Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

All right. Good morning, and welcome to Day 2 of the Barclays Global Healthcare Conference. My name is Carter Gould, covering U.S. Biopharma. I'm pleased to welcome Cytokinetics. What a difference a year makes in terms of a transformational year for Cytokinetics. Joining us from the company, we have CEO, Robert Blum. Fady Malik, who leads up the R&D effort and Andrew Callos on Commercial. Robert is going to make some opening comments and share some slides, and then we'll hop into Q&A.

Thank you, Carter. Thank you to Barclays for inviting us back to provide an update. Indeed, it's been quite a -- very important transformational year as we announced data from a clinical trial at the end of last year. I'll get to that in a minute. I'll be making some forward-looking statements. I'll refer you to our SEC filings. I'm going to very quickly summarize where we are at in terms of pursuit of our mission to bring new medicines to improve health spend for people suffering from severe cardiovascular, neuromuscular disease, impaired muscle function, which ties to the science and the biology that underlies everything we do. And this is an up-to-date now depiction of our pipeline, and you can see how it pivots so importantly around cardiac myosin. Myosin as a mechanochemical enzyme, we know it better than anybody. We are the first to demonstrate ways of modulating it with activators and inhibitors and aficamten showed in a Phase III study at the end of last year, positive clinical trial results across all primary and secondary end points. Those results have been top lined, not yet presented. And as you'll hear more today, we're intending to present, publish and submit regulatory approvals around those data. At the same time, we're pursuing aficamten in additional Phase III studies, 1 called [indiscernible], 1 called ACACIA. We'll talk about those. And we're going to be advancing CK-586, another cardiac myosin inhibitor forward in Phase II. So this begins to form the contours of our portfolio as it's advancing from clinical research to commercial readiness. And we'll also talk about aficamten as it relates to go-to-market strategies. But there's more to Cytokinetics as we'll elaborate over future presentations pertaining to our focus in muscle biology. As we think about building a specialty cardiology franchise, we think about it being anchored by aficamten and as aficamten is addressing populations. These are each adjacent to the other, and therefore, should hopefully afford a higher probability of technical success based on what we've already learned from aficamten in SEQUOIA. So aficamten in oHCM based on SEQUOIA should read, hopefully, optimistically on what to expect for aficamten in Maple, which is just moving more frontline versus beta blockers, again in oHCM, but then also things we've already learned about aficamten in Redwood Cohort 4, a Phase II study in nHCM, we think, augur well for what we hope to see in ACACIA, a Phase III study of aficamten in nHCM and onwards and onwards, as you can see, as we think about all of this directed to the same customer segment, and that's an important point of emphasis. Starting with SEQUOIA, this summarizes what was in the press release. We did well by the design and conduct of the study and hit with high statistical significance and clinically meaningful effects across all prespecified endpoints as well as prespecified subgroups. These data, as exciting as they were to press release are more exciting as they will be presented and published, we hope, beginning in Q2, mid-May at the European heart failure meetings and hopefully concurrent publication. More studies and more data being presented throughout Q2 and Q3, lots of news flow. Speaking of how we build value and how we go to market, these are the catalysts that we're pointing to as we think unlock significant future value and build on what we already know from aficamten. And this is how we think about what's in our fiduciary obligations as we operate this company, what are we going to be doing in order to ensure we're maximizing shareholder value for those things that we ourselves can control. They're all laid out here as hopefully, shareholders will find both encouraging and compelling. So in summary, we're positioned, we think, well for success. We've been good students of companies that have preceded us in terms of how they've built valuable enduring, sustainable franchise business models, and it starts with science, credibility and integrity of research and development. We think we're enabled to be able to do that because of our long-standing and pioneering leadership in this space, and that pays dividends as we go to market and as we think about other ways of accessing and deploying capital in an efficient way. We reported on our Q4 earnings a couple of weeks ago. You see them depicted here. We have approximately $800 million in cash, cash equivalents and access to near-term capital under our current line of credit with Royalty Pharma. And that represents about 2 years of cash based on the guidance we provided in February, which speaks to an operating burn not inclusive of any revenue we may earn this year of between $390 million and $420 million. Here, the milestones summarized in another way. And I'll just thank you for that opportunity to summarize the company and introduce us.

Perfect. Thank you, Robert. Some new slides in there, too.

I've been busy.

I'm sure we'll be measuring the LifeSaver chart there to figure out exactly what that implies for the market cap of the company in the end of the decade. But maybe let's start with ESC on the horizon as we all book our travel plans to Portugal. Maybe help set expectations around -- are we going to see multiple publications? Is it just going to be sort of a full presentation of SEQUOIA. Are we going to get some subcuts there? How are you sort of level setting expectations for folks?

Well, this is where I'll ask Fady to speak to this specifically, but in introduction, it's going to be a very aggressive, comprehensive plan.

Right. So the heart failure meeting of the ESC is in Lisbon in the middle of May. We hope to target that with at least 3 presentations. One being the primary results presentation, which will ungate, if you will, the rest of the analyses of the data. It's a very rich data set. And in fact, before we unblinded the database, we developed several supplemental analysis plans for the CPET data, the ECHO data, the KCCQ data, integrated efficacy data analysis, dosing and safety, pharmacokinetics and PK/PD modeling and things like that. And so with the heart failure meeting will begin to roll these out with a plan over the next several months to have 8 to 10 presentations of different dimensions of the data several publications, some of them which will be simultaneous with the oral abstract presentations.

And this is also inclusive of ongoing work with Forest. You're going to see at ACC even sooner in early April, an additional cut of data from Forest, patients who have been on the open-label extension with aficamten, and we think that augurs well for how we're thinking about ultimately positioning aficamten in a regulatory submission inclusive of what we hope will be a differentiated REMS.

Definitely, I want to come back and touch on REMS. But for a second, if we think about that filing, any -- at this point, how you're thinking about then communicating to the Street that, that's complete. Obviously, you detail that it's going to be a rolling submission and that you've seen pretty far along on a number of the components. But should we expect a PR upon completion, submission, kind of how are we thinking about that?

So we're very far along both as it relates to U.S. but also EMA in China. And the intention is to get all of those completed in the second half of the year. As it relates to the FDA, we'll announce when we've started and we'll announce when we finished.

Okay. One thing that's maybe gone -- has gotten a little bit less focus is sort of the implications of positive SEQUOIA on MAPLE and ACACIA. Can you talk about -- I mean, on some level, I'm certain it helped in terms of enthusiasm on enrollment, but what else it means in terms of just derisking those studies and maybe lessons also from just running studies -- large pivotal studies in this space.

Well, so just briefly, MAPLE is a head-to-head trial of aficamten versus metoprolol. Metoprolol being kind of first-line therapy. We want to demonstrate aficamten superior to metoprolol. SEQUOIA itself provides pretty strong evidence that that's the case. I mean we had patients in SEQUOIA that were only on aficamten the absence of beta blocker therapy. And we have patients that were only on beta blockers in the absence of aficamten therapy and there are sizable differences between the treatment effects in those groups. So we think SEQUOIA validates the premise for conducting Maple. The -- probably the investigator community has been most excited about that trial because they view it as answering a critical question for them, which is which drug do we start first. We have these very cheap drugs and now we have some really expensive drugs that are extremely effective. How do we position them in the guidelines. We have to be data-driven, evidence-driven. So we're working to generate that evidence. ACACIA is a trial in nonobstructive HCM. So that's the form that is less common than the obstructive form, but probably underdiagnosed. And again, I think the -- those patients don't really have any effective treatments. We had some very good data in Phase II in the nHCM population. The safety data with aficamten and SEQUOIA certainly are driving patients -- the physicians to be interested in that study as well.

Okay. You touched on REMS, Robert. Obviously, it's been a main focus. You've talked about your -- I think I asked you a question on the earnings call on the specific topic and you talked about sort of your still conviction on a differentiated REMS. Maybe to bring in Andrew here, too. When you think about all the different components of the REMS that exist for your competitor -- potential competitor in the future? Which ones are the real sort of sticking points that you think if those were lessened or weekend a bit with your label that would have an impact on the market.

Probably the 2 or 3 most important ones that differentiate our frequency of echos, especially in the titration phase, the window that the echo has to be completed before the next prescription can be filled and sent to a patient and then the drug-to-drug interaction monitoring that needs to occur with the patient every month. Those are 3 key areas that if we can make that a good experience for patients and physicians and lower the frequency of those occurrences and/or eliminate like the DDI REMS element. I think they will be key differentiators that as well as safety are the 2 areas of differentiation.

Okay. In discussing what REMS potentially could look like, one thing you have teased out is a potential risk-based REMs. What conceptually, maybe at a high level, can you maybe frame what that might look like, Fady.

Well, so not every ACM patient is equivalent in terms of the risk of developing a low ejection fraction, which in SEQUOIA, we only saw about 2.5% rate. It was generally asymptomatic. And so it's something to manage, but it's not a medical emergency. And the patients that are more likely to develop low ejection fraction, for example, are those whom after you titrate in the target dose or on the cusp. In medicine, we often will monitor patients based on how close they are to some particular safety threshold. The closer you are, the more frequently, we may take a look at it until we're confident that you're stable in that range. So if someone had an EF of 52%, you're worried about EF less than 50%, you might check them 2 or 3 times before spacing out their echos as opposed to someone whose injection fraction was 75% as it's unlikely that level to get below 50%. So you shouldn't treat everyone the same.

Fair to say we'll see some analyses at ESC that are supportive of something along those lines?

Probably not those specific analyses, but I think we will elaborate on those over time.

Okay. And maybe on the -- coming back to Maple, the beta blocker arm. There's a lot of historical data, but a lot of it is historical and some of it is quite old. How should we then think about how that arm might perform in Maple?

So the beta blocker arm, there's some recent data that's pretty good with a crossover trial, taking patients, treating them with beta blockers, crossing them over to placebo or vice versa treatment placebo, crossing them over to beta blockers. And what they found is that the beta blockers reduce the gradient. They do improve symptoms to some extent. They don't have an impact on exercise performance, so no change in peak VO2 and biomarkers aren't really improved by them either. And so that's what we expect for our beta blockers. Aficamten on the other hand, has a sizable impact on exercise performance, probably even a somewhat larger impact if you don't have background beta blocker therapy has a dramatic effect on biomarkers and gradient, probably to a greater extent than beta blockers and more profound effects on symptoms. So that's the comparison we think. We think it's a trial that the community, frankly, expects to be positive. They've already sort of moved in their heads to thinking myosin inhibitors are better than beta blockers, but again, they need the evidence.

Maybe coming back to commercial, and I'm sure you can all chime in here. And that is just maybe first, the level of heterogeneity you're seeing in the practices today in terms of adoption and how they're adopting myosin inhibitors. And then as you think then about your launch. I mean to what extent do you think you can kind of maybe harmonize that or drive a little more uniformity and kind of how these drugs are potentially being adopted? And maybe we can go from there.

Sure. So I think the data really informs appropriate treatment for a broad patient group. So there's not a need to distinguish out those that are New York Heart Class II, III that are labeled at least in the label and that will be paid by payers in that way. So it could be a broad patient population and I think the other kind of key factors in activating a broader cardiology group, not just the centers of excellence, not just the academic centers to go from the little over 1,000 prescribers today of CMIs to the number closer to, say, 10,000 or more. I think that's where you get a broad patient population treated as well. So I think there are the areas we'll focus on. And that will be driven in some extent where we think we can lead by a REMS program as well as a differentiation on safety.

What's interesting in regard to that is, well, Andrew speaks to about 1,000 people who have prescribed a CMI up till now, really about 300 of those are responsible for 80% of the prescription volume. So it's still very concentrated primarily around centers of excellence. You're still only talking about less than 5% of eligible patients who are getting a CMI, so there's a lot more work to be done. And I think BMS is actually doing a very good job as they took to market mavacamten. It's done over $200 million in its first full year of sales and still half patients are getting free drug. And I think they're on a nice trajectory. If you look at the shape of the launch curve, they're getting favorable leverage with payers and ratings from HTAs in Europe. All those things speak to what has the makings to be a strong cardiovascular category. And if we do our job, it's less about trying to compete with mavacamten -- aficamten and mavacamten, both should be contributing to a greater category awareness and expansion of category utilization across a broader array of patients.

Okay. I think at this point, investors have kind of -- some of them made up their minds in terms of what the likelihood of you having a differentiated REMS or may not look like? How should we expect sort of over the course of this year as you have these regulatory interactions as that progresses the investment community sort of being updated on the status of those conversations with FDA? Or it seems like that might spill into '25.

Yes. But -- we've already had 2 interactions with FDA and the subject of REMS comes up, and we've had interactions that give us some reassurance that they should be hopefully looking at aficamten on its own merits, absent mechanistic class labeling in REMS. We can't foresee a scenario by which given the dosing of aficamten was so different in clinical study that the REMS could even be the same. But we think there's other ways that we should approach this such that we could ensure a differential REMS. And some of that while it's come up in prior interactions with FDA through the month of February, will be further socialized and further interactions with FDA during the second quarter. So when we submit we'll have had further interactions with FDA and understanding a bit more how they might be thinking about these things, what their key sensitivities are, what analyses we have to do to ensure it's submitted alongside of our proposed REMS to make this a more constructive process. To your point, we're not going to know until maybe a mid-cycle review or afterwards how that necessarily resonates with FDA in any kind of committal way, but we'll certainly understand before we submit what matters to them.

We've got about 2 minutes left, and there's a couple of kind of higher-level strategy and other kind of important questions. You talked about partnering in Asia and partnering in Japan. At the same time, the financing question continues to come up. Can you talk about, a, to what extent those are linked if your Japanese partnership doesn't materialize, you decide not to do that? And does that drive a financing decision? And then you've talked about in the past about the number of different levers you get pulled on the financing side and how those are sort of being prioritized in your mind today?

Yes. So we're looking at all these things in parallel, and we'll likely do several things. A BD opportunity in Japan is the one we got started on first, and hopefully, that will be enabling us to have achieved that when we do other things. But we're not considering this necessarily as linked. It all depends more on what's the messaging we would have if we went out and raised new capital. We want to make certain that we have clarity with regard to regulatory submissions planned and the positions that we're right now adopting with regard to differential REMS. We want to understand much better that, and we want shareholders to be more assured that we know what we're doing. We want to have seen these data presented and published in a way that they're laid open for others to review and not simply rely on the fact that we issued a press release at the end of December. So these are things that will be rolling forward in the next few months. And as we get clarity around those, and we've got more water under the bridge, so to speak, with regard to interactions with not only those who could be large shareholders, but also as we consider restructuring our debt deals, we'll be in a better position to implement and execute on some of these plans. I would be looking at these things to be more later in the year as we do more in the front half of the year.

All right. Perfect. Well, we are out of time. Cytokinetics, thank you very much for joining us. Look forward to the next couple of months. .

Thank you.

Thank you. Thank you.