Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to the Cytokinetics 2023 Annual Stockholders Meeting. At this time, I would like to inform you that this meeting is being recorded [Operator Instructions] I will now turn the meeting over to John Henderson, the Chairman of Cytokinetics' Board of Directors. Please go ahead.

Welcome, ladies and gentlemen. I'm John Henderson, the Chairman of the Cytokinetics Board of Directors, and I welcome you to our 2022 Annual Meeting of Stockholders. I call the meeting to order. John Faurescu, Associate General Counsel and Corporate Secretary, will record the minutes. Before proceeding to the formal business, let me introduce Robert Blum, the company's President and Chief Executive Officer, who will provide a review of our 2022 accomplishments and plans for 2023 after our formal proceedings. Before proceeding, though, I'm pleased to introduce the members of Cytokinetics' Board of Directors who are here with us today: Muna Bhanji, Sandy Costa, Sandy Smith, Wendell Wierenga and Nancy Wysenski. I'm also pleased to introduce the other members of the company's management joining us here today: Steve Cook, Senior Vice President, Supply Chain Operations; Ching Jaw, Senior Vice President and Chief Financial Officer; Fady Malik, Executive Vice President, Research and Development; Diann Potestio, Vice President, Global Value and Access; Dan Kates, Vice President, Medical Affairs; Erin Donnelly, Vice President, Portfolio Management; Kari Loeser, Vice President, Chief Compliance Officer; Diane Weiser, Senior Vice President, Corporate Communications and Investor Relations; Robert Wong, Vice President, Chief Accounting Officer; YulyMae DiNapoli, Vice President, Chief Human Resources Officer. I would also like to introduce Bob Jones, our company counsel from Cooley, as well as Dan Coleman of Ernst & Young LLP, the company's independent registered public accounting firm. And Dan is available to respond to appropriate questions. With that, I would now like to turn the meeting over to John Faurescu to conduct the formal business of today's meeting as set forth in your Notice of the Annual Meeting and Proxy Statement. After the formal part of our meeting, Robert Blum, as I said earlier, will review the company's recent business activities. So John?

Thank you, John. Good morning. I have at this meeting a complete list of the stockholders of record of the company's capital stock on March 21, 2023, the record date for this meeting. I have proof by affidavit that the company's proxy statement, proxy card and annual report on Form 10-K were deposited in the United States mail commencing on April 7, 2023, to all stockholders of record at the close of business on March 21, 2023. The affidavit, together with copies of the proxy statement, proxy card and the annual report, will be filed with the minutes of the meeting. In addition, Robert Wong, Vice President and Chief Accounting Officer, will serve as the Inspector of Election to carry out the duties set forth under the General Corporation Law of the State of Delaware. Mr. Wong has signed an oath of office as Inspector of Election. The oath of Inspector of Election will be filed with the minutes of the meeting. We have present in person and by proxy holders of a sufficient number of shares to constitute a quorum. So the meeting is duly constituted. We will vote by proxy and written ballot today. If you're a stockholder attending the meeting today in person and have turned in a proxy and do not intend to change your vote, then it is not necessary that you vote, because we will count your votes as expressed in your proxy. Those attending stockholders present in the room today who did not turn in a proxy card or who wish to change your vote and have your proxy card with you, please raise your hand. Are there any additional proxies to be submitted at this time? Is there anyone present, whether or not you already submitted a proxy, who now wants to vote in person? The polls are now open for voting, at 10:04 a.m. Pacific Time. The polls will be closed to voting after we go through the matters to be voted on. We will first present the 6 proposals submitted for approval. Please save all questions related to the proposals for after all of the proposals have been presented, after which we will announce the preliminary results of the voting. The first item of business is the election of directors. The following 3 directors are nominated by the Board of Directors as Class I Directors of the company to serve until our 2026 Annual Meeting: Edward M. Kaye, Wendell Wierenga and Nancy Wysenski. The Board of Directors recommends that the stockholders vote FOR these 3 Class I nominees. The second item of business is the approval of the amendment to the company's Amended and Restated Certificate of Incorporation to permit the exculpation of the company's directors. The Board of Directors recommends that the stockholders vote FOR the approval of this proposal. The third item of business is the approval of the amendment to the company's Amended and Restated Certificate of Incorporation to permit the exculpation of the company's senior officers. The Board of Directors recommends that the stockholders vote FOR the approval of this proposal. The fourth item of business is the ratification of the selection by the Audit Committee of our independent auditors. The Audit Committee of the Board of Directors has selected Ernst & Young LLP to serve as our independent registered accounting firm for the fiscal year ending December 31, 2023. The Board of Directors recommends that the stockholders vote FOR the ratification of this selection. The fifth item of business is the advisory vote on the executive compensation of the company's named executive officers as described in our proxy statement for this Annual Meeting. The stockholders have been asked to vote on an advisory basis on the following resolution: "Resolved that the company's stockholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in the company's proxy statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the related compensation tables and the narrative disclosure to those tables in the proxy statement." The Board of Directors recommends that the stockholders vote FOR the advisory proposal. The sixth and final item of business is the frequency with which the stockholders of the company wish to have an advisory vote on the compensation of the named executive officers. The Board of Directors recommends that the frequency with which the stockholders have an advisory vote on the compensation of named executive officers is every 1 year. If you have voted in today's meeting, would you please give your ballots to the Inspector of Election? It is now 10:07 a.m. Pacific Time, and the polls for each matter to be voted on at this meeting are now closed. No additional ballots or votes and no changes or revocations to ballots or proxies will be accepted. At this time, I would like to report on the results of the voting. Regarding Proposal 1, the proposal to elect each of Edward M. Kaye, Wendell Wierenga and Nancy J. Wysenski. Edward M. Kaye received 53,747,558 votes for his election, and 32,769,039 votes were withheld. Wendell Wierenga received 78,964,121 votes for his election, and 7,552,476 votes were withheld. Nancy Wysenski received 81,892,163 votes for her election, and 4,624,434 votes were withheld. Accordingly, the proposal to elect each of Edward M. Kaye, Wendell Wierenga and Nancy J. Wysenski is APPROVED, and each of these director nominees are elected. Regarding Proposal 2, the approval of the amendment to the company's Amended and Restated Certificate of Incorporation to permit the exculpation of the company's directors. Votes in favor of the proposal were 84,086,696; votes against the proposal were 2,218,239; and 211,662 votes were abstained. Accordingly, the proposal is APPROVED. Regarding Proposal 3, the amendment to the company's Amended and Restated Certificate of Incorporation to permit the exculpation of the company's senior officers. Votes in favor of the proposal were 74,005,479; votes against the proposal were 12,316,276; and 194,842 votes were abstained. Accordingly, the proposal is APPROVED. Regarding Proposal 4, the appointment of Ernst & Young LLP as the company's independent registered accounting firm for the fiscal year ending December 31, 2023. Votes in favor of the proposal were 88,925,767; votes against the proposal were 1,545,824; and 82,668 votes were abstained. Accordingly, the proposal has been RATIFIED. Regarding Proposal 5, the resolution concerning the advisory vote on the compensation of the named executive officers as disclosed in the company's proxy statement for the 2023 Annual Meeting of Stockholders. Votes in favor of the proposal were 83,090,317; votes against the proposal were 3,278,668; and 147,612 votes were abstained. Accordingly, the proposal is APPROVED on an advisory basis. Regarding Proposal 6, the frequency with which the stockholders of the company wish to have an advisory vote on the compensation of the named executive officers. Votes in favor of 1 year were 86,007,057 votes; in favor of 2 years were 25,784; votes in favor of 3 years were 399,295; and 84,461 votes were abstained. Therefore, the proposal for a frequency of 1 year is APPROVED on an advisory basis. This concludes the formal business of the meeting, and we would now like to begin our report to stockholders. The meeting is now concluded. The following discussion and presentation contain forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual results might differ materially from those projected in these statements. Factors that could cause our actual results to differ materially are contained in our SEC filings, including our most recent annual report on Form 10-K, quarterly report on Form 10-Q and current reports on Form 8-K. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website. These forward-looking statements speak only as of today. You should not rely on them as representing our views in the future, and we undertake no obligation to update these statements. I will now turn over the meeting to Robert Blum, our President and Chief Executive Officer.

Thank you, John. In my role as President and CEO, I'm pleased to be addressing you at Cytokinetics' 19th Annual Stockholder Meeting. Thank you to everyone who has joined us in person and to those also listening by phone and online. As I elaborated in our shareholder letter, in 2022, we refined our core values to clarify and distill them into 4 key tenets: patients are our North Star; science is in our soul; we, greater than me; and make it happen. These values reflect our patients are at the center of all we do, our commitment to critical scientific thinking and integrity, our pledge to foster diversity, equity and belonging, while always being our best selves and, our signature, tenacity, resilience and results orientation. As we've entered 2023, we've leaned into these values to persevere through some admittedly disappointing developments in our pipeline. First, earlier this year we received a Complete Response Letter from the FDA regarding our new drug application for omecamtiv mecarbil, our cardiac myosin activator being developed for the potential treatment of patients with heart failure with reduced ejection fraction, or HFrEF. While we were disappointed with this outcome, this was a scenario for which we had prepared. As you'll hear, we're now engaging with regulatory authorities for potential international approvals for omecamtiv mecarbil as we also continue to engage FDA to assess potential next steps for this program in the United States. More recently, we announced that COURAGE-ALS, our Phase III clinical trial of reldesemtiv, being developed for the potential treatment of ALS, met the criteria for futility. As a result, we're now closing out that trial. Cytokinetics has been committed to the ALS community for more than a decade, and this was an extremely disappointing outcome. We will continue to support this community, as we have for so many years, as our compassion and commitment endures. While we're certainly very disappointed by the outcome for COURAGE-ALS, it affords us an opportunity to realize certain savings in 2023, which we believe can extend our cash runway and enable us to reallocate resources to further increase our focus on aficamten. Previously, approximately 60% of our R&D budget was devoted to aficamten, but with savings we now expect in 2023, an even higher proportion of our total spending will now be dedicated to aficamten. And as you'll hear me elaborate more in a moment, in 2022, we began patient enrollment in SEQUOIA-HCM, the potentially pivotal Phase III clinical trial of aficamten in patients with symptomatic obstructive HCM. And we recently announced that this trial is currently completing enrollment. We expect results in late Q4 2023. We also began Cohort 4 of REDWOOD-HCM in patients with nonobstructive HCM in 2022, and we recently announced encouraging data that support progression to a Phase III clinical trial in that patient population. These milestones represent an important step forward for that program, which is poised to expand further in 2023 with the start of 2 additional Phase III clinical trials. In parallel, over the last year our company evolved significantly in preparation for the future commercialization of our medicines. We built up our capabilities and commercial readiness for our specialty cardiovascular franchise, inclusive of aficamten and omecamtiv, as well as earlier programs advancing in development. In 2023, we're celebrating 25 years since our start of operations. And while so much has changed for Cytokinetics over the years, our patient-centricity, integrity, critical thinking and resilience remain as strong as ever. Our operations now span both coasts, following the opening of an additional office outside of Philadelphia in 2022, and our more than 400-employee strong organization now supports our vision of being an integrated commercial-ready biopharmaceutical company with a robust and innovative pipeline arising from our own research. In the corporate presentation that will now follow, I plan to share highlights of the progress we achieved in 2022 as well as some of our more recent activities related to these development programs. For those of you joining us by webcast, you can find a PDF of the presentation slides under the Downloads tab in the webcast window. And I'll now provide an update on the company. Again, as John mentioned, I'll be making forward-looking statements. We don't undertake any obligation to update these statements, but I do refer you to our SEC filings with regard to caveats to those statements. As you can see on Slide 3, our Vision 2025 continues to guide us as we pursue the advancement of our pipeline of specialty cardiovascular programs. We intend to be in a position such that we can advance at least 2 of these programs into the hands of patients by 2025, enabling us to further build the commercial business that we've sought to architect, design and construct over these years; at the same time, maintaining our commitment to advancing innovations with our expanded research platform, our expanding development pipeline of up to 10 candidates by 2025, all while maintaining the same values and commitments and integrity that have brought us forward to this key milestone year. All of this work is rooted and anchored in the same biology, a biology under the supervision of our Head of R&D, Fady Malik, and his vision by which we have designed and integrated research assays that enable us to interrogate a structure called the sarcomere, around which we have advanced through discovery and development activators and inhibitors of proteins that drive the mechanics and the contractility, the biomachinery, of muscle. And you can see them depicted on this slide, those activators and inhibitors that comprise our cardiovascular pipeline. In particular, in this presentation, I'll focus on aficamten, our cardiac myosin inhibitor, and omecamtiv, our cardiac myosin activator. As you can see in this pipeline, they've advanced to the late stages of development. Aficamten being that lead horse we're riding as we build out the next level of this company and business, but behind it also omecamtiv; CK-136, our cardiac troponin activator; CK-586, which is entering Phase I for the potential treatment of HfpEF. And as you can see, over these 25 years Cytokinetics has built what amounts to, we believe, a leading cardiovascular pipeline of novel mechanism drug candidates around which we believe we can build an enduring and sustaining business. I'll elaborate now on 2 of those drug candidates, those in advanced development, before highlighting briefly the 2 in early development. Starting with aficamten. Aficamten is being developed for the potential treatment of hypertrophic cardiomyopathies, including orphan-designated disease, like obstructive HCM and nonobstructive HCM. This is a market that's evolving now, with the first branded drug recently introduced. And at the same time, we believe that the greatest potential in this market opportunity lays beneath the surface in terms of currently undiagnosed and untreated patients. There are roughly 280,000 such diagnosed patients, and we believe it's incumbent upon us developing a next-generation drug candidate in this space to be focused to where that market opportunity can be greatly expanded and, hence, where we think aficamten can become a mainstay of treatment. Aficamten, we believe, delivers on an aspirational target product profile of the optimal cardiac myosin inhibitor, a drug candidate that can achieve rapid onset of action, rapid reversibility, enabling more precision dosing as well as a simplicity of use to be enabling of convenience for physicians as well as patients. And we do believe this would be the profile of a drug candidate in this space that can redefine this category. Along the way, we've been conducting a Phase II study called REDWOOD-HCM. Here, you see the design for Cohorts 1 and 2 of what are 4 cohorts in this Phase II study. Cohorts 1 and 2 have been completed. And this was a study that looked at 10 weeks of dosing of aficamten in a dose escalation phase for obstructive HCM patients. Data presented last year demonstrated dose-dependent reductions in gradient, meaningfully large reductions and at the same time, they were achieved rapidly, within 2 weeks. You'll hear in a moment how those effects have been sustained. But also, importantly, no treatment discontinuations or interruptions, no treatment-related SAEs, a reversibility of drug effect upon cessation of dosing and, importantly, statistically significant reductions in NT-proBNP and improvement in NYHA Class, referring to a biomarker of outcomes as well as a measure of patient symptoms. You can see those data depicted on this slide. Impressive achievements in terms of reductions in NT-proBNP achieved within 10 weeks as well as improvements in NYHA Class heart failure symptoms. These are all indicative and encouraging of what we would hope to see in Phase III. I'll speak to that trial design in a moment. But we also conducted a Cohort 4 and recently have read out results data from those patients with nonobstructive disease. And here, you can see a similar trial design; these initial data presented just recently at the ACC meetings, with more data coming later this month at the European Heart Failure meetings. Here, those data already presented again dose-dependent decreases in proBNP, improvements in NYHA Class and reductions in troponin, all auguring well for what we should hopefully see as we measure outcomes in Phase III. Also very notably presented recently and last year, our longer-term follow-up for these patients in these early cohorts. And here, you see data from FOREST-HCM, which is the longer-term extension. And you can see these gradient reductions are sustained out to 48 weeks of measurement. More of these data coming later this year. And also, you can see in the open-label extension, like we saw in the earlier 10 weeks, these data underscore sustained improvements in NYHA Class as well as in KCCQ scores. So we believe that the effects observed early on in REDWOOD, as now maintained out to longer-term follow-up in FOREST, lend support for what we hope to see in Phase III. So, too, do the safety data that have been presented from these studies. And here, you can see we continue to have no reported cases of ejection fraction falling below 40%, an important measurement of crossing over the threshold to heart failure. And again, no treatment-related dose interruptions or discontinuations from this long-term follow-up. So we began a study of aficamten in obstructive patients called SEQUOIA, a Phase III study looking at change in peak VO2, as measured by cardiopulmonary exercise testing, from baseline out to Week 24. And we're very pleased to have recently communicated on our last week earnings call that we expect to complete enrollment and randomization in this current month of May to be enabling of results from this potentially pivotal study by the end of this year, in late Q4 2023. This is a study that's being conducted all over the world, including in China by our partner, Ji Xing, and we do believe that this study, with a primary endpoint of change in peak VO2, secondary endpoints in change in KCCQ and improvements in NYHA Class, could be enabling and supportive of registration and submission of regulatory documents for potential approval next year. We're very excited about that study and what it can mean for patients as well as for shareholders. At the same time as that study is completing its enrollment and randomization this month, in this second quarter we expect to start another Phase III study of aficamten in patients with obstructive disease, a study called MAPLE. This is not a study that we believe is critical path to registration and approval, but could be enabling of further expansion of labeling. Consider it possibly like a Phase IV study that we're bringing up to start sooner. And this is a study that we think could be enabling of further comfort on the part of physicians to be treating patients here with aficamten potentially as a first-line therapy, as this is a study going head-to-head with beta blocker, metoprolol. And this is a study that we expect will enroll approximately 170 patients worldwide, another further commitment and underscoring of our convictions to support aficamten in an expanded development program. And here, you can see that expanded development program as encompasses our commitments in both obstructive HCM and nonobstructive HCM, and that represents for us a comprehensive clinical trials program, with SEQUOIA leading the way, MAPLE coming in right behind it, FOREST continuing all along the way and another Phase III study to be begun later this year in nonobstructive patients. Our aficamten brand strategy is depicted on this Slide #21. We expect to compete in the HCM market with the currently approved drug already demonstrating successes in that space, but also as we think can be meaningfully expanded with more physicians being comfortable using a drug like aficamten if its profile continues to demonstrate what we've already seen and where we think that can be enabling of patients to be maintained on therapy as well as where the category itself may be demonstrated useful for currently those patients not yet diagnosed, where we believe under the hood, so to speak, there's quite substantially more opportunity for this mechanism of action. So that is our strategy for aficamten. It is around which we expect to build our commercial business. But at the same time, that business is predicated on a continued commitment to our specialty cardiovascular pipeline, and that's where omecamtiv continues to occupy a prominent space in our planning. I will acknowledge that omecamtiv mecarbil earlier this year received a Complete Response Letter from the FDA with regard to the NDA for that drug candidate in HFrEF, heart failure with reduced ejection fraction, but it doesn't stop there. We are continuing to engage FDA around a possible path forward for omecamtiv mecarbil, and we hope to have more to report on that in this calendar year. But at the same time, we are furthering the development and regulatory activities associated with omecamtiv mecarbil outside of the United States, where an MAA is on file with EMA. We recently received Day 120 questions, and we're looking at what might be our response and planning with regard to omecamtiv in Europe. At the same time, it's also on file in China under the supervision of our partner, Ji Xing, and we're considering also other markets around the world. We still believe very much that omecamtiv mecarbil has demonstrated safety, tolerability and efficacy in patients, especially those with more severely ill cardiac symptoms and disease, and outcomes that augur for where we think this drug, alongside of standard of care, can demonstrate meaningful improvements. And we do believe that's in the interest of not only science and patients, but also shareholders, as we continue to pursue omecamtiv mecarbil as part of our cardiovascular pipeline and strategy. I have one slide here on our emerging cardiovascular portfolio because I do believe as shareholder interests are served, we should continue to be innovating. Our research engine has demonstrated over many years high levels of productivity, and that's advanced to early development now in the form of 2 other compounds while we continue research. CK-136 is in Phase I, a single-ascending dose cohort of a Phase I study looking at safety and tolerability and where that may lead, we hope, to potential further development in patients with compromised cardiac function, including, as depicted on this slide, patients that might have right ventricular failure or other conditions and diseases associated with impaired cardiac contractility. We also have recently received news that the IND is cleared from FDA, enabling a start of Phase I for CK-586, another cardiac myosin inhibitor that we believe has a different mechanism of action to aficamten and can be and should be developed potentially for those certain patients who have heart failure and preserved ejection fraction that resemble those nonobstructive HCM patients I spoke about a moment ago. And we're looking forward to exploring CK-586 in a Phase I study in this second quarter. And we also continue to commit to research in the area of muscle biology; this being very exciting, as our scientists are leveraging their pioneering leadership as it relates to the contractility of muscle and now looking beyond the mechanics of muscle to energetics, growth and metabolism of muscle as we expand our footprint in that space. All of that leads me to now conclude this presentation with a corporate profile. And here, you can see in a snapshot a summation of where we are. The company has 1 to 2 potential new launches that we expect in the next couple of years, based on advancement of aficamten and omecamtiv mecarbil, while still advancing 5 clinical-stage programs currently, moving to, we hope, as many as 10 in 2025, and that's depicted with our vision and on this slide. You can see here the metrics associated with our commitments. We have over 400 employees brought together by the same mission, purpose, culture and values. We have over $700 million of cash currently on our balance sheet, and we've given guidance to the fact that we believe that current cash represents over 2 years of forward cash runway, given our guidance, as well as, as we reported last week, a reduction in spending that we expect to be reflective in updated guidance with our Q2 earnings call later this summer. But here, you can see the balance sheet as we reported at the end of March, and it represents a very healthy cash balance to be supportive of those aspirations and ambitions I just spoke to. And here, as I conclude, are those expected 2023 milestones that we believe factor and figure into what matters to shareholders. As you can see, it's mostly about aficamten in this calendar year. And there you see the SEQUOIA results we expect by the end of the year and the expansion of the development program for aficamten, that representing a large majority of our investment spending. But it doesn't stop there. We also believe very much it's in the interest of shareholders as well as our mission to be continuing to advance our other programs, omecamtiv, CK-136, CK-586, as well as research in support of the plans to build an industry-leading specialty cardiovascular portfolio. With that, I thank you for your interest and attention to this corporate update. And for all of you here in the room, we're available for any questions you may have. Not seeing any questions in the room, that concludes my comments. I want to thank everyone for their continued support of the company. We remain committed to our goal of transforming patient lives, and we look forward to updating you on our progress. Thank you again. With that, I'll turn it back over to John Henderson.

Thank you, Robert, for the update on the progress Cytokinetics is making across our pipeline of muscle-directed therapies. 2023 will be a very important year for Cytokinetics, and it will be one marked by tremendous, but prudent, growth and expansion to support the accelerated development of aficamten as a next-in-class cardiac myosin inhibitor with potential advantages to expand the category and provide a potential medicine to enhance the physician and patient experience. With a focus on building our specialty cardiovascular medicine business, including the advancement of our early-stage cardiovascular programs for CK-586, our additional cardiac myosin inhibitor, and CK-136, our cardiac tropanin activator, our future remains bright, and our values continue to guide us towards our mission to bring innovative medicines to patients and caregivers and to deliver continued progress against our goal of improving the lives of people living with the diseases of impaired muscle function. With that, I want to thank all of you who have participated today in this stockholder meeting. I now declare the meeting adjourned.

This concludes today's conference call. Thank you for participating. You may now disconnect.