaningfully different once that review process is completed than they do now.

Is there a timeline for that?

We've already submitted -- the period for --.

I'm sorry, for the review, for their --.

There may be, I don't know it off the top of my head. The initial deadline for submitting comments on their call for the need to revise them was June 30, and we did submit our comments. And I'm expecting that then there will be a new draft that will come out, I believe, this fall sometime and then there will be a period where we can comment line-by-line on that.

And again, this may be something that is published by EMA and I just don't know it off the top of my head, but I would imagine it would be sometime next year before there would be final new guidance from EMA on this.

Great. Thanks for taking the question, guys.

Thank you, Ritu.

Your next question comes from Charles Duncan with JMP Securities.

Good afternoon, Charles.

Hi, guys. Thanks for taking the question. A quick question with regard to the ALSFRS. I'm kind of wondering if you think you need to actually increase the score relative to baseline, or will stabilization be sufficient? And if there is a -- if you're able to increase, say, ALSFRS relative to baseline, does that suggest a different regulatory strategy and partnering strategy?

We did observe, albeit to underscore what Andy said, only has achieved nominal statistical significance in a small study of short duration and as was intended for other purposes. But we did see that certain patients were experiencing an increase in their ALSFRS in 4024 and 4025 relative to baseline.

And this may be unprecedented. Certainly, no drug has been demonstrated in a statistically robust way to show even a change in the rate of decline versus standard of care. So we think that we have the potential with a longer duration study to show a change in the rate of decline and even a potential increase for those patients relative to their own baselines. So there are two different ways that this drug might ultimately be viewed and play out and then form a registration strategy.

If after CY-4026 we had demonstrated that patients felt better in terms of ALSFRS, a validated endpoint, even as to their own baselines, that would really be extraordinary and warrant some additional conversations with regulatory authorities about registration and approval. As may be more probabilistic, if we see a change in the rate of decline for patients, where they still are declining but not as much as would be on standard of care, then that may inform a separate path forward.

As to your question, I don't think that as it relates to potential partnering we would approach a potential deal under those circumstances differently, but it could speak to faster time to market in the former scenario relative to the latter scenario.

And then -- Robert, thank you for that. Regarding tirasemtiv partnering, as well as some of the data that could be coming up, I'm wondering if your strategy in terms of partnering is indication-specific or perhaps more platform access like partnering for the drug.

And then secondarily, with regard to myasthenia gravis, I understand it's an evidence of effect study, but could you perhaps contract myasthenia gravis versus ALS with regard to the things that you'd like to see? What would really define success in that ongoing study that will be read out soon?

I'll answer the first question and turn to Andy for the second. With respect to partnering, we're really not inclined to do a deal that splits indications away, meaning that we would enter into a partnership for certain indications -- for instance, ALS and not myasthenia gravis. It's possible, but it's not what I think would be more likely to occur and, therefore, should be expected.

The way we and potential partners are engaging in conversations, for the most part, is that ALS may be the first of indications and as a gateway to others to follow, some of which may be orphan and faster time to market indications, others of which may not be orphan indications, but still represent significant unmet need and would be approached as such. And don't forget, we've got the second compound, CK-107, with the same mechanism but different physiochemical properties, could further expand the franchise.

So our preferred mode in partnering is to enter into a deal that really allows for the broad exploitation of the compounds and unique mechanism across multiple indications and conditions. And I think the best partner for us would be one that would really be committed to that strategy with us and signing up to a development plan with us that affords both companies opportunities to engage in development and commercialization. And certainly, we expect that Cytokinetics will be involved in that key way.

So we're looking forward to doing a deal like that and, as such, ALS provides some validation for what may follow, but it's certainly not the only indication that we're discussing with potential partners. So to that point, I'll then ask Andy to respond to your questions about what we're seeking to measure in the case of MG patients.

There's a score that is more of a blend of objective measures of strength and functional ability called the Quantitative Myasthenia Gravis Score, QMG, that we're using in the myasthenia gravis trial. So it's a bit different, in a way, than the ALS Functional Rating Scale, but it is where that -- where the clinical study is that and sits right now.

I think the biggest difference between the two patient populations, as we try to close enrollment in the myasthenia gravis trial, is just that myasthenia gravis is a much less dire disease with some available treatment options. We may be able to improve on them with cure of symptoms to some degree, but very rarely do myasthenia gravis patients die from that disease, whereas essentially all ALS patient die from theirs.

And so the motivation of the different patient populations to come into a clinical trial is very different, and even their ability to do so. Most myasthenia gravis patients are at work, they hold down jobs, and coming into a trial is a very different proposition for them than an ALS patient, who cannot work and is home bound and has a very different motivation for enrolling in a clinical trial.

Thanks for the added color.

Thanks, Charles.

Your next question comes from Mike King with Rodman & Renshaw.

Hi, Mike.

Hi, guys. Thanks for taking the question. Let me do a little bit of zig while others are zagging. I wanted to ask about -- a quick question on omecamtiv. I know you can't say a lot because it's an Amgen program, but I'm just wondering if you could give us some sense of what it would be -- is it simply dyspnea or some other types of outcomes that you guys would be looking for as far as the decision process to go to the next cohort?

Yes, so I'm going to turn that over to Fady to answer.

Yes. The decision to go to the next cohort, really, it's an integrated analysis of all the data available -- safety data, efficacy data, and so forth. And so the decision to go is frankly more weighted towards safety in the previous cohort rather than efficacy, although you can imagine if you have a negative impact on the efficacy endpoint that that might be considered a safety signal.

Right.

So it's really focused on safety.

Is it the objective of the trial to reach an MTD to establish what the --?

No.

-- dose-defining toxicity or adverse event is?

No, I think we understand, I think, where the MTD is of the drug. In this trial, the high dose that we will explore in the next cohort is designed to avoid toxicities we've seen at above the MTD. And so it's to confirm, if you will, that that is well tolerated, but now in a sicker, acute population of heart failure patients.

Okay.

We've done a very careful elaboration of the dose-limiting effects in health volunteers and we've seen in prior Phase II studies what higher plasma concentrations can do in terms of inducing potential adverse effects. In this case, of ATOMIC-AHF, we're really studying the low end of the dose response curve.

And in multiple ascending dose cohorts, we're now, as Fady pointed out, drilling down in greater numbers in more acutely ill patients to see if not only do we have appropriate tolerability, but also does that correspond with potential in-hospital efficacy as would be measured against dyspnea.

But to underscore, it really is primarily a study to understand safety and tolerability as we might approach now moving into a Phase III Program sometime afterwards.

Okay. And how do you --? Help us understand how you would emerge, the IV and the oral formulations, now that you've got an acceptable oral formulations. Are you thinking of one trial with continuous therapy or two trials separate from one another? And maybe help us to understand that a little bit.

The way we have been thinking about it and, of course, this is not locked down and certainly it's as would be agreed between Cytokinetics and Amgen. But we've spoken publicly, and so has Amgen, about what we think an appropriate Phase III path could look like -- or program could look like. And it would unlikely be a single Phase III study and more likely would be at least two. And as we'd combine in a strategy, IV and oral, albeit not each study necessarily both, but the goal would be to seek registration around an IV and oral regimen.

And with that, I'll turn to Fady to maybe elaborate specifically.

Right. So, there are two kinds of patients one can envision treating. There are acutely ill patients that eventually would become outpatient and then there are outpatients as well who aren't in the hospital. And those two strategies of starting acutely ill patients on IV therapy and transitioning them to oral therapy to continue therapy, or for patients that don't require IV therapy who may be exiting the hospital or may be in the outpatient clinic, starting them on oral therapy, are two tracks, if you will.

And those could be studied in two separate trials. They could be studied in a single trial where people can be randomized to either arm -- well, they wouldn't be randomized to either arm, but they could be enrolled in either arm depending on their condition. So I think that's more of an operational detail. But I think the key point is the intent to study both strategies at the current -- that's our plan at the current time.

So there are advantages to us doing that. And as I've mentioned, I think, on these calls in the past, there are both offensive and defensive reasons why that makes a lot of sense. We have, in omecamtiv mecarbil, advantages that this is a compound that can be formulated into intravenous form and therefore used in a hospital and easily titratable, etc., but also is highly orally bioavailable . And as that is the case, it could extend the potential functional benefits for patients as they would take the oral in the outpatient setting for chronic heart failure.

What we've now in the last quarter addressed is that there are multiple ways that we can formulate omecamtiv mecarbil as an oral in order to be able to progress it into Phase II, the goal being to select one of those oral forms for progression to Phase III. So we look back on this last quarter in the Phase I study and say this was pretty successful in that Amgen conducted a collaboration with Cytokinetics, a study that evaluated multiple oral forms and several of those graduated to the next level.

Right. Okay, great. And then, maybe to move back to the 4026 trial, could you maybe give us some more color? Are you going to replicate the data -- the doses that you used in 4024, or might you contemplate going higher? That's the first part of the question. The second part of the question is would you expect to register if -- let's say it's successful and all goes well with the regulators and such. Would you expect to register all those doses and ask patient to go through a titration process, or would you expect them just to -- would you expect to settle on an optimal single dose?

Well, the study is designed to use the dose titration regimen that was studied in CY-4025. And we'll have a lot more experience with the percentage of patients that are able to get to the highest dose that we studied in that trial, which was 250 milligrams twice a day, and we don't intend to go any higher than that in CY-4026. But once we have hundreds, rather than dozens, of patients' worth of experience, it's conceivable that we might decide that titration to stop before getting to 500 or try to go higher than 500 might be useful.

But doses of most drugs are actually titrated anyway, so I think that the dose titration regimen is, I'll say at this point, not unlikely to be what would be done in clinical practice subsequent to the hopeful approval of the drug. It's a little early to know until we see the data from 4026.

From the standpoint of a practical matter, managing these patients is dose titration feasible or is it -- could it be a hindrance to adoption?

No. Frankly, I think it would be easier. I think the tolerability of starting low and then gradually titrating up is no worse, and in many patients probably better, than starting with a dose that you would like them eventually to achieve.

Right. Or it could also allow for dose reduction, if necessary, I presume.

If necessary.

Yes. And then my final question on that is just with regard to riluzole. Again, for registration purposes, what are you thinking? Will some combination with riluzole be required, be desirable, or just be optional?

Well, I think the way we've designed the study is that patients can come in and be randomized to tirasemtiv versus placebo, whether or not they're on riluzole. And so hopefully the label that we would get is that the drug is for use with or without riluzole, and an appropriate dose adjustment if patients are on riluzole.

Okay, great. Thanks for answering my questions.

Thank you, Mike.

Your next question comes from Simos Simeonidis with Cowen and Company.

Good afternoon, Simos.

Hi, guys. Thanks for taking the questions. Can you talk about what is the [rate-limiting] step or steps until you start 4026? Is it basically the review of the protocols and the response from EMA and FDA, or anything else that needs to be taken care of?

Yes. I'll mention it; and if I forget something, Andy, please add. We certainly need to ensure that we don't have any negative feedback regarding the protocol. And that's something that we don't expect, but with the passage of time we'll know that for certain. And we are planning as if we are proceeding with the study to be started as soon as possible, and hence our guidance today regarding this study starting in the fourth quarter.

We, in that way, have to enter into contracts with sites. We have to go through the IRB approval process at those sites. We need to convene the investigators ready for the initiation of those sites and the initiation of the study. Those are certainly not unfamiliar activities to us. We've done nine clinical trials with CK-357 in three years. We have a clinical operations team in the group that supports it that are really well suited to do this rapidly.

So we're moving forward with the anticipation that this will all happen in that timeframe. And I'd suggest that unless something comes out of left field that is really unexpected, we'll be on timeline to make that occur.

Okay. And then, in terms of number of sites and the breakdown between US versus ex-US, and I guess also how long do you -- are you planning that this enrollment period might take?

The majority of the sites would probably be in North America, the United States and Canada, maybe two-thirds of them. And it's our goal to enroll the study by mid-year next year and report the data out before the end of the year.

So we've looked at the other studies that have enrolled ALS patients in recent years and we've done calibrations as to what we think might be an expected enrollment rate for this trial, albeit I'll also say we have what appears to be a good window where there are fewer competing trials right now. There's good momentum for CK-357 or tirasemtiv in the ALS population and there's certainly evidence to suggest, as we've reached out to centers to see who may be interested, that momentum is translating into enthusiasm for this trial.

So, we're hopeful that this trial will get up and running quickly and enroll rapidly.

Okay. And final question. In the press release today you say the trial, 4026, is going to be "in patients with ALS receiving riluzole," so are all patients on 4026 going to be taking riluzole or --? I think what you had talked about before is if they were on riluzole before the trial they'll be one it, but if they were not they're not going to start it. So, I guess, is it true that part of the trial will be of patients without, that are not taking riluzole?

Patients that are not taking riluzole will be eligible for the study as will patients who are taking it. So whatever they were on as they come into the study, they can come in and we'll randomize them to tirasemtiv versus placebo over their background of care, whichever it is -- with or without riluzole.

Okay, great. Thank you for the clarification.

Yes, it is true that a majority of patient would be expected to be on riluzole inasmuch as that's currently the case in both North America and in Europe, even more so in Europe than North America, but we also expect that there may be some patients not on riluzole.

Okay, great. Thank you very much.

Thank you, Simos.

Your next question comes from the Chad Messer with Needham & Company.

Hi, Chad.

Hi. Yes, thanks for taking my question. I just wanted to circle back and be clear. I know you said two-thirds of the sites you plan to be in the US and you hope to enroll by mid-year. I was wondering if you could just talk to what the relative importance of those European sites is. And if it takes a little longer to get them on-board than you were thinking, if there's some risk to the timeline or if there's a way to make up for it with what's going on on the US sites.

Yes, the strategy to roll this study out to include European centers is one that was contemplated in light of potential partnering interests and otherwise a global registration development program that would serve our longer-term interests. We certainly want to study this drug so that it can be in parallel evaluated for registration across all the major regulatory jurisdictions in US, Canada and Europe. But that said, it wasn't driven by the thought that we had to have European centers to make this happen.

There's a fair degree of international momentum building for tirasemtiv. And we've engaged European key opinion leaders, and they're as motivated as are their North American counterparts. And we wanted to address that interest by engaging more broadly, even as our own commercial interests may be more focused to North America simply because of what's tractable to Cytokinetics with our resources. But certainly, a potential partner with have interests also in Europe.

So there may be other practical reasons to engage Europe and, if so, Andy, I'll turn it to you. If not --.

It will take longer to come on and we view them, to some degree, as an insurance policy if enrollment is not as brisk as we might hope in North America, that we will have these additional sites coming on in the early part of 2013 to help get us over the top.

Yes, to Andy's point, it's not just that all centers are coming online at the same time, there will be a bit of a staggered start for some of the European centers.

Okay, great. Thank you. That's very helpful.

Thank you, Chad.

And we have reached our allotted time for questions and have time for one last question. Our last question comes from George Zavoico with MLV & Company.

Hey, George.

Hey, Robert. Hi, Sharon. Hey, Fady and Andy. I just made it, I guess. A couple of quick questions then. Sharon, you said that 13% or so of your R&D budget goes to cardiac.

That's correct.

What are you still responsible for on the omecamtiv development? My understanding was that Amgen was pretty much taking over all of it. Are you working on a follow-on compound or something else?

That represents both our stewardship costs associated with omecamtiv, which are small. The larger portion of that number relates to the research collaboration that we have ongoing with Amgen, looking at next-generation cardiovascular compounds.

Okay, great. I look forward to --

That's what the revenue we -- sorry. That's what the revenue that we have in associated with it as well. So they reimburse us for FTEs.

Okay. Cool. Good. And with regard to the second oral formulation trial, you said it was going to be another Phase II, so you've narrowed down the field from, I forget, about six or eight formulations down to a smaller number? Are these going to be like more detailed PK/PD-type studies where you look at different regimens for the same formulations? What's keeping you from actually picking one from the first group, from the first trial?

I should probably say, George -- and I'll ask Fady to add -- the protocol is not yet locked down. And I want to be mindful and respectful of our colleagues at Amgen, that we would not be foreshadowing what that protocol will look like before we know that it's agreed. But what we have indicated is that our goal would be to further refine selections as we move from healthy volunteers into heart failure patients, and afterwards --

Okay.

-- understand longer-term safety.

Yes, George --

Okay.

I think the two major differences are moving from healthy volunteers into the actual patient population, and the other is from single dose to multiple dose.

Okay, great. And then finally, the last quick question, when -- is there an upcoming Amgen option or decision point where within the next couple of years, like there was recently?

The deal that we had with Amgen didn't really afford Amgen per se another option like occurred when they exercised their contractually defined option in 2009. Of course, Amgen can continue or not as it may see fit, subject to termination provisions if they were not to proceed, but there's no formal option.

Cytokinetics has, as the deal may go forward, options, in particular, as it may pertain to co-funding certain later stage development costs and co-promoting in North America, but Amgen doesn't have such an option to speak of.

Okay, good. And clearly, putting yourselves into a much better financial position, and certainly will inform any of those kinds of decisions going forward. [That's good].

Yes. Certainly, Cytokinetics and Amgen will together review data from Phase II studies and will be making decisions regarding potential progression to Phase III. And then, that will have implications not only to what's going to be occurring in the US and Canada, but also internationally. There are milestone payments that are due and payable to Cytokinetics as the program matures, both that are pre-commercial and also post-commercial.

And I'll just remind you that presently our license to Amgen is limited in geography to exclude Japan. It's a worldwide license in all countries, and the territory is defined as all countries except for Japan. And that's something that we will continue to consider, how to best to exploit for potential benefit to Cytokinetics in Japan.

Okay, thank you very much. I'll look forward to your continuing progress in both heart failure and ALS.

Thank you, George. I appreciate it.

Thank you. I will now turn the call back over to Robert Blum for any final comments and closing remarks.

So, thank you, Operator. And also, thank you to all the participants on our teleconference today, for your continued interest in Cytokinetics. We look forward to updating you on our continued progress. And, operator, with that we can conclude the call.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.