Cytokinetics, Incorporated

Good afternoon and welcome, ladies and gentlemen, to Cytokinetic's first quarter 2023 conference call. At this time, I would like to inform you that this call is being recorded and that all participants are in a listen-only mode. At the company's request, we will open the call for questions and answers after the presentation. We will allow for one question per participant. I will now turn the call over to Diane Weiser, Cytokinetic's Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Good afternoon, and thanks for joining us on the call today. Robert Blum, President and Chief Executive Officer, will begin with an overview of the quarter and recent developments. Thaddee Malik, EVP of R&D, will provide updates related to Affecampton and other drug candidates comprising our early stage pipeline. Stuart Kupfer, SVP and Chief Medical Officer, will provide further updates on the development program for Affecampton. Andrew Kalos, EVP and Chief Commercial Officer, will speak further about commercial preparation activities for AFCampton and the market opportunity. Robert Wong, VP and Chief Accounting Officer, will provide a financial overview of the past quarter, and Ching Jha, SVP and Chief Financial Officer, will discuss our financial outlook and corporate development strategies. Finally, Robert Blum will provide closing comments and review expected key milestones for 2023. 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 might 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 including our current report regarding our first quarter 2023 financial results filed on Form 8K that was furnished to the SEC today. We undertake no obligation to update any forward-looking statements after this call. And now I will turn the call over to Robert.

Thank you, Diane, and thanks for joining us on the call today. While we began the first quarter with a clinical stage program directed to the potential treatment of ALS, We ended the quarter acknowledging that we can no longer commit to that opportunity. In the best interest of the science and the shareholders, we must own that reality and rededicate to that which ultimately holds the greatest promise for patients. Toward that end, I want to emphasize our confidence in and priority commitment to our specialty cardiovascular pipeline of novel cardiac muscle directed drug candidates. Despite the disappointment related to ALS, in the first quarter of 2023, significant progress was made across our cardiovascular pipeline with particular focus to Affy-Campden and its broad development program. As Fatty and Stuart will elaborate, screening in Sequoia HCM, our pivotal phase three clinical trial in patients with obstructive HCM, is expected to close tomorrow, enabling enrollment to conclude in a few weeks and the readout of results in the fourth quarter of this year, as planned. We also recently reported data from cohort four of Redwood HCM, as well as 48-week data from Forest HCM, both providing compelling evidence for our next-in-class cardiac myosin inhibitor. Finally, we made progress towards expanding development for afecamtin with the plan to soon start Maple HCM, the active comparator phase three trial versus metoprolol, and continued preparations for our planned Phase III clinical trial of Afikampton in nonobstructive HCM. As you know, during the quarter, we also received a complete response letter from the FDA for Omikampton McCarble. We're continuing to engage with FDA and are planning to meet with FDA this quarter to discuss their feedback and to better understand what may be our options going forward. We expect to provide an update when we have something more meaningful to report. In the meantime, we're pressing forward toward potential international approvals for Omicamptive McCarvel. In Europe, we're engaging EMA in its review of the MAA and are preparing to respond to day 120 questions. And in China, the Center for Drug Evaluation of the National Medical Products Administration is reviewing the NDA submission for Omicamptive McCarvel. As I previously mentioned, during the first quarter, We also announced that Courage ALS, the phase three clinical trial of rel-deceptive met criteria for futility at the second planned interim analysis. Our dedication to the ALS community over the last decade has been a hallmark of our commitment to novel muscle-directed medicines, and we're disappointed that we'll not be able to move forward a drug candidate for patients with this grievous disease. Given the data from the interim analysis, we proceeded to conclude study conduct at Courage ALS and we're completing closeout activities in both this trial as well as the open label extension study during this second quarter. We plan to present full results from Courage ALS at a medical meeting later this year. The trial was designed and conducted with scientific integrity and in the interest of people living with ALS, and we hope it may serve as a blueprint for how to conduct rigorous patient-centric clinical research. While we're certainly very disappointed in this outcome for Courage ALS, it affords us an opportunity to realize certain savings in 2023, which we believe can extend our cash runway and enable us to reallocate resources to further increase our focus on AFI Campton. Previously, over 60% of our R&D budget was already devoted to Affy Campton, but with savings we now expect in 2023, an even higher proportion of our total spending will now be dedicated to Affy Campton. Ching will elaborate further on our expected 2023 spending in a moment. So while the first quarter brought some unexpected setbacks, we remain as committed as ever to our mission to bring forward new medicines for patients with diseases of high unmet need. Our late stage as well as our early stage pipeline of potential cardiovascular medicines provide a solid path forward, fortified by our strong balance sheet to support continued execution in the interest of all of our stakeholders. And with that, I'll turn the call over to Fatty.

Thanks, Robert. In the first quarter, we made substantial progress across a broad development program for afecamptin. In March, we presented data from cohort four of Redwood HCM at ACC, which showed that treatment with afecamptin resulted in significant improvements in heart failure symptoms and cardiac biomarkers in patients with nonobstructive HCM. Cohort four was a dose-finding exercise, allowing for two-dose titrations with the goal of increasing dose with echocardiographic guidance and evaluating the effects on symptoms and biomarkers. As a reminder, unlike in obstructive HCM, where the goal is to titrate patients to a minimally effective dose necessary to eliminate the LVOT gradient, in nonobstructive HCM, the goal is to titrate to the maximum dose based on ejection fraction. In cohort four, by week six, 85% of patients achieved the highest dose of 15 milligrams of afecamptin. Importantly, despite uptitrating patients to higher doses, there were no drug discontinuations due to adverse events. As we previously reported, three patients had LVEF drops below 50 at the week 10 visit. However, the LVEF normalized in all three of these patients after the two-week washout period. The data from this dose finding cohort will inform the phase three dosing scheme. In terms of safety, afecamptin was well tolerated. There was one death due to sudden cardiac death unrelated to treatment with afecamptin. This patient had a history of sudden cardiac death prior to participation in Redwood HCM. Two days prior to the event, the patient's LVF was normal symptoms and biomarkers improved, and the plasma concentration of apicamtin was within the expected range. We and the investigator believe the death was unrelated to apicamtin, and therefore remain confident about the safety and tolerability of apicamtin. Building on the presentation at ACC, later this month, we're pleased to be presenting further data from cohort four in the late-breaking clinical trial session at the European Society of Cardiology's Heart Failure 2023, taking place in Prague. These results will include data from additional patients who are not included in the results presented at ACC due to timing, as well as data related to the Kansas City cardiomyopathy questionnaire and other additional findings. To provide some perspective on the goal of cardiac myosin inhibition in non-obstructive HCM, it's important to note that although these patients lack a significant LVOT gradient, their disease burden is measured by NYHA class and KCCQ, as well as biomarkers, including NT-ProBNP, is just as severe as those patients with obstructive HCM. The magnitude of improvement in these markers of disease burden that we've observed with abecamptin were substantial, nearly equaling what we observed in obstructive HCM. and provide a strong indication of treatment benefit. We're pleased with the initial data from cohort four, and we view them both as supportive of advancing to phase three and highly encouraging of the potential effect of afecamptin in this important segment of the HCM population. Additionally, at ACC, we presented 48-week data from FOREST-HCM, the open-label extension study showing the treatment with apicampin was associated with significant and sustained reductions in the average resting and valsalva LVOT gradient, significant improvements in NYHA class, and significant improvements in NT-proBNP. At 48 weeks, 88% of patients experienced an improvement of at least one NYHA functional class, including many patients who are no longer symptomatic. In those patients that reached 48 weeks, none remained in an NOHA Class III, compared to 47% of patients who are Class III at baseline. Reducing symptoms can have a profoundly positive impact on patient lives, and so these data are quite notable. Treatment with afecamtin appeared to be safe and well-tolerated, with no instances of treatment interruption or discontinuation attributed to afecamtin. We're encouraged that with longer-term treatment with Apikampton, patients are experiencing a sustained treatment benefit. Through these data, we're seeing not only a clearer picture of the potential benefit that Apikampton may have for patients, but also how Apikampton appears to show potential to optimize both patient and physician experience. During the quarter, we continued conduct of Sequoia HCM, the pivotal Phase III clinical trial of Apikampton, in patients with obstructive HCM. As Robert mentioned, we expect to complete patient screening tomorrow and randomize the last patient soon thereafter. We're tremendously grateful to all of our investigative sites around the world for working with us to achieve this milestone. Recently, the DMC reviewed safety, efficacy, and biomarkers for Sequoia HCM and recommended that the trial continue as planned. With enrollment nearly complete, we're pleased with the patient population that we enrolled and believe we're achieving our goal of focusing on patients who stand to benefit from afecamtin. We met four important targets for enrollment that give us confidence in the results we hope to see. First, the proportion of patients who were taking beta blockers as background therapy, which limit heart rate from increasing and can blunt exercise performance, met our expectations. Second, we enrolled patients with clearly impaired exercise capacity as evidenced by an average peak VO2 at baseline well below normal. Third, the proportion of patients using bicycle or treadmill to perform their exercise test met our expectations. And finally, enrollment in Sequoia HCM took place globally, enrolling a balanced and diverse patient population in the US, Europe, Israel, and China. We believe that the way we've designed and conducted Sequoia HCM and the patient population we've enrolled will contribute to a clear read on the potential efficacy and safety of afecamptin. Before I hand it over to Stuart, I also want to touch briefly on our earlier stage pipeline. First, in the prior quarter, we completed three ascending dose cohorts in the phase one study of CK136, our cardiac troponin activator, in healthy volunteers and expect data in the second half of the year. Additionally, following our IND submission for our second cardiac myosin inhibitor, CK586, we received FDA clearance to initiate its phase one study. 586 represents a key new clinical program for the expansion of our pipeline, and we intend to develop it for the potential treatment of heart failure with preserved ejection fraction. Another important addition to our growing specialty cardiology business. With that, I'll turn the call over to Stuart to speak more on the expanding development program for Apicampton, including Maple HCM and our planned phase three clinical trial in non-obstructive HCM.

Thanks, Paddy. In the first quarter, we made progress towards beginning Maple HCM, which we expect to open for patient enrollment in this quarter. As a reminder, MAPL-HCM is the second phase three clinical trial in patients with obstructive HCM, during which we'll be assessing afecanthin as monotherapy compared to metoprolol. The primary endpoint is change in peak VO2 assessed by cardiopulmonary exercise testing from baseline to week 24. Secondary endpoints include change in NYHA class, KCCQ, anti-proBNP, and measures of structural remodeling. Our goal with this trial is to evaluate the potential superiority of apicanthin to the standard of care therapy of beta blockers. Beta blockers are used as first-line therapy for the majority of patients with HCM because historically there have been few alternatives. While beta blockers can improve gradients and lead to mild symptom improvement, a substantial portion of patients do not achieve desired symptom reduction with beta blockers, and they're associated with many undesirable side effects. Additionally, beta blockers do not improve exercise capacity, and when used in combination with a cardiac myosin inhibitor, may attenuate its beneficial effects. If afecantin is shown to be superior to metoprolol, it may simplify the approach to treating HCM by enabling the use of afecantin as first-line monotherapy. We're encouraged by data previously presented from Forrest HCM demonstrating successful withdrawal from background therapy in patients treated with afecantin. And our clinical study sites are enthusiastic about participating in this trial. We look forward to starting enrollment in Maple HCM soon. Additionally, as Fadi mentioned, the positive data from cohort four of Redwood HCM presented at ACC were encouraging for our plans to further expand the development program for Affy-Campden by starting a phase three clinical trial in non-obstructive HCM. We've recently had productive interactions with FDA to ready for this trial. We're finalizing our planning and preparations and expect this third phase three trial of Ethocampin to begin in the second half of this year. We look forward to sharing more information relating to the planned trial design later this year. With that, I'll turn the call over to Andrea.

Thanks, Stuart. In quarter one, we continued activities and preparations for the potential approval and commercialization of afecantin, including market research to further expand our understanding and better characterize the market and the opportunity. While the overall prevalence of HCM in the U.S. is estimated to be roughly 700,000 to 1 million, we estimate the diagnosed patient population, inclusive of both obstructive and non-obstructive HCM, to be approximately 290,000. Therefore, the undiagnosed population is sizable, up to 700,000 patients. We believe currently undiagnosed patients represent a very significant growth opportunity for category growth. Through our market research, we've learned that the vast majority of diagnosed patients are currently being treated with beta blockers, calcium channel blockers, or both. And we believe approximately two-thirds of those patients are symptomatic and may be eligible for a cardiac myosin activator like afecantin if approved. At the same time, we also expect the diagnosed prevalence of HCM to increase over time at a mid-single-digit growth rate, driven by evidence generation, commercialized treatment options, escalating patient and physician interest, expanding use of CMIs outside of centers of excellence, and the overall appreciation of CMIs in the treatment of HCM. Additionally, during the quarter, we continue to engage further with payers who expressed interest in both HCM, CMIs generally, and Affecantin specifically. Some payers have limited experience with HCM due to the lack of approved therapies until recently, but they are interested in the disease, especially in patients with O-HCM or highly symptomatic. We see this as an opportunity for education and up-leveling of their knowledge of HCM over time. Our development program for afecamtin has been designed to provide ample evidence for how afecamtin, if approved, may optimize both patient and physician experience through quick and sustained improvement of symptoms, straightforward dose titration, minimal drug-to-drug interaction, and avoiding dose interruption. Through Maple HCM, we're also attempting to show that afecamtin is superior to the standard of care beta blocker, to potentially further enhance patient experience by avoiding beta blockers altogether and enabling simple monotherapy. Finally, as we explained earlier this year, the majority of the commercial team has been shifted to support AFI-CAMPT and launch readiness activities should it be commercialized, and we plan to continue to assess our resourcing to account for the shift in focus from OMA-CAMPT of McCarble readiness to AFI-CAMPT readiness. We are fortunate to have a talented and dedicated team with deep experience in cardiovascular disease markets, telling us forward to become a global specialty cardiology company leading with Afikampen. And with that, I'll turn it over to Robert Wong.

Thanks, Andrew. We ended the first quarter with approximately $704 million in cash and investments. Our revenue in Q1 2023 came primarily from a milestone payment we recognized from Xi Xing, for the expected Phase III trial of afecantin in patients with NHCM to occur later this year, as well as earned revenue from Astellas in the quarter. Our first quarter 2023 R&D expenses increased to $79.4 million from $45.9 million in the first quarter of 2022, primarily due to increased spending for our clinical development activities related to our cardiac myosin inhibitor programs and COURAGE ALS. Our first quarter 2023 G&A expenses were $49.7 million, up from $33.1 million in Q1 2022, due primarily to higher personnel-related costs, including stock-based compensation and pre-commercial launch readiness expenses. And now Ching will review our financial outlook and corporate development strategies.

Thanks, Robert. We ended the quarter with approximately $704 million cash on the balance sheet, which represents two years of cash runway. To be clear, we're not adjusting our 2023 guidance today. However, we do expect to reduce our overall spending in 2023 by more than 10%, primarily through a reduction in planned outsource services and headcount growth, thereby resulting in over $50 million in projected savings relative to previously forecasted spending for 2023. By employing these measures, we're able to extend our existing cash runway this year as well as in 2024, during which time we have previously anticipated incurring costs for manufacturing commercial supply, commercial readiness preparations, and medical education activities for route incentives. We expect to provide new financial guidance with our Q2 earnings call. To further add to our balance sheet this year, I'll remind you that we also expect to receive a $50 million non-refundable milestone payment from Royalty Pharma upon the start of the pivotal phase three clinical trial of Epicampton in patients with non-obstructive HCM, which is expected to begin in the second half of the year. And finally, on the corporate development side, To further support our balance sheet and our path forward, this year we are continuing to seek a potential partner in Europe for Omicamptomacarbo as well as in Japan for both Omicamptomacarbo and Apicampton. We also believe that we may need to open the aperture on potential European partnering of Apicampton as part of our broader cardiovascular portfolio in light of recent events. That said, We continue to prepare for U.S. commercialization independently, and as we progress our corporate development for the balance of this year, we will continue to make decisions that are in the best interest of patients and our shareholders. And with that, I'll turn the call back over to Robert Blum.

Robert Blum Thank you, Ching. Today, our company looks different than how we expected to look as we started 2023. However, we're confident in where we stand and in the road ahead of us. We've overcome challenges before during our 25-year history, and we believe that with our foundation of a strong research and development pipeline rooted in muscle biology, we now have an opportunity to build the industry's leading specialty cardiology business. As we look to the future, we're optimistic and we have strong conviction in Affie Campton and also our other novel mechanism drug candidates, advancing in our cardiovascular pipeline. Also, last quarter, we were proud to release our inaugural Corporate Responsibility Report. This report reflects our commitment and continued integration of corporate responsibility throughout our organization, as well as decision-making processes and our ongoing commitment to provide transparency and accountability on matters related to corporate responsibility. We intend to release an annual update to this report on our progress and goals, building on the foundation, and as we continue to focus on how we can better serve patients, the communities around us, as well as the environment. As Ching mentioned, we're in an advantaged position with the cash that we have, and we're managing it carefully. We're prudently managing our spending, our growth, and our allocation of resources. We have a promising development program with our cardiac myosin inhibitors and CK586, and in addition, we're equipped with an early stage and research pipeline that adds further to our portfolio of muscle-directed therapies. Our intention is to build value for our company through our science, and that has not changed, and we'll continue to balance the needs of both patients and shareholders as we advance forward. Now, I'll recap our upcoming milestones. For Omicampt and McCarble, we expect to continue to pursue potential international approvals for Omicampt and McCarble, including in Europe and in Japan. I'm sorry, in China. For Affy-Campton, we expect to present additional data from cohort four of Redwood HCM at Heart Failure 2023 on May 20 in Prague. And we expect to complete patient enrollment in Sequoia HCM in Q2 2023 with results expected in Q4 2023. We expect to begin Maple HCM, the second phase three clinical trial of afecampton as monotherapy in patients with obstructive HCM in Q2 2023. And we expect to begin a phase three clinical trial of afecampton in nonobstructive HCM in the second half of 2023. As well, we expect to advance our U.S. go-to-market strategy during 2023. For CK136, we expect single ascending dose data from the Phase 1 study in the second half of 2023. For CK586, we expect to advance that compound into a first in human Phase 1 study in this quarter, Q2 2023. And finally, for REL Dissemptive, we expect to conclude clinical trial conduct and complete the majority of closeout activities for Courage ALS in Q2 2023, and we expect to share results in the second half of the year. And operator, with that, we can now open up the call, please, to questions.

To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. As a reminder, please limit to one question. Please stand by while we compile the Q&A roster. And our first question comes from Sreekripa Dhanvarakonda with Truist. Your line is open.

Thank you so much for asking my question. Good afternoon. Good afternoon. Thanks for taking my question. So for Appy Campton, it looks like you're on track for enrollment completion in second quarter. Um, I, I just was wondering how confident are you about the timelines for fourth quarter? Could it, is there any chance that it could spill over into early, um, 2024? And then as you see Canvios launch and whatever you're hearing, um, from, from the ground, from the ground, um, has that changed what you think you need to do to prepare for commercialization of Appy Camptons? Thank you so much.

Sure, so two questions, really. The first one is around enrollment, and we do expect to be completing enrollment, as you heard from Fatty, such that randomization and enrollment are both concluding in the month of May. And therefore, we are confident to see results in the fourth quarter of this year. With regard to a potential commercial launch of Afikampton, we're monitoring the uptake in cardiac myosin inhibitors as a class carefully, and we like what we see. We believe that the market is evolving very much as we predicted, and we're not expecting that that should change the way we think about the commercial uptake. Maybe I'll just turn to Andrew to see if there's anything he wants to add.

I would agree, Robert. BMS recently reported their first quarter earnings and I think showed good momentum. And we're hearing very positive things for the category overall from clinicians, so it doesn't change the way we feel about it at all. I think, if anything, we're even more bullish about it than maybe we were before.

Thank you so much. I'll get back to you.

Sure.

One moment for our next question. Our next question comes from Saleem Syed with Musoho. Your line is open.

Hey, Robert. Thanks for the question. So just one for me on the enrollment of Sequoia. I just want to make sure I understand this correctly. I'd love to just get confirmation from you or some caller on when was the last time you looked at the blinded aggregated standard deviation for peak VO2 in sequoia, and can you confirm that we are indeed sub 3.5 on the standard deviation and that there's no risk of trial increase at this point? Thank you.

Just answer that there is no risk of increasing enrollment at this point. As I said, we're going to be done enrolling patients tomorrow. and we'll finish randomization shortly. And standard deviation, I can't tell you exactly the last time I saw it, probably in the last week, but it's certainly within the expected parameters.

Super helpful. Thanks so much, guys.

Thank you, Salim.

One moment for our next question. Our next question comes from Tess Romero with J.P. Morgan. Your line is open.

Good afternoon, Tess.

Hi, good afternoon everyone. Thanks so much for taking our question. So one from us on non-obstructive HCM. So we're looking forward to the full presentation there later this month on cohort four. As we recall, KCCQ is one of the key endpoints you're monitoring for health status. Can you quickly orient us briefly to what magnitude of change you are looking for over 12 weeks of treatment on the KCCQ and Like is there a change that would be considered kind of clinically meaningful there? And kind of what we should be expecting with respect to approximate baseline score? Thanks so much.

So obviously for the fact that this is an open label study, you recognize that we've seen these data. So while we don't want to front run the data ahead of the presentation as a late breaker later this month, I will ask Fatih to try his best to answer your question without being too forward leading.

I do not really want to give quantitative expectations given I know what the quantitative numbers are, but I should say that the baseline data indicate a severely symptomatic population in terms of the baseline KCCQ score. In general, expectations of an increase of five points or more is what's considered clinically meaningful. And so I think that's how I would put that in context as you see the data later this month.

And any other kind of analyses that we should be specifically looking out for beyond KCCQ that we haven't already seen to date?

Yeah, we'll actually be showing data in relation to the assessment of angina, which is something that hasn't really been assessed in a trial like this before. So I think we'll show some of the first data in terms of angina score in NHCM. We'll be looking at some of the echo parameters, and you'll see a greater... you know, more of the KCCQ data than just what the delta was. So you'll see sort of the responders that have smaller or larger responses and a proportion of those people.

Okay.

Thank you so much.

Thank you.

One moment for our next question. Our next question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.