Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Thanks everybody for coming to the Citi Biopharma Conference. Next on the docket, we have with us Cytokinetics. They had some interesting news today. I'm sure we'll discuss it. Before we jump into that, if you could all just introduce yourselves and give us kind of the brief history of Cytokinetics, and then we'll jump in.

So good afternoon. Thanks to the folks at Citi for inviting us to the conference today. It's a big day for us. So I'm joined by an all-star team of our senior executives. I'm Robert Blum. I'm President and CEO of Cytokinetics. I'll ask them to introduce themselves. I'll maybe for just a few minutes, provide some background and then jump into a presentation that we made and try to do all that in about five minutes so that we leave plenty of time for conversation.

So I'm Fady Malik. I'm the Head of Research and Development at Cytokinetics and joined the company when we launched in 1998. I'm a physician scientist and cardiologist and lead our both discovery and development efforts.

I'm Sung Lee. I joined Cytokinetics about 16 months ago as CFO.

Hello there. I'm Isaac Ciechanover. I'm the Chief Business Officer, and I also joined around 16 months ago.

So as mentioned, I'll just provide a quick overview, but then I'll jump into a few slides. So Fady and I started this company 27-plus years ago, and over these many years, we've built out a new pharmacology rooted in one biology, and as he is a visionary and physician scientist has led us all along the way. Over the course of these many years, we've built out a portfolio. You'll hear about that more in a minute. And we've added to our team, including, as you see here, Sung and Isaac, who joined us within the last year or so. And I think that reflects the maturity and the evolution of the company. There are many of us who have been with the company for 10, 20 or more years, others who have joined more recently, all fit for purpose as we're seeking now to turn a page on the company as we move from R&D to commercialization over the next several months. So with that as a background, I'll jump into some more detail. I'll be making some forward-looking statements. I'll point you to these slides and also to our SEC filings as it relates to caveats to those statements. We don't undertake an obligation necessarily to update those statements. But I will be talking to you about the company in broad brush strokes. Our mission has always been to mine this area of biology for new medicines. And in particular, as that biology reads on muscle and translating muscle biology into a new muscle pharmacology, in particular, around diseases of cardiovascular and neuromuscular impairment. And as you can see on this slide, our commitment to that science has translated into a pipeline, a pipeline of potential medicines, all of which have been discovered and developed at Cytokinetics and for which we're quite pleased with progress, including progress announced even just this past weekend at the European Society of Cardiology. As I mentioned, our focus has been on muscle biology and in particular, the mechanics or machinery that drives the contractility of muscle and where one particular molecular target, cardiac myosin, a mechanochemical enzyme that translates ATP hydrolysis into mechanical force that drives contractility of muscle. And ours is the first company to industrialize research around the sarcomere, the fundamental unit of muscle contractility that we all probably studied in high school, but for which we now have a pharmacology rooted in myosin modulation inhibitors and an activator of myosin that we believe hold great promise to the build of a specialty cardiology franchise. Lead amongst these compounds is aficamten, a potential next-in-class cardiac myosin inhibitor. It's currently pending FDA review for potential approval in obstructive hypertrophic cardiomyopathy based on a study called SEQUOIA that read out over a year ago. And that study provides, we believe, ample support and evidence for what we hope will be an approval later this year, PDUFA date, December 26. And at the same time, we're pending regulatory review in China and in Europe based also on SEQUOIA. And that informs the leading edge of our pipeline and go-to-market strategy. This past weekend at the European Society of Cardiology, investigators presented results from a second Phase III study called MAPLE, that study was positive, and we believe that could enable a potential label expansion, but not initially will we go to market based on MAPLE instead on SEQUOIA. And as you may have questions, the team here, we can respond to how MAPLE factors into our life cycle management plans. A third study is completed enrollment and will read out in first half of 2026. That's a study called ACACIA. ACACIA is a study of aficamten in patients with nonobstructive HCM. So you begin to understand how aficamten is itself a pipeline in a pill, OHCM followed by nHCM, but for which there are 2 other drug candidates in later-stage development, omecamtiv mecarbil, a cardiac myosin activator, already the subject of over 30 completed clinical trials, including one 8,000-patient study called GALACTIC that was positive and for which we're now doing a second confirmatory study and how that may enable us to extend the franchise to advanced heart failure treated by the same physician group. And then there's another cardiac myosin inhibitor called CK-586. It acts by a different mechanism. It's being developed for the potential treatment of heart failure and preserved ejection fraction. Three drug candidates, molecular target, one strategy oriented towards building an enduring business in specialty cardiology. We have other compounds in earlier clinical development that are depicted on the pipeline. I won't speak to them today. So you begin to see how this all begins to play out in terms of what could be multiple specialty cardiology launches that could be occurring over successive time, starting with SEQUOIA by the end of this year, followed by MAPLE, followed by Acacia, followed by HFrEF, followed by HFpEF. And there, you begin to understand why we think a specialty cardiology business model, the likes of which really don't exist in biopharma, but for which we believe could build uncommon enduring value for patients and shareholders. Over the weekend, I mentioned we presented results from MAPLE, this was -- these are the primary efficacy data as they were presented on Saturday in a late-breaking session simultaneously published in the New England Journal. And what you can see here depicted is patients on aficamten did better by the primary efficacy endpoint of peak VO2. This is a measure of exercise capacity. Patients on the standard of care beta blocker, metoprolol actually did worse. How could that be standard of care? You might ask, this was the first randomized controlled study of a beta blocker in patients with OHCM despite the fact that beta blockers have been a mainstay standard of care in this disease for 60 years. And absent having done a proper study like this, we do believe now that these data are presented and published, they may turn heads and call into question the use of the first-line treatment in this population. And as I think the cardiology community very enthusiastically embraced these data when presented on Saturday. If you're interested, we also convened an IR webinar this morning and the principal investor -- I'm sorry, principal investigator presented again, and those data and that presentation is archived on our website alongside of the publication. Here are the design elements of the ACACIA study that I mentioned. As you may have questions, we'll get into that, I'm sure. ACACIA is due to read out in the first half of next year, as I mentioned. This is really interesting. Nonobstructive HCM represents probably half the population with HCM and where the prevalence would suggest it's growing at a faster rate than obstructive HCM. The first-in-class compound in this category, a compound called mavacamten was recently the subject of a study called ODYSSEY in patients with nHCM. Those data were also presented on Saturday at the same late breaker. Unfortunately, that study was not successful. The study failed to demonstrate an effect on either of the two co-primary endpoints, but with trends that are really quite provocative and for which we believe they may illuminate that aficamten in ACACIA could represent a positive outcome. And as you may have questions about what was presented and why we remain optimistic, Fady can speak to that in our question-and-answer session. So again, we're building a specialty cardiology franchise. You see here how they all fit together. This is a concentrated customer segment base where we believe with roughly 125 sales professionals in each of the United States and Europe, we can get to the high-volume prescribers who treat these advanced populations where there's a very high unmet need. We believe we can build a specialty distribution network and with what we believe to be both payer leverage and differentiation amongst products, we believe we can build a very valuable business for shareholders with all of these products. We have a strong financial position. We recently reported our Q2 earnings over $1 billion, approximately $1 billion in cash. And to the point, given deals we've done, and I do believe Cytokinetics has created a high watermark amongst peer group companies in terms of combining both equity dilutive, but especially leaning into nonequity dilutive capital with partnerships, royalty monetizations and the proper balance of debt, we believe we have access to still additional capital. We have access to $100 million in a loan from Royalty Pharma that we have already qualified for, another $175 million that we may qualify for if aficamten is approved by the end of the year and an additional $150 million that may be available to us for the development of one of our pipeline programs. So these are loans that come with deals we've done with Royalty Pharma and for which we believe the cost of capital is competitive and advantageous to us as we continue to hopefully be good financial engineers much in the same way we've developed our R&D pipeline. And Sung can speak to how we're thinking about not only access to capital, but how we can be efficient with regard to deployment of capital. So with that, as an introduction, I'll turn it back to you for question and answer, and thank you for your interest in Cytokinetics.

Thank you so much for that, and I appreciate the seminar this morning. It was very interesting. I guess to start out, when we look at this space overall, OHCM and nHCM, naturally, people are looking at Camzyos, which is out there, mavacamten, and they're trying to measure that up against the profile of aficamten. Thus far, we can compare them on the actual data in OHCM, which is under the FDA review. But there's also these other emerging data sets with respect to MAPLE and ACACIA coming online, ODYSSEY from there end. How do you see the profiles of these drugs ultimately being compared? I mean there's the REMS program. Yes, there is the data that will be on label, but they also -- all the doctors know that there's other things going on that differentiate them.

Yes. So that's a very good question. There's a lot to unpack. I'm going to turn it over to Fady, but I'll just start by saying, we played a hand in the discovery of mavacamten as it was discovered in a company that incubated within our laboratories before we spun it out as a separate entity. So we know that compound quite well. We understand its positives, but also where there could be opportunities to engineer a next-in-class compound as we did. And aficamten was engineered with certain properties in mind, and we've studied it both preclinically and clinically to elaborate on what could be a differentiated profile. And we do believe the clinical studies that we've conducted in later-stage development, REDWOOD, SEQUOIA, now MAPLE elaborate on its profile. With that, maybe I'll turn it over to Fady to answer your specific question.

Sure. As we -- as Robert said, and we work to discover aficamten, we had a particular profile in mind. We wanted a drug that could be titrated easily, drug that was reversible if you -- like with any drug you titrate to effect, you wanted to be able to down titrate simply, drug that's devoid of significant drug-drug interactions that complicate its use and ultimately, then to take those properties, including a shallow PK/PD relationship and develop a best-in-class data package for them. And so through the conduct of our Phase II trial, REDWOOD, followed by SEQUOIA, which is now followed by MAPLE in obstructive HCM, we think that the safety profile of aficamten is exemplary with showing essentially that titration works and titrate the drug as needed. You don't have to interrupt treatment. You can down titrate the drug if necessary, patients respond to down titration. We haven't observed heart failure events, significant heart failure events as a consequence of use of aficamten. And now as was presented at the ESC in addition to MAPLE was some very long-term follow-up data in our open-label extension. So those -- those attributes have -- that we intentionally designed in aficamten now are manifesting themselves in our development program. And ultimately, we hope that leads to a label and practical everyday experience in using aficamten that make it something that physicians want to choose.

Understanding your REMS program is still in the works, and we don't have a submission. Where do you see given the recent changes that happened on Bristol's and as potential areas of differentiation for your program?

Yes. I think the properties, again, the way that we have employed aficamten in our clinical trials, we hope would be reflected in the label as well as REMS. So titration would occur on a more frequent schedule, so patients could potentially get to target dose within 6 to 8 weeks if they so choose, perhaps maybe longer than that if they decide to go more slowly. If they don't have to worry about significant drug-drug interaction effects, that's another aspect of REMS that physicians might be educated on the label, but patients don't have to, every month, kind of go through their medication list with a pharmacist because there aren't as many or meaningful clinically significant drug interactions. All of these things, I think, help, if you will, differentiate a potential REMS from another. And the REMS are reflective of your label. And so -- and the label is reflective of the use of the drug in the clinical trials as well as obviously, the data that you generate with them. And so I think if you look at our clinical data, they support a meaningfully differentiated REMS down the road.

In terms of once it's approved and launches, what's the lift in getting into the new-to-therapy patients versus potentially getting some switches. It strikes me that certainly given some changes regarding for Camzyos, a switch is a higher lift, a much heavier lift than would be new patients -- new to therapy. And towards that end, how penetrated is the market at this point?

Yes. So BMS is doing a nice job educating and building market awareness for the category of cardiac myosin inhibitors. They're adding about 1,500, 1,600 patients per quarter, and they're going to do north of $1 billion worldwide in sales this year, but for which in the United States, there's still about 650 physicians who are accounting for over 80% of the prescriptions, and it's incumbent upon us to work to grow the category and to hopefully have preferential share of category, but to ensure that more physicians are comfortable prescribing a cardiac myosin inhibitor for their patients. Right now, we believe they've penetrated about 15% of the symptomatic diagnosed population and where there's even more who are undiagnosed and perhaps going to be available ultimately for treatment, and that's in the United States. So we believe that a next-in-class opportunity if aficamten were to be approved, could be opening the aperture on the market in ways that the differentiation could drive wider adoption. Cardiology launches generally take longer. There's both that period under which you have to go from free drug to revenue-producing drug, but also just adoption takes longer, but they have long tails as well. And we do believe that there's quite substantial TAM here and enduring value that could make this one of the leading cardiovascular categories. And it's important that Cytokinetics when we go to market, we're not seeking to compete with BMS. That would be perhaps bringing us both down, but rather as could be enabling of more patients to benefit from this innovation. So while there may be some switches, and we're hearing that there are high-volume prescribers who are intending to switch their patients, that's not going to be core to our strategy. Rather instead, what's core to our strategy is building on the momentum and speaking to the integrity of our data, our science and its implication for patients with OHCM.

On the question of the high-volume prescribers, because of the burdensome REMS program, has there been kind of a conglomerate of people who will just pass the patients on because they don't want to deal with the program towards these high-frequency prescribers? And can a drug that gets kind of has a more simple or easier program push beyond that group?

Yes. So we've been out in the field, if you will, for a couple of years seeking to answer that question. And I think we've got a lock on it. We understand referral patterns very well locally, metro area by metro area. And we understand how they translate to payers. We have had 15 area business managers and many MSL's deployed for a long time readying for our commercial launch. We believe we understand it well enough to know this that right now, a lot of community-based cardiologists are choosing to refer patients to centers of excellence, but reluctantly. And that if there is a potential new medicine that could be available with a less burdensome REMS that they may be more likely interested in prescribing themselves. And we believe we can activate them if aficamten is approved with the differentiated label that we expect of it. So our strategy will be to focus to centers of excellence and also where there may be low-lying fruit in the peripheral community of cardiologists who also see a lot of HCM patients. And our intention is to be focused to where we can influence both those high-volume prescribers who have themselves already been warehousing patients awaiting the potential of aficamten and as they've told us, and at the same time, grow the category beyond where currently cardiologists are comfortable prescribing.

So you presented details of MAPLE this past weekend, and the data was very, very strong. It was clearly superior. How does that translate ultimately into a market opportunity? Is it -- how difficult is it going to be to move into the first line? How should we think about that when we're building our models? And secondly, do you see as there being a benefit just from optics perspective of eventually having on label that might help after beta blockers, even though the trial is for frontline?