Cytokinetics' (CYTK) CEO Robert Blum on Q4 2015 Results - Earnings Call Transcript

Cytokinetics, Incorporated (NASDAQ:CYTK)

Q4 2015 Earnings Conference Call

February 16, 2016 16:30 ET

Executives

Diane Weiser - Vice President, Corporate Communications and Investor Relations

Robert Blum - President and Chief Executive Officer

Andy Wolff - Senior Vice President and Chief Medical Officer

Sharon Barbari - Executive Vice President, Finance and Chief Financial Officer

Analysts

Joe Pantginis - ROTH Capital Partners

Charles Duncan - Piper Jaffray

Jason Butler - JMP Securities

Ritu Baral - Cowen

Thomas Yip - FBR

George Zavoico - JonesTrading

Operator

Good afternoon and welcome ladies and gentlemen to the Cytokinetics’ Fourth Quarter 2015 Conference Call. At this time, I would like to inform you that this call is being recorded. [Operator Instructions] I will now turn the call over to Diane Weiser, Cytokinetics’ Vice President of Corporate Communications and Investor Relations. Please go ahead.

Diane Weiser

Good afternoon and thank you for joining us on this conference call today. Leading today’s call is Robert Blum, our President and Chief Executive Officer. Following Robert’s initial comments, Andy Wolff, our Senior Vice President and Chief Medical Officer, will provide updates on the clinical development program for omecamtiv mecarbil, our first-in-class cardiac myosin activator, which is being developed for the potential treatment of heart failure and VITALITY-ALS, our ongoing Phase 3 clinical trial of tirasemtiv, our first-in-class fast skeletal muscle troponin activator, which we are developing for the potential treatment of amyotrophic lateral sclerosis, or ALS. Andy will also speak to our recently initiated Phase 2 clinical trial of CK-2127107 or CK-107 in patients with spinal muscular atrophy, or SMA. Andy is doing double duty on today’s call as Fady Malik, our Executive Vice President of Research and Development, is unable to join us today. Sharon Barbari, our Executive Vice President of Finance and Chief Financial Officer, will provide a financial overview for the quarter and year end as well as our financial guidance for 2016. Robert will then provide a corporate update and additional perspective as well as corporate milestones for 2016 before opening the call for questions.

Please note that portions of the following discussions, including our responses to questions contain statements that relate to future events and future performance rather than historical facts and constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements may include statements relating to our financial results and guidance, our strategic initiatives, including Vision 2020, our collaborations with Amgen and Astellas, our and our partners’ research and development activities including the initiation, conduct, design, enrollment, progress, continuation, completion and results of clinical trials were significant in utility of preclinical study and clinical trial results and the properties and potential benefits of our dug candidate. 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 our 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.

And now, I will turn the call over to Robert.

Robert Blum

Thank you, Diane and thank you to everyone on the line for joining us for this call today. We are pleased to have ended 2015 strong, with a strong fourth quarter that positioned us well now in 2016 as our clinical programs advance in late stage development. This momentum fortifies a foundation for our 5-year strategic initiative, Vision 2020, empowering our future. Vision 2020 is designed first to deepen and expand our pipeline, and second, to advance our portfolio of muscle biology-directed drug candidates towards late stage development and potential commercialization.

The key components of our roadmap for the next 5 years are to progress proprietary research programs focused on muscle contractility, growth and energetics into development under new collaborations; advance next generation skeletal and cardiac muscle activator compounds into clinical development by leveraging existing research collaborations; conduct late stage clinical development of novel first-in-class muscle activators for the potential treatment of ALS, SMA, heart failure and other diseases impacting muscle function; continue to collaborate with patient communities to support the urgent development of new medicines for diseases of impaired muscle function with pressing unmet medical needs; and finally, to mature our company operations to enable development, registration and commercialization of muscle biology drug candidates across North America and Europe.

We made tremendous progress on this strategic roadmap in the fourth quarter, most notably in our clinical development programs. As you may know, a little over a week after our top line announcement of the results from the expansion phase of COSMIC-HF, our Phase 2 clinical trial of omecamtiv mecarbil in patients with heart failure, the trial’s lead investigator, John Teerlink was invited to present the findings at a late breaking clinical trial session at the American Heart Association Meeting. We held a special investor event at the AHA meeting and Andy will elaborate on both the positive results as well as some insightful KOL commentary in a moment.

In the fourth quarter, we also made progress activating North American sites and enrolling patients in VITALITY-ALS, our Phase 3 critical trial of tirasemtiv. Andy will speak to recent progress in VITALITY-ALS and will also comment on a protocol amendment we recently filed, which is intended to increase the trial’s statistical power to detect the change in our primary endpoint as well as in key secondary endpoints, most of which are related to respiratory function.

As we recently announced, we also have started the first Phase 2 clinical trial of CK-107 for the potential treatment of SMA, an orphan hereditary disease most often diagnosed in infants and young children and for which there are no current therapies. There is great interest in the trial within the community and we have received a significant number of inquiries from patients and their caregivers with regard to potential participation in this trial that’s very humbling to us. Andy will provide further details on both the tirasemtiv and CK-107 development programs.

And finally, during the quarter, we made progress on our joint research program with Amgen directed to the discovery of next-generation cardiac sarcomere activators. And in addition, we continue to make progress into our joint research program with Astellas directed to the discovery of next-generation skeletal muscle activators.

Let me now turn the call over to Andy so that he can elaborate on the progress with each of our clinical stage programs from this quarter.

Andy Wolff

Thank you, Robert. As Robert mentioned and as I trust you all have seen, during the fourth quarter, we announced the presentation of results from the expansion phase of COSMIC-HF at the American Heart Association Meeting in November. This opportunity came within weeks after our top line results were announced and we believe reflected the enthusiasm with which the results have been received by the cardiology community. I think many of you had the opportunity to attend or listen to the investor meeting and webcast we held to review the data following Dr. John Teerlink’s presentation at the conference, but I will recap some key findings and highlight some of the perspectives offered by the COSMIC-HF executive committee as well as provide you with an update on potential next steps.

As a quick reminder, the expansion phase of COSMIC-HF was designed to evaluate the pharmacokinetics, pharmacodynamics, safety and tolerability of omecamtiv mecarbil administered orally to approximately 450 patients with chronic heart failure and left ventricular systolic dysfunction. Patients were randomized 1:1:1 to receive either placebo or treatment with omecamtiv mecarbil at a fixed dose of 25 milligrams twice daily or in the pharmacokinetics, or PK-guided dose titration group, 25 milligrams twice daily, which could be increased to 50 milligrams twice daily depending on the plasma concentration of omecamtiv mecarbil after 2 weeks of treatment with the 25 milligram twice daily dose.

The primary objective of the expansion phase was to characterize the pharmacokinetics of oral omecamtiv mecarbil during 20 weeks of treatment. Prior to COSMIC-HF, the effects of omecamtiv on cardiac function, has been studied for only up to a week. The secondary objectives included evaluation of safety, tolerability, echocardiographic measures of cardiac function, heart rate and N-terminal-pro-brain natriuretic peptide, or NT-proBNP, which is the biomarker associated with the severity of heart failure during the 20 weeks of treatment. Approximately 100 sites in 13 countries participated in one or both phases of COSMIC-HF.

COSMIC-HF met its primary pharmacokinetic objective in that exposure to omecamtiv mecarbil was in the desired range of plasma concentration at all time points. Approximately 60% of patients in the dose titration group did escalate to 50 milligrams twice daily. Importantly, there were statistically significant improvements in all three specified secondary measures of cardiac function, as well as in heart rate and in NT-proBNP in the PK-guided dose titration group. Systolic ejection time, the pharmacodynamic signature of omecamtiv mecarbil increased and was accompanied by an increase in stroke volume. Both measures reflect an increase in systolic or contractile function of the heart, as was further evidenced by observed increases in fractional shortening and ejection fraction.

What was most important and especially exciting to us were the effects we saw on cardiac dimensions and volumes. As we have reported, there were statistically significant reductions in left ventricular end-systolic and end-diastolic dimensions and volumes in the dose titration group. Essentially, in patients treated with omecamtiv mecarbil, the pumping chamber of the heart, the left ventricle got smaller. As you may know, typically with systolic heart failure, the heart grows larger to compensate for poor contractile function. What we saw in COSMIC-HF was that an improvement in contractile function may have contributed to reversals in this enlargement, referred to as reversed remodeling. So the heart is functioning better, pumping more blood per beat and starting to get smaller. Additionally, we found that heart rate in COSMIC-HF decreased significantly in the dose titration group, as did measured levels of the neurohormone NT-proBNP in both groups receiving omecamtiv mecarbil, something not observed in prior studies of omecamtiv mecarbil that employed shorter term dosing.

Adverse events, including serious adverse events, in patients on omecamtiv mecarbil appeared comparable to those on placebo, a small increase in troponin was seen among patients receiving omecamtiv mecarbil. Increases in troponin were independently adjudicated and none were determined to be due to clinical events of myocardial ischemia or infarction. There was no difference in death and cardiac adverse events were similar between placebo and the active treatment groups. We are very pleased to see the consistency of results across all of these metrics. Observing these changes, sustained over 20 weeks of chronic oral therapy, was extremely gratifying and support of the therapeutic hypotheses that we have pursued for over 15 years in this program, namely that directly and specifically improving cardiac systolic function with the cardiac myosin activator can have potentially favorable pharmacodynamic effects during longer term treatment of patients with systolic heart failure. However, its effects on long-term morbidity and mortality remain unknown and an outcomes trial is necessary to address these key questions.

As mentioned, we convened an investor meeting during the AHA Scientific session, including members from the COSMIC-HF executive committee. They were asked to comment on the predictive value of these pharmacodynamic markers on clinical outcomes. What we heard was that the consistency of results we observed has been rarely seen in Phase 2 clinical trials in heart failure and that the impact of omecamtiv mecarbil on cardiac function, in particular the reduction in cardiac volumes and drop in the NT-proBNP has been associated with improved outcomes in studies of other drugs and devices in patients with heart failure. They felt these findings were supportive of studying omecamtiv mecarbil in a Phase 3 outcomes trial.

Towards that end, we worked closely with Amgen during the fourth quarter on a number of collaborative activities in the areas of clinical development, regulatory affairs, manufacturing and market research. On the clinical front, we recently conducted another Phase 1 study in Japan and are moving swiftly to start a Phase 2 trial of omecamtiv mecarbil in Japan so that we can hopefully include Japan in a potential Phase 3 clinical program. In addition, we have finalized key elements of the draft Phase 3 protocol to support ongoing regulatory interactions. We are now in the midst of those end of Phase 2 meetings, which have been scheduled to occur with the FDA, EMA and other regulatory authorities in this first quarter of 2016. Preliminary feedback has been positive and supportive of our potentially advancing to Phase 3 later this year. We anticipate making a decision together with Amgen regarding the potential advancement of omecamtiv mecarbil to Phase 3, following consideration of regulatory feedback in the next few months.

With that update on our cardiac program, I will turn to an update on our skeletal muscle activator programs. During the quarter, we made progress on North American clinical trial site activations and patient enrollments into VITALITY-ALS, our Phase 3 clinical trial designed to assess the effects of tirasemtiv versus placebo on slow vital capacity or SVC and other measures of skeletal muscle strength including other measures of respiratory function in patients with ALS. We now have activated more than half of all planned sites and will now be focusing attention this quarter on activating our remaining sites. With over 200 patients currently enrolled, we remain on track to complete enrollment in the first half of 2016 with data anticipated in the third quarter of 2017.

Importantly, we believe the increase in the duration of the open label phase from one week in BENEFIT-ALS to two weeks in VITALITY-ALS, along with a longer, slower, dose titration steps following randomization to one of the three target dose levels of tirasemtiv in VITALITY-ALS, have together served to reduce the number of post-randomization dropouts in VITALITY-ALS compared to the number of early terminations we observed in BENEFIT-ALS. Also, we recently amended the protocol for VITALITY-ALS to increase the number of enrolled patients from approximately 445 to approximately 600. The increased number of patients enrolled will increase our statistical power from 80% to 90%, to detect a difference between tirasemtiv and placebo of six percentage points in the primary endpoint, which is the change from baseline to 24 weeks in SVC.

You may recall that 6 percentage points was the magnitude of effect seen in BENEFIT-ALS after only 12 weeks of double blind treatment. In addition, you may recall that the curves describing the decline over time in SVC on tirasemtiv versus placebo continued to diverge throughout the 12 weeks of double-blind treatment in BENEFIT-ALS. Consequently, in VITALITY-ALS, these curves may continue to diverge from 12 weeks to 24 weeks, which could result in a difference between tirasemtiv and placebo in the change in SVC from baseline to 24 weeks of approximately 12 percentage points. By implementing the protocol amendment, VITALITY-ALS will have well over 90% power to detect the treatment difference of that magnitude. Finally, regarding tirasemtiv, at the sixth annual California ALS Research Summit, Cytokinetics in collaboration with Knopp Biosciences, presented exploratory analyses of data from patients with ALS complying from three different sources; First, the placebo data from MPower, the Phase 3 clinical trial of dexpramipexole in patients with ALS. Second, the placebo data from Cytokinetics Phase 2b study of tirasemtiv in patients with ALS BENEFIT-ALS.

And finally, the Open Assess Pro Access database, this combined database included multiple observations of SVC over time from well over 900 patients with ALS. The average rate of decline of SVC was remarkably consistent across, the three databases and over time, declining linearly at approximately 0.9 percentage points per day for up to 68 weeks. Also, in this combined database, the standard deviation about the change from baseline to 24 weeks in SVC was 17 percentage points, which is exactly the value we assumed when we calculated the sample sites for VITALITY-ALS. Finally, our analyses of this combined database demonstrated that a reduction in this average rate of decline in SVC from 0.09 to 0.04 percentage points per day, which is consistent with the reduction in the average rate of decline in SVC that we observed over 12 weeks of treatment with tirasemtiv in BENEFIT-ALS, predicts a reduction in the risk of clinically meaningful events, including a 19% reduction in the risk of a decline in any one of the three respiratory questions of the ALSFRS-R, as well as a 22% reduction in the risk, in the time, the first occurrence of respiratory insufficiency or death and a 23% reduction in the risk of the first occurrence of tracheostomy or death. These analyses were in support for our design of our ongoing Phase 3 trial of tirasemtiv VITALITY-ALS, which will also assess the effects on these endpoints. In parallel, we also engaged in manufacturing, commercial planning and advocacy related activities this quarter in support of VITALITY-ALS and tirasemtiv.

Turning to the development of CK-107, our next-generation skeletal muscle troponin activator, partnering with Astellas, we are excited to have started our first Phase 2 critical trial in patients with spinal muscular atrophy, or SMA, earlier this year. As you may know, SMA is another dire disease in great need of new therapies to address progressive functional limitations. We believe CK-107 has the potential to improve muscle function in the adolescent and adult patients with SMA that we are enrolling in our now ongoing clinical trial. And if CK-107 is approved, it could be used alone or in combination with other gene-directed therapeutic approaches being investigated.

There has been a strong interest in our trial as we have received numerous inquiries about it from people living with SMA and their families. The primary objective of our double-blind randomized placebo-controlled clinical trial is to determine the potential pharmacodynamic effects of CK-107 following multiple oral doses in patients with type 2, type 3 or type 4 SMA. Secondary objectives are to evaluate the safety, tolerability and pharmacokinetics of CK-107.

As outlined in our press release, the trial is planned to enroll 72 patients in two sequential dose cohorts, in other words, two cohorts of 36 patients each, half of them ambulatory and half of them non-ambulatory. The first group of 18 ambulatory patients will be either type 3 or type 4 and the 18 non-ambulatory patients, who will all be either type 2 or type 3, will receive 150 milligrams of CK-107 versus placebo. The second group of 18 ambulatory and 18 non-ambulatory patients will receive 450 milligrams of CK-107 or a lower dose based on an interim review of the data between cohorts. Each cohort will receive CK-107 or placebo dose twice daily for 8 weeks. Multiple assessments of skeletal muscle function and fatigability are performed in this hypothesis-generating trial, including respiratory assessments, upper limb strength and functionality for non-ambulatory patients as well as a 6-minute walk test and a timed up and go test for ambulatory patients.

We expect this trial to be one of several Phase 2 clinical trials to be conducted in collaboration with Astellas in neuromuscular and non-neuromuscular disorders over the course of this year. The second, to be conducted by Astellas, will study CK-107 in patients with chronic obstructive pulmonary disease, or COPD and is expected to be underway in the first half of 2016. The goal of the trial is to evaluate the potential of CK-107 to increase measures of exercise, function and time to muscle fatigue. This study will assess cardiopulmonary and neuromuscular effect, safety and tolerability, as well as the pharmacokinetics of CK-107. More information is posted on www.clinicaltrials.gov and we will have more to say about it once it starts in the next few months.

With that update on our plans for our skeletal muscle program, I will now turn the call over to Sharon for an update on our financials.

Sharon Barbari

Thank you, Andy. As our press release contains detailed financial results for the fourth quarter of 2015, I will refer you to that public statement for the details on our P&L and balance sheet. We ended the fourth quarter with approximately $111.6 million in cash, cash equivalents and investments, which represents at the end of 2015 over 17 months of going forward net cash burn based on our 2016 revenue and expense guidance that we announced today. Our guidance includes our current estimated cost of VITALITY-ALS for tirasemtiv in 2016 and ‘17. In addition, we also recently announced that we drew down the second $15 million tranche from our growth capital loan with Oxford Financial and Silicon Valley Bank. This additional $15 million gives us approximately 3 to 4 months of additional cash runway in 2016 and ‘17.

Revenues for the fourth quarter of 2015 were $9.8 million compared to $21.8 million during the same period in 2014, which included a $15 million milestone payment from Astellas. Revenues for the fourth quarter of 2015 included $5.1 million of license revenues, $4 million of research and development revenues from our collaboration with Astellas, and $0.6 million in research and development revenues from our collaboration with Amgen. Revenues for the same period in 2014 included $2.3 million of license revenues and $3.3 million of research and development revenues and a $15 million in milestone revenues from our collaboration with Astellas, in addition, $1.1 million of research and development revenues from our collaboration with Amgen and $0.1 million in milestone revenues from our collaboration with MyoKardia.

Our fourth quarter 2015 R&D expenditures totaled $13.2 million. From a program perspective, for the fourth quarter, approximately 83% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, which include both expenses associated with tirasemtiv and CK-107, 10% to our cardiac muscle contractility activities and 7% to our other research activities.

Revenues for the 12 months ended December 31, 2015 was $28.7 million compared to $46.9 million during the same period in 2014. Revenues for the 12 months ended December 31, 2015 included $13.9 million of license revenues, $12.2 million of research and development revenues from our collaboration with Astellas, and $2.5 million in research and development revenues from our collaboration from Amgen. Revenues for the same period in 2014 included $9.8 million of license revenues, $15.4 million of research and development revenue, and $17 million in milestone revenue from our collaboration with Astellas, $4.5 million of research and development revenues from our collaboration with Amgen and $0.1 million in milestone revenue from our collaboration with MyoKardia.

For the 12 months ended December 31, 2015, R&D expenditures totaled $46.4 million. From a program perspective, for the 12 months ended December 31, 2015, approximately 78% of our R&D expenses were attributable to our skeletal muscle contractility research and development activities, which include both expenses associated with tirasemtiv and CK-107, 12% to our cardiac muscle contractility activities and 10% to our other research activities.

Today, we also announced our financial guidance for 2016. The company anticipates cash revenue will be in the range of $13 million to $16 million. Cash R&D expenses will be in the range of $67 million to $70 million. And cash G&A expenses will be in the range of $21 million to $24 million. This cash guidance excludes $20.5 million in license revenue, which was received in 2015 and will be earned and recognized over the remaining term of the Astellas development plans in 2016 under Generally Accepted Accounting Principle as well as any potential milestones that maybe achieved in accordance with our collaboration agreement with our partners, Amgen and Astellas. In addition, this guidance excludes an estimated $4.5 million in non-cash-related operating expenses, primarily related to stock compensation expense. In 2015, we put in place both an ATM and a growth capital loan to provide us with financial flexibility to fund operations through 2016 and prepare for data for VITALITY-ALS next year. That concludes the financial portion of today’s call.

With that, I will turn the call back over to Robert.

Robert Blum

Thank you, Sharon. 2015 was indeed a transformational year for Cytokinetics. And as you have heard, we start 2016 strong with momentum across our three muscle biology-directed development programs. As we recently outlined in our Vision 2020 strategic initiative, over the next 5 years, our goal is to expand our portfolio of novel muscle activators and mature operations to commercial readiness for a multiple first-in-class compound directed to the potential treatment of people living with diseases of impaired muscle function. Ending 2015 strong establishes a firm foundation for our vision and 2016 will be an important and exciting year for of execution against that strategic roadmap.

The results from COSMIC-HF exceeded our expectations and provide what we believe as your leading heart failure KOLs with whom we and Amgen have consulted a compelling case to proceed to Phase 3. As mentioned, we are in the midst of ongoing interactions with regulatory authorities. The feedback to-date is encouraging. We expect a decision regarding the potential advancement of omecamtiv mecarbil into a Phase 3 clinical development program in the next few months. And in the meantime, we are making preparations for the start of a Phase 3 program. We are pleased that VITALITY-ALS site activation and enrollment are proceeding well and we look forward to completing enrollment in this Phase 3 trial of tirasemtiv in the first half of 2016.

Our increased confidence in the safety and tolerability of tirasemtiv, together with analysis of data regarding SVC and correlation to downstream clinical interventions, both together contributed to our recent decision to file the protocol amendment to increase the targeted enrollment and therefore the statistical power of the trial. On the CK-107 front, I want to commend our clinical operations team for their diligence to initiate our first Phase 2 clinical trial in people with SMA. We have received a significant number of inquiries from people living with SMA and their families who are interested in this clinical trial. Each of these interactions reminds us of how important our work is and how much patients with SMA need new medicines to treat impaired muscle function. Towards that end, we also announced an expanded partnership with Cure SMA to increase education, awareness and fundraising for SMA. As a national gold partner, Cytokinetics lends support to key national and local initiatives to advance the understanding of and research towards potential treatments for SMA.

During the recent quarter, we also continued research activities under our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activators as well as under our joint research program with Astellas directed to the discovery of next-generation skeletal muscle activators. As previously reported, together with Astellas, we have selected a skeletal muscle activator candidate and anticipate initiating preclinical development in 2016. Additionally, we expect to identify a next-generation cardiac muscle activator with Amgen, which may also move into preclinical development during the current calendar year. And finally, across our several clinical development programs, we remain committed to the urgency to bring new medicines to people battling devastating diseases of impaired muscle function, many of whom will face progressive loss of that muscle function. This quarter, members of our team continued to work closely with our colleagues in the ALS advocacy community to help draft and advance guidelines that may accelerate drug development and regulatory approvals of potential medicines for ALS.

And with that, I will now turn to our expected milestones for 2016. For omecamtiv mecarbil, we expect to make a decision regarding the potential advancement to Phase 3 in the next few months. For tirasemtiv, we expect to complete enrollment of VITALITY-ALS in the first half of 2016. For CK-107, we expect to complete enrollment of the Phase 2 clinical trial in patients with SMA in the second half of 2016 and we also expect Astellas will initiate a Phase 2 clinical trial of CK-107 in patients with COPD in the first half of 2016. And for our preclinical research, we expect to continue research activities under our joint research program with Amgen directed to the discovery of next-generation cardiac muscle activator and as well under our joint research program with Astellas, directed to the discovery of next-generation skeletal muscle activators. Under our collaboration, we expect to advance two next-generation compounds in preclinical development in 2016. All-in-all, a busy year ahead and one that we hope will again produce significant progress for Cytokinetics and to the benefit of all of our stakeholders.

Operator that concludes the formal portion of our call today, I would now like to open the call up to questions, please.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Joe Pantginis with ROTH Capital Partners.

Robert Blum

Good afternoon Joe.

Joe Pantginis

Good afternoon. Hi all. Thanks for taking the question and obviously congratulations on all the progress you made in 2015. Regarding the tirasemtiv news today, if increasing enrollment, I guess I will cut to the chase first of what I see is one of the conclusions. Based on Andy’s comments, it doesn’t appear that they are going to be any impact on the timelines, which I think is very encouraging and that you are obviously or at least my opinion, seeing very high demand for enrollment into this study?

Robert Blum

I think you are correct. We are sticking with the timeline for completion of enrollment in the first half of the year, even as we are increasing the target enrollment, somewhat substantially, as Andy outlined. I think what you can draw from that is as we emphasize, it’s partly because we believe that the safety and tolerability of tirasemtiv as evidenced already in this study, appears to favor this design. And based on analyses we have done, we think it’s prudent for us to be increasing the target enrollment in order to be able to enhance the statistical power for the primary efficacy endpoint, as well as secondary endpoints. That’s in part also a function of our increased confidence in our outlook, which is attributed also to our feelings about omecamtiv mecarbil and the potential advancement of omecamtiv mecarbil to Phase 3.

Joe Pantginis

Sure. And I guess with regard to the amendment, have you received feedback yet. And then also, I guess can you sort of paint a picture of what the drivers were and I think you did a good job in the call, but I wanted to see if you can expand the drivers were to increase the enrollment, obviously you increased the power, as you said, but how much of the PRO-ACT database as well as the data that you described fit into being able to make this decision?

Robert Blum

So I will start and maybe then turn it over to Andy. Firstly, you asked if we have received feedback and we have communicated these changes to the sites and also to regulatory authorities and the feedback has been positive. We don’t expect that this will be at all an issue. In fact, it’s being embraced. Secondly, you asked about the motivations behind it. Andy can elaborate on the statistical power, but I will say that this was already decisions we are making even before we had conducted the analyses associated with the EMPOWER study.

Andy Wolff

Yes. I don’t think those analyses really had much bearing on it. I will say, it certainly was encouraging to see the data from that combined database confirm the assumption of 17 percentage points as the standard deviation about the change from baseline to 24 weeks in slow vital capacity. We took that number from BENEFIT-ALS and we had to extrapolate because that study only went out to 12 weeks, of course. So we extrapolated from 12 to 24, came up with 17. And then as you now know, have confirmed it with a much larger database, the three of which are all very consistent one with the other. I think I may turn it back to Robert. I think we would have always liked to have had 90% power, but I think recent developments in other programs made us feel that we could finally now decide to apply the resources to doing that.

Robert Blum

I think that’s right. I mean, this has always a question of how you invest in programs when you are moving multiple programs forward in parallel. And as this may hopefully serve as a pivotal study for tirasemtiv, better to have 90% power, if that’s something that is affordable. And that’s what we decided in making this recommendation in protocol amendment.

Joe Pantginis

That’s very helpful. Thank you. And I guess, if I may just quickly with omecamtiv, it was very encouraging to hear that you are already in ongoing discussions with regulatory authorities. I guess would you be able to provide anymore detail regarding what potential outstanding questions or issues might be. And then the broader question that applies to both tirasemtiv and omecamtiv mecarbil would be, would you look to seek breakthrough designation for these drugs since they are very novel from a disease modifying standpoint and can impact patient populations quite significantly if they reach the market?

Robert Blum

Yes. So we won’t be able to comment on specific discussions and interactions we are having regulatory authorities. Otherwise, we can speak more in general tone, which is to say that when you engage with the FDA at the end of Phase 2 interactions, you post specific questions. Those questions then prompt answers and a dialogue. With regard to EMA, it’s a slightly different process as you may know where you see protocol assistance and scientific advice. With regard to our regulatory interactions, we have in this quarter interactions with FDA, EMA and other regulatory authorities. And we are together with Amgen discussing a plan for a Phase 3 program that contemplates a specific protocol and you get an opportunity to discuss the inclusion and exclusion criteria, the endpoints, as well as other specifics regarding the protocol or protocols as well as other issues around CMC and non-clinical activities. So, it’s different for FDA and EMA in terms of how those conversations go. And what I can reiterate is those are all planned to occur this quarter. Some have already occurred. And as we and Amgen are going through these together, we are encouraged by already by what has transpired. I don’t think I can do much better than that. With regard to breakthrough designation, that’s something that we will contemplate, it’s not something that we have determined.

Joe Pantginis

Great. Thanks so much for the information.

Robert Blum

Thank you.

Operator

Our next question is from the line of Charles Duncan with Piper Jaffray.

Robert Blum

Hi, Charles.

Charles Duncan

Hi, guys. Thanks for taking the question and congrats on the progress in the last year. I think maybe you have answered my questions, but I want to take a stab at it anyway. I know that you have ongoing discussions regarding omecamtiv, but you mentioned explicitly being encouraged by the way things were going. And can you point to any one thing or group of things such as the size of the trial that’s being contemplated in terms of sample size or the duration of dosing or endpoints that you find encouraging at this point?

Robert Blum

Yes. We have already discussed publicly how we are looking at a potential Phase 3 program that would enroll thousands of patients and which would be event driven and which would be pivoting around a primary endpoint that could include that in hospital readmission with secondary endpoints that would flow from there. And as such, while we can’t speak specifically about our own plans together with Amgen, what we have been able to do is share with you and others that we believe that studies like the PARADIGM-HF study, the other study are ones that create some markers or bookends around which we and Amgen are discussing with regulatory authorities, possibilities that maybe appropriate for omecamtiv mecarbil. So, I think that’s still the best information I could provide. Certainly, we have our own feeling that we are discussing with regulatory authorities about where we may lie in that space and that’s what in particular the meetings are set up to discuss.

Charles Duncan

And with the completion of the meetings, would you be able to articulate a plan in terms of the protocol and do you anticipate that happening by say the middle of this year?

Robert Blum

Yes, I think that seems reasonable. I expect that we will be making a decision following the conclusion of these regular interactions, that’s something that we and Amgen would be making together and that would proceed the plan to still hopefully begin a Phase 3 program before the end of the year.

Charles Duncan

Okay. And then just one question on tirasemtiv, I like expanding the size of the trial, because it does feel or seem like there is less risk. But I guess I am wondering is there any new variable, I think you kind of answered this with Joe’s question, but was it primarily driven by your ability to invest in this program or some new clinical observation or analyses that were done and why is this different than when you initially started the study?

Robert Blum

So, I will turn it to Andy to answer in part, but I will start by saying it was partially a function of our ability to invest in the program and do so with more confidence. That’s something we always would have wanted to do. Now, we go from 80% power to 90% power and that’s informed by other analyses, but it’s also informed by feedback we are receiving from the size and in particular with regard to enrollment rate and the design of the study, the study design seemingly to meet expectations in terms of being able to hopefully elucidate and improve safety and tolerability profile.

Andy Wolff

Yes, I mean, I think there is no particular analysis that was done. It would always have been better to have had 90% power for the primary endpoint of a Phase 3 study. And again, I think this maybe the third time one of us has said it, we always would have preferred that, but we didn’t feel that we really could make the investment of those resources until more recently. And well, I wouldn’t say it was necessarily part of our thinking, I do think that seeing far fewer post-randomization premature terminations with this design than we have this benefit is also encouraging and supports enlarging the trial without taking a risk of missing timelines.

Charles Duncan

Okay, that’s helpful. Thanks for the added color.

Operator

Our next question is from the line of Jason Butler with JMP Securities.

Jason Butler

Hi, thanks for taking the question and let me add my congratulations on the progress. Just wanted to I guess ask same question in a different way Andy’s last comment there. You said that the essentially the dropout rate in the early stages of the trial has been much lower than you saw in BENEFIT-ALS. Is it in line with what you predicted when you designed the trial?

Andy Wolff

Well, when we designed the trial, we very conservatively assumed that the longer open label treatment period, the slower dose titration and targeting three different dose levels, not trying to get everybody up to 500 would have no effect on the dropout rate. That’s not what we believed. We thought it would and it proves to have had a good effect on the dropout rate. But just in terms of the assumptions we made, we assumed that there would be no improvement, because that was the most conservative thing we can do. But in fact, as the trial has progressed, we are seeing I think meaningfully fewer dropouts post-randomization. It’s important to know though that with patients now supposed to be in the study for over a year that just the length of the trial alone is going to probably cause dropouts to pickup a bit as we get further and further into the trial.

Robert Blum

As a function of disease progression.

Jason Butler

Okay. And then just thinking it’s likely too early to make any comments around the standard deviation you are seeing around the primary endpoint. But do you have an opportunity at any point during the trial to make a further protocol amendment based on, for example, futility analysis?

Andy Wolff

Not for that reason, but it’s always possible without taking an alpha penalty to look at the aggregate standard deviation and we generally do that. So, if we had found that we had seriously mis-underestimated the actual standard deviation, there is always an opportunity to address that. I don’t think – I am optimistic that will not happen, however.

Robert Blum

Yes, I will also remind you that also in the interest of being conservative, we estimated an effect size at 24 weeks, which was no different than the one we observed in BENEFIT-ALS at 12 weeks, 6 percentage points in the change from baseline in SVC, even though the effect size was growing from week 4 to week 8 to week 12 in BENEFIT-ALS. So, we may now have well over 90% power to detect that difference at 24 weeks if the standard deviation holds true to what we estimated.

Jason Butler

Great, helpful. And then just a quick question on CK-107 and the trial you are going to start in COPD, can you give us any more color you had around trial design and what measures of success will be for that study?

Robert Blum

Much like the SMA study, this is hypothesis generating. And in fact, there is quite a lot of detail available on the clinicaltrials.gov website pertaining to CK-107. Being that that study has not yet started, we have chosen not to elaborate on this earnings call, but that information is out there.

Jason Butler

Great. Thanks for taking my questions.

Robert Blum

Thank you.

Operator

Our next question is from the line of Ritu Baral from Cowen.

Robert Blum

Hi Ritu.

Operator

Ritu, your line is open.

Ritu Baral

Thank you for taking the question. Just going back to the omecamtiv mecarbil Phase 3 program again, I know you mentioned that there are good precedents out there for Phase 3 heart failure programs, but given the unique mechanism of omecamtiv, is there any I guess subtleties to either see outcomes endpoints or particular secondary endpoints that might be part of the trial, especially ones that could have importance for commercial aspects of the drug?

Robert Blum

It’s a good question, but unfortunately Ritu maybe a bit premature for us to respond to that. I think that may have to wait until we have finalized a study design that we then can communicate publicly.

Ritu Baral

Got it. And did I hear correctly, you are going to be doing a Japanese Phase 2 for omecamtiv?

Robert Blum

Yes. So recently, Amgen in collaboration with Cytokinetics conducted another Phase 2 study of omecamtiv mecarbil in Japan, in Japanese patients and now we are moving swiftly to begin a Phase 2 study of omecamtiv again in Japan in Japanese patients, with the goal of having that completed in such a way that Japan could be included in the potential global Phase 3 program.

Ritu Baral

So not something along the lines of ATOMIC or COSMIC?

Robert Blum

Correct. I mean it’s similar and that it will be in heart failure patients, but not something of that magnitude nor would it be expected to be rate limiting to the potential start of a Phase 3 program.

Ritu Baral

Got it. Okay, that’s helpful. And I have one follow-up just as far as 107 and SMA, given how noisy I guess the early Phase 1, Phase 2 data from tirasemtiv and ALS was when it was first emerging years ago, how should we be looking at the Phase 2 data as it emerges in SMA, the compounds are related, do you expect sort of similar variability or do you think it could be cleaner or less clean because of the disease in question?

Andy Wolff

Well, it’s really hard to know when you going into a new population what you are going to find. But I will point out that this is a study of eight weeks duration. And you may recall, the first Phase 2 in ALS was actually a single dose study. So there will be multiple evaluations of these various functional endpoints over time. So I would hope that this study will yield reasonably robust results and inform whether or not we should further develop a drug for young adults and older children with SMA.

Robert Blum

Another way to think about this Ritu is that this is a population of adolescents and adults with SMA, who may not be progressing as rapidly as ALS patients do and therefore it’s conceivable that we may potentially identify endpoints that could even point to the potential to improve muscle function, as well as potentially slow the decline in muscle function. And that’s things that we will be monitoring over the course of this two-month duration treatment.

Andy Wolff

Yes. I think that’s an extremely important point that Robert just made. The fact that we have a much more stable disease platform in SMA because they just don’t progress monthly, as we saw and that alone makes it difficult to see drug effects in ALS because the best anybody has ever been able to do it to keep them from getting worse a little bit more slowly, I didn’t say that right, but you can only make them get worse more slowly, no one has been really able to improve them whereas in SMA we actually might be able to see some improvements from baseline.

Ritu Baral

Got it. And one last question, if I may. As you and Amgen look at second generation omecamtiv candidates, what are you looking to improve or what is the most important part of the therapeutic profile to improve in the second-gen program?

Robert Blum

So I first might add that we are talking about next-generation cardiac sarcomere activators, but not necessarily operating by the same mechanism of action of cardiac myosin activation as does omecamtiv mecarbil. And then secondly, certainly as we have learned about omecamtiv mecarbil, there could be an opportunity to affect systolic ejection time in such a way that it may not impinge on diastolic filling to the same degree or with the same therapeutic window, so those are the kinds of things that you always look for in the next-generation compound whether it’s the same mechanism or not.

Ritu Baral

Great. Thanks for taking my questions guys.

Robert Blum

Thank you.

Operator

Our next question is from the line of Vernon Bernardino from FBR.

Robert Blum

Hi Vernon.

Thomas Yip

Hello everyone. Hi Rob, this is actually Thomas Yip asking couple of questions for Vernon. Vernon sends his regards. Perhaps I will continue the dialogue for 107. We already see the challenges on clinicaltrials.gov and I do see a different dosing scheme for your COPD trial compared to SMA trial, can you perhaps talk a little bit about what is dosing rationale for the COPD trial?

Andy Wolff

The COPD patients are a little older and more functional than SMA patients and so we didn’t feel it was necessary to study first the lower dose level and then a higher dose level, but could just go in with the single dose level in the study.

Thomas Yip

Sure. And I do see so as dosing for 14 days and then watch out 14 days and then switch to either placebo or drug for 14 days, so is this designed does this mirror another trial or what exactly are the rationale?

Andy Wolff

Well, the rationale is that the drug has acute effects on fast skeletal muscle performance. We have seen this with tirasemtiv as well. It doesn’t take time for it to build up. I mean, the effects happen immediately. So if there is an improvement in the skeletal muscles of these patients with COPD and I am going to come back to that in a second, it ought to be discernible within a relatively short treatment period. And then again, they also have a very stable platform of disease, so it’s not likely that patients who received placebo first and then drug second are going to be very different when they get the drug and vice versa. They are pretty stable over time. So the other question you haven’t asked, but I will answer anyway because I anticipate someone may is, this is not about improving respiratory performance in these patients, the disease is associated with significant limb muscle abnormalities, metabolic abnormalities and weakness, and also something that’s sort of fortunate for this particular compound, a switch from slow to fast fiber predominance. And there is a lot of literature you can find that shows that the exercise intolerance with COPD patients is at least as much, if not more so, related to their limb muscle dysfunction than it is to their respiratory insufficiency. So that’s the rationale for going into that population.

Thomas Yip

Great. Thanks for added color. I guess just one final follow-up perhaps for Sharon, does COPD trial trigger any milestones from Astellas?

Sharon Barbari

We can’t. We don’t comment on what the triggers are related to milestones. We do anticipate milestones from both Amgen and Astellas in the coming year, but I can’t tell you what the triggers are.

Thomas Yip

Okay, got it. Thank you for taking my questions. Again and looking forward to another great quarter.

Robert Blum

Thank you very much.

Operator

And our next question is from the line of George Zavoico with JonesTrading.

Robert Blum

Hi George.

George Zavoico

Hi Robert. Hi everyone. Good quarter, good progress. Thank you for defining it all on your call. I have a couple of fairly quick questions. You are talking about the increased number of patients in VITALITY. What is going to be, if you could comment on it, what is going to be the increased cost and what was the original cost or the smaller drop?

Sharon Barbari

We typically don’t provide guidance with respect to the specific cost of the trial. We can tell you that this would be in the range of $5 million to $10 million from an increased standpoint of adding the additional patients.

George Zavoico

Okay, thanks for that. And it sounds like you are saying that you always wanted the 90%. It sounds like based on your very conservative estimates, Andy, that you were talking about the assumptions for what, how you first calculated the powering. It sounds like at 80%, was that kind of conservative powering you were already fairly confident in a successful outcome. Now, this is sort of a super powering in a way, isn’t it?

Andy Wolff

I wouldn’t disagree with that. I mean, I think the likelihood is, but we just can’t know until we have the data that those curves that we have showed you so many times for the changes over time in slow vital capacity on tirasemtiv versus placebo are going to continue to diverge over time and it was a very conservative assumption that the 6 percentage points difference that evolves over 12 weeks of treatment in benefit would not evolve further. So yes, we maybe highly overpowered to see the primary endpoint, but that’s not a bad thing.

George Zavoico

It’s definitely not a bad thing considering recent Phase 3 failures mainly in other areas of course, but with that extra $5 million to $10 million, that’s certainly worth getting that added confidence I think. Actually, you are talking about the next-gen compounds in the cardiac phase it’s interesting if it’s a different mechanism, have you considered perhaps being able to use the next-gen compound in combination with the first gen compound to get a synergistic effect?

Robert Blum

So, I am not sure that those necessarily produced a synergistic effect, but those are the kinds of things that we have talked about and resource limitations being what they are that’s not currently in the cards.

George Zavoico

Okay. Just thinking further along in the future, regarding MPower, you mentioned that the data came mainly from the placebo arm, did you also look at the changes in SVC in the Dex arm and was there anything there that you might have learned if you look there?

Andy Wolff

We didn’t have access to the Dex arm, but they were willing to share the placebo data with us and I think that maybe is more relevant anyway, because what we are really trying to do is obtain a natural history exercise, if you will, to confirm that the extrapolations we made regarding our primary endpoint and other respiratory endpoints from the limited amount of treatment duration we had in BENEFIT-ALS appear to be consistent over time and similar across database. I think I will emphasize that first characteristic, because I mentioned during the call, but I didn’t say too much about it. I think it’s very reassuring to have data that goes out to 68 weeks on these patients and see that the decline in slow vital capacity is highly linear over that entire period of time. It’s not as though you get 6 months out or something like that and then they start to decline more rapidly. Certainly, there are patients that will do that and these are mean data based on 900 plus patients, but on average, the decline is highly linear and predictable over time, so that really does bode well for us being able to demonstrate what we hope to be able to demonstrate in VITALITY-ALS.

George Zavoico

Especially considering what your initial assumptions where. And finally quick question on COSMIC, you mentioned all the cardiac functional parameters, first part one of the question is now muscle translated in some quality-of-life improvements, can you comment on that or is that going to come later?

Andy Wolff

I can’t comment on that yet.

George Zavoico

Okay.

Robert Blum

Well, I will just say that there will be other analyses of COSMIC that will be forthcoming and presented at the proper scientific sessions.

George Zavoico

Okay. Which brings me to the second part of the question, in this area sort of precision medicine in choosing patients that more likely to respond to an experimental drug, you probably can’t say, but just tell me if you are doing it, you are looking at subgroups like who has got diabetes, blood pressure ranges, lipid levels, is that all going to be part of the subgroup analysis?

Andy Wolff

Yes, those things are all being looked at. And in fact, I will just remind you what you haven’t seen so far from COSMIC, one is a fairly compressive analyses of effects in different subgroups and the other is the relationships between the pharmacodynamic effects we observed in the omecamtiv mecarbil concentrations. So, there are many upcoming cardiology meetings where we can present additional types of data from COSMIC and ACC was a little too close, but starting with European heart failure meetings and following on from there, I would expect you will see new data. I mean, the main results are out there they are not going to change, but some of the questions that you have asked I think you will start seeing some results like those.

Robert Blum

And to your point, yes, those will be factoring into design elements for a potential Phase 3 program.

George Zavoico

Okay, thank you very much. Looking forward to the upcoming results as you mentioned it in those heart failure meetings. Thank you very much.

Robert Blum

Thank you.

Operator

And sir, there are no further questions in queue.

Robert Blum

Okay. Well, thank you. Thank you, operator. Thank you to all the participants on our teleconference today. We are very pleased with how 2015 ended on a positive note leading into strong momentum as we now proceed in 2016. We look forward to keeping you updated on our progress. We appreciate your continued support and your interest in Cytokinetics. Operator, with that, we can conclude the call.

Operator

Ladies and gentlemen, this does conclude 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: transcripts@seekingalpha.com. Thank you!