Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Welcome, everyone, to the 41st Annual JPMorgan Healthcare Conference. My name is Tessa Romero. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Taylor Hanley and Adhiraj Chauhan from the team. Our next presenting company is Cytokinetics. And speaking on behalf of the company, we have CEO, Robert Blum. Before I turn it over to Robert, I just wanted to highlight that there is a Q&A for those listening on the webcast. And if you get your question in there, I'm happy to kind of squeeze it in there on your behalf. So with that, Robert, over to you.

Thank you, and thank you to JPMorgan for inviting Cytokinetics to be presenting an update here at the 2023 conference. I'm very pleased to be speaking on behalf of Cytokinetics. This is a very important year. I'll be making some forward-looking statements. I'll draw reference to the SEC filings for caveats on those statements, and we don't undertake obligation to update with regard to those statements. I'll be speaking and providing an update on a company that is committed with high conviction to this mission, a mission to bring forward new medicines to improve health span of patients with devastating cardiovascular and neuromuscular diseases rooted in impaired muscle function. Our focus is on muscle biology, and this is a structure, the sarcomere, which is the fundamental unit of the mechanics and contractility of muscle. Ours is the first company to industrialize this structure for high-volume drug discovery. And over many years, we've advanced now compounds discovered and optimized, characterized and now developed by scientists and clinicians at Cytokinetics anchored in this structure. This is a structure that gives muscle force and power, and we've identified activators and inhibitors of this structure. Lead amongst those are our cardiovascular drug candidates that will be elaborated on the next slide, but you can see we have quite a number of compounds that target different isoforms of myosin, which is the mechanochemical enzyme largely responsible for driving the activity of this structure. If you look at our pipeline, you see the pipeline of a company that's committed to original drug discovery and innovation divided into 2 verticals. Those drug candidates that either activate or inhibit proteins involved in the mechanics and contractility of cardiac muscle or skeletal muscle, and lead amongst these are our cardiovascular drug candidates, including aficamten, an inhibitor of cardiac myosin, now in a Phase III study, a pivotal Phase III study for the potential treatment of hypertrophic cardiomyopathy, and you'll be hearing a lot more about that here in a moment. Also omecamtiv mecarbil pending FDA approval as a potential new treatment for heart failure and still other compounds on this slide. You'll see that this is a slide of a company that's mature through its research and development, and we aim to be the leading company with emphasis to specialty cardiology in the biopharmaceutical sector, and we'll be speaking about how we can build a franchise strategy in terms of how to get there. So in terms of 2023, what are the key priorities? They're listed here. First and foremost is continuing execution of SEQUOIA-HCM. That's the pivotal study for aficamten for the potential treatment of obstructive hypertrophic cardiomyopathy, and at the same time, advancing a broad development program for aficamten in obstructive and nonobstructive HCM, and we'll be hearing later about how we intend to commit investment capital in large part disproportionate to everything else in favor of aficamten. But we also are engaging with FDA ahead of a February 28 PDUFA date for the potential treatment of omecamtiv mecarbil. I'll have some things to provide updates on that in a moment. We also have another Phase III drug candidate in reldesemtiv, and we want to continue execution of the pivotal study COURAGE-ALS through its completion of enrollment in this calendar year, while at the same time advancing an early-stage development pipeline for drug candidates that are also rooted in contractility as well as expanding that pipeline with new compounds coming out of research into development. So let's start with cardiac muscle and in particular, what's our franchise strategy, how does that read on aficamten in particular. So we intend to build synergies associated with aficamten and potentially omecamtiv mecarbil around a commercial franchise. What does that mean? It means focusing to the commercial readiness around where a sales organization of roughly 150 to 200 people potentially could provide sufficient reach and frequency in order to become a leading company specialized in this sector. That means also building out the commercial support functions, market access, analytics, learning and development, pricing, forecasting and other things as to be enabling of a go-to-market strategy. Already, we've deployed medical affairs and medical scientists in the field who are assisting with the conduct of clinical trials as well as disease state education and awareness, and there are corporate support functions that are important associated with IT, finance, et cetera, in order to make that happen. Who are we targeting? We're targeting those roughly 1,000 hospitals and fewer than 10,000 cardiologists, who are the high-volume prescribers for specialty cardiology medicines that are rooted in diseases of muscle function. And with omecamtiv being potentially the first-to-market, aficamten being the one, to quickly follow behind, we're building an infrastructure that we think can be supportive of an emerging specialty cardiology franchise with high economies and synergies, as you can see depicted here. To this point, we've hired roughly 1/3 of the people that we would expect to be required in order to make that happen. We've got a cardiovascular franchise team of roughly 75 people, about 10 of whom are solely dedicated to omecamtiv. That means that the other 65 are engaging in activities that would benefit the company for what is both aficamten and omecamtiv. And you can see on the right-hand slide, those activities that are underway have been already pre-NDA filing and those that would be gated upon NDA approval. Still roughly 2/3 of the field-based personnel would be gated upon potential approval. So what does that mean for aficamten? We're looking at a market that is large, but growing where the majority of the candidate patients are still largely undiagnosed. Roughly 280,000 diagnosed HCM patients in the United States, about 190,000 of whom are symptomatic. But you can see here that number is expected to grow and the largest proportion still undiagnosed. And aficamten is a next-in-class inhibitor of cardiac myosin. We're aspiring to a target profile that would be enabling of category expansion to those patients currently undiagnosed. Rapid onset of action, precise dosing, simplicity of use, rapid reversibility, these are things that we think build on Phase II data we've already seen and should hopefully be therefore confirmed in the ongoing Phase III study. Those Phase II data came from REDWOOD-HCM cohorts 1 and 2. This is the trial schema. It was a study of roughly 10 weeks of dosing Cohort 1 lower dose, Cohort 2 higher dose. And as you can see here results just recently a couple of weeks ago published in the Journal of the American College of Cardiology. And as you can see here, dose-dependent rapid reductions in resting gradient, left ventricular outflow tract gradient and Valsalva. These are impressive data that were already presented and published, and we believe augur well for what we should see in Phase III. But also when looked at and across responder definitions, responder meaning patients who, after treatment, have gradients resting less than 30 millimeters of mercury and Valsalva less than 50, you can see dose-dependent increases in those responder definitions across Cohorts 1 and 2. Importantly, without treatment-related SAEs, strong reversibility and also accompanied by statistically significant reductions in NT-proBNP and improvements in NYHA class, as depicted on this slide. So these data are already well socialized, and we think set expectations for what we should be seeing in the pivotal study as I'll speak in a moment. But we are also conducting a Cohort 4 in patients with nonobstructive HCM. And at this meeting, we're pleased to present that we completed enrollment in Cohort 4 in the fourth quarter of last year, and you can expect results from this open-label cohort in this first half of this year. These data are encouraging. We've already seen them as open label, and they already set the table for us to be planning for an end of Phase II meeting and the start of a Phase III study later this year. We've also been presenting open-label extension from REDWOOD-HCM in a study we now call FOREST-HCM. And you can see here, as already presented, out to 6 months consistent and sustained reductions in resting gradients as well as improvements in NYHA class and changes from baseline in KCCQ. This again speaks favorably to what we should expect in a Phase III study. You'll see more data from that open-label extension this year. It wouldn't be right to present those data without fair balance. You can see here, the safety data underscore good safety and tolerability and both with regard to REDWOOD-HCM and FOREST-HCM, you're seeing a favorable profile in terms of treatment interruptions, discontinuations, SAEs and the stopping criteria of LVEF below 40. So we're incredibly encouraged by these data speak to what we hope now to see in SEQUOIA. SEQUOIA is the ongoing Phase III study. The plan is to enroll at over 100 in -- plus 100 sites in U.S., Europe and Asia. This study is enrolling well. With our Q4 earnings call in February, we'll give an update on enrollment, but we're also guiding to results in the second half of this year from this pivotal study that should set the stage for approval hopefully next year. This study is looking at end points out to 24 weeks, and hence, why the 6-month data from the OLE speak favorably to what we hope to be seeing in SEQUOIA-HCM. We also are seeing in the open-label extension data that give us confidence that physicians feel comfortable withdrawing frontline beta blocker therapy and still are seeing good gradient reductions improvements in NYHA class without also reductions in LVEF. So that informs then the design and conduct of a trial that will be underway soon as well. Another Phase III study will be starting soon in obstructive HCM. Think of this study, if you will, as a potential Phase IV-like study that we're also just starting early. It's not pivotal to the registration strategy, but we do believe it will be supportive of use post approval. So you see here a broad development program for aficamten across obstructive and nonobstructive HCM. This is our highest priority commitment in 2023. And you can see all those studies and timelines factor there. Our goal is to do this such that we are filing an NDA next year for potential approval next year. Aficamten is targeting patients with a high unmet need. We believe that the health care professionals based on market research see that the rapid onset of activity, the improvement in symptoms, reduction in thickness of walls -- septal wall thickening would suggest this could be a next-in-class profile contributing to a meaningful expansion in the category. So you see the characteristics of the ideal HCM patient for aficamten. These are patients who are symptomatic and uncontrolled and also newly diagnosed to my point about category expansion. So our brand strategy that informs market access detailed here. We're going to be competitive in the HCM market by expanding the customer segment that will be comfortable using inhibitors of cardiac myosin to [ maintain ] patients on therapy and to also penetrate into the undiagnosed sector of that marketplace. So here you can see some high-level comments about our market access strategy. It is now underway. Our go-to-market strategy is already being implemented in 2023 to support a potential approval in 2024. So I don't want to simply talk about aficamten without also providing an update on omecamtiv even though it's not our highest priority for 2023. You may know that omecamtiv was a subject of an Advisory Committee meeting in December. The Advisory Committee vote did not go our way. They voted 8 to 3 against the overall benefit risk for omecamtiv in the overall treatment population. We are continuing engagement with FDA. We have interactions throughout this and next month ahead of a PDUFA date of February 28, and we'll have more to say about this with our upcoming earnings call, but we continue to prepare for the potential commercial launch as may follow that PDUFA date. And we do believe that there is still a very high unmet need in patients with heart failure and reduced ejection fraction, especially in patients who are intolerant to guideline-directed medical therapy. And as you can see on this slide, only about 23% of patients with HFrEF are on the 3 pillars of therapy. Many patients don't get to optimal doses because of comorbidities. Many patients can't be on all 3 GDMT treatments, and therefore, they drop off therapy. And we believe these are the type of patients who might best benefit from omecamtiv mecarbil as would be not foundational, but add-on therapy for heart failure. You can see, it's a large market. It's still an epidemic in this country, but for which we're not focused to all such patients. We're focused to those same patients where there would be high overlap with where we expect to be with aficamten. Roughly 2 million patients who have ejection fractions less than 30% recent hospitalization and because of limitations in GDMT, they still have opportunity to benefit from an add-on therapy, like omecamtiv mecarbil. These are the results from the pivotal Phase III study. This was a study that was over 8,000 patients. It's the second largest heart failure study ever conducted. The study was positive, P less than 0.05. In fact, P equal 0.025, admittedly a modest reduction, 8% relative risk reduction in the overall population. But if you look at those patients who are more severely ill, more advanced heart failure, you see a larger treatment effect that's clearly evident in the patients with ejection fractions below 30%. And also, when you look at Class III and IV patients or recently hospitalized patients, there's a meaningful treatment benefit in these prespecified subgroups. And it's okay to look at prespecified subgroups when the overall population saw a clinically benefit and a statistically significant one. So we're looking at these prespecified subgroups as could inform potential strategy. When you look at patients who are intolerant to GDMT, you see an even larger 38% relative risk reduction patients who are seeing mortality trends also in favor of omecamtiv, even when treated with GDMT. And here again, favorable tolerability and safety, underscoring that the benefit risk perhaps in this subset of the overall population is still favorable. I'll now switch gears and quickly talk about our other program in Phase III. This is a program for reldesemtiv, a skeletal muscle troponin activator, being developed for the potential treatment of ALS. ALS is getting a lot of attention these days. Cytokinetics hosted a fundraiser for a nonprofit last night and hundreds of people were in attendance, recognizing the high unmet need in ALS for education, awareness and new medicines. We conducted a large Phase II study of over 400 patients. And what we saw across 3 doses in Phase II was a consistent effect across all doses in reducing slow vital capacity relative to placebo or standard of care, a nominally statistically significant finding in a smaller Phase II study intended to be hypothesis generating. When combining those doses to get more statistical power, you see an over 25% relative risk reduction in slow vital capacity, and you also see that the ALSFRS, the pivotal endpoint for registration in ALS trials also saw a meaningful reduction clinically relevant, favoring reldesemtiv when added to standard of care. That effect was even more pronounced in patients who were more rapidly progressing. So we began to look at these in a post-hoc way admittedly in order to inform a Phase III study design for COURAGE-ALS to look at those patients less than 24 months since diagnosis and who have more compromised ALS functional scale status. COURAGE-ALS has already enrolled over 300 patients. It should be completing enrollment after we conduct an interim analysis in the first half of this year, and our goal is to see results from this study next year. I'll now end with just a couple of slides on our corporate profile. Here's our balance sheet as of the end of Q3. You can see at that time, approximately $900 million in cash and cash equivalents. We ended the year with over $800 million on our balance sheet. We'll be updating our financials and financial guidance with our Q4 earnings call in February. But here's what I'd like to leave you with. We intend to be committing, as far as investment spending, a majority of our R&D dollars towards aficamten. As you can see here, approximately 60% of planned R&D spending this year still representing over 2 years of cash from the beginning of this year, and that's going to aficamten this year. So in terms of milestones, you see them broken out here. On the first row, you're seeing things that are earlier in the year; on the second row, things that are later in the year; and we intend to make aficamten our highest corporate priority, as you can see here, but also setting the table for the franchise strategy that is, we believe the hallmark of our future successes with omecamtiv and also setting the table for what could be the second vertical going to market, and that's reldesemtiv. So a busy year, lots of news flow, lots of catalysts and milestones, and we look forward to keeping you abreast of our progress through the year. With that, I'll end the presentation. Thanks very much, and we'll turn it now to questions.

Great. Great. Yes. So now we're going to flip over into our 20-minute Q&A session with Robert joined by Fady Malik, EVP of Research and Development, at Cytokinetics. So welcome, both. So please just kind of wave your hand at me if you have any questions because we're having some technical difficulties with the Q&A queue. So just wave your hand, if you have any questions, but I'll get us started here. So start starting with aficamten, how is your enrollment progressing in SEQUOIA-HCM? And it sounds like you're on track to share data in the second half of this year. And maybe help us frame what level of detail we could see in the top line data release later this year?

So I think we accomplished what we set out to accomplish in 2022, which enables us to be confident about completing enrollment here in first half 2023, to be enabling of at least topline results in the second half. Fady oversaw the execution of a SWOT team that went out and visited nearly all of the enrolling sites all around the world in Q3 and Q4 to be ensuring that we're enrolling well. I'm not going to comment today on where we are specifically in terms of enrollment, but we will provide an update with our Q4 earnings call. And maybe I'll ask Fady to comment on what we might could expect from results later this year.

Yes, I think by the end of this year, we'd hope to be able to report topline results. I would say that we'll definitely give some sense of, obviously, the trial is positive, to what extent we're happy with the data. We may not include a lot of details because we'd obviously like to keep the trial eligible for a late-breaking presentation at an upcoming medical conference. But I think as we have in the past, we've provided sufficient detail to -- for people to understand what the results will be like when they're fully presented.

Okay. Okay. And why was peak VO2 chosen as the primary endpoint of SEQUOIA versus gradient or another endpoint? And kind of what is the bar you think you need to hit there? I believe that the trial is powered for a 1.5 difference between your 2 arms. So just help us understand that a little bit. And then have you previously collected any peak VO2 data with afi?

Yes. Well, so peak VO2 was selected because it's an objective measure of exercise performance. And that's one of the things that these patients suffer from is reduced exercise performance. They have trouble walking upstairs or even walking up streets that have slopes in them or inclines in them. And peak VO2 and the exercise test that accompanies the measurement of that is the most objective measurement of exercise performance. Things like left ventricular outflow tract gradient or other biomarkers don't necessarily rise to the level of being a functional or symptomatic improvement. And so in terms of an approvable endpoint, generally you have to show an improvement in function or symptoms. So that's the rationale for using an exercise endpoint as the primary endpoint. The second part of your question is...

Bar to hit.

The bar to hit, right? So we powered the study at 1.5. In general, in the heart failure field, an improvement of 1.0 was felt to be clinically meaningful. The -- we chose a somewhat higher bar. We actually have very good power to see 1.5 in excess of 90%. It was the improvement roughly that was seen with mavacamten in the EXPLORER study was 1.4. And so we powered the study to be able to see that or better.

Okay. And kind of what is the feedback from docs? Is 1.5 as sufficient? That seems to be the feedback we get, but that's like the clinically meaningful kind of...

Yes. I mean, as I said earlier, the literature supports even a 1.0 as being clinically meaningful. But as importantly as peak VO2 measurements of symptoms as we're doing in terms of KCCQ, the Kansas City Cardiomyopathy Questionnaire, NYHA class are also important measures of patient symptomatic improvement.

Yes, which kind of gets me to my next question. Sort of what are the key secondary symptom improvements we should be focusing on here? And what does your market research suggest are the most important measures for physicians? And sort of give us a sense for what sort of placebo-adjusted bar you might like to hit on either NYHA class or KCCQ improvement to kind of say, okay, this program is differentiated.

Well, you named probably the most important secondary endpoints of NYHA class and KCCQ. These are generally very well correlated with physicians' impressions of how patients are doing as well as patient impressions of how they're doing and are important to assessing the impact of the drug on patient well-being. We would like to see, for NYHA class, obviously, that the majority of patients achieved a one or more class improvement. The NYHA class are 4 classes, and fourth class is essentially symptoms at rest. We don't enroll too many of those patients because they probably need more urgent resolution of their symptoms. We mostly enroll class 2s and 3s because class 1 is asymptomatic. We'd like to see the 2s go to 1. That's a pretty high hurdle because to have no symptoms is a tough one. Going from 3 to 2 is a bit easier, which is moderate to severe to mild to moderate. And so one or more class improvement, I think, in the majority of patients is what we'd like to see. With KCCQ, I think it's a scale that's not as frequently used to assess patients, but has very good validation in the literature in terms of its correlation with patient quality of life. And generally, a 5-point or more improvement is what's considered meaningful there. As we presented in some of our open-label data, we were seeing improvements far in excess of that. And so we think that these therapies is class therapies have a real impact on patient well-being.

I might just add that when you do the market research here, physicians favor function and then symptoms, patient symptoms then function. And it's a dynamic where there are some patients who are going to be themselves, pushing to be on a new therapy, and you're going to need to demonstrate that the drug is doing more than just simply increasing exercise capacity. They're going to want to know that they feel better, that their well-being is improved. And physicians are also very much focused to ease of use, reversibility in properties around therapeutic window and rapid onset of action. So these are the kinds of things that do score high in our market research, underscoring a potential favorable adoption associated with a next-in-class profile.

Yes. And how important is kind of the faster time to titration to your efficacy profile do you think?