Cytokinetics, Incorporated (CYTK) Earnings Call Transcript & Summary

Great. Thank you, everyone, for joining. I'm Max Skor, biotech analyst with Morgan Stanley. And before we get started, for important disclosures, please see the Morgan Stanley Research Disclosures website at www.morganstanley.com/researchdisclosures. And I'm very happy to welcome the Cytokinetics team: Robert Blum, CEO; Sung Lee, CFO; Andrew Callos, Chief Commercial Officer; Fady Malik, Research & Development. Welcome, team. Thank you very much for joining us today.

Thank you.

And maybe just to start off, so Robert, we're in the early stages of the MYQORZO launch. Could you just walk us through key learnings at this point and what we should really focus on going forward into year-end?

So MYQORZO, aficamten, was engineered with certain properties in mind and was developed very much to elaborate on those properties. And I think those are playing well to what we hope ultimately proves competitive advantage in the marketplace: ease of use, flexibility, convenience. These are things that we think matter, especially for a second to entry in a category of cardiovascular medicine. And I do believe that, as we have projected, we're on track for some pretty ambitious goals. Goals like preferential share of new scripts by the end of the year; goals like parity market access. That's all translating into very solid launch velocity and momentum. Andrew can elaborate. But we reported our full second quarter. And in that quarter, as you should expect, we saw a majority of new scripts coming from velocity accounts, those roughly 700 accounts that represent over 80% of the historical CMI business. But what was also encouraging, and this is imperative to growing the category, is that there were at least half of prescription -- sorry, half of prescribers coming from either, historically, physicians who had not prescribed a CMI or had not done so in a while. And that speaks to their comfort with MYQORZO, especially given a differentiated REMS risk mitigation and also where we believe the data -- strong data publications support its use. So we're really optimistic and encouraged coming out of Q2. Q3 continues to look promising. And we're looking forward to sharing results at our next earnings call.

Great. So MYQORZO's new-to-brand share exceeded 40% in June and you're targeting more than 50% CMI new patient preference share by year-end. What are the biggest drivers required to close the gap? And what could allow the share gains to occur more quickly?

So some of that relates to market access where those barriers are being chipped away and we expect parity by the end of the year. But maybe I'll ask Andrew to elaborate on how we get to that goal.

Sure. So from a new-to-brand share of 50%, as you mentioned, end of the second quarter, we were above 40%, and still trending in that direction, over 50%. When we look at what is it going to take to get there, our strategy has always been kind of to the higher we decile physicians, every 10%, and the higher the decile means the most productive physicians, we have the highest share, and it goes down from there. So it continues to get the centers of excellence on board and expand the market. And as we expand the market, below decile 10% and 9% are the highest, spend more time with our field force, spend more time with those customers, and generally those, as you go down, those deciles are less familiar with the details of the data and the differentiation. So there's an education component as well. But what we've learned, no surprise, is that differentiation matters, the REMS matters, the experience and the process of getting a patient on therapy and going through the REMS matters, and market access matters. So it's reinforcing those elements as well as you go down. But we remain confident in that goal of greater than 50%. Because when we focus resources, we're seeing the share difference.

Great. And I think, Robert, you touched on this in the opening remarks, but more than half of MYQORZO prescribers have been low-volume CMI prescribers or physicians writing their first CMI prescription. What are you seeing in terms of conversion from initial trialing to repeat prescribing and greater prescribing depth?

So on average, those new-to-CMI prescribing were those that not written a script for Camzyos in quite some time. On average, they are 3 prescriptions already. So it's not like it's one-off. We're seeing repeat prescribing. And this is a category where we're also very pleased to see a couple of other things coming forward. One is very strong adherence and compliance on the part of patients. Patients, when they get a CMI prescription, and especially for MYQORZO, are staying on it. And I think that's essential to the kind of growth trajectory we're highlighting. The other thing that's really nice to see is that as physicians are prescribing, the time from prescribing to dispensing, the time from dispensing to revenue, reimbursement is short. At one time upon launch, I think analysts, in general, were assuming it might take at least 60 days to see that conversion from dispensing to reimbursement, where that on average is closer to 3 weeks today. So we're really pleased to see that. I think that speaks volumes to the kind of demand, the quality of the demand that we're seeing with MYQORZO.

And can we just touch on the sales force, and any feedback you're getting from physicians on the early launch? Is the differentiated REMS resonating? Are there any roadblocks right now that you're working on to try and fix and expedite the launch?

Yes, I'll ask Andrew to comment. But with any launch, there's going to be some friction points. What I'm especially proud of is how our team is responding to those and knocking them down in order to accelerate the launch. But Andrew, do you want to speak to that?

Sure. So I think what we're hearing from our field force is kind of what I mentioned before, is that the -- understanding the differentiation is important. We can't assume, especially as you go outside of the centers of excellence, that cardiologists understand the data and the differences in the data, as well as the process, the REMS process, to get a patient enrolled and on therapy. I think they're critical components. The other key area is when you look at general cardiology, and we didn't have as much focus on general cardiology, those who haven't prescribed, I think we're very pleased to see that 40% of our prescribers were the core what we call velocity accounts, 80% of the market, but then 30% had written very little CMI and 30% were naive to CMI. That 30% were naive to CMI is where the majority of the market growth occurred. So it validated what our expectation was, was that we do well in the velocity accounts, the 40% of the physicians. But to expand the market, at the same time, we need to do well in expanding the market to really have the category and the brand get into the growth phase that we expect. So really pleased to see that. And when you get into that 30% of the market, again, it's differentiation, process, REMS and access. That's really the thing that we're focused on. And when physicians do understand that, we are seeing a preference share.

Prior to FDA approval and launch, we were projecting that, if approved, we should expect a differentiated risk mitigation profile, a differentiated REMS. The FDA did approve MYQORZO and the REMS is different, and I think it's proof positive as to how that difference is being appreciated by customers that we're seeing category growth, growth in the market, and especially in the community. Where community cardiologists who might not previously have been comfortable writing a prescription, perhaps because they thought a REMS was an insurmountable hurdle, now they feel comfortable with MYQORZO. And that's even as, admittedly, we launched with a REMS that was more manual, less automated. People don't necessarily all understand that with a REMS, there is a process back and forth with FDA. And as we have evolved the REMS to make it more system-wide and integrated across different personnel within the cardiology office, we've been lowering barriers to wider adoption amongst more cardiologists more comfortable prescribing MYQORZO. So as we get to potentially over 50% preferential share of new scripts, I think it speaks to, again, those REMS that -- treatment experience, patient experience being more and more embraced by more cardiologists.

Can you touch on potentially patients switching from Camzyos to MYQORZO? What feedback? What's driving that at this point? Are physicians comfortable doing that? And how do you expect that to evolve over time?

Yes. So it's roughly 5% to 7% of the sales we've reported to this point. It's not core to our strategy to be encouraging of that switching, but it is organically occurring. And maybe I could ask Fady to comment on what might be prompting that. And there is an investigator-sponsored or initiated study that is evaluating how best to do that.

Yes. I mean there are several reasons for potential switching from one to the other. Perhaps difficulty in up-titrating with residual symptoms or gradients, drops in EF that require treatment interruption, DDIs that had -- that are bothersome to the patient because of a particular medicine they would prefer to be on. All of these things contribute to physicians deciding to switch from one to the other. And how to do that, we never studied that formally, but there is an ongoing investigator-initiated study to look at a particular means of doing that relatively efficiently, primarily by discontinuing Camzyos for a couple of weeks and then starting MYQORZO at week 2 and titrating as per normal. So we'll see how that looks probably early next year sometime.

Okay. That's helpful. So what are the remaining opportunities to reduce the time from prescription to paid therapy? And how much could improved access contribute to the launch trajectory?

Andrew, do you want to take that?

Sure. I don't think there's a lot more we're going to do to change the time to therapy. We're right around 3 weeks in terms of paid therapy, which is where we're going to see it in steady state. We may improve that by a few days over time as payers and their policies are clearer to physicians. In terms of access, clearly, anywhere where we still have kind of new-to-market blocks, where we have to go through a medical exception process, that certainly does slow down or speed-bump, if you will, patients getting on therapy. And there are instances where patients can't get on therapy. We do provide free drug. Sometimes those patients get put on a competitive product because of that market access situation. So nothing outside of the normal ordinary course for a launch, but I think we're quite pleased with where we stand in terms of time to paid therapy and the percentage of patients of over 80% who are on paid therapy.

Okay. And you're also launching in Europe. Could you speak to the opportunity there and when we -- or how should we think about the contribution to the overall revenue picture?

Yes. We believe very strongly that we have an obligation to patients, especially in countries that participated actively in our clinical research. So we did commit to a go-to-Europe strategy, and we have now launched in Germany. Soon we'll be launching in other countries, U.K. by the end of the year, Italy, France, Spain and others next year. And knowingly, pricing in those countries is not on par with that in the United States. But at the same time, we believe we can build a profitable business with MYQORZO in oHCM by itself, and add to that nHCM, and that can even get more attractive. Maybe I'll ask Sung to comment on where ultimately Europe may line up relative to the U.S. in terms of the total financials picture.

Sure. Happy to do that. So if we look at the total worldwide opportunity for MYQORZO, Europe in the end could represent approximately 15% to 20% of that pie, which would be very significant for us considering this is in a blockbuster category and potentially in a second indication in nHCM. So it's a very valuable opportunity for us.

Okay. That's helpful. And then before moving on to ACACIA and the non-obstructive opportunity, you have several, let's say, layers of development going forward. We have approval in obstructive right now, we have the MAPLE sNDA and PDUFA date coming up, and then potential submission of the non-obstructive label expansion towards the end of the year. Could you talk a bit about how you're investing in these opportunities, the sales force going forward and just positioning as more data you just presented at ESC, but how physicians are responding to this approach?

Yes. So I think one of the hallmarks of Cytokinetics, both past and future, is our science. And we came to market with MYQORZO in oHCM with many dozens of manuscripts published in peer-reviewed journals to be enabling of our commercialization. So science to medical, medical to commercial, we have been enabled in oHCM first with SEQUOIA, then MAPLE, and as you point out, an sNDA pending FDA review and EMA. Next up is nHCM, and we recently presented the results and published them, of the study called ACACIA. And this speaks to strategy. It's not accidental, it's very much on purpose, that Cytokinetics as a pioneer should be leading and extending this category from oHCM to nHCM, and ultimately, as we build our business, from HCM to heart failure. So while it might have taken us a while as a company to go from R&D to commercialization, we do think we have competitive advantage for our leadership in this space. So you asked about nHCM. This is a very important opportunity for Cytokinetics in as much as, if approved, MYQORZO would be the only medicine approved across the broad spectrum of HCM, o and n. And it's the same customer segment that's prescribing for nHCM as is targeted for oHCM. So we think we have a cohesive strategy between R&D and medical and commercialization to build on. So one should expect that this should continue, that as we demonstrate our leadership in oHCM and category growth, that should extend to shareholder returns in nHCM.