Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

All right. Great. I'm Max Skor, a biotech analyst with Morgan Stanley. And before we get started, I'd like to read some quick disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, I am happy to welcome the Cytokinetics team. With us today is Fady Malik, Head of R&D; Sung Lee, CFO; and Andrew Callos, Chief Commercial Officer. So just from the top, there's a lot of exciting things that have both happened with Cytokinetics this year. And then looking forward, we've got the PDUFA date. But maybe I'll just open it up to the team here if you have any opening comments.

Sure. Thank you, Max, for having us. And I might just start with the forward-looking statement. We'll be making forward-looking statements and refer you to our SEC filings for that. We don't take any obligations to update them. We're coming here off the European Society of Cardiology Conference over Labor Day weekend, where we presented in full the primary results of MAPLE-HCM, which was our clinical trial of aficamten as monotherapy versus the current first line of therapy, metoprolol. And I think that was quite a watershed moment for the field in that the performance of the beta blocker was much poorer than expected. This is a therapy people have used for decades with very little evidence supporting its use. And we weren't surprised that aficamten outperformed it, but really the basis for the use of the beta blocker as a standard of care was, I would say, undermined by the data that we presented in aficamten. So lots of people leaving the meeting with questions about what do they do with their patients on beta blockers, how do they adequately maybe think about their treatment paradigms more objectively, potential updates to guidelines in the future and things like that. On top of that, we saw data from ODYSSEY, which was the BMS trial of mavacamten in nonobstructive HCM with some promising evidence of benefit there, and we can discuss that as well. And as we kind of roll into the last quarter of 2025, we're looking forward to our PDUFA date at the end of the year. Obviously, we have a late cycle meeting this month, and with lots of preparations ongoing for launch and then rolling into next year, other approvals potentially in Europe and maybe China approval coming even before FDA approval this year. So the next 6 to 8 months are shaping up to be pretty exciting and transformative ones for Cytokinetics.

Great. So maybe we just touch on MAPLE first. If you can give kind of the high-level data sets, the fact what struck me, and I think highlighted by KOL feedback is the fact that beta blockers in regards to exercise capacity, it also deteriorated, and it was significant with aficamten. Any highlights there? And maybe if you can call out key KOL feedback, that would be great.

Sure. Well, so in MAPLE, we assessed exercise performance as the primary endpoint, and it was probably not that surprising that beta blockers caused a decrease in exercise performance. That's been seen in other conditions. It's even been seen in a small study of nHCM -- rather of obstructive HCM patients. What was really more surprising was the lack of effect of beta blocker on reducing the obstruction, the LVOT gradient. There was almost no effect of the beta blocker on that. And that's fundamentally the rationale for using the beta blocker in oHCM. So lack of impact on the underlying cause of symptoms. The increase in BNP was also a bit surprising. Patients reported a fair number of adverse events that were a consequence of the beta blockade. And we pushed the dose in the trial. And so we could say that the beta blockers had a fair shot at it, but it also led to several down titrations and discontinuations of the beta blockers. So I think when you walk the floor and spoke with KOLs afterwards, this was presented in front of an audience of about 4,000 people on the -- in the most prestigious session of the meeting, you got the sense that they were just questioning the basis for the use of this drug for their first line of therapy and how that might -- ultimately, the standard of care may evolve in HCM.

And potentially, this would be submitted as a supplemental application after the PDUFA date in December. But overall, this is a significant milestone. How is it kind of shaping Cytokinetics' positioning in HCM overall? What's your approach going into the potential launch in December?

So from a commercial point of view, when the sNDA goes in, this is not a new indication, it just further elucidates the effective beta blocker. So it is in the public domain. We're obviously focusing our launch on SEQUOIA. But when we talk to physicians, when we do formal research or anecdotally, when we talk to KOLs, the -- a few takeaways are: One that beta blockers will probably still be used in the near-term first line, more driven by payers, but the call to action to add aficamten a lot sooner than they would have otherwise. Two, as it gets -- there's many cardiologists who don't prescribe CMIs today. They do use beta blockers, there's around 10,000 cardiologists who are 80% of the market. And about 80% of those 10,000 cardiologists aren't writing CMIs. So this would get more of them on board. So what it does is it increases penetration, i.e., the number of patients who would be on a CMI over time, and it increases our preference share when we've studied a profile of aficamten to include MAPLE data. So I think it's pretty promising in that we can get a broader set of the cardiology community engaged in treatment, get aficamten, if it's approved, added sooner. It will get added to guidelines. I think that will -- if it does in 2027 is our base case of that. And if it does get added to guidelines, I think that will further propel some of that activity.

And you said 2027.

That's base case.

Base case.

Our best guess. I mean, we don't control that, obviously.

Yes. And any gating factors in regards to getting that on label? Would you -- what would be the bull case in that scenario? Or just...

Timing wise?

Yes.

I mean, I think you can assume we will be filing it quickly after approval, and it's about a 10-month review. So toward the end of 2026.

Okay. That's very helpful. And so moving over to the potential launch, the PDUFA date in December. And so you have a late cycle review this month, is there any expectation that you'll put something out regarding that late cycle review or any commentary around that or expectations?

Well, as we did with the mid-cycle meeting, I mean, we committed to updating on our quarterly earnings call. Next quarterly call will be in November, so I would anticipate a more detailed update at that time. I don't anticipate necessarily anything detailed in the meantime. We haven't -- these are very fluid discussions. And so despite there being a late-cycle meeting, we're always in constant exchange with FDA with regards to different things. And so we'll plan to focus in the quarterly call and give maybe more substantive updates at that time.

Okay. And maybe this is a good opportunity just to ask how are interactions going with the regulators? Or everything consistent? Any changes there?

Yes. I mean the review team has remained pretty constant. We get a lot of questions about that. The review team and their members have been the same throughout the process. They're pretty experienced with the mechanism of action. They're very, very knowledgeable now, obviously, about aficamten and its profile. And so I just would characterize our interactions as productive and have been progressing normally through the course of the last few months.

Okay. And I believe you just said in regards to having fluid discussions, ongoing discussions with regulators. Will this be the first formal meeting where they basically give their response to the REMS that the team submitted?

No. I mean when we submitted the REMS, we got comments back from them that were stylistic and editorial and things like that. The REMS have to kind of follow the label. The label ultimately has to get finalized and if there are any discrepancies, they have to be reconciled at the end. We seem to have good alignment between label and REMS. And what -- as we move forward, as we continue to negotiate a final label, that will finalize itself shortly thereafter. So they're moving together in parallel, probably is the best way to put it, and they'll get finalized in parallel.

Okay. And then in regards to the potential label, the proposed REMS, I don't want to push you too far on details, but I'm just trying to think about how potentially it could be differentiated from Camzyos. I know there's differences in drug-drug interactions, the titration schedule. But anything you'd like to comment there?

Yes. I'm just going to comment on our clinical trial experience and what we've put out in the public domain as a means of thinking about it. When you look at the way that aficamten has been dosed in all of its clinical trials, including MAPLE, including FOREST, including SEQUOIA, this was done in such a way that every -- basically, the patients would start the drug every couple of weeks with some flexibility now in FOREST, where it's every 2 to 6 weeks. They can come in, have an echo, potentially uptitrate. Every echo either leads to a titration or it leads to an entrance into the maintenance phase, if the target dose has been reached. Treatment, down titration is the means by addressing EF less than 50%, above 40%. Treatment interruptions have been very rare. And we don't expect necessarily any differences when we get to labeling because obviously, the clinical data would inform the label. Drug interactions, we published the -- or we presented those data at the American College of Cardiology some time ago, and the data demonstrated that there are multiple pathways of aficamten metabolism. It's hard to block them all at the same time, blocking any one pathway doesn't lead necessarily to a large increase in aficamten exposure. And so again, we expect any labeling around drug-drug interactions to be consistent with that profile that we see, which is altogether, we think quite differentiated and should ultimately lead to a differentiated label.

Okay. And based on the fact that Camzyos, the REMS was updated this year, it's been on the market for a bit. What kind of learnings are you taking from that launch and applying to your own launch? Or specifically in the United States, patient demographics you're targeting, physicians, community setting, where can you be differentiated in regards to Camzyos?

So when we look at it from a launch point of view, we have our campaign. We spent the last probably 4 or 5 months finalizing what that campaign would be to communicate that differentiation. I won't get into details of where the differences are. I mean, obviously, Fady just described them from our Phase III study, but we do have differentiation in efficacy, safety, REMS and patient support, assuming that the label and REMS program is finalized the way we're expecting. And that campaign will communicate that very clearly to physicians. I think what we've learned, and I think we've all been students of launch. I think our commercial team is very experienced in launch. We've all launched many products. And the key is to get a core set of physicians on board first that will be likely the centers of excellence to make sure that they're communicating their experience to the next kind of level of cardiologists. I think we do have a profile in aficamten that likely can expand the market to a broader set of cardiologists and when I say likely expand the market, it will -- I do believe it will expand the market, likely what I mean in 2026. Can we do it as quickly as in 2026. MAPLE will help a lot with that, especially if guidelines get updated faster than we were expecting. If a case is positive, that will certainly help with that. So I think there's lots of reasons to believe that acceleration could occur beyond what maybe a base case launch could look like. I think finally, we've been really focused on HCM, aficamten, this patient population, this treatment journey. We've designed a patient treatment program around it. We've been interacting with the KOLs. They know us very well. We know them very well. So I think we have a competitive advantage in that we have that level of focus as an organization and a business model, that specialty that you don't need large field forces and a lot of resources to compete in.

So in many ways, with MAPLE potentially on the label, that's where the inflection could come from expanding beyond centers of excellence to community setting. Do you think that's a reasonable expectation?

Yes, I think that's a very reasonable expectation.

Okay. And then without providing specific guidance or launch metrics, how are you communicating to investors, the investing community in regards to what 2026 looks like in regards to the launch?

So in November at our earnings call, we'll probably describe that better in terms of the metrics, but you can imagine it's going to be things like the number of patients treated. The number of patients that are commercially -- being converted to commercially paying patients, the number of physicians who have been certified in the REMS program. So there'll be a couple of metrics that we talk about that are early indicators of greater launch success. And I think -- the first year of mavacamten's launch had around 4,000 -- or the first 12 months, I believe, had around 4,000 patients. So I think that would be a minimum that we would expect. I certainly think for reasons around MAPLE, the patient support program, the areas of differentiation, the ability to expand, I certainly believe we could do better than that. But we'll have to see how the label and the REMS play out as well.

Okay. That's very helpful. And so moving on, you noted it, Fady, at the beginning in regards to ODYSSEY, Camzyos, the data in nonobstructive HCM. Is there anything you'd like to call out there before maybe some questions on that program?

Sure. I mean I think the -- what we saw at ODYSSEY was that the underlying basis for believing that a cardiac myosin inhibitor would impact the physiology of HCM in a positive way was confirmed. We saw improvements in echocardiographic measures of cardiac relaxation. We saw decreases in NT-proBNP, which is also a reflection of probably filling pressures of the heart. And so that physiologic basis for believing that there would be a clinical benefit to that was solidified. And in a very large and global population of HCM patients. The clinical outcomes data were not statistically significant in terms of their statistical testing plan, but there were positive trends on both endpoints that were, again, encouraging. One of the endpoints was confounded by a large placebo effect. And so I think all of those things portend well for ACACIA potentially being positive down the road with certain improvements in the way the study is potentially conducted or the product is dose and things like that.

Could you speak to the patient journey for someone with nonobstructive HCM? What does it look like? What are the diagnostic criteria? My sense from both your presentation and reviewing the ODYSSEY data, it seems like it could be a heterogeneous population, but any commentary around that would be helpful.

Sure. Well, the obstruction in oHCM gives you a very specific and kind of unusual feature by which to say those patients have obstructive hypertrophic cardiomyopathy. The nonobstructive patients don't have the obstruction. So what they have, though, are thickened ventricles, they generally have geometries that are not very normal-looking, asymmetric hypertrophy for instance, or the hypertrophy is concentrated at the apex or they have mid-cavitary obstruction, things like that. So this is not, in general, something like you see in heart failure with preserved ejection fraction where the hypertrophy is more concentric looking. So it's more of a visual thing. And we have our physicians, that are HCM experts, look at every single echo that is a part of the qualification process and as patients get screened into the study. So we think we have pretty good control of that. The patient journey is also a bit different because nHCM -- oHCM can be recognized early because of a murmur. You need a stethoscope, listen to somebody's heart, you hear a murmur, even if you don't know what the murmur is, it does suggest that perhaps you should image the heart and see what's going on. And that leads to an echocardiogram and hopefully, the echocardiogram leads to a diagnosis. nHCM is silent. There's no murmur. The symptoms are often mistaken for other things and as other things can present very similarly. And so it takes -- these patients tend not to get recognized until later in their disease until they've had substantial symptoms for quite some time. And I think that just is a call to action for us to improve diagnostic rates and elevate the diagnosis and the sort of differential diagnosis. And therapies -- available therapies, if aficamten does become available for that, often change that dynamic, and they improve diagnostic rates and recognition of disease.

So just touching again on the inclusion criteria for ACACIA versus ODYSSEY. I know you've noted previously that you have a team that's reviewing echocardiograms. How confident are you that you've enrolled a differentiated patient population compared to ODYSSEY?

Well, I would say -- I wouldn't say that their population was the reason that ODYSSEY didn't reach statistical significance. I mean, I think we've enrolled a population with some more objective measure of exercise intolerance. So we have an upper limit on peak VO2. That was not in the ODYSSEY entry criteria, that people could have normal or even over normal peak VO2s. We both had entry criteria related to KCCQ that required patients to have substantial symptoms, symptom burden. We have maybe a bit higher of an NT-proBNP entry criteria, which is another objective measure of burden of disease. So I think these things are fine-tuning things. The review of echos is important, obviously. But then probably the biggest difference will be in dosing density, I would imagine. We piloted the dosing of aficamten in nHCM patients in Phase II and then retested it in the open-label extension. We were able to titrate patients, the majority of them to the highest doses. We didn't have patients having interrupt treatment. And generally, we're able to take that same dosing regimen right into Phase III, having road tested it. So hopefully, that will also increase our likelihood of success.

Okay. And then for the nonobstructive patients, how reflective is the enrollment criteria for ACACIA in regards to the overall patient population? I'm trying to get a sense of the TAM here.

When we designed ACACIA, if you think of all of HCM as a pie, [ SEQUOIA ] was really the treatment-resistant population. Patients that were on background therapies still have substantial symptoms. We required a high level of both resting and provoked gradient to get into the trial. MAPLE enrolled patients with obstructive HCM that essentially met just a diagnostic criteria, all-comers that sort of met those diagnostic criteria for obstructive HCM. So what's left are essentially the patients we enrolled in ACACIA. These are patients that don't have -- they don't meet the diagnostic criteria for obstruction. They have the appropriate wall thickening. They have symptoms, things like that. But we've tried not to exclude a lot of patients from the trial because, again, we wanted to address the whole pie, not just pieces of it.

So would you say the opportunity is larger, but less defined in regards to which patients would go on therapy right away in nonobstructive?

No. I mean I think the patient population, again, people that have HCM, we hope at the end of the day, is that aficamten is a drug indicated for hypertrophic cardiomyopathy, period, end of story. And not obstructive or nonobstructive or cuts in both directions. And so -- and that's the way it should be. This is a disease of hypercontractility. This is a mechanism that addresses hypercontractility across the whole spectrum of HCM. And there shouldn't necessarily be little pockets that are carved out other than patients that don't have symptoms. I mean those are the ones that probably are not needing of therapy until later in their disease.

The overall population size, nHCM is about half the market, and oHCM is obviously, the other half. And from the symptomatic, our expectation is the number is going to be pretty similar, about 130,000, 140,000 that are symptomatic. I think the difference is, obviously, if we are successful there, then there -- none of them would be treated. There's not -- they don't -- beta blockers don't work well. So first-line therapy, really would be the call for -- which could fuel further first-line therapy for oHCM over time as well.

And sorry, just going back to the beta blocker dynamic. When do you plan to get feedback from payers? Do you expect the MAPLE data to potentially support shrinking the time patients are on beta blockers to start? Yes, just any commentary around that.

So guidelines are probably the most impactful thing for payers. I think in reality, we're not trying to position MAPLE to fuel first-line therapy in the short term. I think what we're trying to fuel is a call to action for those who have HCM who are not on a CMI, when aficamten gets approved, to be on aficamten. That approval should at least get payers to reduce the time frame, but beta blockers will still be first line. The ability to add a CMI and accelerate use more quickly from a payer is really the response we're looking for and from the community of cardiologists to get more of them to write because of the superiority of beta blockers not working for the gradient.

Okay. And so I'd like to touch on the pipeline also. I know most of the questions have been around aficamten, but you have a pipeline -- expanding pipeline. And is there any highlights or catalysts we should keep an eye out for over the next 12 to 18 months?

Sure. I mean, I think just with even aficamten as a pipeline and a product, right, with ACACIA reading out next year, label updates occurring next year and potentially the year after in terms of ACACIA. And following that, omecamtiv mecarbil, that trial COMET, which is the trial in severely reduced ejection fraction heart failure patients, we'll have finished up enrolling. And hopefully, in 2028, we'll read out and positively as it's supported by a fairly large -- maybe the largest ever clinical trials program supporting a pivotal trial. And that is a drug that would add nicely to the aficamten launch as that story is beginning to mature. The omecamtiv data and potentially its launch approval, things like that would follow soon thereafter. AMBER is a trial in heart failure with preserved ejection fraction. This is a kind of a population where we think nHCM is a model of that particular population, thickened heart, symptomatic, a lot of same features in HCM. We'll see early data from the Phase II trial in 2026. And if those data are supportive, launching of a size -- a more sizable trial in 2027. So I'd say the next 3 years have a lot of exciting changes for Cytokinetics on top of transformation of the company into a commercial powerhouse.

I think that leads in well. Maybe we can just discuss financials. I believe with over around $1 billion in cash at the end of 2Q, additional potential tranches from Royalty Pharma, how are you thinking about capital allocation? And any thoughts on business development?

Yes. So Max, our top priority, obviously, is the launch of aficamten in the U.S. We're also putting up the infrastructure -- commercial infrastructure for launch in Europe later next year as well. So that will be an important priority. Also, with our capital allocation, advancing our pipeline is very important. As Fady said, we have sort of an abundance of opportunities with aficamten alone, sort of a pipeline and a product. So funding those ongoing studies, taking ACACIA across the goal line. We have the wherewithal to do that and of course, omecamtiv mecarbil and CK-586. So those are our capital allocation priorities. You mentioned something very important. In addition to the cash balance of $1 billion midyear, we have important options ahead of us in terms of additional access to capital. So starting with a $100 million term loan that we've already qualified for. So I think it's fair to expect us to take that down before the end of the year. And if aficamten is approved before the end of this year, we would qualify for an additional $175 million. So that will be an important source of additional capital. And as you know, we've retained the vast majority of worldwide rights to aficamten still with the exception of Greater China and Japan, where we have partners. So that could be an additional important source of nonequity source of financing, selling the rights to rest of the world.

Okay. And that leads into a couple of quick questions we've been asking several of our companies. Just with the China's recent rise in biotech innovation, how are you thinking about your competitive position here? And will this influence your R&D or BD strategy at all?

Well, I think like every company out there, we certainly look at the entire landscape in terms of opportunities to externally partner or license things. So I think that, that we're certainly not going to be restricted in our view in that way. Maybe just to step back a minute, the company is, we think, uniquely positioned not just to launch aficamten and develop that market, but -- and with other clinical and regulatory milestones in the future, but we've maintained a pretty meaningful and productive research group. We have other small molecules that are poised and hopefully will enter development in the near future as our entire pipeline has grown internally from work from our research group. But that doesn't mean that we're only thinking to grow our pipeline with internal discovery because, obviously, there's a lot of opportunities externally as well. We've considered things in China. We consider things anywhere really in order to augment that. And our long-term vision is to grow our pipeline over the course of the next 5 years and add to those 3 important products that we've talked about today.

And would the opportunity potentially or -- is the China opportunity becoming more significant now, I guess? Or is it equal with anything else you can find across the world?

I think we find innovation everywhere. I mean, I think we've talk to companies in China around potential partnerships. I mean, there are companies in the U.S. we've talked to as well. I don't think there's a tilt necessarily one way or the other, but we'll be as open-minded as anyone else will be.

Okay. And I guess last question. Is there anything I missed? Or is there something you would like to highlight? Or you think are top of mind among investors?

Well, I think it's a confluence of how our first launch is coming together with a field that has developed a lot of enthusiasm for new therapies. We're seeing other products being developed in HCM. We're seeing the standard of care really shift. And so I think of it as a very opportune time for us to launch aficamten, which we hope will be a highly differentiated product first in o and maybe potentially in nHCM. The company has positioned itself very well financially. We've had a long time to prepare commercially to launch aficamten. And so in many ways, we represent unusual story in how we've come to this point. And hopefully, we'll continue with that momentum going forward.

I mean, maybe just to add that the level of energy and excitement at Cytokinetics is really off the charts. One, we have a very differentiated product that we really believe in, in both the profile, the REMS. We're building a patient support program that's very accustomed to this patient population. Timing is great in that there are many sales representatives on the market or who have recently left organizations who have been focused on cardiology. We have 9,000 applicants for a little over 125 jobs. And we have very deeply experienced representatives who know these cardiologists, who have relationships, who will be in these offices. So when you combine the commercial team, the know-how, the people on top of the rest of the organization, the differentiation we have in aficamten, the life cycle coming with MAPLE and ACACIA, I think there's a lot to be really bullish about in the short term. And you can feel the energy in the company as it's getting closer and closer to launch.

Great. Well, thank you very much.

Thank you for having us.