Cytokinetics, Incorporated (CYTK) Q4 2021 Earnings Report, Transcript and Summary

Good afternoon and welcome, ladies and gentlemen, to Cytokinetics' fourth quarter 2021 conference call. [Operator Instructions]. I will now turn the call over to Joanna Siegall, Cytokinetics' Senior Manager of Corporate Communications and Investor Relations. Please go ahead.

Thanks. Good afternoon, and thanks for joining us on the call today. Robert Blum, President and Chief Executive Officer, will begin with a brief overview of the quarter and recent developments. Fady Malik, EVP of R&D, will then provide updates related to omecamtiv mecarbil and CK-136. Stuart Kupfer, SVP and Chief Medical Officer will provide an update on aficamten and reldesemtiv. Andrew Callos, EVP and Chief Commercial Officer, will discuss commercialization planning activities for omecamtiv mecarbil. Robert Wong, VP and Chief Accounting Officer, will provide a financial overview for the past quarter. And Ching Jaw, SVP and Chief Financial Officer, will discuss our 2022 financial guidance and corporate development strategies. Finally Robert Blum will provide closing comments and review expected key milestones for 2022. 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 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 current report regarding our fourth quarter 2021 financial results filed on Form 8-K today. We undertake no obligation to update any forward-looking statements after this call. Now I will turn the call over to Robert.

Thank you, Joanna, and thanks again to everyone for joining us on the call today. We had a very productive fourth quarter with additional positives and progress continuing into the early part of this year. Most notably, we recently announced that the FDA accepted for filing our NDA for omecamtiv mecarbil, a signing a PDUFA date of November 30, 2022. This is an exciting milestone for our company, which has been made possible by dozens of clinical trials, thousands of clinical trial participants, and years of dedication from employees of Cytokinetics. We also announced the results of METEORIC-HF, which did not show an effect of treatment with omecamtiv mecarbil compared to placebo on exercise capacity in patients being treated with standard of care medical therapy. While we are, of course, disappointed in this result, the NDA on file with the FDA is based on the results from GALACTIC-HF and we do not expect the results from METEORIC-HF to read on the potential approval of omecamtiv mecarbil, given the safety profile was consistent with prior clinical trials. Turning to aficamten. We've made substantial progress in this program throughout 2021 and again already this year. During the quarter, we received breakthrough therapy designation from the FDA for aficamten, the Center for Drug Evaluation of the National Medical Products Administration also granted breakthrough therapy designation for aficamten for the treatment of symptomatic obstructive HCM in China. Additionally, just yesterday, we announced that SEQUOIA-HCM, the Phase III clinical trial of aficamten in patients with symptomatic obstructive HCM has opened to enrollment. We also recently shared top line results from Cohort 3 of REDWOOD-HCM in patients treated with disopyramide, which is supportive of including this patient population in SEQUOIA-HCM. Later in this call, Stuart will detail our plans for expanding the development program for aficamten with additional trials to be underway this year. During Q4, we also progressed earlier-stage research programs to IND-enabling studies, and we are also planning to advance the clinical development of CK-136, our cardiac troponin activator. Fady will speak more to our objectives for this novel mechanism program in a moment. Underpinning our recent successes and support of our ambitious goals this year is our strong balance sheet and funding commitments that together represent over 2 years of cash runway, bolstered by 2 recent transactions on which Ching will elaborate further. We are entering an exciting new phase for our company. We've continued to expand our team, and we're building new capabilities leading up to the potential approval and expected launch of omecamtiv mecarbil. At the same time, we've continued to work across our pipeline of late-stage programs with aficamten and reldesemtiv as well as earlier stage programs, including CK-136 and our preclinical activities, all progressing. Today, we look forward to sharing updates with you from all of these programs as well as our expected milestones for the year. And with that, I'll turn the call over to Fady to elaborate firstly on recent developments related to omecamtiv mecarbil and CK-136.

Thanks, Robert. Last week, we announced the top line results of METEORIC-HF, evaluating the effect of 20 weeks of treatment with omecamtiv mecarbil compared to placebo on exercise capacity. This trial consisting of 276 participants, there was no effect on the primary endpoint, which was the change in peak oxygen uptake or peak VO2, as measured by cardiopulmonary exercise testing from baseline to week 20. Adverse events were similar between the treatment arms and it's important to note in this trial that we enrolled a lower-risk patient population than GALACTIC-HF and investigated a different hypothesis, namely increasing exercise capacity as opposed to reducing the risk of clinical outcomes. While medical therapies have demonstrated significant reductions in the risk of adverse clinical outcomes in heart failure patients with reduced ejection fraction, as was also observed with omecamtiv mecarbil and GALACTIC-HF, demonstrating an improvement in exercise capacity with the same medical therapies has been elusive. METEORIC-HF was an extremely well-conducted trial, performed under challenging circumstances given the pandemic. I want to congratulate the study team and the investigators for completing this trial as well as to thank the patients for their participation. The full results, which are embargoed for now, will be presented at the ACC scientific session as a late-breaking clinical trial in April. We're continuing to pursue additional learnings from GALACTIC-HF. In the fourth quarter, we presented the results from Post-Hoc analysis showing that treatment with omecamtiv mecarbil was associated with a significant reduction in the risk of stroke. This reduction may be related to the reduction in adverse events of atrial fibrillation or flutter as well as improvements in atrial and ventricular function that have been observed in GALACTIC-HF in previous clinical trials for omecamtiv mecarbil. At the upcoming ACC scientific session in April, we look forward to presenting new analyses from GALACTIC-HF, comparing the effect of omecamtiv mecarbil on the prespecified subgroups of hospitalized patients versus outpatients, plus our health economics and outcomes research colleagues in collaboration with Dr. Nihar Desai of the Yale School of Medicine and others will be presenting data on the heart failure on the health care resource utilization as well as the associated intensity and cost of patients from GALACTIC-HF. As Robert mentioned, the NDA for omecamtiv mecarbil is under review by FDA with a PDUFA date of November 30, 2022. I want to take a moment to congratulate and thank all the contributors to this filing as it represents many years of dedication in the pursuit of an innovative hypothesis for the potential benefit of patients with heart failure. Now back to pre-commercialization activities for omecamtiv mecarbil. On the medical affairs side, in the fourth quarter, we continued to expand the size and leadership of our therapeutic medical scientist team and began development of our managed health care medical science team as well. We also completed vendor selection for the medical contact center and finalize the governance and design of our investigator-sponsored study program. The medical affairs team will continue important education activities, supportive of the potential launch of omecamtiv mecarbil driven by our 2022 strategic plan. Switching gears to CK-136, our investigational novel cardiac troponin activator. During the quarter, we presented preclinical data relating to its discovery and optimization. We also presented and published preclinical data on an analog of CK-136, showing that it increases contractility without negative impacts on myocardial energetics. We have started our planning to enable advancing the development program for CK-136 before the end of the year. CK-136 has the potential to be differentiated from omecamtiv mecarbil, given its mechanism of action and our plans to investigate its potential safety and efficacy in adjacent populations of unmet need, such as heart failure with right ventricular dysfunction. With that, I'll turn the call over to Stuart to provide an update on aficamten and reldesemtiv.

Thanks, Fady. During the quarter, we were pleased to announce that the FDA granted breakthrough therapy designation for aficamten for the treatment of symptomatic obstructive HCM based largely on the data generated from the Phase II clinical trial, Redwood-HCM. HCM remains an area of high unmet need with few treatment options for patients who often experience many symptoms that impact their daily quality of life. A few weeks ago, we also shared top line results from Cohort 3 of Redwood HCM conducted in patients with obstructive HCM who were refractory despite treatment with the last line of medical therapy disopyramide. Results showed that substantial reductions were achieved in the average resting and post-Valsalva left ventricular outflow tract gradients. These decreases were achieved with only modest decreases in average LV ejection fraction with no patients whose ejection fraction fell below the prespecified safety threshold of 50%. The pharmacokinetics and safety and tolerability profile of aficamten were consistent with prior experience in Redwood-HCM, and there were no treatment interruptions. We look forward to presenting the full results of Cohort 3 at the ACC Annual Scientific Session in April. Yesterday, we were pleased to announce the opening of enrollment in Sequoia-HCM, the Phase III registrational trial of aficamten. Sequoia-HCM is a randomized, double-blind, placebo-controlled international clinical trial designed to compare 24 weeks of treatment with aficamten or placebo in patients with symptomatic obstructive HCM, who has substantial outflow track gradient despite background medical therapy. The primary objective is to evaluate the change from baseline to week 24 in peak VO2, measured by CPET as a measure of exercise capacity. We expect to enroll 270 patients to aficamten or placebo in addition to standard of care, randomized in a 1:1 ratio. Following the positive results of Cohort 3 of Redwood-HCM, patients whose background therapy includes disopyramide will also be eligible to enroll. Each patient will receive up to 4 escalating doses of aficamten or matching placebo, beginning with 5 milligrams once daily and escalate the 10, 15 or 20 milligrams once daily as needed to achieve target outflow track gradients. Dose escalation is based on echocardiography alone. Secondary objectives include evaluations of the change in KCCQ clinical symptom score and New York Heart Association Functional Class at week 12 and week 24. While the inclusion and exclusion criteria are summarized in yesterday's press release, one of the key criteria I want to call out is that we'll be enrolling patients with peak V02 less than 80% of that predicted for each patient, indicating a clear and objective reduction in exercise performance. Therefore, we do expect to enroll a patient population whose decreased functional capacity is characterized by an objective rigorous measurement. We anticipate enrollment of Sequoia-HCM to take roughly 1 year and therefore, expect to enroll through the duration of this year. Meanwhile, we're continuing to enroll prior patients from Redwood-HCM into the open-label extension study, Redwood-HCM OLE. A great majority of patients from Redwood HCM are choosing to continue into the open-label extension with 37% -- with 37 patients so far included at sites that are open to enrollment. We look forward to sharing the first data cut from the open-label extension of Redwood HCM later this year. This year, we also plan to expand the development program for aficamten. First, we plan to add a cohort 4 to Redwood-HCM to enroll symptomatic patients with nonobstructive HCM. This approach will enable us to move more expeditiously into a potential pivotal clinical trial in nonobstructive HCM thereafter. We expect to begin enrolling cohort 4 at several sites starting in the United States very soon. It will include approximately 30 to 40 patients with nonobstructive HCM enrolled in an open-label fashion to escalating doses of aficamten of 5, 10 or 15 milligrams as informed by echocardiography. The primary objective will be safety and tolerability of aficamten in this patient population, but we'll also evaluate their biomarker and symptom responses. Further details of the design of Cohort 4 will be provided when we announce that, that is open to enrollment. Second, later in 2022, we plan to start an additional Phase III clinical trial of aficamten in obstructive HCM to better understand its use relative to current standard of care therapy. The results from this trial may be incorporated into treatment guidelines or an expansion of the label of aficamten, following its potential initial approval that may be based on the results of SEQUOIA-HCM. Our planning to conduct a second Phase III clinical trial of aficamten is further testament to our confidence in the next-in-class profile of aficamten. We look forward to sharing more details about the expansion of this important development program for aficamten throughout the year. Turning now to reldesemtiv. We continued enrolling patients in COURAGE-ALS, the Phase III clinical trial of reldesemtiv in ALS. As a reminder, this is a large international trial that will enroll 555 patients with ALS in US, Canada, Australia, and Europe. And it builds on the results from FORTITUDE-ALS, the Phase II clinical trial, which showed that patients on all dose groups of reldesemtiv experienced less disease progression than patients on placebo with larger and clinically meaningful differences emerging over time. During the past quarter, we presented data from our ALS program at the International Symposium on ALS/MND. Among the presentations was an analysis of the baseline characteristics of the first 27 patients enrolled in COURAGE-ALS, which showed that the majority of patients enrolled at the timing of the analysis for middle progressors or fast progressors as was intended by the inclusion criteria of COURAGE-ALS to increase the sensitivity of detecting a treatment effect. As we continue to enroll the potentially pivotal clinical trial this year, we expect the data monitoring committee to conduct the first interim analysis in the trial, which will assess for futility and has triggered 12 weeks after approximately 1/3 or more of the planned number of patients is randomized. We remain enthusiastic about what COURAGE-ALS may deliver for patients with ALS. These patients and their advocacy organizations are fighting tirelessly to support the development of new therapies for what is truly a terrible disease. These patients continue to inspire us every day. With that, I'll turn the call over to Andrew.

Thanks, Stuart. During the fourth quarter, we continued to build our commercial capabilities, systems, organization and infrastructure while executing against our go-to-market strategy in the US for omecamtiv mecarbil across market access, sales and marketing. First market access progress includes furthering our pricing strategy and distribution approach, while we continue to engage with all major payers with plans to expand our payer interactions to include the results from GALACTIC-HF in the coming months. Second, with our marketing team in place, the brand strategy as well as the product positioning that highlights the benefits of omecamtiv mecarbil and how it addresses unmet need in the treatment of heart failure with reduced ejection fraction has been finalized, and we continue to progress the development of our launch campaign. Finally, activity in supportive of building and deploying our sales force for the potential launch continues. We have finalized sales force size and structure. Furthermore, key customers have been identified across hospitals and cardiologists and field territory boundaries have been designed. We expect our sales force size to be around 200 FTEs and consistent with our gated approach, the hiring of sales force representatives will occur after approval of the drug by the FDA. As we have stated previously, our strategy has been based on this gated build remaining prudent of spend and initiating activities in line with key derisking events. The recent announcement of acceptance of our NDA by the FDA is one of those events, which has triggered the start of certain activities and some additional hiring in key longer lead time positions, including first-line field managers, sales operations, commercial learning and development and further expansion of our ETOR, patient services, and access distribution strategy. Still, our overall team will only be about 1/3 of our expected post-approval headcount as the majority of our spending and FTEs will not occur until approval, including hiring our field representatives, media purchases and patient support programs. For aficamten, we've engaged with global health technology assessment organizations during the past quarter to better understand value drivers that would be supportive of access in key European markets. In 2022, we will complete our US go-to-market strategy for aficamten and continue to conduct market research with payers, physicians and patients to inform this potential entry as a new treatment for hypertrophic cardiomyopathy. And with that, I will turn the call over to Robert Wong.

Thanks, Andrew. I'll review our cash revenue and spending for the fourth quarter 2021. We ended the fourth quarter with $623.7 million in cash and investments. This cash balance does not include $150 million in proceeds received from transactions executed in late 2021 and early 2022. Our revenue in the fourth quarter of 2021 came primarily from $54.9 million of license revenue recognized from the transaction with Ji Xing. Our fourth quarter 2021 R&D expenses increased to $43.5 million from $29.2 million in the fourth quarter of 2020, primarily due to increases in spending for clinical development activities for our cardiac muscle inhibitor programs, COURAGE-ALS, facility expenses and for regulatory filing costs. More than 60% of our R&D expenses were attributable to our cardiovascular programs and the remainder of our expenses were attributable to our skeletal muscle programs and early research activities. Our fourth quarter 2021 G&A expenses were $33.8 million, up from $13.9 million in the fourth quarter of 2020 due primarily to higher outside service spending in anticipation of the potential commercial launch of omecamtiv mecarbil, an increase in personnel-related costs, including stock-based compensation and facility expenses for our new headquarters. And now Ching will review our financial outlook and corporate development strategy.

Thanks, Robert. Today, we announced our financial guidance for 2022. The company anticipates 2022 revenue will be in the range of $20 million to $25 million. Operating expenses will be in the range of $380 million to $400 million and net cash utilization will be approximately $365 million to $385 million. Our current cash balance of approximately $724 million, plus additional committed capital expected to be earned from Royalty Pharma upon the dosing of the first patient in SEQUOIA-HCM represents more than 2 years of forecast based on our projected operating expenses and net cash utilization range for 2022. Given the PDUFA date of November 30 for omecamtiv mecarbil and our approach to only hire the majority of the sales force post NDA approval, I expect a relatively slow ramp-up in commercial spending in 2022. Most of the sales and marketing spend for the commercial launch of omecamtiv mecarbil, for example, related to sales force, media purchases and patient support program spending will not occur until 2023 if omecamtiv mecarbil receives approval in late 2022. And therefore, we do not expect significant post-approval related increases in spending until 2023. Our strong balance sheet is supported by 2 recent transactions. During the fourth quarter, we announced the expansion of our collaboration with Ji Xing Pharmaceuticals by entering into an exclusive license and collaboration agreement to develop and commercialize omecamtiv mecarbil for HFrEF in Greater China. Cytokinetics also entered into a common stock purchase agreement that provided for sales -- provided for the sale and issuance to entities affiliated with RTW Investments of shares of Cytokinetics common stock with an aggregate purchase price of $20 million at a price per share of $39.125. In January 2022, we announced that Royalty Pharma will provide Cytokinetics long-term capital of up to $300 million primarily to support the potential commercialization of omecamtiv mecarbil and further development of aficamten. It will be available to us in 5 tranches, including an initial tranche of $50 million, which was received upon closing of the deal and 4 additional tranches. Those 4 additional tranches totaling $250 million will be accessible in 25 million increments subject to certain conditions upon the occurrence of certain milestones related to omecamtiv mecarbil and aficamten. Each tranche that Cytokinetics goes down will be followed by an interest-free payment free period of 6 calendar quarters, after which equal installment repayments will be required over the following 34 calendar quarters. The total amount of interest and principal repayment will total 1.9x the amount drawn. Additionally, royalty pharma purchase from Cytokinetics, a revenue participation right on aficamten of 4.5% and sales up to $1 billion and 3.5% for sales above $1 billion, subject to certain step-downs. In exchange, Royalty Pharma will pay to Cytokinetics a total of up to $150 million, including $50 million at closing and 2 additional 50 million tranches, each conditional upon the initiation of potential pivotal clinical trials for obstructive HCM and non-obstructive HCM, respectively. Consistent with our past practices, we will aim to end 2022 with more than 2 years of forward cash runway, given the potential for increased spending in 2023 and 2024 to support the planned commercial launch of omecamtiv mecarbil and our expanded R&D pipeline. We expect to pursue additional business development as well as potential financing and/or other corporate development deals again in 2022. And with that, I'll turn the call back over to Robert Baum.

Thank you, Ching. We expect that 2022 will be another transformational year for our company. The work we've engaged in during the fourth quarter of 2021 and the early part of this year has set us up well to execute against ambitious goals set forth in our Vision 2025, beginning with what may be the regulatory approval of our first potential medicine as well as the expansion of our development programs for aficamten, alongside of progress with reldesemtiv and the advancement into the clinic of earlier-stage candidates and advancement through the clinic of CK-136. Additionally, as Ching mentioned, we're pleased with the recent licensing agreement for omecamtiv mecarbil in China. As we stated, it's our intention to launch omecamtiv mecarbil in the US and do that alone, but we're actively pursuing opportunities to potentially partner omecamtiv mecarbil in Europe as well as in Japan, and we're remaining focused on long-term strategies of sensitively building out our organization. We look forward to sharing more about those corporate development strategies later and throughout this year. And now I'll recap our expected milestones for 2022. For omecamtiv mecarbil, we expect to launch omecamtiv mecarbil in the United States, pending potential FDA approval, which may come in Q4 2022. For aficamten, we expect to continue enrollment in SEQUOIA-HCM throughout 2022. We expect to begin enrolling patients with nonobstructive HCM in a cohort 4 of Redwood-HCM that will occur in this first quarter 2022, and we expect to begin a second Phase III clinical trial of aficamten in obstructive HCM later in the second half of 2022. And we expect to share data from the open label extension study for patients who are completing Redwood HCM throughout 2022. For CK-136, we expect to reactivate the development program in this year 2022. For reldesemtiv, we expect the data monitoring committee to conduct its first interim analysis from COURAGE-ALS in 2022. And for ongoing research, we expect to advance new muscle-directed compounds and conduct IND-enabling studies for 1 to 2 potential drug candidates in this calendar year. Operator, with that, we can now open up the call to questions, please.

We will now begin our question-and-answer session. [Operator Instructions] Our first question will come from the line of Carter Gould with Barclays.

We just have a question on the decision to launch the second Phase III study for aficamten. If you could talk about how this trial will be different versus Sequoia. And second, is this a result of an ask from the FDA or EMA?

So I’ll start and then turn it over to Fady and Stuart. But firstly, it is not in response to any request we received from FDA. Rather instead, it’s underscoring confidence in a next-in-class candidate that we think it’s incumbent upon us to advance the field as could ultimately speak to broader abelling, and we think that aficamten affords us that opportunity. We’re not going to elaborate too much on its design right now, but I will ask Fady and Stuart if there’s anything further they want to add. I’ll just maybe add that there are lots of important scientific questions with regards to therapeutic intervention in this patient population. They all aren’t answered by SEQUOIA, but they – but additional studies may contribute to understanding where therapy may be positioned guidelines or maybe effective under different situations. And as Robert said, we’ll provide more details as we get closer to initiating this Phase III trial. But we’ll emphasize it wasn’t in response to any particular feedback from regulators.

Your next question will come from the line of Justin Kim with Oppenheimer.

Just a couple from me. I know the METEOR data are still fresh in the hands of the team, but I was curious if there's any observations on peak VO2 reliability as an endpoint, particularly during COVID-19? Just trying to sort of understand whether there was sort of any variability observed based on patients' enrollment before or during the pandemic?

It's a tough question to answer, absent being able to share the data as we will soon enough at ACC. But maybe, Fady, do you want to speak to that?

Yes. I think it's a good question because we obviously conducted this trial during a challenging time. I will say, I think that the quality of the data are surprisingly good in that respect and that there are very few missing CPET tests and the quality, the variability and so forth was pretty close to what we expected. Cardiopulmonary exercise testing in general seems to be a very objective means of assessing exercise capacity and not really -- there's not much of a placebo effect there either. So I think the -- overall, the modality and the pandemic despite the pandemic was still a meaningful outcome in this trial.

Okay. Great. Great. And maybe just one on the sort of fourth cohort. Given the lack of rental options for symptomatic nonobstructive disease, would you anticipate these patients to skew maybe more towards the severe side in nonobstructive patients. I'm just kind of curious to know what the specific clinical activity measures might advance the programs to broader, larger studies?

Fady, do you want to take that?

I'll start, and I'll turn it over to Stuart. I think it's still to be seen. I think you see the spectrum of symptoms that you see in the obstructive patients as well, they're going to be less severe and more severely affected patients. We will skew based on our enrollment criteria a little bit towards the more symptomatic patient population. But I don't think that there's reason to per se, I think they're different. Stuart, anything you want to add to that or.

Yes. I mean I agree, certainly, just by the factor is symptomatic indicates the degree of disease progression, and we'll be tracking, circulating biomarkers as well to sort of characterize the severity of the disease. And so that will essentially inform us how we proceed and how these patients perform or the safety profile looks in terms of the next study.

Your next question will come from the line of Anupam Rama with JPMorgan.

Maybe just following on Carter's question on the second aficamten obstructive study. I know you're not talking about the trial designs too much, but are these going to be kind of 2 independent or completely different populations that you'll be enrolling, say, in Sequoia versus the second Phase III? Or will there be some overlap in patient phenotype?

It's a good question. Obviously, in light of the fact that they're both going to be directed to patients with obstructive HCM, there's going to be some overlap, but they're really intended to ask and answer different questions. One should not be codependent on the other. And as we've already indicated, we expect SEQUOIA-HCM to be a lone sufficient and pivotal for potential registration. Perhaps that's the best I can do right now without elaborating on the design, which we don't intend to do today. But Fady, anything you want to add?

No, I think that's -- to me clear, I think we are going to -- it will be an obstructive HCM patients. And I think, again, to say that there are lots of scientific questions. You could probably think of several yourself that you'd like to know in terms of how to implement therapy in these patients and what might be expected as a result of therapy, and we don't want to -- we want to indicate that we're planning to pursue some of those to better inform the field. But we're just not ready to tip our hand at this point in the process.

We’re not trying to be coy. All we’re trying to do is make certain that we get it organized before we start describing it in its design for the fact that we do want to get SEQUOIA HCM off and running, and then we’ll soon enough be able to elaborate on what this next trial will look like.

Your next question will come from Akash Tewari with Jefferies.

This is [indiscernible] on for Akash. So could you give us more color on why the team is enrolled in another Phase III aficamten study? Would you perhaps do a head-to-head study versus mava? Also how much will this trial cost? And our second question is, previously we noticed mava as a long-term extension for nonobstructive HCM despite being on a stable dose. 21% patients on long-term extension had their LVEF drop below 50%. Is there any color that you could give us on the stability of LVEF for Redwood for patients in Cohort 1 and 2? Have any of these patients needed dose adjusted after 10 weeks, and they have seen their LVEF drop below 50%.

So I'll take the first one and maybe ask Fady and Stuart to speak to the data from open-label extension. Again, we're not going to speak to the specific design of this second Phase III study. I can tell you that the costs associated with that study are more likely going to be born in 2023 than 2022. We do expect to start the second Phase III study this year, but the majority of that spending will not hit our P&L this year. I won't comment on whether it's going to be a head-to-head comparison with another drug or not for the fact that that's not our intention today. Instead, our intention is to say that for the fact that now we've raised additional capital and for our confidence in its next-in-class profile, we do believe that it's our obligation to advance the category as should be enabling of potential further expansions in labeling in accordance with standard of care. And I think that's the best we're going to be able to do today. Fady or Stuart, do you want to talk about LVEF and the open-label extension?

Sure. Well, we are planning to present data from an open-label extension in the coming year. So we're not going to elaborate on details -- any details right now. What I can say is that I think the data from the first 3 cohorts of Redwood-HCM are really informative in terms of what we might expect in the longer term. So you may recall that there were no patients who required any treatment interruptions during any of those cohorts. And I think that sort of speaks to the relatively wide therapeutic index of aficamten. And that's something that, again, we'll just have to sort of continue to follow with longer-term experience that we'll gain the open-label extension of Redwood as well as the SEQUOIA-HCM, which is a 24-week trial.

It's not for us to comment on another company's drug candidate, how it's performing in a clinical study. What I can tell you is what Stuart just said, is we're pretty comfortable that the dosing and the dose regimen that is echo-guided demonstrated in cohorts 1, 2 and 3 that it was producing predictable exposures that could be maintained.

Your next question will come from Charles Duncan with Cantor Fitzgerald.

Robert, congrats to you and the team on that OMI NDA acceptance as well as the core start. I have -- I think in exercise capacity. And so I kind of have a 2-part question for Fady and then had a follow-up that I wanted to ask for Ching. So regarding the 2-part question on exercise capacity, given the meteoric results, I guess I'm wondering how can you -- how do you reconcile that relative to the mechanism that we've talked about in the past? And do you think that, that could impact in any way the perception of clinical value for OMI? And then the second part is relative to the conduct of the METEORIC study, was there any takeaways that you have from that study that would impact or help you conduct this study better for SEQUOIA with aficamten?

Good questions. Fady?

I think with regards to the results that we saw in New York, the lack of effect on exercise tolerance. I think there are a couple of potential explanations and admittedly, their conjectures and shouldn't be taken as any read on the results. But when you see -- we clearly know that omecamtiv mecarbil increases exercise performance. I mean, cardiac performance. We've shown that in other clinical trials. But in these patients that we enrolled in New York relatively stable. The question is how much is their cardiac performance limiting to their exercise performance. Recall, these patients have the heart failure results and a lot of skeletal muscle dysfunction, you see energetic deficits and the skeletal muscle that go along with cardiac muscle. And the relative contributions of the 2, I think, are not very well understood. You clearly see with other drugs or other -- rather, I should say, mechanical means or device-related means that improve cardiac function, proven in some exercise performance -- they generally have much larger impacts on cardiac performance. And so it could just be that the magnitude of increase in cardiac performance produced by drug is not large enough to see an improvement in skeletal muscle performance in these patients or rather exercise performance in these patients.

That makes sense. And then the risk on afi on the conduct of that study? Or...

Yes. I think the -- well, just the other part was whether it impacts the clinical value of omecamtiv. And I think there, I think it doesn't really. Most of the focus has been on clinical outcomes. It would have been nice to have to see a positive study, obviously, and would have distinguished omecamtiv from other heart failure therapies where you have impacts on clinical outcomes. But like those therapies, you don't have that actually impacts on exercise capacity. So we don't -- we -- at least in our market research and things haven't seen a large negative impact of not having a benefit there. In terms of takeaways for SEQUOIA, there's certainly a big advantage to having conducted a large international Phase III trial using an endpoint that's measured the same way as the endpoint we're going to conduct Sequoia with. And so we have a lot of experience now in terms of how the test can go wrong, how should do train sites, what should you be looking for? And how do you qualify sites, all those things. And I would say METEORIC when you look at the data quality and all that was really excellently conducted study, and I think that leads well on our ability to do the same in Sequoia.

Okay. And then quickly moving to Ching regarding expense guidance, I appreciate you providing full year guidance for this year, probably not ready to do that for next year. But I guess I'm just kind of wondering, in terms of the expense this year, would you anticipate a step function or incremental increase for next year? And then out of the $365 million to $385 million expenses, what percentage of that will be spent on omecamtiv marketing approximately?

So first part of your question, as Andrew outlined during the call, we don't expect to begin hiring the sales force until after we receive NDA approval, which is now looking likely to be end of November. So if you look at 2022, I don't expect significant increases in 2022 relative to the range we gave today. In 2023, those sales force that we hired in 2022 will accrue full year expenses. So I do expect a significant headcount increase -- headcount expense increase in 2023 in addition to all the marketing spend, media buys and patient support program, et cetera. So we're not ready to give 2023 guidance, but I think it's safe to say that the expenses in 2023 is expected to be higher than 2022. And in terms of percent of the range, we're not breaking it down today, but as Andrew outlined, the spending in 2022 in commercial for omecamtiv mecarbil is roughly 1/3 of the total spend that we will anticipate once omecamtiv is launched and the commercial spending reaches steady state.

In 2022, what percent was marketing and the marketing spend is really quite modest. If you mean commercial and inclusive of that is supply chain, distribution, logistics, as well as other commercial expenses beyond marketing, then it starts to become a bit more notable, but it's still quite significantly smaller than that, which is going to even one of our clinical trials. So I wouldn't be focused on the marketing spend in 2022 as a big driver of increased spending, much of that increased spending in 2022 versus 2021, for instance, relates to the fact that it's a full year of COURAGE-ALS a full year of SEQUOIA as well as the additional clinical trials that you heard about today. Why did we choose to do the deals that we did in December and January in large part it's in order to be able to be in a position to substantially expand the development program for aficamten as we announced today.

That’s helpful, Robert. Appreciate it. Not all that concern about expenses and look forward to additional biz-dev activity out of you folks.

Your next question will come from Madhu Kumar with Goldman Sachs.

This is Rob on for Madhu. I was just wondering, can you please remind us of what the futility analysis criteria for the potential second half looking to COURAGE-ALS?

Sure. I'll turn to Fady and Stuart for that.

So the question is about the upcoming futility analysis?

Yes, correct. What's the criteria?

Well, as we mentioned in the call, we won't conduct that until we have about 1/3 of the patients who have reached 12 weeks treatment. It's a pretty straightforward futility analysis. Essentially, we're assessing whether reldesemtiv is showing a trend of greater benefit versus placebo. I mean, that's kind of the -- that's sort of the bottom line. So not such a high bar, but we certainly want to have some level of confidence before we continue to advance the trial. So that's really the objective of the first interim.

This first futility in keeping in mind the study design provides for a second interim analysis as well. But this futility analysis is really designed to ensure that there’s no adverse consequence of the addition of reldesemtiv to standard of care. And therefore, to Stuart’s point, it’s not a particularly high bar. We expect to be able to proceed through. Our goal is to be able to know that we’re doing at least as well as we saw in FORTITUDE-ALS and then seeing those effects as could be amplified over longer periods of time. So the first futility will be a lower bar the next interim could provide for a higher bar.

Your next question will come from Jeff Hung with Morgan Stanley.

This is Melina on for Jeff. So I guess just following up for COURAGE. In addition to sample size, can you talk a little bit more about the things we're doing in elements of the study design that will help increase the chances for success? And then our second question, just a quick one for CK-136. Was it kind of a question of reprioritization that you're now reacting the program later this year? Or what was kind of the decision to now reactivate the program?

Sure. I'll start with the second question. We wanted to make sure we had the additional resources, cash and otherwise to be able to advance CK-136. To remind you, this was a compound previously that was partnered with Amgen and we needed to provide for the transition under our collaboration with Amgen to be able to fully independently progress it forward, and that's what we're doing now. But in the second half of 2021, we were ready for this in part to ensure that we could finish what we started. And our intention is to pick up where CK-136 left off under our Amgen collaboration, advance it forward in Phase I and be in a position to make a decision about potential Phase II as soon as we can. So you'll see more about CK-136. We're pretty excited about this molecule. It's a novel mechanism, we think, affords it opportunity to be studied in some key indications with high unmet need, and therefore, you'll hear more about that this year. With respect to COURAGE-ALS in your first question, I'll turn it to Stuart and Fady, but I'll start by saying sample size is just one of the things that we're looking at based on learnings from FORTITUDE-ALS and in discussions with regulatory authorities, we've designed COURAGE-ALS to enrich for what we hope will be a treatment effect based on things that we have previously observed. Stuart and Fady, perhaps you can elaborate.

Yes, that’s exactly right. What we learned from FORTITUDE-ALS really, I think, strengthens the study design and increases probability of success, not the least of which is the dose selection, right? We selected a dose of 300 milligrams BID. We think that was optimal in terms of the benefit risk profile. Another major element, which Robert was alluding to is enriching the population for patients that are medium or fast progressors. And I mentioned this in the call – during the call. And the reason for that is based on, again, results from FORTITUDE and showing that those patients that are actually demonstrating the largest magnitude of treatment benefit. So with that the patient population where there was less progression compared to placebo. And this is kind of what you might expect be the greater ability to detect treatment effect in a population that is progressing more rapidly. So sort of increasing the sensitivity, the likelihood of demonstrating a treatment benefit. There are other elements as well. I won’t go into a lot of detail, but we put a lot of thought into the design of the study in terms of the ability of patients to actually engage and participate. Obviously, these patients have a lot of difficulty with mobility and just being for transportation to the clinic is very difficult. So most of our visits are actually remote visits. And so I think compared to other trials that have been conducted in ALS, this one is relatively easy where patients participate in. So it has significantly less burden. And hopefully, that will improve patient retention and engagement.

Your next question will come from Dane Leone with Raymond James.

This is Sean on for Dane. Just kind of maybe a little bit of detail would be good on the endpoints for the Redwood cohort 4. How do they compare and contrast to the MAVERICK study? And then kind of how do those secondary endpoints, maybe functional endpoints point you to a potential pivotal?

Yes. I think the MAVERICK study taught us some things. I thought it was a good study, and it demonstrates that BNP is an effective biomarker for this mechanism of action in this population, but we can also go farther as we intend to do in Cohort 4. Pretty soon we'll be posting on clinicaltrials.gov, the design and endpoints for the study. But Fady or Stuart, do you want to say anything else at this time?

No, I was just going to basically say reflecting what Robert said, will elaborate in detail when we’re ready to start. But in terms of the objectives being safety and tolerability and those finding, I think you can get some sense of the kind of endpoints we’ll be incorporating.

Your next question will come from Jason Butler with JMP Securities.

Robert, just one on omecamtiv for me. Just in terms of the 200-person sales force, can you speak to what proportion of the target audience that allows you to focus on from the start and how that breaks down between hospitals or physicians that spend a lot of time in hospitals versus outpatient heart failure clinics?

Sure. We'll turn to Andrew to answer that, please.

Sure. Thanks for the question. So, relative to sales force, we’re focused on the majority of cardiologists who treat worsening heart failure. I would say it’s probably in the 60% to 70% range. And there is some overlap, obviously, between cardiologists who treat in hospital and as compared to just spend time in the hospital. So, there will be kind of duplicate coverage for those cardiologists who cover both. And then your kind of final point of your question in terms of relative sizing, we’re probably about 60 — 65% focused on — just in terms of headcount, focused on outpatient cardiologists and the balance of them focused on hospitals. A lot easier to cover the hospitals, there's probably about —there’s a little less than 1,000 hospitals we’re focused on and less than 10,000 cardiologists and maybe that’s just another way to think about it.

Your next question will come from Salim Syed with Mizuho.

This is -- it's Mike Linden on for Salim. A couple on aficamten, if I may. First on SEQUOIA, I know it's early on with enrollment just having started. What is the comfort level for SEQUOIA's enrollment in the U.S. with mavacamten possibly approved in April? Or maybe what are some of the drivers that might push patients to actually enroll knowing there's a possibility of being on placebo versus mavacamten availability? And then the second question also on aficamten, I know it's -- you can't speak on price and it's pretty early here, but just generally, on the Obstructive HCM market, there seems to be a little bit of discrepancy between how people are modeling peak sales for mavacamten versus modeling for aficamten. And one of the key drivers there is obviously price. So, debate over where the ballpark price comes in, it seems to be kind of a wide range that people focus on with ICER having come in talking about mavacamten at 12,000 to 15,000 a year. I believe Myocardia's numbers were previously a lot higher than that. So just generally speaking, just to help us understand the dollar size of the market for Obstructive. What market comp should we be looking at or what framework?

Sure. So, why don't we start with your second question first and I'll turn to Andrew. I will tell you for quite a long time, we've been pointing to price and value in this category as was different than sometimes put forward by Myocardia and echoed by Wall Street analysts. We're taking note of the ICER commentary. We also expect BMS is pretty savvy about these things and knows what it's doing in terms of how it's ultimately going to be pricing in accordance with expected demand and as well as value assumptions. Where that ultimately sorts out in terms of gross to net, I think, is something that we'll be observing. We obviously have our own scenarios. But for a product that's just entering Phase III, you'll please forgive us if we'll be not disclosing anything about how we intend to ultimately be pricing. Andrew, anything you want to add to that?

Yes. I mean, probably the only thing maybe to add to think about forecasting is certainly not going to be in the ICER price range. I would -- I guess it's not going to be in that top range you've seen either. So, you're probably somewhere in the middle. There's always a good analogy just to look at price prevalence relationships. This is a rare disease. Right now, there's diagnosed less than 200,000 patients in the U.S. So, I think maybe that could give you another hint or clue in terms of maybe pricing to try to look at. And when you consider forecasting over time, there's really -- there's symptomatic treatments. There's obviously surgery as well. So, there's really not a good effective pharmaceutical treatment that treats the underlying condition until these -- and if these products would get approved. So, you look at that 190,000 prevalence if you believe that the prevalence is 3x to 4x that just because of diagnosis rates be increasing over time and you kind of look at that price point, I'm imagining that over time, you're going to get the majority of patients treat it. So hopefully, there are some inputs or some thoughts for modeling. But beyond that, I'm not going to really comment.

To your first question, which spoke to enrollment, the projection that Stuart put forward of approximately a year, give or take, that's with the full knowledge that we expect mavacamten to be approved in Q2. And I do think that that drug should likely be embraced and will be launched successfully. I think BMS will be effective at commercializing that first-in-class compound. But at the same time, we feel pretty good about our projections for how we expect SEQUOIA to enroll both because aficamten affords a next-in-class profile because of the fact that in a clinical trial, patients are afforded access to care and resource intensity that isn't always available outside of a clinical trial, especially as would be through an open-label extension, but we're not banking on the U.S. alone. Obviously, we're enrolling patients in other geographies, too. Fady or Stuart, anything you want to add to that?

Yes. Well, I will add that patients who enrolled in SEQUOIA, will, of course, have the opportunity to enroll in the open-label extension, right? So, there's an advantage to having aficamten for long-term treatment at no cost. And I think that can be appealing as well.

I think the other thing to keep in mind is that we're not talking about a disease that's rapidly progressive and fatal, which makes it very difficult to obviously enroll if there's an available drug out there. But these patients have lived with their symptoms often for years and whether they may choose to go into a clinical trial or begin another drug, obviously, is their choice, but we think it's -- Stuart said, it's still pretty attractive to be able to enter a clinical trial and receive long-term open-label treatment at the end of that study at no cost to them. So we'll see how that goes.

SEQUOIA is going to be enrolling in a very large number of clinical trial centers. So that goes a long way towards enabling of us to be confident in what will be roughly 1 year to enroll the full complement of patients.

Your next question will come from Yasmeen Rahimi with Piper Sandler.

Robert, so, 2 questions. I absolutely respect your decision on providing more color on the design of the second aficamten HCM study. But I would like to understand, Fady, from you, can you maybe help us understand Obstructive HCM patient populations better? Like how do we segment these patients? Like I know you alluded to mild to moderate in terms of symptoms. But if you could speak a little bit more granularly in regards to the spectrum of disease that could be helpful? And then the second question is about non-obstructive HCM study. Given that we have seen the failure with another mycin binding inhibitor in non-obstructive HCM, what confidence do you have that you should be able to see success in this population?

Sure, Yasmeen. Good to talk to you. I think in terms of oHCM, there’s a whole spectrum of disease. You have patients who have fairly mild obstruction, but may have other different parts of their ventricle that contribute to abnormal filling and potentially symptoms. You have patients that have high levels of obstruction, but maybe not very much symptoms. Obviously, you have patients with high levels of obstruction and significant symptoms. And then finally, you have patients in whom medical therapy isn’t really controlling their disease and they have to consider surgical or invasive options in terms of septal ablation. So, I think in a nutshell, that is sort of the spectrum of patients and we’re focused really on the symptomatic patients with a significant degree of obstruction for studies of aficamten and in this field in general. But there are other populations to consider as well. In terms of your second question with regards to nHCM, non-obstructive HCM, by definition, these patients don’t have obstruction of blood flow leaving their heart, but they have thickened strip ventricles with problems with filling. You viewed MAVERICK as a failure, but I think you have to be cautious in the way you think about that. MAVERICK was a study that was relatively small, not very long. And it had a lot of clinical endpoints, which probably were underpowered with regards to assessing clinical events or clinical outcomes, symptoms or exercise performance. If you could measure exercise performance in a study of 50 people, we wouldn’t need to do SEQUOIA in the study of 270 people. And do you know in this population, whether treatment is sufficient for 16 weeks versus do you need much longer treatment 6 months to 12 months, for instance. So, I think the key in a Phase II study of nHCM is asking whether there are signals that read on the potential in a Phase III trial to impact a more clinically relevant outcome. Might you see indications of reverse remodeling, might you see biomarker changes and other things and then moving to Phase III to better design and implement a Phase III trial, where you test that – test the impact of those things on clinically meaningful endpoints. So, I don’t view – I think MAVERICK pointed to the impact of the mechanism of action on certain biomarkers, which are potentially predictive of long-term benefit in the area. But obviously, we still have to build that bridge from Phase I to Phase III.

Your next question will come from Rohit Bhasin with Needham & Company.

This is Rohit on for Serge. Just in regards to the METEORIC-HF trial, did this trial change the way you think about potential investments for marketing omecamtiv upon approval?

I'll start and maybe turn to Andrew, but I'll say definitely not. We made the decisions to do what we're doing based on GALACTIC and GALACTIC alone. And while we had hoped to see effects from METEORIC that would be additive to what we saw with GALACTIC, the fact that the results are neutral in METEORIC don't subtract from what has us excited about omecamtiv from GALACTIC. I will tell you that omecamtiv joins a long list of heart failure drugs that have not demonstrated improvement in exercise stamina. And while we thought we had a good therapeutic hypothesis that warranted testing, we feel confident that the METEORIC results are telling us that this drug candidate much like many others, isn't translating into effect on exercise stamina. But however, it has already demonstrated in a substantially larger clinical trial, GALACTIC, much, much larger, much longer treatments that it had effect on hard clinical outcomes, including a composite of death and heart failure-related events and our investment decisions are predicated on that. Andrew, anything you want to add to that?

You covered it really well, Robert. The only thing maybe I would add is that we had done some market research as well with physicians to get their feeling on METEORIC, had it been positive, neutral or negative. And had it been positive, then it certainly would have been additive as Robert described. But given where it netted out, we're not really anticipating any impact at all and it changes nothing on our positioning, nothing in our overall strategy, nothing in our investment in field force size. I mean, all continues as planned.

And to that effect, it’s not just investments in commercialization, but investments in life cycle management. As we think about potential approval for omecamtiv down the road, we are already contemplating what would be other studies that we think we would be wanting to initiate in 2023 and 2024.

Your next question will come from Emanuela Branchetti with H.C. Wainwright.

I was wondering if you can help us gauge the awareness around omecamtiv in the clinical community? And what do you envision will be important in driving the adoption if the drug will be approved? How long do you think we will have to wait to see omecamtiv inclusion in the American guidelines, for example? And do you think this will constitute a key point post approval?

Good question. So awareness is a function of a number of things, including the activity associated with clinical research and to what extent those investigators are themselves engaged actively in the management of patients with heart failure. And for the fact that omecamtiv mecarbil was being developed in the United States and also globally, for so many years across so many studies, awareness is reasonably high. Andrew can speak to that in more quantitative ways from market research. I'll also point out that as we're intending to go to market with omecamtiv mecarbil, the guidelines will matter importantly. And guidelines, as Fady can speak to, are being updated now with more frequency. And we do expect that omecamtiv is going to be reflective in guidelines shortly post approval. And that's one contributor to what could be early adoption. Another one is market access, and that's where we're going to be a bit more conservative, as Andrew can speak. So why don't we start with Andrew asking him to comment first and then Fady afterwards.

Sure. So, on awareness, there's actually really good awareness relative to where omecamtiv mecarbil is in the registration status. Unaided, we're about 1 in 10 cardiologists are aware of omecamtiv, which is actually very high for unaided awareness when you don't have a commercial presence in the marketplace. And over half of cardiologists when aided when you just talk about mechanism, et cetera, are certainly aware of it. So, we have really good awareness going into a launch. Relative to adoption, one of the things you see across pretty much all launches is adoption is generally slow in the beginning. Some of that is due to awareness as you've asked and others is due to just uptake by payers over time. So, we're expecting broad payer access probably 12 to 14 months after launch. But we certainly know that uptake will be slow maybe for the first 12 or 14 months as we start to build more of that payer access and patient access, especially with Medicare, where the majority of patients are and there's a very defined time line to get Medicare access. So hopefully, that helps. Fady?

Yes. Thanks, Andrew. I think with regards to guidelines, as Robert indicated, the guideline committees have acknowledged the more rapid pace of heart failure research and the availability of new data that may drive heart failure care and in parallel, the need to potentially update guidelines to incorporate new evidence as it’s generated. So, while they may go through a process of a complete rewrite of the guidelines every few years, I think the – particularly in the U.S. are beginning to think about smaller updates to the guidelines in the intermediate periods. And so we would hope with the data that we have and particularly with an approval that guideline committees may look to see where to incorporate omecamtiv mecarbil into the standard of care.

And at this time, there are no further questions in queue. I would now like to turn it back over to Robert Blum for closing remarks.

Thank you, operator, and thanks to everybody on the call today. I'll make my concluding comments brief. We ended 2021 on a high note. Lots of progress in our R&D pipeline as well as in preparations for 2022. We executed at the end of the year and early part of this year on some key transactions that afford us a stronger balance sheet as well as more forward cash runway. And we started this year already on a high note with regard to designation of the NDA for omecamtiv under standard review in our expected PDUFA date later this year as well as with the Cohort 3 of REDWOOD-HCM and the start of SEQUOIA-HCM. So we're firing on all cylinders, and we're feeling pretty good about how this can be another transformational year. We appreciate everybody's interest in the company and the progress we're making. We look forward to keeping you abreast of that progress and prospects throughout this year. With that, operator, we can now conclude the call. Thanks very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.