Cytokinetics Inc (CYTK) 2015 Q2 法說會逐字稿

Good afternoon, and welcome, ladies and gentlemen, to Cytokinetics' Second Quarter 2015 Conference Call. At this time, I would like to inform you that this call is being recorded, and that all participants are in a listen-only mode. (Operator instructions.) I will now turn the call over to Diane Weiser, Cytokinetics' VP of Corporate Communications and IR. 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 CEO. Following Robert's initial comments, Andy Wolff, our SVP and Chief Medical Officer, will provide an update regarding the start of VITALITY-ALS, our phase three clinical trial 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.

Then, Fady Malik, our SVP of R&D, will provide an update on our clinical development program for CK27-107, or CK-107, our next-generation fast skeletal muscle troponin activator, and our plans for a phase two clinical trial in spinal muscular atrophy, or SMA. Fady will also provide an update on the clinical development program for omecamtiv mecarbil, our first-in-class cardiac myosin activator, which is being developed for the potential treatment of heart failure.

Sharon Barbari, our EVP of Finance and CFO, will then provide a financial overview for the quarter, then Robert will conclude the call with additional perspective and comments on our key milestones for 2015. We will then open the call for questions.

Please note that 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 Reform Act of 1995, including but not limited to statements related 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 IR 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.

And now, I will turn the call over to Robert.

Thank you, Diane, and thank you to everyone on the line for joining us for this call today.

I first want to take a moment to formally introduce and welcome Diane, who joined our Company a few months ago to lead our Corporate Communications and IR function. Diane brings nearly 30 years of communications experience to this newly-created position at Cytokinetics. We're thrilled to have her join our team to take our external and internal communications to the next level at a time when we have so many exciting milestones ahead of us.

Recently, we achieved a watershed moment at Cytokinetics, which also is very important to the ALS community at large. We started a phase three clinical trial for Tirasemtiv, our first-in-class fast skeletal muscle troponin activator, which we're developing for the potential treatment of ALS. VITALITY-ALS is the Company's first phase three clinical trial, and we believe is the only multinational phase three clinical trial enrolling patients with ALS at this time.

The trial is designed to confirm and extend results observed in BENEFIT-ALS, our phase 2B trial for which results were presented last year. In that trial, Tirasemtiv reduced the decline of slow vital capacity, a key measure of respiratory function in patients with ALS. Based on these findings, we have designed VITALITY-ALS to assess the effects of Tirasemtiv versus placebo on slow vital capacity, and also on other measures of respiratory function in patients with ALS. Andy will elaborate on the trial design and on our progress getting the trial up and running shortly.

The launch of VITALITY-ALS comes at an exciting time coincident with the one-year anniversary of the Ice Bucket Challenge, a worldwide social media phenomenon that significantly raised awareness of this devastating disease, as well as substantial funds for research and patient support services. We're honored to have been awarded recently a $1.5 million grant from the ALS Association to support the conduct of VITALITY-ALS, as well as the collection of clinical data and plasma samples from patients in VITALITY-ALS in order to help advance the discovery of potentially useful biomarkers in this disease.

This is a unique collaboration between a nonprofit, academia, and industry, and represents the first time plasma samples from an industry-sponsored clinical trial are being shared with the ALS research community. Through this collaboration, we hope to fundamentally alter the treatment paradigm for this devastating disease and arm the ALS community with meaningful new information that may lead to additional avenues of clinical research.

We've also advanced planning for our phase two clinical trial with CK-107 for the potential treatment of spinal muscular atrophy, or SMA, an orphan hereditary disease for which there are no current therapies, most often diagnosed in infants and young children. We continue to engage with leading researchers in the field, along with our partner, Astellas, to design a clinical trial that will be focused on older children, adolescents, and adults with SMA, a population that has not been the primary focus of other recent investigational approaches to the treatment of this disease. This follows our recent poster and oral presentation of three phase one studies at the 19th International SMA Researcher Meeting during the Cure SMA Conference, on which Fady will expand shortly.

Turning now to our heart failure program with omecamtiv mecarbil, our first-in-class myosin activator, more than 400 patients have now concluded dosing in the expansion phase of COSMIC-HF. We're nearing completion of this trial, and we look forward to announcing data from this, our last planned phase two trial in the United States, in the fourth quarter. In anticipation of these data, we held meetings with our partner, Amgen, to plan a potential phase three program to evaluate omecamtiv mecarbil in heart failure patients, which we anticipate could begin in 2016.

Let me now turn the call over to Andy so that he can elaborate on the start of VITALITY-ALS, our phase three clinical trial of Tirasemtiv in patients with ALS.

Thank you, Robert. VITALITY-ALS, which stands for Ventilatory Investigation of Tirasemtiv and Assessment of Longitudinal Indices after Treatment for a Year in ALS, is a phase three clinical trial designed to assess the effects of Tirasemtiv versus placebo on slow vital capacity, or SVC, and other measures of respiratory function in patients with ALS. The objectives of the trial are to confirm and extend the results observed in our phase 2B study, BENEFIT-ALS, from which we learned many lessons that have been applied to this study design. I will quickly recap what we learned from BENEFIT-ALS and then discuss the study design of VITALITY-ALS.

BENEFIT-ALS was the first clinical trial of its size to demonstrate a positive and potentially clinically meaningful effect on respiratory muscle function and skeletal muscle strength in patients with ALS. The effect of Tirasemtiv to reduce the decline in SVC in BENEFIT-ALS was robust, specifically the effect was similar in magnitude across all pre-specified and other subgroups evaluated, and was statistically significant within the majority of those subgroups. Tirasemtiv may have cumulative effects on vital capacity that persist beyond the discontinuation of treatment, something we will attempt to confirm in VITALITY-ALS.

Vital capacity is a clinically meaningful measure used to inform important clinical decisions and to predict disease progression. Thus, the effect of Tirasemtiv to reduce the decline in vital capacity may be clinically meaningful in patients with ALS and warrant further investigation for a longer duration in VITALITY-ALS.

VITALITY-ALS is a multinational, randomized, double-blind placebo-controlled trial that is designed to enroll 445 patients with possible, probable, or definite ALS diagnosed within 24 months and with a baseline vital capacity at least 70% of predicted based on age, sex, and height. Patients may be enrolled whether or not they are on Riluzole therapy. The primary endpoint of the trial is the change from baseline in SVC to be assessed after 48 weeks of double-blind, placebo-controlled treatment.

Secondary endpoints to be assessed after 48 weeks of double-blind, placebo-controlled treatment include time to decline in any of the three respiratory domains of the ALS FRSR, or death. The other secondary endpoints were listed in our press release announcing the start of VITALITY-ALS and can be found on clinicaltrials.gov, and include the times to various milestones in the decline in respiratory function associated with disease progression in patients with ALS.

Patients enrolled in VITALITY-ALS will receive two weeks of open label treatment with Tirasemtiv administered at 250 milligrams per day, and will then be randomized to double-blind treatment with placebo, or one of three target Tirasemtiv dose levels - 250 milligrams per day, 375 milligrams per day, or 500 milligrams per day in a 3-2-2-2 ratio for a total of 48 weeks of randomized, double-blind, placebo-controlled treatment. Then, in a four-week double-blind Tirasemtiv withdrawal phase, patients on Tirasemtiv will be randomized either to continue the double-blind Tirasemtiv dose they were receiving or to be withdrawn to placebo in a one-to-one ratio. Patients who had been receiving placebo during the 48 weeks of double-blind, placebo-controlled treatment will continue to receive placebo during this phase. We expect VITALITY-ALS to be conducted in more than 75 centers in North America and Europe, and to include most of the sites who participated in BENEFIT-ALS.

As Robert has previously mentioned, a design for VITALITY-ALS was finalized following interaction with both FDA and EMA. Based on these communications, we believe SVC is an appropriate primary endpoint in conjunction with secondary endpoints which would associate a reduction in the progressive decline in SVC by Tirasemtiv to prolongation of the time to clinically meaningful event, such as the initiation of mechanical ventilation, the onset of respiratory insufficiency, and other respiratory events associated with disease progression in patients with ALS.

Turning to our startup activities, during the quarter we met with many of our North American and European investigators at investigator meetings for VITALITY-ALS in San Francisco and in London. We were pleased to be received with such enthusiasm at both meetings as we unveiled the details of the trial and provided training regarding the necessary assessments as a means to ensure consistent conduct of the trial across site locations. We anticipate enrolling patients into the trial over the next six to nine months. In parallel, we have remained engaged with our partners in the US and Europe, ALS advocacy community, who continue to represent the powerful voice of the patients and caregivers.

Finally, we are honored to have been awarded a $1.5 million grant from the ALS Association to support VITALITY-ALS, as well as the unique collaboration between the ALS Association, Barrow Neurological Institute, and Cytokinetics during the conduct of VITALITY-ALS. As part of a trial, and for the first time, plasma samples and longitudinal clinical data will be obtained from patients enrolled in VITALITY-ALS, which will be integrated into the NEALS Repository to support ongoing activities within the scientific community for research on biomarkers from patients with ALS.

The NEALS Repository is a resource for the academic research community to identify biomarkers that may help to assess disease progression and underlying disease mechanisms in ALS. We are extremely gratified to have the opportunity to contribute this way to the ALS community.

With that update on our plans for Tirasemtiv, I will now turn the call over to Fady for an update on our SMA and heart failure programs.

Thank you, Andy. Turning first to the development of CK-107, our next generation skeletal muscle troponin activator, which is partnered with Astellas, we continue to make progress against our goal of initiating a phase two clinical trial in patients with SMA in the second half of this year in accordance with an agreed plan with Astellas.

As you know, SMA is a disease in great need of new therapies to address functional limitations and modify disease progression, and we believe CK-107 has the potential to improve muscle function, especially in adolescent and adult patients when used alone or in combination with other therapeutic approaches that are being pursued, including replacement therapy or correction of the faulty SMN-1 gene, modulation of the low functioning SMN-2 backup gene, and neuroprotection of motor neurons affected by the loss of the SMN protein.

In June, we presented a poster at the annual Cure SMA Conference, and were pleased to be selected onsite for an oral presentation of data from three of our completed phase one studies that evaluated the safety, tolerability, PK, and PD effects of CK-107 in healthy volunteers. In these studies, CK-107 was well tolerated at single doses up to 4,000 milligrams, and the PK profile was linear and dose-proportional across the range of doses studied. Data from the phase one studies also showed significant dose concentration and frequency dependent increases in the force of muscle contraction elicited by nerve stimulation in healthy volunteers.

The increases in force were most evident in the midrange of nerve stimulation frequency, consistent with preclinical studies and correlative to the activities of daily living. Therefore, we concluded that, by directly increasing skeletal muscle function, CK-107 may enhance physical performance in patients with neuromuscular diseases, including SMA.

These data prompted the expansion of our collaboration with Astellas last December to include neuromuscular indication and the decision to proceed to a phase two trial in patients with SMA, which we will begin later this year in the fourth quarter. We outlined the plan for the study at our R&D Day, but let me briefly recap it. We plan to focus on SMA type two, three, and four patients, those who are both ambulatory and non-ambulatory, and evaluate a range of endpoints, including respiratory and other measures of skeletal muscle function following treatment to steady-state with CK-107. We anticipate enrolling approximately 75 patients treated for one to two months from up to 10 to 12 centers in the US.

Turning to the development of omecamtiv mecarbil and COSMIC-HF, the last of our planned phase two trials, more than 90%, or 400 patients, have now concluded dosing in the expansion phase of the trial. Data Monitoring Committee met during the quarter, and again more recently, and requested no changes in the conduct of the trial. As Robert mentioned, we're on track to have data from this trial in the second half of this year, and specifically in Q4. And as we have previously stated, the data from COSMIC-HF, coupled with data from the ATOMIC-AHF trial, will inform the potential progression of omecamtiv mecarbil into a phase three outcome study, which we anticipate could begin in 2016.

As you'll recall, from short-term trials we've conducted with omecamtiv mecarbil over the years, we know the signature pharmacodynamic effect of omecamtiv mecarbil is to increase systolic ejection time, the amount of time that the left ventricle is contracting and ejecting blood. Corresponding increases in stroke volume, decreases in heart rate, and other measures of cardiac performance occur. In addition, we have observed changes in the size of enlarged hearts of these patients as reflected by decreases in N-systolic and N-diastolic diameters.

COSMIC-HF trial is looking to confirm whether these effects are durable and maintained during 20 weeks of treatment. Again, there's no pre-specified primary clinical efficacy endpoint. Rather, the trial is designed to assess the safety, tolerability, pharmacokinetics, and pharmacodynamics of longer-term treatment with omecamtiv mecarbil. Importantly, we'll be eager to see the pharmacodynamic effect of prolonged treatment on cardiac performance in patients with heart failure due to systolic dysfunction, which we hope may be predictive of long-term clinical outcomes.

As Scott Solomon of the Brigham and Women's Hospital commented at our R&D Day this quarter, "What is unique about omecamtiv mecarbil is its potential ability to improve the true contractile function of the heart." And finally this quarter, we continued collaborating with Amgen on clinical and non-clinical development activities, as well as regulatory and other planning activities related to the potential movement of omecamtiv mecarbil into a phase three development program.

And 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 second quarter of 2015, I'll refer you to that public statement for the details on our P&L and balance sheet.

We ended the second quarter with approximately $108.2 million in cash, cash equivalents, and investments, which represents over 18 months of going-forward net cash burn based on our revised 2015 financial guidance. Our guidance includes the estimated costs of our planned phase three development activities for Tirasemtiv in 2015 and 2016.

Revenues for the second quarter of 2015 were $6.5 million compared to $7.8 million during the same period in 2014. Revenues for the second quarter of 2015 included $3 million of license revenues and $2.9 million of revenue and development revenues from our collaboration with Astellas, and $0.6 million in research and development revenues from our collaboration with Amgen. Revenues for the same period in 2014 included $2.7 million of license revenues and $4.2 million of research and development revenues from our collaboration with Astellas, and $.8 million of research and development revenues from our collaboration with Amgen.

Our second quarter 2015 R&D expenditures totaled $12.6 million. From a program perspective for the second quarter, approximately 79% of our R&D expenditures were attributable to our skeletal muscle contractility research and development activities, which include both expenses associated with Tirasemtiv and CK-107, 11% to our cardiac muscle contractility activities, and 10% to our other research activities.

Today, we also announced revised financial guidance for 2015. We anticipate cash revenue to be in the range of $44 million to $47 million, cash R&D expenses to be in the range of $58 million to $61 million, and cash G&A expenses to be in the range of $18 million to $21 million. This guidance includes the $30 million upfront payment from Astellas that will be deferred and recognized over a two-year period ending in 2016 under Generally Accepted Accounting Principles, and it also excludes the $15 million milestone payment earned in 2014 from Astellas, and an estimated $3.6 million in noncash related operating expenses primarily related to stock compensation.

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

Thank you, Sharon. In summary, the second quarter of 2015 was filled with momentum-building events, and we expect much of the same in the second half of the year. Starting the Company's first phase three clinical trial in patients with ALS is a key milestone for Cytokinetics. We are extremely encouraged by the enthusiasm from the ALS community as VITALITY-ALS gets underway. The promise of advancing what could be the first new medicine to treat patients with ALS in over 20 years, and the potential of the first drug that may slow the progressive decline in respiratory function that is a hallmark of the disease and the usual cause of death in patients with ALS, should not be underestimated. As you know, ALS patients face a ruthlessly progressive disease that generally ends in respiratory failure, so the opportunity to slow that decline is extraordinary.

We are equally excited by the feedback we are receiving from the SMA community as we advance plans for our planned phase two trial of CK-107 in SMA at a time when there is growing interest in new therapeutic possibilities for this relentless disease. Cytokinetics' leadership in neuromuscular diseases, muscle biology, and drug development creates another perfect storm that is widely recognized by patients and caregivers, and we are proud to stand alongside them.

Finally, we look forward to results for omecamtiv mecarbil from COSMIC-HF, which could be Cytokinetics' most important valued driver this year. The burden of heart failure is significant, particularly given the aging of the population and Medicare's increasing focus on reducing re-hospitalization for heart failure, a hallmark and vicious cycle of the disease. Given the mortality and readmission rates in heart failure, we believe that significant unmet clinical need still exists for potential drugs that can improve the underlying deficit of declining cardiac muscle function. Therefore, we believe the prospect of advancing omecamtiv mecarbil to a phase three trial in 2016 augers well for adding a first-in-class cardiac myosin activator to the suite of available therapies.

Now, I'll recap our expected milestones for the remainder of 2015. For Tirasemtiv, we anticipate enrollment of VITALITY-ALS over the next six to nine months. For CK-107, we expect to initiate a phase two trial of CK-107 in patients with SMA in the fourth quarter of 2015. For omecamtiv mecarbil, we expect results from COSMIC-HF to be available in the fourth quarter of 2015. And we expect to continue joint development activities in collaboration with Amgen directed to the potential advancement of omecamtiv mecarbil to a phase three clinical development.

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

Jason Butler, JMP Securities.

Good afternoon, Jason.

Hi, Robert. Thanks for taking [my] questions, and congratulations on the progress.

First question -- just actually let me start with the financial side for Sharon. The increase in expense guidance, the small increases you had, are they driven by any changes in the clinical development programs, any trial design changes that you've made?

Yes. So, when we gave our initial financial guidance on the fourth quarter call, that financial guidance didn't have the finalized protocol for the VITALITY-ALS. This guidance now has the final estimated costs for VITALITY, as well as we also signed a revenue agreement for research with Amgen. So, that's the increase in the research -- or in the revenue amount.

Okay, great. Then, on VITALITY-ALS, Robert, I understand it's early, but any initial signals from the enrolling centers that gives you confidence in your enrollment timelines?

No. I think you answered your own question. It is early. We're focused right now generally to startup activities. And what that means is site initiation visits, et cetera. So, I think it's premature to comment on whether those enrollment projections of six to nine months are valid. I hope that, by the time of the next earning call, we'll be able to do that.

Great. And then, last question from me, and forgive me if I didn't hear this correctly, but I think you said in your opening comments that you continue to have dialogue with Amgen about the phase three plans for omecamtiv. Is there any additional color you can give us there about how both you and Amgen view the program today, obviously with the fact that you still need the data from COSMIC?

So, I'll comment, and maybe then ask Fady if he wants to elaborate. But, what I'd say is, by our proceeding to this point with COSMIC and with the DMC having in each quarter reviewed the data and given us the thumbs-up, while I can't speak for Amgen, I can say certainly we find that to be highly encouraging. The workstreams are both nonclinical and clinical and regulatory, and we and Amgen are jointly preparing for advancement to phase three, something that isn't definitive but increasingly looking like something we'd need to be best prepared to make happen in 2016. So, the assumption is that we may proceed to those preparations with the idea towards getting a study underway in 2016, and there's nothing that would suggest otherwise.

Okay, great. Thank you, and thanks again for taking the questions.

Sure thing.

Chad Messer, Needham & Company.

Hi, Chad.

Hi, thanks, Robert. Thanks for taking my question. I just have one for you, and I'm going to ask it in a bit of a blunt way because I've asked it in other ways before. And the reason I'm doing it is because it remains the number one question that I get pretty much continually when I talk to investors about Cytokinetics right now, and that's about the potential for an [SPA] for VITALITY. I know in the past you've said it's something you're still potentially discussing, but even if it were to take more time to get, I just -- A, anything you can comment on where you are on the process, and B, why you -- and I totally get why SVC is an endpoint that makes sense for phase three. But, given that it's a new one, why it's not the best thing for shareholders to get an SBA before starting this study.

So, thank you for the question, and you are being consistent by asking that question again. What I'll say is, even as you've asked it more bluntly, I don't know that I can give you any more of a satisfactory answer than I've given you before.

To be clear, in interactions we've had with each of FDA and the EMA, we've been informed that they do not believe that SVC, in and of itself, would be approvable as an endpoint. Rather, it's, as we hope might be the case, SVC together with secondary endpoints. So, I want to be clear about that. That's why we use the expression "confirm and extend" the findings from BENEFIT-ALS, extending referring to both at a later time point, in this case 24 weeks versus 12 weeks as measured in BENEFIT-ALS.

But also, very importantly, that should correlate with other secondary endpoints, which we hope will favor Tirasemtiv in VITALITY-ALS, those including time to fall, in respiratory questions in the ALS-FRS, and also time to other interventions. Those secondary endpoints, just to be clear as well, are listed in the description of VITALITY-ALS as could be found on the clinicaltrials.gov website.

So, your question relates to a SPA, and here again, despite the fact that I gather it's a question that you are getting, I don't think that we'll be able to respond to your satisfaction, simply to say that those conversations that we may be having with regulatory authorities remain confidential. There are advantages to having a SPA, as we've discussed, and there can be also disadvantages, especially in a new indication area where we want to not limit the degrees of freedom we may have in a clinical trial that will be hopefully unprecedented in terms of demonstrating effects on respiratory function. So, maintaining flexibility is important.

I don't think I'm going to be able to do any better than that. I'm certainly not willing on a call such as this to walk through the nuances and the play-by-play on our ongoing regulatory interactions. I don't know, Fady or Andy, if there's anything further you would want to add.

No, I don't think so.

I don't think that's probably what you were hoping for, Chad, but that may be the best I can do.

Okay. Well, thank you, and best of luck to you guys, and best of luck for the ALS patients.

Thank you, Chad.

Joe Pantginis, Roth Capital Partners.

Hi, Joe.

Hi, all. Thanks for taking the questions, and thank you for the update.

Robert, this may be a question for Andy, but the question is with regard to inclusion criteria. Obviously they're very similar with regard to VITALITY and BENEFIT. And what I'm pointing to is the commentary about diagnosis, whether it's possible, probable, or definitive. And I guess I wanted to see how those characteristics might have impacted patients in phase two. Do they have the same sort of levels of degeneration? Or how does it really impact a study or -- in inclusions?

So, that is, like, just absolutely bog standard inclusion criterion for any recent ALS study for the past decade or more. It's always that same definition. So, it's no different from what we did in BENEFIT-ALS, or in what other sponsors have done recently. The big difference is that I would point you to is the vital capacity is higher than it was in BENEFIT-ALS. They have to have a 70% predicted vital capacity, whereas in BENEFIT we began at 60% of predicted and even reduced it to 50% of predicted before the study was over.

And there are two reasons for that. One, as you've heard, after the open label treatment period, there's fully over a year of double-blind treatment. So, we wanted to select patients that we felt could stay in the trial for long enough to provide meaningful data. And two, as you may recall us discussing earlier, there was evidence from BENEFIT-ALS, when we did the subgroup analyses of vital capacity, looking at those patients who were in the upper half at baseline versus those that were at the lower half at baseline, the ones that had the higher vital capacities at baseline also appeared to have a somewhat larger benefit from Tirasemtiv. So, that was another reason to elevate that number.

And then, the only other real difference is this limitation that they must have been diagnosed within two years. We didn't have that in BENEFIT-ALS. And the reason, again, was it was a much shorter study. Now we have a longer study, and we want to try to have a little more homogeneity about the patient population that we're enrolling.

Got you. No, that's very helpful. Thank you. And I guess to your points on the upper half and the vital capacity, maybe to your earlier comment in your prepared script about how you may be seeing cumulative effects on vital capacity. And I guess I would ask the question in the following way. Based on that data and the fact that you are the only drug to show this effect at this point, the question is going to be highly speculative here, sort of like the home run question. You obviously need to complete the entire study, but with regard to the primary endpoint assessment at week 24, what is the regulatory potential to not stop the study early, but being able to make the drug available even on an accelerated basis?

So, we won't -- although the endpoint is assessed at a time point that's after 24 weeks of treatment, we won't know any of the results of the study until after the full study has been completed. And then, at that point, we certainly have every intention to allow those patients who have completed the study, and who wish to continue on open label treatment, to do so. But, a broader program than that is beyond our ability to comment right now.

Right. And I was alluding to, even like you see many times with oncology, where DSMB would look at it, you're still blinded, and that basically say it just doesn't make sense to have patients on placebo at this point, but I understand. Thank you very much.

Thank you, Joe.

Roy Buchanan, Piper Jaffray.

Hi, it's Roy in for Charles. Thanks for taking the questions.

Hey, Roy.

Hi. I had a few on BENEFIT, or actually, sorry, on VITALITY. So, has the first patient been randomized, or are you still screening?

So, right now, again, we're focused to the startup activities, the site initiation visits, et cetera. So, that's the extent to which we're making comments about where we are.

Okay. And then, can you remind me if this study has interims and what the screen failure rate you're assuming?

So, Andy just answered the question about interims. Right now, we don't have any interim looks into the data. Rather, instead, we'll complete treatments on all patients before we'll have an opportunity to see any of the data, including the 24-week data. What was your other question?

The screen failure rate assumption?

So, we've been pretty conservative about that right now, and we're looking to the BENEFIT-ALS experience primarily to inform both screen failure as well as potential early terminations. And in that way, the study could be, as we've taken certain steps and measures to hopefully improve tolerability and other aspects of the study, we may ultimately have improved upon that from what our experience was in BENEFIT-ALS.

Okay. And then, back to BENEFIT, do you guys plan to upload the patient level data to NEALS or PROACT, or somewhere else?

You're talking about after the conclusion of VITALITY-ALS?

No, before, I guess, or any time. I'm talking about the BENEFIT data.

BENEFIT-ALS. Well, we don't have any current plans right now to upload that data to any public databases. It's something that's been asked of us. And frankly, right now, we haven't yet gotten that far where we might decide finally on how to approach it. You could imagine, as some companies have done, that you would upload the placebo arms of those studies. And while the drug is still being evaluated, not yet the treatment arms, but we haven't even gotten that far in our consideration of the issue.

Okay. And then, a quick one on COSMIC. So, it seems like maybe the last patient should be out in mid-August. Can you help us maybe expect the data in early 4Q, late 4Q? Do you guys have any ideas there?

I don't think we're going to refine the guidance any more than that. I think we and Amgen both in our earnings call are pointing to Q4. You can do the math, as it sounds like you may already be doing, based on when we announce completion of enrollment. But, that said, I wouldn't focus simply to last treatment visit, or rather last dosing, because there's follow-up visits, and also time to collect data, analyze -- or rather time to collect data, database lock, and analysis. And in that regard, I think your best bet would be to focus to Q4.

Okay, very good. Thank you.

Thank you.

Vernon Bernardino, MLV Company.

Good afternoon, Vernon.

Hi, Robert. Good afternoon, and thanks for taking my question. I just -- and you probably can't answer this question, but I'm going to ask it anyway. Regarding your conversations with the FDA, can you share with us perhaps what their opinion may have been regarding SVC as an important predictor of disease progression in ALS?

Sure. I'm going to paraphrase, obviously, but in our meetings with FDA, and I'd say also with EMA, there was a consensus view that SVC is indeed an important prognostic and predictive factor. It's a good measure. It's quantitative. But, it is a measure that should be correlative, presumably therefore also with other effects and endpoints that track with respiratory function, as well.

As we've stated I think in meetings with you and others, SVC happens to be -- vital capacity happens to be that measure that, in the published literature, is demonstrated to be both prognostic of disease progression, the rate of progression, also survival. Also, the published guidelines underscore how vital capacity should be an important measure to inform other interventions, for instance non-invasive ventilation.

I don't think there's any questioning of that. In our conversations with the regulatory authorities, both FDA and EMA understand that. And their point back to us, and it's a very valid one, is if, in fact, this drug is having an effect to slow the decline in vital capacity, so too should it correspond with these other endpoints in terms of increasing the time to a fall in respiratory domains of ALS-FRS, or time to interventions, time to respiratory failure.

And we agree, so that's why we have designed this study, both with the primary endpoint of vital capacity, something that we know well from BENEFIT-ALS. And we can understand best how to use that information in the conduct of VITALITY-ALS, but also to extend the study to later time points where hopefully we'll see these effects on secondary endpoints, as well. And I think that was what FDA and EMA asked of us when they said confirm and extend these findings.

So then, to also paraphrase, they then are going to look at the totality of data? And it's hard to really have an idea what weighting they're going to put any measure that would help them decide that you now have a package that they would -- where they would recommend you submit an NDA.

I think your point is a good one. That's the crux of the issue. And to the earlier question and my response, it is always -- [to always thus] with FDA and EMA. It's the totality of the data, and that's where we've designed VITALITY-ALS with the objective of demonstrating an effect we hope that favors Tirasemtiv, both with respect to the primary efficacy endpoint, but also one or more secondary endpoints.

And as you know, in speaking to you and Andy, the cumulative effect on VC has always intrigued me. What are the measures that come together will give you the picture as to the cumulative effects and them being positive in aggregate, giving an idea that the cumulative effects are responsible for a so-and-so measure of improvement, or slowing of decline?

So, maybe to answer that question, I'll ask Andy first to comment on the ordering of the secondary endpoints, and then maybe ask Fady to comment on why we might hypothesize that Tirasemtiv could have effects downstream, and even cumulative, on some of those secondary endpoints.

Well, first of all, I think what I thought we meant when we were talking about cumulative effects was just the fact that, in BENEFIT-ALS, as you may recall, the difference between the Tirasemtiv group and the placebo group continued to increase over time. The curves were divergent throughout the 12 weeks of the study so that, at four weeks, the difference between the two groups was on the order of around three percentage points, and by 12 it was close to six percentage points.

And so, in VITALITY-ALS, where we study patients for much longer, there's no reason to suspect that the curves may not continue to diverge that way. And so, we might have a much larger treatment effect later on in the trial.

If that is true, therefore then, one would imagine if vital capacity is declining more slowly in patients on Tirasemtiv, and because it is such a reliable predictor of disease, one would imagine that in a study much longer than BENEFIT-ALS, as we have now, you would begin to see patients on placebo having declines in the three questions related to respiratory function in the ALS-FRSR, and not so many happening in the patients being treated with Tirasemtiv. So, that's the first secondary endpoint, is time to a decline of one point in any of the three respiratory questions in the ALS-FRSR, or death. You always have to have death.

And then, the next one is time to a decline of at least 20 percentage points in the SVC. And you can -- in the interest of time, I'll just remind you, you can go onto clinicaltrials.gov, and they are there, and they are in the order in which they would be analyzed in the so-called closed testing procedure that we use to account for multiple testing, and keeping the error and the P value appropriate.

Thank you for that clarity. So, obviously the goal is to slow this decline, and therefore hopefully the result is a longer life for these patients. Now, at the conclusion of the study, have you thought, or are there any plans for an extension phase of treatment for these patients?

Yes. We do believe that, after the study has completed -- or not even after the study has completed, but more accurately, as patients complete the study, they would be offered the opportunity to go onto open label Tirasemtiv.

Terrific. And that leads me to the question that was first asked by Chad, and that is perhaps not at SPA, but if there is a profound benefit that you see at the end of the study, and therefore you go to extension phase, would that put you in a position where you could perhaps request accelerated approval whereby the FDA could give you conditional approval, and therefore an extension phase, therefore confirm the long-term benefits of Tirasemtiv?

It's conceivable. But, as Robert has already mentioned, it's going to depend on the totality and the strength of the data. If we see a just whopping effect on vital capacity and clear effects on some of these secondary endpoints, it might not even be an accelerated approval. It might just be an outright approval. But, that would be the home-run scenario. And I think you can imagine things in between that and a negative trial. We don't expect a negative trial. So, it really will depend on how robust and how large the treatment effect is that we observe.

So, a couple of points just to add. One is, to your point, that is an option that is on the table at that point in time, but it would not necessarily require data from the open label extension in order to be able to have a conversation about either accelerated or conventional approval, either with FDA or EMA. Those are things that I think are all fair game.

Secondly is just to underscore, in Andy's comments he referred to percentage points, and I want to make certain that you and others understand, that's absolute percentage points on a background of a decline of roughly three percentage points per month in the placebo patients in their slow vital capacity. That magnitude of difference, approximately five to six percentage points at the end of 12 weeks, represents a relative reduction of over 60 percentage points -- 60%, I should say. So, I just want to make sure that that was also clear.

Okay. So, just to confirm there, that's relative to baseline and not relative to improvement over placebo?

That's relative to -- well, in both cases it's change from baseline, both with respect to placebo and also in the treated group.

Right. To elaborate, we're just testing the hypothesis that a change from baseline, which will almost surely be a decline, as it was in BENEFIT, the decline from baseline in patients on placebo will be significantly greater than the decline from baseline in patients on Tirasemtiv.

Terrific. Thanks for the clarity, and I'm looking forward to the pieces coming together.

Thank you.

George Zavoico, JonesTrading.

Hi, George. Good afternoon.

Hi, Robert, Andy, Fady, Sharon. Just to maybe belabor that point a little bit more, what is the powering of the study? You've cut the number of patients almost in half, but you've increased the duration. So, you're going to see a larger change in SVC. You're most likely going to see a larger change in SVC. But, what is the powering there that lets you do that number of patients? And what is the exact -- well, what is the parameter that you're looking for to see a change, the percent change in SVC that you expect to see between the two groups?

So, I'll take a first stab at that, and Andy, you can add to it as you wish. The powering is certainly a function of a lot of different assumptions, including not only the number of patients and the magnitude of effect, but also the early termination rate as we experienced in BENEFIT-ALS. So, we designed VITALITY-ALS to detect at 24 weeks a magnitude of effect that was observed in BENEFIT-ALS at 12 weeks. And in using the same assumptions with respect to early termination, at 24 weeks we have over 80% power to detect that difference using those much more conservative assumptions.

As we may see, early termination rates decline with more longer, slower dose titration and other measures that we've implemented in VITALITY-ALS compared to BENEFIT-ALS. That number approaches 90%, and can exceed 90% depending on what numbers you use in those assumptions. So, it's difficult to say how is the study powered. In effect, it depends on which assumptions you use on early termination and magnitude of effect.

As Andy pointed out, the magnitude of difference favoring Tirasemtiv versus placebo was increasing from week four to week eight, and week eight to week 12 in BENEFIT-ALS, and may continue to increase as we now take patients out to 24 weeks. But, to be conservative, we built VITALITY-ALS around the magnitude of effect observed at 12 weeks in BENEFIT-ALS.

Yes, so you're skewing the results to favor -- obviously a more favorable outcome by doing so.

I think we've leaned to the conservative in the design of this study.

Yes. I mean, that seems apparent. And as Andy indicated, even if the curves don't diverge, but they stay constant at the 24 weeks, it's still going to reset endpoint, it sounds like.

I think in that case, we have at least 80%, and possibly over 90% power to detect that, depending on what assumptions you use with regard to early terminations.

Okay. So, that seems to be the first hurdle. The second hurdle then is the mix of secondary endpoints that you're going to be measuring. And it seems to me that both you and the FDA and the EMA, when you talk about the totality of effect, I mean, there's so many variables in there, and there's so many different outcomes that it's almost like you're inventing your own endpoint, together with the SVC, could in fact turn out to be registrational.

Well, here's where we are exploring a new pharmacology inasmuch as Tirasemtiv we believe is the first investigational medicine to demonstrate effects on respiratory function. As such, the choice of secondary endpoints, the rank ordering and hierarchy of them and how you proceed through them in a statistical way all has to be pre-specified in a statistical analysis plan.

But, to your point, you're going to want to see the totality of that data in order to understand where the cumulative effect may lie, and that's where this has to be a dynamic process.

Okay. Sounds like a very interesting design, conservatively planned, with an outcome that I hope for everybody's sake, especially the patients, will be a positive one. Thank you very much.

Thank you, George.

Thank you, George.

Thank you. And I would now like to turn the conference back over to Mr. Blum for any closing remarks.

Thank you, Operator, and thank you to all the participants on our teleconference today. I hope you'll agree that we had a productive quarter in the second quarter, and we have some exciting prospects as we look forward to the second half of this year. We appreciate your continued support and interest in Cytokinetics. And Operator, with that, we can now conclude the call.

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