Cytokinetics, Incorporated (NASDAQ:CYTK) Q3 2023 Earnings Call Transcript

Cytokinetics, Incorporated (NASDAQ:CYTK) Q3 2023 Earnings Call Transcript November 3, 2023

Operator: Good afternoon, and welcome, ladies and gentlemen, to Cytokinetics Third 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’ll now turn the call over to Diane Weiser, Cytokinetics Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Diane Weiser: 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. Fady Malik, EVP of R&D will provide updates related to aficamten focused to SEQUOIA-HCM and FOREST-HCM; Stuart Kupfer, SVP and Chief Medical Officer will provide additional updates for aficamten relating to SEQUOIA-HCM and MAPLE-HCM, and we’ll also discuss our early-stage pipeline, inclusive of CK-586 and CK-136. Andrew Callos, EVP and Chief Commercial Officer will discuss commercial readiness activities for aficamten. Robert Wong, VP and Chief Accounting Officer will provide a financial overview of the past quarter; and Ching Jaw, SVP and Chief Financial Officer will discuss our financial outlook and corporate development strategies.

And finally, Robert Blum will provide closing comments and review upcoming expected key 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 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 third quarter 2023 financial results filed on Form 8-K 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.

Robert Blum: Thank you, Diane, and thanks for joining us on the call today. I’m pleased with the progress we made in the third quarter, particularly focused to aficamten, our top priority and with emphasis on the execution of SEQUOIA-HCM and advancement of its broad development program. Thanks to the diligence and dedication of our teams, we remain on track to share top line results from SEQUOIA-HCM in late December. While this time line is admittedly tight, we’re confident due to the superb organization and oversight of SEQUOIA-HCM by our clinical operations and statistical teams, like all of you on the call we’re eager to see these top line results. As Fady will elaborate, we have strong conviction that the top line results from SEQUOIA-HCM will meet our high expectations for both safety and efficacy based on the patient population enrolled in SEQUOIA-HCM, as well as the unique attributes of aficamten.

If SEQUOIA-HCM meets our expectations on both efficacy and safety, we expect it may contribute to expansion of the cardiac myosin inhibitor or CMI category on both accounts. Simultaneously during the quarter, we continued to build our specialty cardiology franchise by advancing the ongoing clinical trials in the development program for aficamten, as well as earlier stage clinical research with enrollment underway in both MAPLE-HCM and ACACIA-HCM, we foresee a near-term future with multiple catalysts for aficamten. And rounding out our specialty cardiology franchise, our CK-586 a second cardiac myosin inhibitor and CK-136 a cardiac troponin activator, on which Stuart will provide an update. Our cash position at the end of the quarter represents over 18 months of cash runway based on our 2023 net cash burn guidance.

Importantly, as is our practice for both financial health and prudent planning, we’re gating spending through the readout of top line results of SEQUOIA-HCM and we’re judiciously focusing our current spending on activities related to our top priorities again with focus to aficamten and a critical eye towards cost efficiencies. Today, you’ll hear about the continued progress we made during the quarter and what to expect through the end of the year, as we approach 2024 and as you heard a few weeks ago at our Investor and Analyst Day, Cytokinetics remains laser focused to delivering on the promise of aficamten as well as to advancing our earlier-stage pipeline, as we build our specialty cardiology franchise for the potential benefit of both patients and shareholders.

And with that I’ll turn the call over to Fady.

Fady Malik: Thanks, Robert. In the third quarter, we made significant headway across the development program for aficamten. Recently, we were pleased to present the baseline characteristics of patients enrolled in SEQUOIA-HCM the pivotal Phase III clinical trial of aficamten at the HCM Society Scientific Sessions. The baseline characteristics met our objective for the intended trial population, having enrolled a global diverse and real-world population with a substantial deficit in exercise capacity and significant symptom burden despite existing standard of care. Patients enrolled in SEQUOIA-HCM had an average peak oxygen uptake or peak VO2 of 18.5 milliliters per kilogram per minute at baseline or 56.9% of that predicted for their age and sex which is an objective indicator of the extent of their reduced exercise capacity.

Nearly a quarter of the patients were NYHA functional class III, with an average KCCQ score of 74.7 further reflective of a highly symptomatic patient population despite background treatment with guideline-directed medical therapies. Background medical therapy included beta blockers, calcium channel blockers and disopyramide with patients permitted to receive combination background medical therapy. Beta blockers, which were known the blunt maximum exercise capacity due to their effect to slow heart rate, we used in 61% of the patients. We are very pleased to see that our objectives are achieved and that we enrolled the population that we intended. As we approach the readout of SEQUOIA-HCM later this year, we’re confident in the completeness of the data and that we’re outperforming the design assumptions for the trial.

The extent of missing data and the standard deviation of the primary endpoint are all within our assumptions, which should augment the power of the trial to assess the change in the primary end point. I’m also pleased to report that nearly all patients have completed dosing and sites have not reported any patients with an LV ejection fraction less than 40%. We’re eagerly anticipating sharing the top line results in late December. Our convictions are high that the results of SEQUOIA-HCM will meet our expectations. These convictions are further reinforced by the long-term efficacy and safety of aficamten that we’re observing in FOREST-HCM the open-label extension clinical trial. At our recent Investor and Analyst Day we shared new longer-term data with data available in some patients for greater than two years.

More than 200 patients have been enrolled in FOREST-HCM to-date and data from 143 patients with obstructive HCM were available for this analysis. The new data from FOREST-HCM showed that no patient had a treatment-related LV ejection fraction less than 50% during the treatment period – during the titration period and approximately two-third are receiving 15 milligrams or 20 milligrams of aficamten. During the maintenance phase of FOREST-HCM there have been no instances of LVEF plus with 40% which would require treatment interruption and only three instances of LVEF less than 50% that simply required a dose down titration. Of the 579 monitoring echocardiograms completed during the maintenance phase of treatment 99.5% of them did not result in a dose down titration.

We also observed in these reported data from FOREST-HCM that the mean resting and LVOT gradients remain reduced and below the diagnostic threshold for obstructive HCM after treatment for more than two years. Patients also experienced sustained reductions in cardiac biomarkers and improved symptoms. Approximately half of patients were NYHA functional class I or asymptomatic and 80% of patients improved by one or more functional class. Furthermore 90% of the SCT eligible patients at baseline were no longer SCT eligible at the time of this analysis. aficamten has been generally well tolerated with no treatment-related serious adverse events as assessed by investigators. Additionally, approximately 30% of patients have reduced doses of background therapy are discontinued entirely, at the discretion of the treating physician and/or by request from the patient.

This supports the rationale for MAPLE-HCM which Stuart will discuss next. These new results from FOREST-HCM are quite compelling and we look forward to continuing to gather more longer-term data for aficamten in this open-label extension. Shifting briefly back to SEQUOIA-HCM following the top line readout of the results in late December, we expect to hold a meeting with FDA in the first quarter of next year to discuss the top line results with the goal of potentially submitting a new drug application for aficamten in the second half of 2024. During that initial meeting to review the top line results we’d expect to begin a dialogue about how do the safety and efficacy of aficamten observed in REDWOOD-HCM SEQUOIA-HCM and FOREST-HCM would influence the design of a REMS program.

We look forward to these interactions and we’ll provide further updates next year. Now, I’ll hand it over to Stuart to elaborate on additional progress we made for aficamten and provide an update on our earlier-stage clinical pipeline.

Stuart Kupfer: Thanks, Fady. During the third quarter we started ACACIA-HCM a pivotal Phase III clinical trial of aficamten in patients with symptomatic nonobstructive HCM. Enthusiasm among investigators as high as, many of the investigators participating in ACACIA-HCM have prior experience with aficamten from REDWOOD-HCM, FOREST-HCM and SEQUOIA-HCM. Additionally, as you may know patients with nonobstructive HCM have limited treatment options. Standard of care medications; including beta-blockers and calcium-channel blockers are not very effective and therefore patients with non-obstructive HCM often struggle with a high symptom burden. Our hope for this clinical trial is to gather evidence about the potential of aficamten for this important segment of the HCM population, which lacks treatment option.

In the third quarter we also continued patient enrollment in MAPLE-HCM the Phase III clinical trial evaluating for the potential superiority of aficamten with monotherapy compared to metoprolol as monotherapy in patients with obstructive HCM. We’re pleased to report that enrollment is progressing according to plan. If positive, MAPLE-HCM should support the possibility for aficamten to be considered for first-line therapy in obstructive HCM. Shifting to our earlier stage pipeline. As Robert mentioned, we also made progress advancing both CK-586 and CK-136 during the quarter. We’ve now completed the single-dose cohorts of the healthy participants in the Phase I study of CK-586, our cardiac myosin inhibitor in development for the potential treatment of a subgroup of patients with heart failure with preserved ejection fraction or HFpEF with hypercontractility.

We’ve now concluded our analyses of the single-dose cohorts, which are supportive of the proceeding to the multiple dose portion of the study, which we expect to start in this fourth quarter. As the Phase I study progresses, we also recently unveiled new preclinical data for CK-586 at our Investor and Analyst Day showing improved diastolic function and reduced cardiac fibrosis in an animal model of HFpEF. These data along with the results observed with aficamten in non-obstructive HCM, which has features similar to that of HFpEF with hypercontractility support the potential benefit of CK-586 in this patient population. Shifting to CK-136 our cardiac troponin activator we completed the single ascending dose cohorts in the Phase I study in healthy participants.

And we’re now analyzing these data to inform potentially proceeding to the multiple dose cohorts of the Phase I study. With that I’ll turn the call over to Andrew.

Andrew Callos: Thanks, Stuart. As we outlined at our Investor and Analyst Day, our approach to commercial readiness in 2023 is centered around understanding the patient journey and the holistic experience of living with HCM. As such, we have been focused on gaining a deep understanding of the HCM market with the intention of designing an optimal physician and patient experience. During the quarter, we continued to conduct market research to assess potential patient profiles and available market segments in obstructive HCM, which have confirmed the symptomatic patient population in need of disease-modifying treatment with a potential next-in-class CMI. By anchoring our commercial strategies to this patient-centric approach we are preparing to address a high unmet customer need with the objective of positively impacting patients and shareholders if aficamten is approved.

At the same time, we’re learning through our market research that physicians indicate a strong interest in the potential target product profile for aficamten showing that there is room to capture CRM share among newly treated HCM patients and the potential to expand the total CMI market. Furthermore, we expect CMI penetration of eligible — obstructive HCM patients to be less than 20% at the time of expected launch of aficamten meaning that over 80% of the obstructive HCM eligible patient population will remain untreated with the CMI. We are therefore focusing our commercial readiness strategies to those enabling expanded use of CMIs building on the expected next in-class profile of aficamten arriving from our clinical trials program. We also will strive to design a seamless and patient-friendly CMI experience through a comprehensive patient support program to help address the emotional, financial and educational needs of a patient throughout their journey.

With the patient experience in mind, we recently held a mystery theater program at the HFSA Annual Scientific Meeting where we facilitated a discussion surrounding the impact of obstructive HCM, which may have a patient on patient quality of life, mental health and well-being, as well as how cardiologists can better understand and address these concerns. This approach of elevating the holistic and human-centric view of HCM is resonating with HCTs and we hope it may help foster better position patient conversations, and raise more awareness of the myriad impact of HCM. Through the end of the year, we plan to continue our market research and go-to-market planning for aficamten. In 2024, our experienced team will shift focus to the design and build of our commercialization strategies as informed by market research, the results of SEQUOIA-HCM and our deepening market insights.

With that, I’ll turn the call over to Robert Wong.

Robert Wong: Thanks, Andrew. We ended the third quarter with $554.7 million in cash and investments. During the quarter, we received a $50 million milestone payment from Royalty Pharma upon the start of ACACIA-HCM, which is treated as a liability on our balance sheet in accordance with GAAP. In addition, recently, we received a $2.5 million milestone payment from Ji Xing received upon the start of ACACIA-HCM. Our third quarter 2023, R&D expenses increased to $82.5 million from $62.7 million in the third quarter of 2022, primarily due to spending on our cardiac myosin inhibition programs. Our third quarter 2023, G&A expenses were $40.1 million, down from $48.2 million in Q3 2022 due primarily to lower outside service spending. Now I’ll hand it over to Ching to review our financial outlook and corporate development strategy.

Ching Jaw: Thanks Robert. As Robert mentioned, we ended the quarter with approximately $555 million on the balance sheet, which represents over 18 months of cash runway based on our 2023 net cash burn guidance. In the second half of the year, we have reduced our spending and are critically assessing our go-forward spending priorities to help facilitate the best return on our financial commitments. Our main priority remains aficamten, and as we approach 2024 we are being prudent in our spending around preparations for the potential commercial launch of aficamten. Towards that end, we are gaining expenses ahead of our sharing the top line results of SEQUOIA-HCM. Once we have the results and provided they are positive we will be able to refine our assumptions further and on gate spending.

As usual, we plan to provide guidance to our 2024 spending during the Q4 earnings call. As for access to capital, I’ll remind you that through our transaction with Royalty Pharma we remain eligible for two additional loan tranches under our development funding agreement, including $75 million upon our potentially sharing positive results from SEQUOIA-HCM and 100 million upon acceptance of an NDA submission for aficamten in the US. As it relates to corporate development, over the year we have engaged in a rigorous process in which we met with multiple potential partners. We have noted a high degree of interest in aficamten, both independently and in some cases in concert with potential to include only omecamtiv mecarbil in regions outside of North America.

This process has affirmed the value proposition to our go-to-Europe strategies. With that said, we do not expect to enter into a partnering deal prior to announcing the top-line results from SEQUOIA-HCM and will continue to evaluate how we access and deploy capital as we will learn more about aficamten from SEQUOIA-HCM. Now, I will turn the call back to Robert Blum.

Robert Blum: Thank you, Ching. As we proceed to close out 2023, we’re approaching an important inflection point for our company. With aficamten representing the leading edge of our specialty cardiology franchise, the top line results from SEQUOIA-HCM will potentially accelerate our momentum as we plan transitions to become a fully integrated biopharmaceutical company in 2024. In 2023, much was put into motion that is now carrying us closer to our goal of bringing forward new medicines for patients with diseases of impaired muscle function. While our priority remains aficamten and our earlier stage pipeline, during the quarter we submitted a formal dispute resolution request to the FDA’s Office of New Drugs regarding the CRL or complete response letter for omecamtiv mecarbil.

Our objective is to appeal FDA’s conclusion that substantial evidence of effectiveness has not been established to support approval of omecamtiv mecarbil. As I’ve said before, we do not currently have plans to conduct another clinical trial of omecamtiv mecarbil, and we may not be able to address the deficiencies noted in the CRL. However, we still believe in the science underlying omecamtiv mecarbil and the demonstrated evidence to potentially benefit patients with advanced or worsening heart failure. If our appeal to FDA proves successful, we’ll then consider potential next steps for omecamtiv mecarbil, albeit and importantly, as to the lens of a company for which our top priority is aficamten. We also continue to pursue potential approval for omecamtiv mecarbil outside of the US.

Regarding Europe, we submitted our responses to the day 120 questions to the EMA and now await their feedback. As relates to China, our partner JI XING submitted a request for voluntary withdrawal of the NDA for omecamtiv mecarbil to the Center for Drug evaluation of the National Medical Products Administration of the People’s Republic of China, subject to potential resubmission upon receipt of favorable feedback from EMA or FDA with regard to potential drug approval for omecamtiv mecarbil in the EU or US respectively. Shifting now to business development, As Ching said, and to be clear, we do not expect to partner aficamten leading into the readout of SEQUOIA-HCM. Our focus remains on that, which is under our control and that which is the most meaningful for our company and for patients and shareholders, which is advancing Aficamten.

However, it is reinforcing to our corporate strategies to have engaged with potential partners who have expressed a high level of interest in Aficamten and ultimately validate our own planning. We believe that we are doing right by all of our stakeholders to objectively and critically evaluate our own plants. As a result, with the readout of results from SEQUOIA-HCM, we’ll be better prepared to execute on our strategies. As we approach the end of 2023, we reflect on a year marked with both ups and downs admittedly. We have faced certain setbacks which tested our company’s grit and resilience, but we’ve also made great progress. Today, we’re uniquely positioned for success with a strong specialty cardiology franchise led by our own broad late-stage development program for Aficamten complemented by earlier-stage drug candidates that have arisen from our industry-leading research and leadership in muscle biology and the mechanics of contractility.

That plus our relationships with key stakeholders and our access to capital sets us apart as does our passion, our dedication to our mission and are focused on doing right by patients. I look forward to 2024 with optimism and eager anticipation for what’s yet to come. Lastly, and before I recap our upcoming milestones, I’d like to also mention that leading into the results and the readout of SEQUOIA top line in late December, we plan to enter a quiet period starting on Monday, December 4. Now our upcoming milestones. For Aficamten, we expect to share top line results from SEQUOIA-HCM in late December and continuing enrollment of patients in Maple HCM and Acecia-HCM and continue to advance our go-to-market strategies for Aficamten. For omecamtiv mecarbil, we expect to continue to pursue potential approval for omecamtiv mecarbil in Europe.

And for CK-136, we expect to analyze data from the single ascending dose cohorts of the Phase I study to inform potentially proceeding to the multiple ascending dose cohorts in that Phase I study. And finally, for CK-586, we expect to proceed to the multiple ascending dose cohorts in that Phase I study in this quarter Q4 2023. Operator, with that, we can now open up the call to questions, please.

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Q&A Session

Operator: Thank you. [Operator Instructions] And our first question will come from Joe Pantginis from H.C. Wainwright. Your line is open.

Robert Blum: Good afternoon, Joe.

Joe Pantginis: Hi everybody. Good afternoon. Thanks for taking the question. So curious on Fady’s comments with regard to the patient populations in SEQUOIA. And specifically, any more color you could provide with regard to the background therapy reductions and more importantly, how these therapy reductions might improve the quality of life and the safety of these patients? And then secondly, just quickly, anything meaningful to discuss with regard to the cost impacts of the formal dispute with the FDA and the EMA filings for afacamtin? Thanks a lot.

Robert Blum: Sure. I’ll let Fady answer your first question, and I’ll take the second.

Fady Malik: Thanks Joe. I think with regard to withdrawal of background therapy, the protocol, as we reported back at ACC allows investigators to will solely withdraw beta blockers or other background therapies such as disopirmide or calcium channel blockers based on patient tolerance. And then at the same time, they’re also allowed to up-titrate afacamtin as necessary to compensate. And so we see — I can’t give you exact percentages, but we see substantial about two-thirds, I think, withdraw from all background therapy. I think in most cases, they’ve been able to discontinue disopirmide and also with beta-blockers as well quite successful in terms of withdrawing from those. So, I think from a patient point of view, it simplifies medical therapy. It gets them off of some of the troublesome adverse events that they experience with those drugs and it simplifies their medical regimen.

Robert Blum: And to your second question regarding potential costs associated with our submitting the formal dispute resolution. They’re really quite minimal. These are costs that relate to internal activities and together with council, no new studies, no new analyses, nothing that would represent a meaningful investment of spending.

Joe Pantginis: Thank you, guys.

Robert Blum: Thank you.

Operator: Thank you. And our next question will come from Dane Leone from RJS. Your line is open.

Dane Leone: Hey, how is it going Robert and team? Yes, we’re talking a lot lately. So, really only one question for me that keeps coming up with investors is given the late December nature of the topline SEQUOIA, can you just provide any detail on how you think the team will handle disclosure of the topline data? I think a lot of people point back to some of the early REDWOOD disclosures that your team made around description of some of the key primary endpoints and maybe some detail around left ventricular ejection fraction adverse events. But anything you can tell us of how your team plans to handle, I think, could be really helpful for setting expectations? Thank you.

Robert Blum: Sure. I’ll do my best, recognizing that we don’t have the data, so it’s hard to be as clear as you might want us to be. But our goal is to disclose all of that, which should hopefully convey our ability to have achieved a next-in-class potentially best-in-class profile for afacamtin? How much of that will be quantitative with p-values, primary and secondary endpoints, safety and adverse effects is ultimately going to depend on that which we can consider alongside of, hopefully, the American College of Cardiology, where we would hope to be presenting these data, albeit not for several more months afterwards. So, our goal will be to be communicative as much as we can but knowing we don’t want to jeopardize any presentation at a proper scientific forum, so we recognize what is expected if we’re going to have a next-in-class potentially best-in-class profile.

And those are the things that are top of mind for us as we will think about that which we can disclose. Obviously we’ve got to disclose that which is deemed material to shareholders.

Dane Leone: Excellent. Thank you.

Robert Blum: Thank you.

Operator: Thank you. Our next question will come from Salim Syed from Mizuho. Your line is open.

Robert Blum: Good afternoon, Selim.

Salim Syed: Hi. Good afternoon, Robert. I guess a question from me. I’ll just follow-up on that on SEQUOIA. I just wanted to maybe hear from you or Fady just so that we are all clear on how we should compare mavacamten to aficamten? They had a 1.4% unit change on peak VO2 and I think there was about a 6% injection fraction sub-50%. Just curious, if you could just frame work for us the bookends low-end and high-end on peak VO2. Like is it a one point change in a 1.8 where it’d be comparable? Or where do you actually start to feel like you can differentiate on efficacy. And the same question just on safety, how much different do you need to be versus mavacamten in order to feel like you can actually differentiate and how that speaks to our REMS et cetera? Thank you.

Robert Blum: Sure Salim. So you won’t be surprised for me to again emphasize that we’re not going to be making comparative statements with mavacamten. The SEQUOIA-HCM study is a different study than was the study EXPLORER-HCM that led to the approval of mavacamten. All I can speak to and all Fady will speak to is that which relates to aficamten and what our expectations are ultimately labelling and positioning and how physicians see those two potential medicines will define what will be our hope of expanding the category and best-in-class. So with that long caveat, maybe I’ll ask Fady to try his best to speak to what our expectations are around aficampten in SEQUOIA-HCM.

Fady Malik: Yeah. Salim, I think what we will see and hope to see is that the changes are going to be meaningful in magnitude such that the question isn’t really one of whether there’s a slight difference between one or the other. Both drugs are going to be — well I should say mavacamten we know is quite effective in patients. We hope to see aficampten be equally or even better effective. I don’t think you can judge those types of things just based on comparisons of a single number. You have to really look at the totality of the data across all the endpoints. You have to couple it with the safety profile as again as we might see in the study. And so there’s not a simple answer to your question as I know you’re hoping me to provide.

Salim Syed: Okay. No worries. I wanted to ask the question. But I appreciate the answer. Thank you.

Robert Blum: Thank you, Salim.

Operator: Thank you. Our next question will come from Jason Zemansky from BofA. Your line is open.

Robert Blum: Hello, Jason.

Unidentified Analyst: Good afternoon. And this is Cameron Rosa from Bank of America Securities on for Jason Zemansky. Congratulations on the progress. And thanks for taking my question. I’d like to ask a follow-up on EF, if I may. You recently reported data from FOREST-HCM OLE where three patients had an LVEF production below 50%. What do you think you need to show regarding LVEF productions in SEQUOIA to make regulators comfortable permitting fewer echos as part of a potential REMS that have to fall below EXPLORER 6% or following the death in MAPLE EXPLORER are regulators to be more cautious on the class as a whole at least initially?