Cytokinetics, Incorporated (CYTK) Q2 2022 Earnings Report, Transcript and Summary

Good afternoon, and welcome, ladies and gentlemen, to Cytokinetics' Second Quarter 2022 Conference Call. At this time, I would like to inform you that this call is being recorded. All participants are in a listen-only mode. [Operator Instructions]. I would now like to turn the call over to Diane Weiser, Cytokinetics' Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

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 provide updates related to omecamtiv mecarbil and aficamten. Andrew Callos, EVP and Chief Commercial Officer, will discuss commercialization planning activities for omecamtiv mecarbil and our specialty cardiology franchise strategy related to aficamten. Stuart Kupfer, SVP and Chief Medical Officer, will provide an update on reldesemtiv. 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 financial outlook and revised 2022 guidance. Finally, Robert Blum will provide closing comments and will review expected upcoming 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 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 second quarter 2022 financial results filed on Form 8-K today. 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 to everyone for joining us on the call today. We made significant progress in the second quarter across our pipeline, and we enter the second half of the year with a strong balance sheet, inclusive of approximately $383 million in net proceeds through the offering of convertible senior notes, which we completed at the beginning of Q3. As many of you know, securing diversified nonequity diluted sources of capital to build our balance sheet has been a tenet of our business for many years. And the funds raised through this transaction support our continued progress and expansion of our pipeline, all with the goal of improving the lives of people with cardiovascular and neuromuscular diseases of impaired muscle function. Importantly, during the quarter, we announced the scheduling of a Cardiovascular and Renal Drugs Advisory Committee Meeting for omecamtiv mecarbil to occur on December 13, 2022, as well as the extension of the PDUFA date for omecamtiv mecarbil to February 28, 2023. As a result, we've been able to adjust our launch readiness activities, time lines and budgets and thus narrow our spending guidance. We also advanced our development program for aficamten in ongoing trials and through preparations for additional trials expected to begin later this year and also next year. For reldesemtiv, we continued enrollment and conduct of COURAGE-ALS according to plan, and we also recently started the open-label extension trial, COURAGE-ALS OLE. Behind the scenes to these late-stage programs, our work continues on track and against goals set forth in our Vision 2025 to bring forward earlier stage programs to expand our pipeline. Firstly, to touch on omecamtiv mecarbil. Our next important milestone is participating in the Advisory Committee in December. And while we do not yet have the agenda nor specific topics of interest to FDA, we expect that FDA may want to discuss the scope of the potential indication given that GALACTIC-HF was conducted in a broad population of more than 8,000 patients with heart failure and reduced ejection fraction, but the results demonstrated that the treatment effect of omecamtiv mecarbil seems to be amplified in certain prespecified and other subgroups of patients with worsening heart failure, whether that's measured by low left ventricular ejection fraction, high NT-proBNP, recent hospitalization, low blood pressure or other measures. The FDA may also want to discuss the dosing of omecamtiv mecarbil and how it may be implemented in clinical practice. And suffice it to say, our teams are keenly focused to preparations for the Advisory Committee meeting, and we'll be well prepared to engage constructively with FDA and its advisers. At the same time, we're pushing ahead on several work streams related to the potential approval and launch of omecamtiv mecarbil. And due to the shift in the PDUFA date, we've adjusted certain time lines and the associated spending to account for the potential approval taking place in 2023 rather than 2022, which has prompted us to refine our 2022 guidance related to spending. Ching can elaborate on this extension of our cash runway in a moment. As we continue our European partnering campaign, we have in parallel advanced a path toward approval and expect to submit a marketing authorization application for omecamtiv mecarbil to the European Medicines Agency, or EMA, by the end of the year. If we're successful at partnering omecamtiv mecarbil in Europe, we'd expect to receive additional capital to support flexibility in progressing our cardiovascular pipeline globally. As it relates to work to advance aficamten in the second quarter, continued enrollment in conduct of SEQUOIA-HCM is progressing, and we're pleased to see the enthusiasm from the many dozens of sites planned to participate in this trial. We also continued planning for a second Phase 3 clinical trial of aficamten in obstructive HCM, which we anticipate will start in the fourth quarter of this year. Today, Fady will be describing objectives of that trial in more detail to elaborate on its purpose and goals supportive of our overall strategy for aficamten. And finally, in Q2, we presented the first longer-term data from REDWOOD-HCM OLE, showing significant sustained reductions in LVOT gradience, improvements in symptoms and cardiac biomarkers, all with a favorable safety and tolerability profile. These data build on the 10-week treatment results from REDWOOD-HCM. And we look forward to sharing additional longer-term data throughout 2022 and through 12 months later this year at medical meetings. Shifting to reldesemtiv. We continue to enroll patients and activate centers in COURAGE-ALS, and we also recently started the COURAGE-ALS open-label extension study. We look forward to the first interim analysis, encourage ALS designed to test for potential futility. That's expected to occur in the fourth quarter of this year. And as you'll hear from our team today, we're moving full steam ahead as we enter the second half of the year with a reinforced balance sheet to support our advancing pipeline and as we undergo the transformation to be what we expect to be, a fully integrated biopharmaceutical company. With that, I'm going to now turn the call over to Fady, please.

Thanks, Robert. As we continue our dialogue with the FDA and prepare for our upcoming advisory committee meeting for omecamtiv mecarbil, we're pleased to see additional analyses emerging that reinforce the definition of those patients who may be served by treatment with omecamtiv mecarbil. That is higher risk patients with worsening heart failure. During the quarter, we presented results at the Heart Failure 2022 meeting that were then published in the European Heart Journal of a new analysis from GALACTIC-HF on the effective treatment with omecamtiv mecarbil in patients with heart failure and reduced ejection fraction and low blood pressure. The results show that there was greater treatment effect from omecamtiv mecarbil on the primary composite endpoint of cardiovascular deaths or first heart failure events than in patients with outload blood pressure and that omecamtiv mecarbil did not further lower blood pressure in those patients. Those receiving omecamtiv mecarbil had a lower incidence of treatment-emergent serious AEs and adjudicated for strokes compared to placebo. Safety of patients on omecamtiv mecarbil was similar to patients on placebo in the slow pressure blood group -- low-pressure group. These findings are important because patients with low blood pressure can often be challenging to treat, and blood pressure can often be a limiting factor for up titration and initiation of available standard of care therapies. The importance of these findings was not lost on the heart failure community, many of whom commented to us on its value for their patients in discussions we had with them following the data presentation. These results add to the growing body of evidence showing that the treatment effect of omecamtiv mecarbil is amplified in patients who have worsening heart failure, whether that's defined by lower ejection fraction, recent hospitalization or in this case, lower blood pressure. As Robert mentioned, we also advanced the development program for aficamten. During this quarter, we presented the first longer-term data from REDWOOD-HCM OLE at Heart Failure 2022, encompassing 38 patients who completed either 12 or 24 weeks of treatment. The data showed that treatment with aficamten was associated with substantial reductions in the average resting left ventricular outflow tract gradient and the Valsalva gradient. These reductions started to occur within two weeks of treatment, were sustained through 24 weeks of treatment and were achieved with only modest decreases in the average left ventricular ejection fraction. The majority of patients had an improvement in one or more NYHA class, and there was also significant improvements in NT-proBNP and cardiac troponin, two cardiac biomarkers. Notably, treatment was well tolerated with no permanent discontinuations of aficamten. As we look forward to sharing additional longer-term data from Redwood OLE later this year, we're encouraged by these initial data cut -- this initial data cut supportive of aficamten being a next-in-class therapy with a strong safety, efficacy and tolerability profile. In developing a therapy addressing the underlying cause of HCM, we're also interested in impacting the disease process or hallmarks of disease progression and demonstrating potential reversal of the adverse thickening and stiffening of the myocardium that results from increased contractility. At the American Society of Echocardiography, 33rd annual scientific sessions, we presented data from an analysis of REDWOOD-HCM, looking at changes from baseline and echocardiographic measures of cardiac structure and function after 10 weeks of treatment with aficamten compared to placebo. What we found was that at week 10, measures of cardiac structure, diastolic and mitral valve function improved in treatments treated with aficamten. In fact, there was significant reduction in left atrial volume index, a trend towards reduction in left ventricular hypertrophy, improvements in ventricular relaxation and filling a reduction in the proportion of patients with systolic anterior motion of the mitral valve leaflet and a trend towards reduction in those with eccentric mitral regurgitation. Together, these data suggest that treatment with aficamten may help address each of the main defining characteristics of HCM, left ventricular hypertrophy, impaired cardiac relaxation, induced mitral regurgitation and to ultimately improve cardiac structure and function. Moving to SEQUOIA-HCM. We're pleased to share that we're continuing to progress with study start-up, enrollment and conduct and now with regulatory approvals in nearly all 14 countries participating in the trial, including more recently, China, where our partner, Ji Xing, will conduct the China cohort. Initiation of sites in the U.S. continues, and we're also activating many sites in Europe and China. We are overcoming site start-up challenges related to the pandemic that impacted staff availability. And we anticipate this third quarter will mark further progress in global site activations and subsequent enrollment in this trial. In fact, we expect the majority of planned sites in SEQUOIA-HCM to be activated by the end of Q3. Given the number of international trial sites and the enthusiasm of our investigator group, we continue to believe the trial will complete enrollment in the first half of 2023, with results from SEQUOIA-HCM expected to be available in the second half of 2023. In addition, during the second quarter, we continued enrolling patients with nonobstructive HCM in Cohort 4 of REDWOOD-HCM. We've now enrolled nearly half of the planned number of patients in this open-label cohort and that we are pleased with its progress. We may be able to conduct an interim analysis of data from this cohort by the end of this year to inform planning for potential FDA interactions in the first half of 2023. We look forward to providing a further update with our next earnings call and sharing data from this cohort in the first half of 2023, which if supportive, would enable the start of a potential Phase 3 pivotal trial in patients with nonobstructive HCM to occur in 2023. In the second quarter, we also continued planning activities for the second Phase 3 clinical trial of aficamten in obstructive HCM. The goal of this additional Phase 3 trial is to better understand and position the use of aficamten relative to current standard of care therapy. We believe we are on track to begin this trial in the fourth quarter. And now I'd like to share a few details about the intended trial design. This Phase 3 multicenter, randomized, double-blind trial is planned to evaluate the safety and efficacy of aficamten as monotherapy compared to metoprolol as monotherapy in people with symptomatic obstructive HCM. Metoprolol is a beta blocker commonly prescribed to people with obstructive HCM. And by studying it against aficamten, we expect to evaluate the potential for aficamten to be considered for first-line therapy in people with symptoms and functional limitations due to HCM. We're not ready to share all the details of this trial, but we recently met with FDA and have alignment on the clinical trial design. We hope this level of detail provides some context into our goals for the trial and how it may contribute eventually to potentially differentiated expected labeling for aficamten. We look forward to sharing more details and to starting this clinical trial for our next-in-class drug candidate later this year. Moving now to medical affairs at Cytokinetics, as we mature our capabilities in the recent quarter, we continued hiring and have now onboard our complete managed health care medical scientist team and have successfully initiated medical support for our global value access and distribution activities. We were also pleased to hold the inaugural meeting of the investigator-sponsored study review committee during this quarter and to launch a field-based customer relationship management or CRM system to support our medical scientists in their engagements with scientific leaders around the country. Coming up, we look forward to presentations at HFSA and AHA with additional data from our specialty cardiovascular franchise, details for which we plan to be sharing soon. With that, I'll turn the call over to Andrew to provide an update on our commercial readiness activities in support of our planned specialty cardiology franchise strategy.

Thanks, Fady. Our commercial activities in the second quarter focused hiring to field management and other ongoing launch-related activities. With the extension of the PDUFA date in the next year, we have evaluated and adjusted certain of our time lines, particularly for activities that are gated to the potential approval and subsequent launch of omecamtiv mecarbil. In particular, the hiring of the remaining first-line sales leaders and customer-facing colleagues, including our approximate 200-person sales force has been shifted to occur after the PDUFA date next year. Our plan remains to have two-third of our planned spending related to the launch of omecamtiv mecarbil gated to take place after the PDUFA date. Other work streams in support of potential commercial launch remain on track. During the second quarter, we completed hiring of the majority of our headquarter-based team and now have in place all key roles needed for launch, including the majority of our marketing team, pricing and market access teams, analytical and commercial operations teams and senior sales leadership as well as over 50% of our intended first-line sales managers. In terms of market access, our teams have been actively engaging with key payers to share our clinical, health care utilization as well as economic data consistent with FDA guidance for unapproved products. As it relates to supply chain, we have built on Q1 momentum with significant progress made in ERP implementation, key realization and supply readiness as well as in recruiting activities filling key roles for our commercial supply chain. As FDA is reviewing the NDA for omecamtiv mecarbil, we are also engaging in discussions related to the potential use of a diagnostic test of plasma concentrations to guide dose optimization with omecamtiv mecarbil to facilitate getting the right patients to the right dose, ultimately optimizing the benefit the drug may have. Moving to afecamten. We also continued our go-to-market strategies in the U.S. with the goal of having an initial plan in place by the end of the year. As we plan for a potential launch of aficamten, we are closely tracking the HCM market dynamics and launch of [indiscernible]. Our market intelligence has indicated there are hundreds of patients who are beginning treatment and there is enthusiasm for this new mechanism of action from cardiologists. We are witnessing the beginning of a paradigm shift in the treatment of HCM with the availability of the first cardiac myosin inhibitor, and we'll continue to monitor the launch and uptake of [indiscernible]. This helped us to understand the HCM market, gain insights and learn from this commercial launch experience to form our commercial planning for aficamten. And with that, I'll turn the call over to Stuart to provide an update on reldesemtiv.

Thanks, Andrew. In the second quarter we continued enrolling patients in COURAGE-ALS and have now enrolled approximately 250 patients to date. We have nearly completed activation of the full complement of sites with over 75 centers activated around the world. Enthusiasm for this large international Phase 3 trial has remained high from investigators, and we're pleased to see enrollment advancing well. We're also paying close attention to the evolving landscape for potential treatments for ALS. There is also a great deal of interest in potential new medicines, and we believe reldesemtiv is well positioned to align with interest of regulatory authorities and patient communities, giving us muscle-directed mechanism of action and the promising clinical evidence related to reldesemtiv generated to date. Importantly, we remain on track for the data monitoring committee to conduct the first interim analysis of COURAGE-ALS, which will assess for futility. In the fourth quarter of this year, this futility analysis was triggered 12 weeks after approximately one-third of a planned number of patients were randomized. We look forward to the readout of that milestone for COURAGE-ALS and will hopefully then continue with trial conduct. We also recently started COURAGE-ALS OLE, the open-label extension of COURAGE-ALS. In the OLE, patients will receive 300 milligrams of reldesemtiv dosed orally twice daily for 48 weeks, after which they may transition to a managed access program. The managed access program aligns with our strong commitment to the patient community and to ensuring access to our investigational medicines in a safe and ethical way. As such, patients who have participated in any Cytokinetics' ALS trials will be eligible to enroll in the managed access program, which we expect to launch in the fourth quarter of this year. More recently and just this morning, we jointly announced with the ALS Association a new release of the Pooled Resource Open-Access ALS Clinical Trials database or PRO-ACT, now inclusive of donated clinical trial data from our completed clinical trials in ALS, including BENEFIT-ALS, VITALITY-ALS and FORTITUDE-ALS. This database houses the largest ALS clinical trial data set with nearly 11,000 ALS patient records from 23 completed clinical trials. The data are harmonized and anonymized to create a unique freely available resource for the scientific community. We're proud to contribute our clinical trial data to the proactive database and hope that it may contribute to new therapies and potential breakthroughs for people with ALS. And with that, I'll turn it over to Robert Wong.

Thanks, Stuart. We ended the second quarter with approximately $597 million in cash and investments. Our revenue in Q2 2022 came primarily from the recognition of our deferred revenue for royalties on the net sales of products containing mavacamten as a result of the extinguishment of royalty obligations. Our second quarter 2022 R&D expenses increased to $57.1 million from $36.4 million in the second quarter of 2021, primarily due to increases in spending related to our skeletal muscle program, our cardiac myosin inhibitor program and our early research program. More than 50% of our R&D expenses were attributable to our cardiovascular program, as expected, given activity for the cardiac myosin inhibitor program. And the remainder of our expenses were attributable to our skeletal and early research activities. Our second quarter 2022 G&A expenses were $42.7 million, up from $21.2 million in Q2 2021 due to higher commercial readiness spending and higher personnel-related costs, including stock-based compensation. And now Ching will review our financial outlook and corporate development strategy.

Thanks, Robert. We ended the second quarter in a strong financial position with approximately $600 million cash on the balance sheet. In addition, in July, we raised approximately $523 million in net proceeds from the offering of 3.5% convertible senior notes. The notes have a 30% conversion premium and are due in 2027. In connection with this transaction, we repurchased approximately $117 million in aggregate principal amount of outstanding 2026 notes through privately negotiated transactions. The remainder of the proceeds will be divided among the following priorities: one, to expand the clinical development program for aficamten, including for the second Phase 3 clinical trial in patients with obstructive HCM and a potential Phase 3 clinical trial in patients with nonobstructed HCM. Two, to expand commercial capabilities and conduct readiness activities in the U.S. for potential launches of omecamtiv mecarbil and aficamten. Three, to advance our early-stage clinical development pipeline, including progressing CK-136 to Phase 2 studies and the potential development of additional cardiac myosin inhibitors for HFpEF. Four, to expand our muscle biology focused research activities to energetics, growth and metabolism of muscle. And five, for general corporate purposes, including working capital. We're pleased with having executed a successful convertible debt offering and bolstering our balance sheet in support of the advancement and expansion of our pipeline. Turning into our 2022 guidance. Due to the PDUFA extension, we have revised our guidance to reduce our net cash utilization for the year. Previously, we expected our operating expenses to be in the range of $380 million to $400 million and net cash utilization to be approximately $365 million to $385 million. We have reduced our net cash utilization to approximately $360 million to $365 million due to the shift in hiring of our sales force and spending on activities planned to occur only after the launch of omecamtiv mecarbil, which now has a PDUFA date in February of 2023. We believe our balance sheet, inclusive of the cash raised through the convertible debt offering represents between two and three years of forward cash. And we expect to end 2022 with more than $800 million in cash. And with that, I'll turn the call back over to Robert Blum.

Thank you, Ching. So we're entering the second half of this year with strong financial footing, multiple programs progressing across our pipeline and a commercial transformation underway. We're building teams and capabilities, and we're engaging in new activities and work streams and at the same time working to expand our pipeline by advancing earlier-stage drug candidates. As Ching mentioned, we raised more than $500 million through our convertible debt offering. These funds will allow us to advance CK-136 into early development in the second half of the year with the goal of mapping out our strategy for proof-of-concept Phase 2 studies to be underway in 2023 in specialty cardiovascular indications that would be complementary to omecamtiv mecarbil. This program offers an entirely new vector for value, and we look forward to sharing more developments with you. And additionally, new capital allows us to bring forward new compounds arising from our research aligned with the goal outlined in our Vision 2025 of our having 10 therapeutic area programs running by 2025. You should expect to hear more with regards to new INDs in the coming months. So as we scale our company, we're continuing our business development discussions, and we plan to add to our long-term history of deal making to further bolster our balance sheet and ultimately bring forward our therapies to more patients around the world. During the second quarter, we advanced discussions focused on potential partnerships in Asia and also in Europe, including partnering omecamtiv mecarbil in Europe and partnering both omecamtiv mecarbil and aficamten in Japan. We're being deliberate in these interactions as we intend to choose the right partner and the right deal structure in each geography while also preserving rights responsibilities and economics for Cytokinetics as we believe to be in the interest of our science and also our confidence in our abilities to execute on what should matter to our shareholders. Finally, we're now also expanding our footprint beyond South San Francisco and we'll be opening a small East Coast office outside of Philadelphia later this summer, and that's going to be for employees, primarily in our commercial, medical affairs and supply chain teams. This new office represents an important milestone in our growth and maturation to a fully integrated biopharmaceutical company and will hopefully allow us to continue to attract top talent on both coasts. Now I'd like to recap our upcoming milestones. For omecamtiv mecarbil, we expect to participate in an advisory committee meeting to review the NDA for omecamtiv mecarbil on December 13, 2022. We also expect to launch omecamtiv mecarbil in the U.S. pending FDA approval in Q1 2023. For aficamten, we expect to continue enrolling patients with obstructive HCM in SEQUOIA-HCM through 2022, with results expected in second half 2023. We also expect to continue enrolling patients with nonobstructive HCM in Cohort 4 of REDWOOD-HCM with data expected in first half 2023. We also expect to begin a second Phase 3 clinical trial of aficamten in obstructive HCM in Q4 2022, and we expect to share additional longer-term data from Redwood HCM-0LE, the open-label extension study of aficamten in second half 2022. For CK-136, we expect to reactivate the development program in second half 2022. For reldesemtiv, we expect the data monitoring committee of COURAGE-ALS to conduct the first interim analysis from that trial in this next Q4 2022. And for ongoing research, we expect to advance new muscle-directed compounds and to conduct IND-enabling studies for one to two potential drug candidates. Operator, with that, we can now open the call up to questions, please.

Thank you sir. [Operator Instructions] And our first question will come from Justin Kim of Oppenheimer. Your line is open.

Good afternoon, Justin.

Hi, Robert. Good afternoon and thanks for taking the questions. And congrats on all the progress. Just maybe trying to connect the dots here between the things that you've been mentioning. With the guidance of the IND-enabling studies for one to two drug candidates next year and the mention earlier this quarter around potential additional myosin inhibitors to address HFpEF specifically. Just wondering if it's fair to assume that HFpEF would be sort of a primary indication of interest here and whether it be sort of new compounds relative to maybe aficamten targeting it.

Very good question, and I'll start and ask Fady to elaborate. Yes, you should assume, please that HFpEF is of key interest to us for the mechanism of action of cardiac myosin inhibition. With regard to which compound or compounds they advance there, that's still to be determined. Maybe Fady can elaborate on how we're thinking about that.

Yes. I mean, I think with regards to the development in that area, the question is defining the patient population has really modeled by our work in NHCM. Those patients in NHCM have many features in common with the population and HFpEF. And so I think in thinking about advancing a program in HFpEF, you'd want to look to what we're learning in any exam as we may be reporting at the beginning of next year and -- as maybe indicative of the direction we're going.

Okay. Great. Great. And maybe just one follow-up before I hop in the queue. Maybe not directly specific to the Phase 3 design of the second aficamten study and OHCM. But to the company's knowledge, has there been a study of any beta blocker prospectively demonstrating improvements in exercise capacity for patients with OHCM?

I can answer that question. Yes, there was a nice publication at the end of last year that looked basically at a crossover study of patients on metoprolol and then crossed over to placebo and vice versa, either starting on placebo and crossing them over to metoprolol. They looked at its impact on the gradient on symptoms, on exercise performance using peak VO2. And that reference provides a nice baseline, I think, for what beta blockers do in HCM. They tend to reduce the gradient. You do see some symptomatic improvement. You don't see any improvement in exercise capacity, in part because they limit the increase in heart rate. And they are accompanied by side effects that some people find bothersome. So that paper published by Dibo et al and Jack is a good sort of benchmark for what beta blockers do in HCM, at least over the short-term. There were short-term studies.

Great. Thanks so much.

Thank you so much.

Thank you. One moment please for the next question. Our next question will come from Akash Tewari of Jefferies. Your line is open.

Hello, Akash.

Hi, hello. This is Ari for Akash. Thanks for taking our questions. We have two questions, if we may. So the first is about -- so looking at mava's label, the benefit from mava was quite limited in patients on beta-blocker therapy compared to those who are not. So well, is it be possible that physicians may need to sell beta blockers before they start using mava? And also based on your understanding, what's the percentage of OHCM patients on beta blockers in real world? And my second question is really about like drug pricing. So given Medicare is a major player in cardiovascular space. How do you think this deal will impact your evaluation? And will you consider personally like borrowing any assets? That's all my questions. Thank you very much.

Sure. So I think you asked three questions. So let's take them one at a time. The first related to our understanding of the mavacamten label. Is that right with regard to beta blockers? Could you repeat that, please?

Yes, correct.

And could you repeat the question as to specifically what you're getting at?

For sure. I'm asking about, the benefit from mava was quite limited in patients that are on beta blocker compared to those who are not?

Fady, if you would take that one, please.

Well, I think people have looked at the subgroup analyses in an explorer and the benefit appears to be attenuated in patients and beta blockers. There's some language in the FDA materials with regards to that. I think other analyses have shown that you do see improvements in those patients despite the fact they are on beta blockers. Of course, they -- to get in the trial, they still had to have high gradients and you'd call them incompletely treated with their beta blockers. So I think that's really a question of sort of looking at the data a little more deeply. Your other point was what percentage of patients are on beta blockers. And then roughly 70% to 80% of patients start with beta blockers in terms of -- and stay on them with terms of their initial therapy for OHCM. And in particular, metoprolol tends to be the drug of choice. So that's, I think, the answer to both your questions.

And your third question, I believe, relates to legislation pertaining to Medicare and pricing negotiations and how that might read on aficamten. Is that correct?

Yes, correct.

I think it's premature for us to be speculating on where that will get bottomed out. But I do think that there are appearances of carve-outs that might relate to orphan indications and specialty indications that might not have the same kind of competitive dynamic for which there may not be the same sorts of pricing pressures and budget impact. But I suspect that that's going to be evolving and fluid for some time, and I think it's premature for us to go down that path in terms of how it might affect aficamten when ultimately this might become legislation. I think over time, we'll be assessing for that and how it could impact our potential business interest. But right now, aficamten is in Phase 3, so we'll focus to clinical research.

Understood. Thank you very much. This is very helpful.

Thank you.

[Operator Instructions]. One moment please. Our next question comes from Madhu Kumar of Goldman Sachs. Your line is open.

Hello, Madhu.

Hey, this is Rob, on for Madhu. Thanks for taking our question sir. So where specifically are you looking to reduce spending in 2022? And how should we think about potential for label clarification out of the only AdCom?

So we'll take those one at a time, and I'll start with maybe asking Ching and then Andrew to speak about where we might be seeing some savings in terms of commercial spending in 2022. And then maybe Fady and I will tackle how we might think about the AdCom, although I suspect you'll appreciate we can't be too prognostic about that, not even yet knowing what are the questions or the agenda. But let's start with your spending question.

Maybe I'll start and then I'll hand it over to Andrew. So we had planned to hire our sales force only after we received approval for omecamtiv mecarbil. So originally, the PDUFA day was at the end of November this year. It's now being pushed out to February of next year. So the field force cost for the month of December, for example, would be pushed out to next year as will some of the marketing spending in media purchase agency costs, some of that will be pushed out to 2023 as well.

And Ching, the only thing maybe I would add is that it's a modest reduction in '22 because of the PDUFA date being in November. They are more being pushed out in '23, early '23 as we expected to have the field force in place in January and now that gets pushed out several months. So a very modest reduction in '22, given the late PDUFA -- original PDUFA date then in November.

And moreover, just as we enter the second half of the year and recognizing the environment in which we're operating, we take a sharp pencil to revising our financial spending across the organization, and we are -- we identified other places where we thought we could save some money this year. And we think that's just prudent and good housekeeping. With respect to your second question pertaining to expected labeling, I don't think we can really do justice to that question in the absence of yet us having more fulsome discussions with FDA and as would follow an AdCom. So we conducted the GALACTIC study. And as you know, that study enrolled a heterogenous population with HFpEF but for which we saw a more amplified efficacy in prespecified subgroup of patients with lower ejection fraction as well as in other subgroups, some prespecified and others that were post hoc, all of which contribute together to an understanding of the efficacy being amplified in patients with worsening heart failure. So there could be a conversation around which we might discuss what would be the indication in patients with higher risk. Those are things that could be addressed through graph, tables and figures in the potentially approved package insert or otherwise in the indication statement. And those are ultimately things that are up to FDA and its advisers to determine to talk about. So I'm not sure I'm answering your question well enough, but I'm sure that you can understand. That's maybe the best we can do right now.

Yes, I appreciate that. Thank you for taking our questions.

Thank you.

Thank you. And again one moment as we get our next question. Our next question shall come from Yasmeen Rahimi of Piper Sandler. Your line is open.

Hi, Robert and team. Thank you so much for taking my questions. So thank you, first of all, for providing a little bit more glimpse of information on the second Phase 3 study that you're contemplating an obstructive HCM and considering running it for potential to be first-line therapy. How should we be thinking about effect size, size of the study? And what data -- and I'm sorry that's repetitive, exists with aficamten to give us confidence to be equally competitive with first-line therapies, if not superior.

Yes. So I'll briefly start and ask Fady to add to these comments. And certainly, for the fact that we believe aficamten may represent a next-in-class approach, it's incumbent upon us to, as we've indicated, advance the field. And we foresee that this is a big opportunity to demonstrate that cardiac myosin inhibition has potential beyond where the field exists today. So hence, the interest in doing this study, and I'll ask Fady to speak more about the rationale.

Thanks, Robert. I think it's probably premature for me to give you specifics with regards to numbers and powering and so forth. But we would expect a sizable treatment difference as opposed to beta blockers. Remember, we were studying Aficamten currently on top of standard of care and against patients who are on standard of care. And so the -- if you will, we think we can achieve the same degree of efficacy with aficamten as monotherapy. And if we can do that in patients who are, again, basically on monotherapy with beta blockers, we'd expect similar, if not greater effects than we plan to observe in SEQUOIA. So I think that's part of the answer to your question. And that would imply a study that was smaller than SEQUOIA in order to demonstrate those effects. I think the other -- go ahead. Did you want to…

No, I was just going to ask what the rate-limiting steps are of just kicking off the study then? Is it just further discussions with the agency on finalizing the protocols or what is left to do -- and I apologize for interrupting your thoughts, Fady?

No, no problem. I mean starting in any study is a complicated exercise, especially one where you're double-blinding against an active comparator. So manufacturing drug and a placebo for the active comparator and beginning preparations in terms of the electronic systems of the trial and so forth. So there's a lot of work to get the study going. So I would -- if you -- the study is, in some sense, started, meaning that we're initiating all the preparations and doing a lot of work to get it up and off the ground. And we expect to be interacting with sites soon in order to get it to them in time for the end of the year. I think the last thing I was just going to comment on this question is that the field, I think, wants to ultimately know what -- how these therapies stack up against one another. And the only way that you can do that is by doing side-by-side trials and looking at things that speak not only to functional and symptom improvement, but also disease modification over time. And I think all of those things are important for the field to understand how to use these therapies and sequence them.

Great. Thank you so much for taking my questions.

Thank you, Yasmeen.

Thank you.

Thank you. And one moment please for our next question. Our next question shall come from Salim Syed of Mizuho Group. Your line is open.

Hello, Salim.

Hi, it's Mike Linden, on for Salim. Thanks so much for taking our questions. One on aficamten and the recent Cemzyos launch, if I may. I'm curious to see or to hear how you're thinking about where the myosin inhibitor market is headed as you talk to docs and prescribers. Maybe what's been learned so far, where there's uptake? Or is there any blockages, anything like that? And then maybe to follow-up on that, just maybe whether you think based on existing data, of course, that this might be a switch market versus new patients?

Yes. So we've been both doing our own work in this space as well as learning from the work done by equity research analysts and investors, all of whom seem to be pretty focused on this launch and coming about this in ways that I think are now coalescing around the launch seems to be going well. The launch seems to be going according to expectations. There are seemingly hundreds of patients that may already be started on mavacamten, and there's a lot of free drug out there. Some of it is 30-day supply, some is more than 30-day and typically coming through specialty channels. It seems that the feedback that we are hearing is positive. I'll ask Andrew to comment on some of the things specifically. And Fady also, if he wishes regarding what we're learning from our commercial and medical teams in particular. But then as far as your question on patient switches, I trust you mean as it relates to beta blockers, or are you asking about what will be our strategy? If it's the latter, our strategy, then it's premature for us to speak to that. Certainly, this is a new product launch with a new mechanism and it's most important that education and awareness be building around Cemzyos and how that can benefit patients who, to this point, haven't had much to be positive about and mavacamten appears to be a very important new medicine. So maybe I'll ask Andrew and Fady to comment on anything else they're hearing about the launch.

And maybe Robert only thing I will build on is the uptake is occurring mainly at HCM centers and cardiologists associated with those centers. The launch is going as we expected it to go with BMS. Payer coverage is starting on the commercial side. Patients are getting access to the drug through -- likely through -- I'm guessing here, but likely through three programs and hub services and medical exceptions are being processed. Physicians are gaining experience and as they gain more experience, they'll continue to put more patients on the product. So as we can tell, it is a transformation in -- from a mechanism point of view, for patients with HCM and again, as you're going as we expected. I don't know, Fady, if there's anything you wanted to add or, its Robert, I covered it.

I think that covers it.

Thanks so much.

Yes, I think that covers it well. Obviously, the launch, these are still early days, but all seems to be going well. And in that way, I think it reflects enthusiasm for the mechanism.

Thanks guys. Appreciate it.

Thank you.

Thank you. And again one moment for our next question. Our next question will come from Joseph Pantginis of H.C. Wainwright. Your line is open.

Hello, Joe.

Hey everybody, good afternoon. Thanks for taking the question. Two questions on omecamtiv mecarbil. I guess the first one is more of a housekeeping and the other one is a bigger picture. So for the housekeeping, I just want to make sure. So all of the PK data that the FDA requested is in place and you provided it to them? And is there anything else outstanding that you need to provide?

At this point, we've provided that everything that you -- that they've asked for, but that doesn't preclude them from asking for more down the line.

No, of course. And then the broader question that I have here is with regard to your market preparedness, more specifically marketing research that you might be conducting. I guess I'd ask it this way with regard to market readiness for acceptance by the market, meaning as you're talking to physicians and the broader community in cardiovascular health care for heart failure, the -- how rapidly you think the drug could be implemented into the treatment paradigm with other drugs? And is the market already accepting the complementarity of omecamtiv?

So obviously, we can't be promoting omecamtiv mecarbil before it would be potentially approved, but there are things that we can be observing as would be enabling of that, hopefully, upon approval. And I'm really pleased with how we're using especially this extra time to be readied for what will be a commercial launch when that does occur. Maybe I could ask Fady to speak to how we see the guidelines evolving. And Andrew, if there's anything further you want to add.

Yes. I mean I think the -- with the papers that have been coming out with omecamtiv mecarbil and the data that have been published with regards to EF and low blood pressure and other things, when guidelines committees consider where to it fit it in, where does it fit in, what we would hope to see would be that they would acknowledge that in patients that have sort of failed on foundational therapy, meaning that they've been put on as much of the foundational therapy as they can tolerate and yet are still not doing well and still have high-risk features such as hospitalization or recurrent hospitalization or high NT-proBNP or other things that they may consider omecamtiv mecarbil as an option. And you can see in the current guidelines, sort of the what's next box. I mean, after you've tried everything, what you do -- what's next that you might do, and we think of omecamtiv mecarbil as one of those next in line therapies.

And maybe just to build on from a market research point of view, I mean we go to medical congresses, we talk to KOLs, we conduct commercial advisory boards. We do something called the NAN study, which we will put a label, which we think is the target label based on where we think it will end up. And once approved in front of physicians and NASM about utilization. And largely, you can generate what you think market share will be and demand will be. But uniformly across when we ask physicians and cardiologists, I'm talking about, we always get a similar answer of there's a handful of patients or a particular patient profile or a type of patient in mind that they know they would use this product on. So we feel good about the launch, we feel good about the profile for worsening heart failure, and we feel good about where physicians are telling us in terms of utilization for appropriate patients. Obviously, the proof will be when we launch the product and we get the final label. But overall, the demand seems to be appropriate for a launch and for our utilization based on the field force we're planning on deploying.

Got it. Thank you very much. I appreciate it. Sorry Robert.

Yes. Just a final comment. Another way to look at this is sort of what are the proxies for what might be predictive of a successful commercial launch. There's high awareness of omecamtiv mecarbil. There's high awareness of the high unmet need and the absence of satisfaction of need for current guideline mandated treatments. And at the same time, guidelines are getting updated with more frequency. So we foresee those to be good signs of what could be hopefully a positive commercial launch when the time comes.

Understood. Thanks again.

Thank you.

Thank you. One moment for our next question. Our next question will come from Carter Gould of Barclays. Your line is open.

Hey Carter.

Great. Hey guys, you've got Edwin, on the line for Carter. We wanted to ask a follow-up to the question on the Cemzyos launch. In this new world where there's a therapeutic option, specifically, if you could frame for us any views on impact to diagnosis or an early take on the burden of the REMS program or monitoring from your discussions with KOLs and stakeholders? And then our second question, if you could just frame for us your expectations for a potential readout of Cohort 4 from REDWOOD? Thank you.

Yes. So with regard to the first, I don't think we're going to get into the business of speaking too much about a competitor's launch. We foresee that mavacamten is going well. But as to how that might be ultimately tailored to the kinds of things you're asking about, I don't think it's for us to be addressing those matters for you. I think that's more important that the equity research community be doing its own independent analysis of those kinds of matters. Sorry about that, but I just kind of feel like that's maybe improper for us to be addressing things to that level of detail. What was your second question?

Yes, no problem. Yes, we just want to ask if you could frame for -- got it, got it, go for it, Fady. Thank you.

And just with regards to what they might expect with us to report for Cohort 4. So data with Cohort 4, as we've said before, we're looking at many of the things that we've looked at in Cohorts 1, 2 and 3 with the exception of left ventricular outflow tract gradient because these patients don't have them. So safety and tolerability. We'll be looking at NYHA class movement, we'll be looking at biomarkers like NT-proBNP and troponin. We'll be looking at echocardiographic response, either declines in LVEF, but also we want to look more closely at changes in cardiac structure and function and diastolic function. So all of those things as you've seen us report for aficamten in the obstructive HCM cohorts, we plan to also do the same sort of measurements and report those for the nonobstructive groups.

Thank you.

Thank you.

Thank you. One moment for our next question. Our next question will come from Jason Butler of JMP Securities.

Hello Jason.

Hi, thanks for the question. Hey Robert. So you mentioned one of the potential discussion topics for the omecamtiv outcome that you're preparing for is dosing and bolts-on how to apply to clinical practice. Can you just give us your thoughts on how you're planning to direct and educate physicians to find the right dose to maintain the right dose for a patient. And then you also mentioned essentially a companion diagnostic. How quickly into a launch do you think that, that -- something like that could be implemented? And how would that change the overall strategy of getting patients on to the drug? Thanks.

Yes. So maybe just to start and maybe also amend a statement you made. In GALACTIC, we did employ methodology for assessing PK exposures in order to dose titrate patients to a target dose level, and that was described and is published in terms of how we were ultimately getting patients to target doses as defined by PK parameters. What I want to mention, however, is you use the terminology companion diagnostic, and it's not necessarily a companion diagnostic as would be the literal sense of that word. And in that way, we're looking at various ways of approaching this that would be enabling of different strategies to get patients to target dose that would enable them to be using different kinds of assays as could be useful, as could be useful in clinical practice as we go beyond what was used in a clinical trial. So that's still somewhat dynamic in terms of how we might best approach that post launch. That's a matter that we'll be communicating over time as we might assess the different alternatives and the different options. I'm afraid I won't be able to do much better than that right now. I don't know, Fady or Andrew, if you want to take a stab at that. But our goal is to be in a position to be equipping physicians to be able to get to the best target dose with a PK assay, but for which the way in which we might do that is still not yet something we intend to be communicating now.

Okay, great. Appreciate it. Thanks for taking the question.

Thank you. And one moment for our next question. Our next question will come from Charles Duncan of Cantor. Your line is open.

Hey, Charles.

Hey, good afternoon Robert. Robert congrats on the progress in the quarter. And thanks for taking my question. And one more question on ome and then a question on reldesemtiv as well and that program. So on ome, the multipart question is as you're preparing for the AdCom, there's about four months. And can you bite us a little bit of color on really the work plan. Do you need to have mock AdComs? And if so, how many, or at least one. And what is going to be the one, the key focus you think about high-burden patient. Is it going to be ejection fraction? Or is it going to be hospitalization or blood pressure. What do you think is the most compelling?

Yes. So I'll ask Fady to speak to how we're preparing. But yes, we will have a mock AdCom. We'll do a number of these different types of preparations in order to be best-suited and best-prepared where the team, and there's a core team, is working very feverishly now already in these preparations and meeting frequently each week. Fady, anything you want to elaborate?

Well, I guess I'll say, obviously, we're quite focused on our preparations. We don't have a specific agenda or topics yet. But -- there's certainly a number of things we need to do to prepare background materials and clear slide presentations and prepare with mock panels in terms of getting the team practice to answer questions. I think we have a great team that's very experienced and has worked on this drug for a long time and has gone through the process now of submitting an NDA and working through the approval process. So we'll be ready when the time comes.

Okay. Don't doubt that that's the case. Looking forward to that. And then my question on relde perhaps for Stuart, interesting time and hopefully some progress you're making at least for some of -- in terms of paradigm. But relative to your current program, I guess I'm wondering if you could give us some sense of what it means for interim analysis for futility. I get that generally, but I'm wondering if there's a certain kind of data to see you're expecting out of those one-third of patients at 12 weeks. Then also, if you could tell us whether or not within the OLE, if you have any patients actually enroll in that? I think you alluded to that, but I didn't catch it for sure.

Thank you, Charles. The interim analysis is fairly straightforward. It's a relatively low bar, I would say, to continue the trial. We really want to determine if there is a trend, a favorable trend in terms of the main outcome of -- for reldesemtiv compared to placebo. And we fully expect that based on our Phase 2 data. But it's just sort of a matter of being efficient and responsible in terms of study conduct and doing what's best for the development program and what's best for patients.

And regarding OLE?

The OLE, we are just getting started with the OLE. So it was just at the cusp of patients starting to roll over into the open-label extension that we're pretty excited and proud that we have this offer to those patients.

Okay. Very good. Thanks for taking the questions.

Thank you.

Thank you. And one moment for our next question. Our next question will come from Rohit Bhasin of Needham & Company. Your line is open.

This is Rohit, on for Serge. Good afternoon. Thanks for taking my question. Can you talk about how the omecamtiv delays with the FDA have affected possible partnership discussions? And then second question, is there anything you can share regarding feedback you're receiving from providers regarding the data on the ALS database? Thanks.

Sure. With regards to partnering, I don't think the PDUFA date extension has had an effect. Our conversations are continuing. And I think that potential partners see this as maybe more par for the course these days, especially for new mechanisms. So it has not changed the way we're approaching our strategy for partnering. Your second question, could you repeat it, please?

Sure. Yes. Is there anything you can share regarding the feedback you're receiving from providers regarding the data on the ALS database?

You're referring to this morning's press release. The feedback is, I think, generally one of appreciation. This has been the conversation we've been having with the people who administer and manage to the PRO-ACT database for quite some time. And we've made now a major contribution to the database for the data from these three completed studies. So the incorporation of our data into PRO-ACT is something that was contemplated and considered and planned for, for quite a long time. Fady, you or Stuart, anything you want to add to that?

Stuart?

This is -- I think it's just another example. It is actually Global Citizens. And we have these robust datasets from previous clinical trials. And we're obviously very committed to finding therapies to help these patients. So I think that we've received a very positive feedback. And it just further strengthens and demonstrates our commitment to this community and these patients.

Yes, I might add that for the fact that Cytokinetics has a reputation in the ALS community for having conducted large, very rigorous robust clinical research. I think there is a view that these are high integrity data that should make a big difference and a big impact for their inclusion in this database.

Thank you.

Thank you.

Thank you. I see no further questions in the queue. I would now like to turn the conference back to management for closing remarks.

Thank you, operator. And thanks to everybody for joining us on this conference call today. Clearly we made a lot of very good progress in the second quarter. And again, more recently in this third quarter we've set the table, we believe, for a very successful second half of this year and moving into next year what could be transformational for Cytokinetics for its science for patients and ultimately also for shareholders. We very much appreciate your persistent support and enthusiasm for what we're doing and look forward please. Operator, with that, we can now conclude the call, please.

Yes, sir. This concludes today's conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.