Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

All right. Thanks, everyone, for joining us at the Goldman Sachs Global Healthcare Conference. Really excited to have the team from Cytokinetics here to kind of walk us through the story, obviously, heading into a very impactful 6 months ahead. So it's a good time to chat with Robert and Fady. So I have a disclosure read at the beginning we acquired to make certain disclosures in public appearances about Goldman Sachs' relationships with companies that we discuss. The disclosures relate to investment banking relationships, compensation received or 1% or more ownership. We are prepared to read aloud disclosures for any issuer during the sessions upon your request. However, these disclosures are available in our most recent reports available to you as clients on our firm's portal. In addition, updates to those disclosures are available by ticker on the firm's public website. Goldman Sachs agrees to host this conference third-party speaker will provide confidential or material nonpublic information. In addition, by attending this conference, you provide on [indiscernible] right to record and redistribute the conference information. The views of third-party speakers do not necessarily reflect those in Goldman Sachs. And with that, let's hop right in. So obviously, this impactful 6 months ahead. So let's start with your lead drug cardiac myosin drug, aficamten or afi for short.

So can you please remind us of the rationale for targeting cardiac myosin for hypertrophic cardiomyopathy or HCM.

So maybe better for Fady to take that since we conceived of this class of mechanism both aficamten and its predecessor.

Well, so in hypertrophic cardiomyopathy, the disease is driven by mutations in the sarcomere, which is the fundamental unit of contractility and muscle. And those mutations have the effect of causing the sarcomere to be hypercontractile. Meaning you get a greater contractile effect with every cardiac cycle. And you can imagine how over millions of heartbeats that, that leads to destruction of the muscle hypertrophy of the heart, just like any muscle when you overwork it. And so -- and the fundamental issue there is that whatever the mutations are within the sarcomere, they lead to too many myosins. Myosin being the fundamental motor unit in the sarcomere, too many myosin, too many hands on the road pulling on the rope. So aficamten is a cardiac mycin inhibitor. And so it reduces the number of active mycin, the active cross bridges, fewer hands on the rope and sort of do some of the balance in the sarcomere to where the contractility is more normal. . The disease of hypertrophic cardiomyopathy is characterized by increased pressure gradients, patients feeling worse, breathless. And the idea here is that inhibitor should reduce those gradients, reduce pressure, reduce symptom burden and allow those patients to live a more normal life.

Great. So given there's an approved drug already for HCM targeting cardiac myosin and CMOs from Bristol-Myers web. I guess at a high level, how do you think afi differentiates in this treatment landscape?

So aficamten was designed to have what we would characterize as the optimal properties of a cardiac myosin inhibitor and the Phase II data that we have been reporting now for a couple of years, would underscore that this myosin inhibitor is translating into patient opportunities that we believe augur well for what we should hopefully recapitulate in Phase II. So I'll turn to Fady maybe to speak to what we've seen in Phase II and what was originally designed into this next-in-class profile.

Yes. The Phase II was designed to essentially show that aficamten could be titrated safely every 2 weeks. The benefit there to patients is that within a short period of time, they realize the benefit of the drug. And so by 6 weeks or so, every patient had achieved their target dose. Consequently, at the end of a 10-week treatment period when we went through the drug, we want to show the effect was reversible, so that if any patient got into trouble that decreasing the dose would effectively bring them back to where they were at the prior dose. And so we were able to demonstrate reversibility in that context. Shallow onset of effect so that you don't have patients that have really large responses to the same increment in dose. So the shallow exposure response relationship. We wanted to understand the range of doses that were effective there, and that was accomplished through kind of 2 overlapping dose escalation cohorts. Those data helped us designed in the Phase III trial of SEQUOIA HCM, which is what's ongoing now.

Okay. So maybe kind of following from this, a little more granularity. Can you walk through some of the existing clinical data for afi, both in obstructive and nonobstructive HCM.

So just to set the context, and maybe I'll ask Fady then to go into it in more detail. We've conducted Redwood HCM, which is a study -- a Phase II study comprising 4 cohorts, 3 of those cohorts 1, 2 and 3 looked at patients with OHCM cohort 4 patients with NHCM. And patients as they complete the randomized placebo-controlled portion of Redwood cohorts 1, 2 and 3 have been rolling into an open-label extension that goes by the name of [indiscernible] And all of these Phase II cohorts are 10 weeks duration treatment with a 2-week washout period. And maybe, Fady, if you want to speak to sort of what we've observed through those cohorts.

Sure. So I'll split it into 2 parts. One is obstructive HCM. Those are the patients that have a thickening of the heart underneath where the aortic valve or the blood exits the heart, they develop a pressure gradient there in the nonobstructive patients, which we studied in Cohort 4. So in [indiscernible] what we observed in the first 2 cohorts, which are essentially dose-finding cohorts. So we studied in the first group 5, 10 and 15 milligrams. In the second group, 10, 20 and 30 milligrams. We want to understand the range of doses that we potentially were going to take with us into Phase III. In that placebo-controlled double-blind study of those 2 cohorts, we found that the gradients, the pressure gradient is resolved with treatment in the higher dose cohort, 9 out of 10 patients resolve their gradients below the diagnostic criteria for obstruction. We saw improvements in functional class as measured by the NYJ class to where -- about 65% of the patients had a 1 class or greater treatment improvement. We saw a reduction in biomarkers that are correlated with cardiac stress, like NT-proBNP and troponin. And importantly, we also saw that safety was quite good and that we didn't have patients who had to either stop the drug because of too exuberant a response or it for other reasons. Ultimately, we -- out of that experience, decided to focus on first 4 doses, 5, 10, 15 and 20 going forward in our clinical trials program because of the 30-milligram dose, we only had 1 patient that ultimately achieved that dose. And so it didn't seem -- it seems like we've reached the top of the exposure response relationship. The third cohort in Redwood was designed to look at patients who have been excluded from all prior development of this mechanistic class. Those are patients on the last line of medical therapy, which is called disopyramide. And so that was an open label experience, relatively small, 13 patients who showed the same things, gradings went down. These are patients failing this last line of therapy because they were gotten to our trial because they had high gradients despite being on disopyramide. They still had a treatment response. They still improved their New York Heart Association class. Safety also was quite good in that group. And so that provides the rationale for including them in our Phase III trial and really providing them potentially with an option down the road for medical therapy. And then the last group, Cohort 4, which we really reported on only in the last few months, these are the nonobstructive patients. These patients have very little in the way of treatment options. They don't respond to beta blockers or calcium channel blockers, kind of the standard of care, surgery is not really an option for them. And as we reported in March and in May, these patients experienced a substantial treatment benefit. They -- their biomarkers went -- were improved. The anti-proBNP is They had a functional class improvement in their NYJ class. They had improvements in their Kansas City cardiomyopathy questionnaire to where about 60% of the patients had a 5-point, which is a kind of a clinically meaningful threshold or greater improvement in their KCCQ. And safety overall was reasonably good. We had reversible declines in ejection fraction in patients at the end of therapy, and that helped us to really define the range of doses that we would take forward. 85% of the patients got to the highest dose. And so as we've thought about now the Phase III trial, we understand the range of doses and kind of how to dose the drug in that group.

And what's encouraging about all of these cohorts is you're getting patients to their target dose within just a few short weeks, and that's producing symptom burden relief within just a few short weeks, which I think will matter a lot ultimately to patients if that's borne out by the Phase III data and also as we go to market.

Great. So kind of with all of that in mind, I mentioned SEQUOIA, the Phase III trial. So can you remind us some of the key aspects of the design of this trial? And then maybe follow-up with some discussion about how it roughly compares in terms of design to the EXPLORER trial for KAMZIos in the same obstructive HCM population.

Maybe I'll start. Firstly, we're going to avoid making any comparisons of aficamten to mavacamten. But certainly, the trial designs we can describe how they're similar and how they're different. As it relates to SEQUOIA, it's intended to be as real world as can be practical, and I say that from a couple of different optics, 1 of which is the way in which the clinical trial was designed but also where it's conducted. It's a study that's being conducted truly internationally throughout Europe, North America, even in the Middle East and Asia. And SEQUOIA is designed to look at patients with obstructive HCM compared to -- so it's a comparative study those on placebo alone or those on placebo plus aficamten as would be dosed over 24 weeks with a washout period of 4 weeks. And the idea here is to assess for changes in peak VO2, as measured by CPET for those patients who start with baseline measurements and then over time. And then secondary end points, including the KCCQ. And our objective here is to, with SEQUOIA readout in a way that could be expanding for potential array of patients and those physicians who treat them and their comfort for use of myosin inhibitors. So maybe I'll turn to Fady and speak more to the specific design elements, including the statistical objectives.

Yes. So with SEQUOIA, our objective was to be able to demonstrate an improvement in exercise capacity, functional class and symptoms. And so the endpoints reflect those 3 objectives. First, being an exercise capacity. There, we measure exercise capacity using an objective test, which is a cardiopulmonary exercise test. And the metric of interest there is a change in peak oxygen consumption. So the primary endpoint of the trial is the change in peak VO2. The other endpoints of NYHA class, functional class and KCCQ I've described Phase II data in those -- in generally, and those are the secondary endpoints as well as looking at some of the echocardiographic and biomarker changes that occur with treatment with aficamten. The primary endpoint is really just a continuous measure, a continuous calculation of using the change from baseline at week 24. And it's powered to over 90% power to detect a 1.5 milliliter per kilo per minute change. What does that mean practically? Well, clinicians tend to think of anything above 1.0 as being clinically significant with what we have in terms of the number of patients we've enrolled and the observed variability so far, we have well over 90% power to see a 1.5 change or even less than that in this clinical trial. So we think in terms of conduct, that's very -- that endpoint should be very assessed. The other objectives have to do with safety. And they're looking at the number of patients that have treatment-related safety events, in particular, drops in ejection fraction. The way that we handle those is with a decrease in dose that's handled through a computer system. So there's no physician or our intervention. It's only in cases where the injection fraction drops fairly low that there is an unblinding event. The trial is 24 weeks in duration. There's a 4-week follow-up after the -- after 24 weeks, they come off drug at 24 weeks, and I have a follow-up visit at 28 weeks, at which point then data can be cleaned and database locked and finally analyzed.

You asked about the comparison to the EXPLORER study. So there are similarities and differences. So the endpoints are different. The primary efficacy endpoint in SEQUOIA is change in peak VO2. The primary endpoint in EXPLORER, the pivotal study for mavacamten in obstructive patients was a combination endpoint that included both peak VO2 and change in NYHA class. And we're measuring both of those things, but we're doing it separately. Where our primary endpoint is peak VO2 by itself. Otherwise, the patients being enrolled are similar. It's possible. We'll see in the baseline characteristics, some differences. We can't be sure, but it's possible that we'll be in a position to report on the baseline characteristics in SEQUOIA sometime in Q3 has maybe occur at either the HFSA meeting or the HCM Society meeting, both of which are in September. But our goal here is to advance the category and advance the science. So there are things that we aimed to do that could be enriching for treatment effect and amplifying of magnitude of response. These are things that should be enabling of us to understand whether aficamten should, in fact, have labeling that may ultimately prove different. So for instance, we're looking at patients on and off beta blockers. We're looking at patients who come into the study with a deficit and exercise capacity and may, therefore, have potential to see a greater increase in exercise stamina. These are some of the things that might ultimately prove to be different between the 2 studies, although we can't know that until we see the data.

All right. So on all that, can you remind us how enrollment is going in SEQUOIA? And I guess, how confident are you that you're on track for a readout this year?

So here's what I can say. With our Q1 earnings call, which was conducted on May 4, we indicated that we would expect to complete screening on May 5, which we did. And we'll give an update on enrollment with our Q2 earnings call, which will be in early August. But to answer your other question, we do feel confident that we're on track to see data in Q4, which means we would have needed to meet our objective of completing enrollment in Q2. We're still in Q2, so we'll report on all of this here in the next few weeks. And our objective, as we've commented publicly was to even over enroll the study, and we'll be able to provide some thoughts about that, too. The study was designed to enroll 270 patients. And as such, it would be the largest clinical trial conducted in a population of obstructive HCM patients. And our goal was to over enroll it. So we'll see how we do.

Okay. So I asked this question because I'm going to get asked this question in the next couple of days. When you say you'll see data by year-end '23, do you mean you'll see data or we will see data?

Our intention is to top line it by press release in the fourth quarter.

Okay. Excellent. Great.

But the actual full data presentation may not occur until the next logical medical meeting, which as we look at the calendar, would likely, therefore, be the American College of Cardiology meeting in early 2024.

Perfect. So to that end, let's get to that point about the top line versus full medical data. So I mentioned I'm in here watching my favorite holiday movie Bloop, press release, top line data from SEQUOIA. How should we think about the data we're going to see in the top line for SEQUOIA relative to a more complete review of the data at a medical meeting like ACC in next year?

It's a hard question to answer until we actually see the data, but it would be our intention to report that, which is deemed material and not have that otherwise jeopardize the presentation of the data at a medical meeting. And that's in part a negotiation between us, lawyers and the people at the American College of Cardiology. We've done this before. And it's a dynamic process, but you can expect at least that, which reports on the primary efficacy analysis and hopefully a p-value associated with that. As to magnitude of effect, I don't know. And then there's the secondary endpoints and then there's the safety. I think you should hopefully expect some reporting on those. But again, not enough that it would be deemed front-running the presentation at a medical meeting. So it's some combination of those things that should enable investors, hopefully, to feel confident that the study met -- its endpoint as could be enabling of potential approval. And then as to how much and how it might ultimately read on a REMS program or the product profile or all these kinds of things. That's something that I now until we see the data as to how much of that would be included in the press release versus a medical meeting.

Okay. So it's an excellent transition for us. The question we get asked about all the time for this class, right, given the kind of structure for [indiscernible] right now on approval and kind of how do you think the transition better time. How should we think about a potential REMS for afi based purely on how you designed kind of monitoring in SEQUOIA?

Based on how we designed the monitoring. So we designed monitoring in SEQUOIA, so as to be able to collect and analyze data that would inform a flavor of realms. Meaning, if it is evident that in doing as frequent echo monitoring as we're doing that there are no value adds for that, no excursions that warrant assessment of ejection fraction or other echo parameters as frequently. One would hopefully be able to make a case for less frequent echo monitoring in the real world than was in the clinical trial. That's the objective. Our base case is that we're doing more monitoring in SEQUOIA that we think should be necessary post marketing. And we just have to collect the data in order to be able to evidence for that base case. But so far, I think you can be encouraged by the fact that we have now dozens of patients beyond 1 year and some patients beyond 2 years in the open-label extension of the REDWOOD Phase II study. And we're encouraged by the fact that we're not seeing dose interruptions, dose discontinuations, drug-drug interactions or anything that would warrant frequent echo monitoring post marketing. So to the extent that continues and to the extent that is validated by the SEQUOIA data that would lend evidence to how we would approach FDA vis-a-vis

Okay. So I mean following from that, do you think that these are issues that could come up as early as the initial FDA review of aficamten? Or is this the kind of thing where potentially a couple of years down the road to a commercial launch you could revisit an existing REMS regime kind of based upon real world experience?

I think it's part of our go-to-market strategy. So the initial approval should hopefully reflect that in as much as a REMS can often be proposed by a sponsor, and it becomes part of the negotiation of the label. And our base case is that we should have a form of REMS, but not necessarily one that's very restrictive in terms of frequency of echo monitoring.

Okay. So kind of following from that at a high level, SEQUOIA is successful, how do you view the commercial proposition for API relative to other drugs, HCM landscape?

So we look at aficamten as is a next-in-class compound. And if you look at next-in-class compounds generally speaking, it's incumbent upon those companies commercializing a next-in-class compound to be expanding of a category, a lifting tide, if you will, helps all boats. Our expectation is that aficamten will enter a market that's still in its infancy with still a vast majority of patients on beta blockers and calcium channel blockers and not a myosin inhibitor. And our goal would be to demonstrate that physicians in HCM centers of excellence, but also outside of those centers could be comfortable with a profile of aficamten so as to be able to use that to the benefit of their patients. We foresee that there's a large market here and upwards of 200,000 patients in the United States. And where that just represents in some ways, a tip of an iceberg because there are a lot of patients who are currently symptomatic, but not undiagnosed -- but not diagnosed, sorry. And therefore, it's incumbent upon us to continue to build education and awareness around the potential benefits of myosin inhibitor could accrue to patients. So we're looking at this as a category that's going to grow appreciably both in obstructive patients and also potentially in nonobstructive patients, and this is an area that could be defining of a very large cardiovascular market.

All right. So maybe moving beyond SEQUOIA. Can you walk us through the additional planned pivotal studies you all have for afi and obstructive HCM?

So you used the word pivotal. So there's another study called MAPLE, that I don't consider pivotal, but it should be, if successful, expanding of labeling. Maybe I'll ask Fady to comment on the design of maple. And then there is another Phase III study in non-obstructive HCM. Maple is going to get underway with start this month. And the nonobstructive HCM pivotal Phase III study will get underway in the second half of the year. We haven't commented so much on the design of that study yet. But maybe, Fady, if you wouldn't mind speaking to maple.

Sure. So maple HCM is intended to evaluate monotherapy of aficamten versus monotherapy of beta blocker. Beta blockers traditionally are first line of therapy in this disease. Many of our patients in SEQUOIA will be on beta blockers as background therapy. What we saw in the open-label extension in FOREST is that we allowed physicians to titrate background therapy, and in doing so, they eliminated beta blockers or calcium channel blockers in their patients and saw that the efficacy was maintained with aficamten as monotherapy. And so we now want to evaluate head-to-head, which of these 2 therapies is superior. The reasons to think aficamten would be superior, beta blockers tend to blunt exercise capacity. So when you look at trials of beta blockers, there's no improvement in exercise capacity. They have more modest effects on symptom improvement. And so the real storyline here is can you establish a cardiac myosin inhibitor as a preferred first-line therapy in this disease because of more larger treatment benefits, fewer side effects and potentially also demonstrate that there is structural -- positive structural changes that occur in the heart with a mechanism designed to target the disease as compared to a beta blocker where they may not exist. So MAPLE is about 170 patients. Patients can either be naive to therapy or they can be on background therapy and withdraw from it. They are then randomized to aficamten or beta-blocker, metoprolol, in this case, and they undergo titration in a blinded fashion. They are treated for 24 weeks. And at the end of 24 weeks, peak VO2 is the primary endpoint. But of course, we're measuring similar things as we do in SEQUOIA. It's about 170 patients. It's smaller than SEQUOIA. The entry criteria are a bit more relaxed compared to SEQUOIA. So we'll see patients that are not necessarily as severely impacted as those in SEQUOIA. And that trial is going to start imminently. It's really enthusiastically embraced by the community. They want an answer kind of this question and data that support maybe using cardiac myosin inhibitors as first-line therapy. The other trial that we are planning to start is in the nonobstructive HCM patients. And as I described earlier, the Phase II data were really quite promising. And we've used that to inform the design of a Phase III study will start in the second half of this year. We haven't given any details about that, but you can imagine we'll measure things in that we've measured before. I mean, these patients have the same symptom burden. And so the same issues that they have in terms of exercise capacity, symptoms and functional class, and we'll look to begin that trial for the second half of the year.

I want to follow up on discussion of MAPLE because like intrinsically, one can get your hackles up that beta blockers are like their multi-decade inexpensive frontline therapy, and kind of the conventional wisdom is you're going to step through that before you get to a drug like aficamten. So in your discussions both with the regulators and also with payers, like what do you need to see in that trial to really make the case that you should take a branded drug ahead of a beta blocker as first-line therapy in a disease like this.

Keep in mind that beta blockers tend to make patients feel worse. And if you're measuring exercise capacity, as Fady has pointed out, patients on beta blockers don't have the ability to perform with the same endurance because oftentimes, beta blockers blunt heart rate, and you can't get your heart rate up to be enabling of higher exercise stamina. But on top of that, they make people feel crappy. So I don't think there's going to be a tremendous obstacle to overcome with physicians despite beta blockers having been around for a long time. If we demonstrate superiority with aficamten versus metoprolol, payers are actually encouraging of this study because right now, you do have to step edit through beta blockers to get to a myosin inhibitor. And the objective would be to demonstrate that, that may no longer be necessary, especially if we demonstrate superiority in terms of exercise capacity, an endpoint that matters as well as safety things that ultimately the patients complain about the most.

Okay. So maybe coming back to non-obstructive. I think a question we get from a lot of people is how to think about the timing for non-obstructive -- in that time, the addressable population in nonobstructive HCM relative to obstructive disease. How do you think about that kind of proportionately the nonobstructive relative to the obstructive population?

So the prevalence of nonobstructive HCM is smaller than obstructive HCM -- and they're

Diagnosed prevalence.

Diagnosed prevalence. And therefore, one should not expect that the labeled indication will address a treatable market that's considerably larger. It's actually smaller. What's important, though, is that nHCM has read-through to other patients who have comorbidities and diagnoses that may ultimately benefit from a myosin inhibitor. So we look at nHCM almost as a gateway to how we think about a myosin inhibitor and how it may have application to a subset of patients with heart failure and preserved ejection fraction of which there are millions of patients and for which roughly 1/3 to half of them have thickened walls in their heart and other symptoms and structural abnormalities that are resembling what you see in nHCM. So Think of it as a continuum of will, if you will, obstructive patients, non-obstructive patients HFPEF, all of which ultimately define a very large cross-section of cardiovascular patients growing larger with the aging demographics.

Right. So I'll ask you the question we're asking all close to question -- we're asking all companies at the end of the conference. Why should someone buy and own Cytokinetics shares in the coming 12 months?

So Cytokinetics is a company now in its 25th year. Fady and I started the company 25 years ago, and we are coming into a period in the second half of this year that is its most important period. We are staring down a pivotal study that could represent a transformational event for the company as would be enabling of our compound aficamten to be a new potential medicine in the treatment of obstructive HCM. Investors see that as we understand from them as a meaningfully important driver for value in part because there's a predecessor company that we helped launch that developed the first-in-class molecule and Phase III data prompted that company's acquisition at a premium far north of where we're currently trading today. That's not why we are doing the study to be sure. But at the same time, I can't ignore that as an investor value proposition. What I can say is it's a meaningfully important catalyst for Cytokinetics as we mature our business, being in a position where we can advance our science for the benefit of patients and be in a position where we could go to market with our first medicine next year, and build a more enduring sustainable business as it would be the leading edge of a specialty cardiovascular business. We now find ourselves with 4 potential medicines, drug candidates in our pipeline. Aficamten the lead amongst those. And we believe that we've developed in our science and pharmacology what can be a somewhat unique profile, a specialty cardiology company that with a limited sales and marketing infrastructure, can produce a very high return on investment and return on sales. And I think that's a good place to be.

Excellent, Well, thank you so much, Robert, and Fady for joining us this afternoon, and thanks everyone for joining us today at the Goldman Sachs Global Healthcare Conference.

Thank you.

Thank you.