Earnings Call Transcript - CYTK Q4 2020

Operator, Operator

Good afternoon, and welcome, ladies and gentlemen, to Cytokinetics' Fourth Quarter 2020 Conference Call. At this time, I would like to inform you that this call is being recorded. I will now turn the call over to Diane Weiser, Cytokinetics Senior Vice President of Corporate Creations and Investor Relations. Please go ahead.

Diane Weiser, Senior Vice President of Corporate Creations and Investor Relations

Good afternoon, and thanks for joining us on the call today. Robert Blum, our President and Chief Executive Officer, will kick off the call with an overview of our 2021 priorities considering company performance in 2020. Then Fady Malik, our EVP of Research and Development, will provide a more detailed update on omecamtiv mecarbil, including perspectives on recently presented supplemental analyses from GALACTIC-HF, the positive Phase III clinical trial of omecamtiv mecarbil, as well as progress on METEORIC-HF, the second Phase III clinical trial of omecamtiv mecarbil. Next, Stuart Kupfer, our SVP and Chief Medical Officer, will update us on our cardiac myosin inhibitor program. Then Robert Wong, our VP and Chief Accounting Officer, will provide a financial overview for the past quarter; and Ching Jaw, our SVP and Chief Financial Officer, will discuss 2021 financial guidance and corporate development strategies before Robert Blum then returns to provide concluding thoughts on the year ahead and expected key milestones for 2021. Please note that portions of the following discussion, including our responses to questions, contain statements that relate to future events and performance rather than historical facts and constitute forward-looking statements. Our actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause our actual results to differ materially from those in these forward-looking statements is contained in our SEC filings, including our current reports filed on Form 8-K this morning. We undertake no obligation to update any forward-looking statements after this call. And now, I will turn the call over to Robert.

Robert Blum, President and Chief Executive Officer

Thanks, Diane, and thanks again to everyone for joining us on the call today. As we begin 2021, I hope you and your families are healthy and well while we are all still in the throes of the COVID-19 pandemic. Despite the challenges of stay-at-home orders, clinical trial interruptions and restarts, and transitions relating to our longest-standing development and commercialization collaboration, we entered this year at the forefront of muscle biology research and with the most advanced pipeline in our company's history, a strong balance sheet, and are now preparing for engagements with the FDA towards what may be our first potential NDA filing, which may set the stage for our first approved medicine. Following the positive Phase III clinical trial results from GALACTIC-HF, our immediate priority is to secure FDA feedback to provide clarity for potential regulatory submission of omecamtiv mecarbil in the United States in the second half of 2021. We expect to meet with the FDA in the next few weeks. Simultaneously, we will complete ongoing work streams focused on product, market, and the sales analyses to inform the development of our go-to-market strategy and commercial readiness activities in the first half of the year. As we announced at the end of 2020, worldwide development and commercialization rights to omecamtiv mecarbil and CK-136, formerly known as AMG 594, are reverting to Cytokinetics. While this was unexpected, we believe it affords Cytokinetics the freedom to operate as we chart our own commercial path forward and lay the groundwork for the cardiovascular franchise plans we unveiled last summer at our Analyst and Investor Day. With this in mind, we also expect to engage in business and corporate development activities this year to seek commercialization partners in Asia, Europe, and possibly for co-promotion in the United States. These activities are already underway as we begin our outreach campaigns, and Ching will elaborate on our overall corporate development approach in a moment. Additionally, this year, we will continue to prioritize the development of CK-274 and our next-generation cardiac myosin inhibitor. In December, we announced that we completed an interim analysis of Cohort 1 of REDWOOD-HCM, our ongoing Phase II clinical trial of CK-274 in patients with symptomatic obstructive hypertrophic cardiomyopathy. That interim analysis informed progression to Cohort 2, which opened to screening in December. I'm pleased to announce today that we have now fully enrolled Cohort 2, and we expect to have top line results from both cohorts by midyear 2021. As the year progresses, we'll articulate our plans to advance CK-274 potentially into Phase III in the second half of the year. Stuart will provide details on the interim analysis and how we're currently thinking about the continuing development program. Though our priorities in 2021 will be focused on our cardiovascular programs, once we have clarity on our go-to-market strategy with omecamtiv mecarbil and the progression of CK-274 to Phase III, we will then consider opening COURAGE-ALS to enrollment. That is our planned Phase III trial of reldesemtiv in patients with ALS, which may further expand our late-stage pipeline. Our research engine continues to be productive despite the challenges posed by the current pandemic. Thanks to the dedication of our scientists, we anticipate advancing additional compounds and potential development candidates emerging from research into development in the coming one to two years. We expect to leverage our leadership expertise in muscle contractility to expand into other aspects of muscle function, which may extend to the potential treatment of other serious yet adjacent diseases and conditions, and we'll have more to say about that later in the year. 2021 has the potential to be a transformational year for Cytokinetics as we prepare to potentially submit our first NDA that could lead to the commercialization of our first medicine to treat patients with heart failure. As we've articulated in our Vision 2025, which we introduced early last year, our goal over the next five years is to achieve potential regulatory approvals for at least two drug candidates arising out of our pipeline and to drive towards sustainable product-driven revenues while, in parallel, doubling our pipeline of development programs and also planning to expand our discovery platform beyond muscle contractility. Based on our strong performance in 2020 and momentum already in 2021, we believe we're well on our way. With that, I'll turn the call over to Fady to elaborate on developments related to omecamtiv mecarbil.

Fady Malik, EVP of Research and Development

Thank you, Robert. In November of 2020, the results of GALACTIC-HF, our Phase III trial of omecamtiv mecarbil, were presented at the American Heart Association meeting and subsequently published in the New England Journal of Medicine. Since we've reviewed these results in some detail already, I'll start with a recap of additional analyses that the Executive Committee Chair, Dr. John Teerlink, presented at the Global Cardiovascular Clinical Trialist Forum, or CVCT meeting in December, and provide some perspective on the patient population that may benefit most from treatment with omecamtiv mecarbil based on these data. As you'll recall, the primary results from GALACTIC-HF demonstrated a statistically significant effect of treatment with omecamtiv mecarbil to reduce the risk of the primary composite endpoint of time to first heart failure event or cardiovascular death compared to placebo in patients treated with standard of care. While no reduction in the secondary endpoint of time to cardiovascular death was observed in the overall population, the statistically significant primary efficacy endpoint was achieved in the overall trial population comprising over 8,000 patients enrolled in 35 countries around the world. The effect of omecamtiv mecarbil was consistent across most prespecified subgroups, with potentially greater treatment effect suggested in the over 4,000 patients with a left ventricular ejection fraction of less than or equal to the median of 28%. The supplemental analysis of the slower ejection fraction subgroup presented at CVCT showed that this potentially greater treatment effect in patients who received omecamtiv mecarbil was consistently observed in patients with characteristics that may indicate more advanced heart failure status such as being hospitalized within the last three months, having New York Heart Association Class III or IV heart failure, having higher NT-proBNP levels, or having lower blood pressures. When you look at the absolute risk reductions in these large prespecified subgroups, they are quite meaningful, ranging from 5.2% to 8.1%. Additionally, an analysis of the relationship between ejection fraction when it examined as a continuous variable and the hazard ratio for the primary composite endpoint in GALACTIC-HF suggested a potentially greater treatment effect of omecamtiv mecarbil in patients with increasingly lower ejection fractions. Given the primary effect of omecamtiv mecarbil to increase cardiac function, it stands to reason that patients with lower ejection fractions drive greater benefit. These results are important because we know that these sicker, more advanced heart failure patients continue to have substantially elevated risk despite receiving standard-of-care therapy, and based on the progressive nature of the disease, they are frequently unable to tolerate guideline-directed medical therapy as their disease worsens. These are often the most challenging patients to treat, and they can be frequently hospitalized and rehospitalized. So a picture is beginning to emerge that suggests that omecamtiv mecarbil may provide a new treatment option for this critical population of more severely ill heart failure patients. Biologically, it stands to reason these patients with more impaired systolic function may benefit more from this novel mechanism therapy overlaying it with standard of care. Unfortunately, these patients are not currently receiving appropriate treatments and may represent more than half of the three million patients living with heart failure and reduced ejection fraction today. These patients often land in our hospitals, increasingly contributing to both clinical and economic burdens on our system. We have few treatment options available as their disease progresses despite current medical therapy. Since reporting the results of GALACTIC-HF, we've had the opportunity to engage with nearly 200 healthcare professionals, including leading heart failure opinion leaders, investigators, and community cardiologists. The consensus feedback has been positive and supportive of our seeking regulatory approval based on the results of GALACTIC-HF, the safety profile of omecamtiv mecarbil, and the unmet need among the more advanced heart failure population. The last quarter also saw significant actions by the FDA within the heart failure arena, and we're encouraged by the recent expansion of the label for Novartis's Entresto and heart failure with preserved ejection fraction, as well as the recent FDA approval of vericiguat. We believe these developments reinforce the significant unmet needs in heart failure despite the availability of guideline-directed medical therapies. We believe these developments could augur well for omecamtiv mecarbil, given its novel muscle-directed action and the results from GALACTIC-HF observed on top of standard of care. As we've indicated, Cytokinetics is committed to advancing omecamtiv mecarbil as a priority in 2021. Along those lines, we are now scheduled to have our first regulatory interaction with the FDA before the end of this quarter. We look forward to providing updates on this and future regulatory interactions, as well as confirming our anticipated timing for a potential NDA submission to the FDA in the second half of 2021 as we conduct these regulatory interactions and complete our ongoing transition activities with Amgen. In parallel, we're continuing to conduct METEORIC-HF, which is not on the critical path to NDA submission, and we expect to complete enrollment in the first half of this year. Finally, within our cardiac myosin activator program, we will also regain development and commercialization rights for CK-136, previously referred to as AMG 594, our first-in-class cardiac troponin activator. Following up on Amgen's Phase I study, we'll be evaluating what further Phase I studies may be required in order to advance this drug candidate. But as Robert mentioned earlier, omecamtiv mecarbil remains our higher priority for 2021. With that, I'll turn the call over to Stuart, who will provide an update on our cardiac myosin inhibitor program.

Stuart Kupfer, SVP and Chief Medical Officer

Thanks, Fady. At the end of last quarter, we progressed REDWOOD-HCM to Cohort 2, following a positive interim analysis. REDWOOD-HCM was designed to evaluate the potential benefits of our next-generation cardiac myosin inhibitor, CK-274, in patients with disruptive HCM and symptomatic heart failure. To remind you of the trial design, patients were randomized in a 2:1 ratio to placebo or CK-274. Once daily doses of 5, 10, or 15 milligrams or placebo were administered in Cohort 1, with those titration individually determined based on achieving specific echocardiographic targets. Dosing adjustments were made every two weeks over a 6-week period, and the overall treatment duration was 10 weeks. The interim analysis of data from Cohort 1 showed that patients experienced substantial reductions in the average resting and left ventricular outflow tract gradients. These clinically relevant decreases in pressure gradients were achieved with only modest decreases in average left ventricular ejection fraction. Importantly, there were no dose interruptions due to ejection fractions falling below 50%, which was a prespecified safety threshold. The pharmacokinetic profile was similar to that observed in Phase I in healthy subjects. In addition, the safety and tolerability data were supportive of continued dose escalation, with no serious adverse events attributed to study treatment as reported by the investigators. Based on the December review of interim results from Cohort 1, the Steering Committee and the Data Monitoring Committee of REDWOOD-HCM recommended that the trial proceed to Cohort 2, and I'm pleased to announce that we've now completed enrollment in the second cohort. Patients in Cohort 2 are being treated with escalating doses of 10, 20, or 30 milligrams or placebo once daily. We expect to report top line results from the trial midyear with full data to be presented at an upcoming medical meeting this fall. As we await results from REDWOOD-HCM, we are already preparing for the initiation of a Phase III pivotal trial in patients with obstructive HCM, with the goal of starting this trial before year-end. We recognize the urgency to bring novel medicines to patients with HCM for whom there are no disease-modifying therapies to inhibit the underlying hypercontractility that is the hallmark of the disease, and to improve quality of life and functional capacity. Upon receipt of the Phase II results, our goal is to conduct end of Phase II meetings with FDA and EMA in the second half of the year to enable the start of Phase III before year-end. Our objective for Phase III is to evaluate the effect of CK-274 on patients' symptoms and function as well as to understand the long-term safety profile of CK-274. Toward that end, we will soon begin enrolling patients from REDWOOD-HCM in an open-label extension trial. First, enrolling patients who have completed participation in Cohort 1, and then rolling over current patients in Cohort 2. Similarly, patients participating in our Phase III pivotal trial will have the opportunity to enroll in the open-label extension trial. The long-term follow-up of patients will not only contribute to our understanding of the efficacy and safety profile of CK-274 but will also facilitate an assessment of the potential effects of CK-274 on reverse remodeling, evaluated by cardiac imaging. Lastly, our collaboration with Ji Xing has made rapid progress towards our shared objective of enabling the potential inclusion of China in a global Phase III clinical trial, CK-274, in patients with obstructive HCM. The IND submitted in China for our Phase I study of CK-274 has been approved, and the study is anticipated to start during the first quarter. As part of the overall cardiac myosin inhibitor development strategy, we also continued to assess CK-271, our additional cardiac myosin inhibitor during the quarter. We now understand the pharmacokinetic profile of CK-271 based on a single ascending dose study in healthy volunteers. While the data are supportive of continued development, we are prioritizing the rapid advancement of CK-274 and expect to have clarity before year-end on Phase II plans in another indication such as nonobstructive HCM or a subgroup of heart failure patients with preserved ejection fraction. In the future, we may consider advancing CK-271 in an alternative indication outside of the scope of CK-274. This is the upside of one of the key hallmarks of our R&D strategy to develop backup, follow-on and next-generation compounds to maximize our options and increase the probability of success. And with that, I'll turn it over to Robert Wong, who will provide an update on our financials.

Robert Wong, VP and Chief Accounting Officer

Thanks, Stuart. I'll first provide an update on cash, revenue, and spending, and then Ching will review our financial and corporate development strategies looking forward. Details on our actual results for the fourth quarter 2020 are included in the press release, which we released earlier this afternoon. We ended the fourth quarter with approximately $501 million in cash and investments. This balance includes $85 million, which was received in connection with the closing of our sale of a royalty on mavacamten to RTW Royalty Holdings Designated Activity Company. Our revenue in Q4 2020 came primarily from our strategic alliances with Amgen and Astellas and also from an earned milestone payment. Our fourth quarter 2020 R&D expenses increased to $29.2 million from $18.3 million in the fourth quarter of 2019, primarily due to higher spending for our activities associated with REDWOOD-HCM and readiness activities for a potential Phase III trial of reldesemtiv. More than 50% of our R&D expenses were attributable to our cardiovascular programs, as expected, given activity for METEORIC-HF and the cardiac myosin inhibitor program, and the remainder of our expenses were attributable primarily to our early research activities. Our fourth quarter 2020 G&A expenses were $13.9 million, up from $10.6 million in Q4 2019 due to higher personnel-related costs, including stock-based compensation and higher commercial readiness spending. And now Ching will review our 2021 financial guidance and corporate development strategy.

Ching Jaw, SVP and Chief Financial Officer

Thanks, Robert. Today, we announced our financial guidance for 2021. The company anticipates 2021 revenue will be in the range of $23 million to $28 million. Operating expenses will be in the range of $195 million to $205 million, and net cash utilization will be approximately $160 million to $170 million. Our current cash balance of $501 million represents more than two years of forward cash based on our projected operating expenses and this net cash utilization range. Our net cash utilization range includes approximately $35 million of nonrecurring building construction and related capital expenditures. It also includes potential receipt of $45 million from RTW Royalty Holdings Designated Activity Company in exchange for a low single-digit royalty on CK-274 in connection with the funding agreement signed in July 2020, subject to conditions for payment being fulfilled. Should we not exercise our option to receive the $45 million, we expect our net cash utilization range will be increased. We may revise this guidance later in the year once we finalize our strategy and potential commercial launch plan for omecamtiv mecarbil. Significant additional expenses and net cash utilization may arise from our executing on those strategies and plans that are not included in the guidance. Examples of such additional expenses include, but are not limited to, the purchase of drug substance related to omecamtiv mecarbil from Amgen and other costs associated with transitions from Amgen, funding of the development and regulatory activities associated with the immunoassay used in GALACTIC-HF and METEORIC-HF to determine the dose levels of omecamtiv mecarbil, as well as other potential commercial planning and readiness activities. Our goal is to end 2021 with more than two years of forward cash. As we prepare for the potential commercialization of omecamtiv mecarbil and advance the clinical development of CK-274, we have already begun to execute on our corporate development strategy. The strategy is twofold: first, to seek a development and commercialization partner for omecamtiv mecarbil and CK-274 in Japan and other geographies; and second, to seek potential royalty monetization and/or structured financing deals to support the commercial launch of omecamtiv mecarbil. As we advance commercialization plans for omecamtiv mecarbil, which we believe will importantly lay a strong foundation for commercialization of CK-274 and the expansion of our cardiovascular franchise, we are studying comparable company best practices and building a fit-for-purpose commercial organization. As our target product profile comes into focus, we will be putting together pricing models, forecasts, and profitability assessments to inform our U.S. and European go-to-market strategies, including investment and partnering or co-promotion plans. As always, we expect to navigate our key corporate development decisions through the lens of maximizing potential value to our shareholders. And with that, I'll turn the call back over to Robert Blum.

Robert Blum, President and Chief Executive Officer

Thank you, Ching. We've entered what could be a transformational year for Cytokinetics in 2021 as we prepare for the potential marketing authorization and commercialization of our first medicine and concurrently advancing multiple drug candidates in various stages of clinical development. This is all consistent with our Vision 2025 outlined at the start of last year, which articulates ambitious, but we believe achievable goals to commercialize at least two new medicines, establish sustainable product-generated revenues, and both expand our discovery platform and double our number of development programs to 10 by 2025. As we've said today, engaging with regulatory authorities and preparing for the potential commercialization of omecamtiv mecarbil is the first step towards achieving that vision. We have teams executing against multiple work streams to refine the target product profile and determine the appropriate sizing, structure, and territory alignment of our sales organization to optimize customer engagement in a post-COVID world. We're using a combination of applied analytics and learnings from recent cardiovascular launches to determine the manner in which we should engage with physicians in either face-to-face or digital dialogue or both. Importantly, we're planning for a sales force to target the high-volume heart failure hospitals and their adjacent specialty cardiology group clinics, as well as to provide for key market access activities to reach the advanced heart failure patients in the United States, and as may be complemented by a co-promotional partner outside of our focused market segment. Additionally, given the synergy between high-volume heart failure and HCM centers, that investment will be amortized across our cardiovascular franchise and lay a strong foundation for future cross-promotion of CK-274. We're also executing a comprehensive health economics and outcomes research strategy in collaboration with leading academic institutions and healthcare networks to illuminate the burden on the healthcare system associated with advanced heart failure patients and how omecamtiv mecarbil may provide, not only clinical, but economic relief to reduce the cost of rehospitalizations. This will no doubt be of interest to payers as hospital administrators manage against penalties for rehospitalization within 30, 60, and 90 days post-discharge with a diagnosis of heart failure. With results from REDWOOD-HCM expected midyear, we plan to rapidly advance CK-274 into Phase III in obstructive HCM by year-end and also to determine next steps to initiate a potential clinical trial in either non-obstructive HCM or a patient population with HFpEF as they begin in 2022. We believe executing on these activities is essential to balance out our company plans and to inform our cost of capital and the enterprise risk-benefit going forward. We also recognize our place in the urgency to help patients with ALS, and we remain optimistic that we'll begin our Phase III clinical trial of reldesemtiv in patients with ALS later this year. However, once we have regulatory clarity on the path forward for omecamtiv mecarbil as well as visibility on results from REDWOOD-HCM and our associated cost of capital. Finally, we recently welcomed Nancy Wysenski and Muna Bhanji to our Board of Directors, both of whom bring deep experience and expertise in commercial strategy, market access, and especially specialty sales through their leadership roles at Vertex and Merck, respectively, as well as among other companies. Their recent and relevant experience navigating the evolving landscape of access and other issues for patients with high unmet needs will prove invaluable, we're quite sure, as our pipeline advances toward marketing authorization and commercialization. We look forward to providing updates on our progress this year as our leadership and the mechanics of muscle and contractility may translate into new medicines, and medicines that may help patients with devastating diseases of impaired muscle function and improve their health spend. Now let me recap our expected milestones for 2021. For omecamtiv mecarbil, we expect to meet with the FDA to discuss GALACTIC-HF in this first quarter of 2021. We also expect to develop our go-to-market strategy and potential commercial launch plans in the first half of 2021, and we expect enrollment of patients with heart failure in METEORIC-HF to be completed in the first half of 2021. For CK-136, we expect to analyze Phase I data to determine the next steps in the development strategy in 2021. For CK-274, we expect a Phase I study of CK-274 in China, conducted under the license and collaboration agreement between Cytokinetics and Ji Xing Pharmaceuticals Limited, to get started in this first quarter of 2021. We expect to begin an open-label extension study for patients who complete REDWOOD-HCM in the second quarter of 2021. We expect to announce results from both cohorts in REDWOOD-HCM by midyear 2021. We plan to engage regulatory authorities regarding a potential registration path in the second half of 2021, and we expect to begin a potential Phase III clinical trial of CK-274 by the end of 2021. For CK-271, we expect to continue evaluating the potential to further develop CK-271 in connection with our plans to conduct a broad development program for our cardiac myosin inhibitors in HCM and potentially other indications. For reldesemtiv, we expect to conduct start-up activities for COURAGE-ALS in 2021 and may open the trial to enrollment in the second half of 2021, subject to our plans relating to advancing omecamtiv mecarbil towards commercialization and CK-274 to a potential Phase III clinical trial in patients with obstructive HCM. For our ongoing research, we expect to advance programs and conduct IND-enabling studies to potentially advance one to two potential drug candidates into development in 2022. And operator, with that, we can now please open up the call to questions.

Operator, Operator

Your first question will come from Dane Leone with Raymond James. Please proceed.

Dane Leone, Analyst

Hi, hello. How are you?

Robert Blum, President and Chief Executive Officer

Good.

Dane Leone, Analyst

Thank you for taking my questions. Congratulations on the progress. I guess I'll focus my question on just what you're looking for from this FDA interaction for omecamtiv to give you kind of the decision-making information you need to move one way with that program? I think maybe if you could put that into context of the broader investor discussion, the questions we get in. You mentioned in your remarks, thinking about other launches in the cardiovascular space, I think rightly or wrongly, there are some concerns about how difficult it can be to launch into that space. Some people could say that the recent launch of bempedoic acid is one of those examples. Do you at this point? Or is this still TBD post your discussion with the FDA, have an internal model where you have an idea about what peak sales could be for this launch of omecamtiv? How long did it take you to get there? And then how long does it take into what year of the launch would you actually have a positive margin on that commercial product? Thank you.

Robert Blum, President and Chief Executive Officer

Sure. So Dane, that's quite a lot to ask in one question. I'll try to tackle it and ask my colleagues maybe to join in. Some of that I can answer; some of it, obviously, it's premature. With regard to this upcoming FDA meeting, this will be to review the results of GALACTIC and not otherwise serve as a pre-NDA meeting. We actually expect there'll be a series of regulatory interactions starting in this first quarter and continuing in the second quarter that ultimately will be informing our potential filing of an NDA in the second half of the year. But at this first meeting, we want to talk about GALACTIC and understand whether they believe it would be sufficient and suitable to stand-alone in support of a potential NDA filing and a potential marketing authorization. So we'll review the data with them as we are prepared to do in its comprehensive form. And that should be hopefully informing whether this is going to be pre then supportive of what would could be second and third meetings that we might expect as we go forward in the second quarter. So that's the objective for this meeting. Fady, anything you want to add to that before I might pick up on the other points?

Fady Malik, EVP of Research and Development

No, I think you covered it fine, Robert. Thanks.

Robert Blum, President and Chief Executive Officer

Okay. Dane, then you asked a lot of questions about the go-to-market strategy and when we might expect to be able to give visibility to profitability and things like that. Obviously, we do have models, and we are refining them. In fact, we're in the midst right now of moving from some of the earlier qualitative market research on a series of target product profiles based on the GALACTIC data to more quantitative market research that will inform forecasting, price sensitivities, et cetera. Ultimately, to get to your question, we have to understand what the infrastructure needed to support commercialization would look like. I would argue that there are no other launches that resemble what we have in mind, even as there are other cardiovascular launches. I take your point that some of those launches have underperformed, and therefore, we need to learn lessons from them. But the way we're approaching this, and many of us have direct relevant experience in these types of commercialization activities, the way we're approaching this is, we believe, as could be enabling omecamtiv mecarbil to be complementary to existing drugs, but for patients where there are no other good alternatives. Our goal then would be to point to both safety, efficacy, and economic value in connection with that as would be a very concentrated tractable commercial market where those patients present the most burden, that being in the institutional care setting where those patients then tend to be treated adjacent by specialty cardiologists focusing on advanced heart failure. One doesn't need many hundreds, certainly not thousands, of reps to be able to reach those patients and those physicians, and especially understanding where one can see high-yield returns. With AI and digital marketing, we expect to build a fit-for-purpose organization that's suitable for a post-COVID world. We do believe that there are go-to-market strategies that should be affordable to us and provide prompt visibility to profitability. How soon? It's really going to be a function of some things that I shouldn't speculate on at this time. But we do expect to lay out a go-to-market strategy midyear this year in support of our plans for omecamtiv mecarbil, and I expect we can provide more clarifying information at that time.

Dane Leone, Analyst

Thank you very much.

Robert Blum, President and Chief Executive Officer

Thanks, Dane.

Operator, Operator

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

Jason Butler, Analyst

Hi. Thank you for the questions. Now that you have completed the first cohort of the Phase II study for 274, can you share your thoughts on the trial design considerations for Phase III? I understand that you need to wait for the full data, but what factors are influencing your decision-making? Additionally, how does this compare to the EXPLORE trial for mavacamten? What are your considerations for determining the next steps for an additional indication for 274, such as nonobstructive HCM, HFpEF, or something similar? What key factors are you still analyzing? Thank you.

Robert Blum, President and Chief Executive Officer

Sure. Good question. So I'll ask Fady and Stuart to address them, but before I do, I'll just highlight. I think the rapid enrollment of Cohort 2 in REDWOOD-HCM speaks to the significant enthusiasm on the part of this mechanism and CK-274, both in U.S. and ex-U.S. institutions that are enrolling patients in REDWOOD-HCM and from which we'd be expanding in a potential Phase III program. So with that, I'll turn it over to Fady and Stuart as they can highlight how that Phase III program may take shape. Some things we'll be able to speak to now, and other things, obviously, we're going to keep confidential for now, but also how we're thinking about other indications. Fady?

Fady Malik, EVP of Research and Development

Yes. I'll address the first part of the question, Jason. I think with regards to Phase III, one of the things we want to take advantage of is the easier dose toggle of CK-274, to be able to craft endpoints that speak to earlier symptom resolution and improved exercise performance, ease of titration, and things like that. So really the data from REDWOOD will give us a sense of how to tune some of those the timing of those assessments and the design of Phase III as well as tune some of the escalation criteria and so forth. As Robert said, I think we're in the midst of designing this. We have some interesting good ideas. Probably when we launch a trial, we'll try and make sure that people understand the differences between our Phase III trial and the way EXPLORER was conducted. I'll turn it over to Stuart to talk a little bit about how we're thinking about NHCM or HFpEF.

Stuart Kupfer, SVP and Chief Medical Officer

Well, yes. I was just going to comment that certainly, the obstructive HCM study design will depend on the results from REDWOOD-HCM. And well, as Fady said, maximize and take advantage of the opportunity to try to differentiate from mavacamten. But I'm just sort of introducing my comment that way because REDWOOD-HCM will also help inform our strategy with nonobstructive HCM or HFpEF. We have discussed previously about some of the features of nonobstructive HCM that may inform benefit in a subgroup of patients with HFpEF. So I think a lot of this decision-making is contingent upon the results of REDWOOD-HCM and where we see the best opportunity.

Jason Butler, Analyst

Okay, great. That's very helpful. Thanks for taking the questions.

Stuart Kupfer, SVP and Chief Medical Officer

Thank you, Jason.

Operator, Operator

Your next question will come from Joe Pantginis with H.C. Wainwright. Please proceed.

Robert Blum, President and Chief Executive Officer

Hi, Joe.

Joe Pantginis, Analyst

Hello, everyone. I appreciate the opportunity to ask a question. I would like to concentrate on business development since it has been a significant part of the discussions today in your prepared remarks. Can you share when discussions began after Amgen returned the asset? Also, looking ahead, how important is it for a potential partner to be actively involved in commercialization and expansion into other markets or even co-promoting in the U.S., especially with the NDA timeline approaching?

Robert Blum, President and Chief Executive Officer

Yes. So very good questions. I'll start and then see if Ching wants to add anything as well. So we began these discussions promptly after we received the notice from Amgen, albeit all caveated by saying there are certain things we cannot be sharing in as much as our collaboration with Amgen is winding down and will be officially ending in May of this year. Therefore, there are confidential materials that cannot be shared in that interim period. And there are non-confidential materials that can be shared ahead of that, albeit that relates to omecamtiv mecarbil. As we think about business development and corporate development, they go hand in hand. Our interests are to prioritize partnering, as may enable a combining of omecamtiv mecarbil and CK-274, for which we have no similar restrictions, and with focus on Japan and Europe before co-promotion in the U.S. So we've got a very clear-minded view of what we're interested in. You're right; a potential partner may have an interest in co-piloting certain of those activities, but we also know that we're the lead here, and we're in a position to inform a potential partnership on terms that we would find acceptable by pushing forward on these initiatives. In this case, we want to make certain that we have our go-to-market strategy clarifying we do know what the regulatory feedback is in order to be able to identify the best potential partner on the right terms. The fact also doesn't limit us from having conversations on matters pertaining to royalty monetization and structure deals. And with that, I'll turn it over to Ching to see if he wants to elaborate on some of those ongoing discussions.

Ching Jaw, SVP and Chief Financial Officer

Yes. Thanks, Robert. So we have begun discussions with various parties on both fronts, both in terms of potential business development deals and/or royalty monetization or structured financing deals. I would just say that you might be able to look at the deals that we've done in the past with companies like Royalty Pharma and others to get a sense of the type of deal structure we might be pursuing for the royalty monetization and structure financing. I'll just stop there.

Joe Pantginis, Analyst

No. That's really helpful. I appreciate that color. And then, obviously, a lot depends on omecamtiv, but I was just curious if you could provide a little more color on the gating factors about pushing reldesemtiv forward?

Robert Blum, President and Chief Executive Officer

Sure. The trial that we have laid out for reldesemtiv called COURAGE-ALS is one that has design features that enable it to be stopped or adapted to interim analyses. As such, if we aren't seeing what we expect to see in that trial, then we could pull the plug or we can actually dial up some of the patient enrollment as well. That's for a study that we have fully costed, and for which a significant percentage of the cost would be borne by our partner, Astellas, in exchange for a low single-digit royalty. We believe that this is a trial that is affordable. But at the same time, we recognize that our priorities need to be focused on omecamtiv and CK-274, especially as those will be more cost-intensive and also inform our cost of capital. Therefore, we want to have all of the information in place when we make a decision to start that trial. In the meantime, we can be conducting start-up activities that would enable us to begin that trial around the same time frame. We believe that this is prudent investment in the balanced way we're approaching our portfolio, recognizing priority number one is omecamtiv, priority number two is CK-274, priority number three is reldesemtiv. We do expect that we should be advancing all three during the second half of the year.

Joe Pantginis, Analyst

Got it. Thanks a lot, guys.

Robert Blum, President and Chief Executive Officer

Thank you.

Operator, Operator

Our next question will come from Salim Syed with Mizuho. Please proceed.

Robert Blum, President and Chief Executive Officer

Hi, Salim.

Salim Syed, Analyst

Hey, Robert. How are you doing?

Robert Blum, President and Chief Executive Officer

Good.

Salim Syed, Analyst

I have a couple of questions, possibly for Fady or Stuart. Regarding the CK-274 guidance, you mentioned similarities to the PK data and noted significant reductions in the LVOT gradient. Are you currently satisfied with the results from Cohort 1, or do you anticipate needing a Cohort 2? It sounds like you're already planning a pivotal trial, so I’m interested in your perspective on the data set, especially given the substantial reductions observed at four to six weeks. My second question is about the data from 274 that we'll receive in the middle of the year. Can you explain what you intend to include in the press release? Will it be a placeholder announcement or will it contain substantial information for investors? Lastly, regarding 136, I feel there might be some hesitation in advancing this troponin activator. You seem interested in conducting additional Phase I studies, and I'm curious about what insights you might have on that. Given the situation with omecamtiv, I would expect a troponin activator to progress more rapidly in the pipeline.

Robert Blum, President and Chief Executive Officer

Yes. So let me start, and then I'll turn it over to Fady and Stuart. I'm probably going to go in a reverse order of your questions. With regard to CK-136, we're in the midst of these transition discussions with Amgen, and we still need to assess that data and whether anything else might need to be done in accordance with further development in Phase I before committing to how we might do Phase II. I suspect there are going to be other activities that will need to be done in order to be prepared for Phase II. However, don't take that to mean that we're any less enthusiastic about its potential because that's not true. The fact of the matter is we have a bit of an embarrassment of riches in terms of our ability to fund and prioritize everything at the same time. I do believe that we'll find a way to make happen a plan for CK-136, but in priority order relative to the other programs we've mentioned. Also with regard to how we will report results from REDWOOD when we do? It's hard to answer that question until we have the data, but expect it will be somewhere in between just simply a top-line announcement and that which would be reserved for the presentation itself, enough to be able to communicate the results in order to be able to set the table for what would be the presentation. It won't be in its full detail to jeopardize the presentation but enough so that it will hopefully inform us and shareholders about why that may be supportive of movement into Phase III and distinguishable as well from the first-generation product. With that, I'll turn it over to Fady to answer your question about Cohort one and anything else he wants to add.

Fady Malik, EVP of Research and Development

Hi, Salim. I think the answer to your question is that both Cohort one and Cohort two will inform final dose selection for Phase III. Cohort 1, clearly, it was a set of very active doses, but not every single patient had a full treatment response. That is the rationale for exploring some higher doses in Cohort two to increase the percentage of patients who meet the treatment response. The combination of the two will inform both the starting dose and the high dose we select. They are on track to enable us to design and begin Phase III by the end of this year.

Salim Syed, Analyst

Okay. Thanks so much. I appreciate the color.

Fady Malik, EVP of Research and Development

Thank you.

Operator, Operator

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

Robert Blum, President and Chief Executive Officer

Hey, Charles.

Charles Duncan, Analyst

Yeah. Thank you. Hey, Robert and team. Thanks for taking my questions. Lots of good ones asked, but I'll give it a shot for a couple of others. First of all, regarding the upcoming FDA meeting in the next few weeks, I assume that you'll wait for the actual minutes? Or do you think that the questions that you're asking are not sufficiently complex that you'll be able to talk about that even yet this quarter?

Robert Blum, President and Chief Executive Officer

So we'll certainly want to see the minutes, but I also don't know that, that meeting will sell, prompt any further disclosure as much as a continuing set of activities. Therefore, we'll have to assess the outcome after the meeting. But what we aren't intending to do is provide a play-by-play on every regulatory interaction and every activity in accordance with transitions from Amgen because all of this factors into a gestalt that will communicate as we think is appropriately informative but as those things materialize materially. I hope that's helpful.

Charles Duncan, Analyst

Yes. That is. So it seems like there is no particular question around clinical strategy, i.e., perhaps waiting for METEORIC or additional clinical work, it's really in terms of what to include in an NDA?

Robert Blum, President and Chief Executive Officer

No, not at this meeting. At this first meeting, it really is to discuss GALACTIC and whether it is supportive of proceeding towards what would likely be next, further interactions in a pre-NDA meeting. We're expecting a series of these meetings over the course of the next several months. If we learn that GALACTIC by itself was not sufficient to support a filing or if there's something that definitive, we might then feel obligated to communicate that because that would be a surprise. But our expectation is we'll get advice that will likely need to be elaborated in further interactions.

Charles Duncan, Analyst

That's helpful. My second question is about commercialization. Assuming everything goes well with the agency and omecamtiv is approved, I'm curious if you've received any feedback from payers at this point. What are the key pharmacoeconomic considerations that you believe differentiate omecamtiv in terms of its ability to provide value for patients and payers?

Robert Blum, President and Chief Executive Officer

Very good question. We've engaged already well over 150 key opinion leaders, and we've gotten very consistent consensus feedback that they believe that omecamtiv mecarbil in GALACTIC generated data that would distinguish it from other medicines currently available for treating heart failure and especially, as it augments cardiac performance and in GALACTIC demonstrated activity, safety, and efficacy on top of standard of care well-maintained patients on adherent standard of care. Thus, we see that as very encouraging. But to your question, that's not the entirety of the story. We have been engaging payers, and we will continue to do that through the period of this Q1 and Q2. We're getting good feedback that a new medicine that could keep people alive and out of the hospital and especially reduce costs associated with heart failure would be a welcome addition. As you know from the results from GALACTIC, the predominant effect we saw with omecamtiv mecarbil added to standard of care was a reduction in hospitalizations and rehospitalizations, and that was on top of standard of care. This effect size seems to be more meaningfully large as you get into more advanced heart failure patients based on secondary analyses. That's very interesting and compelling, and that informs a lot of the value proposition and what could be the pharmacoeconomic rationale for omecamtiv mecarbil as it is commercialized. We believe that this is potentially ripe for the times, given that these heart failure hospitals are increasingly under penalty for readmissions, as was first 30 days and now increasingly with public policy initiatives looking likely to move to 60 and 90 days. Meaning any rehospitalization during that period would be at the cost of the index hospital. Therefore, adding omecamtiv mecarbil upon discharging, with the expectation it could reduce the number of those rehospitalizations, should be both clinically advantageous and potentially economically advantageous. We see the value proposition being particularly important, especially knowing that heart failure is the number one discharge diagnosis for patients admitted into hospitals on Medicare, and it's only looking to get worse with the aging demographics. We foresee that this is increasingly a significant portion of the story as it's unfolding with additional analyses and research still to be done.

Charles Duncan, Analyst

That's helpful, Robert. Thank you. I appreciate the thoughtful answer. Last question is perhaps for Ching. Ching, you said several things, one of which caught my attention, but one thing that I remember is on the immunoassay. It makes sense that your expense guidance can't really be well informed until you decide on a path forward in terms of commercialization and other matters concerning omecamtiv in the pipeline. However, you mentioned the immunoassay, and I'm trying to understand it better. What is the potential expense associated with that?

Ching Jaw, SVP and Chief Financial Officer

Charles, there, I'm referring to the existing relationship between Amgen and Thermo Fisher in the development of the in vitro diagnostics that will be used for dose titration of omecamtiv mecarbil. As Amgen steps out of that relationship, the assumption is we will have to step in, and we have just begun discussions with Thermo Fisher on the path forward. So that's what the immunoassay comment was meant to refer to.

Charles Duncan, Analyst

Got it. So more later, okay. Thanks for taking my questions.

Robert Blum, President and Chief Executive Officer

Thank you.

Operator, Operator

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

Jeff Hung, Analyst

Thanks for taking the questions. With the focus for omecamtiv mecarbil on patients with ejection fractions below 30%, I guess, what are your current thoughts on how to more effectively reach this group of patients once omecamtiv is on the market? And then I have a follow-up.

Robert Blum, President and Chief Executive Officer

These are very identifiable patients, as you might remember from hearing from Mike Felker at our panel presentation after the results from GALACTIC were presented at AHA. These are patients that tend to be treated, not just by cardiologists; more often, it's the specialty heart failure cardiologists who are called upon for these frequent flyers in U.S. hospitals. These patients are not difficult to identify and very often are well known. In fact, as we've been engaging with opinion leaders, it's that patient phenotype that is top of mind for many of them because they don't have anything in their toolbox right now that could be helpful to those patients who are already bottomed out on their blood pressure or kidney function and potassium levels. Therefore, that's where the profile of omecamtiv may be especially suitable. Fady, anything you want to add to that?

Fady Malik, EVP of Research and Development

Yes. I think just the main point is that these patients, as we talked about earlier, are often in and out of the hospital. They are readily identified based on the fact that they require a higher level of care. The physicians that take care of them are often positioned to have hospital-based practices and other things that lend themselves to being approached and engaged in terms of what alternatives are available to them.

Jeff Hung, Analyst

Great. Then I heard the question, but I missed the answer on the next one. So sorry if I missed it. Could you just repeat the answer? For the REDWOOD data, what endpoints should we expect to see with the top-line data? I guess what do you need to see to consider the study a success? Thank you.

Fady Malik, EVP of Research and Development

Well, I think, Jeff, the data that we have are similar to what we announced in Cohort one release, but the level of scale will be greater than what you saw there. We're looking at are related to echocardiographic response, pharmacokinetics, and safety. I think those are the key things that we will be emphasizing in our reporting of the study.

Jeff Hung, Analyst

Just to clarify, when you mention reported, are you referring to the top-line data in the press release? Will you address all those aspects?

Fady Malik, EVP of Research and Development

Yes, I'm sure we'll cover all those aspects. I can say right now to what level of detail. We haven't written the press release, obviously.

Jeff Hung, Analyst

Okay. Thank you.

Robert Blum, President and Chief Executive Officer

Thanks, Jeff.

Operator, Operator

Your next question will come from Ted Tentoff with Piper Sandler. Please proceed.

Robert Blum, President and Chief Executive Officer

Hey, Ted. Thank you.

Ted Tentoff, Analyst

Hey, guys. Thanks so much for the updates all the time. I guess my only question really have to do with the current study, and I don't know if there's anything you can, just in terms of design or sort of what you're thinking there? Thank you.

Robert Blum, President and Chief Executive Officer

Sure. We published a poster in December relating to the design of COURAGE-ALS. Maybe I'll ask Fady to highlight its main features.

Fady Malik, EVP of Research and Development

Perfect. Thank you. Yes. COURAGE-ALS is a study that would enroll patients, randomize them to active versus placebo treatment for six months. At which point, the patients on placebo would cross over to active treatment. So the last six months of treatment, 12 full months, all patients would be on active treatment. Study stayed blinded for the entire time period. The primary endpoint assessed at six months is the ALSFRS, which is the ALS functional rating scale that has been used as a secondary endpoint in the Fortitude Phase II study. The other key feature is that there are a couple of analyses that enable us to either study per futility at an earlier stage of its conduct or to assess it for upsizing should it need to be upsized for powering. But maybe just in interest of time, I'll leave it at that.

Operator, Operator

Your next question will come from Greg Suvannavejh with Goldman Sachs. Please proceed.

Robert Blum, President and Chief Executive Officer

Hi, Greg.

Greg Suvannavejh, Analyst

Yes. Sorry about that. Thanks for taking my question and for the updates. I've got two questions, please. My first, maybe it's actually for Ching, just on the guidance. I realize that the guidance is the guidance, but clearly, there are some determinations of the path forward for omecamtiv mecarbil. So I'm just trying to get a sense of what magnitude of swing could we possibly see once you get your strategy as we look at our models? I'm just trying to get a sense of how much of your current thoughts around omecamtiv mecarbil are already contemplated into that $160 million to $170 million net cash utilization? And could it be meaningfully different once you figure out your plans on the go forward? So that's my first question. And then my second question has to do around comments that, obviously, you're going to meet with the FDA in the next little bit to find out if indeed, the agency does view that the data that you've generated is supportive of a filing on a go-forward basis. Obviously, I think we'd all hope that. But any preliminary thoughts as to if that's not the case, what other trials you would contemplate doing in order to take it across the finish line? Or is there another then strategic decision as to what to do with the program going forward? Thanks.

Ching Jaw, SVP and Chief Financial Officer

In response to your first question, Greg, it's a bit premature to provide specific details since we are currently seeking potential partners. Our cost structure might change based on the economics and cost-sharing arrangements with these partners. I can share that I expect substantial increases in spending in 2021 if we find a viable path forward for omecamtiv mecarbil in terms of commercialization. However, it's important to note that by the time we could establish our sales force, it would likely be late in the year. As you consider changes for 2021 compared to potential increases in 2022, I believe most of the increase will occur in 2022. I hope that clarifies things.

Robert Blum, President and Chief Executive Officer

I think that's the operative point. While we may provide a change in guidance midyear related to 2021 spending, depending on what you might think to be significant or meaningful, it's unlikely going to have the kind of effect that you might be worried about in 2021 as much as it might have an effect on our cash runway extending through 2022 and into 2023. Therefore, it's not enough to build a go-to-market strategy if we can't also fund and finance it. That's where business development and corporate development go hand in hand. Our aim is to keep that adjustment within a reasonable range, and I can't put a percentage on it right now, but I trust you understand that there are many moving parts right now affecting that. Your other question related to FDA, if we get definitive feedback at this upcoming meeting that GALACTIC by itself is alone insufficient to inform potential progression to an NDA filing, firstly, I think we'll be surprised. But secondly, we do have an ongoing second Phase III trial, METEORIC. As we mentioned, it will complete enrollment in the first half of this year, and that could very well serve as a second pivotal if that would be required. We have an over 8,000-patient study with a p less than 0.05. Therefore, we don't foresee that that should be necessary, but that could be the second Phase III trial that might be required. If not that one, we would expect that another trial could be conducted in this population that we think was the most responsive to omecamtiv mecarbil in GALACTIC. But of course, that's a whole other ballgame, and that would take additional resources and time, which is not currently what we foresee.

Greg Suvannavejh, Analyst

Understood. Thank you so much.

Robert Blum, President and Chief Executive Officer

Thank you.

Operator, Operator

We do have one final question in queue coming from Carter Gould with Barclays. Please proceed.

Robert Blum, President and Chief Executive Officer

Hey, Carter.

Carter Gould, Analyst

Hello everyone. Good evening. I've been listening for a while and this is my first time asking a question. Regarding your comments on 274 versus 271, it seems that you are focusing on 274 in the short term, but are considering all possibilities for distributing indications. Is that an accurate understanding? Have you made any decisions about avoiding overlapping indications with these assets in the near term? As a follow-up, Robert, you mentioned possible co-promotion options for omecamtiv while also discussing how you could leverage your commercial infrastructure and synergies for a growing cardiovascular franchise. I'm trying to grasp your thought process regarding a co-promotion decision—what factors might influence your choice to pursue that option or not? Thank you.

Robert Blum, President and Chief Executive Officer

Sure. Firstly, we haven't made any decisions regarding not overlapping indications, but we're looking at CK-274 in obstructive HCM. As you know, it's following behind very good work that Myokardia did with mavacamten, now in the hands of BMS. We have a lot to learn about where as a next-generation compound we can advance the field. As you might have noted, BMS made some announcements about its interest in nonobstructive HCM and also in HFpEF. We think that as they go forward with mavacamten in those indications, it will inform how we might choose to proceed with CK-274 and CK-271. We can't afford to do everything at the same time, so we've got to prioritize things, and we're looking at nonobstructive disease and we’re looking at HFpEF with an eye on how we might be, if not first to market, how we might be a potential best-in-class. That's where we want to ensure that we're being smart about our pipeline of cardiac myosin inhibitors. I hope that's helpful. Regarding partnering and co-promotion, I'll just mention that we're looking at where we could build our business, but recognizing we can't build everything we want. Some things we have to rent as we then establish positive marketing contribution and positive cash flows to funnel them back into an expansion and scale up of our commercialization. I don't expect that we will be going into Europe by ourselves. I expect that will be built together with a co-promotion partner. In the U.S., I want to ensure that we are leading in the area where we think we can make the most impact with the highest yield, specifically in the institutional care segment. As we might scale our commercial organization beyond those hospitals and those integrated networks into the community, there are those clinics that are more adjacent that are likely treating advanced heart failure patients, and there are those that are more distal and we might see benefit to having a co-promotion partner in some of those activities as we might ultimately build our commercial business. Again, this must be factored in together with what we are doing from a digital standpoint, recognizing that we can be a leader in that space as it relates to heart failure. These are all things that factor into how we think about co-promotion and franchise building. What we want to do is know that we've got a presence with feet on the ground in those high-volume heart failure hospitals that are also those high-volume HCM centers. This will be essential as a nucleus to our strategy. Is that okay?

Carter Gould, Analyst

Thank you.

Robert Blum, President and Chief Executive Officer

Thank you, Carter.

Operator, Operator

And we have reached the end of our question-and-answer session. I would now like to turn the call back over to Robert for closing remarks.

Robert Blum, President and Chief Executive Officer

Thank you, operator. Thank you to my colleagues, and thank you to all of you on this call for these discussions. I think we've laid out for you why we think 2021 can be a transformational year for Cytokinetics. We're very excited about it. We're optimistic about what this means, not only for omecamtiv mecarbil but for other drug candidates in our pipeline and for our company, and we look forward to updating you on our progress. With that, operator, we can bring this call to a close.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.