Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

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's Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Cytokinetics with CEO, Robert Blum and EVP R&D, Fady Malik. Welcome.

Thank you very much.

Thank you.

So for those who may not be familiar with Cytokinetics, can you provide a brief introduction?

Sure. So this year, we're celebrating our 25th year of pioneering biology in large part following the vision of Fady to my left, we are a leader in the discovery and development of new potential medicines that are modulators of the mechanics of muscle, either activating or inhibiting proteins involved in the machinery of muscle that give rise to potential new therapeutics for diseases related to muscle dysfunction. Foremost amongst those are potential cardiovascular medicines to lead amongst those is a drug candidate called aficamten. It's an inhibitor of cardiac myosin, the enzyme that is primarily the driver of contractility in cardiac muscle and we're developing that for the potential treatment of hypertrophic cardiomyopathy, a pivotal clinical trial due to readout later this year. And behind that, other potential medicines that are activators or inhibitors of other proteins involved in the mechanics of cardiac muscle giving rise to a pipeline of experimental therapeutics that we think may have the opportunity to transform cardiovascular medicine.

Great. So aficamten is being developed initially for obstructive hypertrophic cardiomyopathy or HCM. Can you give us an overview of obstructive HCM, how it alters contractility and how it impacts patients with obstructive HCM?

Sure. Perhaps better for Fady to do that?

Sure. So hypertrophic cardiomyopathy is labeled the disease of the sarcomere. Sarcomere is the fundamental unit of muscle contractility, and in hypertrophic cardiomyopathy, there are mutations within the sarcomere that disrupt the balance of how the machinery works. And so it becomes excessively activated, hypercontractile, too many myosin cross-bridges forming and excessive contractility. And that leads to thickening of the heart, stiffening of the heart fibrosis that develops and in some patients and asymmetric thickening that obstructs the blood flow leaving the heart, hence the term obstructive hypertrophic cardiomyopathy.

Now CAMZYOS is already on the market for obstructive HCM. Can you talk about how aficamten is differentiated from CAMZYOS?

Yes. So maybe I'll start and ask Fady to pick up. CAMZYOS is a medicine being commercialized by BMS for the treatment of obstructive HCM. It's a first-in-class cardiac myosin inhibitor that arose from research at Cytokinetics prior to our spinning out a company from our research called MyoKardia that BMS acquired. Through the course of that work together, we participated in the discovery of mavacamten or CAMZYOS and it represents some of the very best in our thinking and research, but for which there are always opportunities to improve upon new medicines. And aficamten came behind and specifically was designed to address what we thought could be enabling of even more patients to benefit from a cardiac myosin inhibitor. So under Fady's supervision, our scientists went back to research and begin to look at ways that we could potentially develop a myosin inhibitor that would have what we would hope to be best-in-class properties. And with that, maybe I'll turn it over to Fady to describe what we prioritized in that discovery program.

Well, we really went back to first principles. What would you want a drug that's going to reduce cardiac contractility, you want something that is predictable in terms of its dosing that has a shallow exposure response relationship so that as you increase dose, the treatment effect doesn't come on too rapidly. And also, if you exceeded where you wanted to be that it was eminently reversible so that you could work your way back up the dose response curve fairly quickly. You want to avoid things that might change blood levels, drug-drug interactions, you want a drug that's relatively safe and well tolerated. And so from those principles, we work in the labs to develop aficamten and realize most of those objectives as we've now gone through clinical development, what those preclinical objectives seem to translated clinically in a human.

Now growing number of investors have become pessimistic about the opportunity in obstructive HCM based on the CAMZYOS sales. What are your thoughts on CAMZYOS launch? And any learnings that you can implement in the potential launch of aficamten?

So I think those investors might be failing to remember that they were also somewhat bearish on some of the other cardiovascular launches that have ultimately exceeded expectations. Novartis' Entresto, for example. And I think Wall Street sometimes can be shortsighted about some of these cardiovascular drug launches in terms of where ultimately they may return value for shareholders. The cardiovascular drug launches are notorious for taking longer to get to traction with [ payors ] and ultimately to the asymmetric phase of commercial growth. And what we're seeing around the BMS and CAMZYOS launch is very encouraging of what ultimately could be the market potential, not just for CAMZYOS, but for cardiac myosin inhibitors, more broadly speaking. You're seeing new prescriptions and total prescriptions increasing week-to-week and month-to-month. You're seeing very, very high levels of patient and physician satisfaction. And there is a REMS program in place for CAMZYOS, and it takes admittedly a few months for physicians and patients and pharmacists to get through to what ultimately will be a target dose on maximal symptom relief, but all the signs and prognostics around what would be a market taking off are there. What we're seeing is patients getting prescribed the drug, staying on drug, high adherence and compliance. We're seeing more and more of the diffusion of the prescriptions coming not just from centers of excellence, but into the community of cardiologists. And most importantly, we're seeing more and more payers sign up at levels that would be indicative of high adoption amongst payers. This is a new category and the first of these branded drugs for the treatment of patients who have a very high severe unmet need. So it's natural that payers are going to be a bit resistant. But what we're seeing is that patients are coming into the hub, they're getting drug, oftentimes free drug for 7 to 8 weeks before they're converted to prescription pay. And that window is coming in, so it's happening faster and faster and more and more patients are getting through that process ultimately on to reimbursed and paid drug, such that I would anticipate we'll begin to see more of that asymmetric phase of the launch coming later this year and early into next year. So it's only been about a year from launch. But all the signs are there that this is going to be a launch that meets or exceeds BMS' expectations when it acquired MyoKardia and indicated that they thought this drug would do about $4 billion in peak sales.

Now you showed compelling hemodynamic results in REDWOOD-HCM cohorts 1 and 2. Can you just remind us what you saw?

Yes. So cohorts 1 and 2 were the first studies we did in obstructive HCM. And so those were placebo-controlled studies where we were interested in assessing the effect on the pressure gradient, the obstruction of aficamten dosing. Plus, we want to do -- explore the dose range, potential dose range that we might use in a Phase III trial. And what we found in that is, first of all, drug was very well tolerated, the onset of effect was as we thought within 2 to 4 weeks, we saw the gradients fall below what you would define as obstructive pressure gradient, so below 30 for a resting gradient below 50 for a provoke gradient and gave us a really good sense of where to dose this drug and how to dose in Phase III. We additionally saw improvements in NYHA class and other metrics, biomarkers and things that we're all in a positive direction. So it was encouraging for continuing to move forward.

The SEQUOIA-HCM results are arguably one of the most highly anticipated biotech readouts this year. Can you go through the design of the study and how it's different from the CAMZYOS phase III?

Well, the SEQUOIA is the Phase III trial that we designed to evaluate the effect of aficamten on exercise capacity, functional levels and symptoms as measured by peak VO2 during a Cardiopulmonary Exercise Test or oxygen consumption, peak oxygen consumption and New York Heart Association functional class and the Kansas City Cardiomyopathy Questionnaire for symptoms. We designed the trial with the benefit of seeing one another Phase III trial and HCM look like, which was the EXPLORER, the mavacamten trial. And we wanted to ensure that we enrolled patients whose exercise capacity was limited objectively. And so we instituted a limit on peak oxygen consumption of 80% predicted. So that would provide an objective measurement that these patients did have reduced exercise capacity. We wanted to be real world. We allowed patients to be on any background therapy, beta blockers, calcium channel blockers, disopyramide or combinations of those medicines. We were interested in ensuring that we didn't get a preponderance of patients on beta blockers because they tend to blunt exercise capacity. And all of these things of learnings that we observed really helped to optimize the study design.

I think that's one thing I might want to emphasize Fady's last comment that for SEQUOIA coming in behind the pivotal trial for mavacamten, there are things that we can learn that we did apply in the design and conduct of SEQUOIA in terms of what might be an opportunity to illuminate these potential best-in-class properties for the benefit of physicians and patients. Some of the top enrollers of that pivotal study for mavacamten came on board as employees of Cytokinetics, working with Fady and his team, applying those learnings in such a way that SEQUOIA we hope is optimally designed for maximal opportunity to demonstrate best-in-class properties.

Given the potential advantages of aficamten, beyond statistical significance, what do you think you need to show for the study to be considered a success? Does aficamten have to be more efficacious than CAMZYOS or have better safety with less stringent REMS program?

I think it starts with safety and convenience. So obviously, we want to demonstrate that drug was well tolerated. We didn't have excursions of low ejection fraction that were serious. So that gives people confidence in terms of being able to use the drug and also to push the dose higher to explore maximum effectiveness. SEQUOIA was designed with that in mind. There are multiple opportunities to escalate dose. That said, efficacy is obviously going to be very important. And we hope to really show, if you will, not just statistically significant results, but meaningfully positive results on the efficacy side as well.

And what kind of feedback do you hear from physicians on the CAMZYOS, REMS program, and how would it impact your launch strategy if you end up having a similar program?

So the REMS program is challenging. It's challenging from the information and education standpoint, but even more so from the practicality and logistics standpoint because it's requiring of echo's on a very frequent basis, those echo's are limiting in terms of the ability to dose optimize as physicians may want to do on their own. It's, in some ways, reducing to an algorithm, their physician judgment and care. And hence, it's our objective and the way we design SEQUOIA, it's our expectation that if successful, aficamten upon commercialization may have lesser restriction, fewer impediments to the operation and use of the drug in the marketplace. What does that mean? That means that there may very well be a REMS, but a different kind of REMS or different forms and flavors of REMS, some are more information in education, while others are intended more to ensure safety through the use of echo. So you might imagine, for instance, that aficamten, if it continues to demonstrate fewer excursions and no early terminations that we might expect echoes but on a much less frequent basis. So there might be periodic echo's, but only to ensure dose is optimal on a once or twice yearly basis. And that would make a huge difference to the capacity constraints that right now are limiting the number of patients who can benefit from a cardiac myosin inhibitor.

You expect the full SEQUOIA data to be presented at ACC next April. So how much of the data should we expect to see with the top line results? Will it mainly be peak VO2? Or could we see some of the secondary end points?

So that's a difficult question to answer, [ absent ] seeing the actual data. We're going to have to disclose that, which is deemed material to shareholders when we have the top line results, and we expect those results before the end of the year. But at the same time, we have to ensure proper integrity for preserving that, which will be important to the cardiology community. And in some ways, that's a negotiation with the American College of Cardiology once we have the data. So it's difficult to know for certain what will be in a top line press release versus what will be held for presentation, but we don't want to do anything to jeopardize the presentation of the data at a proper cardiology forum. So whether we can comment on P values, whether we can comment on secondary endpoints, those are the kinds of things that typically can't be knowable until we actually have the data, and we can discuss it with the cardiology steering committee for the ACC.

And it sounds like for my following question is, it may fall under that category of we need to see the data, but do you think that there will be enough reported in the top line results for investors to draw their own conclusions on how aficamten compares to CAMZYOS?

Yes.

Okay. And then can you just remind us of your commercial launch preparations and launch strategy to target patients?

Yes. So we haven't been so fully disclosive of that. We're actually going to have an Investor Day coming up in a couple of weeks, and we'll be sharing more of our plans and strategies. But suffice it to say that for our focus and expertise as a specialty cardiovascular company and with time available to us over these last few years to ready for a potential commercial launch. We've done a lot of work in this space. We know it quite well. And we understand ultimately where aficamten could be well positioned not just to be next-in-class but potentially best-in-class. So our strategy will be pivoting around where we can ensure that we're growing the category for the benefit of ultimately all patients and ensuring that physicians and pharmacists and ultimately, patients are benefiting from aficamten in a maximal way. We're looking at where there are concentrated pockets of demand for a myosin inhibitor for the treatment of obstructive HCM but also looking at where that -- we expect this category to grow in the direction of nonobstructive HCM and ultimately, physicians who may treat outside of centers of excellence. We're looking at building a lean commercial infrastructure to support what we think can be a high return on investment and sales in North America and also those key markets in Europe, where we think we can also build a valuable business for the benefit of patients and shareholders.

Great. For MAPLE-HCM, you're studying aficamten versus metoprolol. Can you talk about metoprolol and its use in HCM?

The metoprolol is -- it's called beta-adrenergic blocker. It blocks the receptor that responds to endogenous catecholamines. It is used to slow heart rate in HCM and therefore allow the heart to fill more, reduces the pressure gradient that way because the heart expands a little bit and that the exit path for blood grows a little larger, the pressure gradient goes down. So it's effective in that context. But by limiting heart rate, it also tends to limit one's ability to improve exercise performance. And so even though you've dropped the gradient, exercise performance doesn't improve, beta blockers have side effects. People don't like, some of them well documented, depression, fatigue, erectile dysfunction. And so even as a first-line therapy, I leave a lot to be desired. And in our open-label extension, we've been permissive of investigators withdrawing background therapy, it actually incurs that if they want to undertake it, they can go ahead and do that. And as we reported last year, quite successfully withdrawn in many patients with basically the -- without a reduction in terms of the effectiveness of aficamten.

And so let's just -- that's a classic example of something that we're doing not only for the benefit of the clinical research, but ultimately, the category expansion and market opportunities. So what Fady just described as MAPLE-HCM is more akin to what you might anticipate would be a Phase IV study to be conducted post commercial launch. And here, we're doing it at a time when -- while it's not a critical path to registration and first approval, we do think it will make its way into the guidelines to be permitting of a drug-like aficamten to be used frontline in patients with obstructive HCM and as would be enabling of more and more patients to benefit. So a high-level expertise and commitment to this mechanism translates, we think, in advancing the ball down the field, and we anticipate that we'll have results from MAPLE not too long after we have results from SEQUOIA.

Great. Early this year, you presented data from Cohort 4 of REDWOOD-HCM and nonobstructive HCM. Can you just remind us what you saw?

Yes. So Cohort 4 of REDWOOD, as you said, nonobstructive HCM. So these patients have thickening of the heart, but they don't have that thickening right underneath where the blood exits the heart, so they don't have a pressure gradient or obstruction. They still have quite significant symptoms, symptoms that are just as bad as the OHCM patients, but drugs aren't effective in treating it generally. We've -- in our cohort of about 40 patients within HCM, it was an open-label cohort. We wanted to understand primarily really how to dose the drug because you're just looking at ejection fraction and you want to see how you can escalate and not necessarily drop ejection fraction too far. We're really quite pleased with what we observed. We saw improvements in KCCQ, which is the symptom score. We saw improvements in NYHA class. We saw objective improvements in biomarkers that were substantial. And many of those patients didn't really like it when they came off the drug at the end of the 10-week dosing period, and then we they were subsequently enrolled in the open-label extension. So we were quite encouraged really by the efficacy that we observed.

And some of those magnitude effects were amongst the largest observed in cardiovascular clinical research. So we're very encouraged by the effects we saw with aficamten in nonobstructive HCM, so much so that we accelerated the advancement of aficamten from Phase II into Phase III, starting the Phase III study last week.

Right. Speaking of that study, so ACACIA-HCM, can you talk about the design of study and what you think the bar for success will be?

So ACACIA-HCM is a nonobstructive trial, it is using a symptom score as a primary endpoint, the Kansas City Cardiomyopathy Questionnaire. Secondary endpoint is exercise capacity as measured by cardiopulmonary exercise testing, NYHA classes, the next point after that. It's -- we'll be dosing about 420 patients with HCM for 36 weeks in total to the endpoint being assessed, although patients will continue for as long as 30 -- for 72 weeks, in the trial. And so basically, the last patient finishes that 36-week time point. So it give us a good sense of both safety, but obviously, the efficacy. It builds on what we did in Cohort 4. And very similar end points, very similar things that we're assessing, and we're quite optimistic and excited to see that get underway.

And patients with nonobstructive HCM, they have a very, very high symptom burden and yet the best thing that we've got available to them right now are beta blockers and that's even very controversial. So a myosin inhibitor that's more deliberate in its mechanism of action for the benefit of this high unmet need could be very importantly welcomed by the cardiology community. And here, with aficamten with the start of Acacia last week, we hope that, that trial will enroll very rapidly and may ultimately be in a position to serve patients very soon.

Great. Well, moving beyond aficamten. You had a Type A meeting with the FDA for omecamtiv mecarbil. What was the feedback? And what's the current status in Europe and China?

Good question. So the Type A meeting with FDA, which occurred back in Q2 was very informative that helped us understand sort of between the lines what was behind the thinking of FDA in issuing a complete response letter for omecamtiv mecarbil. Having been involved with the development of omecamtiv mecarbil for many, many years. Fady and I have been through many interactions with FDA written and in person, and we wanted to get some clarification because not all of those communications necessarily aligned with what ultimately was represented in the CRL letter. So we got some of those clarifications, and we haven't commented so much beyond that as to what might be the next steps. In the meantime, we're looking at Europe. We're looking at China, and we want to get through those procedures to understand what could be the opportunity for omecamtiv initially outside of North America. So in particular, with respect to Europe, we're in the process of responding to the questions we received from EMA. They are in the midst of now finalization of those responses such that we're hopefully going to be submitting those replies with the still expectation, there's still opportunity and hope that we'll see omecamtiv approved for patients next year.

Great. For CK-136 and CK-586, can you just provide a review on these programs and what types of indications you might pursue?

Yes. So CK-136 is a sarcomere activator, it's a cardiac troponin activator. So it increases cardiac contractility like omecamtiv. It's in Phase I. We're now studying it to assess its potential dose response in healthy volunteers. But with an eye towards developing it in types of heart failure where we haven't looked at, that was omecamtiv. Omecamtiv was developed in kind of general heart failure with reduced ejection fraction, but there are lots of specialized conditions that don't sort of fall under that umbrella, patients that have had congenital heart disease, patients that have pulmonary hypertension, right heart failure, many other kinds of conditions. So we're thinking of it potentially to develop it and specialty heart failure if you will. The -- and then CK-586 is a cardiac myosin inhibitor like aficamten although it has a different fundamental mechanism of action, still myosin inhibitor, but works a bit differently. That's also in Phase I. And the strategy there is unlike aficamten, which is being developed in a disease like hypertrophic cardiomyopathy, genetic disease, hundreds of thousands of patients, we're looking at heart failure with preserved ejection fraction, these patients generally have high normal ejection fractions. They develop symptoms of heart failure. They look a lot like the nonobstructive patients, just maybe not quite as severe in terms of the thickening of their heart and so forth. Like those patients, there are very few proven therapies for them. And fundamentally, we're trying to build off of what we are discovering with aficamten to expand the category into those patients.

So if you think about aficamten now in 3 Phase III studies, omecamtiv, which is the subject of regulatory review around the world, 136 and 586, both in Phase I. Other programs arising out of our research. It's not difficult to come to the conclusion that Cytokinetics as a specialty cardiovascular company is uniquely positioned for the aging demographics and what is very high unmet needs in those important cardiovascular conditions where there is still a severe unmet need despite conventional therapies. And we think we're well positioned as a smaller emerging growth biopharma company that is translating to commercialization to turn that into a very, very valuable business. And as it relates to shareholder value, as it relates to value for patients, and for the physicians who treat them, Cytokinetics building on its 25-year history is on the cusp of what we think can be some very important transformations.

Great. Well, looks like we'll have to leave it there. Thanks so much for your time.

Thank you.

Thank you, Jeff.