Cytokinetics Inc (CYTK) 2014 Q4 法說會逐字稿

Good afternoon, and welcome ladies and gentlemen, to Cytokinetics' fourth quarter 2014 conference call. (Operator Instructions) I will now turn the call over to Sharon Barbari, Cytokinetics' Executive Vice President of Finance and CFO. Please go ahead.

Good afternoon, and thank you for joining us on this conference call today. Leading today's call is Robert Blum, our President and Chief Executive Officer. Following Robert's initial comments, Andy Wolff, our Senior Vice President and Chief Medical Officer will provide an update regarding our ongoing interactions with regulatory agencies and planned Phase III clinical development program for tirasemtiv. Our first-in-class fast skeletal muscle troponin activator, which we are developing for the potential treatment of amyotrophic lateral sclerosis or ALS.

Afterwards, Fady Malik, our Senior Vice President of Research and Development will provide an update on our clinical development program for CK-2127107 or CK-107, our next generation fast skeletal muscle troponin activator, and our plans for Phase II clinical trial in spinal muscular atrophy our SMA.

Fady will then provide an update on the clinical development program for omecamtiv mecarbil, our first-in-class cardiac myosin muscle activator, which is being developed for the potential treatment of heart failure. I will then provide a financial overview for the quarter and Robert will conclude the call with additional perspectives and comments regarding our future plans and key milestones for 2015. We'll then open the call for questions.

Please note that 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 and collaborations with Amgen and Astellas 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, 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. We undertake no obligation to update these statements after this call.

I'll now turn the call over to Robert.

Thank you, Sharon, and thank you to everyone on the line for joining us for this call today. I'd like to begin our fourth quarter conference call by providing a summary of Cytokinetics 2014 activities as my colleagues will elaborate during the call. Overall, we're pleased with how Cytokinetics executed, responded and prepared in 2014, in particular in the areas of clinical R&D as well as business development and in concert with our corporate strategy to enable parallel advancement of our three development stage programs. We believe we're well positioned in 2015 with our programs proceeding towards later stage clinical trials.

Looking back on 2014, Cytokinetics steadfastly delivered on our mission even as we had to confront and overcome certain setbacks. We are resilient and our team remains strong in its conviction. We advanced our programs and exceeded our financial guidance for 2014, ending the year with significantly more cash and forward runway than when we began the year. We continue to lead the field of muscle biology related drug discovery and development as evidenced by pipeline progress and as evidenced by yet another innovative deal transaction.

Recently, upon completion of certain Phase II readiness activities with CK-107, we announced the expansion of our collaboration with Astellas. Much like we expanded our relationship with Amgen for our Cardiac Muscle program in 2013 following our joint review of results from ATOMIC-AHF and are agreeing to plans for the further development of omecamtiv mecarbil in Japan. We are now pleased to expand our relationship with Astellas. For our Skeletal Muscle program and to include neuromuscular indications and that followed our joint review of data from Phase I studies and are agreeing to plans for the further development of CK-107 in a Phase II program.

Cytokinetics has continued to deliver results in our collaborations and our partners have stepped up by extending and expanding joint research and development programs and making related payments to Cytokinetics, that we can then invest in both partnered and un-partnered programs. Expanding our collaboration with Astellas enables us to conduct a Phase II clinical trial of CK-107 in patients with SMA. The deal expansion provided us with $55 million upfront in the form of a license fee, a milestone payment and an equity investment.

In addition, we expect to receive over $20 million from Astellas in reimbursements for planned research and development activities over the next two years. The agreement also provides for Cytokinetics to potentially receive over $600 million in the pre-commercialization and commercialization milestone payments as well as escalating royalties to Cytokinetics with increased sales. We retain the option to co-fund the development of CK-107 in SMA and other neuromuscular indications and exchange for increased milestone payments and royalties. And if we exercise our co-promotion option, Astellas will reimburse Cytokinetics for certain expenses associated with our promotion activities. We believe CK-107 holds promise for patients and is on a solid footing in collaboration with Astellas. While in 2014, we learned that BENEFIT-ALS did not achieve its primary efficacy endpoint 12 weeks of treatment with tirasemtiv was associated with statistically significant increases versus placebo in a clinically meaningful measure of respiratory function known as slow vital capacity or SVC.

We dedicated much of the second half of 2014 to evaluating the robustness of data from this largest Phase II trial conducted in patients with ALS. I'm pleased to announce today that following extensive analysis of data from BENEFIT-ALS accompanied by consultations with experts including investigators, other neuromuscular and pulmonology clinicians, payers and also representatives of each of the U.S. FDA and the European EMA, we now plan to initiate a Phase III clinical development program for tirasemtiv in patients with ALS.

We have listened carefully to the feedback we've received and we're finalizing the design of a Phase III trial that we believe can confirm and extend results from BENEFIT-ALS. We believe that patient's caregivers, clinicians, payers, and regulatory authorities would all respond well to a new medicine in ALS that slows the rapidly progressive decline in respiratory function.

We believe that longer duration treatment with tirasemtiv may result in clinically meaningful effects on SVC and other clinically important measures of respiratory insufficiency and related clinical events. We look forward to tirasemtiv proceeding to Phase III in this year 2015 and answering questions about tolerability, durability of effects on SVC and correlation with other measures of patient function.

Turning away from skeletal muscle programs for a moment in 2014, we continue to work diligently with our partner Amgen. Last year, we conducted a Phase I trial of omecamtiv mecarbil in healthy subjects of Japanese ancestry to inform additional preparation for Japan's inclusion in a potential Phase III clinical program.

COSMIC-HF, which is evaluating oral omecamtiv in patients with chronic heart failure is nearing completion of patient enrollment. Data expected from COSMIC-HF in 2015 alongside data from ATOMIC-AHF, which evaluated intravenous omecamtiv mecarbil in acute heart failure patients should inform how we may proceed to Phase III with this drug candidate under our collaboration with Amgen. We are encouraged by still blinded safety data arising from hundreds of patients in COSMIC-HF and are jointly engaging in manufacturing, regulatory, clinical and commercial development activities with the assumption that omecamtiv mecarbil may proceed to Phase III in 2016.

Let me now turn the call over to Andy. So that he can get us started today on elaborating on these development programs, and starting with tirasemtiv directed to the potential treatment of ALS.

Thank you, Robert. In the fourth quarter, we focused on planning and readiness activities including end of Phase II regulatory interactions to inform the design of the Phase III clinical for the potential treatment of patients with ALS.

Recently, we met with the FDA to discuss results from benefit ALS and the potential Phase III program. We also recently met with representatives from EMA, while regulatory interactions with each of the FDA and EMA are ongoing. We believe that the feedback we received informs our advancement of tirasemtiv to a Phase III clinical development program, intended to confirm and extend results from benefit ALS. As you heard from Robert, our objectives for the Phase III program will include assessing effects of longer duration treatment of tirasemtiv on measures of respiratory function in patients with ALS including effects on the SVC, but also including other clinically meaningful endpoints. We believe the information we have received from consultants, market research and regulators alliance in an actionable manner and underscores the importance of respiratory function for patients with ALS.

To remind you, when I said ALS as a Phase IIb multi-national double-blind, randomized, placebo-controlled clinical trial designed to evaluate the safety, tolerability and potential efficacy of tirasemtiv in patients with ALS, the results of benefit ALS showed that treatment with tirasemtiv resulted in a statistically significant and potentially clinically meaningful reduction versus placebo in the decline of the SVC at each assessment over 12 weeks of double-blind treatment.

The pre-specified secondary efficacy endpoint of the SVC is a measure of the strength of the skeletal muscles responsible for breathing that has been shown to be an important predictor of disease progression and survival in prior trials in patients with ALS.

In addition, reductions and the decline in SVC on tirasemtiv versus placebo in BENEFIT-ALS were observed consistently across all of the pre-specified patient subgroups we examined. Furthermore, the lesser decline in SVC on tirasemtiv versus placebo persisted undiminished at one and four weeks after the last dose of double-blind study medication demonstrating the durability of the effect of tirasemtiv on SVC.

To confirm the clinical importance of these findings, we've consulted with neuromuscular and pulmonary experts, both in the United States and internationally and have concluded that the results from BENEFIT-ALS provide compelling evidence that tirasemtiv may preserve pulmonary function in patients with ALS that warrants investigation in a Phase III clinical development program.

I'd like to take a few minutes to distill for you what we learned from our conversations with these experts about the clinical importance of SVC to patients with ALS. Of course, in a clinical setting, patients with ALS are evaluated in a variety of ways. However, their respiratory function is especially important to assess because patients with ALS usually die from respiratory failure. Multiple studies have shown that the rate of decline in pulmonary function, as measured by vital capacity, strongly predicts mortality. Prior to respiratory failure, the rate of decline in vital capacity from visit to visit as well as the far below at certain threshold of final capacity, (inaudible) discussions about advance directives, home health needs and expectations regarding duration of independent living. Referrals to hospicem, recommendations regarding feeding tube placement and prescription of non-invasive ventilation or all based on respiratory function measured by vital capacity.

Third party payers also make decisions about funding such interventions based on vital capacity, thus both the rate and change of vital capacity as well as the decline to a specific level of vital capacity are our direct imports to the patient and treating physician. When we announced the initiation of our planned Phase III trial, we will elaborate on its design, but we believe now that we have the support of all stakeholders to conduct a trial of tirasemtiv, that they confirm and extend the results of (inaudible) BENEFIT-ALS.

With that update on our plans for tirasemtiv, I will now turn the call over to Fady for an update on our other Muscle Contractility programs.

Thank you, Andy. Turning first to the development of CK-107, our next generation skeletal muscle component activator partnered with Astellas. I'm pleased to report that last year we completed Phase II readiness development activities in accordance with an agreed plan under the joint oversight of Cytokinetics and Astellas. These development activities included certain manufacturing activities, preclinical and Phase I clinical studies and other planning related to the potential progression of CK-107 to Phase II clinical development.

As Robert mentioned, in the fourth quarter, Cytokinetics expanded our strategic collaboration with Astellas enabling development of CK-107 in patients with SMA and potentially other neuromuscular indications. While we and Astellas are continuing discussions about other potential clinical indications including non-neuromuscular indications, we've agreed that Cytokinetics will conduct this first phase II trial in patients with SMA Astellas's expense.

SMA is a severe neuromuscular disease that occurs in one of every 6,000 to 10,000 live births each year and is one of the most common fatal genetic disorders. SMA manifest in various degrees of severity, as progressive muscle weakness resulting in respiratory and mobility impairment.

There are four types of SMA; name for the time of initial onset of muscle weakness and related symptoms. Type one is infantile; type two, intermediate; type three, juvenile; and type four, adult onset. Life expectancy and disease severity vary by from type 1 we have the worst prognosis and the life expectancy of no more than two years from birth to the Type 4 patients who have a normal lifespan, but with gradual weakness that develops in the proximal muscles of the extremities resulting in mobility problems. Few treatment options exist for these patients resulting in a high unmet need for new therapeutic options to address symptoms and modified disease progression. We believe that direct activation of the skeletal muscle sarcomere by CK-107 may address muscle weakness that characterized SMA could demonstrate effects on key functional parameters.

We've embarked on a Phase II clinical planning exercise and activities and our conducting manufacturing activities that will be needed to complete. We completed before the Phase II clinical trial and SMA can be initiated later this year. In addition to the clinical program, we also extended our joint research program focused on the discovery of additional skeletal sarcomere activators through to the end of 2016.

Turning now to the development of omecamtiv mecarbil. In the fourth quarter, enrollment of patients continued in the expansion phase of COSMIC-HF. To remind you, omecamtiv mecarbil is the first-in-class cardiac myosin activator that we are developing in collaboration with Amgen for the potential treatment of systolic heart failure.

COSMIC-HF is a Phase II double-blind, randomized, placebo-controlled multicenter clinical trial designed to assess the pharmacokinetics and tolerability of omecamtiv mecarbil in patients with stable chronic heart failure and left ventricular systolic dysfunction.

Secondary objectives are to assess the changes from baseline in echocardiographic parameters and N-terminal pro-brain natriuretic peptide during 20 weeks of treatment. We expect COSMIC-HF to complete patient enrollment this month. Over 150 patients in COSMIC-HF have completed 20 weeks of dosing with investigational product. Recently, the data monitoring committee recommended the trial proceed without any changes to the protocol.

While we do not see unblinded data from COSMIC-HF, we do receive updates of aggregated blinded data. Members of the data monitoring committee meet regularly and receive unblinded patient level data. They recommended continuation of COSMIC-HF without change which we can now project will read out later this year. We are encouraged by the recent progress of omecamtiv mecarbil development program. COSMIC-HF represents the last planned clinical trial in a comprehensive Phase I and Phase II clinical trials program that will inform the potential progression of omecamtiv mecarbil go to a Phase III registration program. We look forward to data from COSMIC-HF later this year and continue to prepare with Amgen for the initiation of a potential Phase III development program. These activities encompass large scale manufacturing and other ongoing R&D activities including Phase III protocol development and activities related to the further development of omecamtiv mecarbil in Japan to inform and raise its potential inclusion in the global Phase III program.

With that update on our cardiac and skeletal sarcomere programs, I'll turn the call over to Sharon for an update on our financials.

Thank you, Fady. As our press release contains detailed financial results for the fourth quarter of 2014, I'll refer you to that public statement for the details of our P&L and balance sheet. We ended the fourth quarter with approximately $83 million in cash and cash equivalents and investments, which represents approximately 24 months of going forward net cash burn based on our 2015 guidance. That guidance includes the estimated cost of the planned Phase III development activities for tirasemtiv in 2015 and 2016.

The cash at year-end include $10 million from the purchase of common stock buy Astellas in December. However, it does not include an additional $45 million that we've received in January related to the expansion of our collaboration with Astellas.

Revenues for the fourth quarter of 2014 were $21.8 million compared to $24.3 million during the same period in 2013. Revenues for the fourth quarter of 2014 included $2.3 million of license revenues, $3.3 million of research and development revenues, and $15 million in milestone revenues from our collaboration with Astellas.

In addition, $1.1 million in research and development revenue from our collaboration with Amgen and $100,000 in milestone revenues from our collaboration with Myocardia. Revenues for the same period in 2013, included $2.4 million of license revenues and $4.1 million of research and development revenues from our collaboration with Astellas and $17.2 million of license revenues and $0.6 million of research and development revenues from our collaboration with Amgen.

Revenues for the 12 months ended December 31, 2014 were $46.9 million compared to $30.6 million for the same period in 2013. Revenues for the 12 months of 2014 were primarily comprised of $15.4 million of research and development revenues, $9.8 million of license revenues and $17 million in milestone revenues from our collaboration with Astellas, $4.5 million of research and development revenues from our collaboration with Amgen and $100,000 in milestone revenue from our collaboration with MyoKardia.

Revenues for the same period in 2013 were primarily comprised of $3.9 million of license revenues and $6.4 million of research and development revenues from our collaboration with Astellas and $17.2 million of license revenue and $2 million of research and development revenues from our collaboration with Amgen, as well as $1 million in revenues from our collaboration with MyoKardia.

Our fourth quarter 2014 R&D expenditures totaled $8.8 million from a program perspective. For the fourth quarter, approximately 66% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, which include expenses associated with tirasemtiv and CK-107; 20% to our cardiac muscle contractility activities; and 14% to other research activities.

For the 12 months ended December 31, 2014, our R&D expenditures totaled $44.4 million. From a program perspective, for those 12 months, approximately 74% of our R&D expenditures were attributable to our skeletal muscle contractility activities which include expenses associated with your tirasemtiv and CK-107; 17% to our cardiac muscle contractility program; and 9% to our other research activities.

Today, we announced our financial guidance for 2015. Cash revenues are expected to be approximately $42 million to $43 million. Cash R&D expenses are expected to be in the range of $55 million to $58 million. And cash G&A expenses will be in the range of $15 million to $18 million. This guidance includes approximately $30 million in revenue, which will be deferred and recognized over a two-year period ending in 2016 under Generally Accepted Accounting Principles. This guidance excludes the $15 million milestone payment earned in 2014 from Astellas and an estimated $3.6 million in non-cash related operating expenses, primarily related to stock compensation expense.

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

Thank you, Sharon. At Cytokinetics, we've embarked on our most important year-to-date. In 2015, we're ready into start our first Phase III clinical trial, a trial that we believe can confirm and extend the results from BENEFIT-ALS. The first trial is to demonstrate potentially clinically meaningful effects on respiratory function and muscle strength in patients with ALS. We're encouraged an optimistic following extensive analysis, consultations and planning activities that Cytokinetics and tirasemtiv can deliver on the trust and hope that patient's with ALS and their caregivers have placed in us.

Also in 2015, we expect results from COSMIC-HF, a large international Phase II trial of omecamtiv mecarbil. We believe omecamtiv mecarbil represents one of the more promising and innovative drug candidates in an area of high unmet need. After characterization of intravenous and oral forms of omecamtiv mecarbil in a dozen clinical trials enrolling well over a thousand subjects, we eagerly await the results from COSMIC-HF to inform potential progression to Phase III.

Also in 2015, we look forward to initiating a first Phase II trial of CK-107 in patients with SMA. Like ALS and heart failure, SMA is also a severe and progressive disease, and one for which our skeletal muscle activator holds promise for addressing limitations of muscle weakness. We're pleased to take steps forward to engage patients with SMA and their caregivers and the pledge the same diligence and dedication to innovative drug development. That has been our hallmark.

Now, let me turn to our expected milestones for 2013. For tirasemtiv, Cytokinetics expects to initiate a Phase III clinical development program for tirasemtiv in patients with ALS in the second quarter of 2015. For CK-107, Cytokinetics expects to initiate a Phase II trial of CK-107 in patients with SMA in the second half of 2015.

For omecamtiv mecarbil, Cytokinetics expects enrollment of patients in the expansion phase of COSMIC-HF to conclude in this first quarter of 2015 and results from COSMIC-HF to be available in the second half of 2015. We expect to continue joint development activities in collaboration with Amgen directed to the potential advancement of omecamtiv mecarbil to Phase III clinical development.

So in conclusion, I'm looking to 2015 with great anticipation. We've entered the year stronger operationally, programmatically and financially. Our programs are progressing with the benefit of excellent science, careful oversight and diligent planning. Our employees are steadfastly dedicated to our mission to bring forward new medicines for patients suffering from severe diseases for which our expertise in the biology and pharmacology of muscle mechanics can make a meaningful difference. We look forward to keeping you informed of our progress. Operator, that concludes the formal protion of our call today. I'd now like to open up the call to questions, please.

(Operator Instructions) And our first question comes from the line of Charles Duncan with Piper Jaffray.

The good afternoon, Charles.

Good afternoon, Robert. Thanks for taking my question and thanks for the color on all the things that you planned to do this year. Quick question regarding tirasemtiv. I'm wondering, do you plan to seek a spot. I mean it seems like you've gotten some pretty good feedback from the regulatory agencies. But are you going to seek kind of a formalized spot on that -- on that trail?

Good question, thanks for asking, it is something that we would not likely speak to until we've made our final determinations and these are ongoing activities that are as you can appreciate still very fluid. It's something that we've been considering but we have not made any final determinations around.

Okay and second question regarding that probably -- probably the same or similar answer is that, it seems to me that since we've never seen an impact on SBC in the past in an ALF trial. I'm wondering if this could possibly raise to the level of a breakthrough therapy designation.

Here again, I think that's still to be determined. We're focused to the start of the Phase III clinical trial and we're not going to be communicating the play by play on the regulatory interactions throughout the process, but rather when we've got something meaningful and material to share that's when we'll disclose it.

And I know the protocols probably not fully finalized, but can you provide us even a rough order of magnitude estimate on cost and timing. And then wanted to ask you a question about funding.

Sure, let me turn to Fady to address that in some broad brushstrokes.

I mean the trial is going to be designed to confirm the effects that we saw in benefit obviously and so the scope of it will be similar, probably won't be as large necessarily given the power that we had in benefit to examine change in SVC. Trial will be longer because we'll be looking to extend that effect to extend it out to longer time points and then also to be able to correlate improvements in the decline of SVC with other respiratory parameters. So I think the details as you indicate are still being finalized protocols coming together and it's a final form. And once that's put together and the trial starts, we'll be happy to share this in more detail.

So one of the things that we get often asked relates to how are we going to address some of the things we learned in BENEFIT-ALS including tolerability and early termination that we'd like to improve upon in Phase III study. Maybe I'll ask Andy, if you wouldn't mind just commenting a bit on what we're thinking that way.

So if you recall that, in BENEFIT-ALS, all patients who met the eligibility criteria received a week of open-label tirasemtiv at a starting dose of 125 milligrams twice a day for a week before they were randomized to either tirasemtiv or placebo. And part of the reason for doing that was to ensure that patients would tolerate that before they were randomized.

But I think what we've learned from our investigators that a week is really not long enough to determine that. I think patients and investigators often felt rushed and because the patients were very interested in getting into the trial, I think we saw too often that a decision was made to randomize the patient only to have them decide, relatively shortly thereafter that they really couldn't put up with the adverse events they were experiencing.

So we think a two-week period gives them more time. It also gives more time for these adverse events such as dizziness to dissipate as they often do with continued treatment. It just gives investing another patient a little more information before the randomization occurs.

And then during a double-blind treatment, we've titrated up every week and we think that's slower titration would be helpful as we try to achieve the target dose.

So with a longer, slower dose titration, I think it's probably the way we're going to approach that. And we've got some other ideas that you'll hear more about with the initiation of Phase III that that we think we'll address some of those issues.

You also asked about the potential cost of the study maybe, I'll ask Fady to mention sort of where we are in the process towards readiness for Phase III and sharing to speak in general about where we think this is from an order magnitude cost standpoint.

As always we've -- for some time now been going through the process of evaluating our partners in this particular trial and going through their capabilities and presentations and thinking of the team that we want to assemble, which now will be conducting a global trial. So this from, the outset will be a global clinical trial. And the team is quite far in those preparations. That's why we're pointing to started a study in the second quarter.

From a cost perspective, obviously since we don't have the final protocol in place and that all we can really kind of give is brush broad strokes, of what we think the clinical trial will costs and that somewhere between $25 million and $50 million. We'll be able to give more specific guidance once we have the final protocol, we'll be able to narrow that range down.

So that's the range that we've included in our guidance right now and we'll pinpoint that more as we get definitive information and the study gets underway.

Okay and BENEFIT-ALS, can remind us about how much that was, the trial?

That was a study in the same range, closer to $35 million to $40 million.

This one might be a little short or a little smaller in terms that numbers of patients, but a little bit longer in terms of exposure. One last question, then I'll hop back in the queue, regarding omecamtiv. I'm wondering, Robert you mentioned that you've been made aware of kind of blinded safety data. And although it's only over 20 weeks, it seems like nothing stands out to you, at least this point. And so I guess my question is, does the biggest issue with omecamtiv remain therapeutic window or is it translating the improved cardiac output into meaningful clinical benefit in your mind?

So it's really good question. The Phase II study is not really designed with clinical outcomes in mind, that's really going to be addressed in Phase III. In Phase II, we're looking to ensure that we can maintain target plasma concentrations and exposures with oral dosing up to 20 weeks and those are well tolerated and associated with durability of effect is measured by multiple echocardiographic parameters. No single one of which is defined as a primary efficacy endpoint. But where we'd like to see that the things that we know and love about this drug for shorter direct in terms of effects on systolic ejection time and stroke volume ejection fraction and other echocardiographic parameters are maintained as the drug is dosed orally in the chronic heart failure population.

I don't know, Fady, is there anything else that you'd add to that?

No, I mean I think it's a natural step that you take before embarking on long-term Phase III program. (inaudible) patients, a sizable number of patients for several months and look at the overall dataset.

This is seen if or when decision in terms of next steps in Phase III?

So it's hard to answer that question. This is a joint decision that we make together at joint development committee with our partners at Amgen and it's got to be data informed. The data from the ATOMIC-AHF study we believe supports progression of Phase III, but we also have to see this data too. But we're proceeding right now in terms of activities at both companies with the goal that this could be entering Phase III and we want to be best ready for that.

Good deal. Thanks for the added color.

Thanks Charles.

Joe Pantginis, ROTH Capital Partners

This is actually (inaudible) in for Joe. Thanks for taking the questions. Just have a few short ones in the mind. First one is, what are the types of SVC measurements that you're looking to agree on the FDA forward the upcoming Phase III?

So there are a number of ways of looking at SVC and also other respiratory parameters of function. And as we have discussed with FDA and where we are now based on those inputs planning for the Phase III study, we're looking at absolute changes from baseline. We're looking at sloping change in fall of SVC. We're looking at SVC falls below the certain threshold. We're looking at how those changes have effect to measures of respiratory insufficiency in terms of time to event.

There are respiratory questions in parameters within the ALS functional rating scale that we're interested in. And altogether, we're looking at a constellation of those things to inform whether this drug in Phase III longer duration treatment is having affects to slow the rapidly progressive decline of respiratory function. So we're not going to be specific on this call as to what in particular the study is designed for in terms of primary versus secondary or how we're going to be approaching that.

Great. No, thanks. That's one of the office, great. And I was also wondering, you mentioned that it will be a longer trial and since you're looking at respiratory measurements and you mentioned that those are extremely important for disease progression in certain patients. I was wondering if -- since this is a longer trial, we'll be able to see maybe some correlation between SVC improvement and a second survival or is that too much less?

So we certainly will be monitoring for that. That's not what this study would be designed to demonstrate with a statistical significance on mortality.

Okay. And being that SVC is the primary endpoint, I was wondering how much the ALSFRS score we'll have? How much of an impact they will have in the broader scheme of things when you look at all the trial data at the end.

I'll turn that over to Fady to answer.

Yes, I think the ALSFRS is something we certainly plan to monitor over the course of the study. It was not really impacted in BENEFIT-ALS. But it is an important measure of overall disease progression, and we certainly would want to know whether we were impacting it adversely or even potentially with longer treatment seeing a positive effect emerge. And as Robert pointed out earlier, there are particular respiratory domain of the ALSFRS, it will be a special interest. So it's definitely something we will be looking at.

In light of your question, I will ask Andy to comment on in BENEFIT-ALS what we learned about the respiratory domains within that functional rating scale over 12 weeks of treatment with tirasemtiv.

You really sort of need to look at the individual question to understand how little change there really was or even could be expected in those three respiratory questions. If you look at the question 12, which is about the use of mechanical ventilation, the entry criteria requires that patients not be on it at baseline. So essentially none of them were. And then to fall even one point on that scale, you have to be using it intermittently. And then in three months, basically almost no one fell from not using it -- using it intermittently. So the summary statement for all three of those questions is almost all patients came in rated as 4, which is normal, no functional deficit and also then finished the study at 4. There are no other longer study that we may see more change on.

Yes. So the ALSFRS is an excellent tool for measuring progression of the disease over a longer period of time; in the 12-week study it has its limitations. It can be more coarse instrument to detect the deficit that we would have wanted to see. So in retrospect, we've learned a lot about how we want to approach use of ALSFRS and also the respiratory parameters within the ALSFRS in a Phase III study and will employ those learnings as you learn more in time.

Okay, great, thank you for all the information guys. That's really helpful.

Thank you.

Your next question from Jason Butler with JMP Securities.

Hi, Jason.

Hi Robert. Thanks for taking the question. I just wanted to follow up on the duration question for that the tirasemtiv Phase III trial, when you look at the patients that you enrolled and BENEFIT-ALS and the time since diagnosis and that the natural history of the disease. How long do you think, it would take to see patients or what we would have expected for patients to start meeting mechanical ventilation assistance?

Very good question, I'll start and ask my colleagues to provide their comments. So as you might recall patients coming into BENEFIT-ALS had a baseline SVC of between 85% and 90% of predicted normal. We saw in our placebo population much like has been seen in the natural history studies and also whether databases like to proactive database that SVC tends to decline on average about 3 percentage points per month, so that you might draw a straight line and see for a population, how long it might take for them to fall below 50% of predicted normal where the American Academy of Neurology guidelines point to the use of mechanical ventilation and support, that varies terms of compliance with guidelines by geographies, tends to be something that in Europe clinicians will turn to ventilator support earlier but that gives you a sense of how rapidly progressive the diseases is from a respiratory standpoint and what might be expected here in terms of time to event.

Fady, Andy anything you'd want to add to that?

Is that answer to your question, Jason

Yes. That's, helpful. Thank you, Robert. And then obviously you are looking for -- for clarity on endpoints and duration from regulatory authorities, are there any another points of clarity on the trail design or conduct that you're still in discussion on?

So let me turn to Fady to answer that first and I may add to that.

I think we have -- what we need it's always hard to know until you have the final protocol and get their final, final comments but the comments we've had and the guidance that we've received at least that they confirmed as protocol to the sufficient extent at the moment. So I think we have what we need in order to get started on.

Yes, I'd like to echo that. So while we are having ongoing discussions with FDA and EMA. Those are going to be concluded necessarily at a point in time where we've been would start to study afterwards. We're going to be starting the study we already know enough that helps us guide to final protocol development and timing so that we can put together the final plans and budgets. But those conversations will no doubt continue.

Okay, great. And then last question from me, as -- based on your current or most recent interactions, do you see this Phase III trial as the only Phase III trial that you would need for full approval or could it be -- could you require a confirmatory post-approval study as well?

This is an excellent question, one that I think we'll have to be data dependent. At this time in light of still needing to conduct a study. It's not something that I think we can be speculating on.

Okay, great. That's helpful. Thanks a lot for taking the questions.

Thank you.

Chad Messer with Needham.

Hi Chad.

It sounds like that 2015 is going to be another important year for you guys. So my question is this and I know you're still working on the protocol has been, limited amount you've been able to say but you have shared something so for example the tolerability is something you're hoping to improve upon based on some things you learned in the 2b. Is there anything you could do to sort of address the -- I'll just call it disappointing result with ALSFRS endpoint or do you just believe that endpoint is not relevant and does not need to be queried it all in Phase III?

Well, I think the endpoint needs to be queried. But I think there is a pretty clear solid -- say consensus that it's not the only relevant endpoint in ALS, it's a -- as you know it's a very broad scale and impacting many of the specific domains might in fact be considered meaningful. So the respiratory domain of the ALSFRS for instance by itself is probably something that will be considered clinically meaningful. So, we intend to measure the ALSFRS in the study. We're not measuring it, but it does not need to serve as a primary endpoint.

Okay. Would you be concerned that parts are all of the ALSFRS actually went against to (inaudible)?

They think it is.

Would you be concerned if they did?

Why I'd be concerned if they did. Well, I think you have to be concerned if they went in enough of magnitude of difference that it even approached something statically significant, but I would imagine given what we saw in benefit that we could expect to see a relatively neutral impact effect on ALSFRS-R. And if we're showing no impact one way or the other and a clear path on the respiratory measures that will be implying, I think we would be falling.

I think the field is learning a lot about the limitations of ALSFRS, and I think we're hoping to inform that with a study like BENEFIT-ALS, which was as large in international as it was. Not to say that it's not useful, but it certainly not the only thing to look at and we're encouraged by the feedback we're getting that there are other ways of measuring function that don't rely on ALSFRS. But to Fady's point, we should still measure it and especially over longer study we may see that the drug does have a positive effect on ALSFRS.

One of the things that we're looking to this Phase III study to hopefully demonstrate is that with improved tolerability, we may see effects that lean in the favor of tier assumptive, some of the tolerability issues that we think we can address may have confounded the findings regarding ALSFRS in benefit ALS.

And Robert, I know you've said you haven't made any final decision on an SPA, but given that you're still finalizing the protocol, is that something you did want to go ahead and do -- I just, do you still think you'd be able to start to study in the second quarter? I guess that my question would be?

Yes. And I don't want to put more emphasis on finalizing the protocol than it deserves. So finalizing the protocol is something that is relatively straightforward for where we are today based on the inputs we already have and the information that we have gleaned from regulatory authorities and also consultants and others. So one shouldn't interpret that to mean that we've got a long way to go to make that happen.

Okay, thank you. I appreciate the added insight.

Thank you.

George Zavoico, MLV & Co.

Hi, George.

Thanks for the update on the guidance. I have a question regarding the -- this is actually for Sharon. You've guided to $55 million -- if I'm not wrong, $55 million to $58 million in R&D. And my question is, much of this is reimbursed as evident by the R&D revenues related parties this quarter. You actually are profitable this quarter as you were a year ago. So could you -- you're basically just paying for the tirasemtiv because 107 was paid for by Astellas and omecamtiv by Amgen. So can you break down a little bit where you get the $65 million and how much of that you might expect to get reimbursed by?

Well, so the reimbursement come in the forms of the Astellas. The Astellas I think we told you over the next two years, we'll have $20 million in reimbursements from Astellas with respect to what we're going to get both for the clinical development and the reimbursement of FTEs, both on the development and the research side of things. And then -- so the $55 million to $58 million includes the 2015 portion of that. I'm not going to get into the details of what that is. It includes the tirasemtiv clinical trial and then includes the research organization, some of which is reimbursed by Amgen and the rest of the organization, which is not.

And then obviously, the G&A expenses of $15 million to $18 million, those aren't reimbursed. Does that help you?

Yes, it helps. So from a cash flow perspective though, because it's amortized over few years or two years, your P&L is actually -- cash flow is actually more favorable than what it appears from just the income statement. Is that fair?

Yes, so net -- so if we take a look at the revenue guidance was $40 million to $43 million, which include the $30 million that we received in January for the upfront payment from Astellas. All right, so I think that if you look at that gives you an idea of what the overall reimbursements are, so net for the year, we're going to be on a cash flow basis net $30 million to $33 million in burn.

I think that's why, Sharon I pointed to the pro forma where we indicated that we have approximately in over 24 months of cash.

Right.

Yes, now that's a very comfortable position to be in for sure.

And that does not include any potential milestone payments that we might earn on future progress.

Yes, I mean that's even better. And the last question, that you mention preclinical research in your press release and you did mention, I think about it on the call, you expect anything coming out of that, that you can talk about more definitively this year or maybe next year?

So we tend not to point to that in our guidance, but as you know we have active research collaborations with each of our partners Amgen and Astellas and those are directed to next generation approaches, when we have compounds that enter IND enabling studies will speak to that. We have also unpartnered programs here under supervision of Fady and the team, and those are also directed towards other aspects of muscle biology. We continue to lead in this area, not only with respect to contractility but also the Energetics and metabolism of muscle and other areas that will be hopefully translating into other monetizable events and progress in development, but we prefer not to speak to where we are with those research programs or the specific targets of them.

Sure that's understandable. But that also includes a smooth muscle biology, right?

It includes lots of things.

Okay, good luck and look forward to pretty good news flow this year.

Thank you, George. I appreciate that.

And we have no further questions in queue. At this time, and I would like to turn the conference back over to Mr. Blum.

So thank you, Operator and thank you to all the participants on our teleconference today. 2014 was a strong year, 2015 looks to be another very important year. We appreciate your continued support, your interest in the Company. And Operator with that, we'll conclude the call.

Thank you for your participation. This does conclude today's conference call. And you may now disconnect.