Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So for this session, we have Cytokinetics with CEO, Robert Blum, and CCO, Andrew Callas. Welcome.
Thank you very much.
So maybe for those who are not as familiar with Cytokinetics, can you provide a brief introduction?
Cytokinetics is a company focused to one area of biology, one that we have pioneered, specifically the mechanics of cardiac muscle function and how with small molecules, one can augment or suppress that function for therapeutic application in areas of severe cardiovascular illness, specifically around hypertrophic cardiomyopathy and heart failure.
Great. Maybe let's start with aficamten. So following the full data from SEQUOIA-HCM, and this past week on safety and long-term data at ESC, you know, what has physician feedback been like, and what do they see as the biggest differentiation for aficamten from Camzyos?
So I'm gonna resist the temptation to make comparative statements with Camzyos, and I'll just focus to aficamten. So we just came out of the European Society of Cardiology meetings in London. Cytokinetics had six presentations, four of which were late breakers, and four concurrent manuscripts published, with thanks to Dan, who's in the audience, and his colleagues. This was a watershed moment for Cytokinetics and aficamten. And these were additional analyses from the pivotal clinical trial called Sequoia, as well as an ongoing open label extension study called FOREST.
And I'd say there was a very, very high level of enthusiasm for these additional data, as make unequivocal that cardiac myosin inhibition in this disease is going to be a mainstay for treatment, not just in centers of excellence that are right now using Camzyos, but also as community cardiologists will get more and more comfortable with the treatment of patients who are currently underserved and not getting a cardiac myosin inhibitor. And I think that's underscored by the evidence that speaks to longer-term follow-up effects on cardiac anatomy and structure that would be suggestive of potential remodeling. And as that continues with ongoing safety and tolerability, it augurs well for...
As we also saw withdrawal of certain background therapies that sometimes can complicate patients and add to, burden of disease, and for which aficamten looks to be, even as would be indicative in the open label extension monotherapy, we think that augurs well for an upcoming study called Maple that's gonna read out soon.
Can you talk about the differences between aficamten, CK-586, and Edgewise's EDG-7500? You know, with data expected this month from the 7500 phase I, from single dose arms, you know, are there any read-throughs investors should watch for for aficamten or five eight six?
So here again, I'm gonna resist making direct comparative statements, but I'll say the following: aficamten has a different binding site than does CK-586. CK-586 we consider to be also a cardiac myosin inhibitor, although I think it has a mechanism similar to the Edgewise compound. They refer to it differently. I think they're all inhibitors, whether they inhibit at the ATP-based binding pocket or another allosteric site, they have effect to actin-myosin interactions and are all achieving the same objective: inhibiting and having principal effects on systolic function and preserving diastolic function. What we've demonstrated with aficamten in OHCM seems to be already consistent with what I've heard analysts and investors tell me Edgewise is saying they're aiming for with their compound. So I'm not certain where there would be a differentiation or differential there.
But these data that we presented this weekend underscore that we're having the effects on gradients at low doses without any EF excursions. At higher doses, which are gonna be necessary to address gradients in a hypercontractile state like OHCM, we have EF excursions that are still below 5% of total, and that's indicative, we think, of what one needs to show a dose response across a cohort of patients with differential effects on fibrosis and other things that give rise to the burden of disease. So five eight six is our compound coming in behind aficamten. And to be clear, we have other compounds behind five eight six. As a pioneer and a leader in this space, we continually innovate.
CK-586, we're developing for HFpEF, aficamten for OHCM, and I do believe that, we're covering the wide range of where myosin inhibition will make a difference for patients.
Now, Cytokinetics has had multiple meetings with the FDA on the aficamten NDA, including discussing data that inform safety monitoring and risk mitigation strategies. And you've indicated a belief that one should have as a base case, a differentiated risk mitigation profile for aficamten. So what does a differentiated risk mitigation profile mean to you, and what could that entail?
... Yes, so aficamten as a next-in-class should be coming forward with differentiated properties, and we do believe that aficamten, not just because it has a shorter half-life and a flatter PK/PD relationship, but an absence of clinically meaningful drug-drug interactions, should afford, FDA what it's interested in to be enabling of, this compound to have a different label and differentiated risk mitigation. If you look at the summary basis of approval, for the first-in-class cardiac myosin inhibitor, it's very revealing as to what FDA was interested in addressing by putting in place the REMS program that it did. We've had conversations with FDA, and given the physicochemical properties of aficamten, including the ADME properties, we do believe that FDA is amenable to a differentiated way of thinking about this.
And we've had multiple meetings, including a meeting just on a potential REMS program in the second quarter. And FDA indicated an open-mindedness to the things we would like to be achieving in the labeling. Even so far as to be permitting of us, as your question refers, to amend the protocol for the open label extension study for us to be permitting of a lesser frequency of Echos. And Andrew can speak specifically about market research we've done, and as we have an obligation to ensure category growth, what does the frequency of Echo and the window of Echo mean for a next-in-class compound? And I think having an every six-month Echo monitoring is more consistent with how these patients are already being managed by their cardiologist, and I think consistent with our objectives.
And so you mentioned about FOREST-HCM and, you know, the protocol amendment, for the frequency of Echo monitoring. Can you just talk about FOREST-HCM and what you hope to see from that study? And then to go back to your, I guess last comment, would your expectation for the different potential frequency of Echo monitoring, would that apply, do you think, to the whole duration, or is that... You know, would that also apply to the titration phase?
Titration phase is going to be what it is, and our goal is to get patients to their appropriate dose within one to two months of starting therapy, as opposed to what could be, you know, six months or more. It's really during the maintenance phase that we would expect the frequency of Echo monitoring should be reduced. With FOREST, our continuing expectation is that we should be enabling the patients to maintain on target dose without the burden of frequent Echo monitoring or a window that could be restrictive, such that if you miss that window, you've got to start all over again.
As we demonstrated with data presented and published this weekend, after many, many hundreds of Echos, you're still seeing, I think it was 0.7% of those Echos are translating into a need for a down titration and zero dose interruptions, zero dose terminations, zero patients with heart failure symptoms, zero heart failure hospitalizations. This is quite remarkable for an open-label extension, comprising now many hundreds of patients who have been on aficamten now for many, many months. The FOREST data being more consistent with real-world practice, I think it underscores that you can remove certain guardrails and still know that your patients are being maintained appropriately.
Now, Cytokinetics has also had meetings with the EMA ahead of plans to submit the MAA, and you're planning to submit to China later this year. Anything that you'd highlight that stands out as different, you know, about the filing strategy or the contents in Europe and China versus the U.S.?
Not really. It's consistent with our strategy in the United States. I will say that EMA has put in place additional restrictions for mavacamten, measuring 2C19 and other things that aren't required in the same way in the United States. But I think our strategy is consistent across geographies. That's one of the elegant things about aficamten, is I do think we can approach this in a global way. We intend to do that aggressively. So you'll hear more about that in terms of submissions, not just in the U.S. and China and throughout Europe, but also we're increasingly going to be focused to Japan and other territories where we do believe aficamten could be next in class and potentially best in class.
Great. And can you talk about the U.S. and European commercial readiness activities that are ongoing, and, you know, what has the feedback been like from payers?
Better for Andrew to do that.
From payers?
Yeah.
Sure. So from a readiness activity, I'll start with the U.S. In the U.S., we're really ramping up our systems for Salesforce, for distribution, pricing, contracting, revenue recognition, all those types of elements. We're integrating a few third parties, things like hub services, patient support services, co-pay card vendors, et cetera. So we will be ready for the U.S. launch. We're tracking whether we get a priority review or a standard review. We've started interacting with payers in our pre-approval information exchange, explaining the clinical data and economic benefit relative to Sequoia. We've had many payer meetings already, and we will continue those through PDUFA. I think payers are welcoming of a second in category. Payers are also welcoming of, you know, potentially less monitoring, less, you know, overall cost of healthcare.
In Europe, we're, you know, Europe's probably a little further behind because of launch dates are further behind. Germany will be the first to launch. We do have our German leadership in place, as well as our European leadership in place. We're in process of creating our global value dossier and preparing our submissions for HTA, which we can do really pretty far into the review once we get close to EMA approval. And we've kind of mirrored the readiness activities in Europe that we've done in the US. But Europe's more about access and pricing, and once you get that access and pricing, then it's launching on a country-by-country basis. We'll launch as we get access. We won't hire field force, medical, colleagues, et cetera.
And again, we'll do that, making sure we get the right reimbursement level at a country level.
Any updates on signing a partnership in Japan?
No new updates, but I do think that the data that we have presented in these last few months, including this weekend, have been socialized with potential partners. I do think that we have substantially more momentum in those negotiations towards a potential deal, has afforded us opportunity to up the bar for a deal that we'll be doing. I have high confidence that we'll get a deal done.
Great. And maybe, Andrew, just to follow up on your previous comments. In terms of the commercial readiness activities, and the payer feedback, you mentioned, that, you know, they're interested in less frequent monitoring. Any other aspects, you know, any feedback that payers have given you in terms of how, you know, comparing aficamten to Camzyos, things that they're looking for?
I mean, for the most part, the category is not on payers' monitoring. This is not a category that's managed the way the payers manage broad categories like, say, weight loss, GLP-1s, SGLT2s, et cetera, where there's multiple drugs in a category, where there's high levels of spend, the payers are extracting rebates for formulary position. In kind of the rare disease category, categories with smaller patient populations, the payers really manage to label, so they want to make sure you're New York Heart Association Class II, III, you've tried a beta blocker, and that's how they manage it.
It's more of an education on our part, letting them know of the category, the disease, why you know, beta blockers and calcium channel blockers aren't enough in terms of a therapy point of view. They're not disease-modifying, and the impact that a drug like aficamten could have. So it's a very different kind of interaction, but the payer feedback so far has been very positive.
It's probably worth mentioning a couple things, so Andrew brings with him quite ample experience, having co-led the commercial program for Eliquis when he was at Pfizer, and BMS and Pfizer built a tremendous franchise in the anticoagulation space with Eliquis, and what we saw with Eliquis, and like we've seen in other cardiovascular drugs, is a next-in-class drug, especially one that may have a safety differential, can be opening a category to explosive growth, and you can see an inflection and velocity in the commercial curves that would be indicative of more and more cardiologists getting more and more comfortable with the new mechanism. If you look at the existing launch for Camzyos, it's actually quite linear, and it's exactly as we would have predicted.
I think BMS is doing an excellent job, but for which it's still a roughly 400 physicians, 400 cardiologists responsible for about 80% of the prescriptions. And there's going to come a time in the not-too-distant future where you go from them having roughly 8% to 10% of the category to a next-in-class drug, opening up that category to a broad number of cardiologists who wouldn't otherwise be prescribers. Education and awareness and all the other things, payer impediments being removed to be enabling of more patients benefiting from this mechanism. And I think that typically comes, and we saw it with Entresto, with Novartis, typically comes 2to 3 years into a launch.
I think we're going to be able to launch aficamten right at that time when you might expect to see that kind of comfort and growth for a category and provide some acceleration for that growth with a drug that has a differentiated next-in-class profile. So we like the way we're positioned.
Great, and you have multiple studies ongoing for aficamten. Can you just talk about the importance of the opportunities from CEDAR-HCM, MAPLE-HCM, and ACACIA-HCM for potential label expansion?
Sure. So, something that is not quite so common amongst biopharma companies, more common amongst larger pharma companies, we embarked on, if you will, the lifecycle management program for aficamten sooner. So even as Sequoia was still to read out, we launched additional studies, and now as we hope to have approval for aficamten midyear next year, concurrent with that, we'll see results from MAPLE, a study that should be enabling of aficamten as compared to beta blockers in patients with OHCM, and shortly after that, ACACIA, patients with NHCM, and CEDAR, pediatric patients with OHCM. So we've got a body of evidence that we'll be building that should be enabling of label expansion and further penetration of the category across the spectrum of OHCM and NHCM...
OHCM represents probably right now two-thirds of the opportunity, but I think increasingly NHCM is being appreciated in ways that could increase diagnosis and prevalence, and you might start to see that being more like 50/50 over time. And in certain countries, it is already more like 55-45. So I do believe that the NHCM opportunity, as well as what might be afforded by moving into first line therapy as if MAPLE reads out positively, could be possible. I think that's enabling a further label expansion, category growth, and penetration should be factored into valuation models.
Great. Let's shift to omecamtiv mecarbil. Can you just talk about the funding deal, the rationale behind the way it's structured, and what you think that the street might misunderstand from that?
Yeah, I think this was incredibly misunderstood. So you're referring to the fact that we made a commitment recently to do a confirmatory phase III study for omecamtiv. Omecamtiv is a myosin activator, and there we're looking at its potential to treat patients with severe heart failure, advanced heart failure, especially as characterized by a lower ejection fraction, 30 percentage points and below, where we're not seeing that existing standard of care as having an effect as should be enabling of an open opportunity for a new mechanism. So omecamtiv in GALACTIC, an 8,000-patient clinical trial, showed a modest but clinically significant and statistically significant effect, but for patients who had ejection fractions of 35 and below. But if you look at 30 and below, that's a doubling of that effect to roughly 15%.
And those are the patients who are your frequent flyers in U.S. hospitals, high clinical unmet need, high economic burden for rehospitalization, increased Medicare charges. So we made a commitment to do. Once we saw the Sequoia data, once we saw that we had a path forward for aficamten and a lower cost of capital, we made a commitment to do a second confirmatory study for omecamtiv in advanced heart failure. And in order to do that, and do it in a way that wasn't subtracting from shareholder value, as would be concentrated in aficamten, we did a deal with Royalty Pharma, a deal that's been criticized but misunderstood. And the deal's been criticized because Royalty Pharma gets paid, coming or going. They get paid if the drug is successful and commercialized in the form of a modest royalty.
If the drug is not commercialized, they get paid in the form of debt. So what's the problem with that? They get paid in the form of long-term debt, and as reflects a cost of capital, roughly 11% to 12%, which we think is market competitive. We do believe that's incumbent upon us as management to be enabling of augmenting shareholder value, but inconsistent with low cost of capital ways of doing that. And we think that this is not like other forms of debt that we've taken on, that has been understood and appreciated. We do believe that Royalty Pharma is an excellent partner. They've been strategically investing in not just aficamten and omecamtiv, but also CK-586.
And what's misunderstood about this deal is in getting those terms for omecamtiv, we got expressly favorable deals for their funding of CK-586. They're giving us $50 million to do a phase II study, for which they may never get paid if CK-586 is not commercialized. And they have an option to commit an additional $100 million to the phase III study of CK-586, for which they may never get paid unless it's commercialized. So in order to get the deal for omecamtiv, we also did this deal for CK-586.
They have to be looked at as bookends together, and we believe that this is one of the deals that we can be most proud of, as could be enhancing of shareholder value, but also advancing the pipeline behind aficamten to be enabling of a strategic specialty cardiology franchise, aficamten, omecamtiv, CK-586, all directed to the same concentrated customer segment. We think it's consistent with what we should be doing to be thinking beyond aficamten. How do we demonstrate that we're building a commercial business that can be enduring and do so with a lower cost of capital?
Now, for the confirmatory study, besides screening for patients with ejection fraction less than 30%, you know, what other aspects of the study are you modifying from GALACTIC to further increase your chances of success?
Good question. So we're only randomizing those patients who are adherent or compliant to drug, meaning we're measuring plasma concentrations, and we're gonna randomize, much like Novartis did with Entresto, to enhance the study design. We're gonna do something similar with omecamtiv. In the study that Amgen had conducted with omecamtiv, unfortunately, there were 10% to 20% of patients who were not even adherent to study meds. So we think we can augment that performance of the drug by ensuring patients are compliant to their med. We're gonna be enrolling patients recently hospitalized. We're gonna be enrolling patients with higher BNP, so it's again a measure of cardiac risk. So we're concentrating on those patients who were the sicker patients, not really benefiting today from standard of care. You're still talking about-...
Upwards of a million patients in the United States, a similar number in Europe, for which, these are patients who have still high, 30% or higher event rates. So we're looking at a patient population severely ill, and frankly, coming out of the European Society of Cardiology meetings this weekend, we got a ton of questions about omecamtiv, and investigators wanting to participate. This is something where I think the street and the clinical community are not on the same page.
Great, and you've received positive feedback from the FDA regarding flexible phase III design. Can you just talk about how you might implement a flexible design?
Yes. So the FDA is permitting of us to do much less in the way of safety monitoring, considering that we already have an eight thousand patient study, where safety and tolerability was demonstrated to be comparable to placebo. So there are other things in terms of statistics and other design elements that FDA has been permitting of leaning forward, we would argue, in the design and conduct. I think FDA is aligned with us that this is a mechanism that should be developed.
Now, the primary endpoint of the confirmatory study is slightly different from GALACTIC, in that it includes transplant, LVAD or stroke events. Can you just talk about the significance of that difference?
Yeah, this was a very pleasant surprise in GALACTIC, which was looking primarily at death and rehospitalization. We also saw that LVAD implants and stroke were very much favored for the omecamtiv-treated patients versus the standard of care. So adding them to the composite endpoint only enhances statistical power.
Great. Maybe one last question. You know, on CK-586, we've touched upon that, but can you just talk about the opportunity in HFpEF, for that program?
Yeah, so even as data were presented this weekend, we're starting to see heart failure. It used to be thought of as one disease, roughly five to six million patients in the United States, growing to eight to nine million patients during this decade. But now we're looking at heart failure in slices of ejection fraction. There's 30% and below, there's 30to 40%, there's 40 to 50%, there's preserved ejection fraction and super normal. And increasingly, we're starting to segment patient populations within heart failure and where different mechanism drugs may be slotted or positioned. We're looking at CK-586 for those patients with heart failure, whose anatomy is more resembling of NHCM. These are patients with super normal ejection fractions. They still have anatomical features that give rise to a disease burden.
These are different than the heart failure with preserved ejection fraction, who might benefit from GLP-1s, who are patients who are more obese, patients with more metabolic syndrome. These are patients that have anatomical features that are more consistent with the spectrum of HCM, and we think that there's a very significant opportunity there. In many ways, what we're doing with aficamten in NHCM is a harbinger or proxy for what we might expect from CK-586 in that subset of HFpEF patients.
Maybe just actually one more question. So, kind of as a catch-all, I guess, are there any questions that you get frequently from investors, that you think that would be good to clarify? And then the second is that are there... I guess, what do you think is most misunderstood about Cytokinetics that you think you'd wanna, you know, kind of-
I'm gonna ask Andrew to answer the first question. I think one of them is: How do you compete with BMS?
Yeah, so from a BMS competition point of view, you know, there's different business models in pharmaceuticals. I think anyone who's been around it understands a primary care versus a vaccine versus an oncology are very different in terms of how you go to market. It's also true of, just say, general cardiology or specialty cardiology. So general cardiology usually includes primary care, things like blood thinners, SGLT2, where the business model and the differentiation really is focused not only on the molecule, but resources. How many reps do you have? Do you do DTC television? Can you contract? Usually the patients are known, and they're diagnosed, and it's about getting that patient on your therapy as compared to your competitor's therapy, and it's usually through a lot of promotion. A specialty cardiology market is very different.
It doesn't usually go outside of cardiology, and it's a subset of cardiology. It's a higher price point. There's more patients that aren't diagnosed, that are diagnosed. You don't need a lot of resources. It's really about getting the science and the understanding of the science to those specialists who treat the smaller set of patients. It's a much higher level of return. You need patient services and support, and it's an area, I think, where a smaller company who creates a experience for physicians and patients that's very custom to that disease and to that category, can actually outcompete a large pharma. So you know, if this were a general cardiology market, I think it's very difficult without a partner for a company like Cytokinetics to compete against big pharma.
But since that, it's around 10,000 cardiologists. They're 80% of the market, and the price point is over $100,000 in the U.S. today. I've already talked about contracting. It's an area where we know well. We're hiring people who know this category really well, and where we feel very confident, not only because of the differentiation of aficamten, but for all those elements of the business model.
I might just add that if we're competing with BMS, we both lose. The opportunity set here is the 80% to 90% of patients who aren't right now getting a cardiac myosin inhibitor, and I think BMS can hit its target numbers, and we can hit ours and exceed theirs, potentially, as we build this category. So that's number one. You asked also about what's maybe misunderstood. So we got swept up in a lot of M&A discussions, in 2023 and coming into 2024, and, I think, it was, wrongly understood or misunderstood that Cytokinetics was somehow, not cognizant or somehow not responsive to its fiduciary obligations.
In fact, we were criticized when we did the financing in the second quarter that we should have either done it sooner at a higher stock price or we should have not rejected the deal that was put on the table, and that was because there were a lot of articles written about Cytokinetics and rumors about who was interested in buying us and at what price and valuation, et cetera. We issued an eight-K in the second quarter to make clear that we do fully understand our fiduciary obligations. In fact, we did engage in M&A discussions, and we had agreed to all material terms, thinking the deal was gonna be imminent, but for which another party walked away from the table.
That's all to say that we're building a company that we believe can stand on its own and independently build and augment shareholder value, enhance it well beyond where we are today. But we also understand our obligations, and we as a board, we as a management team, will do that which we know we're supposed to do in order to serve the best interests of shareholders. In the meantime, we control that which we can control, and there's those things that we can execute and plan, and that's what we're doing.
Great. Well, let's leave it there. Thanks so much for your time.
Thank you.
Thank you.