Cytokinetics Inc (CYTK) 2017 Q3 法說會逐字稿

Good afternoon, and welcome, ladies and gentlemen, to the Cytokinetics Third Quarter 2017 Conference Call. At this time I would like to inform you that this call is being recorded. (Operator Instructions)

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

Good afternoon, everyone, and thanks for joining us today. On today's call we'll be trying a new format which we hope will be more informative for you. Instead of primarily recapping accomplishments achieved during the past quarter for which we have already issued press releases, we're going to include them in the context of our outlook for the company as we continue to advance our late-stage pipeline of novel mechanism drug candidates.

As we elaborate on development-stage programs, we will point to the promise of our advancing research programs as well as refinements of our commercialization plans and preparation for potentially positive data from VITALITY-ALS. We will discuss key milestones and updates that occur during the quarter, but our goal is really to make this call more engaging and contextual for you.

So Robert Blum, our President and Chief Executive Officer, will kick off the call with some introductory comments about the state of our business. Then Andy Wolff, our SVP and Chief Medical Officer, will provide updates on tirasemtiv as we prepare for the results of VITALITY-ALS, which are expected later this quarter.

Fady Malik, our EVP of Research and Development, will then provide an update on CK-2127107, or CK-107, and the broad clinical trials program underway. Fady will also provide you with an update on the Phase 3 development program for omecamtiv mecarbil as well as provide a glimpse into our future with a brief discussion of our progress and research.

Pete Roddy, our SVP and Chief Accounting Officer, will provide a financial overview for the quarter, and Ching Jaw, our SVP and Chief Financial Officer, will share insights on strategic planning before Robert wraps things up with additional perspective and upcoming corporate milestones, and then we will open 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 performance rather than historical facts, and constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Examples of forward-looking statements may include statements relating to our financial guidance and goals, our strategic initiatives, our collaborations with Amgen and Astellas, clinical trials and the potential for eventual regulatory approval of our product candidates. Our actual results might differ materially from those projected in these forward-looking statements.

Additional information concerning factors that could cause our results to differ materially from those in these forward-looking statements is contained in our SEC filings, including our most recent 10-Q, 10-K and 8-Ks. We undertake no obligation to update any forward-looking statements after this call.

And now I will turn the call over to Robert.

Thank you, Diane, and thanks, everyone, for joining us on the call today.

Last year you may recall we laid out our Vision 2020. We articulated strategies to move the company from an R&D-centric organization towards a more commercially focused one and one always centered on patients that continues to prioritize innovations. Now, with 3 novel muscle-directed programs advancing in late-stage clinical trials, a research engine that may serve up as many as 3 next-generation muscle biology-directed development programs in 2018, very collaborative partnerships contributing substantial nondilutive capital and a reinforced balance sheet that enables us to plan for success and enables our emerging commercial operations, I'm very pleased to say we're making great strides to realize that vision.

As you may know, this fourth quarter represents a pivotal time for our company as we anticipate results from our first Phase 3 trial, VITALITY-ALS. We are optimistic about the design, the conduct and the results of this trial based on what we can know today, as well as the mounting evidence regarding the relationships between slow vital capacity, or SVC, and disease progression in patients with ALS. Andy will elaborate on these matters in just a moment.

Although we are optimistic regarding the results of VITALITY-ALS, we also need to prepare for all possible scenarios. Towards that end, Ching, who just joined the company only a few months ago, has already hit the ground running by leading us and our board through a strategic planning process to map forward various scenarios for the company that we will be in 2018 and the associated operational and financial parameters in each case to optimize the opportunities for success and shareholder return. Ching will share some highlights from that process shortly.

The prospect for positive results from VITALITY-ALS is exciting and potentially transformative for our company. However, you also know that we have purposely built a company that doesn't pivot on any single program, and, as you'll hear from Fady, the CK-107 program is advancing, with 4 mid-stage clinical trials under our collaboration with Astellas. And, in addition, GALACTIC-HF, a Phase 3 cardiovascular outcomes trial of omecamtiv mecarbil, is proceeding on plan and on timeline in collaboration with Amgen. So these are exciting times for Cytokinetics, and I'm optimistic and enthusiastic about our future.

Now let me turn the call over to Andy so he can update you firstly on tirasemtiv.

Thanks, Robert. The last patient visit in VITALITY-ALS was completed during the third quarter. We are now working to resolve outstanding data queries and finalize the data so we can proceed to lock the trial database, conduct our planned analyses, and report results this quarter. The results of VITALITY-ALS have been accepted for presentation by our lead investigator, Dr. Jeremy Shefner, at the International Symposium on ALS/MND on December 8 at 4:20 p.m. in Boston.

We feel confident that we have designed and executed the right clinical trial to evaluate the potential of tirasemtiv to slow the decline in respiratory function and other measures of muscle strength for the following reasons.

First, as we have reported, the baseline characteristics of patients participating in VITALITY-ALS are consistent with those in BENEFIT-ALS and other recently conducted clinical trials in patients with ALS. Second, the dropout rate during the 2-week open-label lead-in phase was similar to the rate of early termination which was observed during the first 2 weeks of treatment with tirasemtiv in BENEFIT-ALS. We believe that extending the open-label lead-in period from 1 week in BENEFIT-ALS to 2 weeks in VITALITY-ALS may have decreased the percentage of patients who do not tolerate the lowest dose of tirasemtiv from dropping out after randomization because, instead, they drop out during the open-label phase.

One more comment about early withdrawals in trials in ALS in general. These trials are increasingly arduous for these patients as their condition worsens during the course of a year. In fact, we recently conducted a review of early withdrawal rates in other completed trials of patients with ALS and on average found that about 30% to 35% of patients drop out of trials of 1 year's duration. To that point, the overall dropout rate in VITALITY-ALS appears consistent with assumptions we made in designing the trial.

Third, we're confident of our statistical power to evaluate the primary endpoint, as the standard deviation about the change from baseline in slow vital capacity in the aggregate blinded data is consistent with our expectations.

In addition, more than 90% of patients who have completed VITALITY-ALS have elected to enroll into VIGOR-ALS, the open-label extension trial for patients who completed treatment in VITALITY-ALS. Of particular note, with this participation in VIGOR-ALS, some patients now have been on tirasemtiv for nearly 2 years.

Finally, we want to share some perspective on the growing body of literature supporting the use of slow vital capacity in clinical trials of ALS, its correlation with forced vital capacity, or FVC, and the apparently equivalent value of both as predictors of survival and other respiratory milestones of disease progression in ALS. Recently, a paper was published in the journal Amyotrophic Lateral Sclerosis in Frontotemporal Degeneration showing that forced vital capacity and slow vital capacity are strongly correlated in patients that can do both maneuvers and interchangeably function as independent predictors of survival in ALS.

This follows the ALS Association's guidance document submitted to FDA, which calls for vital capacity and other measures of respiratory function to be more readily included in clinical trial design and accepted as an approvable endpoint by FDA. Finally, we expect other peer-reviewed publications in the near term that will point to the important prognostic value of slow vital capacity to patients with ALS.

Now, I'll turn the call over to Fady to provide an update on our other R&D programs at Cytokinetics, including the one for CK-107, our next-generation fast skeletal troponin activator, as well as an update on omecamtiv mecarbil and other programs in research.

Thanks, Andy. As Robert mentioned, CK-107 is now advancing in 4 mid-stage clinical trials under our collaboration with Astellas in both neuromuscular and non-neuromuscular diseases for conditions in which impaired muscle function and weakness play a meaningful role. These include spinal muscular atrophy, chronic obstructive pulmonary disease, frailty and ALS.

CK-107 has the same mechanism as tirasemtiv, but it was selected and optimized from a distinct chemical series. As we found in our Phase 1 clinical trial program, CK-107 may have a more favorable tolerability profile relative to tirasemtiv with regard to lightheadedness and other potential adverse effects. All 4 mid-stage trials are well underway, and we expect to announce results from all of them in 2018.

Data from our ongoing Phase 2 clinical trial of CK-107 in patients with spinal muscular atrophy, or SMA, are expected in Q1 2018. Now, this trial is nearing completion of enrollment and may generate data that we hope will provide the basis for testing it in Phase 3 in a population of adolescent and adult patients with SMA.

So, despite recent advances of therapies directed at the genetic cause of SMA, we believe patients may still have residual muscle dysfunction and weakness. We believe we may be uniquely positioned to provide a complementary therapy, such as CK-107, which could become a partner of choice with these other treatments.

Transitioning to a problem now of a far different scale, given the preclinical data showing that CK-107 and other FSTAs increase muscle force, power, and the time to muscle fatigue, the mechanism of action may also lend itself to treatment in an aging population. Despite research and media attention focused on increasing life span, we believe there isn't enough focus on improving the functional quality of extended life span, or, as we might say, prolonging health span.

As patients age, they often lose the ability to perform tasks of daily living, like climbing stairs or doing household chores, which can be partly due to early fatigability of skeletal muscle and even the loss of skeletal muscle mass, a condition called sarcopenia. If CK-107 can improve muscle function, exercise performance and stamina, it may be able to preserve an aging person's ability to perform tasks and maintain independence.

By 2050 America's population over the age of 65 years old is expected to soar to 88 million. In addition, the global population of people aged 80 and older is expected to more than triple over the next 3 decades, reaching nearly 500 million. So we're optimistic about the potential of our scalable sarcomere activators to address this growing health challenge, and we look forward to the first glimpses into this potential in 2018 with data from our frailty trial with CK-107.

Altogether, the results of these 4 trials of CK-107 that are expected in 2018 represent additional clinical catalysts following the results of VITALITY-ALS expected later this quarter. So you can expect significant news flow from our fast skeletal troponin activator program over the next year.

Now, I want to move to our cardiac muscle program and provide an update on omecamtiv mecarbil and GALACTIC-HF. We recently announced that the first patient in Japan had been dosed in GALACTIC-HF, which earned Cytokinetics a $10 million milestone payment from Amgen. The trial remains on schedule, with over 500 clinical sites activated and patient enrollment proceeding in accord with our agreed plan.

We're also engaging with clinical investigators, Amgen and FDA to finalize the protocol for a planned second Phase 3 trial of omecamtiv mecarbil, which is intended to evaluate its potential to increase exercise performance and its potential to reverse the progressive enlargement of the heart in patients with heart failure, an effect called, often, reverse remodeling. We expect to have more to say about these plans in 2018.

Next, let me comment on an analysis of COSMIC-HF Phase 2 clinical trial of omecamtiv mecarbil we've previously reported on that Dr. John Teerlink recently presented at the Heart Failure Society of America scientific meeting. The analysis compared the effect of omecamtiv mecarbil in patients whose heart failure is a consequence of coronary artery disease, or ischemic heart failure, to those with nonischemic heart failure. These secondary analyses suggested that omecamtiv mecarbil produced similar results with regard to cardiac function, heart rate, and biomarkers, including troponin, as well as adverse events in patients with either ischemic or nonischemic etiology of heart failure.

The lack of a difference in ischemic events or in troponin increase between both groups supports our hypothesis that the increase in troponin in patients treated with omecamtiv mecarbil is not due to myocardial ischemia. These analyses are also supportive of the rationale for enrolling both types of heart failure patients in GALACTIC-HF.

Finally, in regards to research, this has been an especially productive period for Cytokinetics and our partners. We're working on several next-generation muscle biology-directed programs and are enthusiastic about advancing potential drug candidates that may offer advantages relative to drug candidates currently in clinical trials.

These advancing programs, some within our collaborations and sponsored by our partners, may lead to a doubling of our development pipeline in 2018, as well as new opportunities to expand the clinical footprint of our programs well beyond our current activities. They may also connect the work we are doing now in the specialty disease segments of muscle dysfunction to chronic conditions characterized by muscle weakness, and that could lead to new treatments to increase the health span of an aging demographic. So we look forward to sharing more about our exciting progress in R&D in 2018.

With those updates, I'll now turn the call over to Pete to provide an update on our financials.

Thanks, Fady. I'll touch on our cash and our revenue and spending on research and development. Again, more details are included in the press release itself.

So, we ended the third quarter with $308 million in cash, cash equivalents and investments. That represents over 24 months of going-forward cash burn based on our 2017 financial guidance. A $10 million payment from Amgen stemming from the milestone for the first patient enrolled in Japan in GALACTIC-HF is included in our revenue, as well as our R&D contract revenue and accounting for license, and totaled $6.2 million for the quarter.

As we exercised our option to co-fund the Phase 3 clinical trials program, thereby increasing potential revenues on future sales of omecamtiv mecarbil, our revenues are reduced for accounting purposes for our co-funding payments. Those payments of $6.3 million per quarter will continue in 2018 until we pay the total $40 million.

Our third quarter 2017 R&D expense totaled just under $25 million. About 86% of those R&D expenses were attributable to our skeletal muscle contractility programs, which include both expenses associated with development and clinical trials for tirasemtiv and CK-107, 10% to our cardiac muscle contractility programs, and 4% to our other research activities. These percentages approximate what we've seen in prior quarters.

Our 2017 G&A expenses include investments in internal capabilities and those systems and outside services focused on commercial readiness, and increased relative to the prior year.

Our guidance for revenue included the $10 million milestone payment we discussed earlier, accounting for deferred revenue from upfront payments over time as well as R&D contract revenue for reimbursement under our collaboration agreements. The revenue from reimbursements are actually based on our actual expenditures. So we're now updating our financial guidance for 2017 cash-based R&D expenses to $103 million to $107 million, and cash revenue to $16 million to $18 million, and we're maintaining our guidance for cash G&A expenses from $30 million to $32 million.

With our Q2 financing activity we've increased certain regulatory and commercial readiness activities for tirasemtiv, and one should expect that those activities and related spending start this year and may continue into 2018. We believe the cash needs for those activities in 2017 are within the ranges of our guidance now, and we plan to provide guidance for 2018 with our Q4 earnings.

Next, Ching will share highlights from our strategic planning process. Ching?

Thanks, Pete. As Robert mentioned at the start of the call, we recently completed our annual strategic planning process to lay out operational and financial strategies based on scenarios related to the results from VITALITY-ALS at the end of this year and our ongoing Phase 2 clinical trials of CK-107 in 2018.

As you may know, we are building 2 business verticals at Cytokinetics, one in skeletal muscle and the other in cardiac muscle. Both have potential to generate near-term and longer term growth in shareholder value, as we may move from clinical trial results to potential commercial returns in meaningfully large and growing specialty care markets.

Over the next 14 months, we expect results from 5 clinical trials, and the company could look very different depending on the outcome of each of these trials. For example, should results from VITALITY-ALS be positive, we are prepared to move expeditiously to build a commercial organization in North America and Europe. If results from VITALITY-ALS are negative or mixed, we would conserve resources until regulatory path forward may become more clear following a pre-NDA meeting with FDA in Q1 of 2018.

Looking further into the future, in the best case scenario by the end of 2018 we could be preparing for the commercial launch of tirasemtiv as well as starting Phase 3 clinical trials in one or more indications with CK-107. In the worst case scenario, should all trials with our skeletal muscle activators fail, which we believe is unlikely, we may focus more resources on our emerging cardiovascular enterprise.

Of course, it is also possible that the ultimate outcome could be one of the multiple scenarios between the best and the worst cases. As you heard, we are also executing plans to advance potential drug candidates from research that factor importantly into our business objectives for the company.

Lastly, we are giving serious attention to how in-licensing and the acquisition of other programs may complement the business enterprise in each potential scenario. We're keeping a mindful eye on our current cash and considering how we can leverage our existing and new partnerships for additional capital. Our future cash burn rates will vary depending on the scenario in which we find ourselves, but in all cases we have a plan to secure necessary working capital through primarily nondilutive measures.

For example, we expect to earn additional milestone payments from each of Amgen and Astellas in the near term, medium term and longer term, and are eligible for over $1 billion in potential milestone payments going forward. We're also positioned well to do new deals, much like we did earlier this year with Royalty Pharma, to monetize potential royalty payments or to partner a currently unpartnered program that is advancing to development.

With that summary, I will now turn the call back to Robert.

Thank you, Ching. So, as you've heard, we've got a lot going on at the company as we prepare for the results from VITALITY-ALS and as we plan for our future. I want to thank our teams who are working so diligently to help prepare for the results from this, our first Phase 3 trial, and the results and potential regulatory filings that may follow and the potential commercialization of our first product.

This is all happening as we are also advancing CK-107 into a broad clinical development program and preparing for a second Phase 3 clinical trial of omecamtiv mecarbil. And, of course, all that's happening while we prepare to advance independent and collaborative research programs into our development pipeline.

So, as you've heard, on the research front we expect to nominate at least 2 development candidates from research from programs either partnered or unpartnered by year-end 2017 and potentially double the size of our development pipeline by 2018. How we do all this and also maintain focus, discipline and strategic upside is no simple task, but we believe that we have the talent, knowhow, resolve and the resources to make it all happen.

Through it all we continue to stay close to the people for whom we are fighting. Our employees participated in a number of disease awareness and fundraising activities during the past quarter. We had teams walk and ride in SMA and ALS events. We held a candle lighting ceremony in support of SMA patients who have lost their battle, and we hosted an art festival fundraiser in support of the ALS Association's Every Drop Adds Up campaign.

Through all of these activities, Cytokinetics' employees stand together with the people fighting these devastating diseases of impaired muscle function, and we stay focused on why we all do what we do every day.

Assuming positive results from VITALITY-ALS, we're engaging in discussions regarding the possibility of an early access program to support tirasemtiv. We recognize that with positive results there may be significant interest among physicians and patients to have access to tirasemtiv before potential commercial availability. In collaboration with outside consultants in this area, we're considering our options, weighing very seriously the regulatory, the ethical, the practical and other key factors that we know we must consider to enable potential support for an early access program.

As we move closer to what we hope is a transformative event in our company's history, we're optimistic about our novel R&D pipeline, and we look forward to updating you later this quarter on the results from VITALITY-ALS. Now with that let me recap our expected milestones for the rest of the calendar year.

For tirasemtiv, we expect results from VITALITY-ALS in this fourth quarter of 2017, and we expect to continue to treat patients who completed VITALITY-ALS and enrolled into its open-label extension, VIGOR-ALS, throughout 2017 and afterwards.

For CK-107, we expect to complete enrollment of Cohort 2 of our Phase 2 clinical trial in patients with SMA in 2017. We expect data from that Phase 2 clinical trial in patients with SMA in the first quarter of 2018.

We expect Astellas to continue enrollment in a Phase 2 clinical trial of CK-107 in patients with COPD and a Phase 1b clinical trial of CK-107 in elderly patients with limited mobility throughout 2017, and we expect to continue enrollment in our Phase 2 clinical trial of CK-107 in patients with ALS, the FORTITUDE-ALS study, in 2017.

For omecamtiv mecarbil, we expect continued enrollment of patients with chronic heart failure into GALACTIC-HF throughout 2017. And for our preclinical research throughout 2017 we expect to continue research activities under our joint research program with Amgen, directed to the discovery of next-generation cardiac muscle activators, and also under our joint research program with Astellas, directed to the discovery of next-generation skeletal muscle activators. And, as mentioned, we expect to nominate at least 2 potential drug candidates from ongoing research programs in 2017.

So, with all of that, now we can open up the call to questions, please.

(Operator Instructions) Our first question is from the line of Joe Pantginis, from H.C. Wainwright.

A couple of questions. First, with regard to your cash balance now, obviously you have a strong cash balance, especially with the recent raise. And one of the things you had mentioned, Robert, I wanted to see if this is still in play, was to maybe have or run a couple extra, say, Phase 1 studies to support the drugs, say either omecamtiv or tirasemtiv or 107, with regard to, say, like drug-drug interaction studies or studies like that. Do you have anything like that planned?

Yes, I will say that as we did conduct a fundraise earlier this year and as we did generate capital from the Royalty Pharma deal, we did commit to doing also a number of other Phase 1 studies to support the ultimate, we hoped, regulatory filings for tirasemtiv. Those are studies that are underway. We haven't commented on what those are. Those are fairly standard for completing a regulatory package much like we're also doing other CMC activities. So, yes, to answer your question, those studies are being conducted now.

Got it, got it. And then, I guess this is a little more, I mean, sort of forward-looking, but obviously you have the December 8 presentation of the data, and I guess my question is, depending on when you have database lock and press the button for the analysis and get your answer, is there a potential that you could put out a press release first where you just announce without any numbers the topline data, since it's material?

So, I'll answer your question, but first let me say this. To be clear, we are still in the process of resolving queries and moving towards database lock, and, as Andy pointed out, we did have last patient, last visit, but I want to be clear that we have not yet database locked. When we do that, there is a well-orchestrated process by which Fady and Andy and others will become sequestered and reviewing the analyses long before they'll bring me over the wall and I'll be part of that conversation about what we've seen. But only after that will we then be in a position where we could potentially topline the data before we might then present it on December 8. We expect we will present it on December 8, but that process takes weeks, and it could be just a few days before December 8, if at all, when we have a topline announcement. Given that, if we do have data that we believe to be unequivocal, we'll report on that in a topline release, and whether that contains numbers or not, that ultimately depends on the results themselves, and we want to make sure we don't do anything to jeopardize the presentation at the ALS/MND meeting. So I don't think I can answer your question to your full satisfaction, given that.

And our next question is from the line of Matthew Harrison, from Morgan Stanley.

This is Ishmael calling in for Matthew. So, one from me. Could you comment on your updated views on the key regulatory hurdles, given that we've seen a potentially more lax FDA? How should we think about the need for a secondary endpoint to hit statistical significance versus a trend? Thank you.

So, your first question was with regard to the regulatory environment in which we're going to be operating. So it's not for me to comment on the FDA review of other sponsors' applications. But what I can say with regard to our interactions with the FDA is we have good dialog and conversation about what should matter with respect to our application. I think we've mentioned in the past that we have had multiple interactions, face to face and through writing, with FDA with respect to this program, including recently. I should also underscore that we believe that we are aligned with regard to what should be an interpretation of results coming out of VITALITY-ALS based on the fact that we submitted a statistical analysis plan, we received comments on that plan, we incorporated those comments into an amended plan and resubmitted that to FDA. So, I think with regard to our application, suffice it to say that I think that we're on the same page, and only when we have results will we have something more that we can talk about with FDA. Your next question -- could you repeat your next question?

So just how should we think about the need for a secondary endpoint to hit statistical significance, given the FDA's behavior?

Yes, I'll talk to this just briefly, but then I'll turn it over to Andy to reflect on that, too. We've said all along that we believe that this trial, as intended, is designed to confirm and extend what we saw in the BENEFIT-ALS trial. In the BENEFIT-ALS study, albeit it was a prespecified secondary endpoint, we did see a clinically meaningful change in baseline from SVC, and that was highly statistically significant. So, hence, we have designed VITALITY-ALS to confirm that, albeit at now a later time point, and we've indicated that we felt it was important based on conversations with FDA and EMA to extend that finding so as to corroborate with hopefully other secondary endpoints. And I'll turn to Andy now to address how we're thinking about those secondary endpoints.

So, we, in the event of a positive effect on the primary endpoint, then we can test those secondary endpoints in a way that allows them to be viewed as dispositive, as well, or something that can be included in the label and about which we can make claims. We recently amended the protocol to elevate 2 of those secondary endpoints higher in the hierarchy of testing, one looking at the change from baseline in the aggregate of the 3 respiratory items of the ALSFRS-R, which, as you may know, has to do with dyspnea, or shortness of breath; orthopnea, or the inability to lay flat and breathe comfortably; and the use of mechanical ventilation. We know that in a trial as long as VITALITY-ALS, just by monitoring the blinded data we're seeing a number of declines in those scores of those items. And so we should have reasonable statistical power to see those affected positively by tirasemtiv.

I can also say that we have had a lot of time to use the data from the placebo patients from the EMPOWER study of dexpramipexole, and we know that in that database, if we look at the slower decliners in vital capacity versus the faster ones, those that declined more quickly also had larger declines in those respiratory subscores, and those that declined more slowly had smaller declines. And the difference tended to be very statistically significant. So the primary therapeutic hypothesis of VITALITY-ALS being that we think we will see the decline in vital capacity being significantly slowed by tirasemtiv, we would expect to certainly at least see trends, favorable trends, with respect to those respiratory items in the ALSFRS-R. And I think even if they are not statistically significant, that would put us in good position.

Did that answer your question?

Yes, thank you. That was very helpful.

And our next question is from the line of Mara Goldstein, from Cantor Fitzgerald.

I just had a question. I know the last quarter we talked a bit about 107 and the delay in readout given the screening failures in Cohort 2 and that you've enrolled, or rather have more sites up and running. But I'm wondering since that time, though, not just because you have more sites enrolled, but has there been any change in that, and any just further thoughts on just screening criteria in general for SMA as you go forward?

Yes, I mean, I think we've certainly been working with the sites to help them identify, bring in patients. We have seen an increase in the number of patients they've identified as potential subjects for screening, and that has translated to an increase in enrollment. So I think we're proceeding on track. I would still say the screening rate, or rather the failure rate is still the failure rate. Whether we're screening more patients or not, we're still seeing about the same screen fail rate, which does make it challenging to continue to enroll. But I think we're on track to complete the study in the time frame we outlined.

Okay. All right. Thank you.

(Operator Instructions) Our next question is from Jason Butler, from JMP Securities.

Just the first one, you talked about the growing body of literature supporting SVC and the correlation with other respiratory endpoints. Do you believe, or does your dialog with FDA suggest that they're well versed in that literature, as well?

You know, I think it's premature right now, because some of that is pending publication. I do believe that the ALS guidance document that has been submitted to FDA, the draft guidance document, I should say, calls this out, as do other publications, including one that is also in draft mode for guidelines in the conduct of clinical trials. So I'd say this is still an evolving picture. But the evidence is mounting, and some of that is coming from registries, some of that is coming from expert advisory groups. I'd say that's a work in process.

Okay, great. And then just to follow up on a comment you made before, you said, I think, if the data -- if you got the data before the 8th and they were unequivocal you would disclose. I just want to check what you actually mean by unequivocal. Can we assume that if you have the data substantially more than a couple of days before December 8 that you would disclose the primary endpoint results whether they were positive or negative?

Yes. I think you can assume that.

Okay, great. And then just last question, in terms of timelines to NDA submission post-data, what are the key gating items? Are any of the CMC-type, drug-drug interaction-type studies long duration? Or is there anything other than the usual putting the body of the submission together that could impact timelines to submission?

It's a very good question, and to our knowledge right now the answer is no, that none of those things are critical path to the filing timelines that we've established. Those are timelines that would have us filing with the FDA in the United States by midyear and Europe just afterwards. So the goal would be to get to those as rapidly as possible. Now, that's gated by when we would have our pre-NDA meeting with FDA and an equivalent meeting with EMA. That's not under our control. But as to the things that are under our control, to the point that you mentioned, Phase 1 studies and CMC activities, we think all of those are in hand so that, while they are still continuing, they should not be rate-limiting.

Okay, great. And then if I could just squeeze one more in, the expanded access program, any initial thoughts on what the costs of that program could be, or if you have readily access to drug availability to support that program?

So, I'd say it's really premature to get into that. We're doing very preliminary planning right now. There's a whole lot of more advanced planning that has to occur once we understand what we're dealing with, and that can only be best informed by having the VITALITY-ALS results. But as pertains to drug supply and as pertains to distribution matters and understanding precedents, both in ALS and in other rare diseases, I'd say that's the focus of our attentions right now. The cost that you'd like to know more about and so, frankly, would we in time, we don't yet have a handle on that.

Okay. Great. Thanks for taking the questions, and obviously looking forward to the next few weeks.

And our next question is from the line of Chad Messer, from Needham & Company.

I think, like everyone else, I'm really excited for December. But a couple things you said about some of your next-generation programs that you expect to put in the clinic next year kind of caught my attention, and I was hoping maybe there's a few more incremental things you could share with us. I gather from your comments you want to save a lot of the details until next year. But you called -- you used the term next generation, which often means taking some biology or mechanism you understand well and then kind of solving for a problem, making something better, much in the way you've got 107, which is sort of a different backbone and superior PK to tirasemtiv.

Just wondering what kind of -- if you can even discuss what kind of improvements on existing mechanisms or biologies that you're studying we might expect out of those programs. Is it similar to 107/tirasemtiv, or are there other kinds of ways in which you can improve these drugs? And then I think specifically you said about potentially being able to target more chronic conditions, so just wondering if there's anything you can share about how you may improve the chemistry to address something like that.

Yes. I'll start, but I suspect you won't be entirely satisfied by the answer, because much of what you're probably interested in is going to be showcased at an R&D Day we expect sometime next year. But I'll turn to Fady and maybe he can elaborate a little bit more than we were able to do in the prepared comments.

Thanks, Robert. I guess what I'll say is that we've developed a platform of trying to develop drugs that target muscle contractility. And we've worked in the heart and skeletal muscles to develop some agents, as you know, the ones that are in the clinic now. But it still leaves a lot of room for thinking of other mechanisms, other muscle types, and other indications, potentially, to pursue with drugs that are designed for those sorts of indications. So I might just leave it at that. We've taken to continuing to exploit our expertise in muscle contractility and muscle biology to develop these new agents coming down the road.

All right. Well, thank you. I certainly appreciate the task in continuing to do that kind of R&D even as everyone else is, myself included, much more focused on your later-stage programs.

(Operator Instructions) Our next question is from the line of Charles Duncan, from Piper Jaffray.

This is actually Sarah on for Charles. Two quick questions from me. First one's on SMA. So, as I recall, this trial's looking at a broad set of exploratory endpoints in a couple different types of patients. Can you remind us the type of results that will be shared in a topline release in first quarter? And, in addition, what kind of things will you and Astellas be looking for to advance further in this indication?

Yes, most definitely. I'll remind you, it may be inherent in your question, this is hypothesis-generating, so we did not prespecify any one of these endpoints. But, as Fady can speak to, we're measuring quite a number of things in this, our first study in patients with SMA.

Yes, so in doing our first study in SMA, we obviously wanted to look broadly at different things that might reflect improvements in muscle function in these patients, some of whom are ambulatory, meaning they can walk, and so we can test things like the time to get out of a chair, 6-minute walk, those sorts of things, in patients that can still walk. But also we have a strata in this study of patients that are not able to walk, and in those cases we are -- in all cases, really, whether you can walk or not walk, we're looking at a standardized scale that's used often in SMA called the Hammersmith Scale. We're looking at breathing function as reflected by vital capacity, and also looking at other measures of upper limb function that can reflect fatigability, if you will, in the upper limbs as they use them. So there's a range of elements there. Many of them are detailed on clinicaltrials.gov, if you're interested in some more of the specifics.

Okay, great. Thanks. And what kind of changes will you and Astellas be looking for to make a no or go decision?

Well, I think it's going to look at the totality of the data and just to -- what would, I think, compel us to move forward is that there's a convincing effect on a measure of muscle function. We can't be certain as to which muscle function may be most sensitive to the drug in this population. No one's ever studied a drug like this in these sorts of patients. But, like with vital capacity in ALS, where a very strong signal emerged after conducting a study in ALS patients, and then we elected to follow it up now in VITALITY, similarly we hope to see something emerge out of the SMA study that is strong and compelling and would be enough evidence for us to continue to move forward.

You know, we're also keeping a close eye on the landscape in which we're developing CK-107, and clearly there's a lot to be excited about with respect to other gene-directed therapies for patients with SMA. But it's our assertion that still these are patients who are going to live longer but with residual muscle dysfunction and weakness, and we want to better understand what could be that unmet need and where the regulatory authorities may see that as representing a potential registration path. So at the same time we'll be generating data with CK-107, we'll be looking to experts and regulatory authorities to guide us in terms of what could be a pathway to approval.

Definitely. And just one last question. Can you provide some color on FORTITUDE's site initiation and enrollment progress, and is it possible we could see results from that study by the end of 2018?

Yes, I think we are expecting to see results from that by the end of 2018. And we're making progress, I think, consistent with that now. These sites have been working very hard on helping us close VITALITY in parallel with starting up FORTITUDE. And so we're trying to make sure we treat them respectfully and ask them to do what they can. But we've been getting sites initiated. We've seen the beginning of patient enrollment that is consistent with our expectations. And certainly we'll have more to say about it as time goes on.

The nice thing about being a leader in this franchise area of muscle biology is as we have engaged these sites now for years in the development of tirasemtiv, it's not like falling out of bed, but it's certainly more facile to now engage them in the development of CK-107 inasmuch as we're looking at similar trial design and endpoints assessments. So we already have relationships with these sites. They're well trained. We're in the process right now, this is the first trimester, if you will, of the clinical trial in terms of study startup and site activations. But we are on timeline with regard to enrollment, too, and probably with the next earnings call we'll be in a better position with most of our sites activated, we would expect, to be able to project enrollment and when enrollment might complete. But right now we do believe we're on timeline to complete enrollment and read out the results in 2018.

And our next question is from the line of Vernon Bernardino, from Seaport Global.

Early congrats, I guess, on perhaps seeing the light at the end of the tunnel in VITALITY. I just wondered if you could just make some comments on the tirasemtiv commercial readiness activities. You mentioned in the press release -- you already mentioned a few, perhaps. I was just wondering if you could elaborate, especially like what kind of market research are you doing. And then regarding the results presented on December 8, assuming you don't make an announcement before that, how comprehensive will the results be? I mean, is it going to be a full presentation with slides and everything like that, or is it going to be like a poster, or what will the format be? And then regarding VIGOR, the number of patients expected -- in the completion of VIGOR, how many patients do you expect VIGOR will be upon its completion?

Sure. So we'll take those one at a time. I'll start with your first question. And your prelude to that question was the end of the tunnel. Frankly, I'll respond firstly by saying I hope this is not the end of the tunnel, but rather I hope this is a new beginning for patients who are suffering with ALS and where tirasemtiv may provide meaningful clinical benefit. But to your question about commercialization, we've been very active in this area, both in the U.S. and in Canada, but also in Europe, as we are doing market research, market access-related activities, trying to understand the environment in which we're operating from a payer standpoint. We're participating in pilot projects with HTAs in Europe, also engaging with HTAs to best understand how they think country by country about what should be important in the health economics outcomes research work that we do and ultimately in the dossier we might submit for reimbursement assistance and authority.

We're looking at best practices in various companies that have preceded us to better understand from patient hub services and other things what's doable, what's compliant, what should be our thoughts about how best to approach that. And from a business intelligence and market analytics standpoint, we're making sure we are equipped with data warehousing and all the things we need to do to best equip our sales and marketing people in order to be most effective in the jobs that they do. You asked about market research in particular, and much of what we've been doing to this point falls into the category of attitudinal. So we're understanding what the unmet needs are and how they view existing therapies. Not all of those are pharmacotherapies. We're also trying to understand what might be the attitudes with regard to new innovations in this area and where they view vital capacity and its predictive and prognostic value to other outcomes, how they view muscle strength, so that we can best understand how our results can fit within the algorithm of care.

Ultimately a lot of this research has to be then performed with the results in hand, and that's when we'll start to do the more refined qualitative and quantitative market research in the first half of 2018, we expect. So that's hopefully a good answer to your question about our market preparedness and market access, market research work. Your next question, I think, related to the format in which the data will be presented and in what kind of completeness. Maybe I'll turn to Fady to answer that question.

So, Vernon, our presentation will be a platform presentation at ALS/MND. As you know, some of these late-breakers are presented in the same session. I think it's actually already posted on the ALS/MND website for you to go look at. So it'll be a presentation. I'm not sure if they have a question-and-answer period afterwards. And they're usually relatively short. The other question you had --

Well, before we go to the other question I'll just say, so it's an oral podium presentation. It's at 4:20 p.m. in Boston on that December 8. And afterwards we would expect that we would have a symposium, a program with the investor audience there in attendance. Meaning that for analysts and investors that are there we would gather a presentation that would go into detail with these results. The results that are expected to be presented from the podium by Jeremy Shefner include both the primary and the secondary efficacy endpoints, as well as key safety findings. So I think the data in its full picture will be available to all of you on that afternoon. Your third question related to VIGOR and what numbers of patients, and maybe I'll turn back to Fady for that.

Yes, I think it's hard to predict what number of patients will finish VIGOR, as we plan VIGOR now to run for at least 3 years. And, as you know, these patients progress with their disease over that period of time quite substantially. So I don't know, really, what we'll end up with, but I would be surprised if we ended up with more than a few dozens of patients left in the trial at that point.

And then one follow-up, if I could. What is the ultimate intention of VIGOR? Is it something perhaps that would become a registry, or perhaps a prelude to a registry?

Not a registry, per se, but VIGOR provides us with an extended look at the safety and tolerability of tirasemtiv, as we have patients on extended treatment. It also provides us some experience in starting the drug in patients that are more advanced in their disease when they take it, because the placebo patients in VITALITY will just be starting it in VIGOR at the point where their disease is a year further advanced than when they entered VITALITY. We will be able to look, for instance, in patients that are on placebo in VITALITY to see how their course changes.

For example, how does the decline in their vital capacity change once they are initiated on tirasemtiv? That provides, I think, supportive evidence of the effects we might see in VITALITY. We can compare how the group in VIGOR that had been on tirasemtiv in VITALITY, so had relatively uninterrupted treatment with tirasemtiv, compares to the group that didn't get tirasemtiv for the first year and then subsequently got put on tirasemtiv and see how the outcomes are different in those 2 groups. So I think it provides supportive data. But obviously the most important data are that that can come from a placebo-controlled trial that is VITALITY.

Thanks. That will be exciting to see, as will the data on December 8. Congrats, and looking forward to it.

And at this time I'm showing we have no further questions. Presenters, I turn it back to you.

Thank you, operator, and thanks to everyone for joining us on this call today. These are very exciting times for Cytokinetics. We're optimistic for our future. We look forward to sharing with you the results from the VITALITY-ALS study later this quarter. And with that we thank you for your continued support and your interest in our company. Operator, we can now conclude the call.

Ladies and gentlemen, thank you for joining us for the Cytokinetics third quarter 2017 earnings call. You may now disconnect.