Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

All right. Well, good afternoon, everyone, and welcome to the 3:00 p.m. Eastern Time session here on Day 2 of the 42nd Annual Goldman Sachs Global Healthcare Conference. My name is Graig Suvannavejh, and I cover U.S. and European Biopharma companies here at the firm. It's my great pleasure to be hosting Cytokinetics today in a fireside chat. And with that, let me welcome the company's CEO, Robert Blum; and the company's Head of R&D, Fady Malik. Gentlemen, great to see you both, and welcome to the conference.

Thank you, Graig. Thank you for having us here.

I believe that, Robert, you wanted to start off with perhaps some introductory comments, and I think you have a slide deck that you want to share. So with that, I'll turn it over to you.

Thank you. Graig. Can you see the slides, okay.

I'm not sure that I can see the slides right now.

Hopefully, they're being seen because we did practice and share the screen. So hopefully, people are seeing these slides. I'm going to scroll through just a few slides. I'll be making some forward-looking statements regarding our business outlook and we don't undertake any obligation to update those statements of forward-looking nature, but I do refer you to our SEC filings with regard to caveats to those statements. Before Fady and I join together in a discussion with Graig relating to the company and answer questions, I'd like to provide just a few slides to frame that conversation. Firstly, on the screen now, hopefully, you can see our pipeline of novel muscle directed drug candidates. Cytokinetics is a company that Fady and I took part in launching together 23 years ago. And for that time, we've been executing on the vision of advancing an area of science, 1 cross-section of biology, into a new pharmacology and executing on Fady's vision for that science as it relates to discovering and developing modulators of muscle proteins that could render a new class of pharmaceuticals for 2 verticals. Those that are either activators or inhibitors of proteins involved in the bio machinery of cardiac muscle mechanics or those activators of proteins involved in skeletal muscle contractility. And over the course of now many years, many, many clinical trials, as we're presenting at this conference today, omecamtiv mecarbil, a cardiac muscle activator or cardiac myosin activator, is the most advanced of these investigational medicines, having been the subject of a clinical trials program conducted over 15 years, over 30 clinical trials including a positive pivotal Phase III trial that read out last year called GALACTIC. We're developing this potential medicine as a treatment for heart failure with reduced ejection fraction, and we're preparing for NDA submissions and go-to-market commercialization as could occur next year.

Robert, can I just interrupt you for just 1 second. It seems that the slides aren't being shown on the screen. If you could maybe try sharing one more time. There were go.

I went and shared it from my screen, Robert. You can go ahead.

Okay. Very good. Sorry for the interruption.

Thank you, Fady. So CK-274 is not a cardiac muscle activator like is omecamtiv, but rather a cardiac muscle inhibitor. CK-274 is being developed as a next-generation compound for the potential treatment of hypercontractile cardio disorders. And there, we're looking at a study ongoing called REDWOOD-HCM, which is due to read out midyear this year, and we're preparing for the start of a Phase III trial for CK-274 to be underway later this year. Underneath the hood of those 2 more advanced compounds are CK-271, another cardiac muscle inhibitor, CK-136, another cardiac muscle activator. I doubt we'll have much time to talk about those in detail today but suffice it to say that we're advancing our pipeline across these multiple modulators of cardiac muscle. Reldesemtiv, is an activator of skeletal muscle, in particular, fast twitch skeletal troponin and we believe that it has shown great promise for the potential treatment of ALS or Lou Gehrig's disease. And time permitted, we can talk about that. We're readying for the potential movement of that compound into Phase III potentially, later this year. And of course, we have other programs in research and early development as we expect by 2025 to be doubling the size of our pipeline, currently 5 compounds moving to 10. So with the next slide, if we could, please, I'll speak to GALACTIC-HF, that pivotal study of omecamtiv that was conducted in 35 countries, over 8,000 patients. The results of which were announced last year at the AHA. They were positive, and they appeared concurrently in the New England Journal of Medicine. The effect of omecamtiv on top of maximal therapy, standard of care, demonstrated a statistically significant reduction in the composite endpoint of death and heart failure related events. And effect size with a hazard ratio of 0.92 and a p-value of 0.025, a modest effect, if you will, predominantly as driven by reduced numbers of heart failure related events, as you can see here. Next slide, please. What's particularly compelling, however, about these data is that we did see that they were more pronounced in patients, who had lower ejection fraction, secondary analysis demonstrating a doubling of the effect size. So our goal is to ensure that the drug development is pointing to where we think the effect is most maximal. And that's where patients with more severe heart failure, lower ejection fraction, higher BNPs and other symptoms point to where there could be even more amplified efficacy. So that's the omecamtiv mecarbil story. With regard to CK-274, our cardiac myosin inhibitor, here you see of just, if we could go back 1 slide. Here, you see the announcement that we made last year, interim analysis of Cohort 1, which demonstrated that we were already seeing at low end of the dose response curve, effects that were substantially clinically relevant, achieving our desired outcomes, as we continue to enroll other patients in Cohort 2 and higher doses. So the interim analysis for the REDWOOD study of Cohort 1 and 2 will be now supplemented by final data as we expect to read out REDWOOD results midyear this year in anticipation of movement into Phase III by the end of this year. So the next key catalyst for the company will be the final results from REDWOOD expected midyear. And then if we could just turn to the last slide, please. In summary, this is intended to provide an overview of the company. We've talked on some of these points already. We are a company of roughly now closer to 200 employees. We did end Q1 with over $[ 460 ] million in cash, which represented over 2 years of runway, given our guidance for 2021. And even as we're expecting to augment our pipeline in advanced compounds, our intention is to end this year with still over 2 years of forward runway and that's predicated on us achieving certain goals with regard to business development and corporate development, deals that are being considered and discussed right now, as would further our financial position. So our priorities are omecamtiv mecarbil and CK-274 with the goal towards building a cardiovascular franchise around muscle pharmacology. And with that, maybe I'll turn it back to you, Graig. We can take the slides down and we can just have a fireside chat. Thank you, Fady.

Thanks, Robert. That was a great overview of kind of where you are as a company. So thank you for putting those slides together -- having your team with those slides together. Maybe from a very high-level perspective as we think about where Cytokinetics is focused as a biotech company. You've been targeting muscle biology for quite some time as a company. And with that said, your kind of a pioneer in this space. And with that said, with perhaps some data around assets that have sometimes been promising and maybe have been disappointing on some level, can you just walk us through what gives you the confidence that targeting sarcomere is from a therapeutic perspective, a very good strategy for Cytokinetics to move forward with.

So I'll start, and I'll turn it over to Fady, who's really the expert in this area. We've already demonstrated that targeting the sarcomere has clinical importance in GALACTIC, a study where most patients received a maximum medical therapy by overlaying omecamtiv to maximal medical therapy, we saw a clinically meaningful reduction in a hard clinical outpoint -- a clinical end point that was achieved with a safety profile that we believe is benign and comparable to standard of care. So already, that's been demonstrated for omecamtiv mecarbil and as speaks to a population that is underserved today, a population of severe heart failure patients, in particular, who are frequent flyers in U.S. hospitals, because they aren't responsive sufficiently to standard of care. We've also seen that evidence with a compound called mavacamten, that we had a hand in discovering that now belongs to BMS. And that compound, an inhibitor of the cardiac sarcomere has demonstrated impressive results in a Phase III study called EXPLORER that has now set the table for a potential regulatory review and potential commercialization next year. So I don't see that there's much dealt, that targeting the sarcomere is a good place for new pharmaceuticals. But Fady, maybe you want to add to that?

Well, I think as the pioneer in this area, I'm probably biased, but it has been a long road. As you indicated. But I think we're emerging really now with promising clinical data, as Robert articulated with Phase III data and thousands of heart failure patients showing clinical benefit and also where clinical benefits concentrated and also Phase III data with a mechanism of action where we hope to follow very quickly. So I think the sarcomere clearly does have clinical impact in several diseases. And our job is to continue to explore where those benefits may further expand in other conditions.

It stands to reason that if you're focusing to cardiovascular medicine, you want medicines that target the heart and so many of the medicines we currently use in the care of cardiovascular patients address secondary consequences and are repurposed for the treatment of cardiovascular disease, but these represent -- our compounds represent some of the first that were specifically discovered and act directly on the cardiac machinery, which is in effect a pump, if you will, either, augmenting or suppressing its function as would be therapeutically gainful. And that's where targeting the sarcomere appears to be a very good place to be.

Thank you very much for that higher-level perspective. Let's transition to your most advanced asset. You talked about omecamtiv mecarbil. You've shown some very thought-provoking data in terms of the GALACTIC data readouts. There's been some investor debates around that data set in terms of the asset and perhaps the strength of the data. You have indicated that you are going ahead, and you will be filing in the second half of this year. As we sit here now in June, as you've been able to post GALACTIC data readout interact with physicians and perhaps payors and other stakeholders, would you -- what's the message you want to perhaps communicate to investors in terms of how the profile of omecamtiv mecarbil is being received out there right now?

So we've tried to be as objective about this as we can be. And we've spoken to well over 100 opinion leaders, including one, who wrote the textbook on heart failure and cardiology that every cardiologist is trained with. That particular opinion leader indicating that we've been looking for over 50 years for a compound that does what omecamtiv does, which is to augment cardiac function and performance without increasing mortality risk. So I don't think there's any question that omecamtiv mecarbil represents a major innovation in the potential treatment of heart failure. Because in GALACTIC, it's demonstrated incremental effect on top of standard of care, especially in patients who are at high risk of death and readmission. So the data that we presented, while the overall effect might be modest, we've demonstrated with additional secondary analyses in prespecified subgroups that the effect is more significantly amplified, larger in those patients, who seem to be doing worse on other drugs. And if this drug can be well positioned for those patients, who are easily identifiable, oftentimes, the ones who are the most difficult-to-treat and themselves are hospitalized and rehospitalized frequently. You're not talking about a niche population. You're talking about over 1 million patients in the United States alone, who contribute meaningfully to the economic burden for Medicare of this disease. This is an opportunity set that we believe represents a meaningfully large opportunity for patients and shareholders. And we believe it's one that's tractable to a concentrated sales and marketing initiative promotion that can be rewarded with high returns and high yield on investment. So that's something we'll elaborate on more over time.

With that in mind, you again have been able to signal to the market that you are going to be filing for approval in the second half. You had gotten feedback from it. I assume, the FDA in terms of a Type C type of meeting and perhaps you're in discussions now or perhaps are still waiting to talk to European regulatory authorities. But with that said, anything you can share in terms of kind of FDA's receptivity and kind of what their body language was coming out of that Type C meeting?

Yes. I'll start, and I'll ask Fady to continue as it relates to the landscape for regulatory review that we're also operating in. But as it relates to omecamtiv, we did have a meeting with FDA in Q1, and we reviewed the top line results of GALACTIC. And we believe, based on the feedback we received, that they are receptive to the view of an MDA submission based on GALACTIC alone. We've had further FDA interactions and still others are planned and we'll update on our Q2 earnings call in early August, but we do believe we are continuing to get positive feedback, and we are executing well on the time line to be enabling of an NDA to be submitted in the second half of this year. Fady, maybe you could speak to sort of what we're observing from other FDA actions around the heart failure setting and why we also see that to be informative to our strategy?

I think there are a couple of recent approvals and label expansions that speak to this. The FDA recently approved VERQUVO, which is a drug that Merck and Bayer developed, guanylate cyclase activator that had a data set that was some ways quite similar to GALACTIC with improvements in the primary endpoint, no statistically significant effect on cardiovascular mortality and -- but addressing an unmet need of worsening heart failure in patients that are already treated on existing standard medical therapy with Entresto, the FDA granted an expansion of the label with -- in a population that was a subpopulation of a trial that didn't actually meet a statistical hurdle for -- as a nominally positive trial. I think both of these just indicate FDA's recognition, heart failure is a tremendous unmet need. The event rates and patient burden in here is as great as any other indication the FDA reviews. There's a need for new and innovative therapies, and they're very much participate in the heart failure community together with academic researchers and others to try to help move those things forward. So it's an area of high priority for FDA. And I think GALACTIC addresses and omecamtiv mecarbil address an unmet need in heart failure that physicians have been looking for an answer for a long time, which is how do you improve cardiac function.

Fair to -- is it fair for me to summarize that perhaps what you're seeing at FDA as a constructive FDA at this point?

Very much so.

Yes. Okay. Great. Thank you very much. So regulatory has been one area of, I believe, investor debate or conversations, at least that I've been having. The other aspect is the commercial side of things. And with that said, certainly, I think we're all awaiting an update from the company as to kind of what the strategy is going to be. Can you walk us through the different types of strategies you think makes sense or at least are being contemplated by the company?

Sure. We'll elaborate more on this later in the year. Our intention is to have an Investor Day that highlights both our go-to-market strategy for omecamtiv as well as our plans for CK-274 and why they go hand-in-hand. But suffice it to say that we recognize our limitations as a smaller company, but we do believe that with our limited access to capital, we are in a position to build a very valuable business around omecamtiv mecarbil to set the stage for them a second launch for CK-274, with focus to tertiary care hospitals and those institutional segments, where a majority of heart failure patients are running through and where there's high overlap with HCM Centers of Excellence. We believe that the more advanced or more severe heart failure patients are largely treated by specialty care cardiologists, who are either in those hospitals or in close proximity to them. So that one needn't go very far from those hospitals in order to be able to cover a majority of that patient volume. We're not going to be targeting primary care physicians. We're not going to be going deep into the community, but we do believe that there are lessons that can be learned from other specialty categories where biopharma companies can make a big impact and where they can cast a long shadow, with investment in sales and marketing resources that are concentrated. And we think high-volume heart failure hospitals is an excellent place to do that. We'll elaborate on some of the numbers and why we think that's a valuable business later this year, but understand that there are not thousands or tens of thousands or even hundreds of thousands of these patients alone, there's over 1 million of these patients in the U.S., who contribute to this clinical and economic burden. And we think there is a perfect storm brewing of what will be clinical utility as well as an economic rationale for managing these patients differently with a new medicine that can safely keep them alive and out of the hospital. And that's where we think omecamtiv may play a key role as an overlay to standard of care.

In terms of the potential things you're considering, would you be considering things like bringing in a contract sales organization? Would this be partnership around this specific asset? Is there contemplation of a partnership around both assets? Is it a situation where you would think about just the U.S. opportunity? Or is -- it's all those things that are being contemplated?

It's all of those things, but in a prioritized order. So our focus is on go-to-market in the U.S., and we believe we can do that ourselves. As may be benefited by some assistance from contract selling organizations, but also keep in mind that post pandemic, there's a lot that can be leveraged with virtual promotion as other companies are learning the hard way. But our focus is on the U.S. initially and our go-to-market strategy as would be more autonomous, although potentially complemented with contractors. With regard to ex U.S., we're looking at partnering in Japan as a strategy where we would expect to be bundling omecamtiv mecarbil and CK-274 in a partnership that we hope to be executing this year. In Europe, it gets a little more complicated and I won't be elaborating as much on what our strategy is there, but we don't believe we can go it alone in Europe. And instead, we see that there could be opportunities for co-development and co-promotion.

If we can just focus on Europe for just a quick moment. Can you give us an update on how you're thinking about its status, omecamtiv mecarbil's status in Europe and whether there is a thought that perhaps the data from GALACTIC are fine as they are to support a filing, is there a consideration of perhaps other studies that need to be done before you can file?

So keep in mind that we had very active interactions with EMA in advance of conducting GALACTIC and through the conduct of GALACTIC. And what we will be doing now with GALACTIC results in hand is triangulating back with EMA on what might be a plan and a strategy. That's not a priority to us until such time as we feel we have everything locked and loaded in connection with the U.S., and we'll be updating on our strategy in connection with Europe afterwards.

Thank you very much. Let's switch to 274, because I think on the basis of the conversations that I am also having on the company, it's clearly a very high interest program for investors, particularly in light of the profile of omecamtiv mecarbil and the potential opportunity for 274 to be differentiated versus mavacamten. I think it would be helpful if you could frame again for our audience, the reasons to believe that 274 can, in fact, be differentiated and what are you hoping to show with your expected data upcoming.

Sure. I'm going to turn that over to Fady, but I'll just preface by saying, it's not for us to be making comparative statements of CK-274 versus mavacamten. We're developing CK-274 as a next-in-class drug candidate. And we believe that it is differentiated, but we're going to focus on what we think are those attributes of CK-274 that we think make it a more optimal drug candidate. So with that, I'll turn it over to Fady.

Yes. I think I'll maybe just focus on the attributes that I think really are outstanding with CK-274. First of all, we designed it to enable both rapid titration of dose, so that dose could be individually optimized in each patient over a short period of time, as well as reversibility, so that if an excessive drug effect was noted in anybody, the safety of the drug would be tied to its time to offset. We believe we showed both of those things in the Phase I study, then we'll be building on that in the ongoing Phase II study. Further, I think, is that the profile of the drug may enable us to dose it and optimize the, if you will, the number of patients that respond that are able to reduce their gradients. And so we're looking for a substantial effect on reducing the LVOT gradients as well as a percentage of patients that you might think of as having qualified as responders. Their gradients have fallen below sort of preset targets that are thought to be clinically important. All of those things come together, and they will help us design and execute a Phase III study that will then elaborate on its clinical efficacy in terms of improving exercise performance. And from Phase II, I think we'll learn features of 274 that allow us to optimize the design of that Phase III protocol.

Appreciate it, Fady. You have shared some Cohort 1 data, you will be sharing Cohort 2 data, and you've started a third Cohort. Maybe if you could just remind us of the Cohort 1 data? And then also the rationale behind Cohort 3.

I think Robert summarized those data in his intro. In Cohort 1, we saw substantial reductions in the gradients. We saw good safety. We didn't have any dose interruptions due to drops in ejection fraction nor did we have any ejection fraction fall below 50%. In Cohort 2, we'll be looking to extend those findings. So Cohort 2 is exploring higher doses and to determine whether we need to go to any higher doses or was there any benefit to dosing the patients higher than we achieved in Cohort 1. And both of those together, again, will inform our final dosing plan for Phase III.

And if you could -- as I think a lot of investors are very much anticipating the Cohort 2 data with potential for value inflection to the underlying shares. But could you frame for us what do you think, and I know you've been asked this before, but could you frame for us again what you think would be good data from the Cohort 2 data.

Firstly, before you do that, Fady, may I just mention that, when we present results from REDWOOD, which, again, we expect midyear this year, it won't be just Cohort 2 data. It will be results of the study comprising Cohort 1 and Cohort 2. I just want to clarify that. And then, Fady, if you could answer the rest of the question?

Yes. No, I mean that's very important because you have to look across the entire data set. And so while we've given some qualitative answer as to how Cohort 1 did, I think we will be looking to see the magnitude of reduction, both the resting and Valsalva gradient, the proportion or incidence of any patients whose EFs fell below 50% across the range of doses that we evaluated, the reversibility of effect. All of those things, I think, taken together, would give us a strong picture of how the drug performs and what its potential advantages may be.

Thank you very much. We've got about 5 minutes left. I was going to perhaps move to other elements of your pipeline including reldesemtiv, but before I do that, is there anything else about 274 that you think that's important for investors to keep in mind?

Yes. I think as it relates to CK-274, much like I said before about omecamtiv, it's important to understand how the 2 together travel as part of our corporate development strategy. But we do believe that Cytokinetics is advancing a pipeline and for having both the cardiac myosin activator and cardiac myosin inhibitor, there's an opportunity to establish a leading specialty care cardiology, a commercial organization that benefits from both. And I think we've seen only occasionally in the biopharma sector, where companies have been able to establish franchises in a therapeutic area and how that can be both important and impactful for patients, but also valuable for shareholders and that's been part of our strategy and plan for all these many years at Cytokinetics. And now we're in the precipice of helping make that happen. So I do want to emphasize that we can't be looking at either of these late-stage programs in isolation.

Thank you for that. Reldesemtiv, clearly, a lot of interest, even very recently. I'm a huge baseball fan. We just had Lou Gehrig's and reldesemtiv, obviously, would address that, a very high unmet medical need. Can you tell us about the mechanism of action there, how it differentiates from your first-generation effort perhaps? And what are the next steps?

So reldesemtiv like tirasemtiv, which we developed previously for the potential treatment of ALS is a small molecule activator of fast twitch skeletal troponin. It enhances skeletal muscle function, amplifies nerve input, augments muscle response and increases muscle force and power, and time to muscle fatigue. Tirasemtiv showed very meaningfully significant clinical activity, albeit as confounded by off-target effects, tirasemtiv crossed the blood-brain barrier and also induced dizziness, light headedness that contributed to a lot of dropouts in a Phase III study. Those patients who did tolerate it, did quite well on tirasemtiv. Many of those patients still receiving tirasemtiv under a managed access program now several years later. Reldesemtiv was designed specifically to be more potent and not cross the blood-brain barrier, and therefore be, perhaps a cleaner activator of skeletal muscle. And in a Phase II trial called FORTITUDE, which has been heralded by its principal investigator and others as amongst the most positive data we've ever seen in ALS, we saw dose-dependent effects on multiple measures important on clinical effect in ALS patients. So there's a compelling rationale for advancing reldesemtiv into Phase III, but we've been purposefully awaiting information relating to omecamtiv mecarbil and CK-274 to know that were we to advance reldesemtiv, it was going to be as complemented by go-to-market activity for omecamtiv and positive results from REDWOOD, hence, or want to ensure that we're not pivoting the company on a success with reldesemtiv, but that we have a forward business strategy for our cardiovascular muscle franchise. That's coming together in a way that I think is very encouraging. So we have been conducting start-up activities for a potential Phase III trial with reldesemtiv, but we haven't yet started that study, instead, we're awaiting the results of REDWOOD.

Thank you for that. Maybe -- we are coming up on time soon. I'll leave perhaps with two questions. Hopefully, you can answer them quickly. One is, you've been quite creative with your financing strategies. And with that said, can you give us a sense of how you think about Cytokinetics and its ability to finance the company in light of the creative financing strategies that you've employed?

From the beginning, Cytokinetics has made it a priority in its corporate development to rely more primarily on business development and structured financing deals, which would be nondilutive than simply going back to the equity capital markets time and time again. And that continues to be our emphasis. We want to be one of those companies that's known for being able to monetize its R&D progress and leadership in ways that afford multiple levers for accessing capital without simply relying on dilutive strategies.

And Robert, this last question is for you, and it's really a strategic question with respect to if we're fortunate enough to be doing a fireside chat together in 5 years, hopefully in Southern California and looking at the ocean and in person, in 2026, what do you think and what do you hope Cytokinetics to look like at that time?

So I believe, and certainly, we're working hard to try to make this happen, that we should be a forward integrated commercial organization built on the backbone of a doubling of our R&D pipeline. We should have 10 programs in development, and we should have at least 2, if not 3 drugs, that we're selling to patients, who are suffering from impaired muscle function related conditions and diseases.

Thank you very much. And with that, Fady and Robert, I appreciate you participating in our fireside chat today. And I also want to thank our audience for joining us as well. So with that, I want to wish you all well. Have a very best rest of your day and have a great rest of the conference. Thank you.

Thank you, Graig.

Thanks, Graig.

Thank you.