Cytokinetics Inc. Q1 2010 Earnings Call Transcript

Cytokinetics Inc. (NASDAQ:CYTK)

Q1 2010 Earnings Call Transcript

April 29, 2010 4:30 pm ET

Executives

Sharon Barbari – EVP, Finance and CFO

Robert Blum – President and CEO

Andrew Wolff – SVP, Clinical R&D and Chief Medical Officer

Analysts

Brian Wong – Needham & Company

Charles Duncan – JMP Securities

Yin Huang – Credit Suisse

Ritu Baral – Canaccord Adams

Joel Sendek – Lazard Capital

Jeremiah Shepard – Wedbush

Operator

Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics first quarter 2010 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 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 Wolff, Senior Vice-President of Clinical Research and Development and Chief Medical Officer. Following the forward-looking statement disclaimer, 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 on the progress of the company's clinical development program.

I will then provide some brief comments with respect to our financials and investment in research and development activity. And Robert will then conclude the call with additional comments regarding our recent activities and discuss the projected milestones for the remainder of 2010. We'll then open the call for a brief question-and-answer session.

The following discussion, including our responses to questions, contains statements that constitute forward-looking statements for purposes of the Safe Harbor Provisions of the Private Securities and 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 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 and we undertake no obligation to update these statements after this call. I'll now turn the call over to Robert.

Robert Blum

Thank you, Sharon. During the first quarter, Cytokinetics continued to build on the important momentum, we established in 2009, with the successful execution of key development milestones related to our skeletal muscle activator, CK-2017357 or CK-357. On the heels of positive Phase I data announced during the quarter, CK-357 entered the first of two Phase IIa, evidence of effect trials that we have planned for 2010.

This particular trial, in patients with Amyotrophic Lateral Sclerosis, or ALS, also commonly known as Lou Gehrig's disease, was open to enrollment in the first quarter and subsequently dosed its first patients this month. We believe that this hypothesis-generating clinical trial could provide key insights into the potential effects of this drug candidate's novel mechanism, which may increase the functional status of patients with ALS.

Furthermore, if increases in skeletal muscle function can be demonstrated in patients with ALS, they may translate similarly into other neuromuscular diseases and conditions associated with impaired neuromuscular function. Finally, the potential therapeutic value of this program was further highlighted during the quarter as the U.S. Food and Drug Administration granted CK-357 orphan drug status as a potential treatment for patients with ALS.

Andy will outline how this designation could hold certain advantages for Cytokinetics. Our heart failure program partnered with Amgen continues to make progress with multiple clinical trials planned through the remainder of the year. I am pleased to announce today that the two companies have been engaged in planning an expansion of our previously announced plans, to now also include a separate initiative, that is intended to advance an intravenous formulation of omecamtiv mecarbil into a Phase IIb clinical trial in 2010.

As I will discuss later in the call, this trial is expected to proceed concurrent with the previously announced plans for pharmacokinetic studies of two oral formulations of omecamtiv mecarbil in 2010. Amgen continues to be a highly-engaged partner that is planning effectively to progress this novel drug candidate and we are pleased to be working alongside them in the joint development of omecamtiv mecarbil for the potential treatment of heart failure.

As you will hear from both Andy and Sharon in a moment, in the last quarter, we believe we executed well on aggressive clinical development timelines and have done so in a fiscally responsible manner for the benefit of all of our stakeholders. I will now like to turn the call over to Andy to elaborate on specific clinical progress achieved during the last quarter in our respective drug development programs as well as to provide some insights into our plans for the future.

Andrew Wolff

Thank you, Robert. In the first quarter, we achieved several high priority clinical development objectives for the lead drug candidate from our skeletal muscle activator program, CK-357. As Robert noted, we completed two Phase I trials and opened our first Phase IIa trial of CK-357, all in the first quarter. To put into perspective, the extent of all that we have achieved in these last few months, consider that during the last quarter, we completed patient enrollment in the second of our two Phase I clinical trials.

Data from both of our Phase I trials were collected, analyzed and the results were released. The necessary regulatory documents to enable our two single dose Phase IIa evidence of effect trials were filed under protocols and were submitted to several sites, institutional review boards, the ALS evidence of effect trial was open to enrollment and dosing has now begun. And the clarification evidence of effect trial is moving rapidly towards its initiation this quarter. Speed with which this was all done yet again demonstrates the expertise, competence and cooperative agility of our clinical, regulatory, legal, finance and administrative groups for which Cytokinetics is increasingly well-known.

Specifically, in the last quarter, we completed Part A of a two part Phase I first time in humans clinical trial designed to assess the safety, tolerability and pharmacokinetic profile of increasing single doses of 357. In this trial, the maximum tolerated dose or MTD was determined to be 2,000 milligrams. At this dose, healthy volunteers reported some dizziness and euphoric mood.

These events were deemed mild in severity. At the single dose that exceeded the MTD, 2,5000 milligrams, volunteers reported moderately severe dizziness and an episode of syncope. To remind you, we also conducted a separate Part B of this trial, which was designed to assess the effects of CK-357 versus a placebo on skeletal muscle function after a single oral dose of 250, 500 and 1,000 milligrams and to assess the relationships of the effects observed to the associated plasma concentrations of CK-357.

The results from Part B were encouraging and demonstrated that in healthy male volunteers, the doses administered were well tolerated and that CK-357 produced concentration dependant, statistically significant increases versus placebo in the course developed by tibialis anterior muscle.

No serious adverse events were reported. Adverse events of dizziness, headache and euphoric mood – all these events were characterized as mild in severity. Results from the second Phase I trial were announced during the quarter. This trial was designed to investigate the safety, tolerability and pharmacokinetic profile of CK-357 after multiple oral doses to steady state in two cohorts in healthy male volunteers.

The CK-357 dose was 250 milligrams in cohort one and 375 milligrams in cohort two. Doses that produced CK-357 plasma concentrations in the range associated with pharmacodynamic activity in Part B of the single dose Phase I trial. Results demonstrated that at a steady state, which was achieved at both dose levels by the sixth 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 dose proportional and exhibited only modest accumulation, compared to the values measured after the first dose.

The only adverse events to be reported by more than one volunteer were dizziness and euphoric – were dizziness, headache and euphoric mood. All these adverse events were judged to have been mild in severity, except for one episode of moderate dizziness on the higher dose. We recently opened enrollment and began dosing in the first of two planned Phase IIa, evidence of effect clinical trials. This trial is a double-blind, randomized placebo-controlled three-period crossover pharmacokinetic and pharmacodynamic trial of CK-357 in at least 36 and up to 72 male and female patients with ALS.

The primary objective of this trial is to evaluate the pharmacodynamic effects of the CK-357 on measures of skeletal muscle function or fatigability in patients with ALS at single doses of 250 milligrams and 500 milligrams. Accordingly, in this hypothesis generating trial, multiple pharmacodynamic assessments will be made without specifying a single primary endpoint. These assessments will include an ALS functional assessment, a modification of the standard ALS functional rating scale, which is designed to detect acute changes in functional status that might be expected to occur after only a single dose of CK-357.

The analyzed functional assessment includes incorporates both direct evaluation by the physician investigator and patients' reports to evaluate patients' function with respect to speech, salivation, handwriting, walking, dyspnea or shortness of breath and swallowing before and after administration of study drug. Study assessments also will include various measures of muscle strength or fatigue, employing both maximum and submaximum voluntary contractions as well as measures of pulmonary function. These measurements will be taken at baseline and at 3, 6 and 24 hours post-dosing after each of two single doses of CK-357 and placebo.

The secondary objectives of this clinical trial is to evaluate the relationship of the plasma concentration of CK-357 and its pharmacodynamic effects, to evaluate the safety and tolerability of the two single doses of CK-357 administered orally to patients with ALS, and to evaluate the effects of the drug candidate on patient and investigator determined global functional assessments.

We dosed the first patients in this trial earlier this month and we continue to add centers. Investigator enthusiasm appears high. So we believe the trial may enroll rapidly. It is important to emphasize that these two evidence of effect clinical trials, one now underway with ALS and the second expected to soon be underway in claudication are designed to be hypothesis generating, rather than hypothesis testing.

That is to say, they are intended to teach us how best to design trials that, if successful, may support drug approvals. We chose these two patient populations and believe they are associated network of well-organized investigators. For these initial trials, because we believe they offer the best opportunity to generate, as rapidly as possible, evidence of a pharmacodynamic effect of CK-357 in patients with diseases that each entail a well-characterized neuromuscular dysfunction.

Should we accomplish a successful outcome in either of these evidence of effect trials, we hope to advance CK-357 into larger studies with prospectively defined primary endpoints, subjected to rigorous principles of statistical analysis that would achieve by what might be more generally regarded as proof of concept and may even be suitable for registration.

As Robert mentioned, during the first quarter, CK-357 was granted orphan drug status for the potential treatment of ALS. The FDA's office of orphan drug products development grants orphan drug designation to new drugs that are biologic that may treat a condition affecting less than 200,000 persons in the U.S. This designation offers a number of potential advantages, which may include a seven year period of U.S. marketing exclusivity from the date of marketing authorization, funding for clinical studies, study design assistance, waiver of FDA user fees and cash credits for clinical research.

We are pleased that the FDA has recognized the potential importance of CK-357 in the treatment in patients with ALS. And we intend to move as expeditiously as possible to a definitive evaluation of CK-357 as a possible therapy for this grievous and uniformly fatal disease for which so few clinically meaningful drugs are currently available.

Moving on to our cardiovascular program and our collaboration with Amgen in the further development of omecamtiv mecarbil for the potential treatment of heart failure, the last quarter had both out teams very busily preparing for the initiation of several new trials expected to be underway in the next several quarters. With respect to the oral formulations of our drug candidate, Amgen and Cytokinetics have been jointly overseeing the production and release of drug product to be studied in two key pharmacokinetic trials to be underway in the next few months.

We can now speak more to the intended design of one of these trials as its protocol outline is now published and described in more detail on the clinicaltrials.gov website. This will be a multi-dose Phase IIa clinical trial designed to evaluate the pharmacokinetics of the immediate release and modified release oral formulation of omecamtiv mecarbil in heart failure patients.

The study will also evaluate the safety and tolerability of the two formulations of omecamtiv mecarbil at steady state. The other trial, also in the final preparatory stages, is a single-dose study designed to evaluate the pharmacokinetics and safety of the modified release of the oral form of omecamtiv mecarbil in patients with renal dysfunction.

Even as our teams are preparing to initiate these trials of oral formulations of CK-452, we have also invested considerable effort in the last quarter planning to advance the intravenous formulation of omecamtiv mecarbil into a Phase IIb trial in patients hospitalized with acute heart failure in 2010.

Robert will have more to say about this in a few minutes, but I am especially pleased that Cytokinetics and Amgen are collaborating on a trial in this critically ill heart failure population. With that update on our clinical development activities in the first quarter, I'll turn the call back over to Sharon.

Sharon Barbari

Thank you, Andy. As our press release contains details of the financial results for the first quarter ended March 31, 2010, let me refer you to that public statement. We ended the first quarter with $103.1 million in cash, cash equivalent and investments, excluding restricted cash in 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.

Our first quarter 2010, R&D expenditures totaled $9.1 million. From a program perspective for the 1st quarter, approximately 71% 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, 6% to our cardiac muscle contractility development and research activities, 17% to our other research and non-clinical development activities, including our smooth muscle contractility program and 6% were attributable to wind-down activities related to our mitotic kinesis inhibitors development and research activities.

As you can see, we continue to focus our financial resources on the research and development programs that we believe will continue to contribute value generation for the company. That concludes the financial portion of today's call. With that, I'll turn the call back over to Robert.

Robert Blum

Thank you, Sharon. As you've heard today, we have had a very productive first quarter. As both Andy and Sharon have both outlined for you, regarding our own internal and currently unpartnered activities, we continue to prioritize our skeletal program with a focus on the two planned CK-357 evidence of effect trials, one in ALS and one in claudication.

Our accelerated movement into these evidence of effect studies has also been significantly assisted by what I have observed to be an unusually high level of interest for the potential of this novel drug candidate among the clinical experts in each of these two communities, especially given the severe unmet medical needs, particularly of patients suffering from ALS, but also those afflicted with claudication.

During the last quarter, I was fortunate to have attended the investigator meetings for each of these two evidence of effect trials. There, I heard firsthand from the devoted medical professionals who care for these patients about the challenges they face in treating these diseases and how these challenges have fostered the genuine enthusiasm they have for the potential of CK-357, which in turn has lead to their participation in these trials.

At Cytokinetics, we hope our activities, in combination with those of our investigators and their patients, might potentially yield potentially clinical benefits that these dedicated professionals and their patients so importantly need. I am also quite pleased to note that a similar imperative regarding the development of CK-357 is evidenced in the shared commitment we and Amgen are applying to the accelerated activities now surrounding omecamtiv mecarbil.

The additional Phase IIb clinical trial that we are now designing for the intravenous form of our novel drug candidate, alongside the currently planned trials to evaluate the pharmacokinetics of the two oral forms, provides our collaboration the benefits of added information sooner for the potential translation of pharmacodynamic effects into possible clinical benefits. We also believe that it may provide us with key information that can more rapidly inform potential next steps in the latter stage development of this first in class compound.

In the past quarter, I attended an advisory meeting regarding the clinical evaluation of the intravenous formulation. I was impressed with the thoughtful deliberation and planning contributed by both Amgen and Cytokinetics colleagues as well as by several leading cardiologists.

Of course, as CK-357 and omecamtiv mecarbil progress through clinical development, our scientists continue to work to augment our development portfolio with innovative first in class small molecules focused on the biology of muscle function even as we also continue to extract value from the compounds and programs that we already have advanced into the clinic.

For example, yesterday at the Society of Vascular Medicine's 21st annual scientific sessions, Cytokinetics presented non-clinical data on CK-357 in a femoral artery ligation model. This pre-clinical model may provide insights into how CK-357 may perform in patients with claudication. Regarding our partnering activities for CK-357, we continue to advance discussions with an objective to tee up multiple options.

As you can imagine, the size and scope of a potential collaboration relating to CK-357 and our other skeletal muscle activators are front and center for many of us at the company. As such, we are highly engaged in discussions with several companies. To remind you, our corporate goal remains to build a neuromuscular franchise rooted in this program, while also engaging a partner who may have infrastructure and interests that can benefit a broader development program for these compounds beyond that which we can afford ourselves or that relate to the treatment of indications that extend beyond our strategic interests.

As we have stated, Cytokinetics may choose to maintain key U.S. rights to develop and commercialize and develop CK-357 in certain indications and respective patient populations that could afford us an ability to further mature our business prospects through the advancement of this program. We believe these partnering discussions are progressing well.

On the corporate front, during the quarter, we announced the resignation of James Sabry from our board of directors. James was a co-founder of Cytokinetics and the company's former CEO and board chairman. We appreciate his significant contributions over his many years of dedicated service to the company and we wish him well in his new role.

We are also pleased that James will continue as a member of our scientific advisory board. With James' resignation from the board, Cytokinetics recently announced the appointment of Patrick Gage as Chairman of the Board. Pat is a highly respected and seasoned R&D executive with extensive experience as both an operating officer and board member in both the pharmaceutical and biotechnology industries.

As he has already proven since his appointment to the board, Pat's assistance in helping us shape the company's R&D and business strategies will no doubt continue to be quite valuable and I personally look forward to working closely with him as we collaborate on mapping a prosperous future for Cytokinetics. As we look to that future, let's review the company's milestones for the remainder of 2010.

For omecamtiv mecarbil, we anticipate that in mid-2010, Amgen will initiate two clinical trials, the first is a Phase IIa, multi-center open-label, dose escalating, sequential cohort pharmacokinetic clinical trial of a modified release and an immediate release of an oral formulation of omecamtiv mecarbil in stable heart failure patients.

The second is a Phase Ib multi-center, open label, single dose safety and pharmacokinetic clinical study of a modified release oral formulation of omecamtiv mecarbil in patients with various degrees of renal dysfunction. We anticipate that by year-end 2010, Amgen will initiate a randomized, double-blind, placebo controlled Phase IIb of a clinical trial of an intravenous formulation of omecamtiv mecarbil in hospitalized acute heart failure patients with left ventricular systolic dysfunction.

The trial is anticipated to examine clinical, echocardiographic and pharmacokinetic endpoints at three dose levels of omecamtiv mecarbil and placebo. The primary and secondary endpoints to be assessed in this trial are still under discussion. This trial is expected to proceed alongside the previously announced plans to conduct additional pharmacokinetic studies of the oral formulations of omecamtiv mecarbil.

Turning now to our skeletal muscle program, we anticipate that in the second quarter of 2010 we will initiate a Phase IIa evidence of effect clinical trial of CK-357 in patients with claudication. We anticipate that data from the Phase IIa evidence of effect clinical trial of CK-357 in patients with ALS will be available during the second half of 2010.

We anticipate that throughout 2010, we will continue non-clinical development of the backup potential drug candidate to CK-357 from our skeletal muscle troponin activator program. And lastly, with respect to other development activities in Cytokinetics, we anticipate that throughout 2010, we will be continuing non-clinical development activities relating to our smooth muscle myosin inhibitors.

In conclusion, I believe the progress we have achieved in the first quarter speaks volumes to the quality of Cytokinetics' abilities to execute well on our plans to sustainably enhance shareholder value while also attending properly to our financial resources. Results achieved in the last few months have nicely laid down the foundation for our future plans.

I hope you share our enthusiasm for how our company is performing and we thank you for your interest and continued support. Operator, that concludes the formal portion of our call today and I'd like to now open up the call to questions, please.

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from the line of Mark Monane with Needham & Company.

Robert Blum

Hi, Mark.

Brian Wong – Needham & Company

Hi, this is Brian Wong speaking for Mark Monane. Congratulations on the good progress during the first quarter. I have a couple questions. The first question is related to the ALS trial. You mentioned that you'll be measuring several parameters, which might lead to potential hypothesis generating that CK-357 that may work in ALS also in addition to other indications. I was wondering if there is any particular parameters you all physicians may pay particular attention to. I was thinking what might be the potential primary importance. Is it going to be like a single measurement or is it going to be a composite measurement?

Andrew Wolff

So one thing that is important about each of these evidence of effect studies is that because we view them as hypothesis-generating and not hypothesis testing. We don't need to check a particular primary endpoint and we have not. We'll do a variety of different assessments on neuromuscular function, even more of them in the ALS study than in the claudication study. We'll analyze all of them and we're looking for a signal of some evidence of pharmacodynamic effect to increase skeletal muscle function. In ALS, when that might be particularly expected to be useful is the ability of these patients to achieve a sub-maximum grip strength repeatedly until they fatigued.

We know that action of the compound is most prominently evident not with the maximum voluntary contraction but rather at sub-maximum contractions. And we know that the compound increases the response of the skeletal muscle to any given level of motor neuron input and that it prolongs the time to fatigue. So repeated sub-maximum grips to fatigue might be particularly informative.

Also, we know that most patients with ALS when they die do so because of complications in the lung. Either they just can't simply breathe anymore because their diaphragms are no longer sufficiently innervated or sometimes before that happens, they still have trouble clearing their secretions and they have pneumonias that can be difficult to treat and sometimes fatal. So we'll be looking at various measures of the ability to inhale rapidly and to also move air in and out of the lungs. That may give us some clue as to the effect in ALS.

Robert Blum

To that point, I'll just again reference that on the clintrials.gov website is a listing with some more details about the endpoints that will be assessed in this evidence of effects study and that may be a useful for you as well.

Brian Wong – Needham & Company

Okay. Yes, that's very helpful. I was just wondering, you might come out with a composite endpoint that may lead potentially for (inaudible) any further trials.

Robert Blum

Keep in mind this study is specifically designed, as Andy underscored, to speak to what may be pharmacodynamic assessments around which we may then, going forward look to test more specific hypotheses that could tie specifically to a registration strategy.

Brian Wong – Needham & Company

Okay. That’s helpful. Also – my second question relates to mecarbil. What are you guys just thinking behind going after different formulations or what's the potential usage of different formulations and various indications?

Robert Blum

As you may know, we have already completed a number of Phase I and Phase IIa studies. Primarily in Phase IIa, in terms of pharmacodynamic validation in heart failure patients for response in intravenous form where the pharmacokinetic- pharmacodynamic relationship is more well characterized. In the meantime, our goal and Amgen's goal and we've stated this publicly a number of times, is to characterize the oral formulations for similar pharmacokinetic properties such that we might be in a position to have them go more concurrently into a registration strategy program that could couple the intravenous and oral forms or at least use the oral forms in a more pronounced way than has been the case to this point.

However, in the interim, we've also concluded that it's in the interest of our understanding of the mechanism of this compound and how pharmacodynamics may translate to clinical benefit, given that we already know that the intravenous pharmacokinetics fairly well, to be able to assess how well that translates to pharmacodynamics and clinical benefit sooner. So as not to suggest any significant shift in our registration strategy, quite the opposite, instead this is intended to inform how best we can understand how this mechanism translates into clinical benefit, at least as the pharmacokinetics of the intravenous forms are more well understood.

Brian Wong – Needham & Company

Okay. Thank you so much.

Robert Blum

You're welcome. Next question please.

Operator

Your next question comes from Charles Duncan, JMP Securities.

Robert Blum

Hi, Charles.

Charles Duncan – JMP Securities

Hi guys, and thanks for taking my question and let me add my congratulations on a nice quarter of progress.

Robert Blum

Thank you so much.

Charles Duncan – JMP Securities

So my first question is, with regard to 357. You said that the data would be available in the second half. That's a pretty big window. I guess I'm wondering if you anticipate being able to roll out data at different points in this study or if there's a certain clinical meeting or otherwise like the Society of Neurosciences that you're targeting. What's really driving the second half, versus say saying something like the third quarter or the fourth quarter?

Robert Blum

Yeah. We just initiated dosing, as you know, in this month of April. And as such, I'm pleased already by the enrollment rate as it's starting to demonstrate the sites' ability to participate in the trial but it's still too early to be able to pinpoint guidance to a specific quarter or a specific meeting. It's typically not our practice, anyway, to pinpoint it so precisely ahead of actual submitting abstracts and having them accept it.

Charles Duncan – JMP Securities

So perhaps you would start with top line data release and then follow up with a presentation to peer reviewed forum?

Robert Blum

Yeah. That's what we do routinely.

Charles Duncan – JMP Securities

Okay. I know this is a hypothesis generating, not testing study, but just to follow-up on the last question. I guess I'm really wondering what it would be that you would see that would encourage you – what you would like to see that would encourage you to move further on in development? Is it really an increase in strength or is it strength over time? What do you think is a key parameter for ALS that has good predictive value for clinical effect?

Andrew Wolff

Well, I'm not sure I would want to be so far out onto the limb as to say that any response that we would hope to see in these pharmacodynamic assessments would then be predictive of eventual clinical benefit. We'd like to think that it would be, but I need to be clear. None of those things have ever been demonstrated to have any forward predictive value, but if we talk about the assessment that I just described a few minutes ago. If we find that versus placebo, patients can achieve more sub-maximal repeated contractions before they fatigue and aren't able to do that anymore, than that would be an encouraging sign. If we find that the maximum negative pressure that a patient can generate as they inhale forcibly is increased in the presence of the drug versus placebo, I think that would be very encouraging.

If we find that this functional assessment, which is a modification of the standard patient reported outcomes on a functional ratings scale. If we find that patients proceed and the investigator notices that they're drooling is better or the intelligibility of their speech is better or their handwriting is clearer, those would all be very encouraging. So we'll look at all of these assessments and I wouldn't say we would need every one to move in the expected direction would be sufficiently encouraged to move forward into more definitive trials. I think if one or two or three of them were, we'd be very pleased.

Robert Blum

I guess that's one of the things I took away from the investigators at the investigator launch meeting, Charles, is that the way they're looking at this is they really don't have in their (inaudible) now a drug that could have this kind of near immediate functional improvement for quality of life for these patients who are suffering so grievously. Instead, other clinical trials, currently underway, which I know you know well, are looking at, perhaps more disease modifying regimens. This is, in fact, something that affect to patients who might receive, even after a single dose, pharmacodynamic functional improvements that we think would best need to be understood in a study of this design before we could then determine how best to proceed going forward.

Charles Duncan – JMP Securities

That said, based on our diligence and talking with physicians even beyond the analyst meeting that you held last fall in New York. It seems like functional improvement is key and disease modification would be nice, but before that even given the unmet medical need, it would be nice to see some improvements in some of these quality of life issues. So could you move quickly to more of a registrational-type scenario?

Andrew Wolff

I think in ALS, we believe we could move reasonably quickly because the disease is so dire in the end that medical need is so high. So if we did see encouraging evidence of improvement in skeletal muscle function that would suggest that if they were maintained over time, during longer periods of dosing, they should lead in increases in functional status and quality of life. I'm hopeful that regulators would agree with us that we could move into studies that might support registration in the nearer term than would usually be the case.

Charles Duncan – JMP Securities

Okay. And then quickly on the backup compound, you mentioned for the skeletal muscle troponin activator. Is that from a different chemical series? Is this prudence or are you seeing something in the some malady active – malady in 357 that you're concerned about in terms of metabolism or optimizing dosing?

Robert Blum

So it's routine in our practice, unfortunately not so often the case for other companies, but we routinely when we advance a compound in the clinical trials, we'll also be looking to advance a backup and also continue to work on a follow up on a series. To us that means in the form of a backup compound that is chemically similar but which offers some risk mitigation and diversification for the unexpected or the anecdotal or otherwise the idiosyncratic activities that may arise only when you get into the clinic. But at the same time, as Sharon pointed out, we're spending about 71% of our R&D dollars towards these ongoing efforts and that's not just in development, that's in research. We are working diligently to prosecute an entirely different chemical series that offers up what may be potential risk mitigation and some redundancy in this program for what could be different physiochemical properties, different pharmacokinetics an even potentially a different mechanism of action in order to round down our interests in the area. That's just simply in the fast twitch skeletal troponin activator space and as you know, we're also working in slow twitch muscle, looking at ways that we might advance compounds that activate slow twitch muscles, so we continue to invest deeply in this area in order to seek to maintain a leadership position in the space and we just think that's good drug discovery business.

Charles Duncan – JMP Securities

I agree. If I could ask just one more question of Sharon, perhaps you can give a little bit more color in. I think you said you had approximately 20 months' worth of cash. Is that anticipating the receipt of any milestone payments?

Sharon Barbari

No, we don't include that. The only thing that it includes is what we have received so far from Amgen in the first quarter with respect to revenue for our involvement in the omecamtiv development and close-out activities and does not include any revenue related to a partnership or any future revenue that we might receive from Amgen.

Charles Duncan – JMP Securities

Does it anticipate the start of any new, bigger trials? Like say, an ALS pivotal trial?

Sharon Barbari

No. Just based on the milestone guidance that we've given you, the only trials that we believe that we will start in 2010 are the trials that we've already discussed related to 357.

Charles Duncan – JMP Securities

I'm sorry, I mean over the course of say the 20 months.

Sharon Barbari

Over the 20 months, yes.

Charles Duncan – JMP Securities

Okay. Okay. Good. Great, thanks for the added color.

Operator

Your next question comes from the line of Yin Huang with Credit Suisse.

Andrew Wolff

Good afternoon.

Yin Huang – Credit Suisse

Good afternoon. I also want to offer my congratulations on the advancement of CK-357 clinic.

Andrew Wolff

Thank you.

Yin Huang – Credit Suisse

My question has to do with the CK-452 compound. You mentioned that Amgen plans to start Phase IIb at the end of this year. Does that depend on the outcome from the other Phase IIa studies oral formulation or not?

Andrew Wolff

It does not.

Yin Huang – Credit Suisse

So if not, why can't they start the Phase IIb earlier than end of this year?

Andrew Wolff

We're still in the process of working together with Amgen and potential investigators and advisors, in order to map out the proper design and lock down a protocol in order to be able to conduct that study this year. Those things just don't happen overnight. I think it is a very encouraging next step that we have this alignment that this is in fact an appropriate thing to do and over the course of these next couple of months, we'll be in a position to refine our plans together with Amgen and also lock down on a protocol to submit that to regulatory authorities, et cetera., to allow for initiation of dosing. Again, hope to occur in Q4, 2010.

Yin Huang – Credit Suisse

And then, just to follow up on that. When do we expect the results from the Phase IIa and also Phase Ib studies of the oral formulation?

Robert Blum

So again, as we indicated today, those studies are still to be initiated. Actually, it would be premature for us to predict when we might see those data. We have not yet, as to one of those trials, elaborated on its design, so better for us to initiate those studies, see how enrollment is going and then together with Amgen be able to map forward when we think data would be arising before I can give you that kind of guidance.

Yin Huang – Credit Suisse

Okay. Thank you.

Robert Blum

Thank you.

Operator

Your next question comes on the line of Ritu Baral of Canaccord.

Robert Blum

Hi, Ritu.

Ritu Baral – Canaccord Adams

Hi, good afternoon, guys. So I have some follow-up questions on the Phase IIb to be omecamtiv as well. If I understand correctly, you're looking at this – you are looking at the trial both to be an informative from a clinical, I guess mechanism perspective, but is there additional commercial rationale for development of an IV formulation? Has anything changed in the treatment landscape, in the inpatient treatment landscape since Amgen exercised its option last year?

Robert Blum

As you know, that's a highly dynamic space in terms of what's going on with acute heart failure treatments. But I think it would be improper for us to imply that this is a commercially-driven decision at this stage of the game rather, instead, this is being driven by our clinical development thinking and our interests to better understand how the pharmacodynamics may translate to clinical benefit. In time, we'll be in a better position to assess whether those potential clinical benefits we may see warrant a separate commercial strategy for an intravenous program, but that isn't currently baked into these plans.

Ritu Baral – Canaccord Adams

Okay. And you did mention in the release the endpoints for the trial are TBD. But what should we be thinking about, just in terms of a classic Phase IIb heart failure trial as far as patient numbers and treatment duration without getting in – committing to specifics, obviously.

Andrew Wolff

Because it's an IV study, obviously the treatment duration is probably going to be on the order of hours and days and not days to weeks. And because it's a Phase IIb, I think you could be looking at hundreds, if not thousands of patients.

Ritu Baral – Canaccord Adams

Okay. And my last question is on 357. You mentioned that the patient enrollment number for that trial will be between 36 and 72, I believe. Is there an either an interim look or analysis that will decide potential enrollment expansion and how would you sort of looking at that patient scale up and structure?

Andrew Wolff

We can do interim analyses in the study. Again, because it is an early Phase II study. And this is very explicit in both of these two protocols. We are tasked with a lot less statistical rigor and issues controlling our alpha error spends and so forth and so on. And so when we have treated enough patients that we feel it might be meaningful to have a look at the data, we would be in a position to be able to do so.

Ritu Baral – Canaccord Adams

Great. Thanks.

Robert Blum

Thank you, Ritu.

Operator

Your next question comes from Joel Sendek from Lazard Capital.

Andrew Wolff

Hi, Joel.

Joel Sendek – Lazard Capital

Hi, thanks a lot. I missed part of the call so I apologize if this question is redundant but the Phase IIb for the Amgen studies. Is that still potentially a registration study?

Robert Blum

You're talking about the Phase IIb as it would now evaluate the intravenous form of the drug alone?

Joel Sendek – Lazard Capital

Right.

Robert Blum

I think as it's currently considered in the absence of a specific registration strategy for an intravenous alone program, I think it would be premature to say. I gather that we won't be in a position yet until we commit to an intravenous only or if we commit to an intravenous only program, to be able to really reliably answer your question.

Joel Sendek – Lazard Capital

Okay. Got it.

Robert Blum

So at this point, I want to make sure I emphasize and to be clear, this isn't to suggest we are looking to do a decoupled development program that would proceed beyond Phase IIb to include then a Phase III study with an intravenous only approach. That isn't a decision that we've made. Instead we've made a decision to do the Phase IIb. We think it benefits the collaboration and also informs what we can best learn as to how we might then design a Phase III program, whether that be with the oral or not.

Joel Sendek – Lazard Capital

Okay. Any idea on when you might be able to make that decision?

Robert Blum

I suspect it's not a 2010 decision.

Joel Sendek – Lazard Capital

Yeah, yeah. Okay. And then – alright. That's all I had, thanks a lot.

Robert Blum

Thank you, Joel.

Sharon Barbari

Thank you, Joel.

Operator

Your final question comes from Mark Monane with Needham Capital.

Brian Wong – Needham & Company

Good afternoon and thank you for taking my follow-up. Two quick questions. One is the word disease modifying agent. That term has been thrown around a lot by several different companies and different articles. Do you feel the skeletal muscle activator and the smooth muscle inhibitor are indeed disease modifying and do you this that allows for a premium price going forward because of the special mechanism of action?

Andrew Wolff

Well, I think strictly speaking, you can't say that something that enhances the response to a given amount of neurological input to the skeletal muscle is modifying the disease per se. A disease in ALS as you know is loss of the upper and lower motor neurons and that's going to contribute – continue, rather I mean to say, even with substantial benefit that might be afforded from treatment with 357. But it might modify the course of the disease quite dramatically. If in fact, we can see significant increases in the amount of skeletal muscle force that are developed in response to these diminished inputs from the motor neuron that we can expect patients might be far more functional before they succumb to the disease and actually may live longer before they finally succumb to the disease.

So I think that we really do expect that in the best possible case, we'll see a substantial modification in the natural history of ALS but not in the underlying pathology of the disease itself.

Brian Wong – Needham & Company

Okay. That was a helpful answer. And then also could you comment on how many people now at the site of Cytokinetics and what's an optimal number for 2010?

Sharon Barbari

114 people – between 110-114 people at Cytokinetics today. You're asking me what the optimal number is?

Brian Wong – Needham & Company

Yes.

Sharon Barbari

I think that really depends on the path of the development programs going forward. We don't expect the organization to grow so in the short term, if that's what you're getting at.

Brian Wong – Needham & Company

Yes, that's what I'm getting at.

Sharon Barbari

We have sufficient resources within research and clinical.

Brian Wong – Needham & Company

Okay.

Robert Blum

To be clear, Mark, to be precise, we do have some open positions and as such as we fill those positions, we will grow incrementally, but we are at a state where we believe the company is well-positioned to prosecute on these programs without having to substantially increase our headcount. We do have some budgeted headcounts that we are trying to fill on the margin.

Brian Wong – Needham & Company

Terrific. Thanks for the added information.

Robert Blum

Thank you, Mark.

Sharon Barbari

Thanks, Mark.

Robert Blum

Operator, any other…

Operator

Your final question comes from Jeremiah Shepard with Wedbush.

Robert Blum

Hi, Jeremiah.

Jeremiah Shepard – Wedbush

Good afternoon.

Robert Blum

Good afternoon.

Jeremiah Shepard – Wedbush

I had a few questions. In regards to the 357, can you say how many sites are enrolling patients so far and I was wondering if we might get an update in terms of enrollment?

Robert Blum

Yeah. I'm not going to be able to give you specific counts on enrolled patients, that's not our practice. But I can point you to the clintrials.gov website where we are with some frequency updating that site with those centers that are currently enrolling and as I think, you look at that site today I believe there may be seven currently listed as enrolling and that number is expected to grow.

Jeremiah Shepard – Wedbush

Okay. And also in terms of the PK studies for 357, were you able to determine if there was the potential for drug-drug interaction with other drugs?

Andrew Wolff

Right now, it's a little too early to discuss that in a lot of detail but as we begin to get into the patient population that are treated with other drugs and as we extend our preclinical development, we'll be able to say more about that, going forward.

Jeremiah Shepard – Wedbush

Okay. And then in regards to the backup compound, there was a question about if it's a similar chemical class? But is it – can you speak to if this backup compound could interact with a fast twitch and slow twitch muscle type?

Andrew Wolff

We don't expect that would occur, in fact the paradigm for our drug discovery has us focusing to fast twitch or slow twitch but not looking across both muscle types.

Jeremiah Shepard – Wedbush

Okay. Last question. In regards to the smooth muscle myosin inhibitor, can we expect an IND filing soon or are there any other key requirements needed before that could be possible?

Robert Blum

So there are certainly other things that are required and we're not including that in our guidance right now. In part, we are conserving our cash and monitoring and moderating our spend in association with our cash balances in as much as we're not looking to push that into the clinic as rapidly as we might otherwise ahead of certain studies still to be done and also obviously we're looking to advance our skeletal program farther and perhaps under our partnerships. So in the same way that we tempered the pace of progress of our skeletal program until such time as we had more clarity from the omecamtiv mecarbil program and we had the financial resources available to us to allocate to do that. We're similarly doing the same with our smooth muscle myosin program.

Jeremiah Shepard – Wedbush

Thank you for taking my questions.

Robert Blum

You're welcome.

Sharon Barbari

Thanks, Jeremiah.

Operator

That concludes the Q&A portion of today's call. I will now turn the call back to Robert Blum for any closing comments.

Robert Blum

Excellent. So thank you operator, thank you to all the participants for joining the teleconference today for your continued interest in Cytokinetics. With that, we conclude the call, hope everyone has a good day. Thank you.

Operator

All participants may disconnect at this time.

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