Cytokinetics, Inc. (NASDAQ:CYTK)
Annual Shareholder Meeting
May 21, 2014 06:00 PM ET
Sharon Barbari - EVP, Finance and CFO
Pat Gage - Chairman
Robert Blum - President and CEO
Good afternoon. And welcome ladies and gentlemen to the Annual Shareholder Meeting Conference Call, Jodie Goldstein. At this time I would like to inform you that this call is being recorded and that all participants are in the listen-only mode. At the request of the company, we will open the call for question 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.
I'm going to turn the call over, so good afternoon everyone. And I’ll turn our call over to our Chairman of the Board, Pat Gage and he will introduce the Directors and Officers in the proceedings today.
Thank you, Sharon. This is Pat Gage. Good afternoon ladies and gentlemen. I am the Chairman of the Cytokinetics Board of Directors. It is a pleasure to welcome you to our 2014 Annual Meeting with Stockholders. The meeting is now called to order. I’ve asked Marjorie Wagman, Cytokinetics General Council to record the minutes.
Before proceeding to the formal business, let me introduce the members of the management who are here today including Robert Blum, President and CEO of Cytokinetics who will be making remarks later; Sharon Barbari, Executive Vice President of Finance and CFO; Marjorie Wagman, VP Legal Affairs and General Counsel; (indiscernible) Senior Director of Finance & Corporate Controller, (indiscernible) and corporate Communications, In addition, let me introduce (indiscernible) our partners from PricewaterhouseCoopers.
Now I would like to turn the meeting over to Sharon Barbari to conduct the formal business of today’s meeting to set forth and assess for us and our notice of our annual meeting and proxy statement. After the formal part of the meeting, we will review the Company’s recent business activities and give you an opportunity to ask questions you might have. Thank you.
Thank you, Pat. I have proof of affidavit signed by William Valentine (ph), an employee of Computershare that notice of this meeting has been duly given and that the notice of Annual Meeting of Stockholders proxy statement and proxy were mailed on April 10, 2014 to all stockholders of record at the close of business on March 28, 2014. The affidavit together with copies of the notice, proxy statement and proxy will be filed with the minutes of this meeting. In addition, the Inspector of Election, James Kirkland of Computershare has signed his oath of office. The oath of Inspector of Elections will be filed with the minutes of this meeting.
The Inspector of Elections has advised me that we have present in person and by proxy a sufficient number of shares to constitute a quorum, so the meeting is duly constituted. We will vote by proxy and written ballot today. If you have turned in a proxy and do not intend to change your vote, then it’s not necessary that you vote because we will count your proxy.
Those who did not turn in a proxy or wish to change your vote should raise your hand and we will distribute to you a ballot to use for voting. Are there any additional proxy’s to be submitted at this time? Is there anyone present whether or not already submitted the proxy who wants to sustain several? The polls are now open for voting this May 21, 2014 at 3:04 PM. The polls will be closed to voting after results to the matters to be voted on.
The first item of business is the nomination and election of Directors. The following three directors are nominated by the Board of Directors as Class I Directors of the Company to serve until our 2017 Annual Meeting, (indiscernible).
The audit, the second matter for voting is the ratification of appointment of independent auditors. The audit committee of the Board of Directors has selected PricewaterhouseCoopers independent auditors to audit Cytokinetics financial statements for the fiscal year ending December 31, 2014. The Board of Directors recommends that the stockholders ratify this disappointment.
The third item for vote is an advisory vote or have executive compensation. We are assessing that our stockholders approved on an advisory basis the compensation of the named executive officers as disclosed in the Company’s proxy statement for the 2014 annual meeting of stockholders. The Board of Directors recommends stockholders approve this proposal.
This concludes the formal business as meeting, if you have voted today (indiscernible) by the Inspector of Elections. It is now 3:06 PM and the polls for each matter to voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or relocations will be accepted.
At this time I’d like to report on the results of the voting as tabulated by the Inspector of elections. There were present and in person 31,400,820 shares of common stock voted representing 87% of the total shares eligible to be passed constituting a majority. The part of results of proposal one, the election of directors, L. Patrick Gage and Wendell Wierenga has been elected as Class 1 director.
Report of the results of proposal two, the ratification of PricewaterhouseCoopers as the Company’s auditors. PricewaterhouseCoopers has been ratified as the Company’s auditors for the fiscal year ending December 31, 2014.
Report of the results for proposal three, advisory vote on executive compensation, the Company’s stockholders have approved on an advisory basis the compensation of the named executive officer as disclosed in the Company’s proxy statement for the 2014 Annual Meeting of stockholders. We expect to report our voting results on our current report on Form 8-K to be filed with the SEC within four business days after the end of this meeting. This concludes the formal business of the meeting and we would now like to begin our report to stockholders.
Before we begin, the following discussion including the Q&A contains forward looking statements under the Safe Harbor provision of the private securities litigation reform act of 1995. Our actual results might differ materially from those projected in these statements. Factors that could cause our actual results to differ materially are contained in our SEC filings, including our most recent annual report on Form 10-K, Quarterly Report on Form 10-Q and Current Report on Form 8-K. Copies of these documents may be obtained from the SEC by visiting the Investor Relations section of our Web site. 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.
I’ll now turn the meeting over to Robert Blum, our President and Chief Executive Officer.
Thank you, Sharon. In my role is President and CEO, I am pleased to be addressing you at Cytokinetics' 9th Annual Shareholder Meeting. It is a pleasure to have several of our shareholders in attendance today, and it’s a privilege to be able to lead Cytokinetics. Your company is moving forward in 2014 on solid footing, in large part based on important progress we achieved in 2013. We believe that 2014 has the potential to be a similarly significant year across all facets of our business as we continue to execute in our plans to advance first in class drug candidates directed to muscle biology and high unmet clinical need.
In the presentation I will follow, I plan to share with you the details and progress we achieved in 2013 and also more recently that relates to our research and development activities as well as in the key areas of corporate development and finance. I’ll share with you certain information relating to a recent disappointment in connection with an important clinical trial we conducted and also how we intend to proceed towards potential next step in that program alongside progress we expect in other programs. We believe Cytokinetics is well positioned in 2014 because of the very way we have strategically constructed a portfolio approach to risk managing drug discovery and development.
We also believe Cytokinetics is well positioned in 2014 because of the way we have established collaboration that ensure we leverage expertise, capital and other resources of our partners. And we believe that Cytokinetics is well positioned in 2014 because we have clarity of vision, value, purpose and commitment that extends across our organization of superb professionals. We remain steadfast in our results to build an uncommon Company by delivering exceptional value to shareholders and by doing right by patients with severe diseases as well as their caregivers.
For those of you joining us by webcast, we welcome you as well. You can find a PDF of the presentation slides under the download tab in the webcast window. And with that introduction I’ll now begin my update on the Company.
This slide -- for those of you on the web cast, I’ll point you to the slide that is the cover of our annual shareholder reported slide number three and it captures the essence of Cytokinetics in terms of how we view both our research activities as well as our ingenuity, innovation and strategic plans. Great ideas originate in the muscles. This was a quotation that was attributed to Thomas Edison. We can’t know for certain that he said it. I am not sure it really matters. What really does matter is how it defines purpose and value of the organization.
Slide No. 4; progress in 2013 reinforces the outlook for -- I am sorry progress in 2013 reinforces outlook for 2014. In 2014 we’re advancing multiple muscle biology directed programs. In the last year we’ve achieved clinically relevant effects in Phase IIb trial. We’ll be talking about that today, both with respect to our heart failure program as well as program directed to ALS.
In the last year we transacted two very key corporate development deals that diversify access to capital, as well as capability and manage risk. We believe the Company is positioned well for continued progress in late stage development as you’ll see both this year and next year. We believe we have a strong balance sheet we report on our financials and that also affords us access to capital for diversified funding sources as you’ll hear more. And most importantly our continued commitment to the patients that we aim to serve, those with severe diseases and you’ll hear more about that in these next several minutes.
It all starts as depicted on Slide No. 5, with the start of the year. The fundamental unit of muscle contractility. For those of you over the webcast you can link to a video that’s depicted down below with a link to that video stored on our website. This is a chart premiere and as you can see depicted, when calcium comes in through the cardiac or skeletal muscle cell, it drives contractility as is engineered through cross bridges of (indiscernible) regulatory complex.
This is a fundamental unit of muscle contractility and also the fundamental unit of our drug discovery and development activities, we believe Cytokinetics is pioneering new therapeutic advances that start (indiscernible) extend to muscle activators that have important implications to human disease and we believe that we’re leading that effort globally.
The next Slide No. 6 depicts our development pipeline in 2014, and over these next several minutes I’ll be describing our activities with regard to tirasemtiv, skeletal muscle activator in particular, skeletal muscle Troponin activator directed to ALS and other neuromuscular indications, recently the subject of a completed Phase IIb clinical trial will benefit ALS. This program is currently un-partnered. I’ll also be talking about CK-2127107, a next generation skeletal muscle activator partnered with Astellas directed to non-neuromuscular applications currently in Phase I and proceeding to Phase II. We expect the Phase II readiness activities underway this year 2014.
And also FAQ in our cardiac myosin activator Omecamtiv Mecarbil which comes in forms both intravenous and oral. In last year we reported on a Phase IIb study called ATOMIC and now we are proceeding forward with a study called COSMIC in collaboration with Amgen readying for we hope to be Phase III readiness.
Let’s start with our skeletal muscle activator program and in particular tirasemtiv followed by CK-107. Slide No. 8, provides if you will a landscape against which we’re executing on program both neuromuscular and non-neuromuscular. As you can see here the activities of a skeletal muscle activator, as we believe are evidenced by preclinical and clinical data demonstrates that these compounds amplify response to motor neuron inputs, increase multiple (indiscernible) and slowed the onset and reduce the degree of muscle testing [ph]. As such the applications for these compounds extend both to neuromuscular disorders described on the left hand side of this slide as well as non-neuromuscular disorders associated with the key weakness on the right side.
Cytokinetics has structured programs with tirasemtiv directed to the neuromuscular indications and potentials and with Astellas our partner with CK-107 for the non-neuromuscular. And we think as such we’re well positioned both to manage risks as well as diversify the opportunity set for what could be a very broad strategic program directed through many different indications. As such there are multiple opportunities per test, skeletal troponin activators that we’re prosecuting both independently and with our partner Astellas.
Starting with independent initiatives I’ll about tirasemtiv first. As you may recall from prior presentations, Cytokinetics began clinical studies with tirasemtiv in 2009 with the first time in-human Phase I study. Since then we have completed four Phase I studies, four Phase IIa studies before we then initiated the BENEFIT-ALS trial as well as other Phase IIa studies. The BENEFIT-ALS study is a study that we began and completed over the last couple of years, in the setting of ALS. We enrolled over 700 patients in that study and we recently announced the results of the American Academy of Neurology meetings much of these next several slides will focus for those results.
But first a little bit of background, in the prior Phase IIa study conducted with Tirasemtiv in ALS patients, we saw as depicted on Slide No. 11, important dose dependent increase in parameters that we felt were clinical effects that were meaningful for these patients in terms of both muscle strength and pulmonary measure that tied two plasma exposures in a dose dependent way and placebo corrected. These were the data from Phase IIa studies that we believe provided support of evidence through proceedings into the BENEFIT-ALS trial.
Slide 12 describes that trial. As designed it was intended to enroll approximately 680 patients initially receiving one week of open label Tirasemtiv before randomization to 12 weeks of double blind treatment versus placebo. With efficacy assessments that occurred at visit five, six, seven and eight, visit five corresponding with week four, visit six with week eight and visit seven with week 12, then a washout period and a follow-up visit, one week later, visit eight and then a follow-up 28 days after watch out begins. The primary efficacy objective was the ALS FRS, a functional rating scale and secondary assessment included measures of pulmonary strength and muscle strength. As you can see on Slide No. 13, BENEFIT-ALS enrolled in eight countries, 711 patients in total, making this the largest Phase II study we believe in patients living with ALS.
Slide 14 describes the efficacy endpoints and the results from the trial. As you can see here, Tirasemtiv versus placebo did not achieve an effect that was being to favor Tirasemtiv. In fact admittedly it was a slight numeric imbalance favoring placebo in the trial. This was not specifically significant and therefore we look at this as a no effects on this primary efficacy endpoint but nonetheless disappointed for the patients and their caregivers that were so committed to in design and conduct of this trial.
Important to note that this ALS FRS functional rating scale is a 12 domain scale with everything from pulmonary function to ambulatory functions, wallowing hand riding and it’s primarily a patient reported outcome tool which was used in clinical trials for about 20 years and never before has there been a clinical trial that demonstrated an effect on this endpoint and BENEFIT-ALS joins the list of clinical trials that did not show an effect on ALS FRS.
However as you can see on Slide 15, for pre-classified also meaningful clinical effects, we did see both statistical significance in the group that favor Tirasemtiv versus placebo in certain measures and we saw numeric trends and also supported Tirasemtiv versus placebo in other measures. These are not post-talk analysis, these are not analysis of sub-group. These are pre-specified analysis that were in our statistical analysis plan and prospectively defined as meaningful and important in patients with ALS. In particular we are looking at the effect on slow vital capacity and the effect on the Mega Score which is aggregate measure of muscle with (indiscernible) strength and we see these as very meaningful and important. These clinical tests make BENEFIT-ALS a standout study in many ways and the first clinical study we believe to demonstrate effects of slow vital capacity and Mega Score and therefore a positive trial in many ways, something that we continue to investigate and pour through.
Here the data on slow vital capacity and as you can see for this measure at week four, eight and 12, there are meaningfully different effects on placebo versus Tirasemtiv favoring Tirasemtiv, highly statically significant. Slow vital capacity as we have come to know over the last several years is something that is measured whenever patients go into their clinics, whether they are on the clinical trial or not. Patients carry around there slow vital capacity not unlike their social security numbers. They know that number is frequently measured and they associate with disease progression. It’s been associated with prognosis and survival in this severe uniformly fatal disease and we believe especially in light of the data from this large trial that these effects are meaningful, especially given the price statistical significance and also the price range of value and the low variability around that measure.
We are digging more deeply into these findings and discussing them with experts in the field so we can best understand their relevance to what could be a registration program to proceed based around slow vital capacity. We also want to understand more about why we didn’t see an effect on ALS (indiscernible) and one of the things we’ve already uncovered is that the average effect associated with Tirasemtiv in this trial, especially those that contributed to life sedative [ph] and also the GI adverse effect may have confounded some of these results and led to more early terminations in this trial.
When we control for weight loss that seems to associated with the GI adverse effect in particular nausea. We actually see that patients who received Tirasemtiv did better than their counterparts on placebo. While not specifically significant, these numeric volunteers that favored Tirasemtiv we think are meaningful and we want to understand them better in the context of the overall trial. Are there ways for instance that we can dose Tirasemtiv differently in the next clinical trial by trade on a different schedule, maybe dose to a different level and exposure as well as perhaps with some combivent medicines like anti-nausea agent as has been recommended to it by ALS experts in order to improve tolerability with Tirasemtiv and also maybe elucidate and more amplify the clinical effect that we’ve observed that we think translate to potential benefit.
So we have a lot of digging still to do into these data. On the left hand side of Slide 18 you see the completed clinical trials in the period 2010 and 2012 and now BENEFIT-ALS completed more recently joined but we need to understand more of the data we have in order to inform potential next steps and the potential for further development of Tirasemtiv. We expect to be engaging in that process over the next several weeks to months. We want to talk to ALS experts, both those who treat patients for their overall disease progression as well as those that focus their pulmonary effects and measure pulmonologists who treat these patients understand how they interpret these data so it can help us reconcile them in light of what may be the plan looking forward. We also want to engage with regulatory parties and potential partners that we may point to the next steps with Tirasemtiv.
With that I’m going to move away from Tirasemtiv and BENEFIT-ALS and talk about the rest of the portfolio at Cytokinetics, beginning with the next fast skeletal troponin component activator, CK-107. Slide No. 20 describes some of the data from preclinical model and in particular in this case from a model of diaphragm muscle fibers that suggest that CK-107 restores function in muscle fibers and therefore may improve pulmonary functions as much as we saw in Tirasemtiv and similarly in other non-neuromuscular indications.
Slide No. 21 shows data from another preclinical model, this model being a rat model of heart failure and as you can see CK-107 in this model demonstrated statistically significant effects in terms of running performance. We think that reads very importantly on the potential translation of this mechanism into diseases such as heart failure. We’ve initiated Phase I studies with CK-107. In fact we’ve initiated already now several Phase I studies. These are results on Slide 22 from a study we reported on in December. This was the first time in human single assembly dose study of CK-107 which demonstrated to be well tolerated up to 4,000 milligrams. That’s a very significant large dose and over that dose range no emerging pattern of adverse effects was observed and in fact we did not achieve a maximum tolerated dose because we did not see any dose limiting effect.
What we did see is that we’ve reached the limits of our ability to dose higher, our given the quantity of material. We did see that we were achieving adequate exposure with oral dosing and we achieved in this study linear dose proportional PK observed up to 4,000 milligrams. And based on these results we interpret that the terminal half-life is compatible with once to twice daily dosing. These Phase I results will be accompanied by additional Phase I results based on studies that are ongoing, multiple ascending dose studies CKTD [ph] studies and other studies that we expect together can inform with our partner Astellas the potential readiness for CK-107 to proceed to Phase II and have more to say about our partnership with Astellas towards the end of this presentation.
So we have the two skeletal muscle activators proceeding forward and we also have as you may recall, a cardiac muscle activator program. Omecamtiv Mecarbil is the first in class cardiac myosin activator that we’re developing in collaboration with Amgen.
On Slide 24 you see both the completed and the soon to be initiated Phase 1 study. We’ve completed quite a number of phase 1 studies over the year, or together with Amgen, more recently based on an expanded collaboration in Amendment to our collaboration agreement with Amgen. We are readying for another phase 1 study to be conducted by Cytokinetics and that will be reimbursed by Amgen, this one in healthy volunteers of Japanese (indiscernible) so that we can ready Omecamtiv Mecarbil for what could be inclusion in a Phase 3 program in Japan as well as in countries around the world.
Here on Slide 25; you can see the phase 2 studies that have either been completed or are ongoing. 1121 and 1221 being two Phase 2 studies conducted by Cytokinetics, ATOMIC-AHF by our partner Amgen and COSMIC by our partner Amgen, both ATOMIC and COSMIC in collaboration and I’ll be reporting now on results from ATOMIC as well as the design of COSMIC and how they fit together.
On Slide 26; and with the movie you can see the pharmacodynamic effect that we’ve observed in prior studies with Omecamtiv Mecarbil. This is important because Omecamtiv Mecarbil, we believe has the unique signature effect, increases volume and objection fraction as measured by echocardiogram, first on -- with improvement and increases in systolic objection time. And that’s something that’s quite visual and measurable in a consistent and reliable length by echocardiogram.
You can see on the left-hand side pre-dosing and on the right-hand side post dosing and as you can see on both the upper short axis view and the lower two chambered view, improved contractile force is consistent with the dose response with Omecamtiv Mecarbil. This is what we’ve seen repeatedly in healthy volunteers and in heart failure patients and what we will be looking for together with Amgen in the COSMIC study as it will enroll now, and all patients who are (indiscernible).
The ATOMIC study, which evaluated Omecamtiv Mecarbil in its intravenous form, completed and read out last year. The COSMIC study is ongoing. The two of those studies together combine to inform a potential decision to proceed the Phase 3, something that we hope to be occurring next year in collaboration with our partner Amgen.
The goal of the program is to combine the IV and the oral forms of Omecamtiv Mecarbil in a potential registration program, the strategy being to direct for this novel mechanism of action to the continuum if there are patients with heart failure, those who are hospitalized and outpatient. Acute heart failure in hospital, in chronic health heart failure outpatient, the goal being with this first in class compounds to demonstrate reductions in death or re-admission following a diagnosis of high risk heart failure.
So where does ATOMIC fit into that strategy in here. Here is the design of ATOMIC on Slide 29. In ATOMIC-AHF Omecamtiv Mecarbil would dose for 48 hours in patients hospitalized with high-risk heart failure. These patients who are very ill, short-of-breath, and refractory to conventional meds. They went with the placebo or Omecamtiv Mecarbil for that infusion period of 48 hours and we assessed dyspnea response at 6, 24, and 48 hours. Dyspnea refers to shortness of breath. And the goal was to see whether Omecamtiv Mecarbil as dosed at low, medium and higher dose levels could demonstrate a dose dependent effect on dyspnea and other measures that we believe are clinically relevant to the treatment of acute heart failure.
Here are data from that study on slide 30. As you can see on the left-hand side, with each cohort of Omecamtiv Mecarbil, compared to a pooled placebo and on the right-hand side each cohort compared to its maxed paired placebos, we saw in both analyses dose dependent effects that we think are supportive of Omecamtiv Mecarbil against dyspnea and how that may be reading on potential progression into Phase 3. We believe that these data are consistent with the therapeutic hypothesis for Omecamtiv Mecarbil and informed the inclusion of a few heart failure patients as may be included in the phase 3 programs. So we were pleased with these data that were first presented last summer and then again last fall at prospective heart failure meetings. Like we saw in Phase I and Phase IIa studies, in this Phase IIb study that Omecamtiv Mecarbil was associated with plasma concentrated related effects on dyspnea and other pharmacodynamic effects.
You can see here on Slide 32 that Omecamtiv Mecarbil was associated with a reduction in worsening heart failure, another important measure for these patients at high risk. We saw in this study as well reductions in supraventricular tachyarrhythmias and ventricular tachyarrhythmias that were associated with Omecamtiv compared to placebo in this trial, again supportive of the therapeutic hypothesis.
We also saw that patients receiving Omecamtiv Mecarbil had trends to reductions in Tachyarrhythmias and also blood pressure that was favorable consistent with the differentiation of this mechanism of action from inotropes as well as supportive we believe of the therapeutic hypothesis for Omecamtiv Mecarbil and potential progression to Phase III. And all of this seems to be very consistent with what we already knew about Omecamtiv Mecarbilm that it was demonstrating effect on Systolic Ejection Time as depicted on Slide 35 in tabular form and on Slide 36 in graphical form.
And as you can see on Slide 36, the increases in Systolic Ejection Time seems to correlate with increasing exposure and maps very closely with what we knew from prior Phase I and Phase IIa studies. This was a very encouraging assignment and you’ll see why we believe that this is particularly well as we talk about now COSMIC. COSMIC is a study of Omecamtiv Mecarbil that’s ongoing. It’s a study of an oral form of COSMIC in patients with chronic heart patients, heart failure.
We had a dose escalation phase complete in 2013 and now in 2014 there is an expansion phase. In the dose escalation phase we look at two different cohorts. Cohort 1 received 25 milligram twice a day, and in that case three different groups received three different oral forms compared to placebo. And then Cohort 2, 50 milligram twice a day, again three different groups, each one receiving a different oral form versus placebo. We and Amgen reviewed the data from the dose escalation phase in 2013 and together we selected one oral form that we’ve now advanced, it’s graduated to the expansion phase. The expansion phase is now underway, it’s underway in what would be approximately 100 centers around the world.
In the expansion phase 150 patients will be getting one of those oral forms, 25 milligram BID for what would be a total duration of 20 weeks. Another 150 patients will be getting that same oral form but in a dose escalation, 25 milligram followed by 50 milligram, again for a total duration of 20 weeks. And the third group of 150 patients will be getting placebo for 20 weeks. All of these patients will be echoed at baseline and then at subsequent time points during the course of the study. That’s very important because this study does not have a primary efficacy end point. It does not have a specific statistical hypothesis that we’re testing, rather the goal of this study is to understand safety, tolerability, pharmacokinetic and pharmacodynamics over the course of longer duration treatments with Omecamtiv Mecarbil. And we’ll be looking to see whether in this study we see durability of the effect that I was just showing you with those echocardiogram.
Our goal is to see that the effects we’ve already demonstrated time and time again that are consistent with exposures are maintained over longer periods of time as long as we maintain those same exposures. In that regard we believe that this study has a potentially higher likelihood of meeting our objectives and being supportive of Phase III.
So that’s my discussion of the R&D programs at Cytokinetics. With that I’d now like to summarize some of the other things about the Company that are important to you as shareholders, in particular those things that relate to our corporate development, our commercial planning and our financial situation and status.
In 2013 we executed on two key transactions, corporate development deals executed by our business development group. In particular with Astellas last summer we announced a new collaboration around CK-107 and non-neuromuscular indications. Astellas committed over $40 million in a combination of upfront and sponsored research and sponsored developments for activities that are now underway.
In that deal Astellas will be responsible for costs associated with the development of CK-107 whether those are activities conducted by Cytokinetics or Astellas in connection with an agreed development plan. Cytokinetics is responsible for the conduct of the ongoing Phase I study, Astellas will be responsible for Phase II and subsequent studies. Cytokinetics retains an option to conduct certain early stage developments at our own expense as may be also reimbursed if development and as we will now have an opportunity to discuss with Astellas what may be those indications that we can prioritize for potential Phase II.
In this year, not only the Cytokinetics committed capital that I mentioned a moment ago but also is eligible to receive over $450 million in milestone payments based on pre-commercial -- for commercial progress plus escalating royalties. Astellas will have an exclusive right to commercialize products worldwide but subject to Cytokinetics’ option to co-promote products in the U.S. and Canada and Astellas would reimburse Cytokinetics for certain of our expenses associated with those co-promotions and co-commercial activities.
That deal was announced in a period very close to the announcement of our deal expansion with Amgen. As you can see depicted on Slide 40, the Amgen deal that was amended June 2013 where Amgen paid us $25 million to expand the license of Omecamtiv Mecarbil and related compound to include Japan and activities associated with the development of Omecamtiv Mecarbil in Japan.
In total Amgen paid us already over a $115 million between the first announcement of the deal in 2006. We exercised their option in 2009 and more recently in 2013 as well is eligible -- Cytokinetics is eligible to earn over $650 million in milestone payments, the majority of which are pre-commercial. Amgen is responsible for development and commercialization and much like the deal I described with Astellas that subject to Cytokinetics having certain participation rights in matters of development and commercialization and here also we received escalating royalties and we have option to co-promote as we would be reimbursed certain of those sales force cost.
These two deals come together in a very important way. Between the two deals, Cytokinetics is eligible for over $1 billion in milestone payments, over half of that sum based on pre-commercial progress and over the next year Cytokinetics is eligible for more in milestone payments than we expect the net burn. So with that we believe that we have diversified access to capitals and we are eligible for significant payments that should allow us to continue to expand our cash run rate as we progress programs forward.
We’re progressing those programs forward in areas of high unmet need. Here on slide 41, you see data related to the ALS opportunity. ALS while is an open drug market, is not a small market, as you can see both in terms of prevalence numbers and incidence numbers, there are many thousands of patients who need a new medicine like an improved measures of pulmonary strength, pulmonary function and muscle strength. And we believe that Tirasemtiv may be just that compound.
We also believe that the opportunity is trackable for a company like Cytokinetics, even recognizing our limited access to capital and other resources. And as you can see on Slide 42, it’s a very concentrated market opportunity where the majority of patients are treated at centers of excellence and where they are all covered by Medicare reimbursement following a definitive diagnosis. Similarly Omecamtiv Mecarbil addresses the high unmet need in heart failure. Here we’re looking at millions of patients. Here we are looking at also acute and chronic unmet needs, not satisfied by conventional treatments. And here too we see that the hospital base market for heart failure is concentrated, largely driven by Medicare and where a new mechanism compound that could address both the clinical burden as well as the economic burden associated with high readmission could be met with wide enthusiasm on the part of payers as well as clinicians and patients.
Cytokinetics reported on its Q1 financials recently at the end of the first quarter, we had over a 100 million in cash, cash equivalents and investments and that represented approximately 22 months of forward operating cash. That includes $37 million from a February 2014 public offering. How are we spending that money? Here you see the financial guidance this year and provided earlier this year and you can see based on the cash guidance parameters, we expect this year in the way of cash, recognized revenue about $19 million to $21 million complimented by the R&D expenses 50 to 53, and G&A expenses 15 to 17. Importantly these are on a cash basis, maybe not include certain other GAAP related estimates, and also they do not include the potential for the milestone payments that I mentioned a moment ago.
Slide 47 describes our capitalization table. And as you can see here, based on basic shares outstanding at the end of March, approximately 36 million share fully diluted including warrants and stock option plans, about $48 million in total.
So I’d like to end this presentation much like I began. Cytokinetics, your company in 2013 achieved important progress in research and development as well as in corporate development and in managing and being good stewards of capital, all of which comes together to reinforce an outlook that we believe is positive for 2014. We have achieved important clinically relevant effects in Phase 2B be clinical trials, in heart failure and also more recently in ALS. We transacted corporate development deals that manage capital, diversified risk and gave us access to resource from our partners. We believe as such we are managing a portfolio and are positioned well for continued progress in late stage development. With a strong balance sheet and diversified funding sources, and all together with continued commitment, a rededication and a doubling of our efforts to the patients with severe diseases. If you haven’t already, I’ll encourage you both here in the room and also on the webcast to see the webinars that are posted to our web site; webinars that involve ALS experts talking about the BENEFIT-ALS result, webinars that involved patients and disease advocates dosed before the BENEFIT-ALS results were available and also since then, I think we would provide a very important context, so you can understand Cytokinetics’ enthusiasm and rationale relating to Tirasemtiv and BENEFIT-ALS and what may be potential next step as we engage together with experts as well as with regulatory authorities.
And with that I’d like to conclude our presentation and open it out now for questions and answers as they are, as there may be here in the room in South San Francisco.
It looks like we don’t have any questions here amongst the investors gathered. With that I’m going to conclude my comments. I’d like to thank our investors here in attendance and shareholders as well as those who are listening in on our conference call for your continued support of the Company as we push forward and prosecute on our business plans. We look forward to updating you on Cytokinetics’ progress throughout this year 2014.
And with that I’ll turn it back over to Pat Gage, and thank you for your attention today.
Thanks Robert for providing an update on the important progress Cytokinetics has made and continues to make in regard to our portfolio with novel drug candidates with varying performing standards, fully breakthrough mechanisms as well as other important disease matters. 2014 hold promises, another year in which we believe Cytokinetics can execute well in connection with strategic corporate objectives that we believe will translate into increased value across all aspects of our business, both for the benefit of patients and also for shareholders. I want to thank all of you who have participated today in the shareholder meeting. There being no further business, the meeting is now adjourned.
Thank you, this concludes today’s conference call. You may now disconnect.
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: firstname.lastname@example.org. Thank you!