Oct 31, 2007
Executives
Sharon Surrey - Barbari - SVP of Finance and CFO Robert Blum - President and CEO Andrew Wolff - SVP of Clinical Research and Development, andCMO
Analysts
Michael Aberman - Credit Suisse Joel Sendek - Lazard Security Alan Carr - Needham Meg Malloy - Goldman Sachs George Zavoico - Cantor Fitzgerald Jason Kantor - RBC Capital Markets
Operator
Good afternoon and welcome, ladies and gentlemen to theCytokinetics Third Quarter 2007 Conference Call. At this time, I would like toinform you that this call is being recorded and that all participants are in alisten-only mode.
At the request of the company, we will open up the call forquestion-and-answers after the presentation. I would now like to turn the call over to SharonSurrey-Barbari, Cytokinetics' Senior Vice President of Finance and CFO.
Pleasego ahead.
Sharon Surrey-Barbari
Good afternoon and thank you for joining the Cytokineticssenior management team on this conference call to discuss our third quarter2007 results. Also present during this call are Robert Blum, our President andChief Executive Officer; and Dr.
Andrew Wolf, Senior Vice President of ClinicalResearch and Development and Chief Medical Officer. Following the forward-looking statements disclaimer Robertwill provide an overview of the company's activity since our last quarterlycall.
And Andy will then provide highlights and details on the progress of thecompany's clinical development program. I will then review the company'sfinancial performance for the third quarter and nine months ended September 30,2007 along with updated financial guidance for 2007 and Robert will close thecall with a review of our research activities and our projected companymilestones for the remainder of 2007.
We will then open up the call for a briefquestion-and-answer session. Please be advised that the following discussion, includingour responses to questions at the end of our formal remarks, contain certainstatements that constitute forward-looking statements for the purposes of thePrivate Securities Litigation Reform Act of 1995.
Examples of such statementsinclude, but are not limited to statements regarding our financial guidance, ouruse of and the ability to draw down capital under our committed equityfinancing facility, the expected initiation, enrollment, conduct, timing,design scope and results of our and our strategic partners, research anddevelopment program; and the utility of those results, the identification ofmultiple compounds in 2008 for potential development, research and developmentmilestones for 2007, anticipated dates of availability of data from clinicaltrial, our strategic partnering effort, the initiation of additional sites andincreased enrollment rates for clinical trials and the potential benefits ofour drug candidates and potential drug candidates. These statements involve a number of risks and uncertaintiesthat could cause actual results and the timing of events to differ materiallyfrom those anticipated by these forward-looking statements.
These risks anduncertainties include a variety of factors some of which are beyond ourcontrol. These forward-looking statements speak as of today, you should not relyon them as representing our views in the future and we undertake no obligationto update these statements after this call.
Please refer to our SEC filings, including our annual reporton Form 10-K and quarterly reports on Form 10-Q for a more detailed descriptionof the risk factors that may affect our results. As well as our earningsrelease posted on our website and filed with the SEC on Form 8-K.
Copies ofthese documents may be obtained from the SEC or by visiting the investorrelations section of our website. Now, I'll turn the call over to Robert.
Robert Blum
Thank you, Sharon.I would like to thank all of you for joining us today on our third quarter 2007conference call. In the past quarter, Cytokinetics continued to advance bothour cardiovascular and oncology programs towards potentially keyproof-of-concept clinical stage milestones.
Within our cardiovascular programthis quarter we presented additional data from healthy volunteers in ourfirst-in-humans Phase I clinical trial of CK-1827452 or CK-452, our novelcardiac myosin activator and from our CK-452 oral bioavailability study. In addition, we continue to enroll patients in our firstPhase IIa clinical trial of CK-452 in patients with stable heart failure, aswell as our Phase I trials with CK-452 in healthy volunteers, details of whichAndy will provide you in a moment.
Within our oncology portfolio, we were pleased to see thecontinuing activities under our collaboration with our partner GlaxoSmithKlineor GSK result in the entry of our third anti-cancer compound GSK-923295 orGSK-295 into human clinical trials. GSK-295 represents the fourth drug candidate to come forwardfrom Cytokinetics research activities, which has generated multiple compoundswith novel mechanisms of action.
We feel that by continuing our investment inresearch and development, we continue to strengthen our pipeline and diversifyrisks associated with our business. Moreover, we believe these continuinginvestments in research and development provide greater value to ourshareholders going forward.
To provide greater detail on our ongoing clinicaldevelopment activities I would now like to turn the call over to Andy Wolff,our Chief Medical Officer.
Andrew Wolff
Thank you, Robert. Within each ofour cardiovascular and oncology programs we are either conducting or arepositioned to soon initiate proof-of-concept trials that we believe will informpotential registration path for these novel drug candidates in their intendedpatient populations.
Beginning with our cardiovascularprogram in September Cytokinetics presented two posters related to CK-452 atthe 2007 Annual Heart Failure Society of America or HFSA meeting in WashingtonDC. The first poster provided anadditional data from our Phase I first-in-humans clinical trial, evaluating theplasma concentration response relationship of CK-452 on left ventricularfunction in healthy volunteers.
The authors concluded that CK-452increased less ventricular ejection fraction and fractional shortening over arange of well-tolerated plasma concentration, both left ventricular ejectionfraction and fractional shortening are measures of how effectively the heart ispumping blood. In addition, it was determinethat systolic ejection time with the most sensitive market of drug effect, andthat increases in ejection fraction and fractional shortening werewell-correlated with these increases and ejection time.
Systolic ejection timeis easily measured and may serve as useful indicator of drug effect in patientwith heart failure. These supplement data previously presented at the 2006Annual HFSA Meeting in Seattle, Washington.
The second poster provided data from an oral bioavailabilitystudy as CK-452 in healthy volunteers, where CK-452 is administered as a liquidform in the fasted state and as a solid capsule, both in fasted and fed stateversus a reference intravenous infusion. The authors concluded that theabsolute bioavailability of CK-452 approached 100% for all formulations.
Thenear-complete absolute bioavailability suggested that there is little or nofirst-pass metabolism of this drug candidate. In addition, food did not have a substantial effect onbioavailability but appeared to delay drug absorption in some subjects, in boththe oral and intravenous formulations, CK-452 is well-tolerated in this trialwith no significant safety issues observed.
Both of these posters can be foundunder the Research and Scientific Publication tabs of our website. As we discussed during our second quarter earnings call, inApril we dose the first heart failure patient and Phase II clinical trialsprogram evaluating CK-452 are novel cardiac myosin activator for the potentialtreatment of patients with either acutely decompensated or chronic heartfailure.
The first trial in this program is a Phase IIa multi-center,double-blind, randomized, placebo-controlled, dose-escalation trial designed toevaluate the safety, tolerability, pharmacokinetic and pharmacodynamic profileof an intravenous formulation CK-452 in patients with stable heart failure. These clinical trials' primary objective is to evaluate tosafety and tolerability of CK-452 in stable heart failure patient.
We'verecognized that there is a great deal of interest in how this trial isprogressing. So I will provide a brief update, Cytokinetics recently completeda protocol-specified review of safety data from the first cohort of this trial,which permitted initiation of dosing in the second cohort earlier this month.
However, no formal efficacy analysis has been performed todate. Although this clinical trial experienced slow enrollment during thesummer, enrollment has improved at these sites in recent months.
In addition, we have initiated and are continuing toinitiate additional clinical trial sites, which we believe should favorablyimpact enrollment rates for subsequent cohorts. We continue to believe thatdata from this trial will be available in 2008.
Cytokinetics continues to enroll subjects in two additionalPhase I clinical trials of CK-452. The first is a single-center, open-label,sequential, parallel group study designed to evaluate the potential for certaindrug-drug interactions with CK-452.
And the second is a single-center study,which progresses from a single-blind, single-dose phase to a randomized, double-blind,placebo-controlled, multi-dose phase in order to evaluate the pharmacokineticsof an oral formulation of CK-452 in healthy volunteers. In developing these clinical trials program, we havesolicited feedback from our partner Amgen and have worked closely with keyopinion leaders in the field of heart failure.
We believe that we have designeda thoughtful and detailed clinical development plan intended to yield a solidunderstanding of the potential therapeutic application of this drug candidatein the heart failure patient population. Now, I'd like to provide you with an update on the Oncology.In August, Cytokinetics announced that GSK initiated a first-time-in-humansPhase I clinical trial of GSK-923295 or GSK-295, a small molecule inhibitor ofthe mitotic kinesin centromere-associated protein E or CENP-E.
This is anopen-label, non-randomized, dose-finding trial designed to investigate thesafety, tolerability, and pharmacokinetics of GSK-295 in patients with advancedsolid tumors. The initiation of this clinical trial triggered a milestonepayment of $1 million from GSK to Cytokinetics under the terms of thecompanies' strategic alliance established in June 2001.
That strategic alliancewas amended in 2006 and 2007 to conduct further research in this area uponwhich rather we'll elaborate later. As previously reported at the 2007 Annual Meeting of theAmerican Association for Cancer Research, GSK-295 demonstrated a broad spectrumof activity against the range of human tumor xenografts grown in nude mice,including models of colon, breast, ovarian, lung and other tumors.
In addition, Cytokinetics continues clinical developmentactivities in support of our two kinesin spindle protein or KSP inhibitor,ispinesib and SB-743921 or SB-921. Cytokinetics is now on the final stages ofpreparing to initiate the Phase I portion of a Phase I/II clinical trialevaluating ispinesib as monotherapy in the first-line treatment of patientswith locally advanced or metastatic breast cancer.
We will be exploring a more dose-dense schedule of theispinesib administered as an intravenous infusion once every other week, asopposed to the once every three weeks schedule used in majority of prior trialsconducted with ispinesib. We believe we may be able to increase the dosedensity of ispinesib on the schedule.
In addition, we believe that this trial could amplifyresults already observed today in women with locally advanced or metastaticbreast cancer. We look forward to providing you details on the specifics and designof the trial as we expect to enroll the first patient in this trial in thefourth quarter.
In addition the NCI continues to enroll patients in a PhaseI clinical trial designed to evaluate the safety, tolerability,pharmacokinetics and pharmacodynamics of ispinesib as monotherapy administeredon days 1, 2 and 3 of a 21-day cycle to adult patients with relapsed orrefractory acute leukemias, chronic myelogenous leukemia in blast crisis oradvanced myelodysplastic syndromes. The NCI also continues to enroll patients in a Phase Iclinical trial to evaluate the safety, tolerability, pharmacokinetics andpharmacodynamics of ispinesib as monotherapy administered on days 1, 2, and 3of a 21-day cycle to pediatric patients with relapsed or refractory solid tumors.
Furthermore, we continue to enroll and does escalate patientin the Phase I portion of our Phase I/II clinical trial of SB-921 in thetreatment of patient with non-Hodgkin's lymphoma. The Phase I portion of thisclinical trial is designed to evaluate the safety, tolerability,pharmacokinetic, and pharmacodynamic of escalating dosages of intravenousSB-921 as monotherapy administered on days 1 and 15 of the 28-day treatmentcycle in patients with Hodgkin's disease or non-Hodgkin's lymphoma.
With that let me the turn call back over to Sharon, who willnow detail our third quarter 2007 financials.
Sharon Surrey
Thank you, Andy. For the third quarter ended September 30,2007 revenues from research and development collaboration were $4.1 millioncompared to $0.1 million in the third quarter of 2006.
Revenues for the thirdquarter of 2007 were derived from license revenue of $3.1 million from ourcollaborations and option agreement with Amgen and the milestone payment fromGSK of $1 million for the initiation of Phase I clinical trial of GSK-295.Revenues in 2006 were derived from our collaboration and license agreement withGSK. Total research and development or R&D expenses for thethird quarter of 2007 were $13.2 million, compared to $12.5 million for thethird quarter of 2006.
The increase in R&D expense is in the third quarterof 2007 over the same period in 2006 was primarily due to increased spendingfor clinical and preclinical outsourcing costs, as well as higher personnelexpenses. From a program perspective, for the third quarter of 2007,approximately 43% of our R&D expenses were attributable to our cardiac contractilitydevelopment and research activities, 10% to our mitotic kinesin development andresearch activities and 42% to our other research program.
Our other researchprograms include our programs directed toward smooth and skeletal musclecontractility, and Robert will comment more on our activities in research in amoment. Total general and administrative or G&A expenses for thethird quarter of 2007 were $4.1 million, compared to $3.6 million in the thirdquarter of 2006.
The increased spending in the third quarter of 2007 over thesame period in 2006 was primarily due to increased personnel and medicaleducation expenses, offset in part by lower patent and legal fees. The net loss for the three months ended September 30, 2007was $11.3 million, or $0.24 per share, compared to a net loss for the sameperiod in 2006 of $14.9 million, or $0.41 per share.
We also reported results of our operations for the ninemonths ended September 30, 2007. Revenues from research and developmentcollaborations for the nine months ended were $10.5 million, compared torevenues of $3 million for the same period in 2006.
Revenues for the first ninemonths of 2007 were largely derived from license revenue from Amgen. Revenuesfor first nine months of 2006 were largely derived from our collaboration andlicense agreement with GSK.
The increase in collaborative research revenues for thefirst nine months of 2007, as compared to the same period in 2006, wasprimarily the result of the recognition of $9.2 million of license revenue fromAmgen. Total R&D expenses for the nine months ended September30, 2007 were $39.4 million, compared to $36.2 million for the same period in2006.
The increase in R&D expenses for the first nine months of '07 wereover the same period in 2006 was primarily due to increased spending forclinical and preclinical outsourcing costs, as well as higher personnel andfacilities expenses. From the program perspective for the first nine months of2007 approximately 44% of our R&D expenses were attributable to ourcardiac, contractility, development and research activity, a 11% to our MitoticKinesin development and research activity, and 39% to our other researchprogram.
Total G&A expenses for the nine months ended September30th, 2007 were $12.6 million, compared to $11.1 million for the same period in2006. The increased spending in the first nine months of 2007 over the sameperiod in 2006 was largely attributable to increased expenses associatedincrease personnel expenses along with higher accounting services fees.
Net loss for the nine months ended September 30th, 2007 was$35.6 million, or $0.76 per share, compared to a net loss of $41.2 million, or$1.15 per share for the same period in 2006. Earlier this month, we entered into a committed equityfinancing facility with Kingsbridge Capital or Kingsbridge, a privateinvestment group in which Kingsbridge committed to provide up to $75 million ofcapital over a three-year period through the purchase of newly issued shares ofCytokinetics common stock, at a discount ranging from 6% to10%, depending on the average market price during the eight-day pricing period.
Under the terms of the agreement,Cytokinetics can subject to certain conditions and limitations, determine theexact timing and amount of any drawdown. We have established the Kingsbridgeline to provide an available source of capital in the event that we are unableto otherwise access the financial market, whether as a result of general marketconditions or because our clinical timelines may shift or unexpected event mayoccur and our development programs would delay.
What we believe could otherwisebe financial event for the Company. Now, I'd like to provide with our updated financial guidancefor 2007.
As stated previously Cytokinetics revenue guidancefor 2007 is estimated to be in the range of $11 million to $13 million.However, our guidance for R&D expenses is being reduced to be in the rangeof $55 million to $60 million, down from our previously guidance of between $70million $75 million. G&A expense guidance remains in the range of $17million to $19 million.
This guidance includes the estimated effects of FAS 123RShare-Based Payments, which requires the expensing of stock-based compensation. This concludes the financial portion oftoday's call.
With that I'd now turn the call back over to Robert, who'llreview expected clinical and research and development milestones for 2007.
RobertBlum
Thank you, Sharon. Before I review the milestone for theremainder of the year, I would like to provide you with the brief update onother research activities at Cytokinetics.
In June, we announced that we had agreedto another one-year extension to the research term under our strategic alliancewith GSK focused to the mitotic kinesin ,CENP-E andin August we announced the GSK had a initiated a Phase I trial with our CENP-Einhibitor, GSK-295. CENP-E is a key component of the Spindle AssemblyCheckpoint and as such it is essential for sale proliferation.
In preclinicaland in virto model, GSK 295 has shown to be active in inducing cell cyclearrest in mitosis. Last week, weannounced the two posters relating to GSK-295 were presented at theAACR-NCI-EORTC International Conference on Molecular Targets and CancerTherapeutics here in San Francisco.One poster identified the molecular determinants of sensitivity to GSK-295, anovel and selective inhibitor of CENP-E.
The authors concluded that certaincell lines are sensitive to apoptosis following mitotic arrest with theinhibitor of CENP-E and that heterogeneity of response was observed. The second poster concluded theGSK-295 elicits to dose-dependant metaphase arrest in replicating tumor cellsfollowed by an associated increase in apoptosis and is active against the broadpanel of both solid and hematological tumor cell lines in cell culture.
Weshare our partners excitement in the advancement of this drug candidate intoclinical trials and believe that with this event Cytokinetics has advancing apipeline of candidates that balances our risk exposure while creating apossibility of multiple value drivers for our shareholders. As Sharon mentioned earlier, ifyou breakout our spending for the first nine months of the year, theinvestments made in research activities with the objectives of furtherexpanding our portfolio potential drug candidates account for approximately 39%of our total R&D spending.
We believe that this a prudent level of spendingthat could lead to identification of several additional drug candidates in 2008and 2009. Towards that objective, we areencouraged by recent in vivo data that validate approaches we are taking in ourmuscular biology research programs directed towards potentially new treatmentsfor hypertension, various bronchoconstriction and pulmonary diseases as well ascertain neurological conditions and diseases of muscle wasting.
On the partnering front, we continue to look towardspossible partnering and other corporate development activities to complementour financing activities. These corporate activities include our early stagepartnering activities focused to our smooth and skeletal muscle programs, aswell as the possible partnering of CK-452 in Japan.
On the financial front, as Sharon also mentioned, we believe our Kingsbridgeline provides a flexible source of capital for the company in the event we areunable to otherwise access the financial markets. While this year has seen our clinical development programsadvancing, another drug candidate entering first-time-in-human trials andresearch compounds moving towards development.
We anticipate that the remainderof the year will also allow us to execute on still several other milestones. In our cardiovascular program, we anticipate initiating anadditional Phase I trial and an additional Phase IIa clinical trial of CK-452,both in the fourth quarter of 2007.
Also in the fourth quarter of 2007, we planon initiating the Phase I portion of Phase I/II monotherapy clinical trialevaluating ispinesib in the first line treatment of patients with locallyadvanced or metastatic breast cancer. In the first half of 2008, we anticipate data to beavailable from GSK's Phase Ib clinical trial, evaluating ispinesib in thecombination with capecitabine.
Regarding SB-921, we will be presenting interim Phase I datafrom an ongoing Phase I/II trial in patients with Hodgkin's disease and non-Hodgkin'slymphoma at the annual meeting of the American Society of Hematology, inOrlando, Florida in December. All in all this has been another busy and productivequarter.
We continue to execute in our business, we do squarely in a growingportfolio of novel drug candidates and continued investments in research. Weremained committed to progressing this pipeline towards potentialproof-of-concept validation in clinical trials and look forward to sharingresults that may inform potential registration studies for our novel drugcandidates.
That concludes the formal portion of our call today. And Iwould now like to open up the call for questions.
Operator, if you please?
Operator
(Operator Instructions). Your first question comes fromMichael Aberman with Credit Suisse.
Robert Blum
Hey, Michael.
Michael Aberman -Credit Suisse
I guess the first the comment that you expect is about thisPhase IIa data in 2008, some of us were expecting it earlier 2008. Can youcomment on that timeline?
And also you've finished the first cohort. How manycohorts are expected?
And is there any possibility of presenting data on acohort-by-cohort basis given this is I would presume and open-label trial?
Robert Blum
I'll take a first dab at that, Michael, and I am going toturn over also to Andy. In terms of data guidance, we've always pointed to 2008for the study and I think that's more reliably what can be expected.
We have,as we indicated with this earnings press releases, pointed to do the fact thatenrollment in the first cohort was slow. We expect that enrollment in cohorts 2and subsequent cohorts will be faster and with that I think its better to pointto 2008 for data coming out of this first Phase IIa trail.
Andy Wolff
And there is a possibility of releasing the data on acohort-by-cohort basis. It really depends upon how quickly we enroll them andwhether there is really material information within them.
So, we need to beguided by the data as we see them. And currently all we've done, as I mentionedearlier, is a safety review of the data to allow us to open the second cohort.But, we don't yet have a formal analysis of any efficacy data from the firstcohort.
Michael Aberman -Credit Suisse
Okay.
Robert Blum
So, were we to conduct an interim analysis that wouldprovide an efficacy read information that would be material, we would elect tothen disclose that by top-line disclosure in a press release to be thenfollowed up by what would be expected to be a more complete analysis presentedat the next appropriate medical meeting.
Michael Aberman -Credit Suisse
I guess, suppose you are probably starting low and goingslow with this trial, based on the your Phase I date in healthy volunteers andyour animal modeling. At about which cohort would you expect to start seeingefficacy that would might be worth doing an interim analysis, cohort 2, cohort3?
Robert Blum
I don't think we can get intothat level of detail. We haven't disclosed what would be the plasmaconcentrations that we would be evaluating on a cohort-by-cohort basis.
What wehave indicated is that this study designed to evaluate dose levels thatcorrelate with the plasma concentrations. That overlap with what we evaluatedin the Phase I, but which are focused more to lower ends of the dose responsecurve and where we would expect to see activity based on the pre-clinicalevaluations, again, at the lower-end of the dose response curve.
We wouldexpect to see activity associated with plasma concentrations in the earlycohorts, where the early cohorts allow us to get to what is designed in thetrial to be the maximum plasma concentrations to be studied with subsequentcohorts intended to prolong the duration of those infusion. So it would not beexpected that it would have to wait for the latter cohorts for us to be able tosee the pharmacodynamic response that we anticipate based on hitting themaximum plasma concentration in earlier cohorts.
Michael Aberman -Credit Suisse
Got it. And what about this isnext trial that you are initiating in the fourth quarter.
Can you give us some coloron this additional Phase IIa trial?
Andrew Wolff
Additional Phase IIa trial forCK-452?
Michael Aberman -Credit Suisse
Yes.
Andrew Wolff
We haven’t disclosed any detailsof that study, but we have indicated publicly our two populations that weintend to study in two Phase IIa trials to be initiated. And those are patientsthat would be undergoing characterization with stable heart failure, where wewould like to be able to point to as we had seen preclinically that thismechanism may translate into increased systolic functions without increase in oxygenconsumption.
And we've also indicated that ournext Phase IIa study will allow us to enroll patients with a ischemiccardiomyopathy, where we will be primarily looking to evaluate safety of CK-452in presence of ischemia given how that co-morbidity often times can complicatethe treatment of heart failure. But we haven't indicated as what would be theorder of those two studies, which one is likely to be in the fourth quarter.
Michael Aberman - CreditSuisse
Okay. We might be expect data frommore than one of these trials that's starting in fourth quarter, I guess, wouldyou expect you can take more than a year for data, or is becoming to get dataas well on 2008?
Andrew Wolff
I think that as we have indicated previously the Phase IIaprogram, which comprises these different Phase IIa studies and additional PhaseI studies are designed to deliver data across these studies in 2008.
Michael Aberman -Credit Suisse
Okay. I will get back in the queue.
Thanks, guys.
Andrew Wolff
Thanks Michael.
Operator
The next question comes from Joel Sendek with LazardSecurity.
Andrew Wolff
Hi, Joe.
Joel Sendek - LazardSecurity
Hi, you guys hear me?
Andrew Wolff
Yes.
Joel Sendek - LazardSecurity
Yes. It's a Lazard Capital Market.
Two questions. I amwondering just a follow up to that, look forward to two questions.
Why is thatenrollment was so slow, was it more because of the fact that the site weren'tjust up in running or is there any capecitabineregard to the drug can you just --
Andrew Wolff
It is a combination things we had barriers to getting sitesup in running. It was little more difficult to get each of them up in going,then, we had anticipated.
And then, by the time we got the majority of themgoing, it was the summer months, which is always a slow time for enrollment,especially when you have a study to design that. It requires patients to have to come back andstay overnight for separate times.
So just getting pass for vacation monthshelps that a lot and we begin to -- well, we've been able to finish in rollingthe first cohort and moving to cohort II. But we've also added, as I mentionedearlier additional size to ensure that the subsequent cohorts are no morequickly than the first one did.
RobertBlum
When we announced in the second quarter that we hadinitiated dosing in April in this first Phase IIa trial that was obviously thefirst patient in the first center. And like any clinical trial there is[J-curve] that speaks to other centers coming one line and increasingenrollment per center as well as cross multiple centers.
And I think this trialis no exception.
Joel Sendek - LazardSecurity
Okay. So you up at curve this point.
RobertBlum
Say that again.
Joel Sendek - LazardSecurity
Okay. So you're up at curve at this point?
RobertBlum
Say it again?
Joel Sendek - LazardSecurity
You are up at curve at this point and then enrollingquickly?
RobertBlum
Yes. We are moving up the curve at this point and we are addingmore centers as well as increasing enrollment that existing centers.
Joel Sendek - LazardSecurity
Okay. And then, just a question on the GSK-295, can you giveus any more detail on the trail design there or what you might see some data inthis timing?
RobertBlum
I think, we've said the data from the trail will come in2008 and it's a fairly standard dose-escalation study in patients with relapsedor refractory solid tumors.
Joel Sendek - LazardSecurity
Okay. Would ASCO be too early, do you think we might seesomething for that study?
Andrew Wolff
It's hard to say at this point, Joe. We are still, you know,the first patient was dosed in August and GSK is sponsoring this trial asresponsible really for the conduct.
We're dose-escalating, I don't know whetherit could be ASCO, we hopefully will have more to say as we get more clarity onthe enrollment patterns. And frankly, has so much to do with where you hit yourMTD as to what would be accepted for presentation from the Phase I study at aplace like ASCO.
So, I think, it's pretty mature to speak to a guidance on when2008.
Joel Sendek - LazardSecurity
Fair enough. And can you just repeat, you mentioned you hadone of the studies or some data at Hodgkin, it's only independent?
RobertBlum
We have interim data from the Phase I/ II study. Our secondKSP inhibitor, SB-921 and patients with Hodgkin's disease or non-Hodgkin'slymphoma.
Joel Sendek - LazardSecurity
Okay.
Andrew Wolff
You may recall, we've already presented this year some interimdata from that Phase I portion and this will follow-up to that be more datafrom the same Phase I/ II trial of this second KSP inhibitor.
RobertBlum
I mean, in person I believe was the first cohort and we'llhave quite a bit more data now.
Andrew Wolff
That's right.
Joel Sendek - LazardSecurity
Thanks a lot.
Andrew Wolff
Joel, thank you.
Operator
Your next question comes from Mark Monane with Needham.
Alan Carr - Needham
Hi, good afternoon. It's actually Alan Carr for Mark.
Robert Blum
Hey, Alan.
Alan Carr - Needham
Hey. Just wanted to make sure I got everything right on the452 program.
Have you just disclosed how many sites you intended to open andhow many are opened in this trial?
Robert Blum
Good question. We have not.
What we have disclosed is thatwe had initiated the study in the UKand that we were adding sites in UK.
Alan Carr - Needham
So, the trial would be done only in Britain?
Robert Blum
No. With additional sites we are now embarking beyond the UK to enroll patients outside the UK aswell.
Alan Carr - Needham
Rest of Europe or US canyou add to that or no?
Robert Blum
We really haven't added anything more into that.
Alan Carr - Needham
Okay. And I am sorry I may have missed this earlier, but canyou tell me little bit more about the following cohort session.
I remember thatthe fourth and fifth are little different, can we expect those to move morequickly than the first three or is this just a matter of just getting more patientsgoing up on this J-Curve as you mentioned.
Andrew Wolff
I think, as we have more sites online and more sites comingonline. I do anticipate that the subsequent cohorts will enroll more quickly.As Robert has already said, the full breadth of converge of the plasmaconcentration range intend to study will occur within the first two cohorts andthe subsequent cohorts only extend the duration of intravenous infusion.
Alan Carr - Needham
Just to get FDA clearance going from each cohort to the nextcohort or just this first -- move to the first to second?
Andrew Wolff
This isn't a regulatory issue. This is just our own safetyreview.
Alan Carr - Needham
Okay, okay. And you mentioned, Iwondered turning to partnering, earlier you mentioned you brought up partneringwith it.
Are you looking to partner some of these -- you mentioned the muscleprogram, the skeletal programs and that sort of things, are you looking topartner those before going into the clinic and can you elaborate on that?
Robert Blum
Yeah. I mean, it's certainlypossible.
We are moving towards the clinic in the absence of partnerships inour smooth and skeletal programs. Certainly having a partner onboard would helpbroaden the type of development programs we could pursue, and even acceleratesome of those programs towards the clinic.
But, not having a partnership isprecluding us from moving forward and investing significantly towards thatobjective. As to whether we partner beforethe clinic or after the clinic.
That really is going to be a function of whatkind of deal terms are negotiated and how we might be able to justifypartnering sooner versus afterwards. We have done deals, as you know, both forprograms at lead optimization stage.
We are moving toward candidate selectionin the case of our first deal in 2001 with GlaxoSmithKline and our partnershipwith Amgen for CK-452 came with that compound in Phase I, moving to Phase IIa.So, it will have more to do with what kinds of terms are available to us undera potential mutually agreeable partnership that we will inform the timing.
Alan Carr - Needham
Is there a rate at which we canexpect to see new candidates from those other programs coming into the clinicsstarting next year?
Robert Blum
I am reluctant to commit to that yet given that theseprograms are still in research, not even yet where we have designated them forcandidate selection in IND-enabling studies. We look to INDs across both '08and '09, and it's possible in '08 as we might designate compounds for formaldevelopment that we might point to INDs at that time.
But, given where we arenow, still working with compounds that are eligible for selection fordevelopment, I think that would be premature point to and IND rate at this stage.
Alan Carr - Needham
Okay. Thanks very much.
Andrew Wolff
Sure. Thanks.
Operator
Your next question comes from Meg Malloy with Goldman Sachs.
Robert Blum
Hi, Meg.
Meg Malloy - GoldmanSachs
Hello Robert. I just have very quick one.
Could you tell uswhat you are thinking about in terms of ispinesib perhaps the first line study?I seem recall that this should be a relatively small sort of principle studywhich is what you were thinking?
Robert Blum
In terms of spending? Or in terms of design objective?
Meg Malloy - GoldmanSachs
Study size, design timing that sort of thing.
Robert Blum
So, I will start and then ask Andy to elaborate. This wouldbe a study that will begin with a Phase I portion, that's a dose escalationdesign, moving then in to Phase II.
And again, looking to amplify what was a 9%objective response rate in the previous Phase II study that was conducted underGSK sponsorship. We haven't given outside guidance as to what we would expectfrom Phase II.
But, rather we are looking and GSK is looking together with usat being able to amplify what we saw previously as monotherapy in second orthird line patients.
Meg Malloy - GoldmanSachs
I guess, I am little confused, while you are calling it aPhase I. It would just not be in breast cancer patients?
Robert Blum
It is, and it's all in women who have previously untreatedlocally advanced or metastatic disease. The Phase I portion is because wereally believe that everything that we've seen to-date with this ispinesibtells us that the optimal dosing schedule with the drug is every other week,because the neutropenia is at a maximum at about seven days, and isreproducibly and very consistently fully recovered by the 15th day.
So, thereis really no reason to wait another week to administer the drug as priorstudies have done, which have administered drug every 21 days. But we do havethe dose-escalate on that every other weeks scheduled to find the maximumtolerated dose.
And then, in that same population of women with previouslyuntreated locally advanced or metastatic breastcancer, we will then take that optimum dose, determine in the Phase I portionof the study and do a fairly typical staged Phase II study. And we haven'tdescribed it in more detail in that and we will, of course, enroll the firstpatients.
Meg Malloy - GoldmanSachs
Great. No, that's very helpful.
Thank you.
Andrew Wolff
Thanks, Meg.
Operator
Your next question comes from George Zavoico with CantorFitzgerald.
Robert Blum
Hi, George.
George Zavoico -Cantor Fitzgerald
Hi, Robert. Hi Sharon.
Hi, Andy.
Andrew Wolff
Hi.
Sharon Surrey-Barbari
Hi.
George Zavoico -Cantor Fitzgerald
Everybody doing great to the questionnaire.
Sharon Surrey-Barbari
Yes.
Andy Wolff
Yes. We survived.
Thank you.
George Zavoico -Cantor Fitzgerald
And a quick question -- a couple of few questions actually.First one is, have you discussed how many patients were treated in the firstcohort?
Robert Blum
We have said, when we announce the design of the study thatwe would be enrolling our cohorts of unequalled eight for cohort.
George Zavoico -Cantor Fitzgerald
Okay. And with regard, also, to that Phase I trial in the UK, myunderstanding is that during the third vacation months it was difficult toenroll patient.
Did you have to, I don't know even if its lot in the UK,did you have to develop or offer any incentives or inducements to get patientsto come to the trial above and beyond where you started with in April and May?
Robert Blum
Our primary strategy here really is to add more centers andotherwise to increase enrollment per center by our sales and our CRO visitingthe centers, and extolling the virtues of the design and why this would beparticularly good study for them to participating in.
George Zavoico -Cantor Fitzgerald
I see. Okay.
And these patients chose stable heart failureright, so how often do they actually come to the centers for check-ups wherethey maybe able to encounter representative from the CRO.
Robert Blum
Well, it’s not such much to representative from the CRO,they see the investigator when they come.
George Zavoico -Cantor Fitzgerald
Okay.
Robert Blum
And it does involve coming back and receiving study drug onfour separate dosing days, where they stay overnight.
George Zavoico -Cantor Fitzgerald
All right. Thanks for providing the update on theenrollment.
And one the last question that in the Kingsbridge financing. Whatwere the costs to you of getting that line of credit and do you think it wastoo high, just right, you think you had a good deal?
Sharon Surrey-Barbari
I think, the costs to us is really variable depending on theprice of the shares issued, the value of the warrant are actually very minor.They are less than 0.5% of the overall dollar amount committed to other shares,committed as part of the committed equity financing lines. So it’s a very lowcosts compared to what you are seeing out in the capital market today, both asregistered directs and even marketed follow-ons, on what the price anddiscounting along with bank receipt are.
George Zavoico -Cantor Fitzgerald
Okay. Thank you very much.
Robert Blum
Thank you, George.
Operator
Your next question comes from Jason Kantor with RBC.
Robert Blum
Hi Jason
Jason Kantor - RBCCapital Markets
Hi. Thanks for taking my call, between lot of the questionshave been asked, but I guess my question is for the CENP-E inhibitor.
What haveyou learned from your trials with ispinesib that’s going to make thisdifferent? Are you in GSK going to go to seven Phase II trial looking all thesedifferent indications because it doesn't seem clear preclinically where thesuite spot is for this drug, I don’t know if you might identify something inPhase I, but my guess is you are going into Phase II somewhat in line to thebest indication for it, is there a way to hone in on that earlier?
Andrew Wolff
It's a very good question andit's something that we continue to actively discuss with GSK what have welearned from our KSP inhibitor experience that could read on what we do asCENP-E, recognizing that CENP-E is a different molecular target. This is adifferent chemical structure and it could very well be entirely differentclinical profile.
But we have I think profiled GSK-295 differently,“pre-clinically” we are looking at what might be the potential for biomarkersto inform strategies that could benefit us in Phase II. I don't think we've locked in onanything right now, that we can speak to publicly but there are conversationsamong those lines how might we best engage GSK resources, NCI resources?
Shouldwe take a shotgun approach, which I think is fair to characterize the way wedid with KSP inhibitors our nine Phase II studies with ispinesib or might welook at a more targeted way, when why we consider combination studies? Howcould there be perhaps imaging analysis in forming what might be other ways oflooking at our Phase I data?
There is all sorts of different things that we aretalking about nothing from that how we committed to or certainly are we in aposition to discuss publicly.
Jason Kantor - RBCCapital Markets
And have any of your enrollmenttimelines with the heart failure program, does that change at all the timing ofpotential Amgen option?
Andrew Wolff
No. We are still comfortable withindicating that we expect Amgen will be in a position to exercise that optionin 2008.
Jason Kantor - RBCCapital Markets
Thanks.
Andrew Wolff
Thanks, Jason.
Operator
You have a follow up question from Michael Aberman with Credit Suisse.
Rob Blum
Yes, Michael.
Michael Aberman - Credit Suisse
Sorry, it can be petty housekeeping question. You guided forrevenue of, I think, peak at $13 million reaffirming.
But, you particularly beenamortizing over past three quarters to more than based on what you've got inthe first three quarters. Did you expect the license revenue amortization inthe fourth quarter?
Sharon Surrey-Barbari
No. So, I don't expect the license revenue amortization tochange in the fourth quarter.
You might be slightly above $13 million, but Ithink the guidance provides for -- it's in the ballpark of where we think weare going to be. There are no additional changes.
We did have some patentreimbursements from GSK in the first half of the year that we may or may notreceive in the fourth quarter.
Michael Aberman - Credit Suisse
Okay. That's all.
I will get to trick-or-treating now.Thanks.
Sharon Surrey-Barbari
Okay. Thanks.
Robert Blum
Thanks, Michael.
Operator
There are no further questions at this time.
Robert Blum
Thank you to all of our participants today for yourcontinued interest in Cytokinetics. We look forward to keeping you apprised ofour development and research programs in the future.
With that have a good day.Happy Halloween. Operator, we can conclude the call.
Operator
This concludes today's conference call. You may nowdisconnect.