Good afternoon, and welcome, ladies and gentlemen, to Cytokinetics 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 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 morning, everyone, and thanks for joining us on the call today. Robert Blum, our President and Chief Executive Officer, will begin with an overview of today's announcement and next steps related to omecamtiv mecarbil. Then we'll open the call questions and Robert will be joined by Fady Malik, Executive Vice President of R and D Libby Schneider, Senior Vice President of Abuse Business Development Qing Zha, Senior Vice President and Chief Financial Officer and Mark Schlossberg, Senior Vice President, Legal and General Counsel. 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 today's press release regarding Amgen's termination of our collaboration agreement available on our website as well as in our SEC filings. We undertake no obligation to update any forward looking statements after this call. And now, I will turn the call over to Robert.
Thank you, Diane, and thank you to everyone for joining us on the call this morning. On Friday of last week, we received notice from Amgen of its termination of our collaboration agreement and its intention to transfer the further development of omecamtiv mecarbil and AMG 594 to Cytokinetics. This notification came as a surprise to us. We and Amgen had previously discussed conducting further analyses of the data arising from GALACTIC HF and engaging opinion leaders to assess their views on the data, as well as to jointly conduct market research on agreed target product profiles. We have planned together for activities that would stretch into 2021 and we expected those activities would result in our having senior level executive discussions in Q1 2021 regarding potential next steps.
We had no indications prior to Friday that Amgen would choose to provide their termination notice before completion of these activities. With that said, Cytokinetics will now regain rights to the field of cardiac sarcomere activation, a field we first pioneered progressed into clinical development and have worked side by side with Amgen to advance. To remind you, the primary results of GALACTIC HF were recently presented at the American Heart Association Scientific Sessions and simultaneously published in the New England Journal of Medicine. The trial demonstrated a statistically significant effect of treatment with omecamtiv mecarbil to reduce the risk of the primary composite endpoint of cardiovascular death or heart failure events, heart failure hospitalizations and other urgent treatment for heart failure when compared to placebo in patients treated with standard of care. While no reduction in the secondary endpoints of time to CV death was observed in the overall population, the effect of omecamtiv mecarbil on the primary composite endpoint was generally consistent across pre specified subgroups with a potentially greater treatment effect suggested in patients with lower left ventricular ejection fraction.
Following the presentation of the results of GALACTIC HF at the American Heart Association meetings, Amgen and Cytokinetics circled with over 50 opinion leaders through formal advisory board sessions and 1 on 1 meetings and we were preparing for a joint synthesis of those meetings to discuss amongst our senior executives. While our discussions with opinion leaders are continuing, the consensus feedback coming out of these meetings is supportive of the role for omecamtiv mecarbil in the treatment of heart failure patients, particularly the sicker heart failure patients and of our proceeding to engage regulatory authorities to discuss paths forward towards potential registration. These meetings included top academic cardiology thought leaders as well as community based specialists who lead high volume heart failure clinics. Collectively, their feedback regarding the results of GALACTIC HF is that omecamtiv mecarbil appears to offer a profile especially well positioned as a novel mechanism treatment for advanced heart failure patients who are difficult to treat and at high risk of worsening disease. To elaborate, GALACTIC HF is a landmark trial and one of the largest ever conducted in heart failure.
It demonstrated a positive effect on the primary composite endpoint in patients receiving standard of care plus omecamtiv mecarbil across a broad diversity of patients as it enrolled both inpatients and outpatients. As noted earlier, there was a more pronounced effect in a pre specified subgroup of patients with lower ejection fraction, which is important as it may inform a phenotype of patients most likely to benefit and as will be key to inform physicians, guidelines and payers. Additional analyses of this subgroup are continuing and will be presented and published in the next few months, as we believe will further elaborate on the potential of omecamtiv mecarbil in difficult to treat advanced heart failure patients who are especially at high risk of hospitalization and rehospitalization. While we're still getting our arms around the prevalence and incidence of patient numbers associated with this phenotype, we believe it is a sizable population and represents at least 100 of thousands of patients in the United States whose heart failure continues to advance despite treatment with existing medications. Moreover, it has been estimated that 75% of these patients when hospitalized will succumb to their disease within 5 years of hospitalization, underscoring the importance of new treatments.
A potential new medicine that can keep patients out of the hospitals would be welcomed by physicians and payers alike. Physicians develop a close relationship with these patients and are limited by currently available options. This is what we're learning and confirming with opinion leaders, but already we're encouraged by what we're hearing. Opinion leaders with whom we have engaged have shared their viewpoints on the key value drivers for inpatients who are often hospitalized and rehospitalized with diagnoses of heart failure. The emerging profile of omecamtiv mecarbil to reduce heart failure hospitalization and other urgent events may afford a solid pharmacoeconomic profile, which would be advantageous to combat economic pressures hospitals are confronting given Medicare penalties for 30 day 60 day readmissions and as are expected to only get more challenging given the prospect of bundled payments.
We and Amgen had planned other meetings with opinion leaders as well as activities to inform the commercial positioning and potential returns on sales and marketing. We will continue and complete those activities, but to repeat, we have already received encouragement to proceed towards regulatory discussions as may inform regulatory submissions and if successful potential commercialization. And with that said, our diligent work continues. Now, we'll proceed independently and deliberately to complete this work, leveraging our expertise and our leadership in cardiac muscle biology and our long standing goodwill with the heart failure community. Looking at this opportunity from our optics, initial assessments of the potential commercial opportunity appear attractive to Cytokinetics and would certainly move the needle for our company.
While we need to better understand these data to be clear, I do not foresee a scenario in which we do not engage regulatory authorities and seek feedback around a potential registration path forward. We have support from the Executive Committee of GALACTIC HF as well as investigators and opinion leaders and we intend to push forward as may serve the interests of patients, physicians and payers. And yes, we see this as an important opportunity at Cytokinetics to serve our shareholders and to reclaim control over our 1st in class drug candidates and to do so with urgency leveraging what has arisen from our collaboration. With urgency because the results of GALACTIC HF underscore potential clinical effect and benefit for omecamtiv mecarbil in an area of high unmet need. At Cytokinetics, we are genuinely committed to advancing the new mechanism medicine in heart failure.
We are the pioneers as to muscle biology and we're leaders in translating that biology to an entirely new pharmacology. We now look forward to proceeding to next steps. However, to be clear, it will take some time to define our timelines and we will require cooperation in these transitions from Amgen. I'd now like to speak to the terms associated with Amgen terminating our collaboration. Amgen is terminating for convenience.
And under our collaboration agreement, upon Amgen's termination, research, development and commercialization rights for compounds, including omecamtiv mecarbil and AMG 594 will transition to cytokinetics. In addition, Amgen will have certain obligations set forth in the agreement to facilitate a reasonably smooth, orderly and prompt transition of these programs, including transfer and assignment to Cytokinetics of specified regulatory filings, data and other information if requested by Cytokinetics, transferring inventory of compounds to Cytokinetics at our expense to the extent possible and requested by Cytokinetics, assigning relevant third party manufacturing agreements to Cytokinetics and granting to Cytokinetics exclusive and non exclusive licenses to certain intellectual property rights. Importantly, Cytokinetics will have no trailing royalty obligations, no trailing royalty payment obligations to Amgen for either omecamtiv mecarbil or AMG 594. With Cytokinetics' consent, Amgen previously granted a sub license to Servier to commercialize omecamtiv mecarbil in Europe and the Commonwealth of Independent States, including Russia. Cytokinetics previously entered into a letter agreement with Amgen and Servier in 20 16, which provides that if Amgen's rights to omecamtivbicarbil are terminated, Servier becomes a direct licensee of Cytokinetics under substantially the same terms as those in our option, license and collaboration agreement between Amgen and Servier.
So what can you expect from us moving forward? We look forward to sharing more data soon and elaborating on analyses already in hand that underscore our enthusiasm for proceeding to discuss this program with regulatory authorities. In the meantime, we plan to be considerably more transparent about feedback from market research and our expected regulatory interactions. We will also assess what would be required to take omecamtiv mecarbil to market by ourselves or otherwise with a partner, so as to inform a decision regarding our potentially seeking a new co promotion partner in North America as well as consider licensing in other territories. We can now proceed to independently assess the merits of that strategy and the practicality of our going it alone or with another partner or partners in this area of hospital based commercialization and outpatient specialty cardiology.
We will do our best to move swiftly in the interest of integrity, authentic commitment to good science and genuine service to patients. Operator, with that, we can now open up the call to questions, please.
Your first question is from the line of Jason Butler with JMP Securities.
Good morning. Hi. Thanks for
taking the questions.
First one, I guess that you're not updating financial guidance here, but can you just give us a sense of what the ballpark costs of the planned activities were with Amgen in terms of continuing to investigate the commercial opportunity, the market research, the dialogue with practitioners and towards the goal of getting regulatory feedback? And then from an R and D perspective, what happens to the cost of METEORIC? Does Amgen continue to cover anything there? Then I have a follow-up question.
Good questions. I'll start and Ching, if you want to add anything or Fady. To your first question, the costs associated with further engagement of opinion leaders in market research were expected to be modest and shared jointly. And those were plans that had been discussed, albeit by people within our organizations at mid levels and not at the senior most levels. With regard to our financials, as you've heard from Qing, we expect to end 2020 with over $500,000,000 in cash and cash equivalents on our balance sheet.
And even as we have this new information and as we peer into 2021, we still expect that will, under all scenarios we're contemplating, represent at least 2 to 3 years of forward cash. With regard to METEORIC, we believe that this study will continue. We had agreed with Amgen with respect to a budget around which METEORIC would be proceeding as we've already guided to completing enrollment in 2021 and readout results in 2021. Ching or Fady, anything else you want to add?
Yes. I would just add that there are multiple scenarios around which we could go to market either by ourselves or with contract sales organization or with partners and we will assess the merits and associated costs of each of these options before determining what our next steps are.
Okay. You
could well imagine that those scenarios that Ching is speaking of, which we have been reviewing already recognizing this could be a potential outcome, are more likely to have effect to our spending in 2022, 2023 more than 2021, but we'll be able to get our arms around those in due course and provide proper financial guidance once we have it.
Okay, great. And then, obviously, you're still learning about the patient population, but can you give us any sense in terms of a commercial strategy? Is this going to be more focused on hospitals and specialists versus to what extent do you think the commercial outreach would need to focus on primary care docs and community cardiologists? Thanks.
Very good questions. So we and Amgen have been discussing these matters for years, and that included potential deployment of resources and what each company would be doing. And it had always been our expectation that Cytokinetics would be building an institutional care hospital based selling force as would be our primary focus. And Amgen's primary focus was going to be cardiologists, specialty care, heart failure specialists in the community. And as such, we have an idea as to what would be deemed competitive with regard to sales and marketing resources as would become optimal for a new medicine.
But as you know, given the trial GALACTIC, which looked at patients who were at high risk of hospitalization, given a recent hospitalization, the focus was to be on catching patients as they were in the hospital and being discharged. So we have a handle on what that looks like from a commitment to commercialization. And to your question, yes, it's not a primary care selling activity, it's a specialty care selling activity and one around which we have already some prescribed numbers that we can now understand whether it makes sense from a practicality and tractable standpoint for us to do that ourselves or with fee for service contracts or with other co promotion partners. But it's not, at all, as your question implies, something that's so formidable that it would be deemed a primary care effort that would be unaffordable to us. Hope that answers your question.
Yes. No, that's helpful. Thanks, Robert. Thanks for taking the questions.
Your next question is from the line of Joe Pantginis with H. C. Wainwright.
Good morning, Joe.
Good morning, everyone. Thanks for taking the question. So first, I guess an observation here, this just appears to be a very, very fast decision by Amgen. And I guess my question is open ended in the sense that, look, when you look at the data that you put out and your comments today, we're looking at a market population of, let's call it, at least 1,000,000 patients. So the potential for a company to return rights based on having a subpopulation be too small or something of that nature certainly does not appear to be the case.
So I guess my open ended question is really at this point, and I know you're still assessing everything that's going on here, but what was Amgen's motivation here? What is the street missing at this point?
It's a very good question and I wish I could answer it. I don't know the answer to your question. I've not had senior level interactions with Amgen to explain this decision. Amgen's press release this morning indicated that the results of GALACTIC did not meet their high hurdle. I'm not exactly sure what that's meaning, but I do believe that these results as we have triangulated with opinion leaders underscore that those opinion leaders and we talk to the very top of the ladder heart failure experts together with Amgen as well as everybody up and down, and we're getting a consensus strong support for movement forward.
I don't know what Amgen's criteria for advancement were. I think that's a question that would better be posed to Amgen.
No, I understand. I appreciate the feedback, Robert. And I guess, 2, I guess, smaller questions, if you will, is, I guess, do you have any body language yet from Servier with regarding their commitment to the program? And second, when do you anticipate going to the FDA?
Good questions. As far as I'm aware, Servier learned of this news today, and I'll be moving swiftly to have discussions directly with Servier. They were participants, as Fady can elaborate, in meetings with opinion leaders over the last week, both formal advisory boards and I believe also they've been doing some of their own independent forensics with their own advisors. As far as going to FDA, as soon as we can practically do that, that's going to require some cooperation from Amgen, as I mentioned. But our hope would be to do that within the next few months.
And once we can understand better, we'll give more formal guidance. I expect you'll see that we'll be much more forthcoming about what we're doing now. Please understand that in order to go to FDA, we have to best understand that phenotype that I alluded to before. That's going to require some additional analyses that are ongoing. There are analyses that we have that will soon be presented and published that will elaborate on what we've indicated and as you'll see soon, but there's still further that we and the executive committee of the clinical trial want to do in order to best assess the profile in order to have that meaningfully constructive conversation with FDA and EMA.
And in that way, it depends on how quickly those analyses can be completed, framed into briefing books and submitted to regulatory authorities, but we'll do that as rapidly as we can.
Got it. Thanks for the added thoughts, Robert.
Thank you.
Your next question is from the line of Charles Duncan with Cantor Fitzgerald.
Hi, Charles.
Yes. Good morning, Robert and team. Thanks for taking our questions. I just wanted to follow-up on the last question regarding FDA timing and see if it sounds like there's some additional analysis in terms of phenotype understanding, but what about clinical data? What about data from GALACTIC or even METEORIC?
Could that impact the timing with which an NDA is filed? And I guess as an additional question or an extension of the previous question, would you anticipate still being able to file an NDA by the end of 'twenty one?
Certainly, but let me first answer your question by saying the phenotype is arising from data from GALACTIC. So it's not like this is not rooted in results from GALACTIC. But let me ask Fady, please, to speak more to how this is all coming together with analyses that will inform strategy.
Yes. Hi, Charles. I think the answer to that part of your question is that GALACTIC, as a large study, we are able to construct, if you will, a patient phenotype from baseline characteristics that can inform where the drug is more best applied. And while we pointed to the EF less than 28 percent subgroup and that certainly is a meaningful biologically plausible marker of drug effect, I think that by itself doesn't define the phenotype. You have some patients with lower ejection fractions that haven't been in the hospital for 11, 12 months who are stable on background therapy and have low blood or normal blood pressures and NT proBNPs, which are normal.
And you have patients with those same ejection fraction who have been in the hospital 2 or 3 times in the last 6 months, have a blood pressure of 100 who are on guideline therapy but not able to maximize guideline therapy. And so I think it's looking at the GALACTIC data set and thinking what's the patient population where we think omecamtiv mecarbil is best applied. And those are the complex and multivariate analyses that we'll be doing in the coming weeks, and that will help us form strategy by which to approach regulators.
Okay. That's helpful, Fady and Robert. But I guess an additional question along those lines. Would you imagine that the GALACTIC HF trial results are sufficient to support an NDA? Or would you imagine that an additional trial need to be conducted?
I believe these are subgroup analyses. They were potentially pre specified, but what are your thoughts in terms of additional clinical activities to support nNDA?
Well, certainly that's what we've been discussing with opinion leaders. Certainly, that's what was intended with GALACTIC. GALACTIC is an 8,000 patient clinical trial that achieved its primary composite endpoint with a P less than 0.05. So it's reasonable for us to assume that it should be as a pivotal trial sufficient for NDA submission and potential registration, but we can't obviously know that absent being able to discuss it with regulatory authorities. So that's what we intend to do as soon as we can.
And I guess one additional question on clinical data and then one on Servier. With regard to clinical data and the decision by Amgen, was there any additional independent efficacy or safety analyses that they conducted that may have turned the opinion of the company on that beyond just kind of the top line data that we've all seen?
Very good question. So I'll ask Fady to comment further. But the way this is set up, there is a database for GALACTIC and a clone of that database. And there is a database that resides at Amgen and a clone of that database that resides with the Brigham and Women's Hospital performing independent analyses as they are represented on the executive committee of the clinical trial. And it's been a collaborative and coordinated exercise to perform analyses and to confirm those analyses between those two resident databases.
Fady, anything you want to add to that?
Yes. I would just say that we've been sharing analyses and data that have come out of the trial and not aware of anything that we haven't seen. It's not to say that there isn't anything, but I think there right now all the data that we've that's been generated out of study has been shared amongst the partners.
Okay. That's helpful. Final question on Servier. We haven't paid much attention to that aspect of potential commercialization. And I guess I'm wondering what could come your way now from Servier?
Should they continue to be engaged in the collaboration in terms of milestone payments or anything?
Exactly. So with our consent, Amgen entered into an arrangement with Servier a few years ago as Servier provided co funding and strategic support for the development program, they received rights sub licensed from Amgen with our consent to commercialize omecamtiv mecarbil in Europe and those other countries that I mentioned. But subject to the very same obligations that Amgen had to us, meaning Amgen had royalty and milestone payment obligations to us and those become Servier's obligations. Now instead of passing through Amgen, they would become direct obligations to Cytokinetics. But there are other things that we now inherit in terms of obligations to Servier, including, as relates to coordination and supply and other things.
So these are details that will still need to be ironed out, but Servier, were they to remain moving forward under a collaboration with Cytokinetics, would have those commercial rights subject to those payments. And this is something that we'll be discussing with Servier. Servier, as you may know, is a leading cardiovascular company in Europe. That's why Amgen with Cytokinetics consent elected to go down that path together. Servier has great expertise in matters associated with commercialization of heart failure medicines in Europe.
So that's something that we find very appealing.
I know it'd be speculation, but do you sense that Servier has any interest in billing a presence in the States?
It's a very good question and something that we will be discussing with them.
Okay. Thanks for taking all my questions and added color.
Thanks, Charles.
Your next question is from the line of Ted Tenthoff with Piper Sandler.
Good morning, Ted. Hi, everybody. So thanks
for the thoughtful update this morning. Obviously, very fluid situation in transit, but I think you provided us with a lot of information. It really seems to me that METEORIC becomes a lot more important at this point. So I just wanted to see if there's any more clarity in terms of enrollment and when we could get data from that trial? Thank you
so much. Sure. I'll start and then ask Fady. But I would reiterate what we said months ago weeks ago, days ago, GALACTIC stands on its own merits. I would not interpret this action of the last few days to suggest that we've changed our views with regard to GALACTIC and its ability to secure potential registration for omecamtiv mecarbil independent of METEORIC.
I want to make that clear. METEORIC is a second study, but it was always designed that GALACTIC should be critical path to a potential approval. The executive committee of the clinical trial as well as opinion leaders believe that it's worth discussing this with regulatory authorities as could represent sufficient results for standalone approval independent of METEORIC, and that's what we'll do. With regard to your question about Meteoric, let me ask Fady to update you. Thanks.
Yes. I think, as Robert said, physician and payer community, they're very interested in outcomes, which is what we measured in GALACTIC. The outcome in New York is exercise performance, which would certainly speak to an added dimension, but I don't think would drive necessarily uptake and use of omecamtiv mecarbil by itself. And so the but to answer your question, New York is continuing. We are hoping to our plan is to complete enrollment in the first half of next year, read the trial results by the end of next year.
And as Robert indicated, that's not necessarily gating to our proceeding with regulatory interactions on the basis of GALACTIC and filing an NDA on the basis of GALACTIC, if that turns out to be, if people are amenable to that in next year prior to having the results of METEOR.
Right. I appreciate that. It just it seems to me that if you're going to be going for a label of keeping people out of the hospital, which was shown in GALACTIC, the exercise data could be meaningful with respect to that label. One last follow-up question. I think you mentioned sort of what the potential patient population was in terms of how many hospitalizations occur in the U.
S? I think it's somewhere around 1,000,000 or so. But could
you just refresh what you said on that? Thank you. Sure. In the United States, there are 6,000,000 patients and growing with heart failure, roughly half of whom have heart failure with reduced ejection fraction. And amongst those, there are over 1,000,000 primary discharge diagnoses each year with a primary diagnosis of heart failure, meaning there are more than that number who are admitted, treated, some of whom unfortunately succumb to their disease in the hospital and over a 1,000,000 discharge diagnoses with a primary diagnosis of heart failure.
When you consider the all listed diagnoses, that number we believe more than doubles. So these are patients who are in and out, in and out of the hospital. And as Fady can speak to, these advanced heart failure patients with worsening disease are oftentimes maxed out on their existing meds. And what's potentially quite attractive is a new mechanism therapy that could address underlying poor cardiac performance without necessarily introducing other issues associated with adverse effects like slowing blood pressure and impairing renal function. These are patients that are complicated And as you may have heard on our investor and media event held approximately a week ago, these are patients that are very challenging and oftentimes ones for which physicians don't know what they might do that they haven't already tried.
Fadi, anything you want to add?
Yes. I'll just add that I think Mike Felker presented that very well in our investor call in which you pointed to the fact that current therapies begin to be withdrawn in those patients as their heart failure gets worse because they are more difficult to use and they have issues with the adverse consequences of those therapies. And so again, a drug like omecamtiv mecarbil, which is easy to start, doesn't drop blood pressure, doesn't interact with kidney function, things like that, and would help keep those patients out of the hospital certainly has a lot of appeal to physicians like that. And that's consistent with the feedback we've got from many other opinion leaders.
Yes, makes sense. And that's why you showed them black. Thanks very much for
that. I believe omecamtamecarbil based on the results of GALACTIC may be affording a very interesting profile to be considered, and this is what we want to be discussing with physicians and payers alike. But not only have we seen with the results from GALACTIC HF, a favorable safety and tolerability profile in those data and also a consistent effect across pre specified subgroups, but we believe that translates into an economic value story. We need to do further assessments and pressure testing, but we believe that can translate into an economic value story in a population that is amongst the most challenging for those hospitals and physicians given Medicare public policy and other private payer restrictions and penalties. This may be amongst one of the very first medicines where that all comes together if these analyses continue to bear fruit in such a way that there is a very, very fundamentally important pharmacoeconomic value story to be told here as well.
Excellent. I look forward to additional data and more insights how this will progress. Thanks everybody.
Thanks, Jed.
Your next question is from the line of Dane Leone with Raymond James.
Good morning, Dane. Hi, Dane.
Thank you
for taking good morning, Rob and team. So
thanks for taking the questions here.
Based on a lot of the communications from Amgen, I'm not sure people are totally shocked by this. But nonetheless, I think that the questions to sort out going forward are just kind of one from your standpoint, what's the actual time order of what you need to do to figure out how to optimize this program, whether take it forward into a regulatory environment, partner it or do something else with it. So you need the final analyses of GALACTIC obviously to understand the profile before speaking with FDA. Do you have a time point on when that will be accomplished? It sounds like your commentary, you do not are not interested in waiting for METEORIC to make a decision on the regulatory front and or overarching strategy.
So from that perspective, what do you actually envision as the cost to engage with Obviously, I think a lot of us would some of my colleagues have been alluding to is just what the ROI would be on the program. Obviously, I think implied from Amgen is that the market wasn't big enough for them to move forward with the cost that they'd have to undertake. But obviously, that could be different for you and or another partner. And then finally, is there any awareness on your end of why there would be a conflict from maybe a FTC point of view if a partner such as Merck who has Versquat and or Novartis who has Entresto would be interested in playing this type of drug in their respective channel? I know there's a couple of questions there, but we're really trying to nail down the strategy here.
Thank you.
Sure. Very, very good questions and I'll try to tick them off. If I miss a couple, please let me know. Let's start with timing. It really depends on cooperation from Amgen, but we were already gearing up for the possibility of engaging regulatory authorities and beginning to think about how that might happen.
And we had understood that that would be something that we could do relatively promptly in the New Year. But however, that again depends on further analyses and discussions with opinion leaders. Our hope is that we're in a position in a matter of weeks to know if that's practical and something that we could be doing in first half twenty twenty one and hopefully be able to narrow that guidance potentially as soon as December or January. And that's going to depend on analyses that still need to occur and our understanding how to piece those together. Typically, you request a meeting from FDA, they've got a certain amount of time to grant that request and you get them a briefing book at least 30 days ahead of that meeting.
And the goal would be to make that decision within a matter of a couple of months in order to be able to hopefully get that meeting on the calendar, if not in Q1, then certainly in Q2 2021, but maybe narrow that range once we have better clarity as to what we can expect from Amgen. With regard to your question about costs, the costs associated with getting there are really quite modest. I think we're talking about what is 100 of 1,000 of dollars in terms of doing market research and other activities that we intend to inform that path to regulatory interactions, not 1,000,000 of dollars. Now that presupposes that we are able to engage Amgen cooperatively in these transitions ahead of the closure of that termination period. The formal termination is 6 months down the road, but our hope is that Amgen will cooperate and engage with us to be enabling of those activities sooner, and we'll have those conversations starting today.
Those conversations have not yet started. With regard to the costs associated with commercializing this by ourselves, yes, we have begun knowing that this was a possible scenario to look at that. And as I mentioned before, those costs become higher obviously in 20222023. But I'm not going to speak today to what they are, only to say that as we've already begun to do our cost estimates and Qing can comment on this and return on investment. And as we've looked at base case scenarios, upside scenarios and also pessimistic scenarios that sales thresholds below our base case scenario have this be affording us a good return on investment, we believe, for Cytokinetics and shareholders, but that's something that needs quite a bit more pressure testing.
And I know that there are shareholders who have reservations about us going alone. We need to assess that ourselves. I have my own concerns about what that might look like, especially as our priority remains to also advance CK-two seventy four and to do that with paste, and that is also a key priority for the company. So we need to understand how these would fit together, whether we might finance further activities. There have been funds who have come to us with objective to offer capital to support our commercialization activities in exchange for more royalty.
We've also been aware that there are other companies, as you've alluded, who might be interested in this from a co promotion standpoint, and you mentioned some of the logical ones who might be interested in this, and now we can proceed to discussions with them as could be quite adjacent and complementary to what they're doing and I do not believe that there would be any anti trust or anti competitive aspects associated with complementary mechanisms in an area of heart failure with lots of unmet need. So, I think that will answer your question for now, but I recognize there's more that you'll want to know and we'll share that with you more transparently as we can.
Thank you. Just one follow-up on that. Just a point, AMG 594 was also returned and it seems obviously holistic that AMG is walking around away from the theory of as well? Would you think that still that is a comprehensive program, as well? Would you think of still that as a comprehensive program bundled together?
I could very well imagine doing that, yes. AMG 594 is in Phase 1 and we believe that it should be moving forward and in Phase II in indications that we've been investigating ourselves and together with Amgen, both as would be following behind omecamtiv mecarbil in half breath, but also and this is important to underscore as we think there are other forms of heart failure that could benefit from this mechanism. And here again, that would certainly move the needle for cytokinetics. Maybe Fady wants to speak a bit about that.
Yes. No, I think there's certainly a sizable population of heart failure that we can approach with this. The patients that we're talking about are often the most challenging that heart failure physicians have to work with. And so there is still a hunger for medicines that can apply in those patients. And fortunately, there are lots of them out there given the event rates and that you can even see just in the dataset that we presented with GALACTIC.
Fadi, the question was those specific to 594 and other adjacent indications unique that we might also pursue? Yes. So we actually
just got a fine point on that as well. And just do you have I know we are waiting for GALACTIC to read out for a decision jointly between yourself and Amgen for the Phase 2 strategy with 594. Have you now in light of what the this is your program now holistically, do you have a decision yet on what the Phase 2 program would look like?
Yes. I mean, I think it's still a little too early to say, Dan, as we noted, we received this notice just last week. So we'll be looking at how this changes our approach with 594. I don't think it changes it substantially. I think omecamtiv is still a molecule that leads and we have a huge database with it now obviously.
There are indications that omecamtiv mecarbil didn't address and we've been conducting advisory meetings and thinking about Phase 2 planning with regards to AMG 594. But I think in the near term, our focus will be on omecamtiv parabola. Yes.
I think it's reasonable to say that we're not likely going to be committing to further development of 594 until we get arms around what it takes to commercialize omecamtiv mecarbil in HFrEF, understand whether that's something that we'll do ourselves or with another partner and how does that bear on CK-two seventy four. Those remain our top priorities.
Great. Thank you so much.
Thank you.
Your next question is from the line of Gil Blum with Needham and Company.
Hi, Gil. Hi, everyone. This is Gil on for Chad and thank you for taking our questions. So given that there's a bit of a narrower market here and Amgen is no longer a partner, what are your thoughts about your current commercial preparedness? I mean, you've already done considerable amount of work.
What additional things should we expect?
Yes. Firstly, I would not characterize this as a narrow market. I would suggest that there is ample opportunity for this to be a meaningfully important commercial program and as you'll hear more from Cytokinetics, Amgen makes its decisions based on Amgen optics, But this is a program that I think, as you'll learn more about it, has significant commercial upside as may represent a meaningfully large opportunity for Cytokinetics. So as we have been working in this area for a very long time, our people have been in many ways, leading the activities associated with medical education, associated with commercial readiness, even under our collaboration. We have small teams of medical affairs and medical scientific liaisons and commercial readiness people already deployed in the field who are establishing relationships with thought leaders who are talking about strategic value, who are engaged in matters associated with positioning, pricing, activities associated with health economics and outcomes research.
One of the benefits of being a small company is we've maintained focus and discipline over many years with high continuity amongst our team members, the same people much like you know me and Fady for over 20 years working on this program. We have others at Cytokinetics have been working on this program for many, many years together working in unison. And I'd say that the commercial plans and activities that have been put forward for omecamtiv mecarbil have largely been designed and architected by Cytokinetics, working collaboratively, of course, with Amgen, but there's no loss of momentum or activity or expertise or know how in association with our ability to move forward, not in any way.
All right. Thank you for the color. Maybe you kind of alluded to this, but maybe kind of a follow on here. Should we think differently about the potential pricing of this drug? As you mentioned, it may be still a significant population, but it is smaller than the entire population of heart failure patients.
Thank
you. Sure. So it was never realistic to think that this drug was going to be used for the entire population of heart failure patients. But I do understand your point. Admittedly, omecamtiv mecarbil in GALACTIC HF, when looking at the overall treatment effect, did not achieve an effect on CV death by itself.
But keep in mind, there continue to be additional analyses that are looking at both the composite endpoint in pre specified subgroups as well as the other secondary endpoints in those pre specified subgroups. And you've only seen part of those data and that story continues to emerge. And as we look at this advanced heart failure, worsening heart failure phenotype, we look forward to seeing what might be effects both on the composite endpoint as well as on secondary endpoints in those pre specified subgroups. What are those that are independent variables? What are those that are dependent variables?
How large are those subgroups? How large a magnitude effect is that in those subgroups? Those subgroups, some of them being larger than many contemporary heart failure trials. Given the novelty of the mechanism, given the tolerability profile and safety profile emerging from GALACTIC, it's reasonable to assume those subgroups matter and that will affect how we think about positioning and pricing. It's premature to get into that until we do formal analyses, qualitative and quantitative market research around pricing, but we'll be forthcoming about that in 2021.
Your next question is from the line of Jeff Hung with Morgan Stanley.
Hi, Jeff. Thanks for Dave.
Thanks for taking the question. In light of the current announcement, how does this impact your plans for reldesemtiv? Have you made a
decision on whether you plan to advance reldesemtiv into Phase 3? And if so, what
With regard to reldesemtiv, it looks like given this news that we will defer on starting a Phase 3 trial until such time as we have our arms around some of these other matters. We do have, in the case of reldesemtiv, regulatory feedback that we believe lends support for progression. We do have activities that would be enabling of the start of that trial, but it wouldn't be prudent of us to commit to that trial beginning until such time as we understand these other priorities and what they would cost us. And as we've always indicated, our first priority is go to market with omecamtiv mecarbil with urgency for the benefit of heart failure patients. Our second priority is advanced CK-two seventy four in obstructive HCM and other indications to be able to ensure that we're moving forward that program as aggressively as we can.
And our 3rd priority has been ready reldesemtiv for progression to Phase 3. Recognizing this news, that third priority will have to wait, hopefully not too long, but we'll have to wait until such time as we can understand how we can properly serve our first two priorities.
Understood. Thanks. And then just a follow-up. You mentioned that regulatory feedback that supports progression for valsasumptive. Is there any feedback that you've gotten more recently that kind of color that you can provide or is this based off of previous feedback?
Thanks.
Yes. We've received recent feedback from regulatory authorities regarding reldesemtiv that aligned with interest to move it forward, coalescing between FDA and EMA and other things that in time I look forward to being able to share. But first things first, I think we need to prioritize and focus to omecamtiv and CK-two seventy four. All right. Thank you.
Your next question is from the line of Craig Svanity with Goldman Sachs.
Hi, Craig. Robert and team, thanks for taking my questions. I've just maybe got a couple. One, just maybe this is a bit more housekeeping, but in terms of in your interest of being more transparent around kind of next steps, Is this something you think would happen before you announced Q4 earnings in March? Or should we assume that perhaps given that this is a very dynamic and fluid situation, there's a lot of additional analysis that needs to be done by Cytokinetics that perhaps we might not get an update until then.
So the question is really just about timing on when we could hear about potential next steps. My second question has to do with if you could restate the amount of eligible milestones that had been available to you per the original or the Amgen collaboration and now that obviously will be foregone. Is it fair to assume that you'll have to think about other sources of funding, whether they be dilutive or non dilutive to kind of replace in effect what has been lost? And then my third question is with this news, how does this impact or change the 2025 vision that you have put forth out there? Thanks.
All very good questions. So the first one related to timing. So our Q4 earnings will be reported in February, and I expect before then, you'll hear more from us with respect to progress along this continuum and our intentions to go forward. I don't expect it will be requiring of us to wait until February to give you that information. With respect to the costs associated with I'm sorry, you asked about milestone payments.
So here again, those are confidential terms of a collaboration agreement that is still in effect until it's terminated. We've received notice of termination, but it's not yet terminated. And as such, as to those milestone payments, we would have been receiving from Amgen and still may receive via Servier, that's something I'll seek counsel on as to how we can provide better guidance and clarity to inform your interest. But however, obviously, it will be lesser than what might have been had Amgen not provided notice of termination. And I'll ask Qing to speak to how we're thinking about cash flows and whether this will have effect to our current budget for 2021.
And I'll come back and speak about Vision 2025.
Hi, Greg. This is Qing here. So first off, with future milestone payments from partners. So even though you're right that we're now in position to have to replace some of those milestone payments, What we had planned for was not 100% of what we're entitled for. So the replacement value is highest you had originally assumed.
With respect to our 2021 spending, we are going to give guidance in our Q4 earnings call early next year. But as Robert said earlier that we expect to end this year with over $500,000,000 in cash. And that $500,000,000 we believe represents over 2 years of forward cash even under this scenario. So I think from a financial standpoint, we're still on very strong footing.
So we have a plan to go forward with priorities in 2021 that was not predicated on earning milestone payments nor predicated on any other financings, dilutive or non dilutive. And we're in a position to continue to execute on those goals and those plans given the cash balance that Qing just spoke to. Obviously, looking beyond 2021, we need to think about our cash runway and how that informs 20222023. And I would hope that by early 2021, we're in a good position to assess what we might want to do in connection with partnering as to maybe inform how we can extend cash runway even farther. And to your point about Vision 2025, it doesn't change.
Our Vision 2025 remains how we get there may now need to be altered, but it remains our commitment to bring at least 2, if not 3 new medicines to patients by 2025 and to double the number of programs in our development pipeline.
Okay. Thank you.
Thank you.
The final question is from the line of Salim Syed with Mizuho.
Hello, Salim.
Hey, good morning, Robert. So thanks for all the color. Just a few for me if I can. So when I'm thinking about the math here, Robert, so before for every $100,000,000 of sales, let's call it just in the U. S.
Market for you that Amgen was going to sell, right, you would get $20,000,000 of that approximately, right? Now for every $100,000,000 I guess you have to pay your own COGS and call it 10%, figure there's not very much in R and D because you've already done pretty much all the R and D you need to do. So there's an SG and A, let's call it 20%. You're now at 70% margin. So but
I don't hear that in
the tone that this is 3x EBIT on a dollar perspective for you. So I'm just kind of wondering what am I missing and where is the disconnect? Is that the right framework to think about the economics here, the potential upside here and the difference in terms? The second question I had was, you mentioned that Amgen is terminating for convenience. And I was just wondering how convenience was defined in the collaboration agreement.
Is there some math based thing there or like what is how does convenience get defined in this legal contract that you guys had? And then thirdly, I was just wondering about Servier. Is there an option here for them to also exit the agreement now that there's been a change in going from Amgen to you guys, the sublicense going from Amgen to you guys?
Sure. Let me take the first one. I may ask Libby, our Head of Business Development to address the third one. But starting with your math, I think you are absolutely in the right direction. Why aren't we making a bigger point of that?
Because we don't still have our arms around this from the standpoint of what's required from the expenditure standpoint to build the infrastructure that we were otherwise going to be leveraging at Amgen. Amgen has a distribution infrastructure. Amgen has certain capabilities that we don't have and will either now need to buy or rent or potentially partner. But you're absolutely right with respect to us going from having a royalty interest to what will be a profits interest. Now, we do have a good handle on what was going to be required from the standpoint of selling FTEs and resources.
And that's not thousands of FTEs, but 100 and low 100. And that's something that we think is extremely practical, but still requires investment. And if you think about this as a medicine that can generate maybe not multiple 1,000,000,000 of dollars of sales at some point, some estimates have been quite high, but rather 100 of 1,000,000 of dollars and maybe even 1 to 2, who knows. What I can tell you is depending on where you are along that continuum, the investment required to secure those sales and profits would be something that I think would put Cytokinetics in rarefied air with respect to peer group companies and something that we're very interested to explore. But at the same time, not at the expense of CK-two seventy four and not at the expense of continuing to maintain our sustainable business enterprise.
So we have to do this in a responsible way. But I do think your math is correct and you don't have to see this drug be doing 1,000,000,000 of dollars for there to be a very attractive return on investment. So as you're doing that math and as we've done that math, I think what you're asking aligns with what we want to pursue and understand first. Your second question related to the term convenience, and I'll speak to what is generally the case. Again, I'm not going to speak to what is specific under our collaboration agreement.
But typically, when a collaboration is terminated for convenience, it's at the discretion of 1 party without as would be prompted by any breach or any other bad behavior or issues underscoring the collaboration that would be rendering 1 party responsible to the other beyond what would be deemed their opt out for reasons that are specific to that party. Amgen had this right to terminate for convenience over 14 years and chose not to do it until Friday. So there's nothing to suggest anything other than they just change their mind about whether this continues to align with their interest going forward. And I'll ask maybe Libby to speak to anything further on that matter or mark anything further on that matter as well as your question about Servier and their rights to terminate. Starting with Libby.
Yes, Robert. I don't think that there's more that we can really add. There are termination provisions under every collaboration and license agreement, but there is nothing specific that we can comment that's public information at this time.
And as to Servier, is there anything we can say about that? Or is that also confidential such that we can't comment at this time?
Yes. For clarity, I was referring to the Servier agreement. What is in the public domain and you've already covered regarding Amgen's termination notices that is in effect 6 months from now?
Yes. Okay. So to be clear Yes. So
to be clear Yes. It was
just to provide notice. There was no definition of convenience. It's just the right to provide notice. That's what they did.
Okay. So to be clear on the Servier piece here, we don't know if there's an option for them to exit?
Just to repeat, every agreement has termination provisions. We just don't have public information that we can share regarding the nature of those.
Okay, got it. Thanks so much guys.
Thank you, Selim.
There are no further questions. I will turn the call back over to Cytokinetics for any closing remarks.
Thank you, operator. So obviously, today's news is very important. It's very important for our science, for our development activities and for our company. It's a very important turning of the page for this program as it relates to cardiac muscle activation, both omecamtiv mecarbil and AMG 594. We've been in collaboration with Amgen going on 14 years.
And during that time, we together conducted a very rigorous clinical trials program for omecamtiv mecarbil, a program that comprised over 30 clinical trials. And as GALACTIC represents the punctuation point on that program, we have feedback from opinion leaders up and down the ladder, people who have written the textbooks on heart failure and others all the way down to those who treat heart failure patients every day in the communities. And these are folks around whom we're rallying for their feedback as to what might be our next steps. And the general consensus has been one should take these data to regulatory authorities and discuss the profile of this novel mechanism drug candidate from GALACTIC as could lend support for registration for particularly difficult to treat patients. We're listening to that feedback and we're preparing to make that happen.
And as to go forward, we see this as reclaiming our future at Cytokinetics. We've benefited from this collaboration as has the program, but at the same time, it's time for us to step up and take this to the next level and we're ready to make that happen. We look forward to sharing more information with investors and analysts, other stakeholders over the next weeks months as we'll provide more clarity on our next steps. Thank you for your interest in this news today. And if you have other follow-up questions of us, please let us know.
We look forward to keeping you updated on our progress. And with that, operator, we can now conclude the call.
Thank you, ladies and gentlemen. This concludes the Cytokinetics conference call. You may now disconnect.