Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Cytokinetics Inc (NASDAQ:CYTK)
Q4 2019 Earnings Call
Mar 3, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome ladies and gentlemen to Cytokinetics Fourth Quarter 2019 Conference Call. [Operator Instructions]. As the company's request, we will open the call for questions-and-answers after the presentation.

I will now turn the call over to Diane Weiser, Cytokinetics' Vice President of Corporate Communications and Investor Relations. Please go ahead.Good afternoon, and thanks for joining us on the call today. Robert Blum, our President and Chief Executive Officer will kick off the call with key 2019 accomplishments and a review of vision 2025 priorities. Then, Fady Malik, our EVP of Research and Development will provide updates on key developments for omecamtiv mecarbil, our cardiac myosin activator an AMG 594 or cardiac troponin activator both under our collaboration with Amgen. Next Fady will update on recent progress with CK-274, our wholly owned cardiac myosin inhibitor now in Phase II and to CK-271 or additional cardiac myosin inhibitor..

Andy Wolff, our Chief Medical Officer for the past 15 years and now Senior Fellow, Clinical Research and Development will provide a brief update relating to reldesemtiv, our fast skeletal muscle proponent activator. Robert Wong, our VP and Chief Accounting Officer will then provide a financial overview for the quarter; and Ching Jaw our SVP and Chief Financial Officer will discuss corporate development strategies and financial guidance. Before Robert Blum provides concluding thoughts on the company's outlook, and expected key milestones. Finally, Stuart Kupfer, our newly appointed Chief Medical Officer also joins us today and will be providing clinical research updates on future call.

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 or actual results might differ materially from those projected and 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. We undertake no obligation to update any forward-looking statements after the call.

And now I'll turn the call over to Robert.

Robert I. Blum -- President and Chief Executive Officer

Thank you, Diane and thanks again to everyone for joining us on the call today. 2019 was a year of strong performance and solid execution against our goals with four drug candidates now advancing in clinical development and another poised to enter the clinic this year, we are well positioned to realize our vision 2005, which foresees are being the leading muscle biology focused biopharmaceutical company that discovers, develops and commercializes new medicines that may meaningfully improve the lives of patients suffering from diseases of impaired muscle function and weakness. We recently outlined our vision 2025 entitled leading with science delivering for patients. And we laid out the key imperatives to enable our continued growth and transformation into a commercial organization over the next five years.

I'd like to recap those imperatives and then provide a brief review of our accomplishments in 2019 before the team provides more highlights from the quarter as well as updates on what's to come. Our key tenants for Vision 2025 include the following: achieving regulatory approvals for at least two drugs arising from our pipeline; building commercial capabilities to market and sell our medicines reflective of their innovation and value; generating sustainable and growing revenues from product sales; doubling our development pipeline to include 10 therapeutic programs; expanding our discovery platform to include muscle energetics growth and metabolism and being that science-driven company people want to join and partner with.

In 2019, we made strides toward achieving those goals. Under our collaboration with Amgen, we completed enrollment in GALACTIC-HF and pass through the first interim analysis with no changes to the protocol or study conduct. And last week, we announced that following the second interim analysis of GALACTIC-HF, the Data Monitoring Committee again recommended continuing the trial with no changes. We now expect topline results in Q4 of this year and we're already preparing for the conclusion of the trial and the reporting of final results. We're also gearing up with Amgen for potential regulatory filings that may lead to subsequent commercialization. METEORIC-HF, the second Phase III clinical trial of omecamtiv mecarbil also got started at the beginning of 2019 and we expect to complete enrollment in this second Phase III trial of omecamtiv mecarbil later this year.

Finally, under our collaboration with Amgen, we initiated the Phase I study of AMG 594 in 2019 and we expect to complete the SAD/MAD study later this year. In 2019, we and Amgen planned for the potential next steps in this program with our shared objective to build a sustainable business franchise with new medicines focused to the pharmacology of cardiac muscle activation. Separate from our collaboration with Amgen, in 2019, in connection with our wholly owned and independent program focused a hypertrophic cardiomyopathies, we generated Phase 1 data with CK-274 and we are ready for the start-up of our Phase 2 clinical trial Redwood-HCM which began enrolling patients earlier this year. Also in 2019, we generated encouraging results from FORTITUDE-ALS, our Phase 2 clinical trial of reldesemtiv in patients with ALS and we engaged with regulatory authorities, payers and KOLs in preparation for a potential future Phase 3 clinical trial.

I'm also pleased that our research activities continue to bear fruit in 2019 and we now look forward to advancing CK-271 our additional cardiac myosin inhibitor into Phase 1 in the first half of this year and to continue IND enabling studies for CK-601, a next generation fast skeletal muscle troponin activator, which is also moving toward clinical research. 2020 will be a pivotal year for Cytokinetics, as we now expect results from GALACTIC-HF by the end of the year and we're preparing for commercial readiness and co-promotion. We also expect to advance and expand our pipeline to enable two other programs to potentially advance to late-stage trials, while another program may advance in earlier stage trials. I'm enthusiastic about both progress we made in 2019 and the prospects for 2020.

And with that, I'll turn the call over to Fady to elaborate on key developments in our cardiovascular programs.

Fady I. Malik -- Executive Vice President of Research and Development

Thanks, Robert. Before I dive in, I'd like to formally welcome Stuart Kupfer to our team as our new Chief Medical Officer. Stuart earned his undergraduate degree and his MD at the University of Florida, followed by training in pediatrics at Yale and a fellowship in endocrinology at the University of North Carolina. He began his career in academic medicine at Washington University, but in 1998 transition to biopharma, including Takeda Pharmaceuticals, where he spent 12 years, most recently as Vice President and Therapeutic Area Ahead of cardiometabolic. His tenure there included experience in heart failure, thrombosis, hypertension and diabetes. Stuart has worked on half a dozen CV outcomes trials with enormous planning and the logistical details they entail. Stuart along with colleagues in discovery, commercial, regulatory, medical affairs work together to cater to drive the strategy of their cardiometabolic portfolio and the execution of that strategy.

I also want to thank Andy for his 15 years of service as our Chief Medical Officer. Andy will now become our first Senior Fellow clinical research and development and continues one of our Senior Vice Presidents. Over the years Andy has made a significant impact to Cytokinetics and certainly on me personally. Setting the standard for the thoughtful development of clinical protocols, our interaction with the community of investigators, the analysis of the results emerging from those trials and subsequently the communication of those results. As many of you know he is recognized within the cardiology and neuromuscular communities reflecting on the span of his work over the years. I look forward to Andy continued contributions to our missions and plans in the coming years. He will be playing a key role in facilitating Cytokinetics transition toward commercialization.

Moving onto key developments in Q4 and then early 2020. I'll first discuss the recent publication of the design manuscript for GALACTIC-HF and JACC heart failure and then review our even more recent announcement regarding the second and final planned interim analysis of this trial. As detailed in the design publication, the primary efficacy endpoint in GALACTIC-HF is a composite of time the CV death or first heart failure event whichever occurs first. And as we've said before, the trial is statistically powered based on a hypothesis relating to the first secondary endpoint, time to CV death. An accrual of 1,590 CV death provides 90% power to detect a hazard ratio of 0.8 for CV death.

A sample size of 8,000 patients was chosen assuming the following: an annualized rate of CV death of 10% in the first year and 7% thereafter; a 24-month enrollment period; total study duration set to 48 months, a three-month treatment lag with the treatment effect hazard ratio of 0.8 thereafter; 10% annual rate of study drug discontinuation, and 10% of subjects lost to endpoint determination, either through non-CV death or study discontinuation over the course of the trial. The overall type one error is 0.05 for two-sided testing. Assuming the rates for experiencing either a heart failure event or CV death are double those for CV death alone and the same other assumptions as for CV death alone. The analysis of the primary composite endpoint is expected to have greater than 99% statistical power.

Turning to the second interim analysis, I hope you all saw we announced last week that following the second and final planned interim analysis of GALACTIC-HF, the Data Monitoring Committee recommended Phase 3 clinical trial of omecamtiv mecarbil continue without changes to its conduct. The second interim analysis was triggered once two-thirds of the 1590 cardiovascular death stipulated by the trial's protocol had occurred in GALACTIC-HF. This second interim analysis included analysis to exclude futility and to permit stopping the trial earlier than expected for a finding of overwhelming efficacy both at the discretion of the DMC. The futility analysis allows the DMC to consider stopping GALACTIC-HF, if there was a low likelihood of the trial demonstrating a clinically meaningful and statistically significant benefit on the primary endpoint at the end of the trial in patients receiving omecamtiv mecarbil plus standard of care compared to patients receiving placebo plus standard of care. The superiority analysis allow the DMC to consider stopping the trial early it's both the primary composite endpoint, and the first secondary endpoint of CV death of CV mortality were highly statistically significant.

Additionally, it is important to note the stopping boundaries provide guidance for the DMC and they do not represent binding rules. The DMC considers all available evidence and its recommendations regarding trial conduct and other considerations may have supported the continuation of GALACTIC-HF even if numerical superiority boundaries were met in the planned analysis. As we have previously stated, the continuation of GALACTIC-HF to full term was a scenario we and Amgen most expected, especially given the proximity of the trial to readout at full term as originally planned with top line results expected later this year. Completion of the trial to run its full course and shows the robustness of data regarding the primary endpoint and all of the secondary endpoints.

In preparation for the potential to stop at the second interim analysis and now, given the current timeline to topline results from GALACTIC-HF, the teams at Cytokinetics and Amgen have focused on regulatory medical and commercial readiness activities and have accelerated certain work streams to prepare for an earlier potential approval and commercial launch. In addition, we launched our disease state education campaign at AHA, which focuses on educating healthcare professional, about the role of cardiac contractility and the sarcomere in heart failure.

With results from GALACTIC-HF now expected in Q4, what does that mean for the timing of METEORIC-HF and our regulatory filing plans. METEORIC-HF will readout following GALACTIC-HF and potentially after we submit initial regulatory applications for omecamtiv mecarbil, which will be based on GALACTIC-HF. Put it another way METEORIC-HF is not on the critical path to filing and we now expect that we would submit those results to regulatory authorities at sometime after an initial potential marketing application as would be supported by positive results from GALACTIC-HF.

Reflecting now on the fourth quarter, in November, we announced additional results from COSMIC-HF. The Phase 2 trial, which showed that in addition to increasing the pumping action of the heart, systolic function, omecamtiv mecarbil did not change and for some measures was consistent with improvement of the heart's diastolic function or ability to relax between heart beats. We believe these findings, increasing the heart's pumping function without adversely affecting how the heart build contribute to the therapeutic rationale for omecamtiv mecarbil in heart failure.

For AMG 594, the cardiac troponin activator discovered under a joint research program with Amgen. Amgen is continuing the Phase 1 study and we look forward to having the SAD/MAD study complete later this year. Additionally, we have established a collaborative working group including team members from Amgen and Cytokinetics, as well as external KOLs to consider the path forward for AMG 594 in heart failure with reduced ejection fraction, and also potentially in other patient population. We'll have more to say about those potential plans for AMG 594 on our future calls.

So now moving to CK-274, our next in class cardiac myosin inhibitor, in Q4, we prepared for the initiation of REDWOOD-HCM. Recall that this is a randomized, placebo-controlled double blind dose finding Phase 2 clinical trial in patients with symptomatic obstructive HCM or oHCM. The primary objective of this trial is to determine the safety and tolerability of CK-274. The secondary objectives are to describe the concentration response relationship of CK-274 on the resting in post Valsalva ventricular outflow tract gradient as measured by echocardiography during 10 weeks of treatment. Additionally, the trial will evaluate the plasma concentrations of CK-274 in patients with OHCM in relationship to dose. Exploratory objectives include the effect of CK-274 on N terminal pro hormone of brain natriuretic peptide or anti-pro BNP and the New York Heart Association functional classification.

As a reminder, our Phase 1 study showed CK-274 achieved the intended pharmacodynamic effect and exposure response relationship reaching steady state within 14 days, thereby enabling a dose titration regimen at 2-week intervals. REDWOOD-HCM is designed to evaluate a flexible dose optimization schedule with CK-274, as therapeutic window and echocardiographic parameters associated with clinical outcomes in patients with HCM. Trial will enroll two sequential cohorts of patients with an option for a third cohort. Within each cohort 18 patients will be randomized two to one to active or placebo treatment respectively and receive up to three escalating doses of CK-2-or placebo based on echocardiographic guidance.

After two weeks of treatment at 5 milligrams once daily, patients will receive an echocardiogram to determine whether they will be up titrated to the next higher dose of 10 milligrams once daily. After two more weeks of treatment patients will undergo another echocardiograms and determine if they will be titrated up to 15 milligrams once daily, the highest dose in cohort one. The doses in Cohort 2 will be determined following a review of the data from Cohort 1. Overall the treatment duration will be 10 weeks with an echocardiogram to confirm reversibility of effect two weeks after the last dose. REDWOOD-HCM is expected to enroll patients in approximately 20 investigated sites in North America and Europe, and we're pleased to report screening and enrolling of patients is under way.

We recently convened our North America investigators meeting for REDWOOD-HCM and as pleased to see the enthusiasm for our next-generation approach to cardiac myosin inhibition, which has the potential to advance clinical research for the treatment of obstructive hypertrophic cardiomyopathy. Getting REDWOOD-HCM up and running brings us another step closer to the potential availability of a next-in-class therapy that may optimize treatment of the underlying cause of patients disease along with relieving the very limiting symptoms that significantly impact overall quality of life in patients with OHCM. We look forward to sharing data from cohort one in the second half of the year.

Also within our cardiac sarcomere inhibitor program, we recently announced the advancement of CK-271, a second cardiac myosin inhibitor, which we expect to enter Phase 1 during the first half of 2020. One of the hallmarks of Cytokinetics Research and Development approach has been to advance multiple compounds to enable potential expansion of a drug development program into different indications and patient populations. CK-271 may afford us the opportunity to expand the clinical development program beyond obstructive and non-obstructive HCM and explore other potential patient populations that may benefit from a cardiac myosin inhibitor. We'll have more to say about this as a translational research advances and as we generate data in the clinic.

And now, I will turn it over to Andy to provide an update on our fast skeletal muscle activator program focused on reldesemtiv.

Andrew A. Wolff -- Senior Vice President, Senior Fellow, Clinical Research and Development

Thanks, Fady. With regard to reldesemtiv, in parallel with ongoing negotiations with Astellas regarding a planned amendment to our collaboration agreement, we are continuing to engage with FDA, EMA and Health Technology Assessment organizations to define our potential path forward, including the clinical and reimbursement value of potential endpoints for a pivotal trial that we are considering. In the fourth quarter, we convened Type-C interactions with FDA to seek feedback on key questions and planned statistical analyzes. While we expect still further FDA interactions, at the same time, the team is working to finalize the protocol, timeline and budget and these ongoing discussions with external stakeholders, many of which are planned in the first half of the year will inform our ultimate approach and a decision about how we may advance reldesemtiv into a potential Phase 3 clinical trial in patients with ALS.

To be clear, this decision will come following results from GALACTIC-HF in the fourth quarter of 2020. With that said, we are encouraged by the feedback that we are receiving, which underscores enthusiasm for the mechanism and data underlying reldesemtiv and its potential in ALS. We are impressed with the positive feedback we continue to receive from ALS key opinion leaders for advocating for our pressing forward and engaging with us in our planning exercises.

In December, at the ALS/MND in Perth, we presented subgroup analyzes from FORTITUDE-ALS demonstrating that with all active doses combined and compared to placebo reldesemtiv had a similar effect on SVC, ALSFRS-R and muscle strength by handheld dynamometer at 12 weeks, whether or not patients were being treated with edaravone and/or riluzole. The majority of patients received riluzole alone 56.5% while only 4.2% we're receiving edaravone alone and 2.6% were receiving both. As the treatment landscape evolves in ALS, these data demonstrate how we may potentially be able to further slow the decline of disease progression by adding new mechanism therapies like reldesemtiv on top of existing treatment regimens.

We also presented data from FORTITUDE-ALS demonstrating that patients treated with reldesemtiv during the trial experienced a significant delay to the prescription an agreement to use durable medical equipment, including manual or power wheelchairs, gastrostomy tubes, noninvasive ventilation and assisted communication devices. These data together with previously reported results from FORTITUDE-ALS underscore the robustness and consistency of data from that trial that we believe support progression of reldesemtiv in patients with ALS.

Finally, in December, the FDA granted orphan drug designation to reldesemtiv for the treatment of ALS. This follows our having received orphan drug designations from the FDA and EMA for the treatment of spinal muscular atrophy.

And with that I will turn it over to Robert Wong, who will provide an update on our financials.

Robert C. Wong -- Vice President and Chief Accounting Officer

Thanks, Andy. I'll first provide an update on cash, revenue and spending, and then Ching will review our 2020 financial guidance and corporate development strategy, more details on our actual results for the fourth quarter 2019, are included in the press release, which we released earlier this afternoon. We ended the fourth quarter with approximately $268 million in cash and investments. Our revenue in Q4 2019 came from our strategic alliances with Amgen and Astellas. For Amgen, we recognized revenue associated with their reimbursement of our development expenses related to METEORIC-HF. For Astellas, we recognized revenue for reimbursement of our research activities as well as for development expenses incurred related to our closing out of FORTITUDE-ALS.

Our fourth quarter 2019, R&D expenses decreased to $18.3 million from $23.3 million in the fourth quarter of 2018, primarily due to lower spending related to our neuromuscular development activities offset by increased activity related to METEORIC-HF and CK-274, more than half of our R&D expenses were attributable to our cardiovascular programs as expected given activity for METEORIC-HF and the cardiac myosin inhibitor program and the remainder of our expenses were attributable primarily to our early research activities. Our fourth quarter 2019, G&A expenses were $10.6 million, up from $7.6 million in Q4 2018, due primarily to higher personnel related costs, including stock-based compensation and higher outside services.

And now Ching will review our guidance for 2020 and highlight our corporate development strategies.

Ching W. Jaw -- Senior Vice President and Chief Financial Officer

Thanks, Robert. Today, we announced our financial guidance for 2020. The company anticipates cash revenue will be in the range of $18 million to $22 million. Operating expenses will be in the range of $120 million to $130 million and net cash utilization will be in a range of $105 million to $115 million. With cash of $268 million at the end of 2019, we entered 2020 with more than 24 months of cash runway given our 2020 guidance.

As you will recall, in Q4, we raised $120.5 million net of underwriter fees and capital and other transactional expenses through a convertible note offering. The convertible note carries a 4% coupon rate, a 27.5% convert premium and matures in November 2026. The use of proceeds are to fund continued development of -- and commercial readiness activities associated with omecamtiv mecarbil. The ongoing clinical development of CK-274 and CK-271 in indications related to hypertrophic cardiomyopathy and related diseases associated was diastolic dysfunction and cardiac fibrosis, including heart failure with preserved ejection fraction. And the clinical development of reldesemtiv in patients with ALS, including a potential Phase 3 clinical trial, as well as for working capital and other general corporate purposes.

Also during the quarter, we continue to pursue opportunities for project financing and partnerships to expand development of our cardiac sarcomere inhibitor program and to further extend our cash runway. To start off REDWOOD-HCM and the advancement of CK-271 in development are both contributing to forward momentum in these partnering discussions, and we remain hopeful that our expanded next generation cardiac myosin inhibitor program may enable our access to further capital. In addition, Cytokinetics is eligible for milestone payments under our collaboration with Amgen during the next years. We entered 2020 with a strong balance sheet and remain confident in our ability to prudently deploy capital against our prioritized programs to maximize shareholder returns.

And with that, I will turn the call back over to Robert Blum.

Robert I. Blum -- President and Chief Executive Officer

Thank you. Ching. So as you've heard it was a highly productive fourth quarter of 2019, which positioned us well for what could be a truly transformative year for Cytokinetics. I'm particularly enthusiastic about the momentum within our cardiovascular vertical with the advancement of a second cardiac myosin inhibitor and the various readiness work streams under way in support of potential commercialization of omecamtiv mecarbil. In addition to what Fady outlined, we're also working diligently with our colleagues at Amgen to plan for the commercial launch of omecamtiv mecarbil, which may come in 2021.

We are working in coordination of pre-launch activities and we expect to align on a co-promotion plan that will govern the deployment of our respective sales forces and the subsequent coordination of their field level activities. Under our collaboration, we have the right to commercialize omecamtiv mecarbil in the hospital setting in coordination with Amgen and as Amgen would be reimbursing certain of our sales force costs. As we design and scale our sales organization, we'll be looking to optimize our go-to-market strategies and future selling activities, leveraging the intersection of high volume treatment centers focused on heart failure with centers of excellence focus to the treatment of hypertrophic cardiomyopathies.

Further as we previously reported, we've begun to scale our medical scientific liaisons team and we look forward to further expanding that group also in 2020. We also have teams concentrating on health economics in heart failure outcomes research to develop models to support our market access strategies and future discussions with payers. This year, in collaboration with Amgen and in partnership with academic institutions and healthcare networks, we expect to generate and publish important data related to the real world burden of managing heart failure patients and highlighting the potential opportunity of new therapies to address the high unmet need and increasing economic burden.

For context, the economic burden of carrying for heart failure patients approximates about $31 billion in the United States alone. And that's projected to increase to over $70 billion by 2030. As the prevalence and burden of heart failure continues to grow, we believe that new therapies that can have a positive effect on clinical outcomes, as well as favorably impact healthcare budgets will be warmly welcomed by clinicians, administrators and payers.

Turning now to AMG 594, CK 274. Cytokinetics is meaningfully expanding and extending our position in cardiovascular drug development. We're fortunate in the position to leverage over 15 years of clinical research with omecamtiv mecarbil to design clinical trials for these newer drug candidates and to consider how best to architect franchise building strategies around our programs directed to cardiac muscle activation and inhibition, strategies that can hopefully benefit more patients and generate better returns. We remain extremely mindful of the unmet needs facing heart failure, HCM, ALS and SMA patients today, and we remain motivated to continue to execute well against our vision to bring novel mechanism medicines to them. In that context, we also must remain prudent to how we operate our business and stay attentive to our cost of capital. We need to consider how we may best diversify our access to capital to build out our pipeline while leveraging partnerships toward our goal of generating sustainable cash flows.

For quite some time, we've looked to omecamtiv mecarbil as a key fulcrum to building our company. And we're pleased that in this calendar year, we'll have pivotal trial results from GALACTIC-HF to best inform our path forward. As such, we'll look to those results to guide our strategies with regard to reldesemtiv in ALS. That's the benefit of our having established ourselves as one of the leaders in muscle biology and having a broad portfolio of promising drug candidates. One program informs our outlook for the others and our underlying cost of capital. We'll continue to prepare for the start of a Phase III trial of reldesemtiv but will await results of GALACTIC-HF before potentially starting that trial. We also expect to finalize ongoing discussions with Astellas in this first quarter relating to amending our collaboration, which should inform matters relating to technology transfer, drug supply, cofunding, royalties, etc, and we look forward to updating you on our plans during the year. Now let me recap our expected milestones for 2020.

For omecamtiv mecarbil, we expect top line results from GALACTIC-HF in the fourth quarter, and we expect to complete enrollment in METEORIC-HF in patients with heart failure in 2020. For AMG 594, we expect that Amgen will complete the Phase I of the SAD/MAD study in the second half of 2020. For CK-274, we expect data from the first cohort of patients enrolled in REDWOOD-HCM to be available in the second half of 2020. And for CK-271, we expect to file an IND and initiate a Phase I study in the first half of 2020. For reldesemtiv, we expect to engage with regulatory and reimbursement authorities in 2020 to prepare for a potential Phase III clinical trial and registration program in patients with ALS. And for our ongoing research, we expect to continue research activities directed to the cardiac and skeletal sarcomere and our other muscle biology research programs, and we expect to continue research and collaboration with Astellas directed to the discovery of next-generation skeletal muscle activators through 2020 subject to current negotiations.

Operator, with that, we can now open up the call, please, to questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Jason Butler with JMP Securities.

Robert I. Blum -- President and Chief Executive Officer

Good afternoon, Jason.

Jason Butler -- JMP Securities -- Analyst

Hi, Robert. Thanks for taking the questions and Congrats on the progress. A couple on omecamtiv and then a quick one on 274. So just in terms of what Fady laid out from the powering assumptions, can you talk about how you think about the potential treatment effect over time? Do you expect it to be consistent? Or could it increase or decrease from the first year when you expect the highest event rate? And then the second question there is on reimbursement. Can you maybe just talk about your strategy to work with payers given that when we're thinking about the experience of Entresto that had higher-than-expected reimbursement hurdles in the first couple of years on the market? Thanks.

Robert I. Blum -- President and Chief Executive Officer

Sure. I'll let Fady answer your first question, and then I'll address the second.

Fady I. Malik -- Executive Vice President of Research and Development

Yes. So I think the answer to your first question is that what we assumed is that there would be little treatment effect for the first three months. And the rationale for that was that we start at a starting dose, and it takes a few weeks to get to the target dose. And maybe it would take some time to see benefit accrue. That's a conservative assessment because it significantly affects the powering assumptions. That said, I think when you look at most outcomes trials and look at their capital Kaplan-Meier curves, often the benefit begins to accrue fairly early and just and continues to accrue over the course of the study in a more or less continuous fashion. So I think we powered the assumptions under which we designed the study were conservative and meant to take into account the possibility there may be a treatment lag.

Robert I. Blum -- President and Chief Executive Officer

With regard to your second question, I'd say we and Amgen have been especially proactive about these issues, already working a couple of years in collaboration and preparations for discussions with reimbursement authorities and payers, both with regard to understanding the landscape and working with select healthcare systems in order to mine their data such that they can best understand what could be their current economic burden associated with how they're currently managing heart failure, but we're also dependent on GALACTIC results. We might expect there to be budget savings as well as potential pharmacoeconomic benefit.

So we're, I'd say, good students of what has been the history in this space. And certainly, I do reflect on the comment you made regarding Entresto and what had been some initial challenges, which I would argue, I think, they've overcome. In large part, they forged the path around which I think we may walk in their footsteps in some respects. Cardiovascular clinics and heart failure hospitals are much better prepared now for newer medicines in large part because they have experienced working with reimbursement authorities in order to consider new innovations. I think we're going to be in a position for having invested substantially in this peri-launch period in order to be able to work with them. Our hope is that to enable a smoother first launch, especially as it relates to payers, understanding what could be the benefit of a new therapy in this space.

Jason Butler -- JMP Securities -- Analyst

Great. That's helpful. Thanks, Robert. And then just real quickly, can you compare and contrast the PK/PD profile that you've seen preclinically for 271 to 274?

Robert I. Blum -- President and Chief Executive Officer

We haven't talked a lot about that and probably won't do so until such time as we see the Phase I data, and we can speak more thoroughly about how we might foresee CK-271 going forward in parallel with CK-274. Clearly, these are compounds that have differences, or else we would have advanced CK-271 forward. But in the interest of wanting to make sure we're data-driven in terms of how we talk about it better, I think to defer that conversation until we have the Phase I data.

Jason Butler -- JMP Securities -- Analyst

Okay, great. Thanks for taking questions.

Robert I. Blum -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Joe Pantginis with H.C. Wainwright.

Robert I. Blum -- President and Chief Executive Officer

Hi, Joe.

Joe Pantginis -- H.C. Wainwright -- Analyst

Hi, everyone. Good afternoon. First question on GALACTIC, more of a logistical question. Just curious in your discussions with Amgen what the communication strategy is going to be. Do you know if both of you are planning to announce that the final event is hit? Or are we going to get just the announcement that the of the final data?

Robert I. Blum -- President and Chief Executive Officer

Yes. So I wouldn't expect us to be announcing when we've accrued that final CV death. More so, I would expect that you should anticipate the next joint announcement would be one that contained the top line results.

Joe Pantginis -- H.C. Wainwright -- Analyst

Good. That's helpful. And then and I guess this is somewhat of a rhetorical question, but just curious here because it's such a herculean amount of data or an immense amount of data that the confidence that you and Amgen have that you're able to hit the 4Q 2020 data readout, being able to compile the patient files from 8,200 patients, etc.

Fady I. Malik -- Executive Vice President of Research and Development

Yes, it's always a herculean task to bring all of those things together. I would say fourth quarter is, right now, our best estimate. When we made that estimate, there was no coronavirus problems around the world and all kinds of other things. But I think we're comfortably within the fourth quarter and expect we'll be able to deliver on that.

Robert I. Blum -- President and Chief Executive Officer

One thing to consider is that in conducting a second planned interim analysis, one has to clean data and bring that data forward for what amounts to a large portion of the data that would be inclusive in a final analysis also. So you can imagine, we're already we I shouldn't say we. We and Amgen, together in collaboration are already well down that path with regard to those events that have already been accrued and collecting and cleaning that data. So I do think that Amgen and Cytokinetics have been especially focused to these time lines. And I think that it's reasonable to expect what it is that we've reported, which is we anticipate Q4 results.

Joe Pantginis -- H.C. Wainwright -- Analyst

That's fantastic. And then just quickly on 274 oh, I'm sorry, reldesemtiv. You guys, obviously, you had a Type C, as you just announced. And you have, in my impression here, a lot of feedback from the regulatory agencies, and a lot of information that I think have given you the opportunity to guide what you want to do pending the GALACTIC outcome. I guess I would ask the question this way. What do you feel is outstanding that you still need answered, say, from the FDA to have a finalized protocol before GALACTIC reads out?

Robert I. Blum -- President and Chief Executive Officer

Sure. Very good question. I'll start and then maybe turn it over to Andy. I think in part, one of the things we want to ensure is we're aligned between FDA and EMA and HTAs in terms of how best to approach the design and conduct of a Phase III study. In an environment against a backdrop where there's fluidity where new medicines are being evaluated and tested, where edaravone is approved in the U.S. but not Europe, and where we want to make sure if we go forward that we have endpoints that meaningfully translate into value as determined by reimbursement authorities, especially in Europe.

Andrew A. Wolff -- Senior Vice President, Senior Fellow, Clinical Research and Development

Yes. I don't think I have a whole lot to add. I'd just maybe emphasize that when you get feedback from these different authorities, EMA, FDA and health technology such as it's not always the same, and you want to make sure that you can harmonize it to the extent possible.

Robert I. Blum -- President and Chief Executive Officer

Yes. I'll also mention that being that this is movement from what would be end of Phase II to Phase III, we also want to make sure we understand all that is required for a registration program, not just the Phase III trial. So are there other clinical pharmacology studies? Are there nonclinical activities that also need to be planned for and conducted in order to meet the threshold? And if you're going to do a Phase III study, you also want to best understand that you're aligned on statistical methodologies for the analysis of those results. All that has to be tucked in as well. So that requires extra special attention and care, multiple regulatory interactions with different regulatory authorities in different jurisdictions.

Joe Pantginis -- H.C. Wainwright -- Analyst

Great. Very helpful. Thank you very much, guys.

Robert I. Blum -- President and Chief Executive Officer

Thank you, Joe.

Operator

Your next question comes from the line of Chad Messer with Needham.

Robert I. Blum -- President and Chief Executive Officer

Hi Chad.

Chad Messer -- Needham & Company -- Analyst

Hi, Good evening, thanks for taking my question and very excited to be on a quarterly call with you talking about omecamtiv pivotal data this year. So just thinking through the high-quality problem of GALACTIC reading out early, understand completely from your prepared remarks and our past discussions, this is not part of the critical path for filing. But how important are the METEORIC data for other things, specifically for like payer discussions and your market access plan?

Fady I. Malik -- Executive Vice President of Research and Development

I mean I think the METEORIC data are additive to what we will see in GALACTIC, but they aren't, I would say, critical to the value case that would be made for omecamtiv mecarbil. That's going to really rest on mortality benefits, rehospitalization benefits. In terms of symptom relief and exercise, functional improvement, those are the things that are obviously very important to patients and the physicians and help drive the rationale for the use of omecamtiv mecarbil. And so we do think the data are important, but aren't necessarily their timing isn't necessarily critical to the launch of omecamtiv mecarbil.

Robert I. Blum -- President and Chief Executive Officer

Yes, I concur with Fady in that what ultimately will matter most to whether omecamtiv mecarbil is included in the guidelines and how payers view it will be what comes out of GALACTIC. Definitely in terms of positioning relative to other potential therapies and also as they inform adherence and compliance on the part of patients to the extent that METEORIC also reads out positively, I think that will be supplemental and help fuel some of the adoption we hope we'll have in commercial traction.

Fady I. Malik -- Executive Vice President of Research and Development

Yes. I just think for perspective, almost none of the other heart failure drugs have evidence of a functional improvement based on exercise.

Chad Messer -- Needham & Company -- Analyst

Okay. That's helpful. And then maybe just a quick one on 594. I believe you mentioned that it's also in your press release that the SAD/MAD cohorts from Phase I will complete in second half 2020. Just wondering should we expect as part of the investment community to receive that data. And if so, when?

Robert I. Blum -- President and Chief Executive Officer

Good question. So we're particularly excited about 594 because it does have a different pharmacology and could enable us to build out a franchise beyond that, which we would be doing with omecamtiv mecarbil. The SAD/MAD study data we might have by the end of this year, but we and Amgen haven't spoken to whether that will be data available. I suspect that will have a lot to do with whether there's additional Phase I data that needs to be generated and what will be our Phase II plans. All of that's still forthcoming in conversation between us and Amgen. So we're explicitly not guiding to data later this year, but rather the completion of that SAD/MAD study.

Chad Messer -- Needham & Company -- Analyst

All right, great. Understood. Thank you.

Robert I. Blum -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Charles Duncan with Cantor Fitzgerald.

Robert I. Blum -- President and Chief Executive Officer

Hi, Charles.

Maria Yonkoski -- Cantor Fitzgerald -- Analyst

Hi. This is Maria Yonkoski [Phonetic] on for Charles. And congratulations on a very productive year. You actually somewhat mentioned in answering an earlier question, but just to get some more clarity, what type of disruptions could the coronavirus cause for the global GALACTIC trial seeing as you have sites in Asia? And could you remind us if METEORIC is only enrolling at U.S. sites? And I have a follow-up.

Robert I. Blum -- President and Chief Executive Officer

Sure.

Fady I. Malik -- Executive Vice President of Research and Development

I meant that in some ways, just as a maybe a little bit of a flip comment, but the coronavirus obviously is affecting many countries, not just in Asia, but you see meetings being canceled in European countries. We obviously have issues in the United States. And so it's a something that we need to consider. But the I think the I don't anticipate it having any impact on trial conduct or finishing.

Robert I. Blum -- President and Chief Executive Officer

Yes. I think that it's a good question, but I think it's premature for Cytokinetics, or for that matter, any company really to answer a question like that. We are talking about it, and we're calibrating where we have country closeout and other things that need to occur. But to this point, we're not aware of any effect that it could have to disrupt our time lines. With respect to your questions pertaining to METEORIC and where that study is being conducted, it's currently being conducted throughout the United States, and we'll also be expanding to include Europe as well. And in that way, we are also aware that things like the coronavirus could have effect to our time lines. But we're, I think, fairly confident that given where we are in enrollment right now, we can meet the guidance that we set for today.

Maria Yonkoski -- Cantor Fitzgerald -- Analyst

Absolutely. And my second question has to do with Astellas was to conclude the sponsorship of research activities through the end of 2019. I know you mentioned that you have ongoing discussions that will conclude this quarter, but I was wondering does the financial guidance that you provided assume that you will fully take over funding responsibility from Astellas moving forward.

Ching W. Jaw -- Senior Vice President and Chief Financial Officer

So the assumption for 2020 is Astellas will continue to support our research FTE as part of the agreement. So that's included in the financial guidance.

Maria Yonkoski -- Cantor Fitzgerald -- Analyst

Okay, thank you so much.

Robert I. Blum -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Jeff Hung with Morgan Stanley.

Robert I. Blum -- President and Chief Executive Officer

Good afternoon, Jeff.

Jeff Hung -- Morgan Stanley -- Analyst

Good afternoon. Thanks for taking the questions. Based on Fady's prepared remarks of developing 271 beyond HCM, does that mean that 271 will be exclusively outside HCM?

Robert I. Blum -- President and Chief Executive Officer

I think it's premature to be that explicit. But certainly, we foresee that the inclusion of CK-271 in development permits the expansion beyond HCM. And that's something that still has to be determined based on additional translational research we're doing, additional Phase I data that we hope to be generating in 2020 as well as what might be the fate of our partnering discussions and how that may ultimately play out. Having CK-271 in clinical development affords us more latitudes in how we might develop this program, but it's premature to be as committal as maybe your question is alluding.

Jeff Hung -- Morgan Stanley -- Analyst

All right. And then how are you thinking about omecamtiv mecarbil and AMG 594 within a potentially changing heart failure landscape with SGLT2 inhibitors and vericiguat?

Fady I. Malik -- Executive Vice President of Research and Development

Yes. I think, omecamtiv mecarbil is obviously years ahead of 594. And the development of 594 is going to be informed by where we see what we see from GALACTIC. You can imagine 594 being developed as a follow-up to omecamtiv mecarbil with the hopes of showing even greater efficacy. Obviously, that depends on what we see from GALACTIC. But you can also imagine that there are other types of heart failure that we haven't addressed with omecamtiv mecarbil that might be uniquely suited to the properties of AMG 594. So I think there's a potential to develop both the drug both in HFrEF but also in other unique indications that have not yet been addressed by omecamtiv.

Robert I. Blum -- President and Chief Executive Officer

And with regard to the other part of your question, SGLT2 inhibitors and vericiguat, this is an exciting time for new heart failure therapies, and I think all of these have the potential to be complementary. But as Andy likes to say, the way we've positioned and developed omecamtiv mecarbil, it hopefully can become foundational to standard of care in light of the fact that it is acting directly on cardiac muscle and may have direct effect to enhanced cardiac function and performance. And in that way, it's designed, frankly, to be partnered and complementary to these other mechanism drugs that have clear benefit as well but also offer something different in the treatment of heart failure.

Jeff Hung -- Morgan Stanley -- Analyst

Great. And maybe one last question. For GALACTIC, what are the variable aspects that might influence or impact whether the data are more likely to come out in the early part of 4Q versus the latter part?

Fady I. Malik -- Executive Vice President of Research and Development

I can't really comment on that. I think there are the event rate, obviously, will determine when the trial finishes and then how long it takes us to close sites out and all those sorts of things. So it's as was alluded to early, it's an extremely complicated and herculean task to bring in a trial in 35 countries around the world. And I think the it's a little too early to comment with precision on exactly when it'll come in.

Jeff Hung -- Morgan Stanley -- Analyst

Great, thanks.

Robert I. Blum -- President and Chief Executive Officer

Thank you, Jeff.

Operator

And your last question comes from Ted Tenthoff with Piper Sandler.

Robert I. Blum -- President and Chief Executive Officer

Good afternoon, Ted.

Edward Tenthoff -- Piper Sandler -- Analyst

Hi guys. Congrats on all the great update. It's going to be a really exciting year. Two questions, if I may. I think just a little bit of housekeeping. I want to make sure I heard that correctly. What were the gross proceeds that we're taken down on the convert? And then secondly, as you look to and anticipate and hope for positive data from GALACTIC, what are some of the steps that are being taken with respect to commercialization prep? And what would be Cytokinetics' expense requirement?

Robert I. Blum -- President and Chief Executive Officer

So firstly, we'll turn to your first question pertaining to the gross proceeds in the convert deal.

Ching W. Jaw -- Senior Vice President and Chief Financial Officer

So Ted, this is Ching here. The gross proceeds from the convert deal was $138 million. And after deducting the transactional fees as well as the expenses for capital, we're left with a net of $120.5 million.

Edward Tenthoff -- Piper Sandler -- Analyst

Understood. Great. And then on the --

Robert I. Blum -- President and Chief Executive Officer

And with respect to your second question if I got it right, your question pertains to maybe more specifics around that, which we're collaborating on with Amgen. This is where I'd say we're especially pleased that Amgen and Cytokinetics are working so effectively together along the lines of many work streams. We have joint commercial operating teams, working closely with joint commercial committees, working closely with joint development committees, reporting to a joint steering committee. All of these committees have their own charters and work streams. There are literally hundreds of activities that are going on between our companies in close coordination.

We, at Cytokinetics, obviously can't match Amgen person-to-person, but we have functional team leaders working closely with their counterparts at Amgen. Certain activities are being performed by Cytokinetics, others by Amgen. And as we are now within what could be launch readiness mode, we're looking at launch preparation plans region by region. And we're doing market research and working closely with things as diverse as selecting brand names and the disease state education, the positioning, the logos, the icons, color schemes.

We're talking about, as I mentioned before, health economics and outcomes research. We're working closely with Amgen, even as it pertains to targeting key accounts and where that might ultimately involve Amgen personnel or Cytokinetics personnel or both. I'd say it's far more than I could reasonably capture in an earnings call like this. Suffice it to say, we've had a long time to get ready for the potential commercialization of omecamtiv mecarbil. We've had a long time to think about what needs to happen to be proactive. And we and Amgen, I think, are doing a very good job to ready for what could be a big opportunity for a new medicine in this disease area.

Edward Tenthoff -- Piper Sandler -- Analyst

I really appreciate that. Thank you.

Robert I. Blum -- President and Chief Executive Officer

Thank you, Ted.

Operator

And there are no further questions at this time.

Robert I. Blum -- President and Chief Executive Officer

So I want to thank all the participants on the teleconference today, both for your continued support and your continued interest in Cytokinetics. We've laid out what was a very solid year in 2019 for execution against our goals and objectives and setting up our Vision 2025 and where 2020 figures, so importantly, in that process. We're looking forward to, in 2020, what could be major milestones that could potentially be transformative for our company and also for our mission in connection with advancing our science to the potential benefit of patients. We look forward to keeping you updated. And with that, operator, we can conclude the call.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Robert I. Blum -- President and Chief Executive Officer

Fady I. Malik -- Executive Vice President of Research and Development

Andrew A. Wolff -- Senior Vice President, Senior Fellow, Clinical Research and Development

Robert C. Wong -- Vice President and Chief Accounting Officer

Ching W. Jaw -- Senior Vice President and Chief Financial Officer

Jason Butler -- JMP Securities -- Analyst

Joe Pantginis -- H.C. Wainwright -- Analyst

Chad Messer -- Needham & Company -- Analyst

Maria Yonkoski -- Cantor Fitzgerald -- Analyst

Jeff Hung -- Morgan Stanley -- Analyst

Edward Tenthoff -- Piper Sandler -- Analyst

More CYTK analysis

All earnings call transcripts

AlphaStreet Logo

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.