Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Okay. Good morning, and welcome to Barclays Global Healthcare Conference. My name is Carter Gould, senior biopharma analyst here at Barclays. I'm pleased to welcome Cytokinetics to the stage here. We are -- Cytokinetics is one of our favorite names here looking into 2022. Every year, market serves up these high-quality assets with blockbuster potential, and we think aficamten is absolutely one of those. And so we're presenting the company, today with CEO, Robert Blum. And we're going to take a little bit of a different spin. We're not going to leave with aficamten. We're going to kind of do this in sort of reverse order. And I want to talk first around relosemtib, as an asset, it doesn't get much attention, and you do have a readout coming up.

So I guess when we think about the COURAGE ALS study, can you maybe just set the stage for that study based on some of the earlier work? And maybe just talk a little bit about the futility analysis coming up.

So COURAGE-ALS ALS is a potentially pivotal Phase III registration study for reldesemtiv for the potential treatment of ALS. And reldesemtiv is a fast skeletal troponin activator, or FSTA, we like to call it. Reldesemtiv has demonstrated potent to activate skeletal muscle and increase muscle force and power and time to muscle fatigue, and it's being studied in ALS, where disease progression is characterized by loss of muscle function. Reldesemtiv follows behind tirasemtiv, which was a drug candidate we have been developing through Phase III, which was showing some encouraging activity, but for which it failed in a Phase III study in part because patients were dropping out due to adverse effects that we believe we've engineered a way with reldesemtiv in large part. So reldesemtiv was the subject of a Phase II study called FORTITUDE-ALS. FORTITUDE showed that for 3 different doses of reldesemtiv, we saw effects that were borderline statistical significant across different endpoints that matter to patients with ALS, including measures of respiratory function and activities of daily living. COURAGE-ALS is designed to amplify that signal that we saw in FORTITUDE-ALS with one of those doses compared to standard of care in a randomized placebo-controlled trial. It's going to be enrolling over 500 patients around the world with end points that will be assessing function, both activities of daily living and respiratory and otherwise. This year, we expect to have a first interim analysis from COURAGE-ALS that is designed principally around a test of futility. It is a relatively low bar. So we don't expect the study to stop early based on futility, rather instead, we hope it will be progressing through to what could be a second interim. The first interim and the second interim are based on roughly 1/3 of the patients getting to different endpoints. The second interim could provide for a resizing of the study. But I think investors should be expecting that this study base case should go to its completion and readout in 2023.

Okay. And when we think about some of the learnings from the Phase II and the modifications you made when you think about the Phase III in terms of dose and patient selection, can you just kind of walk through that? And why you made those changes? What gives you confidence?

So we've been good students of this area of ALS drug development. In fact, I think, we've enrolled more patients into trials with ALS than any other company over several years. One of the things that we've learned both in the course of designing and conducting studies but also engaging with regulatory authorities is that it's in our shared interest to be operationalizing studies where you can remove some of the heterogeneity amongst these patients in order to distill signal from noise. And in ALS clinical trials, there's now more of a gravitation towards focusing to enrollment of patients who are actually declining as opposed to those might be like Stephen Hawking, you might recall who lived with stable disease for many, many, many years. So in COURAGE-ALS, we have modified inclusion and exclusion criteria to be accommodating of medium and fast progressors. We presented a poster in December at the ALS-MND meetings, where it's clear that the patients enrolling into CoreOS meet that definition of medium to fast progressors. And therefore, we're advantaged to be able to see a potential treatment effect for reldesemtiv versus standard of care.

Maybe just one last question on reldesemtiv. Just in terms of the sort of evolving regulatory environment for ALS, it does seem like while FDA is becoming less accommodating in a number of areas, they seem to maybe a little bit more open here given some of other competitor developments there. Does that create maybe an opening for you? Is that something that you guys might be able to leverage or just when you think about what you might need to show in this Phase III?

Definitely, FDA has been leaning forward more accommodating, but that's not, I think, something that will change the way we operate. We're still going to do the right thing by the science and the course of conduct of this Phase III study. It's clear that the ALS advocacy organizations and FDA are aligning more on the desperate urgent need for new medicines in ALS. I think that our program sits alone as the one that is rooted most in good science, good clinical evidence and we are in the course of now conducting a hypothesis testing pivotal trial. So I think we're well positioned for what could be a positive outcome here, but not this year, more likely next year.

Okay. Maybe switching gears to omecamtiv. Clearly, a big year ahead of you guys for omecamtiv. Can you just remind us kind of where you stand on the regulatory process? And obviously, you had a little bit of a setback with [indiscernible] recently, how that factors in or not from a regulatory perspective?

Yes. So omecamtiv [indiscernible], for those you don't know, is our cardiac myosin or cardiac muscle activator. We've been developing it for a while for the potential treatment of heart failure with reduced ejection fraction. And earlier this year, we announced that the FDA had accepted our new drug application for omecamtiv. So it's now on file, and we have a PDUFA date of November 30 later this year. METEORIC was a second Phase III study following behind GALACTIC. The registration study is designed around GALACTIC. And MEDIORC had the potential to be additive were it to be positive. We were intending to seek a supplemental filing around METEORIC, and it was not. It was neutral. But the data will be presented in a couple of weeks at the American College of Cardiology. METEORIC doesn't add nor does it subtract from the profile of omecamtiv arising out of GALACTIC, which was the large international outcomes study. METEORIC was designed to see if, unlike other heart failure drugs, omecamtiv might contribute to increased exercise capacity. And like other heart failure drugs, it does not. So we asked and answered that question, and now we'll focus to, hopefully, this drug candidate getting approved later this year and the commercial launch could occur by the end of the year.

Right. So it doesn't need be a pretty big disconnect in terms of how at least the Street kind of looks at the omecamtiv market opportunity and how you internally think about it. What's really driving that? What are the key aspects that maybe or -- maybe missed by the Street including me in the category?

Yes. I think the Street is overlooking what could be the important potential of omecamtiv mecarbil, not as would be foundational to the treatment of all heart failure patients, but on an add-on basis to standard of care where that standard of care is falling short. And what we've demonstrated time and time again is that the GALACTIC results lend clinical evidence and support of omecamtiv as importantly, should be an add-on therapy where patients are advancing or worsening in their heart failure. So any way you look at it, whether a patient has low ejection fraction, recent hospitalization, high BMP, compromised renal function, we've seen evidence that omecamtiv mecarbil, when added to standard of care is producing a meaningful effect, in particular, on reducing hospitalizations where that's driving the economic burden associated with those patients, which contribute to this being a very significant Medicare challenge. So I think clinicians through their guidelines, payers through their adoption practices are going to look at omecamtiv for a subset of patients, heart failure is a pretty big opportunity measured in millions of patients. There are 1 million to 2 million patients who are recycling in and out of the hospital every year because they're not adequately maintained on standard of care. And that's where, I think, the market is potentially going to be receptive to omecamtiv mecarbil, again, as add-on therapy. And our commercial strategy will be focused there.

So that's a great segue on to the commercial strategy. So given that sort of positioning, what are the key aspects of that go-to-market plan? What are the -- what are you going to have to do differently than all the other kind of heart failure drugs that have kind of tried here with varying levels of success?

Underscore varying levels of success because most have underperformed expectations. And we think we're in a good position to be investing wisely where their heart failure high-volume centers point to a high unmet need. So there's a subset of hospitals where they treat a majority of the heart failure patients. There's a subset of specialty cardiologists who focused to heart failure. And those are the opinion leaders who are driving, we think, a high-volume business that could represent a sustainable opportunity for us. We're going to be investing in a prudent way towards that opportunity. We're not hiring our sales reps but until such time as we have an approval. So we are investing in commercial readiness activities, market access, positioning, pricing, medical education and otherwise, but all with an eye towards building education and awareness for the unmet need for what could be omecamtiv, if approved, and we'll make offers to salespeople contingent upon that approval. So 2/3 of the FTEs or feet on the ground won't be hired until we know we have an approval. And therefore, we're approaching spending in a much more gated way in advance of that approval. If that approval comes later this year, we'll be making those hiring decisions by the end of the year for what could be a launch in 2023. But until that time, we're being careful not to get in front of our skis on this.

And when we think about the strategic importance of having a field force in place ahead of, say, potential aficamten launch down the road, particularly more than likely to be the second to market in HCM. Can you just talk about how that helps mitigate some of that time gap between you and the first mover? Or just any of the strategic relevance of having that field force in place?

Yes. So our commercial readiness strategy is predicated on the knowledge that we're going to market, not with 1 but 2 compounds that modulate the same molecular target, a myosin activator and a myosin inhibitor. And in order to be able to do what we think would be appropriate for a next-in-class myosin inhibitor potentially going to market 1 to 2 years after we hope BMS will be launching mavacamten, and it's incumbent upon us to be engaging already with customers around education and awareness, informing about the potential upside associated with modulating cardiac myosin. So going to market with omecamtiv mecarbil by the end of this year is in the interest of what could be a franchise building strategy to support our objectives with aficamten as we hope could be a next-in-class compound, potentially a best-in-class drug for hypertrophic cardiomyopathy down the road.

That's a good segue. Maybe as a bridge there, can you maybe just sort of set expectations for what we can expect from you guys at ACC coming up? Like, obviously, you're going to have METEORIC data, but you do have some other kind of abstracts and posters.

So ACC is coming up in 2 weeks. We'll have not only METEORIC data, but we'll also have some health economics and outcomes research data associated with GALACTIC. We'll also have other GALACTIC-related presentations. And as it relates to aficamten, we'll have results from Cohort 3 of REDWOOD, which we top line by press release recently, indicating that we saw positive results of aficamten when combined with disepirimide for patients with obstructive HCM. So those data will be presented. And I think as we go through 2022, there's going to be other news flow associated with aficamten, in particular, around the open label extension study for REDWOOD's Cohorts 1, 2 and 3.

Okay. So on the back of the aficamten data that was released last year, you guys hadn't thought about the plan going forward and the overall strategy of the company. I think it's probably taken a little bit of a different shape than most investors kind of expected. I think there's generally sort of a good kind of mid-cap playbook on how to play these things, but you guys came out. You did a financing that not everybody expected in a way that not everybody expected. You -- in terms of your Phase III plan, you've launched, call it, a more comprehensive outlook on maximizing the opportunity with aficamten than people expected. What's really sort of driving that? What are you seeing? Is that just speaking to the confidence in the molecule? Is that speaking in further derisking do you think you need to do for the marketplace? Just help us kind of understand the thought process that's kind of emerged as we think about the past 12, 9 months?

I think some of the things that investors might find a bit uncommon is a derivative of our confidence in the molecule. So mavacamten and EXPLORER presented data that was very meaningful, and we think warrants approval in Q2 as we hope BMS will garner that approval and go to market. And REDWOOD results with aficamten underscore what were some of the things we designed into the molecule as could be next-in-class properties that could potentially expand the category on behalf of both compounds. So as we have conducted Cohorts 1, 2 and 3 from REDWOOD, we decided last year that we should raise capital primarily in a non-equity dilutive way in order to support an expansion of the development program for aficamten. So we did a deal in China to afford us additional capital as well as we did a deal with Royalty Pharma earlier this year. And as such, in this year pro forma, we've got upwards of approximately $800 million in cash, suggesting to us that we can invest in success for aficamten in a more aggressive way. So in addition to recently starting SEQUOIA, the pivotal Phase III study for aficamten, we also announced an expansion of the development program on our recent earnings call, inclusive of a fourth cohort of REDWOOD in nonobstructive HCM patients. And we indicated that later this year, we're going to be starting a second Phase III study of aficamten, not as would be critical path to its registration, but more so as would be indicative of what more typically a company might do post marketing in order to potentially further expand the label and reflect moving up the ladder in terms of standard of care.

And when we think about that second Phase III study, are you ready at this point to disclose any details or rule anything out, say, a head-to-head study or other aspects that people have considered are speculative?

So we didn't appreciate when we had our earnings call and we announced that we would be doing the second Phase III study that it was going to generate so much in the way of questions around what is our intention. So I'll answer your question. But firstly, I'll say, this is not a study that in any way, shape or form was recommended to us by regulatory authorities as would be necessary for approval. In fact, we made the decision to do this independent of any regulatory discussions. We think that this is more like what would be typically a Phase IV study as could be available with data potentially presented and published around the time we go to market and as could be enabling of a better positioning relative to standards of care. As to its design, we're going to defer on any other details until such time as we're ready to start the study. We don't want to be enabling of the competition in this way, but we also haven't made our final decisions regarding its design, and those are things that are being refined right now in conversations between our R&D groups and our commercial groups.

Okay. And the competition will be in this room in an hour, if you want to hear me ask them the same question. And I'd also say, Robert, that was pretty good. I went 25 questions before we got to...

I appreciate that very much.

So I'm not going to ask you to predict what the mavacamten label might look like. But what points will you be focused on? I'm sure monitoring is going to be one of those aspects.

So BMS has already made public statements to the effect that they're in the process of negotiating a REMS program, which I think is in the interest of the category, frankly, that a cardiac myosin inhibitor should be appropriately assessed and trained, physicians should be trained in terms of how it's best to be used, especially in the early days with mavacamten. So I don't know what might be behind all of their conversations, but I do think that BMS knows what they're doing, and they're going to likely do all the right things in support of a successful commercial launch, both in terms of education and awareness, but also the things that BMS does very well, building categories, which includes investing in screening and better diagnosis for now there being an opportunity with a new medicine. We've seen time and time again in cardiology that the availability of a new medicine can open doors for better diagnosis, prognosis and treatment. And I suspect the same thing, BMS has a good playbook for this kind of thing.

When you think about sort of your confidence on the enrollment time lines for SEQUOIA, you guys have been pretty consistent in your messaging there, but you're now going to have -- more than likely going to have mavacamten in the marketplace. Can you just talk through any sensitivities there? Or just kind of your level of confidence that you look at this role in a timely fashion?

Yes. So our expectation now having started SEQUOIA is that it should enroll in approximately a year. And that's predicated on a few things. One is, SEQUOIA is going to be the largest Phase III study conducted in this population and in the most number of centers, not just in the U.S. and Canada and Europe but elsewhere. And we think already based on our surveillance of those centers that there are a lot of patients being readied for screening and enrollment. So we do expect mavacamten to be launched. But like any launch, there will be initial restrictions on its use, subject to payers and other things. And I think by the time those are mitigated, we should be done with enrollment.

Okay. I want to ask one more on sort of SEQUOIA, and that is my understanding there's going to be an imaging substudy in that trial. And just the importance of that, I think, we saw some of those signals start to get teased out in EXPLORER. How important that might be in terms of teasing out disease modification or reversal of disease or fibrosis?

I think these things matter considerably. So while the registration study is not pivoting around those types of parameters, I do think that physician comfort and ultimately, payers will look to those things for longer-term anatomical changes read on what could be used to outcomes. It's impractical to conduct a large outcome study here because mortality risk is low, but symptom burden is high, and that symptom burden is a derivative of a lot of the things that you can measure by echocardiogram and otherwise. So we'll want to see both in the open-label extension study data from REDWOOD, but also in longer-term, substudy and tracking patients in SEQUOIA, how that's potentially enabling of patients to have better anatomy that could read on lower risk and better outcomes.

Okay. And in terms of the nonobstructive patients you're going to enroll in that fourth cohort, how fast do you think that maybe -- may allow you to move then to nonobstructive when we think about a potential pivotal study? Or -- and how that -- with the ongoing -- at that point, hopefully, the launch of instructive may complicate that or not?

I don't know that it will complicate it. I do think that our Cohort 4 of REDWOOD should enroll reasonably quickly, similar to other cohorts in REDWOOD, to enable are potentially moving into a pivotal Phase III study, maybe by the end of next year or early part of the following year. That has a lot to do with the time between end of Phase II and the start of Phase II and conversations with regulatory authorities, but it's something that we'll look at. It's interesting for us to be in a position here where we're not a pioneer, but could be the leader regardless as we are advancing what could be deemed a fast follower. So we'll learn from some of the work that MyoKardia and BMS are doing. And as you know, nonobstructive HCM could be reading on what could be potential of this mechanism of action also in a subset of patients with heart failure and preserved ejection fraction, which is even a larger market opportunity. So we'll be good students of what is being learned with mavacamten and also with our own work with aficamten.

Perfect. We're out of time. We'll have to leave it there. Robert, thank you very much, and we'll see you at ACC.

Thanks very much.

Thank you.