Feb 10, 2009
Executives
Sharon Barbari – SVP, Finance and CFO Robert Blum – President and CEO Andrew Wolff – SVP, Clinical Research and Development, and Chief Medical Officer
Analysts
Mark Monane – Needham Michael Aberman – Credit Suisse Christopher James – Rodman & Renshaw Charles Duncan – JMP Securities Ching Chan [ph] – RBC Capital Markets George Zavoico – Westport Capital
Operator
Good afternoon and welcome, ladies and gentlemen, to the Cytokinetics Fourth Quarter and Year-end 2008 Conference Call. At this time, I would like to inform you that this call is being recorded and that all participants are in a listen only mode.
At the request of the company, we will open up the call for questions and answers after the presentation. I will now turn the call over to Sharon Barbari, Cytokinetics' Senior Vice President of Finance and CFO.
Please go ahead.
Sharon Barbari
Good afternoon and thank you for joining the Cytokinetics senior management team on this conference call to discuss our fourth quarter and year end 2008 results. Also present during this call are Robert Blum, our President and Chief Executive Officer, and Dr.
Andrew Wolff, Senior Vice President of Clinical Research and Development and Chief Medical Officer. Following the forward-looking statement disclaimer, Robert will provide an overview of the past quarter.
Andy will then provide highlights and details on the progress of the company's clinical development program, and I will provide some brief comments regarding our investment in research and development in 2008 and the company's financial guidance for 2009. Robert will then discuss recent additions to the company’s pipeline and finish with a summary of our projected company milestones for 2009.
We will then open the call for a brief question-and-answer session. The following discussion, including our responses to questions, contain certain statements that constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.
Examples of such statements include, but are not limited to statements regarding our financial guidance for 2009, the expected focus, conduct, initiation, design, timing, scope, enrollment, progress and completion of our and our partners' research and development activities, the results from such activities, including the timing of availability and planned presentations of data from our development activity, and the possible significance of such results, the anticipated benefits of our muscle biology focus, our provision of data to Amgen to inform its potential exercise of its option, the potential receipt of funds under our strategic alliance with Amgen, potential partnering activities and the availability of funds under our committed equity financing facility and the properties and potential benefits of our drug candidates and potential drug candidates. These statements involve a number of risks and uncertainties that are affected by a variety of factors and could cause actual results and the timing of events to differ materially from those anticipated by these statements.
These forward-looking statements speak only as of today. You should not rely on them as representing our views in the future.
We undertake no obligation to update these statements after this call. For a more detailed description of the risk factors that may affect our results, please refer to our SEC filings, including our most recent quarterly report on Form 10-Q.
Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our Website. Now, I'll turn the call over to Robert.
Robert Blum
Thank you, Sharon. The past year was marked by significant progress we made in further defining the therapeutic potential of our lead drug candidate CK-1827452 or CK-452.
Complementing our clinical activities, we expanded our muscle biology focus development pipeline with the advancement of one potential drug candidate in IND enabling studies and the addition of two other potential drug candidates into preclinical development. As evidenced by the announcements in the fourth quarter, our clinical data from the phase I and phase IIa clinical trials, CK-452 continues to be a major focus for the company.
Data from this drug development program continues to drive an increasing level of interest amongst investigators, and as Andy will share with you momentarily, we are encouraged with the top line data from the recently completed phase IIa clinical trial in patients with ischaemic cardiomyopathy and angina. In addition, we're looking forward to the completion of our ongoing phase IIa clinical trial of CK-452 in stable heart failure patients.
The latest interim data from this trial were presented at the American Heart Association meeting in November 2008, and we recently completed dosing in the fifth cohort of this trial. We look forward to the completion of final data collection and analysis for this trial in this quarter.
Also in this quarter, we look forward to our delivery of the final clinical trials data to Amgen, which will in turn commence the period in which they may decide whether to exercise their option for a license to develop and commercialize CK-452 worldwide, excluding Japan. As I mentioned earlier and will outline for you in greater detail later in the call, we recently announced the advancement of promising potential drug candidates from research activities focused towards muscle biology and more specifically the modulation of muscle contractility.
As I believe you will hear on a call today, we continue to make important advancements in both our clinical, non-clinical and research pipeline in the past quarter, and indeed throughout the year, and we're looking forward to more of the same in 2009. With that, I'll now turn the call over to Andy.
Andrew Wolff
Thank you, Robert. Cytokinetics’ international clinical trials program which is comprised of both our cardiovascular and oncology clinical development programs continued to perform well during the past quarter with the completion of a phase I and phase IIa trial of CK-452 and the announcement of initial interim data from ongoing clinical trials with CK-452, Ispinesib and SB-743921.
As Robert mentioned, the phase IIa clinical trial results from CK-452 continued to be of interest to the medical, scientific and investment communities. In November, at the 2008 scientific sessions of the American Heart Association, Cytokinetics reported interim results from an ongoing phase IIa clinical trial evaluating CK-452 administered intravenously to patients with stable heart failure.
These interim analyses demonstrated statistically significant increases in systolic ejection time and fractional shortening of plasma concentrations greater than 100 nanograms per ml, statistically significant increases in stroke volumes at plasma concentrations greater than 200 nanograms per ml. In addition, we observed statistically significant correlations between increase in CK-452 plasma concentration and increases in systolic ejection time, stroke volume, fractional shortening and cardiac output.
Of particular note, these data demonstrated statistically significant correlations between increasing CK-452 plasma concentration and increases in ejection fraction as measured by each of two methods, what is commonly referred to as the 2-D method, and a hybrid method which employs a combination of both 2-D and Doppler technology. Statistically significant increases in ejection fraction by the hybrid method were observed at plasma concentrations greater than 300 nanograms per ml.
Furthermore, these increases in measures of cardiac systolic functions were accompanied by other encouraging trends, including statistically significant correlations between increasing CK-452 concentrations and decreases in supine and standing heart rates, and in left ventricular and systolic volumes. As Robert mentioned, we have recently completed the dosing in the fifth cohort of this trial and are now in the process of collecting and analyzing the data from this cohort.
An important milestone in the CK-452 clinical development program that many of you have been waiting came in the fourth quarter with our announcement of top line results from our phase IIa trial evaluating the safety of CK-452 in patients with ischaemic cardiomyopathy and angina. The primary safety endpoint in the trial was defined as stopping an exercise test during double-blind treatment with CK-452 or placebo due to unacceptable angina at an exercise stage earlier than that at baseline.
This endpoint was observed in one patient receiving placebo and did not occur in any patient receiving CK-452 at either the lower or higher dosing regimen. This trial was not designed or sized to test any formal statistical hypothesis.
Rather as I've often explained, we were looking to see if there was a signal for what we and our Amgen colleagues have come to call major badness in this trial, in other words an obvious signal that the drug may not be safe during maximum exercise in this population of patients with both heart failure and angina due to coronary heart disease. In this regard, we were pleased that we did not see patients with diminished exercise tolerance compared to their baselines due to the onset of angina while exercising on CK-452.
We are further encouraged that the majority of the adverse events observed were characterized as mild in both the lower and higher dose cohorts. Two serious adverse events were reported in this trial, both occurring in a single patient with severe underlying coronary artery disease who received CK-452 in the higher dose cohort.
Both events were judged by the investigator to be unrelated to treatment with the study drug. Most importantly, we believe that the results from this trial supports the advancement of CK-452 into phase IIb clinical development.
We're looking forward to presenting the complete results from this trial at an appropriate medical meeting in 2009. During this quarter, we also announced the final results from our fifth phase I clinical trial of CK-452.
This trial evaluated the potential for clinically meaningful drug-drug interactions between CK-452 and compounds cleared mainly by either of two drug metabolizing cytochrome P450 enzyme 3A4 or 2D6, enzymes that are involved in the elimination of many commonly prescribed medications. This study demonstrated no clinically important differences in the pharmacokinetics of CK-452 between extensive or poor metabolizers via 2D6.
Furthermore, no clinically meaningful drug- drug interactions were identified between CK-452 and either of ketoconazole or diltiazem, the first being a potent and the second a moderate inhibitor of 3A4 in either extensive or poor metabolizers via 2D6. These results suggest a low potential for clinically meaningful drug-drug interactions between CK-452 and compounds cleared mainly by either cytochrome P450 3A4 or 2D6.
Moving to our oncology program, we continued to advance the phase I portion of the phase I/II clinical trial for each of Ispinesib and SB-921 on the more dose dense schedule of once every 14 days compared to previously studied regimens of once every 21 days. In the fourth quarter, encouraging interim data from both of these study were represented, Ispinesib at the San Antonio Breast Cancer Meeting, and SB-921 at the Annual Meeting of the American Society of Hematology.
We look forward to additional clinical data from both of these programs in 2009. With that update on our clinical development programs in the fourth quarter, I'm going to now turn the call back over to Sharon.
Sharon Barbari
Thank you, Andy. As our press release contains detailed financial results for the quarter and the year ended December 31, 2008, I would like to part from our past practice of simply repeating the information on the call and instead provide you with some additional information not contained in the press release.
Our fourth quarter 2008 research and development or R&D expenses totaled $11.5 million. From a program perspective for the fourth quarter, approximately 45% of our R&D expenditures were attributable to our cardiac contractility development and research activities, 10% to our mitotic kinesin development and research activities, and 25% to or skeletal muscle modulation research and preclinical development activities, and 20% to our other research activities.
Our full year 2008 R&D expenditures totaled $54 million. From a program perspective, for the full year, approximately 39% of our R&D expenses were attributable to our cardiac contractility, development and research activities, 13% to our mitotic kinesin development and research activities, 19% to our skeletal muscle modulation research and preclinical development activities, and 29% to our other research activities.
Other research programs include in part our programs directed towards smooth muscle modulation. As of December 31, 2008, our cash, cash equivalents, restricted cash and long-term investments totaled $76.3 million.
The amount included 16.6 million in auction rate securities classified as long-term investments at December 31, 2008. As we previously announced, on January 5, 2009, we received $12.4 million in cash as part of the no net cost loan program offered by our portfolio money manager.
This loan is secured by the auction rate securities. In addition, we continue to have available to us a committed equity financing facility with Kingsbridge Capital.
Under this facility, we have the ability at our discretion a predetermined discount to access the lesser of $275 million or proceeds available through the sale of up to 19.9% of our outstanding shares, subject to certain minimum share price and other requirements. Now I would like to turn to financial guidance.
Given Amgen’s potential exercises of its options for CK-452, it is important to understand that we are prudently managing the business in light of Amgen's decision not yet being known. Therefore, we anticipate our 2009 net cash utilization to be in the range of 52 million to $57 million, with cash R&D expenses expected to be in the range of 38 million to $42 million, and cash G&A expenses to be in the range of $14 million to $15 million.
On this basis, we believe that we have over 12 months of cash resources to fund operations. While Amgen may choose to exercise its options for an exclusive license to develop and commercialize CK-452, there is no certainty that this will occur.
Accordingly this financial guidance excludes any revenues associated with such an option exercise by Amgen, including any projections regarding potential reimbursement of R&D expenses related to CK-452. This guidance also does not take into account revenues from other potential collaborations that Cytokinetics may enter into in 2009 relating to CK-452 or other programs.
However, if Amgen does exercise its options, we will provide an update to our 2009 financial guidance, taking into account the 50 million option exercise fee that Amgen would pay to us, as well as any other payments that we may receive from Amgen for R&D activities related to CK-452 that we may conduct under Amgen’s sponsorship. We expect that if Amgen exercises its options related to CK-452, our cash resources would then be sufficient for approximately 24 months of operations.
This financial guidance is on a cash basis and does not include an estimated 12 million in GAAP revenue related to Amgen’s initial payment for its options for licenses of CK-452, and $7.5 million in noncash related operating expenses, primarily related to FAS 123R stock compensation expense. That concludes the financial portion of today's call.
And with that, I’ll now turn the call over to Robert.
Robert Blum
Thank you, Sharon. To conclude, I would like to comment on a few recent events and how they impact the strategic direction of the company.
Looking back on 2008, I am pleased with the progression of our CK-452 clinical trials program. I believe that the profile of CK-452 emerging from these trials has met both ours and Amgen’s expectations.
Furthermore, I believe both we and Amgen are satisfied that Cytokinetics has executed this program well. For example, focusing on the phase IIa clinical trial in ischaemic cardiomyopathy for a moment, recall that we initiated this study at the end of April, enrolled and dosed over 90 patients, and issued top line data by mid-December.
To have this all completed in eight months is no small feat, and speaks to a great effort put forth by many within Cytokinetics as well as our clinical trial investigators and other site personnel. In the near term, we are focused on completing the final data collection and analysis of the phase IIa clinical trial evaluating CK-452 in stable heart failure patients, as well as providing the final data deliverables to Amgen.
I would like to remind you that Amgen has been receiving the agreed clinical trials data in real time throughout the execution of the phase IIa clinical trials program, although this does not alter the agreed timeframe Amgen has to make its exercised decisions. To repeat in this first quarter, we look forward to delivering the necessary data packets to Amgen that would trigger the time clock associated with their option exercise.
Moving briefly now to our anti-cancer drug candidates, in December we announced that GSK informed us of their decision not to exercise their options on Ispinesib and SB-921 , our novel inhibitors of kinesin spindle protein or KSP. As a result, Cytokinetics retains all development and commercialization rights to these drug candidates.
Going forward, given the restructuring of the company announced last September and our forward focus to muscle biology, we are now seeking a new partner for the continued funding of the phase I/II clinical trials for both Ispinesib and SB-921. We have initiated discussions in order to re-partner these programs and are seeking a new collaboration relating to our KSP inhibitors.
We are aware that a number of pharmaceutical and biotechnology companies are currently developing KSP inhibitors for the treatment of cancer and we believe we maintain a compelling position in this emerging area of anti-cancer drug development. We believe that any new partner in the development of these drug candidates could assume a leading position in KSP inhibitor development.
At the same time, the collaboration between Cytokinetics and GSK is continuing with a focus on the development of GSK-295 and translational research relating to centromere-associated protein E or CENP-E. Recently we have disclosed more about Cytokinetics research and development activities focused on muscle biology and the modulation of muscle contractility.
With the restructuring of the company announced last September, this area of biology and related pharmacology became an important focus for us as we continued towards building a sustainable biopharmaceutical company. We are very pleased with the productivity of our research activities in this field over the past year.
In April of last year, we announced a selection of a skeletal muscle activator CK-2017357 or CK-357. This novel potential drug candidate may prove to be a potential treatment for diseases associated with ageing, muscle wasting and neuromuscular dysfunction such as ALS.
This compound has been progressing nicely in IND enabling studies. Also last month, we announced a selection of another skeletal muscle activator to serve as a backup potential drug candidate to CK-357.
We generally seek to identify backups for lead drug candidates in order to mitigate any development risk that might be encountered with a lead development compound. In addition, we announced a selection of a smooth muscle inhibitor development candidate that acting through a novel mechanism to relax smooth muscle may offer potential treatments for diseases such as pulmonary hypertension, asthma and chronic obstructive pulmonary disease.
We are excited about these promising novel potential drug candidates that have emerged from our research activities and believe that our ability to leverage our expertise derived from our cardiac contractility program has contributed to discovery and advancement of these potential drug candidates in a relatively short period of time. We believe these additional programs offer important technical and capital efficiencies, all the more significant in today's increasingly challenging business environment.
Now, as we turn the page to 2009, I would like to share with you our key milestones for the coming year. On the cardiovascular side of our business, in March, we plan on presenting final data from our phase IIa clinical trial of CK-452 in patients with stable heart failure at the American College of Cardiology meeting in Orlando.
In 2009, we plan on presenting final data from our phase IIa clinical trial of CK-452 in patients with ischaemic cardiomyopathy and angina. In mid-2009, we anticipate the initiation of a phase IIb clinical trial of CK-452 in chronic heart failure outpatients at an increased risk for death and re-hospitalization for heart failure.
With respect to our oncology drug candidates, in 2009, we anticipate that GSK will initiate a phase II clinical trial of GSK-295. Looking to our non-clinical research and development programs, in 2009, we plan to submit an IND application for CK-357, and to initiate a phase 1 study of CK-357 in healthy volunteers.
Also, in 2009, we anticipate progressing our smooth muscle inhibitor in IND enabling studies. On the corporate milestone front, in this first quarter, we anticipate providing the required clinical data from our CK-452 phase IIa clinical trials program to Amgen in order to inform the potential exercise of Amgen's options under the company’s strategic alliance.
Looking back on 2008, I am especially pleased with Cytokinetics performance and despite the external environment, which presents key challenges, we remain committed to our plans and optimistic for our future. We believe the steps we have taken in the past year, including the restructuring of the company, concentrating our focus to muscle biology, the strengthening of our pipeline with the advancement of three potential drug candidates, potential new partnerships, and of course the potential near term option exercises by Amgen, all may contribute to continued successes in 2009.
In all, Cytokinetics is committed to building a solid pipeline of novel drug candidates, all with a goal of putting us in a sustainable and durable business position, heading into this year and beyond. That concludes the formal portion of our call today, and I would now like to open up the call to questions.
Operator
(Operator instructions) Your first question comes from Mark Monane with Needham. Your line is open.
Mark Monane – Needham
Hi, thank you. Good afternoon.
And thank you for the reviewing 2008 and look into 2009 in this fine afternoon in New York City.
Robert Blum
Good afternoon, Mark.
Mark Monane – Needham
Please would you spend some time helping us think about prioritizing the smooth muscle and the skeletal muscle programs. Clearly there's a number of different systems that are involved in terms of organ systems.
Does the technology or Andy’s thinking reflect a preference for certain areas over others and why?
Robert Blum
Yes, I'll start and then I will turn it over to Andy as well. In terms of priority, our higher priority right now is advancing CK-357, our skeletal muscle activator into phase 1 clinical trials this year in healthy volunteers.
It will be through the course of this year that we will elaborate more on what we have already learned mechanistically and pharmacologically from the study of this compound and other compounds from the program. And then I think we will be able to provide you and others with more insights into our thinking for phase II and beyond.
But suffice it to say at this time, we're looking at a variety of different indications, some of which I would say are more affordable to us alone, others which may require a partner. And those that we are focused to include diseases such as ALS, sarcopenias, cachexias as and others for which activating the skeletal muscle, increasing the strength and force of skeletal muscle may lead directly on improved quality of life and other measures.
With that, I'll turn it over to Andy.
Andrew Wolff
Right. Honestly, Robert, I don’t – I think you have been very complete, I don't know what more I would say actually.
I think I'll – I mean maybe the one thing I would add is, often it is difficult to look for a pharmacodynamic signal in normal individual, but we think we may be able to do that, and if we can get some readout of the drug’s effect even in a first time in human healthy volunteer study, we're certainly doing that, and we have been quite diligent right now, looking to see what sort of assessments and technologies we might bring to bear on that. Otherwise, clearly, very shortly after determining the maximum tolerated dose in healthy human subjects, we would go into, even if a more mildly diseased population where the chances signal – a higher signal to noise ratio would be better, even healthy elderly people lose muscle mass and function, and as Robert has said, we may be able to see very strong signal in patients with Lou Gehrig's Disease or ALS.
Robert Blum
Does that help, Mark?
Operator
Your next question comes from Michael Aberman with Credit Suisse. Your line is open.
Robert Blum
Hi Michael.
Michael Aberman – Credit Suisse
Hi guys, can you hear me?
Robert Blum
Yes.
Michael Aberman – Credit Suisse
First question, does the initiation of the phase IIb clinical trial trigger the expiration of Amgen's option period?
Robert Blum
A very good question. What we have been able to disclose publicly given the confidential nature of our agreements with Amgen is that Amgen has a defined period of time to make a decision.
During that time, they can evaluate the data that we will have presented to them. Following that period of time, were we to initiate phase IIb, that will in effect render their option no longer exercisable.
Michael Aberman – Credit Suisse
So is it lesser of or in other words if you start the phase IIb before that time period expires, and they have that full time period, or is it once you – because there is – you…
Robert Blum
They have a minimum period of time where even in that period were we to initiate phase IIb, they would still have the defined period of time. But however, once that of period of time has lapsed, if we initiate phase IIb, then their option is no longer valid, if you will.
Michael Aberman – Credit Suisse
Can you talk about the decision to do your first phase IIb in an outpatient, what – this is an oral only, which formulation and dosing do you intend to use in that trial? How many patients do you contemplate et cetera and how involved has Amgen been in this trial?
Have they agreed to this – I know they don't have to, but in theory, have they agreed to this, are they in agreement with this strategy?
Robert Blum
Lots of good questions. I'll say that it is not going to be on this call today that I will be elaborating on the specific design of the study.
That is in effect something that has been discussed quite at length internally with consultants and also with Amgen. I believe we do have good alignment with Amgen on our plans going forward, but however, as you know, until they exercise their options, it is for us to determine and for us to fund.
As such, I'm not sure what else we can say to you as to our plans in phase IIb, it is consistent with what we have shared with you and others publicly where our goal is to develop the IV and the oral in a coupled form in a phase IIb program that would evaluate both in hospital and outpatient patients.
Michael Aberman – Credit Suisse
You mentioned chronic heart failure outpatients, would this be initiated as inpatients and then continued oral as patients, can you give some framework as to how this trial is designed, how you're thinking about it without giving specifics?
Andrew Wolff
Sure. I mean what we have talked about is that we wanted to – we want to be able to register two ways of initiating treatment with this compound.
Hospital wise patients can be treated with the IV and go on to oral, and other patients can go directly on to the oral. And then they include less ill hospitalized patients even, because once they are in the hospital, even if they are not – even if they respond very dramatically and rapidly to standard therapy, that hospitalization for heart failure still puts them at risk as you know for heart failure death and further hospitalization.
So they would still be a good patient for us. Whether it is one steady with different strata, IV to oral or direct to overall, or two separate studies, I don't think that matters a whole lot.
I mean the idea is to register two ways of treatment with the compound. And as we discussed, we have no plan, we will take it if we can get it, but we certainly won't do any thing that would slow down the program or make it more expensive or difficult to register the IV by itself.
It will be a bridge to oral.
Operator
Your next question comes from Christopher James with Rodman and Renshaw. Your line is open.
Christopher James – Rodman & Renshaw
Hi. Thanks for taking my question.
This may be a bit premature, but I have a question about the potential phase III design. It appears that the FDA is interested in accepting dyspnea as an endpoint for acute heart failure drugs, but for chronic heart failure drugs, I think you mentioned in the past, Robert, that you would expect to see a benefit in mortality.
My question is do you think that you’re going to need to show benefit versus another comparator, potential another (inaudible) on the safety side of better mortality, or would you need to see an absolute increase – or no increase in mortality? And then I have a follow-up about the Amgen option?
Andrew Wolff
No, it's been – I think our stated goal, very clearly for a while that we will register these two approaches to the initiation and continuation of treatment, either IV to oral or straight on to oral for the reduction of death and re-hospitalization due to heart failure. And we don't – we will look at things like dyspnea for the in-hospital phase of patients who happen to be initiated acutely with the IV, but that wouldn’t be a primary endpoint.
In the United States, there is no need to study the compound versus anything but placebo. In Europe, they do like to see comparator data, but there needs to be what is a clear and appropriate and ethical comparator, and until we have those discussions with EMEA, I can't really comment on whether anything other than just beating placebo on top of standard therapy would be necessary.
My guess is not.
Robert Blum
And Chris, just to elaborate, I don't believe we have ever said that a mortality benefit alone would be required, but certainly we would expect that you need to be able to rule out the possibility of increasing mortality, and as a function of composite endpoint, we believe mortality would be included.
Christopher James – Rodman & Renshaw
All right, okay, thanks. And then I guess very quickly, could you describe interest – potential interest by other partners should Amgen decide not to opt in or to perhaps delay their option, are you getting interest from other parties?
Robert Blum
Yes, I think that is a good question. We do get unsolicited interest from other companies with respect to this program albeit inasmuch as this program is currently partnered with Amgen albeit under an options structure, we need to be careful about what we can share with them.
Certainly they are in possession of that information which is already public and that is something that has generated interest from other potential partners. Our focus right now remains however on Amgen.
Christopher James – Rodman & Renshaw
Thanks.
Robert Blum
Operator?
Operator
Your next question comes from Charles Duncan with JMP Securities. Your line is open.
Robert Blum
Hi, Charles.
Charles Duncan – JMP Securities
Hi guys, congrats on the progress in completing enrolment in cohort five.
Robert Blum
Thank you very much.
Charles Duncan – JMP Securities
I actually have a question regarding that particular trial, the stable heart failure trial. You showed some improved heart rate in the other cohorts, at least in cohort four, and under much more limited duration of treatment.
Would you expect perhaps then the heart rate effect is a function of dose and/or duration and could be perhaps even bigger in cohort five?
Andrew Wolff
Well, what we have said even during this call earlier is that there is a very definite relationship between the plasma concentration and the decline in heart rate. So the higher the plasma concentration, the more the heart rate drops.
And since the plasma concentration is in turn a function of dose, it would be reasonable to think that at higher doses, the heart rate will go down further. I can't comment on whether it may go down yet even further with continued therapy, it may.
That’s certainly a reasonable hypothesis. I can't say anything about anything from cohort five yet as we’ve just really finished the dosing and still need to collect and analyze the data.
I will say, it is my belief that this decline in heart rate is not a direct effect of the drug, because in preclinical studies we have seen absolutely no evidence of the direct effect on heart rate. Indeed we have evidence that there is no direct affect on heart rate, but rather as systolic function of the failing heart improves in response to 452, there is a withdrawal of the elevated sympathetic tone that such a pathophysiologic marker of heart failure, such that heart rates declines as the heart is not being whipped by (inaudible) means as much it was prior to treatment.
Charles Duncan – JMP Securities
So is there any sense in suggesting that you may have an actual better effect in maybe some heart remodeling over time?
Andrew Wolff
You know there has long been speculation that the acute effects of this drug will be dwarfed by what we see in terms of clinical benefits when we can maintain even a modest increase in systolic function at a tolerable dose over extended periods.
Charles Duncan – JMP Securities
Okay. And then a question perhaps for Sharon, have you set a date for you R&D day, I know you are kicking that around possibly this spring, possibly this fall?
Sharon Barbari
No, we haven't set it yet. We do understand though that I think one of the key event that needs to happen before anybody would be really interested in listening to the rest of what is in our pipeline is the Amgen opt in.
And so we will differ confirming a date until that time.
Charles Duncan – JMP Securities
Okay, it makes sense. And then final question regarding the skeletal muscle program, did you – maybe I missed it, but did you provide any information on the clinical setting there, that you're planning on filing an IND for?
Andrew Wolff
No, we haven't. All we have said is that we expect to begin phase 1 studies this year in healthy volunteers to be followed by movement then into diseased populations.
But we haven't indicated to what division we would submit that IND, nor what are the specific indications we might prioritize in phase II.
Charles Duncan – JMP Securities
But you think you'll be able to talk about that obviously at the R&D day, what kind of considerations are you giving? Is that an area that you would like to pursue all the way to commercialization, Robert?
Robert Blum
Yes. So most certainly we want to elaborate on this the R&D day, but we have done some very through marketing research, assessments, and competitive and commercial positioning around the each variety of different indications for which we think this mechanism leads on improvements in quality of life.
We do think that there are indications that we could afford in some of our base and better case scenarios to take forward into commercialization. That said, we also recognize these are especially challenging times and we have to be careful about how we manage our cash burn.
So a lot of it has to do with CK-452 and Amgen or if not Amgen might be then another re-partnering. All of these things figure into a calculus around which we look to what we can afford to take deeper into clinical trials and potentially into the market ourselves.
All of our programs we think offer a potential for partnering and we're certainly interested in partnering these programs. Our ambitions extend towards the maturing some of our capabilities as we might also ready for late stage development and commercialization.
So it is a delicate and dynamic balance if you will, and a lot of which depends on our financials, but there are certainly indications that we think we can afford to take forward potentially in parallel with a partner, funding and taking responsibility for other indications.
Charles Duncan – JMP Securities
Okay. Thanks for the added color, Robert.
Robert Blum
Sure thing.
Operator
Your next question comes from Jason Cantor with RBC Capital Markets. Your line is open.
Ching Chan – RBC Capital Markets
Hi. This is Ching Chan [ph] for Jason.
Just quickly, two questions on CK-452 program. And first I know you probably won't give a clear answer on this, but I still want to ask, just want to know the – just want to know a little more about the timeline of the opting decision?
I understand you have to deliver the data to Amgen in Q1, so should we expect opting decisions in Q1 or early Q2? That's the first question.
The second one, just wonder if you can run a scenario analysis what's your plan with and without Amgen opting? Thank you.
Robert Blum
So I don't think I will disappoint you in terms of your expectations. I cannot answer your question regarding the timing of the Amgen option.
For binders of confidentially, we're not able to disclose the amount of time Amgen has to make its decision. All I can say is that we will deliver in this first quarter that last bit of data intended to then trigger their option.
So I don't think I can do any better for you than that. Your next question relates to what we would do with Amgen’s exercising or not, and I'll start and maybe then ask Sharon to pick up as well, as we have give guidance today, we believe our current in hand financial resources afford us a solid path forward as we might then have to take CK-452 into phase IIb ourselves and also advance our other muscle biology related programs.
And with those expectations, we believe that our current financial resources afford us greater than 12 months of forward burn. But however, we hope Amgen will exercise its option.
We have prepared for the possibility they may not, but we hope they will. And if they do, not only does that then afford us $50 million in addition on our balance sheet, but also they pickup on the substantial burn that has historically gone to our CK-452 program, and going forward, they are responsible for 100% of those costs.
And in addition to that, we have the potential for further reimbursement of R&D related activities in this program from Amgen, none of those are in our current guidance, because we have no certainty with respect to Amgen’s decisions. So with that I will turn it over to Sharon.
Sharon Barbari
I don't know if I've got much more to add. I think the key for us is just being prudent going forward with this as far our spending and the prioritization of our program.
We also have available to us the Kingsbridge committed equity financing facility and we continue to have the ability to access up to $75 million or the proceeds available from the sale of up to 19.9% of our outstanding shares. And so that’s key for us moving forward, but besides the potential of having additional income coming from partnering other programs besides CK-452 as well.
And we are very, very cognizant of the burn and trying to make sure that we're driving towards valuation point for CK-452 as well as the smooth and the skeletal programs.
Ching Chan – RBC Capital Markets
Okay. Thank you.
Robert Blum
Thank you.
Operator
Your next question comes from Michael Aberman with Credit Suisse, your line is open.
Michael Aberman – Credit Suisse
Okay, thanks for allowing the follow-up. I just want to turn back to the phase IIb question again.
And keeping in mind I think in the past some of the timelines have slipped to a quarter and when you say mid 2009, can you give me some comfort that what activities have you to date in terms of planning the phase IIb? Do you have a trial design agreed-upon, do you need to go to the FDA first to get that, have you started the process?
And when you say mid 2009, can you give us a timeframe, what do you mean by mid-2009 in terms of the latest month that that would incorporate?
Robert Blum
So, I'll try to help you, but Michael you may also not be fully satisfied with my response. In terms of what we are doing, we are manufacturing drug product with the expectation that we will begin this study again in mid 2009.
We are being purposefully silent on whether that means Q2 or Q3 inasmuch as I think there are things that right now we can't put a tight control on, and we don't want to set expectations we can't deliver. So instead, we are saying mid-09.
But however I would not expect that Q4 would fall into mid-09 and the other activities in terms of protocols, we are locking down on protocols that are being discussed internally and with Amgen. I underscore with Amgen albeit I will also emphasize that we are prepared to go forward even as Amgen may not exercise their option.
We do not believe that a meeting with the FDA is required. However, that is not to say we might not have meetings with the regulatory authorities as we might go forward.
So I think that's probably the best we can do, I don't know if Andy you want to elaborate on anything further?
Andrew Wolff
No. I think that – I mean we have to proceed right now with the assumption that Amgen will not exercise, in the hope that they will.
And we have, as Robert has said many times, we think they will, but we can't read their mind, and so it makes it very difficult for us to tell you about some of the details that you have asked, because it maybe one thing under one scenario and a different thing under the other.
Michael Aberman – Credit Suisse
Well, under this scenario, as you said, you don't need – you need to plan as if they are not going to. So under the scenario that you don't, they don't exercise the options, I mean can you give us again just some color as to how – since you are – you have some trial designs, can you give us some color as to will it be an IV oral start, is there more than one phase IIb program, is it a single trial, is it multiple trials, and what timeframe?
Are you looking at six months endpoint, 12 months endpoint, how should we think about timing of the phase IIb program to help us think about when a phase III might start?
Andrew Wolff
I think Robert has said all we can say about when it will start and unfortunately I just don't think on this call we can go any further and say more than we have.
Michael Aberman – Credit Suisse
Okay. But you do have – all right, thank you.
Andrew Wolff
Well, I mean – Michael, obviously we have been doing a lot of thinking and planning, it is just what we can talk about, what we can't, that's the problem.
Michael Aberman – Credit Suisse
Okay, thanks.
Andrew Wolff
Thank you.
Operator
Your next question comes from Mark Monane with Needham. Your line is open.
Mark Monane – Needham
Hi, good afternoon. I just want to – I wanted to just follow up with some financial questions, on the balance sheet, you listed a put option for $3.4 million or so, could you explain what that is?
Sharon Barbari
The put option is related to our investments, so it is part of the agreement that we signed with UBS. We gave them rights to essentially redeem the auction rates at par until June 2010 and then after that they are required to repurchase them from us, and so that’s related to the auction rate securities and evaluation, the difference between the fair value of the auction rate, which is $16.6 million and a par value of $20 million.
Mark Monane – Needham
Question on your GAAP versus your non GAAP financials, for the $12 million going forward on Amgen as your option payment, how long is that amortized for, will it continue into 2010? And for the SG&A and R&D GAAP numbers, what percentage do you think is cash and non-cash?
Sharon Barbari
I don't know that the difference between the G&A and R&D for you is with me today. But the $12 million – it represents an amortization of 4 years from the initial upfront payment that Amgen made to the company.
If in fact Amgen does exercise their option for $50 million in this year, the remaining balance of that option exercised which shows up in deferred revenue would then be taken to the P&L, but that is still all noncash.
Mark Monane – Needham
Thank you very much.
Sharon Barbari
Thanks.
Operator
Your next question comes from Charles Duncan with JMP Securities. Your line is open.
Charles Duncan – JMP Securities
Thanks for taking the follow up guys. I had a question regarding the phase IIb and I understand why you are not able to provide a lot more detail here, but I think one of the concerns in the market is the cadence or the time of the phase IIa.
Would you characterize the enrolment criteria, thinking about the enrolment criteria and the design that you're targeting for phase IIb, would you anticipate the number of measures that you take et cetera in terms of conducting that trial to result in a cadence that is more reflective of the stable heart failure study in phase IIa or the ischaemic cardiomyopathy trial which was executed very quickly?
Robert Blum
First off, I want to apologize to you and Michael and anybody else who feels like we are not being as forthcoming as we should be. A lot of it has to do with the fact that this is fluid.
This is in flux in large part because what we can do, meaning what we can afford to do in the absence of Amgen exercising is different than what we may choose to do where Amgen do exercise and we're going forward together. I don't think it would be productive for us to lay out a clinical development program until we have specific clarity on Amgen's decisions.
But however, we are proceeding forward to ready for the initiation of phase IIb as that matters as top priority for us in this mid 2009 timeframe. The specific design elements are things that I think best be left for a decision as to whether we are doing that alone or with our partner.
As to your next question in terms of what are the criteria for inclusion, I think I'll turn to Andy. But suffice it to say that we continue to think broadly even as we may ourselves be funding this alone, as to what would be the types of patients enrolled in phase IIb.
Andrew Wolff
I think – you know I don't want to be so optimistic as to say we will enroll as rapidly as the ischaemic cardiomyopathy study. On the other hand, we are looking for a more real world population for a more clinically – I don't want to say clinically relevant, because what we've done is clinically relevant, but let's just say that treating patients more as we would expect they may be treated after the drug is approved and on the market, so not so many plasma samples, not so much in patient time.
Some of these folks would go directly on to oral vaccs, a very easy study. There won’t be the kinds of exercise test that might even have been a barrier to enrolment for the ischaemic cardiomyopathy study.
So I am thinking that it will be easier to find patients willing to come on to these phase IIb studies. Now that having been said, obviously, we are still going to need to be careful with our inclusion and exclusion criteria.
But I would expect not to see the difficulty that we had for the first cohort, the stable heart failure study, and perhaps it would be prudent to be not quite so optimistic to think that we could enroll hundreds of patients at the rate at which we enrolled the ischaemic cardiomyopathy study.
Charles Duncan – JMP Securities
That’s helpful, Andy. Thanks.
We look forward to the details when you're ready to provide them.
Robert Blum
Thank you Charles.
Operator
Your next question come from George Zavoico with Westport Capital. Your line is open.
Robert Blum
Hi, George.
George Zavoico – Westport Capital
Congratulations and thank you for taking the questions. A couple of – just three quick questions.
One follow-up on Charles’ question regarding the heart rate effect. Andy, you mentioned withdrawal of elevated sympathetic tone has been possible mechanism.
First question is, do you have any external evidence of that? Second question is, regarding backups, you said you had as a routine policy, you develop backups, do you have a backup for 452, and if so does Amgen have the option for that too if they decide to exercise the option?
And finally just if you can a brief update on the progress of the cardiac cath trial? Thank you.
Andrew Wolff
So I'll start with the question heart rate and we’ve seen this in dogs where we have been able to instrument them more fully and we’ve seen the heart rate fall within 15 minutes of initiating an infusion. At the same time, we see a decline in peripheral resistance without any change in blood pressure.
So this is all consistent with the decrease in sympathetic tone. I know that in more recent studies, we have been measuring circulating catecholamines, but I don't know what those data have shown at this point.
In patients we don't have that of kind of thing, however to then leapfrog to your third question, and I will save the middle one for Robert, the cath lab study as we can get that to finally enroll should answer some of these questions more directly. We will be measuring peripheral resistance in these patients and see what happens to it in response to 452.
And I think we'll have more clarity around that, is it indeed a withdrawal of sympathetic tone as we get more patients enrolled in that trial, which I do expect we will through the course of the year see begin to pick up.
Robert Blum
Yes, to that point, that study has not been a high priority for us. In the second half of 2008, we focused instead on another studies, and in 2009 we may see a ramp up enrolment in that trial.
With respect to your question on backups, at the time we did the deal with Amgen, this is dating back to December 2006, we did have and still do have a backup to CK-452. That remains a viable option where we to find something idiosyncratic or otherwise that limits the development of CK-452.
We have not yet identified any reason to turn to our backup, but we do have a backup. And like that backup, we also have follow-on compounds that we are continuing to investigate, research and characterize.
The backup and the follow-ons would also travel together to Amgen, if you will, if they were to exercise their option, meaning the whole program goes hand-in-hand with CK-452. If Amgen does not exercise its option, then those also go with us to what would then be our interest to re-partnering the program, CK-452, it's backup and follow-on compounds.
Operator
This concludes the question-and-answer portion of today's call. I will now turn the call over to Robert Blum for closing remarks.
Robert Blum
I wanted to say thank you to all the participants today for your continued interest in Cytokinetics. We look forward to updating you throughout 2009 on more progress and more activities.
And with that operator, we can conclude the call. Have a good day, everyone.
Operator
This concludes today's Cytokinetics fourth quarter and year-end 2008 conference call. You may now disconnect.