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Edited Transcript of CYTK earnings conference call or presentation 8-Aug-19 8:30pm GMT

Q2 2019 Cytokinetics Inc Earnings Call

South San Francisco Oct 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Cytokinetics Inc earnings conference call or presentation Thursday, August 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew A. Wolff

Cytokinetics, Incorporated - Senior VP & Chief Medical Officer

* Ching W. Jaw

Cytokinetics, Incorporated - Senior VP & CFO

* Diane Weiser

Cytokinetics, Incorporated - VP of IR & Corporate Communications

* Fady Ibraham Malik

Cytokinetics, Incorporated - EVP of Research & Development

* Robert Wong

Cytokinetics, Incorporated - VP & CAO

* Robert I. Blum

Cytokinetics, Incorporated - CEO, President & Director

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Conference Call Participants

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* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* Edward Andrew Tenthoff

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Jason Nicholas Butler

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Jeff Hung

Morgan Stanley, Research Division - Equity Analyst

* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

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Presentation

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Operator [1]

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Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics Second Quarter 2019 Conference Call. At this time, I would like to inform you that this call is being recorded. (Operator Instructions)

I will now turn the call over to Diane Weiser, Cytokinetics' Vice President of Corporate Communications and Investor Relations. Please go ahead.

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Diane Weiser, Cytokinetics, Incorporated - VP of IR & Corporate Communications [2]

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Good afternoon, everyone and thank you for joining us today.

Robert Blum, our President and Chief Executive Officer, will kick off the call with introductory comments about the current state of our business. Then Fady Malik, our EVP of Research and Development, will provide updates on our cardiovascular program, including the Phase III development of omecamtiv mecarbil, our cardiac myosin activator, and the Phase I development of AMG 594, our cardiac troponin activator, both under our collaboration with Amgen as well as the development of CK-274, our wholly owned cardiac myosin inhibitor now proceeding from Phase I to Phase II development.

Andy Wolff, our SVP and Chief Medical Officer, will then share updates on our neuromuscular program focused on reldesemtiv, our fast skeletal muscle troponin activator under our collaboration with Astellas.

Robert Wong, our VP and Chief Accounting Officer, will provide a financial overview for the quarter.

And Ching Jaw, our SVP and Chief Financial Officer, will discuss corporate development strategies before Robert concludes with additional thoughts on the company's outlook and expected milestones.

Please note that portions of the following discussion, including our responses to questions contain statements that relate to future events and performance rather than historical facts and constitute forward-looking statements. Our actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause our actual results to differ materially from those in these forward-looking statements is contained in our SEC filings. We undertake no obligation to update any forward-looking statements after this call.

And now, I will turn the call over to Robert.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [3]

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Thank you, Diane, and thanks again to everyone for joining us on the call today.

During the second quarter, we made good progress across our pipeline with particular emphasis on our investigational medicines directed to diseases associated with cardiac muscle dysfunction, including heart failure with reduced ejection fraction and hypertrophic cardiomyopathy or HCM. In addition, we continue to gather data to inform potential progression of our neuromuscular program. As has been our history, we continue to follow the science.

In recent weeks, we announced the completion of patient enrollment in GALACTIC-HF, our Phase III study of omecamtiv mecarbil. This represents a major milestone for us and for patients with heart failure with reduced ejection fraction. It also represents a significant milestone under our collaboration with Amgen, which dates back to 2006.

Our team takes great pride in this longstanding collaboration and completing enrollment in line with the defined trial objectives. It's a testament to the diligent work, cooperation and oversight of both companies working effectively alongside the global clinical trial site network.

In the last quarter, we also continued site activation and enrollment in METEORIC-HF, the second Phase III clinical trial of omecamtiv mecarbil, and we remain on track with time lines and other objectives for that ongoing trial. Fady will elaborate on that in a moment.

Importantly, we also kept pace and advanced CK-274, our wholly owned cardiac myosin inhibitor. We're in the final stages of the Phase I study of CK-274 in healthy volunteers and have in parallel been planning to begin our Phase II trial in patients with obstructive HCM. We expect that to get underway in the fourth quarter of this year. We remain enthusiastic about progressing this program, especially given the high-unmet need for patients living with HCM. We believe CK-274 represents a potential next in class drug candidate that may demonstrate a distinct clinical profile consistent with what we have seen in our preclinical work and that may translate into a potential therapy enabling optimized dosing, titration and symptom relief for HCM patients.

On the neuromuscular front, Andy will elaborate on progress made towards potentially advancing reldesemtiv in future clinical trials in each of ALS or SMA patients. We were pleased to recently announce that the European Medicines Agency has granted orphan medicinal product designation to reldesemtiv for the treatment of SMA.

As we continue to pioneer the field of muscle pharmacology in both cardiovascular and neuromuscular diseases, we look forward to potentially sharing results from our ongoing clinical trials and delivering on our mission to bring new medicines to patients suffering from diseases of muscle weakness and impaired muscle function.

With that, I'll now turn the call over to Fady, and he'll elaborate on our cardiovascular programs.

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [4]

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Thanks, Robert. Before I get into specific updates, I'd like to take a moment to reflect on the productivity and promise of our pipeline. We pioneered the pharmacology of muscle function and continue to build our leadership with an expanding and advancing clinical pipeline of novel modulators of sarcomere contractility, both activators and inhibitors.

This work encompassed our screening many millions of compounds, profiling thousands of hit compounds, optimizing and characterizing hundreds of distinct chemical series and conducting dozens of clinical trials. We've learned a lot along the way about how to best to modulate the sarcomere for potential therapeutic benefit and have developed a profound respect for the importance of prioritizing pharmacokinetics and pharmacodynamics of our drug candidates in this area.

As Robert mentioned, we recently completed enrollment in GALACTIC-HF, the Phase III cardiovascular outcomes clinical trial of omecamtiv mecarbil being conducted by Amgen under our collaboration. GALACTIC-HF follows 18 prior clinical trials, which sets the stage for this important outcomes trial and informs the dosing, patient inclusion and exclusion criteria and end points that we and Amgen selected for the study.

With more than 8,200 patients enrolled at over 1,000 sites across 35 countries, GALACTIC-HF is now among the largest heart failure clinical trials ever conducted. We're pleased with the outstanding contributions of our site investigators and study coordinators, and encouraged that we achieved the intended balance of inpatients and outpatients with excellent global representation.

Specifically, we enrolled approximately 40% of the patients in the U.S., Canada, Western Europe, South Africa, and Australasia, 33% in Eastern Europe and Russia, 19% in Latin America and 8% in Asia. Approximately 25% of the patients in GALACTIC-HF were hospitalized at randomizations, which is consistent with the protocol specification.

As you may recall, in March 2019, the data monitoring committee conducted the first interim analysis of GALACTIC-HF, which included consideration of prespecified criteria futility. Upon review of the data, the DMC recommended the trial continue without changes to its conduct. The futility analysis was triggered once a prespecified number of cardiovascular deaths, stipulated by the trial's protocol, had occurred. With enrollment now complete, the next milestone will be the second planned interim analysis, which includes an assessment for the potential for superiority projected to occur in the first half of 2020.

Also during the quarter, we continued site activation and enrollment in METEORIC-HF, our second Phase III trial of omecamtiv mecarbil, which is designed to evaluate the effect of treatment with omecamtiv mecarbil compared to placebo on exercise capacity as determined by cardiopulmonary exercise testing following 20 weeks of treatment.

This trial is being conducted by Cytokinetics under on our collaboration with Amgen. And while it is still early days, enrollment is on track and sites are executing the protocol well. The quality of the initial exercise test conducted by the sites and reviewed by the core lab has been high, which is encouraging. And we look forward to meeting our goal to activate the majority of participating sites this year distributed across the U.S., Canada and Europe. As previously stated, we're seeking to have results available around the same time the GALACTIC-HF is anticipated to read out in 2021.

Now turning to AMG 594, our novel selective oral small molecule cardiac troponin activator that was discovered under our joint research program with Amgen. AMG 594 was designed to show differential pharmacology of omecamtiv mecarbil. And its advancement further underscores our leadership in muscle biology.

In the second quarter, Amgen continued to conduct a Phase I clinical study of AMG 594 . This study includes single and multiple ascending dose cohorts to assess the safety tolerability of AMG 594 in healthy volunteers, and its potential to increase cardiac function. We expect the study will continue throughout 2019 and have been working closely with Amgen to develop a potential Phase II clinical program and plan.

Now moving to our cardiac myosin inhibitor program. In the second quarter, we continued the conduct of the Phase I first-in-human study of our cardiac myosin inhibitor, CK-274. This study in healthy participants will soon be coming to a close and we're pleased that an abstract describing the results has been accepted as a poster presentation at the HFSA 23rd Annual Meeting to be held September 13 through 16.

As you know, we are developing this investigational medicine for the potential treatment of hypertrophic cardiomyopathy and expect to advance this and other compounds in a broad development program. We expect that the Phase I data will lend support to what we have seen emerging in our preclinical work, that is a profile that may distinguish it as a next in class drug candidate.

We believe its pharmacokinetics may optimize the time to reach target dose levels and provide both rapid symptom relief and reversibility. In connection with that profile for this next in class drug candidate, last week we presented preclinical data at the American Heart Association's Basic Cardiovascular Sciences Scientific Sessions, which showed that CK-274 decreased cardiac contractility in vitro and in vivo, suggesting that this cardiac myosin inhibitor may address the underlying hypercontractility of the cardiac sarcomere in HCM patients.

This was the first presentation of data relating to CK-274 at a medical meeting. In vitro studies showed that CK-274 selectively inhibited cardiac myosin activity in a concentration dependent manner and reduced fractional shortening, a measure of cardiac contractility, without any effect on the cardiac calcium transient.

Similarly, in vivo studies in healthy animals demonstrated that CK-274 decreased cardiac contractility in a dose-related fashion. In a mouse model of hypertrophic cardiomyopathy, single doses of CK-274 reduced fractional shortening in a dose-related fashion and its effects appeared reversible within 24 hours after administration of a single dose of CK-274. We believe these data support the distinctive therapeutic hypotheses relating to both onset of action and reversibility of effect.

As we wrap up the Phase I study, we're also preparing for an international Phase II trial to begin in the fourth quarter of the year. Towards that end, we have identified leading clinical sites to participate and we've assembled an enthusiastic steering committee, which includes the foremost experts in HCM.

We are pleased with the feedback we continue to receive from leaders in the field about our approach and the strong interest they have to participate in the clinical trials program of this potential new therapy.

And now, I'll turn the call over Andy to provide an update on reldesemtiv.

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Andrew A. Wolff, Cytokinetics, Incorporated - Senior VP & Chief Medical Officer [5]

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Thanks, Fady. During the quarter, we focused on planning for the potential advancement of reldesemtiv into additional clinical trials. We are pleased to have identified what we believe to be potential paths forward in each of ALS and SMA, and continue to discuss how best to approach regulatory authorities and to develop protocols, time lines, and budgets.

As we have previously stated, we believe that the data generated from our Phase II trials in each of SMA and ALS support progression to potential registration programs. We recognize that both patient communities are in urgent need of new therapeutic options that may be addressed by muscle directed treatments.

Importantly, the introduction of new therapies in SMA has changed the natural history of these diseases. While infants and children treated with these new therapies are fortunately living longer than ever before, they're still expected to struggle with persistent residual muscle weakness that impact their ability to perform activities of daily living.

We believe reldesemtiv may be complementary to these new treatments by addressing this residual muscle weakness. In fact, we recently presented data from 2 preclinical studies of reldesemtiv at the 2019 Annual Cure SMA Conference that showed the addition of reldesemtiv to treatment with either of 2 different SMN upregulators, nusinersen and SMN-C1, an analogue to risdiplam, significantly increased the muscle force in a mouse model of SMA. Data from these preclinical studies suggest that reldesemtiv may complement SMN directed therapies to further improve muscle function, especially for routine activities that may be fatiguing and don't require maximum exertion.

As these therapies become the standard of care, it will be important to understand what the new baseline looks like for patients and what are appropriate end points for ambulatory and nonambulatory patients. We are collaborating with clinical experts in the field as well as patients, advocates and health technology assessors to determine our clinical strategy and study designs.

While we continue to assess the landscape in SMA, we believe there may be greater urgency and unmet need in ALS given a lack of effective treatment options. During the quarter, we drafted a protocol synopsis for a next Phase III trial in patients with ALS and are scheduling meetings to ensure that our proposed approach is sound and aligns with regulatory, patient and payer needs. As you can imagine, this will take some time to get it right. So we do not expect to begin the next trial until perhaps the second half of 2020.

Finally, under our collaboration with Astellas, we also continued preclinical development of our fast skeletal muscle troponin activator, CK-601, as well as our joint research program focused on pursuing other next-generation skeletal muscle activators.

Now I will turn the call over to Robert Wong to update you on our financials.

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Robert Wong, Cytokinetics, Incorporated - VP & CAO [6]

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Thank you, Andy. I'll first provide an update on cash, revenue and spending, and then Ching will review our corporate development strategy. More details on our actual results are included in the press release itself.

We ended the second quarter with $175.1 million in cash and investments. Our revenue in Q2 2019 came from our strategic alliances with Astellas and Amgen. For Astellas, we continue to recognize revenue for reimbursement of our research activities as well as development costs we incurred related to FORTITUDE-ALS.

For Amgen, we recognized revenue associated with their reimbursement of our costs for development expenses related to METEORIC-HF. Revenues include both cash and noncash revenue recognized under ASC 606, the new accounting rules for revenue recognition.

Our second quarter 2019 R&D expenses increased to $24 million from $21.6 million in the second quarter of 2018 primarily because of the increased activity related to METEORIC-HF and CK-274, offset in part by lower spending related to our neuromuscular activity. Nearly half of our R&D expenses were attributable to our cardiovascular program as expected given activity for METEORIC-HF and the cardiac myosin inhibitor programs. Approximately 30% of our expenses were attributed to our skeletal muscle program and the remainder of our R&D expenses were related to our early research activity.

Our second quarter 2019 G&A expenses were $9.8 million, up from $8 million in Q2 2018 due primarily to increased outside legal expenses and higher personnel-related costs.

And now, I will turn the call over to Ching, who will review our corporate development strategy.

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Ching W. Jaw, Cytokinetics, Incorporated - Senior VP & CFO [7]

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Thanks, Robert. As Robert mentioned, we ended the second quarter with $175 million in cash, which represents approximately 2 years of forward cash based on our 2019 guidance of $85 million to $90 million net cash burn rate. As we have previously stated, our strategy remains to manage our cash prudently through the expected readout of the results from GALACTIC-HF in 2021.

During the quarter, we executed on multiple strategies to meet that objective, including our continuing to engage in potential collaboration and project financing discussions relating to our cardiac myosin inhibitor program as potential ways to access nondilutive capital.

We also restructured our short-term growth capital loan to extend the term of repayment beyond 2020, enabling those nearer-term dollars to be invested into our business this year. I will remind you that we remain potentially eligible for precommercialization milestone payments under our existing collaborations as well as additional reimbursement of sponsored research and development activities in 2019.

Our balance sheet remains strong and we continue to seek nondilutive financing to access additional capital and extend our cash runway. Cytokinetics is growing and our pipeline is expanding and progressing, but we remain vigilant to carefully deploy capital to the programs that we believe are most likely to provide the best returns on investment, both to bettering patient care as well as to delivering the best value to shareholders.

To that point, we recently kicked off our annual strategic planning process, which this year will be focused on optimal positioning for growth and prioritization. We are in an enviable position with a larger and still growing pipeline with potential multiple commercial launches in the next 3 to 5 years. So the strategic plan will focus on how best to position the company to maximize shareholder value over the near to medium-term time frame.

And with that, I will now turn the call back over to Robert.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [8]

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Thank you, Ching. So it's clearly been a very productive quarter for Cytokinetics and we remain energized about our prospects, as we look forward into the second half of 2019. This year, we've reinforced that we would have 3 key events shaping the complexion of the company.

First, was the first interim analysis in GALACTIC-HF, which as you know, resulted in our continuing the trial with no changes to the protocol. Second was the announcement of data from FORTITUDE-ALS, which we believe supported progression to a potential Phase III trial that may enable registration.

And thirdly, the data from the Phase I study of CK-274, which will present at HFSA, and we believe support planning to progress into Phase II. We believe for those 3 events, we have gone 3-for-3. I'm pleased with our team's execution and believe we enter the second half of the year with clarity of focus and purpose.

As Ching mentioned, this summer marks the start of our 2020 strategic planning process and we look forward to charting the next phase of corporate development to prepare for scaling the company's operations towards potential commercialization, at the same time expanding our footprint in muscle biology.

Towards that end, we're excited about continued progress in our muscle biology research and we look forward to potentially 1 or 2 new drug candidates entering clinical trials in 2020, as well as the advancement of our other programs further reinforcing our leadership.

In the meantime, we remain dedicated to advancing research, education, support, and awareness for the patient populations we serve. During the quarter, we announced a continuation of our partnership with the ALS Association in the fight against ALS, with the renewal of our gold level sponsorship of the national walks to defeat ALS, our premier level national ALS Advocacy Conference sponsorship, as well as our platinum level sponsorship for initiatives led by the ALS Association, Golden West Chapter.

We're doing much the same in the areas of SMA, HCM, and the other cardiovascular disease communities that mean so much to us, and we look forward to sharing more details about those activities on a rolling forward basis.

Our commitment to bring novel muscle biology directed therapies to patients in need has never been stronger and we look forward to continuing to update you on our progress.

Now let me recap our expected milestones for the remainder of 2019. For omecamtiv mecarbil, we expect to continue to conduct GALACTIC-HF and METEORIC-HF in patients with heart failure throughout 2019. For CK-274, we expect data from the Phase I study of CK-274 in healthy subjects in this third quarter of 2019 and we expect to begin a Phase II trial in the fourth quarter of this year.

For AMG 594, we expect that Amgen will continue to conduct the Phase I study of AMG 594 throughout 2019. For reldesemtiv, we'll continue to advance planning for potential future trials in ALS and SMA. We're currently in discussions with Astellas regarding amending the terms of our collaboration agreement, including for reldesemtiv, the level of potential funding and the share of commercialization returns, as well as which company would be responsible for development and commercialization.

For preclinical research, we expect to continue research activities under our joint research program with Astellas, directed to the discovery of next-generation skeletal muscle activators throughout 2019. And we also expect to continue our other muscle biology focused research, including the expansion of our research activities beyond the contractility of muscle towards the energetics of muscle.

And operator, with that, we can now open up the call to questions, please?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Joe Pantginis of H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [2]

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I want to start off first maybe merging 2 of my questions. I think and I don't want to overstate this, but I think you projected a very important signal today with regard to reldesemtiv, if I heard Andy correctly saying you believe you identified a path for both ALS and SMA. I think even some of the discussions we've been having is obviously ALS has been the focus and it's just constantly questioning about what might be happening with SMA. So I think this is a very welcome announcement today.

So I was just curious, is there anything else you can say with regarding these paths? I know it's early and you're not looking -- you're looking to start studies about a year from now. And then secondly, to your comment, this sounds like you might be vying for more participation based on your comment of renegotiating your deal with Astellas. I don't know if I'm overreaching there.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [3]

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Joe, very good questions. Firstly, with respect to SMA, yes, you're right, having spent a lot of time with advocacy groups and clinical opinion leaders, we do think we're identifying the path forward in SMA. And I'll ask Andy to comment on that in a moment. But at the same time, I hope you also heard him say that we believe that the urgency with regard to proceeding forward in ALS may supersede that of SMA. And there's still things we want to learn in SMA, especially as gene therapy now makes its mark in that marketplace. We want to make certain that we can understand the baseline deficit in patients so as to properly design and power a clinical trial. I'll come back to your second question after Andy has a chance to speak.

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Andrew A. Wolff, Cytokinetics, Incorporated - Senior VP & Chief Medical Officer [4]

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So I'll just say, I think when we talk about a pathway forward, to a large extent, we're indicating that we believe, as I said, the Phase II studies support progressing. The data from them were sufficiently demonstrative of a therapeutic effect that reldesemtiv is worth further study in both disease areas. To get more specific than that is difficult at this point as we mentioned. The landscape in SMA in particular is changing and we're going to need a lot of feedback from, again, as we've mentioned key opinion leaders, advocacy groups, health technology assessors and so forth before we have a very developed idea of what the end points in particular should be. I think we're pretty satisfied with the data from our Phase II study that is ambulatory patients, a 6-minute walk test is a good end point. But we are less clear how we might evaluate the drug in nonambulatory patients.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [5]

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Yes. So there's still some more homework to do there. As you asked in the second part of your question with regard to our collaboration with Astellas, we're socializing all of this together with Astellas and engaging with them through these interactions, and discussing therefore what the protocols would look like, what the time lines and budgets would look like. And yes, you're right. We also noted with this earnings announcement that we are going to be discussing with them how to amend our collaboration agreement to enable the path forward. So that's something where I think we can't say much more about that other than it may result in changes as it pertains to things that, to this point, have had a cofunding arrangement that's been specified, and rights and responsibilities that have been clarified for Phase I and Phase II. For Phase III, we expect that is still to change.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [6]

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Understood. No. That's very helpful. And then if I could just follow-up quickly with regard to 274. Obviously, you put out a lot of preclinical data recently. So with regard to these animal models and these dose exposure levels, can you -- obviously, I might be overreaching here again too, but can you describe any potential read-through with regard to clinical benefit based on these preclinical data in animals? But more importantly and this could be apples to oranges, I'm not sure, a little compare and contrast with regard to mavacamten because I'm sure that's an ongoing question that's on the street right now.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [7]

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Yes, we're not going to compare to mavacamten on this earnings call but I will ask Fady to respond to your question and I'll maybe follow-up afterwards.

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [8]

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Yes. I mean the data I think supported the premise with which we embarked upon, optimizing CK-274. One was that the pharmacokinetics lended themselves to a rapid onset, but also a reversibility of effect that was consistent with its exposure that we maximize, if you will, the shallowness of the exposure response relationship as best as we could and with these mechanism of actions. And that we have evidence of effect in a disease model that doesn't recapitulate to human condition perfectly but showed that the exposure response relationship at mouse model of hypertrophic cardiomyopathy was essentially the same as it was in the normal mice that we characterized. So all of those studies provided us the data that justify moving forward into humans and ultimately into the patients.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [9]

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The preclinical data that were presented a week or 2 ago, they elaborate on things we had already been sharing at our R&D Day last fall. And what ultimately I think you're going to be most interested in are the Phase I data, which now today we're announcing you'll be seeing in September.

What we can share with you is already having seen enough of those data to commit to Phase II, we believe the Phase I data will support and recapitulate things we believed, knowing what we did with the preclinical data, that this compound has properties that we believe will render it beneficial in patients as we move into Phase II. So how the drug behaves is very, very important, as we've spoken a few times. And I think we're seeing in the preclinical data and in the Phase I data, a consistent story.

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Operator [10]

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And your next question comes from Jason Butler from JMP Securities.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [11]

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Let me add a follow-on to 274. You mentioned that you had some feedback from FDA on Phase II trial design. Can you give us any even broad-brush stroke thoughts on the kind of interactions you're having with FDA and what direction you're moving towards for a Phase II design?

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [12]

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I'll mention we've had feedback from regulatory authorities, plural, FDA and others. But maybe I'll let Fady pick up first.

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [13]

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I think, Jason, what we wanted to get alignment on with regulators is essentially the approach we're taking to the study to facilitate its eventual final protocol submission. And I think the key things in designing a Phase II study, which in this case are going to focus on identifying a pharmacologically active dose and characterizing the dose response relationships in patients with HCM, is the starting dose in the study and agreeing that it's a safe dose to begin with as well as the titration schedule and how we titrate the drug in those patients. So the study design really focused on kind of the mechanics of how to conduct the study and a general overall outline of how it would be done. And I think those were very successful interactions. They generally agreed with us and we have a clear road to a final protocol.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [14]

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We are planning in Phase II to elaborate on this pharmacology in ways that will hopefully elucidate the why behind some of the properties we've been referring to with CK-274 and why it matters. And we believe that we've got affirmation of that in the way in which that we've been receiving feedback from regulatory authorities.

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Jason Nicholas Butler, JMP Securities LLC, Research Division - MD and Senior Research Analyst [15]

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Great. Helpful. And then I think another one for Fady. Just on the METEORIC trial, can you just remind us of the patient population here versus GALACTIC and what your assumptions are for a treatment effect both in terms of drug and the control arm?

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [16]

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The patient population is a little different from GALACTIC but not much. In GALACTIC, we required patients to have been hospitalized. They all have low ejection fractions, ejection fractions less than 35%. But in Galactic, we were interested in cardiac events, being hospitalized or cardiovascular death. So we enrolled a high-risk patient population and required hospitalizations, and also high NT-proBNP as entry into GALACTIC.

In METEORIC, we're interested in patients that have exercise intolerance and we don't want them to enter the hospital during the conduct of the study. That would be pretty disruptive to a study that's only 20 weeks long. And so those patients, again, have low ejection fraction. But we don't require them to have been hospitalized. In fact, we exclude recent hospitalization and we also focus on demonstrating that they have reduced exercise capacity compared to age matched controls.

So these are -- I would think of them as more stable heart failure patients, but who have demonstrated exercise intolerance.

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Operator [17]

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You next question comes the line of Chad Messer from Needham & Company.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [18]

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So for CK-274, you think we have a next-generation drug with some better PK properties for these patients. But as you're starting Phase II here, not just thinking about Phase II but sort of Phase III, are there things that were done for the mavacamten development program that you think you can improve upon with your clinical development program to accentuate that? or does it make more sense to kind of go down the path they want and get the best apples-to-apples comparison, and just kind of show you're better?

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [19]

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I'll start and ask Fady to respond. I'll firstly say, we're not going to be elaborating on things that we're going to be doing in a competitive way but you know we're not comparing the 2 drugs in a head-to-head trial. So I don't think there's going to be a clear apples and apples in that regard.

But what I can say is that, with regard to CK-274, we expect that the way in which we will develop this drug candidate, we'll be able to elaborate on what may be unique features of this compound that enable it to be dosed differently and also how that can translate into clinical outcomes and benefit.

So the Phase II study will be elaborated when we begin dosing, but our expectation is there are things we will do that are similar and things that we'll be doing that will be different.

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [20]

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As Robert said, I think the way that we develop this drug will inform how it's used. Obviously, we'll look forward to seeing how the mechanism of action perform in Myocardia's Phase III study. And that information will also inform how we proceed down the road.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [21]

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So (inaudible) you'll see that both companies are being very thoughtful about how to approach this new pharmacology and that this is an evolving landscape. And it's not just with these compounds but others as may emerge. And in that way, I think this is all good for patients.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [22]

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Very helpful, and to be clear, I wasn't asking whether you were going to do a head-to-head. I was more referring to there's ways of designing a Phase III so that it's easier to compare and/or harder to compare. And I appreciate your answer to that question.

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Operator [23]

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Your next question comes from Charles Duncan with Cantor Fitzgerald.

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Unidentified Analyst, [24]

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This is actually Maria on for Charles. I just had a quick question. Could you please provide a little bit more color granularity regarding the METEORIC study? I know you said that the enrollment is on track but maybe just how many sites you're targeting and maybe the percent of targeted patients that you think that you'll be able to enroll by year-end.

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Fady Ibraham Malik, Cytokinetics, Incorporated - EVP of Research & Development [25]

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It's still a little early to give guidance on where we think we'll be at year-end, even though we are now in August. We're sort of in the early phases of the study startup. We've gotten very good enrollment so far given the sites that we've activated. There's been a lot of screening going on, and subsequently patients qualifying for the study.

So I'm optimistic that we are moving ahead and on track with our goal to complete this study at the time that GALACTIC wraps up. We're targeting in the range of 70 to 90 sites in the U.S., and in Europe and Canada. So we'll progress moving those along and we'll sort of decide on the final number depending on how enrollment begins to emerge.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [26]

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What you can do is also be checking on clinicaltrials.gov because we're updating that regularly as we add new sites.

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Operator [27]

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Your next question comes from the line of Ed Tenthoff with Piper Jaffray.

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Edward Andrew Tenthoff, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [28]

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Thanks for the update. Looking forward to the data down in Philly. When it comes to 274, lay out sort of the rationale, if you would, with partnering versus taking it forward yourselves.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [29]

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It's a very good question and this goes hand in hand with what Ching described vis-a-vis strategic planning. We have a situation where we currently have 4 programs in the clinic and potentially 2 more coming into the clinic. And as we think about prioritization, we want to make sure we're doing right by where there is the most opportunity to make the most meaningful impact on patient care, and to maximize shareholder return.

There are opportunities with respect to a cardiac myosin inhibitor that are very much within our reach -- affordable, intractable -- and therefore, there is not a compelling rationale for partnering as it pertains to those.

But there are also ones that go beyond our reach in terms of what we might be able to do ourselves and as such, there could be value in seeking a partner under the right conditions and terms. And as we think about that, we'll think about reldesemtiv. We'll think about omecamtiv. We'll think about our entire portfolio and make certain that we're doing right by those tenets that I mentioned, right by patient care and right by maximizing shareholder value.

And that could include partnering, especially as that may bring in nondilutive capital at a time when we're trying to dial-up our programs across our portfolio. So that's something that we're taking very, very seriously in line with our commitments, as Ching mentioned.

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Operator [30]

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Your next question comes from Jeff Hung of Morgan Stanley.

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Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [31]

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For the omecamtiv mecarbil interim analysis on superiority, is there likely to be any data announced with the interim analysis? Or is it more continuous plan versus being stopped early for overwhelming success or futility?

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [32]

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I think you'll see it's handled very similar to the way that the last interim analysis is, which is we'll just hear whether we should continue or not. Obviously, if they tell us not to continue, there will be a lot more data that will come out in that scenario.

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Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [33]

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And then I just want to clarify. So you're in discussions with Astellas on reldesemtiv and you're drafting protocols for ALS and scheduling meetings regulatory agencies. Is there a scenario where reldesemtiv may not be advanced? Or regardless of the outcome of discussions with Astellas, are you expecting to continue forward with reldesemtiv in ALS and SMA?

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [34]

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It's a very good question. I think there are scenarios by which reldesemtiv goes forward more quickly or more slowly depending on other priorities at the company in context of our strategic planning and how that ultimately gets funded and whether that's something that we choose to do before we know -- we turn over other cars or afterwards.

So there are things that we can do to dial up or dial back activities and that's something that we and our Board are discussing.

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Jeff Hung, Morgan Stanley, Research Division - Equity Analyst [35]

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And then just a housekeeping question. Expenses crept up again in 2Q. So are you reiterating your prior expense guidance? Or how should we think about the expense trend for the rest of the year?

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Ching W. Jaw, Cytokinetics, Incorporated - Senior VP & CFO [36]

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Jeff, this is Ching. We're not changing our expense guidance. Our net cash remains $85 million to $90 million full year.

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Operator [37]

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And we have a question from Joe Pantginis from H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [38]

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With regard to METEORIC, we did touch upon this in the past but just based on (inaudible) prepared comments about the quality of the (inaudible). I was wondering if you could provide a little more color around that, especially around the potential, your -- I guess (inaudible) you've addressed as much as you can the concept of the size (inaudible) beyond placebo effect.

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Diane Weiser, Cytokinetics, Incorporated - VP of IR & Corporate Communications [39]

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Joe?

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [40]

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Yes?

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Diane Weiser, Cytokinetics, Incorporated - VP of IR & Corporate Communications [41]

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You're breaking up. So if there's any way -- maybe you can just try your question again because you were coming in and out.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [42]

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Is this good?

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Diane Weiser, Cytokinetics, Incorporated - VP of IR & Corporate Communications [43]

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Not great.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [44]

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Okay. I apologize for that. I'm not sure what (inaudible) is. I'll email my question in. Apologize.

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Diane Weiser, Cytokinetics, Incorporated - VP of IR & Corporate Communications [45]

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No problem. Thanks, Joe.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [46]

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Sorry about that, Joe but by all means, please email your question and we'll follow-up with you.

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Operator [47]

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And we have no further questions at this time.

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Robert I. Blum, Cytokinetics, Incorporated - CEO, President & Director [48]

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Thank you, operator, and thank you to everybody who joined in and participated in this call today. These are especially encouraging times, given the updates that we provided with our Q2 earnings release and through this call. And we look forward to providing further updates through the third quarter and the remainder of the year. We welcome your questions and comments, and we appreciate very much your support. Operator, with that, we can now conclude the call.

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Operator [49]

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Ladies and gentlemen, that does conclude today's conference call. You may now disconnect. Thank you for your participation.