Cytokinetics, Incorporated (CYTK)

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Cytokinetics Incorporated (CYTK)

Q2 2013 Earnings Conference Call

July 31, 2013 4:30 pm ET


Robert I. Blum - President & Chief Executive Officer

Sharon A. Barbari - EVP, Finance and Chief Financial Officer

Andrew A. Wolff - SVP, Clinical Research and Development, and Chief Medical Officer

Fady I. Malik - SVP, Research and Early Development


Simos Simeonidis - Cowen and Company

Jason Butler - JMP Securities

Charles Duncan - Piper Jaffray

Chad Messer - Needham & Company

Ritu Baral - Canaccord Genuity

Joseph Schwartz - Leerink Swann

George Zavoico - McNicoll, Lewis & Vlak



Good afternoon, and welcome ladies and gentlemen to Cytokinetics' Second Quarter 2013 Conference Call. At this time, I would like to inform you that this call is being recorded and that all participants are in a listen-only mode. At the Company's request, we will open the call for questions-and-answers after the presentation.

I will now turn the call over to Sharon Barbari, Cytokinetics' Executive Vice President of Finance and CFO. Please go ahead.

Sharon A. Barbari

Good afternoon and thank you for joining the Cytokinetics senior management team on this conference call today. Also present during this call are, Robert Blum, our President and Chief Executive Officer; Dr. Andrew Wolff, Senior Vice President of Clinical Research and Development and Chief Medical Officer; and Dr. Fady Malik, Senior Vice President of Research and Early Development.

Following the forward-looking statement disclaimer, Robert will provide an overview of the past quarter highlighting our recently announced corporate partnering transactions, Fady will update you regarding recent progress in the clinical development of omecamtiv mecarbil for the potential treatment of heart failure, and Andy will then provide an update on the clinical development of tirasemtiv in patients with amyotrophic lateral sclerosis or ALS and on the Phase I clinical trial of CK-2127107 or CK-107 in healthy volunteers. I'll then provide a financial overview and updated financial guidance. Robert will then conclude the call with additional comments regarding how these recent activities come together to align with our corporate strategy and expected next steps and projected milestones for 2013. We will then open the call for questions.

The following discussion, including our responses to questions, contain statements that constitute forward-looking statements for purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to our financial guidance, in collaborations with Amgen and Astellas, to the initiation, enrolment, design, conduct, and results of clinical trials, and to other research and development activities. Our actual results might differ materially from those projected in these forward-looking statements.

Additional information concerning factors that could cause our actual results to differ materially from those in these forward-looking statements is contained in our SEC filings, including our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q and our current report on Form 8-K. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website. These forward-looking statements speak only as of today. You should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call.

Now I'll turn the call over to Robert.

Robert I. Blum

Thank you, Sharon. The second quarter has been a very busy and a highly productive one for Cytokinetics with the expansion of an existing collaboration agreement and the signing of a new collaboration agreement that have significant strategic implications for our respective cardiovascular and skeletal muscle programs. We executed well by closing these important transactions. We also continue to make important progress in the conduct of our later stage clinical trials for our investigational products arising from these programs.

The deals infuse immediate cash but are also very purposely intended to afford us access to capital over the medium and longer term, in step with each program's respective progress and as sponsored by our partners in each case. Moreover, the deals go beyond monetizing returns on prior investments for Cytokinetics. Of course they do that too and those are prerequisite for any deal we do. However, each of these deals substantially augments our strategic reach; with Amgen, geographically towards Phase III and in an indication we are already pursuing, thereby reinforcing our existing relationship; and with Astellas, programmatically and towards Phase II in indications we could not have pursued alone but can now do so with a highly motivated leading multinational pharmaceutical company.

Starting with the first deal we announced in June, we expanded our license relating to omecamtiv mecarbil with Amgen to include Japan. In connection with this expanded license, we received $25 million from Amgen comprised of a non-refundable license fee of $15 million and $10 million for Amgen's purchase of Cytokinetics' common stock. In addition we are eligible to receive pre-commercialization milestone payments for the development of omecamtiv mecarbil in Japan of about $50 million as well as royalties on sales of omecamtiv mecarbil in Japan.

Executing on this transaction now positions us well to integration the development of omecamtiv mecarbil in Japan into a potential global registration program, as we are considering strategies for the Phase III clinical development program for omecamtiv mecarbil. Fady will provide an update on development activities and progress relating to omecamtiv mecarbil later in this call.

Alongside announcing the expansion of our deal with Amgen, we also announced that results from ATOMIC-AHF will be presented at a Hot Line Session at the upcoming European Society of Cardiology Meeting, and today, we are announcing encouraging progress in the conduct of COSMIC-HF. We are optimistic about omecamtiv mecarbil and together with Amgen we are taking steps to ready for the potential advancement of this program, both in terms of the stage of trials and its expanded geographical scope.

The second deal we announced in June was a new collaboration with Astellas, a deal which we announced within a week of announcing our Amgen deal. The collaboration with Astellas focuses on research, development and commercialization of skeletal muscle activators. The primary objective is to advance novel mechanism drug candidates for diseases and medical conditions associated with muscle weakness. Cytokinetics is eligible to receive over $40 million from Astellas over the next two years which comes in the form of a $16 million upfront non-refundable license fee and over $24 million in reimbursed sponsored research and development costs.

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