Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Cytokinetics Inc. (NASDAQ:CYTK)

Q4 2009 Earnings Call

February 03, 2010 04:30 pm ET

Executives

Sharon Barbari - SVP, Finance and CFO

Robert Blum - President and CEO

Andy Wolff - SVP of Clinical Research and Development and CMO

Analysts

Michael Aberman - Credit Suisse

Joel Sendek - Lazard Capital

Mark Monane - Needham & Company

Ritu Baral - Canaccord

Operator

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics fourth quarter and year end 2009 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 request of the company we will open up the call for questions and answers after the presentation. I will now turn the call over to Sharon Barbari, Cytokinetics' Executive Vice President of Finance and CFO. Please go ahead.

Sharon Barbari

Good afternoon and thank you for joining the Cytokinetics senior management team on this conference call today. Also present during this call are Robert Blum, our President and Chief Executive Officer; and Dr. Andrew A. Wolff, Senior Vice President of Clinical Research and Development and Chief Medical Officer. Following the forward-looking statements Robert will provide an overview of the past quarter, along with an update on the advancement of our development pipeline focused on the biology of muscle function.

Andy will then provide highlights and details of the progress of the company's clinical development program. I will then provide some brief comments with respect to our financials and our investment in research and development activities. Robert will then conclude the call with additional comments regarding our recent activities and discuss the projected company milestones for 2010.

We'll then open the call for a brief question-and-answer session. The following discussion, including our responses to questions contain statements that constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 most recent annual report on Form 10-K, our quarterly reports on Form 10-Q, and current reports on Form 8-K.

Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website. These forward-looking statements speak only as of today. You should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Now I'll turn the call over to Robert.

Robert Blum

Thank you, Sharon. Beginning with our restructuring in late 2008, and throughout 2009, Cytokinetics steadfastly executed a highly focused business plan, firmly rooted in and focused on the biology of muscle function. In the last 12 months, we have been winding down our activities related to our prior interests in oncology and doubled down on research and development activities directed to muscle biology. Why? Quite simple, we believe that our best path forward, both in terms of return on risk capital and in terms of how best to exploit our competitive advantages in science and drug development, requires us to embrace both the opportunities and responsibilities presented by our novel innovations in modulating muscle function.

We have had here to a carefully constructed blueprint that has informed how best to prosecute a promising portfolio of novel mechanism compounds that may offer significant therapeutic advantages in treating several grievous medical conditions that are increasing in prevalence with our aging population. These potential therapeutic advantages may allow us to better navigate the expected seismic shifts in the regulatory, reimbursement and clinical environments in which we operate.

In 2009, Cytokinetics progressed the development of our omecamtiv mecarbil our novel cardiac myosin activator through the completion of our Phase II A program clinical trials program informing Amgen's exercise of its options to this novel drug candidate in May of last year, another major milestone for Cytokinetics. In the second half of 2009, under our partnership, Cytokinetics transitioned key activities to Amgen. Together we also laid the groundwork for additional clinical and nonclinical development activities for omecamtiv mecarbil which we will share with you in more detail on this call.

We are very pleased that Amgen continues to share our excitement for the potential of our drug candidate and we believe that their diligent commitment is evident in multiple ways that we can elaborate with the steps we are taking together in 2010. Amgen's option exercise afforded us the necessary capital and unleashed other important internal resources to enable us to push forward our nonclinical and clinical program for CK 2017357 or CK 357, CK 357 our fast twitch skeletal muscle troponin activator has a novel mechanism of action that has been observed to directly amplify muscle response to motor neuron input, increase muscle power and prolong the time to muscle fatigue. We believe these properties differentiate this program from perhaps complimentary approaches being pursued by others that are more targeted at increasing muscle mass.

Embarking on this novel area of clinical research required that we remain diligent in our underlying translational research conferring with the appropriate medical and scientific leaders and as will you hear shortly, think more creatively about how we might demonstrate an appropriate proof of mechanism for this compound in humans.

As we unveiled in September at our R&D day, we are defining a new pharmacology in our non clinical studies of CK-357 were designed and executed to map forward a strategy that could translate the compound's novel pharmacodynamic effects from in vivo models to healthy volunteers and hopefully to patients confronting unmet clinical needs.

As Andy will share with you shortly recently announced results from our two Phase I trials of CK-357 serve up additional examples of the ingenuity and the skillful cross functional coordination of R&D activities that you have come to expect from the highly talented team at Cytokinetics.

With today's release we are announcing that Cytokinetics plans on initiating in 2010 at least two hypothesis generating evidence of effect or EOE studies for CK-357. One in amyotrophic lateral sclerosis or ALS, commonly known as Lou Gehrig's disease. In the other in claudication. Andy will speak to what constitutes an EOE study provide additional details on the objectives of these trials in the respective patient populations and walk you through our thought processes in our selection of these initial conditions to study.

Lastly, in 2009 we worked diligently to augment the company's earlier stage development pipeline and we believe continued to exercise prudent fiscal responsibility. We believe these activities have positioned us well to continue to grow and advance our pipeline further in 2010. I would now like to turn the call over to Andy to elaborate on specific development stage progress achieved during the last quarter in our respective drug development programs and also provide some insights into our plans for the future.

Andy Wolff

Thank you, Robert. In 2009, we focused diligently on the execution of key activities related to each of our novel compounds in development. As Robert mentioned, because of our renewed focus on the biology of muscle function, we wound down our oncology trial, worked closely with our partner Amgen on the further clinical development of omecamtiv mecarbil and generated encouraging data from Phase I trials supporting the clinical development of our lead skeletal muscle activator drug candidate, CK-357.

We also continued nonclinical development activities in our smooth muscle program. In September 2009, at our R&D day, we unveiled the company's drug discovery and development strategy, discussed potential indication for our cardiac, skeletal and smooth muscle contractility programs and summarized the nonclinical data that support our defined path forward in research and development in these areas. Beginning with omecamtiv mecarbil during the quarter we closed enrolment on our Phase IIa clinical trial designed to evaluate the pharmacokinetic of both modified and immediate release oral formulations of omecamtiv mecarbil in patients with stable heart failure. In the mean time Cytokinetics and Amgen have been collaboratively planning an additional clinical trial designed to further assess the pharmacokinetic profile of modified and immediate release oral formulations of omecamtiv mecarbil in stable heart failure patients as well as a clinical trial on patients with renal dysfunction.

These trials would be conducted using active pharmaceutical ingredients and drug product manufactured by Amgen. We anticipate that these trials will be initiated by Amgen in the first half of 2010. As these studies progress, we'll have more to say about them.

Moving to CK-357, in 2009 we made considerable progress in advancing this skeletal muscle activator. To remind you, we initiated two Phase I trials of CK-357 in 2009 the first of which was a two part study. In that study the first part, or part A, is designed to assess the safety, tolerability, and pharmacokinetic profile of increasing single doses of CK-357.

To date, single doses of up to 2,000 milligrams have been administered without causing intolerable adverse events. Accordingly the maximum tolerated dose has not yet been determined and we continue to dose escalate in this ongoing trial.

The second part, or part B, was not contingent upon the completion of part A and so we initiated part B in November of 2009. Part B was designed to assess the effect of CK-357 versus placebo on skeletal muscle function after single oral doses of 250, 500 and 1,000 milligrams and to assess the relationship of the effects observed to the associated plasma concentrations of CK-357.

This study enrolled very quickly and at the beginning of January, we announced encouraging data from part B of this trial, showing that in healthy male volunteers the doses administered were well tolerated and that CK-357 produced concentration dependent statistically significant increases versus placebo in the force developed by the tibialis anterior, the muscle we evaluated in this trial.

This particular muscle is comprised of approximately 20% to 30% fast-twitch muscle fibers. So it is possible that we might see an even greater effect of CK-357 in those muscles that have a greater proportion of fast-twitch muscle fibers. For example, the diaphragm, which is essential for breathing is considered to contain approximately 65% fast-twitch muscle fibers.

Just as we have demonstrated innovation and creativity in our preclinical research activity, our development team was successfully able to conceptualize, design, engineer, and construct the instrument we use to demonstrate increases in skeletal muscle performance during treatment with CK 357 in this, our first time in human, Phase I clinical trial of the drug candidate.

We anticipate announcing the full data set from this trial at appropriate scientific conferences throughout the year. I would like to point out that these results were better than we had anticipated, are in line with what we saw in our nonclinical studies and allow us to move with greater confidence in the hypothesis generating EOE Phase II clinical trials this year.

The second Phase I trial we initiated was designed to investigate the safety, tolerability and pharmacokinetic profile of CK-357 after multiple oral doses to steady state in two cohorts of healthy male volunteers. The CK-357 dose was 250 milligrams in cohort 1, and 375 milligrams in cohort 2, doses that produced CK-357 plasma concentration in the range associated with pharmacodynamic activity in part B of the single dose Phase I study.

Results from this clinical trial announced last week showed that at steady state, which was achieved at both dose levels by the 6th day of treatment, both the maximum CK-357 plasma concentration and the area under the CK-357 plasma concentration versus time curve from before dosing until 24 hours after dosing were generally dosed proportional and exhibited only modest accumulation compared to the values measured after the first dose.

In general, systemic exposure to CK-357 in this trial was high and intra-subject variability was low. CK-357 was well tolerated by the healthy volunteers in part B in this trial with most adverse events categorized as mild in severity. Adverse events such as dizziness appeared to increase in frequency with increasing doses of CK-357 consistent with the incident of dizziness observed at similar doses in part B of the single dose study. Events of euphoric mood occurred on 357 but not on placebo. However, they did not appear to be related to the dose level, and their frequency was lower than that observed at similar dose levels in part B of the single dose study.

As Robert mentioned, we are blazing a new trail with the development of CK-357. Consequently, we have spent considerable time conferring with outside experts on several important matters regarding the on going clinical development of this compound. For example we now have determined details, including the feasibility and overall design of each study, the appropriate patient populations and a selection of relevant pharmacodynamic end points that may produce evidence of pharmacodynamic effects after even a single dose of CK-357 and that could suggest potential therapeutic benefit in larger proof of concept trials involving more patients treated for longer periods of time.

We announced today that in 2010, we anticipate initiating at least two single-dose studies EOE studies, the first two of which will be in ALS and (inaudible). As I described at our R&D day, the EOE trials we are planning are different from traditional proof of concept, or POC studies, which generally are designed to test pre specified hypotheses and consequently, typically enroll more patients over longer durations than our EOE studies.

POC studies typically enroll hundreds of patients. Our EOE studies are designed to enroll dozens. Our goal is to develop CK-357 in the most pragmatic manner by conducting smaller, hypothesis generating EOE studies with multiple pharmacodynamic assessments that have been selected to provide evidence of statistically significant and potentially clinically meaningful pharmacodynamic effects of CK-357 in patients with diseases or conditions that are linked to muscle dysfunction, weakness, or wasting.

Following a successful outcome in these trials, we hope to advance CK-357 into larger POC studies with end points that may in some cases even be suitable for registration. I'd like to describe briefly how we prioritize these studies and how we feel that this prioritization could be advantageous for Cytokinetics as-well-as for potential partners. Our first hurdle was to determine which neuromuscular diseases or conditions might respond to a single dose of CK-357 in such a way that could be properly evaluated in an EOE study.

In particular, we followed the biology. As we know that CK-357 has been shown to amplify responses to motor neuron input, increase muscle power, and prolong the time to muscle fatigue. We also considered the practicality of rolling these studies quickly in order to get meaningful data in a relatively short period of time. As such, we considered the collection of certain patient populations around particular investigators and their centers, as-well-as other factors that could influence the speed of enrollment and the costs of getting to an answer quickly.

We also gave thought to the extent of unmet medical needs for each of these diseases, and next, whether those indications might be the subject of an accelerated regulatory review. We also considered whether Cytokinetics could ourselves practically develop CK-357 for one or more indications on our own in North America while also partnering other indications, or sharing global rights by licensing the rights to compounds for those indications in other geographic regions.

As a result of this multi-factorial process, we have chosen ALS for our first EOE study. ALS is caused by a loss of motor neuron input to the skeletal muscle, so we hypothesized that the muscle response to the diminished neuronal input in ALS may be increased with CK-357. 20,000 to 30,000 new cases are diagnosed each year in the US alone. There is no cure and patients eventually die within three to five years of diagnosis, usually from respiratory failure because the skeletal muscles involved in breathing, including the diaphragm, fail to be adequately stimulated by motor neurons.

Because the diaphragm is comprised of approximately two-thirds fast-twitch muscle fibers, a vast skeletal muscle activator like CK-357 could hold a great deal of promise to increase the quality and possibly even the duration of life in this patient population. We will announce details of the trial's specific design after dosing the first patient. However, some of the pharmacodynamic assessments we could make in this trial include measures of grip strength and fatigability, pulmonary function test and functional evaluation such as effects on speech and handwriting.

We also plan to initiate an EOE study in patients with claudication, a cramping or pain in the lower extremity due to insufficient blood supply during exercise because of Atherosclerosis blockages in the arteries supplying the leg muscles. Claudication can be quite debilitating by significantly restricting a patient's movement. Claudication is associated with the number of vascular complications and effects between 1 and 3 million people in the United States.

We believe that CK-357 could hold promise in claudication because in nonclinical studies we have demonstrated increases in skeletal muscle performance in the absence of a significant increase in the muscle's consumption of oxygen. If we can get more work from a muscle, without increasing its oxygen consumption, then we can hypothesize that in claudication, in which oxygen delivery to the exercising leg muscles is diminished because of obstructed blood flow through the arteries that might be able to increase the amount of work that the muscle can achieve before the symptom resulting from insufficient oxygen, which is claudication, occurs.

Some of the pharmacodynamic assessments we could employ in a claudication EOE study are a six-minute walk test, and the time to claudication, and fatigue during by lateral heel rate testing. We plan to announce protocol details of these phase II EOE trials after dosing the first patient in each trial. With that update on our clinical development programs for the fourth quarter, I'll turn the call back over to Sharon.

Sharon Barbari

Thank you, Andy. As our press release contains detailed financial results for the fourth quarter and the 12 months ended December 31, 2009. Let me refer you to that public statement. We ended the year with $112.4 million in cash, cash equivalents and investments excluding restricted cash and the put option on our auction-rate securities. Which represents over 20 months of going forward cash burn based on our financial guidance and the planned redemption of our auction-rate securities mid-year. As we continued the focus our programs in muscle biology, the capital allocation of our research and development, or R&D spending, has shifted considerably.

Our fourth quarter 2009 R&D expenses totaled $9.8 million from a program perspective for the fourth quarter; approximately 70% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, representing a major shift in our internal resources during the quarter. 8% were attributable to our cardiac muscle contractility development and activities, 17% were attributable to our other research and nonclinical development activities, including our smooth muscle contractility program and 4% were attributable to the wind-down activities related to our mitotic kinesin inhibitor development and research activities. For the 12 months ended December 31, 2009, our R&D expenditures totaled $39.8 million.

From a program perspective for the full year, approximately 44% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, 25% were attributable to our cardiac muscle contractility development and research activities. 20% to our other research and nonclinical development activities including our smooth muscle contractility program and 9% to our mitotic kinesin inhibitor development and research activities.

We also announced today our financial guidance for 2010. We anticipate our 2010 cash R&D expenses to be in the range of $38 to $42 million and cash G&A expenses to be in the range of $14 to $16 million. This financial guidance is on a cash basis and does not include an estimated $6.1 million in noncash related operating expenses primarily related to stock compensation expense.

This guidance also does not reflect any potential revenue which may arise from our collaboration with Amgen or additional collaborations with other potential partners. That concludes the financial portion of today's call. And with that I will turn the call back over to Robert.

Robert Blum

Thank you, Sharon. As Andy and Sharon have outlined for you here today our overarching goal for 2009 have been to transition the company and its programs smoothly to a new focus on the biology of muscle function. We believe we successfully accomplished that as evidenced by the completion of our Phase IIa clinical trials for our cardiac myosin activator omecamtiv mecarbil that resulted in Amgen's exercise of its option.

In addition, we advanced CK-357 through two Phase I clinical trials. We expect both programs to progress in 2010, lending important balance and risk diversification to our business. To be clear these programs have been and will continue to be the top priority for the company in 2010.

That said, much as we did in readying for the advancement of CK-357 into clinical trials by monetizing omecamtiv mecarbil through a partnership with Amgen, so are we preparing to support the advancement of other programs into clinical development by partnering CK-357.

If one were to view our current muscle biology portfolio as a three legged stool with one leg representing our work and cardiac contractility and the second being our skeletal program then the third leg of our metaphorical muscle biology stool is represented by our program directed to inhibiting smooth muscle contractility. This program continues to generate encouraging data in nonclinical development studies during the last quarter we presented non clinical data at the annual meeting of the American Heart Association regarding the application of our smooth muscle myosin inhibitors. These data compliment other non clinical data we previously presented from this program that relate to potential applications in hypertension which can be caused by excessive constriction of the resistance arterials that determine blood pressure and also diseases such as asthma and chronic obstructive pulmonary disease, or COPD that result from bronchoconstriction and bronchospasm.

At Cytokinetics we aim to continue our distinguished practices of doing relatively few but we believe strong deals to ensure we maintain the proper business framework to fund and operate the continued development and commercialization of our innovative programs. Many of you inquired about our strategy for a partnership for CK-357.

What I can share with you is that since discussions began the level of interest in number of companies at the table have grown significantly. In addition there is substantial enthusiasm form the scientific medical and business communities. From a strategic perspective we aim to ensure as with any of our partnerships that our next deal provides the best possible balance in ensuring that the program is aggressively resourced and that development progresses in a timely manner and that it provides increasing roles and responsibilities for Cytokinetics as well as the best possible returns to our shareholders.

I will not give specific guidance to deal timing today, but I am hopeful we might transact a collaboration relating to CK-357 in 2010. However, looking at specific guidance for 2010, for omecamtiv mecarbil we anticipate that in the first half of 2010, Amgen will initiate two clinical trials the first is a multicenter open-label single dose escalating sequential co work pharmacokinetic clinical study of a modified release and an immediate release oral formulation of omecamtiv mecarbil in stable heart failure patients.

The second is a multicenter open-label single dose safety and pharmacokinetic clinical study of a modified release oral formulation of omicamtiv mecarbil in patients with various degrees of renal dysfunction. Turning to our skeletal muscle program we anticipate that in the first half of 2010 we will initiate an EOE study of CK-357 in patients with ALS.

We anticipate that also in the first half of 2010 we will initiate an EOE study of CK-357 in patients with claudication and we anticipate throughout 2010 continuing non clinical development studies of the back up potential drug candidate to CK-357 from our skeletal muscle troponin activation program. Lastly, with respect to other activities in development at Cytokinetics, we anticipate throughout 2010 continuing non clinical development activities related to our smooth muscle myosin inhibitors.

In closing, we remain unwavering in our commitment to bring innovative drugs to market and believe that with the progress we achieved in the last year, we contributed to a solid R&D and financial platform upon which we may leverage our expertise, advance our pipeline, and mature our business. I am proud of the speed and quality of the work we perform each and every day at Cytokinetics and also in the way we continually challenge ourselves to develop innovative solutions to the most pressing scientific and clinical problems, especially in light of the increasingly demanding environment in which we operate. As always, thank you for your interest and your continued support. And that concludes the formal portion of our call today. And I would now like to open up the call to questions, if you will, please, operator.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Michael Aberman with Credit Suisse.

Michael Aberman - Credit Suisse

So the evidence of effect trial in Lou Gehrig's, I thought that you mentioned a single dose. Is that a single dose or a multiple dose trial?

Andy Wolff

It's a single dose study. Likely we will evaluate more than one dose level, and certainly we will also look at placebo as well. But as we've discussed these in concept, even as long ago as our R&D day last fall, we talked about a crossover design study in which we gain the statistical power and efficiency of having each patient be his or her own control studied multiple times, once after a single dose of placebo and then once after single doses at two different dose levels of CK-357 and as I'm sure you know Michael, we did see, after single doses of 357 to healthy volunteers, in part B of the first time in human study, measurable increases in skeletal muscle performance within hours after a single dose.

Michael Aberman - Credit Suisse

Where are you going on your multiple dose phase 1 studies and how long would it take to get into a similar trial with multiple doses from a regulatory standpoint?

Andy Wolff

As we announced today, we have completed a study in which we dosed two different dose levels, 250 milligrams once a day and 375 milligrams once a day to steady state, demonstrating that there was only modest accumulation, and general dose proportionality which would give us really all the human clinical pharmacology we would need to support longer term dosing in patients, absent any evidence that we might get from the EOE studies that there was something dramatically different about the PK of the compound in these disease populations, which would be highly unlikely based on.,.

Michael Aberman - Credit Suisse

So I guess what I'm getting at is, I'm not sure I understand why not go to a multiple dose study in Lou Gehrig's, for example where you can get more information and potentially have a better chance of seeing an evidence of effect because you're getting the steady state in higher doses?

Robert Blum

Well, we can get whatever plasma concentration we want to get to after a single dose. It's just a matter of how big of a single dose we give. So I'm not concerned that we're unlikely to see an effect after a single dose because I'm convinced more than ever before, after looking at that time part B data that the pharmacodynamic effect that we see, both pre clinically and now clinically is related directly to the plasma concentration at the moment that we take the pharmacodynamic assessment and not due to any protracted treatment over time.

Andy Wolff

So Michael, don't interpret into that that we don't have interest also in doing multiple dose studies in time. But this is a sequential thing.

Michael Aberman - Credit Suisse

I'm just not clear I understand why it needs to be sequential, but perhaps that's something we can take off-line.

Andy Wolff

I'll just offer one more observation to. To do longer term dosing on end points that might support registration, for example, survival or time to death or (inaudible) would be much larger and longer and accordingly much, much more expensive undertaking than these studies in some dozens of patients, studied repeatedly, used as our own control and may I note even studied repeatedly after each single dose. It's not like we dose them and then make one assessment. We make multiple assessments over time after each dose.

Michael Aberman - Credit Suisse

Again, maybe it will come clearer when I actually see the trial design.

Andy Wolff

Yeah, maybe. Just to finish what I was about to say, I think this is an extremely efficient way to generate pharmacodynamic data showing the drug has an effect on skeletal muscle function in these disease populations, and I think that is the kind of data we can then elaborate into the support we'll need to do longer term study.

Robert Blum

Just to underscore Michael, our goal here is to, as Andy pointed out, hypothesis generate in each of these populations and then we'll have a better handle on where we ought to be going with longer term multi dose studies. But we're casting a wider net given the pharmacology and the mechanism. Ultimately it may be together with a partner that we do some of the longer, larger studies.

Michael Aberman - Credit Suisse

How many patients are there with ALS around? What's the market size?

Andy Wolff

How many patients in the mark size for ALS?

Michael Aberman - Credit Suisse

In US.

Andy Wolff

20,000 to 30,000 new each year.

Michael Aberman - Credit Suisse

Right and what kind of sales force you would need to target ALS?

Robert Blum

So we've I think begun to make estimates that we're talking about dozens.

Michael Aberman - Credit Suisse

And again, I'm asking that because there's a lot of examples of companies that go after these rare diseases that really don't need a partner in the U.S. or North America and really shareholders can get a tremendous amount of value. And so I just wonder, you've got 20 months of cash and it won't take you long to get evidence or a lot of money to get evidence of effect in a disease where you really don't need a partner to commercialize.

Robert Blum

No, we fully agree and we understand where you're coming from on that issue. In particular in ALS we are hopeful we'll be able to move forward ourselves while a partner may be more focused to some other indications. But before we commit to ALS alone we think we ought to be generating a number of these studies to see about evidence of effect.

Michael Aberman - Credit Suisse

There's a pricing issue, because the price for Lou Gehrig is very different than the price for claudication.

Robert Blum

No question. Keep in mind we also have multiple compounds arising out of this program.

Michael Aberman - Credit Suisse

And again, last question, and I'll go to omecamtiv. This phase 1b, how many patients do you anticipate these need to be? You talk about sequential cohort dose escalating. Are these trials that we might be able to see data from in 2010?

Robert Blum

I'm sorry, the beginning of your question was relating to omecamtiv mecarbil.

Michael Aberman - Credit Suisse

Yeah and just in general, the omecamtiv trials that Amgen are starting. These things are going to be Phase 1b multi [center] trials. Will we be able to see data in 2010 and are these (inaudible) negating trials that prevent for Phase II B? And so I'm just thinking from a timing perspective, how big are these trials going to be, how meaningful will the data be, when will we see them and when could we move into Phase II?

Robert Blum

We can't comment until these studies get underway and we see enrollment rates as to when data could be available. At this point all we can say is that they're going to be initiated in this first half of the year. The studies are designed such that it's conceivable there would be data, but at this point it's too premature to say.

Operator

Your next question comes from Joel Sendek with Lazard Capital.

Joel Sendek - Lazard Capital

Just following up on that last question. So in reference to your guidance as well, I guess it would be unlikely that would you get any kind of a milestone payment from Amgen this year. That's why you didn't include it in the guidance?

Andy Wolff

We don't include milestones in general as a policy with respect to things that are not certain like that. That's been our practice.

Joel Sendek - Lazard Capital

Okay, all right, I'll have to make my own decision there. As far as the ALS study is concerned, if you started the first half of this year and it's just a single dose study, about how long will it take before you might see some data out of the both of those studies?

Andy Wolff

I think we'd like to wait and really get a handle on how the enrollment progresses as we begin to enroll. I know what we'd like but let's see if that's what we can really support.

Robert Blum

However, keeping in mind Joel that we're assessing effects within hours of administration, it's not like we're taking these patients out weeks to months to asset the drug effect. So we do believe that we'll see data this year. Andy's point is a good one. Until we see the enrollment rate, it's hard to say what quarter. But we should be able to give guidance to that once we get initiation.

Joel Sendek - Lazard Capital

All right. That's helpful. I want to also understand the dizziness side effect on the most recent data you described. Can you tell us at what dose that kicked in and why it was just mild and why it wasn't dose limiting?

Andy Wolff

Well, it wasn't dose limiting because all the episodes of dizziness that we saw in the part B study were in fact, mild. So while there were definitely complaints that were elicited by indirect questioning, in other words, the study nurse doesn't say, are you dizzy? She just says, how are you feeling? And the volunteers might have said something like, oh, a little dizzy, or a little lightheaded. The doses in that study as we've previously disclosed were single doses of 250, 500, and 1,000 milligrams.

We haven't previously disclosed what the exact rates of dizziness were on each of them and I don't think we should say too much more about that before we present the data in a more complete fashion at an appropriate scientific forum. But I can tell you that there was more on 250 than we saw on placebo and more on 500 than on 250, and more on 1,000 than there was on 500. So the dose relationship was clear, while at the same time I will repeat what I started with. They were mild and weren't even coming close to something that would limit dosing.

Joel Sendek - Lazard Capital

Okay, so they're mild but the frequency increased with higher doses.

Andy Wolff

Correct.

Joel Sendek - Lazard Capital

Okay. And my final question, just housekeeping on the P&L. Can you tell us what the noncash component of SG&A and R&D was for calendar 2009?

Sharon Barbari

For 2009 rough estimate, it's about $2 million, a little bit more than that.

Joel Sendek - Lazard Capital

For both SG&A and R&D?

Sharon Barbari

For R&D in that, I don't have that total number but it is close to the $6 million number that we gave for guidance for 2010 as well.

Operator

Your next question comes from Mark Monane with Needham & Company.

Mark Monane - Needham & Company

Hey good afternoon good evening from New York City. It's getting increasingly dark here. Another place that it's dark is in the casino. You talked about double down earlier, and I want to go back to that point.

Your reference on double down, I want to move to the 357. Are you doubling down on these EOE studies, so you could potentially skip a POC study, or will it be a better informed POC study, or will it be a quicker time to getting to POC? How are you thinking about these concepts?

Robert Blum

I think it's a good question. To elaborate, in using the term doubling down, I'm referring really to the attention, the focus and the commitment we are making to that program prior to Amgen having exercised compared to post-exercise, prior to Amgen's exercise we didn't have the bandwidth or latitudes or some of the financial resources to make the kind of commitment we now can, and with respect to CK-357, as we were discussing with Michael a moment ago, we're casting a wider net, in addition to the studies that we ourselves are sponsoring, we're hoping that we might engage a partner to actually do even more and that could also come with external funding that may even accrue to us from other sources.

So the goal here is to really expand the scope of study of CK-357 in contrast to what we were able to afford ahead of that and that speaks to all the things you mentioned whether that is time to do the studies and whether that's breadth of those studies and size of those studies.

Mark Monane - Needham & Company

I guess we'll look forward to hearing more about individual trial design. But I guess I have a question on 357, partnering similar to Michaels. And that is from a corporate point of view, given that 452 is nicely partnered now with Amgen, you discuss a potential partner for 357 and we know from the well ducted analyst day that the smooth muscle program may focus on asthma or hypertension, very big condition, most likely leading to a partnership. How do you think about value creation at the company with the variety of compounds being partnered?

Robert Blum

There are a lot of moving parts here. You point out the smooth muscle program has relevance to some indications that maybe pointing to larger studies, longer studies and things that may be more difficult for us to afford and certainly partnering that program would allow us to retain more rights and responsibilities longer in the skeletal program. Same to be true for the skeletal program. There are certain indications where I think it's just outside of our access to capital right now to be able to properly prosecute, but yet again we've got a couple of different compounds there. So there are a number of different levers we can pull and we are in active conversations around multiple different architectures of deals. I take the point that from a shareholder value standpoint, there could be more value accruing to Cytokinetics in the near term if we were to retain more rights in certain indications longer, but there's also a partnering marketplace, that we have to contend with, so we're pushing as many of those fronts forward as we can and we'll see where it comes out. But I would like to retain more responsibilities for Cytokinetics in some of those indications where clearly there's a time to market advantage, potentially an expedited regulatory review framework and certainly in North America where we could afford, we believe, the development in commercial activities that tie to those indications.

Mark Monane - Needham & Company

Okay. We'll look forward to that. And then lastly, how many people currently at the Cytokinetics, and what's the optimal number for 2010?

Robert Blum

So we ended 2009 with approximately about 112 people. There's no real intention to grow company significantly. It will be relatively flat to that level in 2010.

Mark Monane - Needham & Company

Thanks very much for the added information. Will look forward to 2010 events.

Operator

Your next question comes from Ritu Baral with Canaccord.

Ritu Baral - Canaccord

I have a question on the evidence of effect studies. Namely, do you have enough data from the two Phase I in hand to do your dose selection for the evidence of the sex studies? Is there any possibility incorporate, say, an adaptive design into what you have planned right now?

Robert Blum

I think we do have enough. I mean, we've shown tolerability of single doses that were twice as large as the highest dose in the part B study that was associated with pharmacodynamic effects and that were actually 8 times as large as the lowest dose we administered, which was also associate with pharmacodynamic effects that’s certain stimulation frequencies and time points. It is possible as we get into the EOE studies, that for some reason and we really don't have any pharmacological reason to anticipate this, but for some reason, patients with, for example, ALS may be less responsive to a particular concentration than normal healthy volunteers. We do have the opportunity with these kinds of early Phase II studies to look at the data without paying statistical penalties because as I think Robert and I have both said at various times, these are really hypothesis generating and not hypothesis testing studies. So amending the protocol to increase the dose, if necessary is an option that we really could pursue.

Ritu Baral - Canaccord

Got you. And any hypothesis on the mechanism of the euphoria that you've seen now that we've seen it in a couple of trials and is there any plan to include a mood scale in the evidence of effect studies or is that something that would you wait for later?

Andy Wolff

I think we'd wait on that. It doesn't really matter if we don't see pharmacodynamic effects in the direction that we need to see. I can't speculate what precisely may be going on to produce the euphoria. I will say that the euphoria and the dizziness do not exclusively only occur in the same subjects, but they tend to group together. So if somebody complains of dizziness, they not infrequently might also be a volunteer that has complained or not really complained, but also reported euphoric mood and vice versa. What we don't see are peripheral hemodynamic effects like falling blood pressure that might suggest that the dizziness, for example, is due to a hypotensive effect of the drug.

There is absolutely no indication of that. We know the drug from preclinical studies does cross the blood-brain barrier. So our hypothesis is that this is a central nervous system effect and therefore, in fact, an off-target effect. So far it's mild at doses that are well in excess of those that produce the desired pharmacodynamic effect. So I think at this point that's about all I can say about it and just stay tuned as we accumulate more data in patients with diseases that we think might benefit from the compound

Ritu Baral - Canaccord

Got you. And as far as duration of disease for the ALS patients that you would like to enroll in the evidence of effect study, do you have an idea of whether you want very newly diagnosed patients or later stage?

Andy Wolff

Well, I won't speak specifically to the entry criteria for the study because we generally don't give out details until we've actually initiated the trial. However, I will just report to you some of the basis for enthusiasm of our investigators, and that has to do with the relatively broad net that we can cast into the ALS population. So for those therapies that are expected to alter the course of the disease, trials tend to exclude patients that have had the disease for too long.

Generally if they have had a diagnosis for more than three years they're excluded because the concern there is that they are progressing so slowly that in that type of patient, it would be difficult to discern any benefit from an intervention to slow progression. At the other end of the spectrum those sorts of trials also tend to exclude patients whose disease is fairly rapidly progressing or that are more toward the end stage and our advisers have been enthusiastic regarding the idea that we could actually take both the longer diagnosed and more slowly progressive patients and those that are a little sicker than you might want to include in a longer term study because all we really need to have are patients who are demonstrably weak in at least some muscle group because of their ALS, and therefore there is a reasonable expectation that that weakness could be improved acutely after even a single dose of the compound, thus fulfilling the goal of the study, which is just to repeat, to demonstrate an evidence of a pharmacodynamic effect but not really rising to the level that I think people would want to see to call it therapeutic benefit. I hope that it will make the case that these pharmacodynamic effects portend the potential for therapeutic benefit. They would not constitute it. On the other though, they are a small and efficient trial.

Ritu Baral - Canaccord

Great, thanks. And one last question actually on omecamtiv, specifically the renal study that Amgen is planning. Is there a stage of kidney disease that Amgen is going to focus on and the rationale behind that?

Andy Wolff

So I won't speak for Amgen or say anything specific to that trial. But I will say that typically in these renal pharmacokinetic studies you do want to enroll several different gradations of renal dysfunction and often what is done is to enroll a cohort with the worst renal dysfunction first because that's sort of a worst case analysis. And if you don't see too much of an effect on the pharmacokinetics in that kind of renally impaired patient, you don't even need to look at the more moderately and then more mildly impaired. I'm not saying that's what they're going to do but these renal PK studies need to get done in every chronic oral development program. So there is sort of a format that people are used to seeing and following.

Ritu Baral - Canaccord

Got it. So it's one of the cookie cutter and potentially pretty short renal…

Andy Wolff

Don't say cookie cutter, but yeah. This is a box that does need to be checked in every development program.

Operator

And there are no further questions in the queue. You may proceed with your presentation or any closing remarks.

Robert Blum

Okay, thank you to all the participants for your continued interest in Cytokinetics today. Operator with that we can conclude the call. Everyone, wishing you a good day.

Operator

This concludes today's conference call. You may now disconnect your line.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Cytokinetics Inc. Q4 2009 Earnings Call Transcript
This Transcript
All Transcripts