Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Welcome, everyone, to the 40th Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm the senior biotech analysts here at JPMorgan. I'm joined by Malcolm Kuno, Priyankar Grover and KalodSmith from the team, our next presenting company is Cytokinetics and presenting on behalf of the company, we have CEO, Robert Blum. I wanted to remind attendees of this session that there is an ask a question feature in the portal, if you'd like me to ask a question on your behalf, to submit the question, and I'm happy to do that in the Q&A. With that, Robert, take you away.

Thank you, Anupam, and thank you to the organizers for having us present the company today. I'll be sharing a presentation on Cytokinetics. And then ultimately, our management team will be available also for Q&A. Cytokinetics is a company focused to muscle biology, and as such, we're mining this space for new medicines as would ultimately be empowering lives for patients. I'll be making some forward-looking statements. I'll refer you to our SEC filings for caveats to those statements, including our most recent 10-Q. And with that, I'll jump into the company and its vision first. Our vision, which we laid out recently speaks to what we want to be in 2025. We want to be that company that will be bringing forward New medicines rooted in the biology of muscle force, power and function and as would be transformative for patient lives. We expect during this time frame to be launching as many as 2 or 3 new medicines, but at the same time, doubling the number of programs currently in clinical research, currently at 5 moving to 10 and expanding our research platform and all the way maintaining our centricity to patients and being that science-driven company that people want to join and partner with. We're a 24-year old company. We've been at this for a while. And as such, we have pioneered, and we are the leader in the biology of muscle function. Here, you see those proteins that comprise the sarcomere, the fundamental unit of muscle contractility, ours was the first company to reconstitute this biology for modern day drug discovery. And our scientists have mined this space for new medicines that may modulate either by activating or inhibiting proteins involved in this structure and as such, modulating muscle function. Looking at our pipeline today, you see we divide it into 2 verticals, those drug candidates that either activate or inhibit proteins involved in cardiac muscle contractility or those compounds that activate skeletal muscle contractility. Lead amongst these is omecamtiv mecarbil, an activator of cardiac myosin that has been the subject of a comprehensive clinical trials program, and we hope it may be available to patients upon NDA approval in this coming year. At the same time, we're advancing aficamten, which is an inhibitor of cardiac performance advancing to Phase III for the potential treatment of hypertrophic cardiomyopathy and reldesemtiv in Phase III, an activator of skeletal muscle contractility for the potential treatment of ALS. These 3 programs will be the subject of today's presentation. With the time I have, I won't be going into the other programs, but those are also advancing under our supervision. Omecamtiv mecarbil. It's addressing what is currently a public health epidemic Even with the current pandemic of COVID, more patients died of cardiovascular problems last year and heart failure lead amongst those. Over 1 million patients are diagnosed and admitted into U.S. hospitals each year with heart failure and that number is growing with the aging demographics. And with current standard of care, half those patients will die within 5 years, outpacing most cancers. And the economic burden of this disease is increasing with that increasing incidence and prevalence. Omecamtiv mecarbil has been the subject of 32 completed clinical trials since 2005, including GALACTIC-HF, the second largest heart failure study ever conducted, conducted in over 8,000 patients in 35 countries, Omecamtiv was studied on top of standard of care. And in that trial, it demonstrated a statistically significant effect on reducing the primary composite endpoint of death and heart failure events, most of which were hospitalizations. Admittedly, the effect was modest about an 8% relative risk reduction when considering the entirety of the population studied. But in prespecified analyses, we see that, that treatment effect was amplified as patients are worsening with left ventricular ejection fractions decreasing below the median and below 30 percentage points. This is suggestive of higher risk heart failure or worsening heart failure. And as you can see on Slide #10, the effect size is more pronounced in severe heart failure. Heart failure as defined by patients who have higher symptom burden, patients who might have recent hospitalization, higher B&P lower renal function. Any way you look at it, heart failure, severe and worsening is associated with more added treatment benefit. And as such, as I advance this presentation, you'll see how we intend to hopefully upon commercialization be in a good position to add to standard of care. Slide #11 speaks to the population we're targeting. While there are roughly 6 million patients in the United States today growing to 8 million by 2032 with heart failure, about half of them have reduced ejection fraction and about 2 million patients today growing to 2.6 million are thought to have ejection fractions below 30 percentage points. omecamtiv mecarbil in galactic worked more favorably and the effect size was larger in populations with worsening heart failure, and that's exactly where the existing standard of care tends to wane. And we do believe that a proposed target population of omecamtiv mecarbil where that ejection fraction is lower, where there's been a heart failure event within the last 12 months or where there may be comorbidities associated with renal dysfunction or lower blood pressure, this is potentially where omecamtiv mecarbil may be best positioned to have more maximal benefit. And our commercial strategy is tied to that same population. We believe that the worsening heart failure or advanced heart failure patients are more often treated by a fewer number of health care professionals fewer than 10,000 and less than 1,000 hospitals. And we think that we can target that population of physicians and ultimately, patients with a concentrated sales and marketing infrastructure, as you see here, mapped geographically on Slide #12. And they tend to congregate around urban centers and tertiary care academic centers. And we believe that with a combination Slide #13 of different ways of approaching and customizing and broadening our reach and frequency through field activity as well as inside sales and digital engagement omnichannel marketing, we can address these populations and titrate in the right kind of sales and marketing activities over time, some that will be available at the time of launch and others when we're more at harvest stage. We've already begun engaging with payers, and this is a highly concentrated customer segment as well. As you can see on Slide #14, Medicare represents over half the population in the top 5 plans account for about 75% of Medicare Part D enrollment. Cytokinetics has already put in place our market access team, and we're already engaging as part of an education campaign directed to these major players. And similarly, we respect and recognize the importance of the commercial supply chain. Next slide. You can see how we already are thinking about organizing logistics in order to be in a best position to address patient need from the supply chain standpoint. That's our commercial positioning. We'll have more to say about that throughout this calendar year. And we expect that we could go to market as soon as second half of this calendar year. At the same time, our registration and positioning may be enabled further by a second Phase III clinical trial that is completing now, and we expect to read out in early 2022. This calendar year, this calendar quarter, we do expect that METEORIC, if positive, could be supplemental to the strategy, it's not a critical path to our registration strategy at this time. This trial is measuring the potential for omecamtiv mecarbil to have effect to increase exercise endurance and stamina in heart failure patients and could go alongside of GALACTIC and this would be relatively unique positioning for a pharmacotherapy if this study proves to be positive. So that's omecamtiv. That's our lead program. And now I'll turn attention to aficamten. Aficamten, in contrast to omecamtiv is not a cardiac myosin activator, but rather a cardiac myosin inhibitor. And aficamten is the subject of a clinical trials program directed to hypertrophic cardiomyopathy, an indication set that is focused to hyper contractile ventricles. -- the opposite problem than heart failure with reduced ejection fraction. And here, a hyperactive ventricle can contribute to high disease burden. Currently, there are roughly 280,000 diagnosed patients with obstructive HCM. That number is expected to grow with new therapies that may be available as soon as this year -- And also, we believe that there is a large undiagnosed population even larger than the current symptomatic diagnosed population. We also believe that the population of non-obstructive hypertrophic cardiomyopathy patients, and ultimately, patients with heart failure and preserved ejection fraction represent growth areas for this mechanism of action. And we're developing aficamten as is a next-in-class cardiac myosin inhibitor following behind a first-in-class compound that we discovered in our laboratories in collaboration with a company called MyoKardia that we spun out of our research a few years ago. MyoKardia developed mavacamten. Bristol-Myers Squibb acquired MyoKardia, and they've done a nice job reading for the potential commercialization of mavacamten as soon as this year. Aficamten was designed to have some properties that may render it next in class. And you see those listed here on Slide 19. It has a shorter half-life. It may afford what we hope can be more flexible dose titration as well as minimal drug interactions we believe that we can develop it in ways to expand the category and ultimately as serves patients' interest. A Phase II study called REDWOOD was conducted and read out midyear last year, REDWOOD evaluated treatment of patients with obstructive HCM over the course of 12 weeks on study medication. And there, we compared aficamten plus standard of care to placebo plus standard of care, and it was a dose titration regimen that we evaluated on pharmacodynamic endpoints. Here, you see on Slide 21 that we saw a nice dose-dependent cohort specific increase in treatment effect as we dialed up doses the response rates as measuring left ventricular outflow tract gradient reductions. And you can see in cohort 1 in cohort 2 compared to placebo, a pronounced and demonstrable effect of improved treatments in terms of effect on reducing outflow tract gradient that was not associated with treatment-related SAEs. The drug demonstrated nice reversibility of drug effect. And this was correlated, as you can see on Slide 22, a with a rapid effect that was maintained over the course of treatment that was rapidly reversible upon cessation of a treatment, whether you're looking at resting gradient or Valsalva-induced gradient, these effects were deemed to be meaningful and clinically relevant. But also as verified with other effects on biomarkers like reduction in NT-proBNP, which was also increasing with increasing dose. And an improvement in heart failure symptoms as measured by New York Heart Association class improvement that improved with dose. So we had high expectations for aficamten in REDWOOD and I would say that these results as presented and published are already exceeding those expectations. We then embarked on a cohort 3, looking at the use of aficamten at those lower doses, 5, 10 and 15 mg in combination with disorder in patients that are still medically refractory despite receiving calcium channel blockers, beta blockers and disopyramide. We should expect to see results from this cohort 3 in this calendar quarter and as may further serve to expand the types of patients we enroll in Phase III. We're also conducting an open-label extension of REDWOOD, Slide #25, and you should expect to see results from that open-label extension as soon as second half of this year. We are readying for the soon start-up of a Phase III trial called SEQUOIA. Slide #26. You can see the design of SEQUOIA. It's going to be looking at aficamten at 4 doses. -- dose titration starting at 5 and moving on a personalized basis up to as high as 20 mg QD. And you'll see that this is a study of 24-week treatment duration. And we'll be looking at as a primary endpoint, change in peak VO2, a measure of exercise performance in these patients with obstructive HCM and again, on top of standard of care. This is a study that's going to be enrolling internationally in North America and throughout Europe. And we hope that it will enroll rapidly, potentially as maybe about a year in duration of enrollment. You should expect results from this study next year. So now I'd like to move to how aficamten, together with omecamtiv informs a franchise strategy for Cytokinetics, something that we think is very important as we go to market. And as we'll distinguish Cytokinetics from all of those other companies who are focused to cardiology and where we think this pays dividends and returns on investment in the near term and over the longer term. We think that the Slide #28 enables you to see how the guiding principle strengthens a franchise build. We're focused to a concentrated customer segment that enables us to be patient and customer-centric but also be prudent with respect to cost-efficient, cost-effective investments and infrastructure that can scale with increasing commercial traction and as will ultimately serve us not for 1 cardiovascular program commercial strategy, but for 2 within the next 2 to 3 years. and with only incremental investment required for the second one. And as such, as you think about us moving to market Think about the infrastructure we build today for omecamtiv that serves us over time also for affected and as would be only thereby requiring a modest incremental investment at that time enabling us to have a coverage of the vast majority of HCM customers, as you can see on Slide 29. So that is the vertical of cardiovasculars. I'll now turn brief attention to our vertical for neuromuscular before wrapping up my presentation. Here, we're developing a drug candidate called reldesemtiv. It's a next-in-class fast skeletal troponin activator that has demonstrated pharmacodynamically to increase skeletal muscle force and power and endurance. And we're studying it here for the potential treatment of ALS, a devastating severe disease around which we have quite ample experience. We conducted a very large international clinical trial called FORTITUDE described on Slide 31 and FORTITUDE looked at 3 doses of reldesemtiv in Phase II compared to standard of care over the course of treatment, a treatment period of 12 weeks. And in that study, we saw all 3 doses demonstrated a relative improvement compared to standard of care in slow vital capacity, a respiratory measure of skeletal muscle function and the primary analysis demonstrated while not highly statistically significant at P less than 0.05, definitely a nominal statistical significance as is fair game for a Phase II clinical study of this size and scale and an informed strategy for Phase II. We looked at slow vital capacity change from baseline over time. And you can see about a roughly when combining doses, 27% relative risk reduction that was maintained after study drug was discontinued and also as verified with a change in the ALS functional rating scale of roughly 25% lesser decline also maintained after study drug was discontinued. So that was emboldening and encouraging of us to proceed to a Phase III study that we started last year called COURAGE-ALS. This study is designed to look at a dose of reldesemtiv 300 mg BID on top of standard of care, and we'll be looking at 24 weeks of randomized controlled treatment followed by a crossover. And this study will be looking at patients who are progressing with their ALS with the goal of demonstrating a lesser reduction in the ALSFRS functional rating scale. We expect this study should enroll nicely. It's 555 patients. It's already underway, and we expect a first interim analysis in this calendar year. With that, as focused to our late-stage programs, I'll wrap up by speaking about our financials. We've recently announced a couple of deals that monetize our leadership in muscle biology and enable us to augment our balance sheet. To accompany a royalty monetization we did in 2017, last Friday, we announced the sale of a royalty -- also to Royalty Pharma, a royalty of 4.5% on the first billion moving to 3.5% afterwards, a royalty on worldwide sales of aficamten. So you see a symmetry between these 2 deals, reflective of the synergies we expect from the commercial business. In each case, a low single-digit royalty has been sold, enabling access to near-term capital. And similarly, that deal was accompanied by a long-term debt deal that enables us to also access capital as we may need it for the benefit of commercial activities later this year and next year. These 2 deals book end with deals we did recently in business development in 2020 and 2021, partnered also omecamtiv and aficamten with Zijin Pharmaceuticals in Greater China. These deals together contribute to increasing our balance sheet, extending our cash runway. And as you can see, we ended Q3 last year with $669 million on our balance sheet. And while we did burn some cash in Q4, we've also accessed recently, as you can see with these deals, over $200 million in near-term capital as well as we have a call on or control over, over $600 million as may be available to us in the near term. And over the next 1 to 2 years as such, we do believe we have thereby up to or exceeding $1 billion in capital that we can draw upon. And in that way, overcome limitations of companies oftentimes in our peer group who go to market and spend so much on commercialization that it comes at the expense of a next act and the advancement of the pipeline. Here, we do believe we're enabled under the best case scenarios to still have 2 to 3 years of forward cash runway as can be then ensuring that we have levers and options and capital efficiency as we build our business in the interest of science, in the interest of patients and in the interest of shareholders. And with that, I'll just point to milestones for this calendar year and then end the presentation. This year, you can expect us to report results from METEORIC in this quarter, to expect results from the Cohort 3 of REDWOOD in this quarter. We're going to be updating on plans now that we've accessed additional capital for expanding the development programs for aficamten you can expect that on our Q4 earnings call in February. You also can expect us to start the SEQUOIA study, the first Phase III study of aficamten, you'll see that in this quarter. And then in this calendar year, you can expect the interim analysis for futility for COURAGE. So a lot of catalysts for this company coming up soon and more as may follow if the NDA is approved and we go to market for omecamtiv as we'll continue to keep shareholders abreast of that progress. With that, I thank you for your attention and your interest in Cytokinetics. Anupam, I'm now joined by Fady Malik, our Head of R&D, with whom I started this company over 20 years ago, also Andrew Callos, our Chief Commercial Officer; Ching Jaw, our Chief Financial Officer, and together we'll be available for any questions and hopefully provide answers for you.

Yes. I just want to remind the listeners in the session that if you would like to submit a question in the portal, that's totally cool, and I will happy to ask the question on your behalf. We do have a question in the portal. It's a bit of a clarification question, but can you confirm that the NDA for omecamtiv mecarbil has been submitted. The guidance was year-end last year.

It's a good question. And last year, we did guide to the fact that we'd be submitting that NDA by the end of the year. We also said that we would be not providing an update until such time as we hear back from FDA as to whether that NDA is accepted for filing or otherwise is rejected for filing. And therefore, as the FDA has up to 60 days to communicate back to us we'll be communicating hopefully soon, the status of that NDA.

Got it. And then maybe on METEORIC-HF, this is the exercise tolerance study that you talked about, Robert. This is anticipated in the near term. The primary endpoint is peak VO2. What is the average baseline of peak VO2 for this population? And what's a clinically meaningful change relative to placebo, so that when you put the car you might think, hey, this is a really, really interesting data update.

Very good question. I'll turn to Fady to address how omecamtiv is being studied in METEORIC and what might be expected.

Yes. Thanks, Robert. So METEORIC, we were interested in assessing how omecamtiv mecarbil might improve exercise capacity and we're measuring that using quantitative cardiopulmonary exercise testing. -- peak VO2 or the amount of oxygen that can be delivered to the tissues as the metric. In METEOR, we enrolled patients who are quite severely depressed in terms of their oxygen delivery, just a point or 2 above where you might even consider these patients eligible for transplant. And so when you talk about clinical meaningfulness, we usually use a metric of a 1 milliliter per kilo per minute is a clinically meaningful increase because it's been correlated with an improvement in outcomes as well. even smaller increases are likely to be clinically meaningful and ultimately, we're powered to see those kinds of changes in METEORIC. .

Just to be reminding, however, that our registration strategy, critical path is GALACTIC. And if METEORIC proves to be positive, and we'll know that soon enough, we'll be readying for that as could be supplemental to the NDA and as would be expanding of the label indication down the road.

The other data set that's reading out in the near term here is Cohort 3 from REDWOOD-HCM. Based on kind of what we already know about the program, like how do we think about what would be an encouraging update in the Cohort 3 data?

Yes. So I'll also turn to Fady to address that, but I'll start by first saying that it's in the interest of patient care to be able to assess the value of a cardiac myosin inhibitor, where that disease is at its most severe form. And in prior studies of myosin inhibitor, patients on disopyramide were excluded we believe that the profile, a next-in-class profile of aficamten lends itself to the assessment in combination. And therefore, we'll get an answer to that question here soon enough. But Fady, maybe you can speak to beyond what I said what might be meaningful from that cohort. .

Yes. And just to remind the listeners, Cohort 3 enrolled patients who were all on disopyramide, which sort of represents the last in line of medical therapy for hypertrophic cardiomyopathy. So we're interested really in 2 aspects. One is it's safe to combine afacamten with disopyramide. And two, are these patients who -- to get into Cohort 3 still had to have substantial gradients and symptoms. Do they derive any benefit from that? Is there -- they've sort of failed all existing medical therapy is aficamten provide some benefit to them in terms of reducing their gradient or improving their [indiscernible] class. So we want to answer both those questions. And then with that, we can decide whether it makes sense to include them in the Phase III study, SEQUOIA, which I think would be the right thing to do for these patients who otherwise would have no alternative other than more invasive measures.

And roughly 5% to 10% of patients with obstructive HCM are currently on disopyramide. So it's not like this is a majority of the patients, but it says a lot about the potential benefits of a myosin inhibitor if it can be combined with other standards of care like that. And these are patients that might also be on beta blockers and calcium channel blockers. So it reflects, I think, on the category and specifically on aficamten.

We have another question in the portal, which relates to a clarification or confirmation on Phase III SEQUOIA-HCM. Robert, in your presentation, did you say or can you confirm that you said that, that data will be in 2023? And my follow-up to that question is how you think about the enrollment curve given you're kind of in the start-up activity phase.

Yes. It's hard to be specific about when results will be forthcoming from a trial that's yet to enroll a first patient, but we do believe it should enroll relatively rapidly. We have a large number of centers that are signed up to participate in the study and the enthusiasm is high. We do believe it should be able to enroll in approximately a year plus or minus. And therefore, it's reasonable to expect data in 2023 when will depend on how quickly it enrolls. But yes, I think that's right. And Fady, maybe you could speak to the second part of the question.

Which I thought you answered it.

Did that answer your question fully, Anupam?

Yes. And I think it answered the e-mail portal question as well. So based on the totality of the known data kind of -- and the forthcoming Cohort 3 data, what is the ultimate your differentiation point relative to mavacamten? And how are you thinking about long-term differentiation?

So we're not here to speak negatively of another compound in a category. I think mavacamten is a very good drug. We had a hand in its discovery, and we believe very much in its potential but we also are advancing the science with a next-in-class compound, and it was designed to have certain distinctions. And with that, I'll ask Fady to speak to both of those as was part of the original discovery but also how in our clinical trials, we're elaborating on what could be further opportunities. .

Yes. So in designing aficamten, we wanted to ensure that you could titrate the drug smoothly that its effects were predictable that you could get patients to target doses in a relatively short period of time. And thus, be able to relieve their symptoms as well. But also that there was a reversibility of effect that would happen fairly quickly if you were to overshoot your target and you wanted to get back to a more normal ejection fraction. So the Phase II data supported those various design targets from the preclinical program. And the design of SEQUOIA is meant to amplify them. We're using every 2-week dose titration so that patients get to their target dose within 6 to 8 weeks. The -- there's opportunity for dose down titration, if needed. And ultimately, we'd like to see how the drug improves exercise performance by looking at cardiopulmonary exercise testing and peak VO2 again, but also symptoms as measured by the Kansas City Cardiomyopathy Questionnaire and New York Heart Association class. And I think in aggregate, all of those things will inform the competitive profile of aficamten and enable people to assess how it may perform in patients.

MyoKardia did a nice job developing mavacamten. BMS is going to do a great job in commercializing it and also attending to life cycle management. They're very, very good at that kind of thing. And we expect that as a fast follower, it's incumbent upon us to further advance the field with aficamten, and you'll hear much more about how we intend to do that, both in clinical research in some updates to follow here pretty soon as well as eventually also in our commercial strategies. But ultimately, this is in the interest of all patients with hypertrophic cardiomyopathies. .

We've got 2 quick e-mail portal questions. When can we start an obstructive HCM study?

So the Phase III study, SEQUOIA, is in obstructive HCM, and that will be starting in this quarter.

Non-obstructive.

Nonobstructive. That will be something we'll be updating with our Q4 earnings call. And I do think that we'll be in a position to move swiftly in terms of our interest in non-obstructive HCM. MyoKardia conducted a study called MAVERICK. It was very informative. We believe that we'll be in a position, again, to advance the field with how we're thinking about non-obstructive HCM as ultimately will, again, tee up what could be late-stage trials for aficamten. .

We've got a commercialization question in the portal, which is, given your potential for near-term commercialization, is there uncertainty to physical access to health care providers? How are you preparing for face-to-face versus virtual promotions at launch? Very good question.

Very good question. I'll turn that over to Andrew Callos, our Chief Commercial Officer.

So I think we have the benefit of understanding and seeing how the marketplace has reacted to COVID. face-to-face interactions have returned largely in the cardiology office. You look at the data, it's about 80%, 90% of pre-COVID levels. But the key thing we're doing is making sure that every cell is roughly higher can detail and engage remotely as well as detail and engage face-to-face. So that is capabilities we're building in and training for. Additionally, we're going to ensure that sales reps and service accounts, things like shipping samples, et cetera, to a physician's office. So we don't skip a beat either way. We can support patients. We can support the education of health care providers remotely or face-to-face. .

I don't see any more questions in the portal. I want to say thanks, Robert and team so much for a super productive session. And I hope you guys have a great rest of the day and great rest of the conference.

Thank you, Anupam. 2021 was a transformative year for our company, and we hope 2022 will be likewise. Appreciate the invitation, and we look forward to keeping people abreast of our progress.

Thanks everyone.