Cytokinetics Inc (CYTK) 2015 Q4 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics fourth-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. At the request of the Company, we will open the call for questions and answers after the presentation.

I will now turn the call over to Diane Weiser, Cytokinetics Vice President of Corporate Communications and Investor Relations.

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 updates 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. And VITALITY-ALS, our ongoing Phase 3 clinical trial of tirasemtiv, our first-in-class fast skeletal muscle troponin activator which we are developing for the potential treatment of Amyotrophic Lateral Sclerosis, or ALS.

Andy will also speak to our recently initiated Phase 2 clinical trial of CK-2127107, or CK-107, in patients with Spinal Muscular Atrophy, or SMA. Andy is doing double duty on today's call as Fady Malik, our Executive Vice President of Research and Development, is unable to join us today.

Sharon Barbari, our Executive Vice President of Finance and Chief Financial Officer, will provide a financial overview for the quarter and year end, as well as our financial guidance for 2016. Robert will then provide a corporate update and additional perspective, as well as corporate milestones for 2016, before opening the call for questions.

Please note that portions of the following discussion, including our responses to questions, contain statements that relate to future events and future performance rather than historical facts. And constitute forward-looking statements for purposes of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.

Examples of forward-looking statements may include statements relating to our financial results and guidance; our strategic initiatives, including Vision 2020; our collaborations with Amgen and Astellas; our, and our partner's, research and development activities including the initiation, conduct, design, enrollment, progress, continuation, completion, and results of clinical trials, the significance and utility of pre clinical study and clinical trial results, and the properties and potential benefits of our drug candidates. 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.

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.

We are pleased to have ended 2015 strong, with a strong fourth quarter that positioned us well now in 2016, as our clinical programs advance in late-stage development. This momentum fortifies the foundation for our five-year strategic initiative, Vision 2020, empowering our future. Vision 2020 is designed first to deepen and expand our pipeline. And, second, to advance our portfolio of muscle biology directed drug candidates toward late-stage development and potential commercialization.

The key components of our road map for the next five years are: To progress proprietary research programs focused on muscle contractility, growth, and energetics into development under new collaborations. Advance next generation skeletal and cardiac muscle activator compounds into clinical development by leveraging existing research collaborations. Conduct late-stage clinical development of novel first-in-class muscle activators for the potential treatment of ALS, SMA, heart failure, and other diseases impacting muscle function.

Continue to collaborate with patient communities to support the urgent development of new medicines for diseases of impaired muscle function with pressing unmet medical needs. And, finally, to mature our Company operations to enable development, registration, and commercialization of muscle biology drug candidates across North America and Europe.

We made tremendous progress on this strategic road map in the fourth quarter, most notably in our clinical development programs. As you may know, a little over a week after our top-line announcement of the results from the expansion phase of COSMIC-HF, our Phase 2 clinical trial of omecamtiv mecarbil in patients with heart failure, the trial's lead investigator, John Teerlink, was invited to present the findings at a late-breaking clinical trial session at the American Heart Association meeting.

We held a special investor event at the AHA meeting. And Andy will elaborate on both the positive results, as well as some insightful KOL commentary, in a moment.

In the fourth quarter, we also made progress activating North American sites and enrolling patients in VITALITY-ALS, our Phase 3 clinical trial of tirasemtiv. Andy will speak to recent progress in VITALITY-ALS. And will also comment on a protocol amendment we recently filed, which is intended to increase the trial's statistical power to detect a change in our primary end point as well as an key secondary end points, most of which are related to respiratory function.

As we recently announced, we also have started the first Phase 2 clinical trials of CK-107 for the potential treatment of SMA, an orphan hereditary disease most often diagnosed in infants and young children and for which there are no current therapies. There is great interest in the trial within the community. And we have received a significant number of inquiries from patients and their caregivers with regard to potential participation in this trial. That's very humbling to us. Andy will provide further details on both the tirasemtiv and CK-107 development programs.

And, finally, during the quarter we made progress on our joint research program with Amgen directed to the discovery of next-generation cardiac sarcomere activators. And, in addition, we continued to make progress under our joint research program with Astellas, directed to the discovery of next generation skeletal muscle activators.

Let me know turn the call over to Andy so that he can elaborate on the progress with each of our clinical stage programs from this quarter.

Thank you, Robert.

As Robert mentioned, and as I trust you all have seen, during the fourth quarter, we announced the presentation of results from the expansion phase of COSMIC-HF at the American Heart Association meeting in November. This opportunity came within weeks after our top-line results were announced. And we believe reflected the enthusiasm with which the results have been received by the cardiology community.

I think many of you had the opportunity to attend or listen to the investor meeting and webcast we held to review the data following Dr. John Teerlink's presentation at the conference. But I will recap some key findings and highlight some of the perspectives offered by the COSMIC-HF Executive Committee, as well as provide you with an update on potential next steps.

As a quick reminder, the expansion phase of COSMIC-HF was designed to evaluate the pharmacokinetics, pharmacodynamics, safety, and tolerability of omecamtiv mecarbil administered orally to approximately 450 patients with chronic heart failure and left ventricular systolic dysfunction. Patients were randomized 1:1:1 to receive either placebo or treatment with omecamtiv mecarbil at a fixed dose of 25 mg twice daily. Or, in the pharmacokinetic or PK-guided dose titration group, 25 mg twice daily, which could be increased to 50 mg twice daily depending on the plasma concentration of omecamtiv mecarbil after two weeks of treatment with the 25 mg twice daily dose.

The primary objective of the expansion phase was to characterize the pharmacokinetics of oral omecamtiv mecarbil during 20 weeks of treatment. Prior to COSMIC-HF, effects of omecamtiv on cardiac function had been studied only for up to a week.

The secondary objectives included evaluation of safety, tolerability, echocardiographic measures of cardiac function, heart rate, and N-terminal pro-brain natriuretic peptide, or NT-proBNP, which is a biomarker associated with the severity of heart failure, during the 20 weeks of treatment. Approximately 100 sites in 13 countries participated in one our both phases of COSMIC-HF.

COSMIC-HF met its primary pharmacokinetic objective in that exposure to omecamtiv mecarbil was in the desired range of plasma concentration at all time points. Approximately 60% of patients in the dose titration group did escalate to 50 mg twice daily. Importantly, there were statistically significant improvements in all pre-specified secondary measures of cardiac function, as well as in heart rate and in NT-proBNP in the PK-guided dose titration group.

Systolic ejection time, a pharmacodynamic signature of omecamtiv mecarbil, increased and was accompanied by an increase in stroke volume. Both measures reflect an increase in systolic or contractile function of the heart, as was further evidenced by observed increases in fractional shortening and ejection fraction.

What was most important and especially exciting to us were the effects we saw on cardiac dimensions and volumes. As we have reported, there were statistically significant reductions in left ventricular end systolic and end diastolic dimensions and volumes in the dose titration group. Essentially, in patients treated with omecamtiv mecarbil, a pumping chamber of the heart, the left ventricle, got smaller.

As you may know, typically with systolic heart failure the heart goes larger to compensate for poor contractile function. What we saw in COSMIC-HF was that an improvement in contractile function may have contributed to reversals in this enlargement, referred to as reverse remodeling. So the heart is functioning better, pumping more blood per beat and starting to get smaller.

Additionally, we found that heart rate in COSMIC-HF decreased significantly in the dose titration group, as did measured levels of the neurohormones NT-proBNP in both groups receiving omecamtiv mecarbil, something not observed in prior studies of omecamtiv mecarbil that employed shorter-term dosing. Adverse events, including serious adverse events, in patients on omecamtiv mecarbil appear comparable to those on placebo.

A small increase in troponin was seen among patients receiving omecamtiv mecarbil. Increases in troponin were independently adjudicated, and none were determined to be used clinical events of myocardial ischemia or infarction. There was no difference in deaths, and cardiac adverse events were similar between placebo and the active treatment groups.

We are very pleased to see the consistency of results across all of these metrics. While observing these changes sustained over 20 weeks of chronic oral therapy was extremely gratifying and supportive of the therapeutic hypothesis that we have pursued for over 15 years in this program; namely, that directly and specifically improving cardiac systolic function with a cardiac myosin activator can have potentially favorable pharmacodynamic effects during longer-term treatment of patients with systolic heart failure.

However, it's effect on long-term morbidity and mortality remain unknown. And an outcomes trial is necessary to address these key questions.

As mentioned, we convened an investor meeting during an AHA Scientific Sessions, including members from the COSMIC-HF Executive Committee. They were asked to comment on the predicted value of these pharmacodynamic markers on clinical outcomes. What we heard was that the consistency of results we observed has been rarely seen in Phase 2 clinical trials in heart failures. And that the impact of omecamtiv mecarbil on cardiac function, in particular the reduction in cardiac volumes and drop in NT-proBNP, have been associated with improved outcomes in studies of other drugs and devices in patients with heart failure. They felt these findings were supportive of studying omecamtiv mecarbil in a Phase 3 outcomes trial.

Toward that end, we worked closely with Amgen during the fourth quarter on a number of collaborative activities in the areas of clinical development, regulatory affairs, manufacturing, and market research. On the clinical front, we recently conducted another Phase 1 study in Japan. And are moving swiftly to start a Phase 2 trial of omecamtiv mecarbil in Japan so that we can hopefully include Japan in a potential Phase 3 clinical program.

In addition, we have finalized key elements of a draft Phase 3 protocol to support ongoing regulatory interactions. We are now in the midst of those end-of-Phase 2 meetings, which have been scheduled to occur with the FDA, EMA, and other regulatory authorities in this first quarter of 2016.

Preliminary feedback has been positive and supportive of our potentially advancing Phase 3 later this year. We anticipate making a decision together with Amgen regarding the potential advancement of omecamtiv mecarbil to Phase 3 following consideration of regulatory feedback in the next few months.

With that update on our cardiac program, I'll turn to an update on our skeletal muscle activator programs.

During the quarter, we made progress on North American clinical trials site activations and patient enrollment into VITALITY-ALS, our Phase 3 clinical trial designed to assess the effects of tirasemtiv versus placebo on slow vital capacity, or SVC, and other measures of skeletal muscle strength, including other measures of respiratory function in patients with ALS. We now have activated more than half of all planned sites, and will now be focusing attention this quarter on activating our remaining sites. With over 200 patients currently enrolled, we remain on track to complete enrollment in the first half of 2016, with data anticipated in the third quarter of 2017.

Importantly, we believe the increase in the duration of the open-label phase, from one week in BENEFIT-ALS to two weeks in VITALITY-ALS, along with the longer, slower dose titration steps following randomization to one of the three target dose levels of tirasemtiv in VITALITY-ALS, have together served to reduce the number of post-randomization dropouts in VITALITY-ALS, compared to the number of early terminations we observed in BENEFIT-ALS.

Also, we recently amended the protocol for VITALITY-ALS to increase the number of enrolled patients from approximately 445 to approximately 600. The increased number of patients enrolled will increase our statistical power from 80% to 90%, to detect a difference between tirasemtiv and placebo of 6 percentage points in the primary end point, which is the change from baseline to 24 weeks in SVC.

You may recall that 6 percentage points was the magnitude of effect seen in BENEFIT-ALS after only 12 weeks of double-blind treatment. In addition, you may recall that the curves describing the decline over time in SVC on tirasemtiv versus placebo continued to diverge throughout the 12 weeks of double-blind treatment in BENEFIT-ALS.

Consequently, in VITALITY-ALS these curves may continue to diverge from 12 to 24 weeks, which could result in a difference between tirasemtiv and placebo and the change in SVC from baseline to 24 weeks of approximately 12 percentage points. By implementing the protocol amendment, VITALITY-ALS will have well over 90% power to detect a treatment difference of that magnitude.

Finally, regarding tirasemtiv, at the sixth annual California ALS Research Summit, Cytokinetics, in collaboration with Knopp Biosciences, presented exploratory analyses of data from patients with ALS combined from three different sources.

First, a placebo data from EMPOWER, the Phase 3 clinical trial of dexpramipexole in patients with ALS. Second, the placebo data from Cytokinetics Phase 2B study of tirasemtiv in patients with ALS, BENEFIT-ALS; and, finally, the Open Access Pro Access database.

This combined database included multiple observations of SVC over time from well over 900 patients with ALS. The average rate of decline of SVC was remarkably consistent across the three databases and, over time, declining linearly at approximately 0.09 percentage points per day for up to 68 weeks. Also, in this combined database, the standard deviation about the change from baseline to 24 weeks in SVC was 17 percentage points, which is exactly the value we assumed when we calculated the sample size for VITALITY-ALS.

Finally, our analyses of this combined database demonstrated that a reduction in this average rate of decline in SVC from 0.09 to 0.04 percentage points per day, which is consistent with the reduction in the average rate of decline in SVC that we observed over 12 weeks of treatment with tirasemtiv in BENEFIT-ALS, predicts a reduction in the risk of clinically meaningful events. Including a 19% reduction in the risk of a decline in any one of the three respiratory questions of the ALS FRSR, as well as a 22% reduction in the risk in the time the first occurrence of respiratory insufficiency or death and a 23% reduction in the risk of the first occurrence of tracheostomy or death.

These analyses lend support for our design of our ongoing Phase 3 trials with tirasemtiv VITALITY-ALS, which will also affect on these end points. In parallel, we also engaged in manufacturing, commercial planning, and advocacy-related activities this quarter in support of VITALITY-ALS and tirasemtiv.

Turning to the development of the CK-107, our next-generation skeletal muscle troponin activator partnered with Astellas.

We are excited to have started our first Phase 2 clinical trials in patients with Spinal Muscular Atrophy, or SMA, earlier this year. As you may know, SMA is another dire disease in great need of new therapies to address progressive functional limitations. We believe CK-107 has the potential to improve muscle function in the adolescent and adult patients with SMA that we are enrolling in our now ongoing clinical trial. And if CK-107 is approved, it can be used alone or in combination with other gene-directed therapy approaches being investigated.

There has been a strong interest in our trial, as we have received numerous inquiries about it from people living with SMA and their families. The primary objective of our double-blind randomized placebo-controlled clinical trial is to determine the potential pharmacodynamic effects of CK-107 following multiple oral doses in patients with Type II, Type III or Type IV SMA. Secondary objectives are to evaluate the safety, tolerability, and pharmacokinetics of CK-107.

As outlined in our press release, the trial is planned to enroll 72 patients in two sequential dose cohorts. In other words, two cohorts of 36 patients each, half of them ambulatory and half of them non-ambulatory.

The first group of 18 ambulatory patients will be either Type III or Type IV. And the 18 non-ambulatory patients, who will all be either Type II or Type III, will receive 150 mg of CK-107 versus placebo. The second group of 18 ambulatory and 18 non-ambulatory patients will receive 450 mg of CK-107 or a lower dose based on an interim review of the data between cohorts. Each cohort will receive CK-107 or placebo dose twice daily for eight weeks.

Multiple assessments of skeletal muscle function and fatigability are performed in this hypothesis-generating trial. Including respiratory assessments, upper limb strength and functionality for non-ambulatory patients, as well as a six-minute walk test and a timed up-and-go test for ambulatory patients. We expect this trial to be one of several Phase 2 clinical trials to be conducted in collaboration with Astellas in neuromuscular and non-neuromuscular disorders over the course of this year.

The second, to be conducted by Astellas, will study CK-107 in patients with chronic obstructive pulmonary disease, or COPD, and is expected to be underway in the first half of 2016. The goal of the trial is to evaluate the potential of CK-107 to increase measures of exercise function and time to muscle fatigue. This study will assess cardiopulmonary and neuromuscular effects, safety, and tolerability, as well as the pharmacokinetics of CK-107.

More information is posted on www.clinicaltrials.gov. And we will have more to say about it once it starts in the next few months. With that update on our plans for our skeletal muscle program, I will now turn the call over to Sharon for an update on our financials.

Thank you, Andy.

As our press release contains detailed financial results for the fourth quarter of 2015, I'll refer you to that public statement for the details on our P&L and balance sheet.

We ended the fourth quarter with approximately $111.6 million in cash, cash equivalents, and investments, which represents at the end of 2015 over 17 months of going forward net cash burn based on our 2016 revenue and expense guidance that we announced today. Our guidance includes our current estimated cost of VITALITY-ALS for tirasemtiv in 2016 and 2017.

In addition, we also recently announced that we drew down the second $15 million traunch from our growth capital loan with Oxford Financial and Silicon Valley Bank. This additional $15 million gives us approximately three to four months of additional cash runway in 2016 and 2017.

Revenues for the fourth quarter of 2015 were $9.8 million, compared to $21.8 million during the same period in 2014, which included a $15 million milestone payment from Astellas. Revenues for the fourth quarter of 2015 included $5.1 million of license revenues; $4 million of research 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 $2.3 million of license revenues and $3.3 million of research and development revenues. And $15 million in milestone revenues from our collaborations with Astellas. In addition, $1.1 million of research and development revenues from our collaboration with Amgen and $0.1 million in milestone revenues from our collaboration with MyoKardia.

Our fourth-quarter 2015 R&D expenditures totaled $13.2 million. From a program perspective, for the fourth quarter approximately 83% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, which include both expenses associated with tirasemtiv and CK-107. 10% to our cardiac muscle contractility activities. And 7% to our other research activities.

Revenues for the 12 months ended December 31, 2015, were $28.7 million, compared to $46.9 million during the same period in 2014. Revenues for the 12 months ended December 31, 2015, included $13.9 million of license revenues; $12.2 million of research and development revenues from our collaboration with Astellas; and $2.5 million in research and development revenues from our collaboration from Amgen.

Revenues for the same period in 2014 included $9.8 million of license revenues; $15.4 million of research and development revenues; and $17 million in milestone revenue from our collaboration with Astellas; $4.5 million of research and development revenues from our collaboration with Amgen; and $0.1 million in milestone revenue from our collaboration with MyoKardia.

For the 12 months ended December 31, 2015, R&D expenditures totaled $46.4 million. From a program perspective, for the 12 months ended December 31, 2015, approximately 78% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, which include both expenses associated with tirasemtiv and CK-107; 12% to our cardiac muscle contractility activities and 10% to our other research activities.

Today, we also announced our financial guidance for 2016. The Company anticipates cash revenue will be in the range of $13 million to $16 million. Cash R&D expenses will be in the range of $67 million to $70 million. And cash G&A expenses will be in the range of $21 million to $24 million.

This cash guidance excludes $20.5 million and license revenue, which was received in 2015 and will be earned and recognized over the remaining term of the Astellas development plan in 2016 under generally accepted accounting principles, as well as any potential milestones that may be achieved in accordance with our collaboration agreement with our partners, Amgen and Astellas.

In addition, this guidance excludes an estimated $4.5 million in non-cash-related operating expenses primarily related to stock compensation expense. In 2015, we put in place both an ATM and a growth capital loan to provide us with financial flexibility to fund operations through 2016 and prepare for data from VITALITY-ALS next year.

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

Thank you, Sharon.

2015 was indeed a transformational year for Cytokinetics. And as you've heard, we start 2016 strong with momentum across our three muscle biology directed development programs.

As we recently outlined in our Vision 2020 strategic initiative, over the next five years our goal is to expand our portfolio of novel muscle activators and mature operations to commercial readiness for our multiple first-in-class compounds directed to the potential treatment of people living with diseases of impaired muscle function. Ending 2015 strong establishes a firm foundation for our vision. And 2016 will be an important an exciting year of execution against that strategic road map.

The results from COSMIC-HF exceeded our expectations and provides what we believe, as do leading heart failure KOLs with whom we and Amgen have consulted, a compelling case to proceed to Phase 3. As mentioned, we are in the midst of ongoing interactions with regulatory authorities. The feedback to date is encouraging.

We expect a decision regarding the potential advancement of omecamtiv mecarbil into a Phase 3 clinical development program in the next few months. And in the meantime, we are making preparations for the start of a Phase 3 program.

We are pleased that VITALITY-ALS site activation and enrollment are proceeding well. And we look forward to completing enrollment in this Phase 3 trial of tirasemtiv in the first half of 2016. Our increased confidence in the safety and tolerability of tirasemtiv, together with analyses of data regarding SVC and correlation to downstream clinical interventions, both together contributed to our recent decision to file a protocol amendment to increase the targeted enrollment and therefore the statistical power of the trial.

On the CK-107 front, I want to commend our clinical operations team for their diligence to initiate our first Phase 2 clinical trial in people with SMA. We have received a significant number of inquiries from people living with SMA and their families, who are interested in this clinical trial. Each of these interactions reminds us of how important our work is and how much patients with SMA need new medicines to treat impaired muscle function.

Toward that end, we also announced an expanded partnership with Cure SMA to increase education, awareness and fundraising for SMA. As a National Gold Partner, Cytokinetics lends support to key national and local initiatives to advance the understanding of, and research toward, potential treatments for SMA.

During the recent quarter, we also continued research activities into our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activators, as well as under our joint research program with Astellas, directed to the discovery of next generation skeletal muscle activators. As previously reported, together with Astellas, we have selected a skeletal muscle activator candidate and anticipate initiating pre-clinical development in 2016.

Additionally, we expect to identify a next generation cardiac muscle activator with Amgen which may also move into pre clinical development during the current calendar year. And, finally, across our several clinical development programs, we remain committed to the urgency to bring new medicines to people battling devastating diseases of impaired muscle function, many of whom will face progressive loss of that muscle function.

This quarter, members of our team continued to work closely with our colleagues in the ALS advocacy community to help draft and advance guidelines that may accelerate drug development and regulatory approvals of potential medicines for ALS.

And with that, I'll now turn to our expected milestones for 2016.

For omecamtiv mecarbil, we expect to make a decision regarding the potential advancement to Phase 3 in the next few months. For tirasemtiv, we expect to complete enrollment of VITALITY-ALS in the first half of 2016. For CK-107, we expect to complete enrollment of the Phase 2 clinical trial of patients with SMA in the second half of 2016. And we also expect Astellas will initiate a Phase 2 clinical trial of CK-107 in patients with COPD in the first half of 2016.

And for our pre-clinical research, we expect to continue research activities under our joint research program with Amgen, directed to the discovery of next-generation cardiac muscle activators. And as well under our joint research program with Astellas, directed to the discovery of next-generation skeletal muscle activators. Under our collaborations, we expect to advanced two next-generation compounds in pre clinical development in 2016.

All in all, a busy year ahead and one that we hope will again produce significant progress for Cytokinetics to the benefit of all of our stakeholders.

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

(Operator Instructions)

Joe Pantginis, ROTH Capital Partners.

Good afternoon, Joe.

Good afternoon. Hi, all. Thanks for taking the question, and obviously congratulations on all the progress he made in 2015. Regarding the tirasemtiv news today with increasing enrollment, I'll cut to the chase first of what I see as one of the conclusions. Based on Andy's comments, it doesn't appear that there is going to be any impact on the timeline, which I think is very encouraging in that you're, obviously, or at least in my opinion, seeing very high demand for enrollment into this study?

I think you are correct. We are sticking with the timeline for completion of enrollment in the first half of the year, even as we are increasing the targeted enrollment somewhat substantially, as Andy outlined. I think what you can draw from that is that, as we emphasized, it's partly because we believe that the safety and tolerability of tirasemtiv as evidenced already in this study appears to favor this design, and based on analyses we've done, we think it's prudent for us to be increasing the target enrollment in order to be able to enhance the statistical power for the primary endpoint, as well as secondary end points. That's in part also a function of our increased confidence in our outlook, which is attributed also to our feelings about omecamtiv mecarbil and the potential advancement of omecamtiv mecarbil to Phase 3.

Sure. And with regard to the amendment have you received feedback yet? And then also I guess can you paint the picture of what the drivers were? And I think you did a good job in the call, but I wanted to see if you could expand. The drivers were to increase the enrollment. Obviously you increased the power, as you said, but how much of the PRO-ACT database as well as the DOP data that you described fit into being able to make this decision?

So I'll start and maybe I'll turn it over to Andy.

First you asked if we received feedback. We communicated these changes to the sites and also to regulatory authorities and the feedback has been positive. We don't expect that this will be at all an issue, in fact it's positively being embraced. Secondly, you asked about the motivation behind it. Andy can elaborate on the statistical power, but I will say that this was already a decision in the making even before we had conducted the analyses associated with the EMPOWER study.

Yes, I don't think those analyses really had much bearing on it. I will say it certainly was encouraging to see the data from that combined database confirm the assumption at 17 percentage points as the standard deviation about to change from baseline to 24 weeks in slow vital capacity.

We took that number from BENEFIT ALS we had to extrapolate because that study only went out to 12 weeks, of course. So we extrapolated from 12, 24, came up with 17, and then as you now know have confirmed it with a much larger database, the three of which are all very consistent, one with the other. I think -- I may turn it back to Robert. I think we would've always have liked to have had 90% power, but I think recent developments in other programs made us feel that we could finally now decide to apply the resources to doing that.

I think that's right. This is always a question of how you invest in programs when you are moving multiple programs forward in parallel. And as this may hopefully serve as a pivotal study for tirasemtiv, it's better to have 90% power if that is something that is affordable, and that's what we decided in making this recommendation in protocol amendment.

Oh, that's very helpful. Thank you. And if I may just quickly with omecamtiv. It was very encouraging to hear that you're already in an ongoing discussions with regulatory authorities. Would you be able to provide any more detail regarding what potential outstanding questions or issues might be? And then the broader question that applies to both tirasemtiv and omecamtiv mecarbil would be, would you look to seek breakthrough designation for these drugs, since they are very novel from a disease-modifying standpoint, and can impact the patient populations quite significantly if they reach the market?

Yes, so we won't be able to comment on specific discussions and interactions we're having with regulatory authorities. Otherwise we can speak more in general tone, which is to say that when you engage with the FDA at the end of Phase 2 interactions you pose specific questions. Those questions then prompt answers and a dialogue. With regard to EMA, it's a slightly different process as you may know, where you seek protocol assistance and scientific advice.

With regard to our regulatory interactions, we have in this quarter interactions with FDA, EMA, and other regulatory authorities, and we are together with Amgen discussing a plan for a phase 3 program that contemplates a specific protocol, and we get an opportunity to discuss the inclusion and exclusion criteria, the end points, as well as other specifics regarding the protocol or protocols, as well as other issues around CMC and non-clinical activities.

So, it's different for FDA and EMA in terms of how those conversations go, and what I can reiterate is, those are all planned to occur this quarter. Some have already occurred and as we and Amgen are going through these together we're encouraged by already what has transpired. I don't think I can do much better than that.

With regard to breakthrough designation, that's something that we will contemplate. It's not something that we have determined.

Great. Thanks so much for the information.

Thank you.

Our next question is from a line of Charles Duncan with Piper Jaffray.

Hi, Charles.

Hello. Thanks for taking the question and congratulations on the progress in the last year. I think maybe you've answered my questions, but I want to take a stab at it anyway. I know that you have ongoing discussions regarding omecamtiv, but you mentioned explicitly being encouraged by the way things were going. Can you point to any one thing or group of things, such as size of the trial, that is being contemplated in terms of sample size, or the duration of those things, or end points that you find encouraging at this point?

We've already discussed publicly how we are looking at a potential Phase 3 program that would enroll thousands of patients, and which would be event-driven, and which would be pivoting around a primary end point that would include death and hospital readmission with secondary end points that would flow from there. And, as such, while we can't speak specifically about our own plans together with Amgen. What we have been able to do is share with you and others that we believe that studies like the PARADIGM-HF study, the other study are ones that create some markers or bookends around which we and Amgen are discussing with regulatory authorities possibilities that may be appropriate for omecamtiv mecarbil.

So I think that is still the best information I could provide. Certainly we have our own feelings that we are discussing with regulatory authorities about where we may lie in that space and that's what in particular these meetings are set up to discuss.

And with the completion of the meetings, would you be able to articulate a plan in terms of the protocol, and do you anticipate that happening by say the middle of this year?

Yes, I think that seems reasonable. I expect that we will be making a decision by following the conclusion of these regulatory interactions. That's something that we and Amgen would be making together and that we proceed the plan to still hopefully begin a Phase 3 program before the end of the year.

Okay. And then one question on tirasemtiv. I like expanding the size of the trial, because it does feel or seem like there is less risk. But I am wondering is there any new variable? I think you answered this with Joe's question, but was it primarily driven by your ability to invest in this program, or some new clinical observation or analyses that were done? And why is this different than when you initially started the study?

So I'll turn it to Andy to answer in part, but I'll start by saying it was partially a function of our ability to invest in the program and do so with more confidence. That's something we always would've wanted to do. Now we go from 80% power to 90% power and that's informed by other analyses. But it's also informed by feedback we're receiving from the sites and in particular with regard to enrollment rate and the design of the study, the study design seemingly to meet expectations in terms of being able to hopefully elucidate and improve safety and tolerability profile.

Yes, I think there is no particular analysis that was done. It would always have been better to have had 90% power for the primary end point of a Phase 3 study and, again, I think this may be the third time one of us has said it. We always would've preferred that, but we didn't feel that we really could make the investments of those resources until more recently. And while I wouldn't say it was necessarily part of our thinking, I do think that seeing far fewer post randomization premature terminations with this design than we have with BENEFIT is also encouraging and supports enlarging the trial without taking a risk of missing timelines.

Okay. That's helpful. Thanks for the added color.

Jason Butler with JMP Securities.

Hi. Thanks for taking the question and let me add my congratulations on the progress. I just wanted to ask the same question in a different way.

Andy's last comment there, you said that essentially the dropout rate in the early stages of the trial has been much lower than [Eucerin] BENEFIT ALS. Is it in line with what you predicted when you designed the trial?

Well, when we designed the trial we very conservatively assumed that the longer open label treatment period, the slower dose titration, and targeting three different dose levels, not trying to get everybody up to 500, would have no effect on the dropout rate. That's not what we believed. We thought it would and it proves to have had a good effect on the dropout rate.

But just in term of the assumptions we made we assume there would be no improvement because that was the most conservative thing we could do. But, in fact as the trial has progressed we are seeing, I think, meaningfully fewer dropouts post randomization. It's important to know, though, that with patients now supposed to be in the study for over a year, the length of the trial alone is going to probably cause dropouts to pick up a bit as we get further and further into the trial.

As a function of disease progression.

Okay. And then just thinking it's likely too early to make any comments around the standard deviation you're seeing around the primary end point, but do you have an opportunity at any point during the trial to make a further protocol amendment based on, for example, futility analysis?

Not for that reason, but it's always possible without taking an alpha penalty to look at the aggregate standard deviation, and we generally do that. So if we had found that we had seriously mis-underestimated the actual standard deviation, there is always an opportunity to address that. I don't -- I'm optimistic that will not happen, however.

I'll also remind you that also in the interest of being conservative, we estimated an effect size at 24 weeks, which was no different than the one we observed in BENEFIT ALS at 12 weeks. Six percentage points from the change from baseline in SVC, even though the effect size was growing from week 4 to week 8 to week 12 BENEFIT ALS. So we may now have well over 90% power to detect that difference at 24 weeks if the standard deviation holds true to what we estimated.

Great. Helpful.

And then just a quick question on CK-107 and the trial you're going to start in COPD. Can you give us any more color yet around trial design and what measures of success would be for that study?

Yes, much like the SMA study, this is hypothesis-generating. And in fact there's quite a lot of detail available on the clinicaltrials.gov website pertaining to CK-107. Being that that study has not yet started, we have chosen not to elaborate on this earnings call, but that information is out there.

Great. Thanks again for taking my questions.

Thank you.

Ritu Baral from Cowen.

Thanks for taking the question.

Just going back to the omecamtiv Phase 3 program again. I know you mentioned that there are good precedents out there for Phase 3 heart failure program, but given the unique mechanism of omecamtiv are there any subtleties to either the outcomes, end points, or particular secondary end points that might be part of the trial, especially ones that could have importance for commercial aspects of the drug?

It's a good question, but unfortunately, Ritu, it may be a bit premature for us to respond that. I think that may have to wait until we have finalized the study design that we can then communicate publicly.

Got it. And did I hear correctly you're going to be doing a Japanese Phase 2 for omecamtiv?

Yes. So, recently Amgen, in collaboration with Cytokinetics, conducted another Phase 1 study of omecamtiv mecarbil in Japan in Japanese patients, and now we are moving swiftly to begin a Phase 2 study of omecamtiv again in Japan in Japanese patients, with the goal of having that completed in such a way that Japan could be included in the potential global Phase 3 program.

So not something along the lines of atomic or cosmic?

Correct. It's similar in that it will be in heart failure patients, but not something of that magnitude, nor would it be expected to be rate-limiting to the potential start of the Phase 3 program.

Got it. Okay that's helpful. And I have one follow up, just as far as 107 and SMA. Given how wavy the early Phase 1/2 data from tirasemtiv and ALS was when it was first emerging years ago, how should we be looking at the Phase 2 data as it emerges in SMA? Compounds are related. Do you expect similar variability, or do you think it could be cleaner or less clean because of the disease in question?

Well, it's really hard to know when you go into a new population what you're going to find, but I will point out that this is a study of eight weeks' duration. You may recall the first Phase 2 in ALS is actually a single-dose study, so there will be multiple evaluations of these very functional end points over time. So I would hope that this study will yield reasonably robust results and inform whether or not we should further develop the drug for young adults and older children with SMA.

Another way to think about this, Ritu, is this is a population of adolescents and adults with SMA who may not be progressing as rapidly as ALS patients do, and therefore it's conceivable that we may potentially identify end points that could even point to the potential to improve muscle function, as well as potentially slow the decline in muscle function, and that's things that we will be monitoring over the course of this two-month duration treatment.

Yes, I think that an extremely important point that Robert just made, the fact that we have a much more stable disease platform in SMA, because they just don't progress monthly as we saw. And that alone makes it difficult to see drug effects in ALS because the best anybody's ever been able to do is to keep them from getting worse a little bit more slowly. I didn't say that right, but you can only make them get worse more slowly. No one's been able really turned them. Whereas in SMA we actually might be able to see some improvements from baseline.

Got it. And one last question if I may.

As you and Amgen look at second-generation omecamtiv candidates, what are you looking to improve, or what is the most important part of the therapeutic profile to improve in the second gen program?

I first might add that we're talking about next generation cardiac sarcomere activators, but not necessarily operating by the same mechanism of option of cardiac myosin activation as does omecamtiv mecarbil. And then, secondly, certainly as we have learned about omecamtiv mecarbil, there could be an opportunity to affect systolic ejection time in such a way that it may not impinge on diastolic filling to the same degree or with the same therapeutic window. So those are the kinds of things that you always look for in a next generation compound, whether it's the same mechanism or not.

Great. Thanks for taking my questions.

Thank you.

Vernon Bernardino from FBR.

Hi, Vernon.

Hi, everyone. Hey, Rob. It's actually Thomas Yip asking a couple questions for Vernon. Vernon sends his regards. Perhaps I'll continue the dialogue for 107.

We already see the trials on clinicaltrials.gov and I do see a different dosing scheme for your COPD trial compared to the SMA trial. Can you perhaps talk a little bit about what is [reprovising] dosing rationale for the just COPD trial?

The COPD patients are a little older and more functional than SMA patients, and so we didn't feel it was necessary to study first a lower dose level and then a higher dose level, but could just go in with a single-dose level study.

Sure. And I do see. So dosing for 14 days and then watch out for 14 days and then switch to either placebo or drug for 14 days, so there's this sign, does this mirror another trial, or what exactly is the rationale?

The rationale is that the drug has acute effects on fast skeletal muscle performance. We've seen this with tirasemtiv as well. It doesn't take time for it to build up. The effects happen immediately.

So, if there is improvement in the skeletal muscles of patients with COPD, and I'm going to come back to that in a second, it ought to be a discernible within a relatively short treatment period and then again they also have a very stable platform of disease. So it's not likely that patients who receive placebo first and then drugs second are going to be very different when they get the drug and vice versa. They are pretty stable over time.

So the other question you haven't asked, but I'll answer anyway because I anticipate someone may, is this is not about improving respiratory performance in these patients. The disease is associated with significant limb muscle abnormalities, metabolic abnormalities and weakness, and also something that sort of fortunate for this particular compound, a switch from slow to fast fiber predominance.

And there's a lot of literature you can find that shows that exercise intolerance in COPD patients is at least as much if not more so related to their limb muscle dysfunction than it is to their respiratory insufficiency. So that's the rationale for going into that population.

Great. Thanks for the added color.

One final followup, perhaps for Sharon. Does the COPD trial trigger any milestones from Astellas?

We don't comment on what the triggers are related to milestones. We do anticipate milestones from both Amgen and Astellas in the coming year, but I can't tell you what the triggers are.

Okay. Got it. Thank you for taking my questions again and looking forward to another great quarter.

Thank you very much.

George Zavoico with Jones Trading.

Hi, George.

Hi, Robert. Hi, everyone. Good quarter good progress. Thank you for defining it all on your call. A couple of really quick questions. You're talking about the increased number of patients in VITALITY. What is it going to be, if you can comment on it, what is going to be the increased cost and what was the original cost to the smaller trial?

We typically don't provide guidance with respect to specific costs of the trial. We can tell you that this would be in the range of $5 million to $10 million from an (technical difficulty - distorted audio) standpoint of adding the additional patients.

Okay. Thanks for that.

It sounds like you're saying you always wanted the 90%. It sounds like based on your very conservative estimates, Andy, that you were talking about the assumptions for what how you first calculated the powering. It sounds like at 80% was that conservative powering you were already fairly confident in a successful outcome. Now this is sort of a supra powering in a way, isn't it?

I disagree with that. I think the likelihood is that we just can't know until we have the data that those curves that we showed you so many times for the changes over time in slow vital capacity on tirasemtiv versus placebo are going to continue to diverge over time, and it was a very conservative assumption that the six percentage point difference that evolved over 12 weeks of treatment in benefit would not evolve further. So, yes, we may be highly overpowered to see the primary end point, but that's not a bad thing.

It's definitely not a bad thing considering recent Phase 3 failures mainly in other areas, of course. But with that extra $5 million or $10 million it's certainly worth getting that added confidence, I think. Actually, you were talking about the next gen compounds in the cardiac phase. It's interesting, if it's a different mechanism, have you considered perhaps being able to use the next gen compound in combination with the first gen compound to get a synergistic effect?

I'm not sure that it would necessarily produce a synergistic effect, but those of the kinds of things that we have talked about and resource limitations being what they are that's not currently in the cards.

Okay. Just thinking further along in the future.

Regarding empower, you mentioned that the data came mainly from the placebo arm. Did you also look at the changes in FCC in the DEX arm, and was there anything there that you might have learned if you looked there?

We did not have access to the DEX arm, but they were willing to share the placebo data with us, and I think that maybe is more relevant, anyway, because what we're really trying to do is obtain a natural history exercise, if you will, to confirm that on the extrapolations we made regarding our primary end point and other respiratory end points from the limited amount of treatment duration we had in BENEFIT ALS appeared to be consistent over time and similar across databases.

And I think I'll emphasize that first characteristic, because I mentioned during the call, but I didn't say too much about it, I think it's very reassuring to have data that goes out to 68 weeks on these patients and see that the decline in slow vital capacity is highly linear over that entire period of time. It's not as though you get six months out or something like that and then they start to decline more rapidly. Certainly there are patients that will do that and these are mean data based on 900 plus patients, but on average the decline is highly linear and predictable over time, so that really does really bode well for us being able to demonstrate what we hope to be able to demonstrate in VITALITY-ALS.

Yes, especially considering what your initial assumptions were. Finally, a quick question on COSMIC. You mentioned all the cardiac functional parameters. First, part one of the question is that must have translated into some quality-of-life improvements. Can you comment on that or is that going to come later?

I can't comment on that yet.

Okay.

There will be other analyses of COSMIC that will be forthcoming and presented at the proper scientific sessions.

Okay, which brings me to the second part of the question. In this area of precision medicine in choosing patients that are more likely to respond to an experimental drug you, probably can't say, but just tell me if you're doing it, you're looking at sub groups like who's got diabetes, blood pressure ranges, lipid levels. Is that all going to be part of the sub group analysis?

Yes, those things are all being looked at, and in fact I'll just remind you what you haven't seen so far from COSMIC. One is a fairly comprehensive analyses of effects on different sub groups and the other is the relationships between the pharmacodynamic effects we observed and the omecamtiv mecarbil concentrations.

So there are many upcoming cardiology meetings where we can present additional types of data from COSMIC. And ACC was a little too close, but starting with European heart failure meetings, and following on from there I would expect will see new data. The main results are out there. They're not going to change, but some of the questions that you asked, I think you'll start seeing some results like those.

To your point, yes those will be factoring into design elements for potential Phase 3 programs.

Okay. Thank you very much. Looking forward to the upcoming results as you mentioned in those heart failure meetings.

Thank you very much.

Sir, there are no further questions in queue.

Okay, well, thank you. Thank you, Operator.

Thank you to all the participants on our teleconference today. We're very pleased with how 2015 ended on a positive note leading into strong momentum as we now proceed in 2016.

We look forward to keeping you updated on our progress. We appreciate your continued support and your interest in Cytokinetics. Operator, with that we can conclude the call.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.