Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales represent. For this session, we have Cytokinetics with Chief Commercial Officer, Andrew Callos; and Executive Vice President of R&D, Fady Malik. Welcome, Andrew and Fady.

Thank you.

Thank you.

Yes, thank you. For those who may not be familiar with Cytokinetics, can you provide a brief introduction?

Sure. So Cytokinetics is a biotech company in South San Francisco founded in 1998 and focused on developing therapeutics directed at cardiac and skeletal muscle. Over the years, we've developed a pipeline now with 3 late-stage products, one in heart failure, one in hypertrophic cardiomyopathy, which are 2 cardiovascular diseases and one in -- for ALS, which is a neuromuscular disease. About 350 employees, I think, 370 employees now, and span everything from concept to late-stage development.

Great. Well, in the near term, the next couple of updates are going to be omecamtiv mecarbil so I think we start there. Can you remind us what you saw on the GALACTIC-HF study and how the data looks in higher-risk patients?

Sure. So omecamtiv mecarbil or those stuff, the background is what’s called a cardiac myosin activator. It's a small molecule that directly increases cardiac function and was developed for patients with reduced cardiac function and heart failure. GALACTIC-HF was the Phase III pivotal trial that was completed in 2020. And it showed a positive effect on the primary endpoint, which was a mortality morbidity endpoint of time to first heart failure event or cardiovascular death, whichever came first. Interestingly, what it did also show was that on the prespecified subgroup, looking at the role of cardiac function as measured by ejection fraction, treatment effect became stronger as cardiac function declined at baseline. So, there was a larger treatment effect, approximately double the size of that in the overall population with those patients who had worse cardiac function at baseline.

Great. And you've also reported results from METEORIC-HF. What do you hope to see in that study? What were the conclusions of the results, and how do those results impact the filing for omecamtiv mecarbil?

Yes. So METEORIC-HF was a second Phase III trial, much smaller GALACTIC was over 8,000 patients. METEORIC-HF was about 270 patients. Its objective was to ask whether increasing cardiac function and heart failure would improve exercise tolerance as measured by cardiopulmonary exercise testing. That trial did not meet its primary endpoint as have many studies of drugs that improve clinical outcomes haven't actually shown benefits in exercise performance. So, we don't think it really affects the primary application, the NDA, which is being evaluated by FDA at the moment. The safety in that trial was bolted safety signals either. And in fact, showed the drug was safe and well tolerated and patients push to their maximum exercise performance.

The PDUFA date for omecamtiv mecarbil was extended to February 28. What did the FDA ask for that was considered a major amendment to the NDA?

Yes. So we submitted in June at the request of the FDA, an updated population PK analysis. So, population PK analyses are agglomeration of all of the pharmacokinetic data that were acquired in the clinical program. In the case of omecamtiv mecarbil, with over 10,000 patients in the development program, at least half of them on active drug, it's an enormous database. They asked us to update it with some studies that were completed right at the very end of development, which we did, but they consider that a major amendment because they wanted to further analyze these data. As may inform dosing and other things. So, at that point, they extended the PDUFA date. At that time, they also -- or just subsequent to that, they informed us that they wanted to have an advisory committee as well. And so, we've been preparing for that. And I think probably the 2 are somewhat coupled.

And as you mentioned, so your ADCOM is scheduled for December 13. What would likely be the focus of the discussion of that panel and how much discussion do you pay for treating the broader patient population versus higher-risk patients?

Well, I think the FDA is getting back to its usual practice of having advisory committees for new molecular entities. So omecamtiv mecarbil is a novel mechanism, novel approach to treating heart failure. In years past, those kinds of programs would always go to an advisory committee. The -- I think in terms of the topics they would like to address, they're usually things around patient population, medical need, perhaps how should the drug be labelled in terms of dosing and things like that. We haven't gotten specific feedback yet from FDA and what they want to discuss. But in general, I think that's the range of topics we would end up discussing it in ADCOM.

Great. And how are the commercial readiness preparations going? Can you remind us how you're thinking about the launch strategy and the size of the sales force needed to target positions?

Sure.

Sure. So with the data that Fady described around the worsening heart failure and patient -- it’s a subset of overall patients, it’s about half -- a little over half of those heart failure with reduced ejection fraction patients where we see most benefit from omecamtiv mecarbil. The physicians who focus on those patients are a subset of cardiologists, it’s less than, say, 10,000 of the over 30,000 cardiologists in the U.S. and we’re also focused on treatment centers, heart failure clinics and heart failure centers that are in urban areas or in academic centers. There’s about less than 1,000 of those. So we have about 200 sales reps planned to cover those -- around 10,000 cardiologists and around 1,000 treatment centers. From a overall perspective, I mean, we continue to meet with payers. We’ve met with every major payer, most of them more than once. We’re signing distribution agreements. We finalized pricing. We haven’t disclosed that yet. We have hired the majority of our field -- first-level field force managers, not the field force will be hired after approval. And the vast majority of headquarter-based personnel have been hired. So we'll be ready for launch, most launch activities, campaign, et cetera, continue we're about 5.5 months away. And the extra 90 days affords probably a little bit more luxury and getting ready, but we would have been ready had been at the end of the year as well.

And if you could just remind me, I think that recently, you had said that a lot of your launch activities, you were waiting until potential approval. After a potential approval, how long would it take for you to, I guess, activate all those steps and be able to sell the drug?

So everything will be done other than the field force being hired and trained. We are going to be -- we're using a partner to help source field force. We will do that actually before approval. So we're pretty far along once approval occurs. Once the approval occurs, assuming it does, the hiring would occur within 30 to 60 days after approval. The training program is probably about another month, 1.5 months. And so I would say, right around 4 months post approval, we will have a field force. We will have other digital campaign out. We'll be doing a lot of promotion that way right at approval and product availability, we're determining a specific date, but it will be pretty close to after approval as well. And it's not a concern for us because generally, commercial payers take about 90 days, sometime up to 6 months to review data. So it's going to take a little bit to get access. So we're really not missing much kind of fertile ground, if you will, with physicians being able to write the product.

And so then just to clarify, is the field force is that that kind of last at the gating factor?

Yes, exactly. Because that's the majority of our spend is field force, but everything other than field force will be done.

Okay. Great. And then is there any other updates on the feedback that you've heard from meetings with payers?

The most of the conversations we've had with payers early on were who is Cytokinetics and what is our portfolio. We've gotten into our preapproval information exchange, which allows us to actually share the clinical data with payers. There's a big interest in the subset of the population for payers like that we're focusing on where the drug had benefit and hearing those promotional materials as well as the, we do have economic data that shows cost avoidance by reduction of hospitalization. We had presented our first data earlier this year and payers are very appreciative of that as well. So, discussions are going as they should be.

Okay. Great. Well, maybe moving on to aficamten. How is enrolment going for SEQUOIA and when do you think that you might complete enrolment?

Yes. So, we've seen an uptick in activity as we come out of the summer months. As you know, the things usually slow down a little bit then, but a tremendous amount of enthusiasm and interest, I just came back from Europe at the European Society of Cardiology, where we had a chance to meet with many of our European investigators. So, we're looking, I think, good for the fall enrolment is hopefully going to go well throughout the fall into next year. Our goal is still to finish enrolment in the first half of 2023 and see data by the end of 2023. And obviously, we'll be able to provide more granularity as we progress.

Okay. You're beating another Phase III study in the fourth quarter. So how is that study different from SEQUOIA and what do you hope to achieve with that trial?

Yes. So maybe just to back up a moment, aficamten didn't really introduce is a different drug. Obviously, it's a cardiac myosin inhibitor, myosin being the motor protein that underlies cardiac contractility. And it's being developed in a genetic cardiomyopathy called hypertrophic cardiomyopathy, where the fundamental contractile machinery of the heart is tuned up and hard contracts too much. And so, the heart gets thicker has trouble filling and other things. Aficamten reduces that, and we've been developing it in the Phase III now it's called SEQUOIA which is looking at cardiopulmonary exercise testing in the obstructive form on top of standard of care. So, these are patients who remain symptomatic, have pressure gradients that are abnormal despite the fact that they're on current standard of care, which generally are beta blockers and calcium channel blockers. The second trial you asked about, which we plan to begin to initiate towards the end of this year is to study aficamten as a monotherapy head-to-head versus beta blockers. And so, the question really is what -- how does it perform against standard of care should it be used first instead of after all the other standard of care is added. Is there a better side effect profile or better relief of symptoms and improvement in exercise functions. So that's the -- it's really to help physicians understand where to position this drug class and their standard of care.

You're planning to share additional data from Redwood, the open-label extension before the year-end. Like what should we look for in that data? And what additional insights might that provide?

Yes. So, the Redwood open-label extension, all the patients in the program end up into our extension trial, which is looking at safety and long-term efficacy in an open-label fashion. We've reported data already from that that show durability of effect and pretty good safety profile. We have late breakers being presented at the Heart Failure Society of America at the end of September, early October. Those studies will build on what we've shown with looking at symptoms, patient performance in the KCCQ, continued safety in that study and other things as well, biomarkers, things like that.

And then with CAMZYOS having been on the market for a few months now, what have you been hearing, and has there been any learnings from that launch? Or has it impacted your thinking for aficamten?

I'll maybe start and turn it over to Andrew, but I think we're really pleased to see that there's a lot of enthusiasm for the mechanism of action as CAMZYOS being launched. It's a drug that we help to develop and certainly want to see out there in the hands of patients. I think in terms of its impact on aficamten, there is a lot of room for more than one drug in the field. And usually with diseases where first directed medical therapies are applied, what you generally see is growth of that segment over time as physicians are more careful about identifying patients and providing them options for therapy. But Andrew, if you want to comment maybe more specifically on their launch.

I mean there's been a lot of -- if you interact with the KOLs, which we have been, there's a lot of enthusiasm and excitement about the mechanism. There is a lot of excitement by patient organizations as well. The challenge -- there's about 1,000 according to BMS, about 1,000 physicians who are trained on the REMS program for CAMZYOS. And as Fady had alluded to, there's a big opportunity to expand that 1,000 cardiologists to probably more like 15,000 or 20,000 cardiologists who could be writing the product. Right now, it's probably a little onerous for patients and for physicians. So, there's a big opportunity based on how we do in SEQUOIA and how the data reads out to make aficamten maybe a little easier to use and prescribe than CAMZYOS. But overall, the launch is going as we would have expected, and I don't know that I would pay much attention to prescription data as much because there's probably a lot of free good programs going on, I'm guessing, which will -- and I know BMS alluded to that in the third -- in their earnings -- second quarter earnings around converting patients eventually to commercial patients.

Right. And you kind of touched upon this, but I just want to make sure if there's anything else. Like what are you hearing from the KOLs investigators and other clinicians on the launch of CAMZYOS the perceptions of aficamten compared to CAMZYOS. Are there any aspects that physicians gravitate towards beyond the rapid onset and rapid reversibility?

Well, I think that there's, first of all, an interest in options, right? So, it's great to have options for patients. Aficamten has several things. I don't want to get into comparing one drug to the other. I think we're testing them head-to-head. But as aficamten is being studied, we expect that its onset of action should be rapid. It has a lack of drug-drug interactions. We hope to show a very good safety profile and a reversibility of effect and make it a drug that hopefully eventually becomes first choice. But the data will support that as time goes on. And we think the physician community is excited to have these options for their patients because many of these patients, the next option really is surgery and having open heart surgery, which many of them would rather avoid.

So, Cohort 4 for Redwood is in the nonobstructive HCM. When you report the data in the first half of 2023, what should we watch for? And what do you think you need to see to advance development of that indication?

Yes. So nonobstructive HCM is the less common form of HCM. And there, I think what you just have is a thick and ventricle, you don't have the obstruction. The effect of what we would like to see with the relatively short-term study we're doing in Redwood with it is the beginning of what we think is long-term remodeling and regression of hypertrophy. So, a fall in biomarkers, maybe the beginnings of a regression in LV mass and as we showed some echo data in the obstructive form, it seems to happen within that time period. Some indication that there's improvement in symptoms. All of those things, I think, would encourage us to continue. But I expect the development of nonobstructive HCM to be somewhat different because there isn't a rapid resolution of high grade and obstruction to blood flow. And so likely, the treatment period will be longer and we'll use the data from Redwood and other things to inform us and have to design and execute Phase III.

Okay. Great. Well, maybe moving on to reldesemtiv, you're continuing to enroll patients encourage ALS. Can you just remind us of the trial design?

Yes. So, you look now to our skeletal muscle drug, reldesemtiv, which is a cardiac troponin activator. That's the sort of the transmission in muscle and census calcium. It's being studied in a 555-patient study called COURAGE-ALS and that study has been enrolling for about a year now, doing very well. It's over 50% enrolled now and continuing to enroll briskly across over 80 sites now around the world. The trial has interim analyses, one of which will be conducted before the end of the year and first of which is for futility. And so that's to look at whether there looks to be at least an effect that is equal or better than placebo or if the DMC looks at the data, how they might otherwise consider there to be some potential positive effect of the drug or at least not worse than placebo. So, it's a relatively low bar. And then there's a second interim analysis conducted that will happen next year that is geared toward helping us ensure that we've enrolled the right number of patients. So, it's an opportunity to expand the data, the trial, if necessary, based on maturing the primary endpoints adequately powered.

And what kind of change in ALSFRS do you need to see to be clinically meaningful? And what gives you confidence that the study might read out positively.

Yes. So, the ALSFRS is a primary endpoint, a functional rating scale used in ALS. And it's a funny thing, but nobody really knows what's the minimally important difference. Some think a 20% difference between placebo, all these patients their function declines over time, but slowing that decline by 20% taught to be clinically meaningful if you survey ALS physicians. But even a 1-point difference on that scale, it can often -- can mean the difference between walking down those stairs out a cane and the sister device or using something like that. So, it's a relatively gross scale. We think that we have a good chance of seeing an impact there because in the Phase II study, which was fairly sizable, about 450 patients, we saw a slowing in the decline the ALSFRS. And we also noted that, that was accentuated in patients whose decline was faster. And so, COURAGE-ALS was designed to enrich for those patients. And so far, the baseline characteristics are consistent with that enrolment pattern.

Okay. Great. Well, you're reactivating the development of CK 136 this year. Can you talk about this program? What kind of indications you're planning to develop? And what would be the next study? Like what would that be and the data readout that we should expect?

Sure. So now you're turning to our earlier pipeline and CK 136 is a cardiac troponin activator. So, it's specific for that transmission and cardiac muscle. It's another means of improving cardiac function. We're intending to initiate a Phase I study with that and look to see if it has impacts on cardiac function. And it look positive and encouraging, we would intend to develop that in more selective populations with heart failure, things that are quite different from HFREF, more specialized heart failure populations. So, it's part of an emerging earlier pipeline that's coming out of research.

Okay. You plan to end the year with over $800 million in cash. You have 2 late-stage studies continuing the potential for an improved drug in the next 6 months. And you're also -- you're expanding your presence on the East Coast. So maybe you want to talk a little bit about that. But what is the vision for Cytokinetics in 5 and ten years?

That's a great question. I mean we've been at this for a while, as you know, and we've worked hard to develop an expansive pipeline now, 3 products of whom one already has positive Phase III results. A second whose I would say, mechanism is derisked and it serves an important patient population. And the third for which we have strong Phase II data and are very -- in a large medical need in ALS. Our vision in the next 5 years is to have 2 or 3 products on the market and to also expand our pipeline with earlier stage potential medicines that include TK136, other cardiac myosin inhibitors as well as things that are in the lab still that are coming out even as we expand staying within muscle but expand outside the area of muscle contractility into other aspects of muscle function. We hope to be an integrated R&D and commercial organization by that time with sales and revenues that are beginning to support our R&D efforts. And so, in the next 5 to 10 years, I hope to see us fulfilling the vision that we've been prosecuting all this time.

And I would maybe just add that we will -- should be expanding our presence to Europe. We should be expanding our presence to Canada, potentially licensing products rest of world, including in Japan. So, it won't only be a U.S. commercial presence that should be more of a global presence.

It's important to -- we do these trials around the world and I think it's important for us to be able to deliver these medicines to patients around the world.

Great. And you mentioned about pipeline, but how do you think about business development? Are you looking at potential assets or companies to acquire? And what is the profile of platforms or programs that would be of interest to Cytokinetics?

I think like any company, as it grows and its needs to develop more products increases, we can't do everything in-house. We've been very successful as an R&D organization, delivering novel mechanism products into the clinic. But I don't -- as good as our research organization is, I'm not under the illusion that we can do everything in-house. And so, we would be certainly interested in beginning to look for and external opportunities that may complement what we have in ways that we may be able to contribute to other companies' development over time as we've matured and can help them mature as well.

Okay. Well, great. Well, looks like we'll want to leave it there. Thank you so much for your time.

Thank you, Jeff.

Thank you. Thanks, Jeff.

Thanks everyone for your interest.