Good afternoon and welcome ladies and gentlemen to the Cytokinetics' Second Quarter 2019 Conference Call. At this time, I would like to inform you that this call is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the call for questions-and-answers after the presentation. I will now turn the call over to Diane Weiser, Cytokinetics' Vice President of Corporate Communications and Investor Relations. Please go ahead.

Good afternoon everyone and thank you for joining us today. Robert Blum, our President and Chief Executive Officer will kick off the call with introductory comments about the current state of our business. Then Fady Malik, our EVP of Research and Development will provide updates on our cardiovascular program, including the Phase 3 development of omecamtiv mecarbil, our cardiac myosin activator and the Phase 1 development of AMG 594, our cardiac troponin activator those under our collaboration with Amgen, as well as the development of CK-274, our wholly owned cardiac myosin inhibitor now proceeding from Phase 1 to Phase 2 development. Andy Wolff, our SVP and Chief Medical Officer will then share updates on our neuromuscular program focus on reldesemtiv, our fast skeletal muscle troponin activator under our collaboration with Astellas. Robert Wong, our VP and Chief Accounting Officer, will provide a financial overview for the quarter; and Ching Jaw, our SVP and Chief Financial Officer will discuss corporate development strategies before Robert concludes with additional thoughts on the company's outlook and expected milestones. Please note that portions of the following discussion including our responses to questions contain statements that relate to future events and performance rather than historical facts and constitute forward-looking statements. Our actual results may 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. We undertake no obligation to update any forward-looking statements after this call. And now I will turn the call over to Robert.

Thank you, Diane. And thanks again to everyone for joining us on the call today. During the second quarter, we made good progress across our pipeline with particular emphasis on our investigational medicines directed to diseases associated with cardiac muscle dysfunction including heart failure with reduced ejection fraction and hypertrophic cardiomyopathy or HCM. In addition, we continue to gather data to inform potential progression of our neuromuscular program. As has been our history, we continue to follow the science. In recent weeks, we announced the completion of patient enrollment in GALACTIC - HF our Phase 3 study of omecamtiv mecarbil. This represents a major milestone for us and for patients with heart failure with reduced ejection fraction. It also represents a significant milestone under our collaboration with Amgen, which takes back to 2006. Our team takes great pride in this long-standing collaboration and completing enrollment in line with the defined trial objectives. It's a testament to the diligent work, cooperation and oversight of both companies working effectively alongside the global clinical trial site network. In the last quarter, we also continued site activation and enrollment in METEORIC-HF the second Phase 3 clinical trial of omecamtiv mecarbil and we remain on track with timelines and other objectives for that ongoing trial. Fady will elaborate on that in a moment. Importantly, we also kept pace and advanced CK-274 our wholly owned cardiac myosin inhibitor. We're in the final stages of the Phase 1 study of CK-274 in healthy volunteers and have in parallel then planning to begin our Phase 2 trial in patients with obstructive HCM. We expect that together underway in the fourth quarter of this year. We remain enthusiastic about progressing this program, especially given the high unmet need for patients living with HCM. We believe CK-274 represents a potential next-in-class drug candidate that they demonstrate a distinct clinical profile consistent with what we have seen in our preclinical work and that may translate into a potential therapy enabling optimized dosing titration in symptom relief for HCM patients. On the neuromuscular front, Andy will elaborate on progress made towards potentially advancing reldesemtiv in future clinical trials in each of ALS or SMA patients. We were pleased to recently announced that the European Medicines Agency has granted orphan medicinal product designation to reldesemtiv for the treatment of SMA. As we continue to pioneer the field of muscle pharmacology in both cardiovascular and neuromuscular diseases, we look forward to potentially sharing results from our ongoing clinical trials and delivering on our mission to bring new medicines to patients suffering from diseases of muscle weakness and impaired muscle function. With that, I'll now turn the call over to Fady and he will elaborate on our cardiovascular programs

Thanks Robert. Before I get into new specific updates, I'd like to take a moment to reflect on the productivity and promise of our pipeline. We pioneered the pharmacology of muscle function and continue to build our leadership with an expanding and advancing clinical pipeline of novel modulators of sarcomere contractility both activators and inhibitors. This work encompasses our screening many millions of compounds profiling thousands of head compounds optimizing and characterizing hundreds of distinct chemical series and conducting dozens of clinical trials. We've learned a lot along the way, about how to best - to modulate the sarcomere for potential therapeutic benefit and have developed a profound respect for the importance of prioritizing pharmacokinetics and pharmacodynamics of our drug candidates in this area. As Robert mentioned, we recently completed enrollment and GALACTIC-HF, the Phase 3 cardiovascular outcomes clinical trial of omecamtiv mecarbil being conducted by Amgen under our collaboration. GALACTIC-HF follows 18 prior clinical trials, which set the stage for this important outcomes trial and inform the dosing patient inclusion and exclusion criteria and endpoints that we and Amgen selected for the study With more than 8,200 patients enrolled at over a 1,000 sites across 35 countries, GALACTIC-HF is now among the largest Heart Failure Clinical trials ever conducted. We are pleased with the outstanding contributions of our site investigators and study coordinators, and encouraged that we achieved the intended balance of inpatients and outpatients with excellent global representation. Specifically, we enrolled approximately 40% of the patients in the U.S., Canada, Western Europe, South Africa and Australasia, 33% in Eastern Europe and Russia, 19% in Latin America, and 8% in Asia. Approximately, 25% of the patients in GALACTIC-HF were hospitalized at randomization which is consistent with the protocol specification. As you may recall, in March 2019, the data monitoring…

Thanks Fady. During the quarter, we focused on planning for the potential advancement of reldesemtiv into additional clinical trials. We are pleased to have identified what we believe to be potential paths forward in each of ALS and SMA and continue to discuss how best to approach regulatory authorities and to develop protocols, timelines and budgets. As we have previously stated, we believe that the data generated from our Phase 2 trials in each of the SMA and ALS support progression to potential registration programs. We recognize that both patient communities are in urgent need of new therapeutic options that may be addressed by muscle directed treatments. Importantly, the introduction of new therapies in SMA has changed the natural history of these diseases. While infants and children treated with these new therapies are fortunately living longer than ever before, they are still expected to struggle with persistent residual muscle weakness that impacts their ability to perform activities of daily living. We believe reldesemtiv may be complementary to these new treatments by addressing this residual muscle weakness. In fact, we recently presented data from 2 pre-clinical studies of reldesemtiv at the 2019 Annual Cure SMA Conference that showed the addition of reldesemtiv to treatment with either of 2 different SMN up regulators, nusinersen and SMN C1 and analog to risk to plan significantly increased muscle force in a mouse model of SMA. Data from these preclinical studies suggest that reldesemtiv may complement SMN directed therapies to further improve muscle function, especially for routine activities that may be fatiguing and don't require maximum exertion. As this therapy become the standard of care, it will be important to understand what the new baseline looks like for patients and what are appropriate endpoints for ambulatory and non-ambulatory patients. We are collaborating with clinical experts in the field as well as patients, advocates and health technology assessors to determine our clinical strategy and study designs. While we continue to assess the landscape in SMA, we believe there may be greater urgency and unmet need in ALS given the lack of effective treatment options. During the quarter, we drafted a protocol synopsis for our next Phase 3 trial in patients with ALS and are scheduling meetings to ensure that our proposed approach is sound and aligns with regulatory patient and payer needs. As you can imagine, this will take some time to get it right. So we did not expect to begin the next trial and so perhaps the second half of 2020. Finally, under our collaboration with Astellas, we also continued pre-clinical development of our fast skeletal muscle troponin activator CK 601, as well as our joint research program focused on pursuing other next-generation skeletal muscle activators. Now I will turn the call over to Robert Wong to update you on our financials.

Thank you, Andy. I'll first provide an update on cash, revenue and spending and then Ching will review our corporate development strategy. More details on our actual results are included in the press release itself. We ended the second quarter with $175.1 million in cash and investments. Our revenue in Q2, 2019 came from our strategic alliances with Astellas and Amgen. For Astellas, we continue to recognize revenue for reimbursement of our research activities as well as development costs we incurred related to FORTITUDE-ALS. For Amgen, we recognized revenue associated with their reimbursement of our cost for development expenses related to METEORIC-HF. Revenues include both cash and non-cash revenue recognized under ASC 606, the new accounting rule for revenue recognition. Our second quarter 2019, R&D expenses increased to $24 million from $21.6 million in the second quarter of 2018, primarily because of the increased activity related to METEORIC-HF and CK 274 offset in part by lower spending related to our neuromuscular activity. Nearly half of our R&D expenses were attributable to our cardiovascular programs as expected given activity for METEORIC-HF and the cardiac myosin inhibitor program. Approximately 30% of our expenses were attributed to our skeletal muscle program and the remainder of our R&D expenses were related to our early research activities. Our second quarter 2019 G&A expenses were $9.8 million, up from $8 million in Q2, 2018 due primarily to increased outside legal expenses and higher personnel-related costs. And now I will turn the call over to Ching who will review our corporate development strategy.

Thanks Robert. As Robert mentioned, we ended the second quarter with $175 million in cash, which represents approximately 2 years of forward cash-based on our 2019 guidance of $85 million to $90 million net cash burn rate. As we have previously stated, our strategy remains to manage our cash prudently through the expected readout of the results from GALACTIC-HF in 2021. During the quarter, we executed our multiple strategies to meet that objective including our continuing to engage in potential collaboration and project financing discussions relating to our cardiac myosin inhibitor program as potential ways to access non-dilutive capital. We also restructured our short-term growth capital loan to extend the term of repayment beyond 2020, enabling those nearer term dollars to be invested into our business this year. I will remind you that we remain potentially eligible for pre-commercialization milestone payments under our existing collaborations, as well as additional reimbursement of sponsored research and development activities in 2019. Our balance sheet remains strong and we continue to seek non-diluted financing to access additional capital and extend our cash runway. Cytokinetics is growing and our pipeline is expanding and progressing, while we remain vigilant to carefully deploy the capital to the programs that we believe are most likely to provide the best returns on investment, both to bettering patient care, as well as to delivering the best value to shareholders. To that point, we recently kicked off our annual strategic planning process, which this year will be focused on optimal positioning for growth and the prioritization. We are in an enviable position with a larger and still growing pipeline, with potential multiple commercial launches in the next three to five years. So, the strategic plan will focus on how best position the company to maximize shareholder value over the near to medium term timeframe. And with that I will now turn the call back over to Robert.

Thank you. Ching. So, it's clearly been a very productive quarter for Cytokinetics and we remain energized about our prospects as we look forward into the second half of 2019. This year we've reinforced that we would have three key events shaping the complexion of the company. First was the first interim analysis in GALACTIC-HF, which as you know, resulted in our continuing the trial with no changes to the protocol. Second, with the announcement of data from FORTITUDE-ALS, which we believe supported progression to a potential Phase 3 trial that may enable registration and thirdly, the data from the Phase 1 study of CK-274, which will present at HFSA and we believe support planning to progress into Phase 2. We believe for those three events we have gone three-for-three. I'm pleased with our team's execution and believe we enter the second half of the year with clarity of focus and purpose, as Ching mentioned, this summer marks the start of our 2020 strategic planning process, and we look forward to charting the next phase of corporate development to prepare for scaling the company's operations towards potential commercialization, at the same time expanding our footprint in muscle biology. Towards that end, we're excited about continued progress in our muscle biology research and we look forward to potentially one or two new drug candidates entering clinical trials in 2020, as well as the advancement of our other programs further reinforcing our leadership. In the meantime we remain dedicated to advancing research education support and awareness for the patient populations we serve. During the quarter, we announced a continuation of our partnership with the ALS Association in the fight against ALS, with the renewal of our gold level sponsorship of the National Walks to defeat ALS, our premier level national ALS advocacy…

[Operator Instructions] And your first question comes from Joe Pantginis of H.C. Wainwright.

I want to start off first maybe merging two of my questions. I think and I don't want to overstate this, but I think you projected a very important signal today with regard to Reldesemtiv. If I heard Andy correctly saying, you believe you identified a path for both ALS and SMA. I think even some of the discussions we've been having is obviously likely been the focus and it's just constantly questioning about what might be happening with SMA, so I think this is a very welcome announcement today. So, I am just curious, is there anything else you can say with regarding these paths? I know it's early, and you're not looking - you're looking to start studies about a year from now. And then, secondly, to your comment, this sounds like you might be vying for more participation based on your comment of renegotiating your deal with Astellas, I don't know if I'm overreaching there.

Joe, very good questions. Firstly, with respect to SMA, yes, you're right, having spent a lot of time with advocacy groups and clinical opinion leaders, we do think we're identifying a path forward in SMA, and I'll ask Andy to comment on that in a moment. But at the same time, I hope you also heard him say that we believe that the urgency, with regard to proceeding forward in ALS, may supersede that of SMA. And, there are still things we want to learn in SMA, especially as gene therapy now makes its mark in that marketplace, and we want to make certain that we can understand the baseline deficit in patients, so as to properly design and power a clinical trial. I'll come back to your second question after Andy has a chance to speak.

So I'll just say, I think when we talk about the pathway forward through a larger extent, we're indicating that we believe, as I said, the Phase 2 studies support progressing. The data from them were sufficiently demonstrative of a therapeutic effect that reldesemtiv is worth further study in both disease areas to get more specific than that is difficult at this point. As we mentioned the landscape in SMA in particular is changing and we're going to need a lot of feedback from again as we've mentioned, key opinion leaders’ advocacy groups’ health technology assessors and so forth. Before we have a very developed idea of what the endpoints in particular should be. I think we're pretty satisfied with the data from our Phase 2 study that an ambulatory patient’s a six-minute walk test is a good endpoint, but we are less clear how we might evaluate the drug in non-ambulatory patients.

Yes so there's still some more homework to do there, as you asked in the second part of your question with regard to our collaboration with Astellas. We're socializing all of this together with the Astellas and engaging with them through these interactions and discussing therefore what the protocols would look like with the timelines and budgets would look like. And yes, you're right we also noted with this earnings announcement that we are going to be discussing with them how to amend our collaboration agreement to enable the path forward. So that's something where I think we can't say much more about that other than it may result in changes as it pertains to things that to this point has had a co-funding arrangement that's been specified and rights and responsibilities that have been clarified for Phase 1 and Phase 2 for Phase 3 we expect that is still to change.

Understood, no, that's very helpful thank you, Robert. And then if I could just follow up quickly with regard to 274 obviously you put out a lot of preclinical data recently. So with regard to animal model and these dose exposure levels, can you obviously I might be overreaching here again too, but can you describe any potential read-through with regard to clinical benefit based on these clinical – based on these preclinical data in animals. But more importantly, and this could be apples to oranges. I'm not sure a little compare and contrast with regard to mavacamten because I'm sure that say an ongoing question that's on the street right now?

Yes, we're not going to compare to mavacamten on this earnings call but I will have Fady to respond to your question, and I'll maybe follow up afterwards?

Yes, I mean the data I think supported the premise with which we embarked upon optimizing CK-274 one was that the pharmacokinetics lended themselves to rapid onset, but also a reverseability of effect that was consistent with its exposure that we maximize if you will. The shallowness of the exposure response relationships as best as we, could and with this mechanism of actions. And that we have evidence of effect in a disease model that doesn't recapitulate the human condition perfectly but shows that the exposure response relationship in – at mouse model of hypertrophic cardiomyopathy was essentially the same as it was in the normal mice that we characterize. So in all of those studies provided us, the data that justify moving forward in humans and ultimately into the patients.

The preclinical data that were presented a week or two ago they elaborate on things. We had already been sharing at our R&D Day last fall. And what ultimately, I think you're going to be most interested in, are the Phase 1 data which now today we're announcing you'll be seeing in September. What – we can share with you is already having seen enough of those data to commit to Phase 2. We believe the Phase 1 data will support and recapitulate things we believed knowing what we did with the preclinical data that this compound has properties that we believe will render it beneficial in patients as we move into Phase 2. So how the drug behaves is very, very important as we have spoken a few times. And I think we're seeing in the preclinical data and in the Phase 1 data, a consistent story.

And your next question comes from Jason Butler from JMP Securities.

Let me just add a follow-on 274. You mentioned that you had some feedback from FDA on Phase 2 trial design. Can you give us any even broad brush stroke thoughts on the kind of interactions you're having with FDA and what direction you're moving towards for Phase 2 design?

Yes, I mentioned we've had feedback from regulatory authorities’ plural, FDA and others, but maybe I’ll let Fady pick up first.

Yes, I think Jason, what we wanted to get alignment on with regulators is essentially the approach we're taking to the study to facilitate its eventual final protocol submission. And I think the key things in designing a Phase 2 study, which in this case, we're going to focus on identifying a pharmacologically active dose and characterizing the dose response relationship in patients with HCM is the, the starting dose in the study and agreeing that it’s a safe dose to begin with, as well as the titration schedule and how we titrate the drug in those patients. So the study design, really focused on – kind of the mechanics of how to conduct a study and a general overall outline of how it would be done. And I think – those were very successful in our actions they generally agreed with us and we have a clear road to a final protocol.

We are planning in Phase 2 to elaborate on this pharmacology in ways that will hopefully elucidate the why behind some of the properties we've been referring to with CK-274 and why it matters. And we believe that we've got affirmation of that in the way in which that we were receiving feedback from regulatory authorities.

And then I think another one for Fady just on the METEORIC trial. Can you just remind us of the patient population here versus GALACTIC and what your assumptions are for a treatment effect, both in terms of drug and the control arm? Thanks.

Yes, I mean the patient population is a little different from GALACTIC but not much. In GALACTIC we required patients to have been hospitalized. They all have low ejection fractions ejection fraction is less than 35%. But in GALACTIC we're interested in cardiac events being hospitalized or cardiovascular death so enroll the high-risk patient population and required hospitalizations and also high NT-proBNP as entry into GALACTIC. In METEORIC we're interested in patients that of exercise intolerance and we don't want them to enter the hospital during the conduct of the study that would be pretty disruptive to a study that's only 20 weeks long. And so those patients again have low ejection fraction, but we don't require them to have been hospitalized. In face we exclude recent hospitalization and we also focused on demonstrating that they have reduced exercise capacity compared to age matched controls. So these are, I would think of them as more stable heart failure patients, but who have demonstrated exercise and tolerance.

Your next question comes from the line of Chad Messer from Needham & Company.

So for CK-274 we think we have – next generation drug with some better PK properties for these patients. But as you're in the starting Phase 2 you’re not just thinking about Phase 2, but sort of Phase 3. Are there things that were done for the mavacamten development program that you think you can improve upon with your clinical development program to accentuate or does it make more sense to kind of go down the path they went and get the best apples-to-apples comparison and just kind of show you're better?

I'll start and ask Fady to respond. I'll firstly say we're not going to be elaborating on things that we're going to be doing in a competitive way. But you know we're not comparing the two drugs in a head-to-head trial. So I don't think there is going to be a clear apples and apples. In that regard, but what I can say is that with regard to CK-274. We expect that the way in which we'll develop this drug candidate, we'll be able to elaborate on what may be unique features of this compound that enable it to be a dose to differently and also how that can translate into clinical outcomes and benefit. So the Phase 2 study will be elaborated when we begin dosing. But our expectation is so things we'll do that are similar and things that we'll be doing that will be different.

Yes, I think as Robert said, I think the, the way that we develop this drug will inform how it's used obviously we'll look forward to seeing how the mechanism of action performance in MyoKardia's Phase 3 study and that information will also inform how we proceed down the road. But I suspect, you'll see that both companies are being very thoughtful about how to approach this new pharmacology and that this is an evolving landscape and it's not just with these compounds but others has may emerge and in that way. I think this is all good for patients.

And to be clear, I wasn't asking whether you're going to do it but head to head I was more referring to there's ways of designing Phase 3, so it's easier to compare and or harder to compare and I appreciate your answer that question. Thank you

And your next question comes from Charles Duncan of Cantor Fitzgerald.

This is actually Maria on for Charles. I just had a quick question, could you please provide a little bit more color granularity regarding the METEORIC study. I know you said that the enrollment is on track, but maybe just you know how many sites you're targeting in maybe the percent of targeted patients that you think that you'll be able to enroll by year-end. Thank you.

Yeah, it's a little early to give guidance on where we think we'll be at year-end even though we are now in August. We're sort of in the early phases of the study start up. We've gotten very good enrollment. So far, given the sites that we've activated there has been a lot of screen going on and subsequently patients qualifying for the study. So I'm optimistic that we are moving ahead and on track with our goal to complete the study at the time that GALACTIC wraps up. We’re targeting in the range of 70 to 90 sites in the U.S. and in Europe and Canada, so we will progress moving those along and we'll sort of decide on the final number depending on how enrollment begins to emerge

What you can do is also be checking on clinicaltrials.gov because we're updating that regularly as we add new sites.

Your next question comes from the line of Ted Tenthoff of Piper Jaffray.

Thanks for the update looking for to the data [indiscernible] lay out sort of the rationale, if you work with partnering versus taking it for very yourselves. Thanks.

Yes, it's a very good question, and this goes hand in hand with what Ching described vis-à-vis, strategic planning. We have the situation where we currently have four programs in the clinic and potentially two more coming into the clinic. And as we think about prioritization, we want to make sure we're doing right by where there is the most opportunity to make the most meaningful impact on patient care and to maximize shareholder return. There are opportunities with respect to a cardiac myosin inhibitor that are very much within our reach affordable and Tractebel and therefore there is not a compelling rationale for partnering as it pertains to those, but they're also ones that go beyond our reach in terms of what we might be able to do ourselves, and as such there could be value and seeking a partner under the right conditions and terms. And as we think about that, we'll think about reldesemtiv, we’ll think about omecamtiv, we'll think about our entire portfolio and make certain that we're doing right by those tenants that I mentioned. Right. By patient care and right by maximizing shareholder value, and that could include partnering especially as that may bring in non-dilutive capital at a time when we're trying to dial-up our programs across our portfolio. So that's something that we're taking very, very seriously in line with our commitments, as Ching mentioned

Your next question comes from Jeff Hung of Morgan Stanley.

For the omecamtiv mecarbil interim analysis on superiority is there likely to be any data announced with the interim analysis or is it more continuous planned versus being stopped early for overwhelming success or futility

And I think you'll see handle very similar to the way that the last interim analysis is, which is, we'll just hear whether we should continue, or not. Obviously if they tell us not to continue there'll be a lot more data that will come out in that scenario, but…

And then, I just want to clarify, so you are in discussions with Astellas on reldesemtiv and you're drafting protocols for ALS and scheduling meetings with regulatory agencies. Is there a scenario where reldesemtiv may not be advanced or regardless of the outcome of discussions with the Astellas? Are you expecting to continue forward with reldesemtiv in ALS and SNA?

It's a very good question. I think there are scenarios by which reldesemtiv goes forward more quickly or more slowly depending on other priorities at the company in context of our strategic planning and how that ultimately gets funded and whether that's something that we choose to do before we know we turned over other cards or afterwards. So there are things that we can do to dial-up or dial back activities and that's something that we and our Board are discussing

And then just a housekeeping question. Expenses crept up again in 2Q. So are you reiterating your prior expense guidance or how should we think about the expense trends for the rest of the year?

Jeff, this is Ching. We're not changing our expense guidance. Our net cash burn remains 85 million to 90 million per year.

And we have a question from Joe Pantginis from H.C. Wainwright.

Thanks for taking the follow-up. With regard to METEORIC, we did touch upon this in the past, but based on fact prepared comments about the quality of the exercise test. So I was wondering if you could provide a little more color around that, especially around the potential you're again [indiscernible] you've addressed as much can the concept of your size affect beyond placebo effect. Yes.

You're breaking up. So…

I'm sorry can you…

Maybe you can just try your question again, because you are coming now

Right, is this good.

Not great.

I apologize for that [indiscernible] I'll email my question and apologize.

Okay. No problem, thanks Joe

Sure about that Joe but by all means please email your question and we’ll follow up with you.

And we have no further questions at this time.

Thank you, operator and thank you to everybody who joined in and participated in this call today. These are especially encouraging times given the updates that we provided with our Q2 earnings release and through this call and we look forward to providing further updates through the third quarter and the remainder of the year. We welcome your questions and comments and we appreciate very much your support. Operator, with that, we can now conclude the call.

Ladies and gentlemen, that does conclude today's conference call. You may now disconnect. Thank you for your participation.